'Functional Unemployment' Increases in May, Says Ludwig Institute

 For fourth straight month, more than 24% of labor force is functionally unemployed

WASHINGTON, June 18, 2025 /PRNewswire/ -- The percentage of American workers unable to secure full-time, above-poverty-wage jobs continues to tick upward, with nearly one-fourth now classified as "functionally unemployed," according to the latest report from the Ludwig Institute for Shared Economic Prosperity (LISEP).

LISEP's May True Rate of Unemployment (TRU) report—a measure of the functionally unemployed, defined as the jobless plus those seeking, but unable to find, full-time employment and those in poverty-wage jobs—increased from 24.2% to 24.3%, while the official Bureau of Labor Statistics rate was unchanged at 4.2%. The functional unemployment rate has remained at 24% or higher since February.

"Over the past four months, we've seen a stagnation in job opportunities that pay above poverty wages, particularly for low- and middle-income workers," said LISEP Chair Gene Ludwig. "As economic uncertainty grows, more Americans are losing ground. Wages aren't keeping up with the rising cost of living, and the shrinking availability of living-wage jobs is compounding the strain. The consequences for working families are becoming increasingly severe."

Across demographics, the functional employment prospects were somewhat mixed in May. Men, Black, and Hispanic workers saw improvements relative to April, while women and White workers experienced an increase in functional unemployment. The TRU for Black workers fell by 0.7 percentage points to 26%, partially offsetting the 1.4 percentage point jump in April. While the TRU for Black workers is slightly lower than in early 2024, it remains higher than in early 2023, which experienced the best levels on record.

The TRU for Hispanic workers fell by 0.8 percentage points to 27.3%, dropping below their 12-month average of 27.8%. In contrast, the TRU for White workers increased by 0.5 percentage points to 23.6%, marking the fourth consecutive month with a TRU above 23%.

By gender, the TRU for women increased 1.3 percentage points to 29.9%, while the rate for men decreased 0.7 percentage points to 19.3%. Overall, the three-month average gender gap has returned to 10 percentage points.

"Identifying trends is key in determining the direction of the economy, and unfortunately, for low- and middle-income workers, the trends are not encouraging," Ludwig said. "The TRU, and its stark contrast with government headline statistics, tells us American workers are facing greater challenges than what we are led to believe."

About TRU
LISEP issued the white paper "Measuring Better: Development of 'True Rate of Unemployment' Data as the Basis for Social and Economic Policy'' upon announcing the new statistical measure in October 2020. The paper and methodology can be viewed here. LISEP issues TRU one to two weeks following the release of the BLS unemployment report, which occurs on the first Friday of each month. The most recent TRU and supporting data are available on the LISEP website at https://www.lisep.org/tru.

About LISEP
The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by Ludwig and his wife, Dr. Carol Ludwig. The mission of LISEP is to improve the economic well-being of middle- and lower-income Americans through research and education. LISEP's original economic research includes new indicators for unemployment, earnings, and cost of living. These metrics aim to provide policymakers and the public with a more transparent view of the economic situation of all Americans, particularly low- and middle-income households, compared with misleading headline statistics. On X: @LISEP_org.

About Gene Ludwig
In addition to his role as LISEP chair, Gene Ludwig is a managing partner of Canapi LLC, a financial technology venture fund. He is the founder and CEO of Ludwig Advisors, which counsels financial firms on critical matters. Ludwig is also the founder of the Promontory family of companies. He is the former vice chairman and senior control officer of Bankers Trust New York Corp. and served as the U.S. Comptroller of the Currency from 1993 to 1998. He is also author of the book The Vanishing American Dream, which investigates the economic challenges facing low- and middle-income Americans. His forthcoming book, The Mismeasurement of America, will be published in September 2025 and is available for pre-order wherever books are sold. On X: @geneludwig.

View original content to download multimedia:https://www.prnewswire.com/news-releases/functional-unemployment-increases-in-may-says-ludwig-institute-302485438.html

SOURCE Ludwig Institute for Shared Economic Prosperity