Functional Unemployment Edges Higher for Second Straight Month, Says Ludwig Institute

Larger share of workers struggling than headline jobless figures suggest

WASHINGTON, June 18, 2026 /PRNewswire/ -- While the official unemployment rate was unchanged in May, "functional unemployment" edged higher for a second consecutive month, according to the Ludwig Institute for Shared Economic Prosperity (LISEP).

LISEP's May True Rate of Unemployment—a measure of the "functionally unemployed," defined as the jobless, the involuntarily part-time, and those earning a poverty wage—increased 0.5 percentage points, from 24.1% to 24.6%. While the increase marked the second consecutive monthly uptick, broader trends suggest stabilization relative to the higher levels recorded late last year: the TRU three-month moving average remained at 24.1% for the third straight month, down from 24.9% in September and 24.4% a year ago. Among prime-age workers (25-54), the May TRU improved by 0.5 percentage points to 17.2%, with a three-month average of 17.3%.

By comparison, the official Bureau of Labor Statistics unemployment rate remained steady at 4.3%. LISEP noted that the TRU captures forms of labor-market hardship not reflected in the headline jobless rate, including elevated levels of involuntary part-time employment.

"It is certainly encouraging to see improvements year over year," said LISEP Chair Gene Ludwig. "Even so, the latest data remind us that many workers are still struggling to secure full-time jobs that provide economic stability. For households living paycheck to paycheck, those challenges remain very real."

By demographic categories, the May TRU for White workers rose 1.3 percentage points to 23.1%, with a three-month average of 22.4%—a full percentage point lower than a year ago. The rate for Hispanic workers increased 1.2 percentage points for the month to 28.9%, with a three-month average of 27.9%, similar to the 28.1% from last May. The TRU for Black workers improved by 2.2 percentage points and now stands at 27.1%, partially reversing last month's 3.6 percentage point jump. Compared to last year, functional unemployment has worsened for Black workers, with a current three-month average of 27.4%, versus 26.6% in May of last year.

Meanwhile, the TRU for men increased by 1.5 percentage points to 20.8%, while the TRU for women remained relatively stable, decreasing 0.1 percentage points, to 28.8%. Over the past three months the men's TRU averaged 19.6%, while the TRU for women has averaged 29%.

"We remain hopeful that the positive employment trends we are seeing can be sustained while recent fluctuations in functional unemployment stabilize—an important goal as many American families continue to struggle with the cost of everyday necessities," Ludwig said. "Policymakers need to focus not just on creating jobs but on expanding access to stable, full-time jobs that pay a living wage. Employment growth is important, but so is the quality of the jobs being created."

About TRU
LISEP issued the white paper "Measuring Better: Development of 'True Rate of Unemployment' Data as the Basis for Social and Economic Policy'' upon announcing the new statistical measure in October 2020. The paper and methodology can be viewed here. LISEP issues the TRU one to two weeks following the release of the BLS unemployment report, which occurs on the first Friday of each month. The most recent TRU and supporting data are available on the LISEP website at https://www.lisep.org/tru.

About LISEP
The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by Ludwig and his wife, Dr. Carol Ludwig. The mission of LISEP is to improve the economic well-being of middle- and lower-income Americans through research and education. LISEP's original economic research includes new indicators for unemployment, earnings, and cost of living. These metrics aim to provide policymakers and the public with a more transparent view of the economic situation of all Americans, particularly low- and middle-income households, compared with misleading headline statistics. On X: @LISEP_org.

About Gene Ludwig
In addition to his role as LISEP chair, Gene Ludwig is a managing partner of Canapi LLC, a financial technology venture fund. He is the founder and CEO of Ludwig Advisors, which counsels financial firms on critical matters. Ludwig is also the founder of the Promontory family of companies. He is the former vice chairman and senior control officer of Bankers Trust New York Corp. and served as the U.S. Comptroller of the Currency from 1993 to 1998. He is also author of the book The Vanishing American Dream, which investigates the economic challenges facing low- and middle-income Americans. His new book, The Mismeasurement of America, was published September 2025 and is now available online or wherever books are sold. On X: @geneludwig.

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SOURCE Ludwig Institute for Shared Economic Prosperity