Rising Functional Unemployment Hits Black and Hispanic Workers Hard, Reports Ludwig Institute

Rising Functional Unemployment Affects Job Seekers

In recent months, particularly July, the job market landscape has become increasingly challenging for workers, especially for Black and Hispanic individuals. According to the latest report from the Ludwig Institute for Shared Economic Prosperity (LISEP), the situation has deteriorated with functional unemployment reaching alarming levels.

The report revealed that the True Rate of Unemployment (TRU) rose from 24.1% to 24.7%, indicating that the number of individuals unable to secure stable, well-paying jobs has surged. This figure encompasses not only those who are jobless but also individuals seeking full-time employment and those trapped in poverty-wage positions. With this latest spike, the functional unemployment rate has now exceeded 24% for six consecutive months, a stark increase compared to the end of 2024.

One of the notable aspects of the report is the significant rise in functional unemployment among Black and Hispanic workers, marking their highest rates since 2021. Specifically, the unemployment rate among Black workers escalated by one percentage point to 28.9%, while Hispanic workers experienced a 1.7 percentage-point increase to 29.5%. In contrast, the rate for White workers saw a slight decline to 22.6%. This disparity emphasizes the ongoing challenges that minorities face within the job market.

Gene Ludwig, Chair of LISEP, expressed concern over the implications of these statistics, stating, “With good-paying job opportunities waning, low- and middle-income households continue to feel the pressure on multiple fronts—from stubborn inflation to the rising cost of basic necessities, ultimately eroding wage growth.