US Job Market Weakens as Functional Unemployment Rises to 24.9%

On August 20, 2026, news was released from Washington, D.C.: a set of data tracking employment conditions in the United States, with a broader statistical scope than conventional indicators, saw its fourth consecutive month of growth in July of that year. This sustained upward trend has led to growing concerns that the bar is getting higher and that it is becoming increasingly difficult for many ordinary workers to land a full-time job that pays enough to support them.

The institution that released the core data for this broader measure is the Ludwig Institute for Shared Economic Prosperity, commonly known as LISEP. The organization published its "True Rate of Unemployment" figures. This number stood at 24.7% in June 2026 and rose to 24.9% by July. The institute refers to this indicator, which measures the real employment situation, as "functional unemployment," whose statistical scope is far wider than the commonly cited unemployment statistics. It not only counts people who have no work at all, but also includes two groups of struggling workers: those who want full-time positions but can only secure part-time gigs, and those who, despite having work, earn less than the poverty line set by the institute each month and are unable to sustain a stable life.

It is important to note that this 24.9% functional unemployment figure is completely separate from the official unemployment rate released by the United States, and the two must not be confused. The national official unemployment rate for July 2026, released by the Bureau of Labor Statistics, was 4.1%, a slight decline from the 4.2% recorded in June. The huge gap between the two figures exists because the statistical standards for the two indicators were completely different from the start, and their design purposes were always intended to answer different questions about the U.S. labor market, reflecting the real conditions of the job market from distinct dimensions.

Functional Unemployment Rises for a Fourth Month

According to LISEP's statistics, its True Rate of Unemployment has risen by 1.3 percentage points since March. The increase recorded in July marked the fourth consecutive month of growth for this indicator, even though the current figure remains lower than the 25.2% recorded in December.

The newly released data point to a reality that is easily overlooked by official statistics: the predicament faced by workers extends far beyond the issues encountered by the group of unemployed people defined by official standards. The term "unemployed" in official statistics only counts those who have no work at all, yet in reality, there are many other people who, by statistical rules, are considered employed and do not appear on the unemployment list but still cannot accumulate enough working hours or earn sufficient income to maintain long-term financial stability. Even with the label of "having a job" every day, they still struggle to make ends meet and cannot sustain a stable life.

This discrepancy, of being statistically counted as employed but actually unable to support oneself, is particularly critical for job seekers who are not satisfied with simply having any job. For many workers, finding a job is not enough just to be classified as part of the "employed population." Whether the quality of the job is secure, whether the monthly working hours are sufficient to support household expenses, whether the salary can cover daily costs with money left over, and even whether the job offers potential for long-term career development, these practical, life-related matters carry as much weight as being statistically counted as "employed."

Official Unemployment Remains at 4.1%

BLS Data Shows a Different Overall Picture of the Labor Market

The Bureau of Labor Statistics announced that in July, the unemployment rate in the United States remained at 4.1%, with approximately 6.9 million people unemployed. In addition, there are about 4.8 million people who can only work part-time for economic reasons, a figure that remains basically unchanged from before. These people all want to find a full-time job, but either their employers have cut working hours at their original posts, forcing them to get by on reduced hours, or they have tried their hardest but cannot find a full-time position and can only take odd jobs with unstable schedules for the time being.

In July, the total number of non-agricultural payrolls, excluding agricultural positions, decreased by 23,000 from the previous month. Breaking it down by industry, the number of education-related jobs under local governments and the employment volume in the retail industry are both declining, while only the number of jobs in the healthcare and social assistance sector continues to rise.

Putting these officially released data together, we can see that the current situation of the labor market is mixed. The core unemployment rate indicator that people usually see most often has improved slightly, but overall job growth has almost stalled, and labor force participation continues to remain in a relatively sluggish state.

Changes in the Labor Force Participation Rate Continue to Draw Attention

According to data from the Bureau of Labor Statistics, the U.S. labor force participation rate in July was 61.4%, which barely changed from the previous month. However, from January this year to the present, this figure has dropped by 0.7 percentage points. In the same July, the proportion of the employed population in the total population was 58.9%, which has also fallen by 0.5 percentage points since the start of the year.

LISEP also incorporated the issue of the declining labor force participation rate into its assessment when evaluating the labor market. This institution proposed a more broadly covered indicator called the "True Rate of Unemployment Out of the Population," which rose from 53.6% to 53.8% in July. Unlike the official statistical caliber, this indicator counts all working-age people who are not normally employed. Even those who have completely withdrawn from the labor market and stopped looking for work are included in the calculation.

If fewer and fewer people are willing to come out to look for work, the apparent decline in the core unemployment rate does not mean that all those excluded from unemployment statistics have actually found jobs. Some people have just become too exhausted to actively look for work anymore. According to the official definition of "unemployment," this group of people who no longer actively seek employment no longer meet the statistical criteria for unemployment and will be removed from the unemployment statistics list, which naturally lowers the apparent unemployment rate.

