Although U.S. government shows that the unemployment rate in the U.S. was at 4.2% in April, the “true rate” was actually around 24.3%, according to a news release by the Ludwig Institute for Shared Economic Prosperity (LISEP).
Its figure would equate to around 66 million citizens.
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A pedestrian in New York City in June 2025. Photo by AFP |
The institute takes into account not only unemployed workers but also those searching for work without securing full-time jobs and individuals trapped in low-wage jobs that pay poverty-level wages.
By focusing on functionally unemployed workers, this measure aims to highlight labor market dynamics overlooked by other economic indicators, such as those left behind during economic growth periods.
“The unemployment data, as it is put out, has some flaws,” Gene Ludwig, LISEP’s chairman, told CBS.
“For example, it counts you as employed if you have worked as little as one hour over the prior two weeks. So you can be homeless and in a tent community and have worked one hour and be counted, irrespective of how poorly-paid that hour may be.”
In essence, people without stable employment should not be considered functionally employed, according to LISEP.
“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,” Ludwig said.
Some analysts, however, are skeptical about LISEP’s methodology.
Labor economist David Card pointed out that the government data already provides multiple alternatives to the primary unemployment rate, such as its “alternative measures of labor underutilization,” which accounts for part-time workers who are looking for full-time employment.
“That is a long-standing series that many people look at. It has risen more over the past year than the standard unemployment rate,” he told Newsweek.
“I am not so convinced that adding all the other groups is helpful, other than as a rhetorical device.”
