Nearly 1 in 4 U.S. Workers Classified as 'Functionally Unemployed' in July
Nearly 1 in 4 U.S. Workers Classified as 'Functionally Unemployed' in July
US · Published Aug 27, 2026
According to the Ludwig Institute for Shared Economic Prosperity, nearly 1 in 4 U.S. workers were 'functionally unemployed' in July
This alternative labor-market measure includes individuals who are jobless, unable to secure full-time work, or earning poverty-level wages. The institute's True Rate of Unemployment rose to 24.9% in July, up from 24.7% in June, marking the fourth consecutive monthly increase. This figure contrasts sharply with the U.S. Bureau of Labor Statistics' official unemployment rate of 4.1% for the same period. The disparity arises from differing definitions of employment. Women and minority groups were disproportionately affected, with functional unemployment rates of 31% for women, 27.3% for Black workers, and 26.7% for Hispanic workers.

Impact & Risks

The findings highlight significant disparities in the U.S. labor market, with women and minority groups facing higher rates of functional unemployment. This could exacerbate existing economic inequalities and strain social support systems. The rising trend in functional unemployment over the past four months raises concerns about the broader economic recovery and the adequacy of current employment metrics in capturing the true state of the labor market. Policymakers may need to address these disparities to ensure equitable economic growth.

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