CLAIM: ‘One-in-Four Workers Are Functionally Unemployed’

Despite official unemployment numbers suggesting record lows, a hidden crisis looms over the American workforce, as “one-in-four workers are functionally unemployed,” according to new research.

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According to the Ludwig Institute for Shared Economic Prosperity, approximately 25% of Americans are “functionally unemployed,” trapped in jobs that fail to provide a living wage.

This stark reality raises concerns about the true state of the economy and the widening gap it creates.

Official stats paint a rosy picture, with April 2025’s unemployment rate at a mere 4.2%.

Yet, the Ludwig Institute reveals a different story altogether.

There’s a noticeable disparity when you consider the broader definition of employment, which includes individuals struggling in part-time, low-wage jobs.

The institute’s findings peg the true rate of unemployment (TRU) at a concerning 24.3%, indicating much more than a temporary or seasonal hiccup.

These revelations highlight the inadequacy of traditional metrics. By counting anyone who worked just an hour in any given two-week period as employed, conventional data fails to capture the economic struggles faced by many Americans.

This skews policy decisions, leaving middle- and low-income earners exposed to financial instability.

The disparity doesn’t just stop at statistics; it deeply affects various demographic groups.

Black workers face a TRU of 26.7%, Hispanic workers 28.2%, while white workers see a slight decrease to 23%.

Gender disparities are equally stark. While men’s TRU increased, women’s rates actually decreased, marking a slight narrowing in the gender gap.

Unfortunately, these numbers only underscore the systemic inequalities burdening American society.

“Amid an already uncertain economic outlook, the rise in functional unemployment is a concerning development. This uncertainty comes at a price, and unfortunately, the low- and middle-income wage earners ultimately end up paying the bill,” says Gene Ludwig, the institute’s chairman.

Ludwig has been vocal about the dire situation. He emphasizes the need for economic policies that reflect real-world employment conditions.

The struggle to pay the bills isn’t just a statistic; it’s a lived reality for countless families striving to maintain a minimal quality of life on inadequate wages.

The gap between the official unemployment rate and the actual job market landscape is staggering.

The average American household falls short of the $67,000 needed for a decent lifestyle, earning only $38,000 on average.

This is more than just numbers—this is the American dream slipping further away from reach.

“The harsh reality is that far too many Americans are still struggling to make ends meet and absent an influx of dependable, good-paying jobs, the economic opportunity gap will widen,” Gene Ludwig comments further.