05/30/2025 / By Lance D Johnson
While politicians celebrate near-record-low unemployment rates, millions of Americans are drowning in financial despair. A shocking report from the Ludwig Institute for Shared Economic Prosperity (LISEP) reveals that nearly 1 in 4 workers are “functionally unemployed” — stuck in part-time gigs, poverty-wage jobs or outright joblessness. The official unemployment rate of 4.2% is a cruel illusion, masking the brutal reality of economic instability gripping working-class families.
Key points:
LISEP’s True Rate of Unemployment (TRU), which accounts for underemployment and poverty-wage work, hit 24.3% in April — far higher than the government’s misleading figures. Millions “employed “employed” but barely surviving:
The crisis is compounded by soaring housing costs, stagnant wages, and inflation, pushing 70% of Americans to their worst financial stress in decades.
Families are buckling under the weight of unaffordable housing:
The American dream of homeownership is slipping away, replaced by a new era of financial triage where survival means sacrificing stability.
While corporations post record profits, families are rationing essentials:
Even white-collar workers aren’t safe. AI automation and corporate layoffs are pushing professionals into desperation. Workers who do not utilize AI in their industry are often left behind. In some cases, companies are finding cheaper labor off shore, utilizing people who will use AI at a fraction of the cost of American workers. AI is giving many companies the ability to streamline their processes, but this can negatively impact employees, who can more readily be taken advantage of.
LISEP’s data exposes systemic inequities:
The middle class is vanishing — families earning $38,000 now need $67,000 a year just to afford basic living standards.
Federal agencies manipulate statistics to hide the crisis, counting homeless workers as “employed” if they worked just one part-time jobs with no benefits. Many families must utilize multiple jobs and juggle responsibilities just to get enough money to pay rent and food.
As LISEP chairman Gene Ludwig warns: “If you say there’s 4.2% unemployment, it causes poor policy decisions. The people who get hurt are middle- and low-income Americans.”
The economy is so damaged, people who are trying to make ends meet will not tolerate political messaging that is used to manipulate them into thinking everything is rosy and improving. The government must be more honest about statistics and break down unemployment metrics that reflect real hardship. These metrics must differentiate true unemployment from part time employment and poverty employment that is insufficient to make ends meet.
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Tagged Under:
AI layoffs, BLS, childcare costs, consumer sentiment, corporate greed, cost of living, economic deception, economic survival, financial stress, government fraud, housing crisis, Inflation, LISEP, middle class collapse, monetary policy, poverty wages, racial disparities, unemployment crisis, wage stagnation, working poor
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