Nearly 25% of workers are "functionally unemployed," analysis finds
Summary
A new analysis shows that nearly 25% of U.S. workers are "functionally unemployed," meaning they either don't have a job and are looking, work part-time but want full-time hours, or earn very low wages. Despite a low official unemployment rate of 4.1%, many people are struggling with jobs that pay poorly or do not meet their needs, while wage growth is not keeping up with inflation.Key Facts
- The official U.S. unemployment rate was 4.1% in July, considered healthy by economists.
- The Ludwig Institute’s measure of "functional unemployment" includes those unemployed, involuntary part-time workers, and workers earning less than $26,000 a year before taxes.
- Functional unemployment reached 24.9% in July, rising for four months straight though slightly down from 25.2% in December.
- Functional unemployment rising while fewer people participate in the workforce may signal weakening in the U.S. job market.
- Employers cut 23,000 jobs in July, fewer than expected, suggesting job growth is slowing.
- Inflation rose 3.4% yearly in July, while wages rose 3.2%, meaning wage growth is not keeping pace with price increases.
- Slower wage growth limits consumer spending, which affects about two-thirds of the U.S. economy.
- Some economists caution that alternative unemployment measures showing very high rates do not align with overall economic observations.
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