For months, the labor market has been one of the few bright spots in an economy plagued by high inflation, rising interest rates and a plunging stock market.
The Labor Department reported at the beginning of May that the economy saw solid job growth in April – despite growing headwinds – and the unemployment rate held steady at 3.6%, the lowest level since February 2020. Employers, meanwhile, posted a record number of 11.5 million open jobs in March.
But the job market outlook is more complicated than that, because the headline unemployment figure is artificially depressed by excluding people who might only be earning a few dollars a week, but who want to find full-time work. It also does not encompass any workers who have stopped searching for a job because they are discouraged or caring for a child.
New data released on Tuesday by the Ludwig Institute for Shared Economic Prosperity shows the "true rate of unemployment" is much higher than those government figures suggest.
A labor market metric developed by researchers at the institute evaluates workers who they consider "functionally unemployed" – individuals who are looking for work and do not currently have a full-time job, but want one, or who do not earn a living wage, which is roughly $20,000 annually before taxes. In April, about 23.1% of the labor market was functionally unemployed.
That is still in line with pre-pandemic levels: According to the Institute, which was founded by former U.S. Comptroller of the Currency Gene Ludwig, the true level of unemployment in February 2020 was about 24.5%.
The figures are even higher for Americans of color. The true unemployment rate is about 26.5% for Black Americans and 25.7% for Hispanic Americans. By comparison, White Americans have a true unemployment rate of 22%.
Likewise, there is a sharp contrast between genders, with women experiencing a true unemployment rate of 28.1%. Men are seeing a true unemployment rate of just 18.6%.
The numbers suggest that despite bright numbers published by the Labor Department in the monthly jobs report, unemployment in the country is much higher than it seems.