‘Functional Unemployment’ Jumps in February; Women, Black Workers All Lose Ground, Says Ludwig Institute

Living-wage job prospects down overall as gender gap widens

March 19, 2026

For Immediate Release

WASHINGTON, D.C. — Functional unemployment worsened in February, particularly for women and Black workers, according to the latest report from the Ludwig Institute for Shared Economic Prosperity (LISEP).

LISEP’s February True Rate of Unemployment (TRU) report—a measure of the functionally unemployed, defined as the jobless, those seeking but unable to find full-time employment, and those earning poverty-level wages—increased 0.8 percentage points, from 23.9% to 24.7%. The Bureau of Labor Statistics (BLS) reported a 0.1 percentage point increase in the official unemployment rate for the month, from 4.3% to 4.4%.

Over the past three months, the TRU has averaged 24.6%—higher than the 24.3% average in the first half of last year, but lower than the 24.9% average in the second half of 2025.

“February’s increase in functional unemployment follows a sharp drop in January, suggesting recent volatility rather than a clear, sustained improvement in labor market conditions,” said LISEP Chair Gene Ludwig.

Black workers saw the largest increase in TRU in February, rising 1.9 percentage points, from 26.9% to 28.8%. The TRU for Hispanic workers increased 0.6 percentage points, to 28.1%, while the TRU for White workers increased 0.2 percentage points, to 22.9%.

Black workers have fared much worse than White and Hispanic workers over the past year, with the Black TRU trending upward since April. The three-month average TRU for Black workers now stands at 28.4%, 1.5 percentage points higher than a year ago; the same three-month average for Hispanic workers is now 28%, a 0.5 percentage point decrease. For White workers, the three-month average is up 0.3 percentage points, to 22.9%.

These disparities are not coincidental. LISEP’s TRU data aligns with broader labor market evidence showing that Black workers—particularly Black women—experienced disproportionate employment losses in 2025, in part reflecting the outsized impact of federal government layoffs on these workers.

By gender, the TRU for men fell 0.2 percentage points, to 18.9%, while the TRU for women increased 0.8 percentage points, to 30.6%. The gender TRU gap—based on the three-month average for each group—now stands at 10.7 percentage points, compared to 9.5 percentage points a year ago as the TRU for women increased steadily over 2025.

“The February one-month increase suggests a return to more typical levels following January’s decline, while the three-month trend indicates that although functional unemployment rose over the course of 2025, it has shown some improvement since the end of the year,” Ludwig said. “At the same time, these figures may not yet fully reflect recent economic disruptions stemming from geopolitical developments, which could point to increased uncertainty ahead.”

‘Functional Unemployment’ Jumps in February; Women, Black Workers All Lose Ground, Says Ludwig Institute

Living-wage job prospects down overall as gender gap widens

‍Jim Gardner

March 19, 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.

Over the past three months, the TRU has averaged 24.6%—higher than the 24.3% average in the first half of last year, but lower than the 24.9% average in the second half of 2025.

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.