America Warned of Millions Who Are ‘Functionally Unemployed’ – Newsweek

Report on Functional Unemployment in the United States and Its Implications for Sustainable Development Goals (SDGs)

Overview of Functional Unemployment

Despite stable headline unemployment rates, a significant portion of the American workforce is experiencing “functional unemployment.” This term encompasses not only the officially unemployed but also those seeking full-time employment without success and individuals working in poverty-wage jobs. According to the Ludwig Institute for Shared Economic Prosperity (LISEP), 24.3% of Americans fall into this category, highlighting deeper labor market challenges that impact economic and social sustainability.

Key Statistics and Trends

1. Functional unemployment rate: 24.3% as of the latest report, slightly up from 24.2% in April but down from 24.7% the previous year.
2. Official unemployment rate: Steady at 4.2% for two consecutive months, with job growth slightly below the yearly average.
3. Disparities in functional unemployment:
   • White Americans: 23.6%
   • Black Americans: 26.7%
   • Hispanic Americans: 27.3%
   • Women: 29.9%
   • Men: 19.3%
4. Estimated number of functionally unemployed Americans: Over 66 million.

Significance for Sustainable Development Goals

SDG 1: No Poverty

The prevalence of poverty-wage jobs within the functional unemployment metric underscores ongoing challenges in eradicating poverty. With many workers unable to secure living wages (defined as below $25,000 before taxes), efforts to achieve SDG 1 are hindered, necessitating targeted policy interventions to improve wage conditions and job quality.

SDG 8: Decent Work and Economic Growth

Functional unemployment reflects underutilization of labor resources and insufficient access to decent work. The stagnation in living-wage job opportunities, especially for low- and middle-income workers, signals a need for sustainable economic growth strategies that promote full and productive employment.

SDG 10: Reduced Inequalities

Significant disparities in functional unemployment rates by race and gender highlight persistent inequalities in the labor market. Addressing these gaps is critical to advancing SDG 10 by ensuring equal access to employment opportunities and fair wages for all demographic groups.

Analysis of Current Labor Market Indicators

Comparison of LISEP and Official Metrics

• LISEP’s True Rate of Unemployment (TRU) incorporates official unemployment, underemployment, and poverty-wage employment, offering a comprehensive view of labor market health.
• The Bureau of Labor Statistics (BLS) provides alternative labor underutilization measures, including part-time workers seeking full-time jobs.
• Some experts question the necessity of combining these metrics into a single index, suggesting that individual indicators may better inform policy.

Expert Perspectives

• Gene Ludwig, LISEP Chair: Emphasizes the stagnation in living-wage job opportunities and the growing economic strain on working families, calling for recognition of the TRU to better reflect worker challenges.
• David Card, Labor Economist: Acknowledges the usefulness of tracking multiple labor indicators but questions the benefit of aggregating them into one index.
• Josh Bivens, Chief Economist at AEI: Notes that low pay is a longstanding issue that has improved in recent years but warns of potential future economic challenges that could reverse gains.

Implications for Policy and Future Outlook

Policy Considerations

1. Enhance wage standards and expand access to full-time, living-wage employment to support SDG 1 and SDG 8.
2. Implement targeted programs to reduce racial and gender disparities in employment, advancing SDG 10.
3. Utilize comprehensive labor market data to inform sustainable economic policies aligned with the SDGs.

Economic Outlook

The U.S. economy faces uncertainty due to trade policies and tariff impacts. Federal Reserve Chair Jerome Powell has highlighted the risk of increased inflation resulting from tariffs, which may affect employment and wage growth. Monitoring these developments is essential to maintaining progress toward sustainable development objectives.

Conclusion

The concept of functional unemployment reveals critical challenges in the U.S. labor market that are not fully captured by headline unemployment rates. Addressing these issues is vital to achieving the Sustainable Development Goals related to poverty eradication, decent work, and reduced inequalities. Policymakers must consider comprehensive labor indicators and implement inclusive strategies to foster a resilient and equitable workforce.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 1: No Poverty – The article discusses poverty-wage jobs and the financial struggles of a significant portion of the American workforce.
2. SDG 8: Decent Work and Economic Growth – The focus on unemployment, underemployment, and the quality of jobs directly relates to promoting sustained, inclusive economic growth and productive employment.
3. SDG 10: Reduced Inequalities – The article highlights disparities in unemployment rates and job quality along racial and gender lines.

2. Specific Targets Under Those SDGs

1. SDG 1 – No Poverty
   • Target 1.2: Reduce at least by half the proportion of men, women and children living in poverty in all its dimensions according to national definitions.
2. SDG 8 – Decent Work and Economic Growth
   • Target 8.5: Achieve full and productive employment and decent work for all women and men, including young people and persons with disabilities, and equal pay for work of equal value.
   • Target 8.6: Reduce the proportion of youth not in employment, education or training.
3. SDG 10 – Reduced Inequalities
   • Target 10.2: Empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status.

3. Indicators Mentioned or Implied to Measure Progress

1. Unemployment Rate – The official unemployment rate reported by the Bureau of Labor Statistics (BLS) at 4.2% is a key indicator for SDG 8 targets.
2. True Rate of Unemployment (TRU) – LISEP’s metric that includes jobless individuals, those seeking full-time employment but unable to find it, and those in poverty-wage jobs, providing a broader measure of labor underutilization.
3. Percentage of Population in Poverty-Wage Jobs – Measured as earning below $25,000 before taxes, indicating economic vulnerability related to SDG 1.
4. Disparities by Race and Gender – Differences in functional unemployment rates among White, Black, Hispanic populations, and between men and women, relevant for SDG 10.
5. Labor Force Participation and Job Quality – Implied indicators include the availability of living-wage jobs and part-time workers seeking full-time employment.

4. Table: SDGs, Targets and Indicators

Source: newsweek.com