True Rate of Unemployment: One-fourth of American Workers Remain ‘Functionally Unemployed’ as Racial and Gender Gaps Widen

More than one-fourth of American workers remain without a job that lifts them above the poverty level, presenting a major challenge for the new Congress and the Biden Administration, according to the latest analysis of the country’s unemployment rate released today by the Ludwig Institute for Shared Economic Prosperity (LISEP). At the same time, racial and gender gaps have widened, exacerbating economic inequity.

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“For any economic recovery to be sustainable, the rising tide must lift all boats,” said Gene Ludwig, LISEP chairman. “While we have seen some improvement in the government-reported unemployment rate since the pandemic began, many of these jobs are not sufficient to support a family. No economic recovery can succeed without the opportunity for all Americans to participate equally.”

In its monthly analysis of employment data, LISEP’s True Rate of Unemployment (TRU) – a measure of the “functionally unemployed,” defined as workers seeking but unable to secure full-time jobs that take them over the poverty level – came in at 25.1 percent for the month of December. This is a marginal improvement over the November TRU of 25.7 percent. The Bureau of Labor Statistics (BLS) unemployment rate for December was unchanged at 6.7 percent.

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While the overall TRU showed a slight overall improvement in living wage job growth, the improvements were not equal across all demographics. The slight decrease was fueled primarily by a 1.3 point improvement in the TRU for White Americans (now 22.7 percent), versus a 0.2 point improvement for Black workers, to 30.2 percent. The TRU rate for Hispanic Americans worsened, up 1.5 points to 31.6 percent.

Meanwhile, the TRU among workers with the highest education level (professional or advanced degrees) has fully recovered to pre-pandemic levels at 11.5 percent, a full percentage point lower than in February 2020. Living-wage job prospects worsened, though, for those with only a high school education, increasing from 21.8 percent to 24.1 percent, and for those with less than a high school diploma, with a TRU of 49.3 percent, up 0.8 points since November.

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