A new study reveals that about 24% of Americans—nearly one in four—are “functionally unemployed,” lacking full-time work or earning less than a living wage, signaling a deep fracture in the labor market masked by a low headline unemployment rate.
At a Glance
- The Ludwig Institute for Shared Economic Prosperity (LISEP) reports that 24.3% of Americans were functionally unemployed in April
- Functional unemployment is highest among Hispanic (28.2%), Black (26.7%), and female (28.6%) workers
- Official unemployment stands at 4.2%, up from a pandemic-era low of 3.4%
- More than 7.24 million Americans are unemployed—the highest non-pandemic total since 2017
- Experts warn that trade uncertainty from tariffs is suppressing hiring and labor force engagement
What “Functionally Unemployed” Means
LISEP defines this group as people working less than full-time or earning below a living wage (about $25,000/year pre-tax). The study shows a persistent rate near 24% over three months—highlighting a structural gap between headline labor stats and actual economic well-being, as reported by Business Insider.
Unequal Pressure on Minorities and Women
The impact falls disproportionately on Hispanic (28.2%) and Black (26.7%) Americans, with women affected at an even higher rate (28.6%). White workers register around 23%. LISEP’s Chair Gene Ludwig warned that “far too many Americans are still struggling to make ends meet…absent an influx of dependable, good‑paying jobs, the economic opportunity gap will widen,” according to Business Insider.
Rising Unemployment Numbers
Though the unemployment rate is 4.2%, the number of people unemployed in May reached 7.24 million—its highest since February 2017 (excluding pandemic years), and up from a low of 5.75 million. Claims for benefits also hit a four‑year high, and job creation down-ticked (135,000 new roles vs. 232,000 earlier in the year), according to MarketWatch.
Trade Tensions Stall Hiring
Economists attribute this labor strain partly to uncertainty from Trump-era tariffs. Businesses are hesitant to hire amid trade disputes, applying the brakes on capital spending and workforce expansion, as noted by MarketWatch.
As the gap between official employment and real economic security widens, LISEP’s findings and weak job growth signal a strained labor market. With trade wars adding to the pressure, experts say action is needed to bridge the gap and ensure opportunity reaches all workers.
