Report: Labor participation rises, but so does ‘functional unemployment’

Ludwig Institute Monthly Report Shows Stagnant Wages for Low-Income Workers

WASHINGTON /PRNewswire/ — Despite higher labor force participation rates in August, many of these new labor force entrants found themselves without full-time, living wage employment, according to August The real unemployment rate (TRU) report Ludwig Institute of General Economic Prosperity (LISEP).

TRU LISEP’s measure of the “functionally unemployed” — defined as those unemployed as well as those looking for but unable to find full-time work with wages above the poverty line after adjusting for inflation — increased 0.1 percentage point from 22.9% to 23%. While the increase may seem small, this increase—combined with a 0.2 percentage point increase in the labor force participation rate—suggests that even though more Americans are working, many cannot find work paying below the poverty line. Similarly, the official US unemployment rate published by the Bureau of Labor Statistics also increased from 3.5% to 3.8%.

“Federal deflationary policy has focused on raising interest rates to slow business expansion and, consequently, wage and job growth. Well, apparently they succeeded,” said the chairman of LISEP Gene Ludwig. “But the price is paid by those who can least afford it – people on low wages. There must be a better way.’

The functional unemployment rate increased for all demographics except for Hispanics, who rose 2.7 percentage points to 25.2% from 27.9%, a partial rebound from a 3% jump in July. Black workers increased by 0.5 percentage points, from 24.9% to 25.4%, and white workers increased by 0.8 percentage points, from 21.1% to 21.9%. For women, the PPI improved by 0.3 percentage points (from 27.7% to 27.4%), and for men – by 0.3 percentage points, from 18.9% to 19.2%.

The TRU for those without a four-year college degree improved in August after increasing in July, falling 1.5 percentage points for those without a high school education (47.4%), and 0.6 percentage points for those with who have a high school diploma (26.6%), and 0.8 percentage points for those with a college degree but no degree (24.4%). TRU continued to increase slightly for those with a bachelor’s degree (0.1 percentage point, to 15.1%), and increased by 1.2 percentage points for those with an associate degree (13.7%).

“While it can be said that only a small increase in functional unemployment is a sign that workers are holding on, even in the face of inflation, it is concerning when we see this increase in parallel with the expansion of the labor force,” Ludwig said. . “If we want to see a sustainable and growing economy, it has to include everyone, including those on low wages. This is a very important point that politicians should consider.”