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

Larger share of workers struggling than headline jobless figures suggest

June 18, 2026

For Immediate Release

WASHINGTON, D.C. — 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."

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

Larger share of workers struggling than headline jobless figures suggest

‍Jim Gardner

June 18, 2026

For Immediate Release

Additional Resources

Historically, systemic barriers have disproportionately hampered Black farmers’ ability to retain land ownership.

Despite this tragic history, there is still time and economic incentive to set some of the inequities right.

In 2021, working mothers with children under 18 earned just 61.7 cents for every dollar a father made. Much wider than the overall gender wage gap, this difference highlights both the motherhood penalty and the fatherhood premium.

Female-dominated, low-paying, part-time occupations are overrepresented among informal workers who also have a formal job.

We need to create an economic environment where companies can hire these workers as employees and pay them a living wage. There are steps policymakers can take to change the gig economy dynamic.

Dependency on tips over base pay is growing because of actions taken by gig companies to institute tipping.

Even for those lucky enough to be making what amounts in many states to the poverty wage of $15 per hour, many will get nothing but a week’s notice before being out on the street.

One study shows that consistent involvement in extracurricular activities increased a child’s likelihood of attending college by a whopping 400% compared to not being involved at all.

Studies have found that both men and women are paid less if they work in “nurturant” occupations.

Since 2015, the correlation between LISEP’s functional employment to population ratio and the inflation rate was more than four times as strong as the BLS’s employment to population ratio, which is depicted in the graph below.

The employment to population ratio settles the discrepancy between what we see around us and what the data says.

The NBER paper defines employment using the traditional BLS U-3 rate. However, the often-used U-3 number fails to capture the quality of jobs.

Among states with stricter COVID-19 policies, reducing unemployment benefits had little to no effect. The average effect of increased employment seems to have occurred only in those states with looser COVID protocols.

Press Contact:

‍Jim Gardner

press@lisep.org

(573) 680-1822

Additional Resources:

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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 TRU one to two weeks following the release of the BLS unemployment report, which occurs on the first Friday of each month. The TRU rate and supporting data are available on the LISEP website at lisep.org/tru.

About LISEP

The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by Gene 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 the founder of the Promontory family of companies and 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 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 the author of the book The Vanishing American Dream, which investigates the economic challenges facing low- and middle-income Americans. His latest book, The Mismeasurement of America, released in September 2025, is now available wherever books are sold. On X: @geneludwig

Please Note:

The Ludwig Institute for Shared Economic Prosperity continuously revises and updates its data. As a result, data presented in this release may no longer reflect the latest estimates. Find the most current data at lisep.org.