What's Happening?
A recent report from the Ludwig Institute for Shared Economic Prosperity (LISEP) has revealed that nearly 25% of the American workforce is 'functionally unemployed.' This term encompasses individuals who
are jobless, those seeking but unable to secure full-time employment, and workers earning poverty wages, defined as $26,000 or less annually. The report indicates a slight decrease in the 'True Rate of Employment' (TRU) from September, but an overall increase over the past year. The Bureau of Labor Statistics (BLS) reported a rise in the unemployment rate to 4.6% in November, the highest since September 2021. LISEP's figures suggest a significant gap between official unemployment rates and functional unemployment, particularly affecting Black and Hispanic workers, as well as women.
Why It's Important?
The report underscores the challenges faced by a significant portion of the workforce, highlighting disparities in employment conditions across different demographics. The concept of functional unemployment provides a broader perspective on labor market health, beyond traditional unemployment metrics. This has implications for policymakers and analysts who rely on government figures to assess economic conditions. The elevated rates of functional unemployment suggest that many households are struggling with stagnant wages and rising costs, particularly during the holiday season. This could influence future policy decisions aimed at addressing income inequality and improving job opportunities.
What's Next?
The Department of Labor is set to release its December employment report on January 9, with forecasts indicating a continued slow pace of hiring and a potential increase in the unemployment rate to 4.7%. This upcoming report will be closely watched by economists and policymakers to gauge the ongoing impact of economic conditions on the labor market. The findings may prompt discussions on potential interventions to support affected workers and address structural issues within the labor market.
