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29 September 2025 F E A T U R E S T O R Y September 2025 » themortgagepoint.com Ludwig has described it as a means to measure the millions of Americans who are in survival mode, rather than on a path toward security. Defining Functional Unemployment W hen Ludwig and his colleagues describe functional unemploy- ment, they are talking about more than the absence of work. They are talking about people who are unable to secure enough hours or earn enough money to make ends meet. That includes workers who are stuck in part-time jobs while seeking full-time employment. It also includes those who may have a job but whose wages are so low that they cannot afford housing, food, or basic savings. Ludwig explained it clearly. If you are a part-time worker and cannot get a full-time job, you are functionally unemployed. If you do not earn above a poverty wage, you are functionally unemployed. In his words, that means you do not have anything that gets you to the first rung of the American Dream. You are in survival mode. The Institute argues that the official unemployment rate presents an incom- plete and misleading picture. It treats part-time jobs and low-wage jobs as if they are equal to full-time work that provides security. It fails to account for the reality of those who are working hard, but unable to advance forward. The Unequal Burden T he TRU numbers also reveal dispar- ities that are less visible in official statistics. Hispanic workers and Black workers fare worse than white workers when measured by functional unem- ployment. More than 28% of Hispanic workers are counted as functionally unemployed. Nearly 27% of Black work- ers fall into the same category. For white workers, the figure is 23%. There are also clear differences by gen- der. The functional unemployment rate for women is 28.6%. For men, it is 20%. These gaps highlight how economic vulnerability is distributed unevenly across society. They show that entire communities bear heavier burdens than the headline unemployment number would suggest. Kyle K. Moore, Economist with the Program on Race, Ethnicity, and the Economy at the Economic Policy Insti- tute (EPI), noted that "one of the things that we do at EPI is put out this series every quarter … a state unemployment report by race and ethnicity that uses data from the local area on employment statistics and the American Community Survey (ACS) to create state-based mea- sures of unemployment by group." Moore further explained, "That's always going to be a useful thing to do, simply because there's going to be regional variation in labor market con- ditions across the country." In light of this, Moore noted that it could be useful for LISEP "to attempt to try to create regional measures of their statistic." Survival Mode in Practice T he Ludwig Institute has published additional research that highlights what survival mode looks like. Millions of households across the country are struggling to maintain even a minimal quality of life. The group found that the lowest earning Americans made an average of $38,000 in 2023. To cover the costs of living tracked by LISEP's index, those same households would need $67,000. The items in that index include essentials like housing, food, transportation, professional clothing, and basic leisure activities. Falling short of that mark means living with constant financial stress, not being able to save, and/or being one medical bill away from crisis. That is why the Ludwig Institute insists that part-time work or poorly paid work should not be equated with genuine employment. As Jung Hyun Choi, a Principal Re- search Associate at the Urban Institute's Housing Finance Policy Center, ex- plained, "Most of the housing research looks at the household level income rather than the individual." Our hypothesis, looking at wealth inequality between homeowners and renters, is that the gap has increased significantly in the past 10 years." —Jung Hyun Choi, Principal Research Associate, Urban Institute's Housing Finance Policy Center This means that if an individual is in that true rate of unemployment bucket, but moves back with their parents, for ex- ample, they do not show up the same way. According to Choi, "That's another layer of complexity that is really difficult to compare this index with the housing market situation because the unit analy- sis is not at the individual level and most of the research that is in the housing market space." The Policy Risks T he wide gap between the official measure and the True Rate of Unemployment is not just an academic