That's the same tried and tested argument that always comes up every time unemployment is discussed. See f.e https://news.ycombinator.com/item?id=17474163
But it is completely false as this graph shows: https://www.bls.gov/opub/ted/2018/u-3-unemployment-rate-was-... Empirical data suggests that U6 is almost linearly dependent on U3, meaning that, indeed, the "real" unemployment in the US is record low.
Yes, service jobs doesn't pay well. That is perhaps related to decades of union busting and resistance against raising minimum wages?
Also, most service sector jobs don’t afford you a mortgage and other lower middle class living. Most service sector workers struggle to get by, compared to your blue collar worker of yesteryear. Those people could afford a mortgage, raise three kids and send the off to state school. That ain’t happening no more.