Functional Unemployment Edges Higher Amid Signs of Labor Market Weakness, Says Ludwig Institute

Workforce participation drops as Black workers face sharpest increase

WASHINGTON, May 20, 2026 /PRNewswire/ -- Functional unemployment rose in April even as the broader trend remained modestly improved from a year ago, with Black workers seeing a sharp monthly increase and labor force participation continuing to decline, according to the Ludwig Institute for Shared Economic Prosperity (LISEP).

LISEP's April True Rate of Unemployment report—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 23.6% to 24.1%. Despite the month-over-month increase, however, the three-month average of 24.1% remains improved from the 24.5% average of a year ago.

By comparison, the official Bureau of Labor Statistics (BLS) jobless rate remained steady at 4.3%, while the broader U-6 measure—which includes unemployed workers, discouraged workers, and those working part-time for economic reasons—rose to 8.2% from 7.8% a year earlier. Also notable is the continued decrease in labor force participation, down 0.3 percentage points since January, alongside an increase in workers who are involuntarily part-time due to slack.

"While labor market conditions have generally improved since late 2025, this month's report points to areas of continued strain, particularly the decline in workforce participation and the growing number of workers relying on part-time employment ," said LISEP Chair Gene Ludwig. "The broader trend may be moving in the right direction, but too many workers are still struggling to find stable footing in today's economy. "

By demographic, Black workers saw a notable increase in April, rising 3.6 percentage points, from 25.7% to 29.3%. The TRU for Hispanic workers increased 0.6 percentage points, from 27.1% to 27.7%. Meanwhile, the TRU for White workers improved in April, dropping from 22.4% to 21.8%, while the three-month average TRU for White workers remained down 0.7 percentage points since January and a full percentage point lower than a year ago.

By gender, the TRU for women improved from 29.3% to 28.9%, while the rate for men increased from 18.6% to 19.3%. Although the gender gap improved in April, the gap has widened by a full percentage point year over year, based on the last three months of data.

"Low- and middle-income workers continue to feel pressure from the rising cost of basic necessities, particularly essentials like food and gas," Ludwig said. "And while labor market conditions have generally improved since last year, many workers are still facing the lingering effects of a looser job market and slower income growth. Rising everyday costs continue to fall hardest on lower-wage households. "

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 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.

SOURCE Ludwig Institute for Shared Economic Prosperity