While the U.S. unemployment rate remains near historic lows, a deeper look reveals that millions of Americans are grappling with underemployment and poverty wages, a condition some experts term "functional unemployment."

In April 2025, the Bureau of Labor Statistics (BLS) reported an unemployment rate of 4.2%, suggesting a robust labor market. However, the Ludwig Institute for Shared Economic Prosperity (LISEP) offers a contrasting perspective. Their "True Rate of Unemployment" (TRU) stood at 24.3% in the same month, slightly up from 24% in March. This metric encompasses individuals who are unemployed, those seeking but unable to find full-time work, and workers earning below a living wage.

Gene Ludwig, chairman of LISEP, critiques the official unemployment figures, noting that even minimal employment, such as working a single hour in two weeks, counts as being employed. 

"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," Ludwig told CBS MoneyWatch.

LISEP's TRU metric aims to provide a more comprehensive view of the labor market by accounting for individuals who lack sufficient work hours or earn wages that don't meet basic living standards. This includes part-time workers seeking full-time positions and those in low-paying jobs that fail to cover essential expenses, such as housing, food, and healthcare.

"If you're part-time and can't get a full-time job, then we count you as functionally unemployed," Ludwig explained to the outlet. "We also count as functionally unemployed people who don't earn above a poverty wage."

The TRU metric also highlights disparities across different demographic groups. Hispanic, Black, and female workers experience higher rates of functional unemployment compared to their White and male counterparts. This suggests systemic issues in the labor market that disproportionately affect specific populations.

The traditional unemployment rate, often referred to as the U-3 rate, has been criticized for not capturing the full scope of labor underutilization. Alternative measures, such as the U-6 rate, include part-time workers seeking full-time employment and those marginally attached to the labor force, providing a broader perspective on unemployment. 

However, even these broader metrics may not fully encapsulate the challenges faced by workers in today's economy. As Ludwig emphasized, many individuals are "in survival mode," lacking the means to achieve financial stability despite being classified as employed.