‘Functional Unemployment’ Shows Little Change, Says Ludwig Institute

Rate for women improves; gender gap closes to narrowest of the year

December 17, 2024

For Immediate Release

WASHINGTON, D.C. — The overall “functional unemployment” rate remained largely unchanged in November, with a slight decline of 0.1 percentage points. However, the functional unemployment rate was marked by mixed trends across demographic groups, led by a 1.3 percentage point decrease for women—contributing to the narrowest gender gap in functional unemployment this year, according to the latest True Rate of Unemployment (TRU) report from the Ludwig Institute for Shared Economic Prosperity (LISEP).

The TRU—a measure of 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—improved slightly in November, dropping from 24% to 23.9%. In contrast, the official unemployment rate as reported by the U.S. Bureau of Labor Statistics increased by 0.1 percentage points, from 4.1% to 4.2%, over the same period.

Despite slight movement in the overall functional unemployment rate, some demographic groups experienced notable shifts. While the TRU for men increased 0.9 percentage points, to 20.8%—the highest for men in 2024—the rate for women dropped 1.3 percentage points, to 27.5%. This decrease marks the lowest TRU for women in 2024, resulting in the narrowest gender gap for living-wage jobs.

“The recent decrease in women's functional unemployment is a significant and encouraging milestone,” said LISEP Chairman Gene Ludwig. “This emerging trend signals a potential shift in the labor market, and we hope to see continued improvement in the coming year.”

The TRU for Hispanic workers improved to its lowest level since June, dropping to 26.9%, while White workers saw a slight decrease, from 22.5% to 22.4%. Conversely, the TRU for Black workers increased 0.7 percentage points, from 26.9% to 27.6%

“This past year has shown us that ‘good’ economic numbers do not necessarily translate into positive outcomes for everyone,” Ludwig said. “The economy is not a monolith, but an amalgamation of different groups, geographies, and demographics. For national policy to be effective, it must be treated as such.”

‘Functional Unemployment’ Shows Little Change, Says Ludwig Institute

Rate for women improves; gender gap closes to narrowest of the year

‍Jim Gardner

December 17, 2024

For Immediate Release

Additional Resources

Historically, systemic barriers have disproportionately hampered Black farmers’ ability to retain land ownership.

Despite this tragic history, there is still time and economic incentive to set some of the inequities right.

In 2021, working mothers with children under 18 earned just 61.7 cents for every dollar a father made. Much wider than the overall gender wage gap, this difference highlights both the motherhood penalty and the fatherhood premium.

Female-dominated, low-paying, part-time occupations are overrepresented among informal workers who also have a formal job.

We need to create an economic environment where companies can hire these workers as employees and pay them a living wage. There are steps policymakers can take to change the gig economy dynamic.

Dependency on tips over base pay is growing because of actions taken by gig companies to institute tipping.

Even for those lucky enough to be making what amounts in many states to the poverty wage of $15 per hour, many will get nothing but a week’s notice before being out on the street.

One study shows that consistent involvement in extracurricular activities increased a child’s likelihood of attending college by a whopping 400% compared to not being involved at all.

Studies have found that both men and women are paid less if they work in “nurturant” occupations.

Since 2015, the correlation between LISEP’s functional employment to population ratio and the inflation rate was more than four times as strong as the BLS’s employment to population ratio, which is depicted in the graph below.

The employment to population ratio settles the discrepancy between what we see around us and what the data says.

The NBER paper defines employment using the traditional BLS U-3 rate. However, the often-used U-3 number fails to capture the quality of jobs.

Among states with stricter COVID-19 policies, reducing unemployment benefits had little to no effect. The average effect of increased employment seems to have occurred only in those states with looser COVID protocols.

Press Contact:

‍Jim Gardner

press@lisep.org

(573) 680-1822

Additional Resources:

TRU White Paper

TRU & TWE Methodology

TRU & TWE Source Data

About TRU

LISEP issued the white paper Measuring Better: Development of “True Rate of Unemployment” Data as the Basis for Social and Economic Policy upon announcing the new statistical measure in October 2020. The paper and methodology can be viewed here. LISEP issues TRU one to two weeks following the release of the BLS unemployment report, which occurs on the first Friday of each month. The TRU rate and supporting data are available on the LISEP website at lisep.org/tru.

About LISEP

The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by Gene Ludwig and his wife, Dr. Carol Ludwig. The mission of LISEP is to improve the economic well-being of middle- and lower-income Americans through research and education. LISEP’s original economic research includes new indicators for unemployment, earnings, and cost of living. These metrics aim to provide policymakers and the public with a more transparent view of the economic situation of all Americans, particularly low- and middle-income households, compared with misleading headline statistics. On X: @LISEP_org.

About Gene Ludwig

In addition to his role as LISEP chair, Gene Ludwig is founder of the Promontory family of companies and Canapi LLC, a financial technology venture fund. He is the founder and CEO of Ludwig Advisors, which counsels financial firms on critical matters. Ludwig is the former vice chairman and senior control officer of Bankers Trust New York Corp. and served as the U.S. Comptroller of the Currency from 1993 to 1998. He is also author of the book The Vanishing American Dream, which investigates the economic challenges facing low- and middle-income Americans. On Twitter: @geneludwig.

Please Note:

The Ludwig Institute for Shared Economic Prosperity continuously revises and updates its data. As a result, data presented in this release may no longer reflect the latest estimates. Find the most current data at lisep.org.