US functional unemployment reaches 25% according to LISEP study

A study by the Ludwig Institute for Shared Economic Prosperity (LISEP) indicates that “functional unemployment” in the United States has risen to 25% over the last four months of the year.

This metric includes individuals over the age of 16 who are seeking to enter the labor market, as well as part-time workers earning less than $26,000 annually before taxes, which falls below the poverty threshold. Gene Ludwig, president of the Institute, noted that functional unemployment is increasing while labor force participation is decreasing, suggesting the labor market may be losing strength despite general unemployment figures.

The shifting labor market follows a period of high inflation and a decelerating hiring pace, serving as a key indicator for Federal Reserve policymakers regarding interest rate decisions.