Lower-income workers took a hit in May, with the overall "functional unemployment" rate climbing by nearly a half percentage point and a spike in the True Rate of Unemployment (TRU) for Black workers, according to the latest TRU report by the Ludwig Institute for Shared Economic Prosperity (LISEP).

The TRU measures the "functionally unemployed," defined as the jobless plus those seeking, but unable to find, full-time employment paying above poverty wages (pegged at $25,000 a year in 2024 dollars) after adjusting for inflation. May's overall TRU increased from 24.2% to 24.6%, a 0.4 percentage point increase, with Black workers experiencing an even higher increase: the TRU for Black workers jumped 2.4 percentage points, from 25.7% to 28.1%. By contrast, the official unemployment rate as reported by the U.S. Bureau of Labor Statistics increased a negligible 0.1 percentage points, from 3.9% to 4.0%.

"Even with cooling inflation, workers in lower-wage jobs are still fighting for economic survival," said LISEP Chairman Gene Ludwig. "And while headline statistics still indicate a robust economy, this month's TRU seems to better reflect the challenges everyday Americans are experiencing."

Functional unemployment was also up for Hispanic workers, with the TRU climbing 0.2 percentage points, from 28.7% to 28.9%. And while the rate for White workers improved, dropping from 22.9% to 22.7%, LISEP notes that this can be attributed to functionally unemployed workers leaving the workforce. LISEP reported that the overall increase in TRU reflects a weakening labor market, which was accompanied by a 0.2 point decrease in the labor participation rate.

The TRU for women in the workforce approached 30%, rising by half a percentage point to 29.9%. The TRU for male workers also increased, climbing 0.8 percentage points to 19.9%.

"Soaring functional unemployment among women, Black, and Hispanic workers — with the TRU nearing 30% for these groups — is a wake-up call for policymakers," Ludwig said. "We need solutions that address the lived experiences of these communities, not policies based on misleading headline statistics."."