Business & Finance
Nearly 25% of U.S. workers are functionally unemployed, study suggests
A research group's alternative measure accounts for poverty-level wages and underemployment, though some economists express skepticism about the figure.
The short version
- The Ludwig Institute for Shared Economic Prosperity reports that functional unemployment in the U.S. reached 24.9% in July after four consecutive monthly increases.
- The organization's alternative metric includes jobless individuals, involuntary part-time workers, and anyone earning below $26,000 annually before taxes.
- Mainstream economists caution that alternative figures in the 20% range do not align with broader economic indicators, despite recent job cuts and inflation outpacing wage growth.
Key facts
- The official U.S. headline unemployment rate fell to 4.1% in July.[CBS News]
- The Ludwig Institute for Shared Economic Prosperity calculated the 'True Rate of Unemployment' at 24.9% for July, up over four straight months but down from 25.2% in December.[CBS News]
- The institute defines functional unemployment to include jobseekers, involuntary part-time workers, and individuals earning less than $26,000 annually before taxes.[CBS News]
- U.S. employers reduced payrolls by 23,000 jobs in July.[CBS News]
- In July, the Consumer Price Index increased by an annual 3.4%, whereas wages grew by an annual 3.2%.[CBS News]
What remains uncertain
- Economists debate whether alternative indicators like the True Rate of Unemployment accurately reflect labor market conditions, with critics stating a 20% rate contradicts other macroeconomic data.[CBS News]