Meanwhile, percentage of Black, Hispanic workers in poverty-wage jobs remains high
While overall functional unemployment remained unchanged in July, the labor market continues to be challenging for Black and Hispanic workers, with rising functional unemployment rates fluctuating at levels well above the overall average, according to the latest True Rate of Unemployment (TRU) by the Ludwig Institute for Shared Economic Prosperity (LISEP).
While the U.S. Bureau of Labor Statistics reported a slight increase in the unemployment rate in July — from 4.1% to 4.3% — LISEP’s TRU provides a more comprehensive view of labor market conditions. By accounting for underemployment and other factors, TRU’s data suggests a worsening situation for low-income workers, according to LISEP Chairman Gene Ludwig.
“Our data consistently indicated a troubling labor market long before the recent uptick in the official unemployment rate,” Ludwig said. “When individuals are working for poverty wages, they are essentially ‘functionally unemployed.’ The current situation may represent a shift from underemployment to outright unemployment.”
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The TRU measures the “functionally unemployed,” defined as the jobless plus those seeking, but unable to find, full-time employment paying above poverty wages ($25,000 a year in 2024 dollars) after adjusting for inflation. While July’s overall TRU remained unchanged at 24.5%, the labor market experience varied significantly across demographic groups. Black workers faced heightened challenges, with their TRU rising from 26.9% to 27.6%. Hispanic workers experienced an even-steeper increase of 1.2 percentage points, from 26.8% to 28%. In contrast, White workers saw an overall improvement, dropping from 23.8% to 23.1%.
The TRU for both men and women remained relatively unchanged, with the rate for men increasing 0.1 percentage points to 20.3% and the TRU for women dropping 0.2 percentage points, to 29.2%. Among education categories, those with advanced degrees continue to maintain the lowest TRU at 12.9%, a 0.8 percentage point improvement, but those with no high school diploma struggled with their July TRU climbing to 52.6%, 0.1 percentage points above its June level.
“Workers at the lower end of the earnings scale have always been the most vulnerable, even in the most robust economy; and here, we are seeing families continue to struggle. The truth is, they never fully recovered from the Great Recession in 2007,” Ludwig said. “We must stop using the stock market and broad, outdated economic indicators as the sole measure of our national economic health. They just don’t accurately reflect the reality for a majority of American households.”
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