Women Record a Sharp Increase in Functional Unemployment

An institute named LISEP released a set of statistical data for July this year. Among the many changes presented in this dataset, one of the most noteworthy shifts appeared among women.

The institute reported that functional unemployment among women increased by 1.6 percentage points to 31%, the highest level since March 2021. For men, the rate declined by 0.9 percentage point to 19.5%.

When comparing these two sets of statistics, the gender gap in functional unemployment widened to 11.5 percentage points.

Many people may misunderstand the 31% female functional unemployment rate at first glance. This figure does not mean that 31 out of every 100 women are officially recognized as unemployed. LISEP's statistical caliber differs from the official one. The group it includes in functional unemployment covers two additional categories of workers: those who wish to work full-time but are forced to take part-time jobs, and those whose income falls exactly at the poverty-line wage level defined by the institute.

Understanding this difference in statistical caliber is extremely important, and anyone interpreting employment statistics must pay attention to it. If you use different measurement standards, the overall economic situation of workers you finally outline may turn out to be vastly different.

Employment Conditions Vary Across Worker Groups

LISEP's July statistics also show that, in addition to the differing employment trends across gender groups mentioned earlier, even among all workers, if they belong to different racial and ethnic groups, their respective employment trends also vary. The trends of these different groups cannot be summarized by a general national aggregate figure. The real employment situation of each group can only be understood when analyzed separately.

Functional unemployment for Black workers remained at 27.3%. The rate for Hispanic workers declined by 1.5 percentage points to 26.7%, while the rate for White workers increased from 23.2% to 23.8%.

The monthly fluctuations in these data all illustrate one point: only looking at the national total unemployment figure is completely unable to clarify the real situation of every category of workers. Even within the same country's overall employment landscape, different people face vastly different circumstances. A single aggregated figure will only erase all these specific differences, and no one can read the real experiences of themselves or people around them in finding and keeping jobs from that one number.

Whether there are job openings available, how much wages one can earn, how many hours one has to work each day, where one works, what industry one works in, and the overall situation of that industry, all these factors affect how each worker navigates their respective employment environment.

Whether there are enough job openings where you live, whether you can earn a salary that covers basic needs, how many overtime hours you have to endure each day, whether your line of work is easy to sustain, and whether there is enough work in the entire industry, these small but concrete details add up to the real job market a person actually faces, which cannot be summarized by a single general figure in the national aggregate table.

What the Latest Data Means for Job Seekers

If you are currently looking for a job, you need to interpret this July employment data in the right way to avoid mistakes. To fully grasp the real situation of the current job market, you cannot draw conclusions by only focusing on the core unemployment number released by the official authorities.

At present, the officially registered unemployment rate remains at 4.1%, a figure that does not seem high on its own, but if you sort through other supporting indicators, you will find that there are many actual pressures hidden in the market.

In July, the national number of full-time jobs decreased slightly compared with before. More notably, since the beginning of this year, the labor force participation rate has been declining, meaning fewer and fewer people are willing to enter the workforce or are actively looking for work. Beyond these, millions of Americans still cannot find the full-time jobs they want, are unable to make a living through full-time work, and can only get by working part-time.

Employment conditions vary drastically across different industries. Even when looking at data from the same month, once broken down by industry, the levels of activity are completely divergent. In the July employment data, the healthcare industry continued to add new positions, while jobs in the retail sector and education-related roles in local governments saw declines.

If you are planning to change jobs or switch career tracks, even if the overall job market appears to have an uncertain outlook, labor demand remains strong in some industries, leaving far more room for you to find a new position.

Beyond choosing an industry with robust demand, those actively seeking new jobs must also incorporate job quality into their assessment scope, rather than only focusing on whether they can receive an offer.

The actual value of a job is determined by a combination of multiple factors, including salary level, access to the stable working hours specified in the employment contract, the comprehensiveness of benefits provided by the company, job stability, availability of free training and upskilling opportunities, and room for career advancement in the future. Any missing element will undermine the actual cost-effectiveness of that job.

Why the Two Sets of Unemployment Indicators Produce Different Results

Why do the two sets of unemployment statistical indicators discussed here produce different results? It is because their core statistical logic is fundamentally different. The official unemployment rate and the True Rate of Unemployment measure completely different groups of people, so they cannot be directly compared.

The U.S. Bureau of Labor Statistics, namely BLS, calculates the official unemployment rate through the Current Population Survey, which produces the most widely heard unemployment statistic. Its statistical criteria are clear: it only includes people who are out of work, able to start work immediately, and have actively submitted resumes or attended interviews to seek employment within a specified period. People who do not meet these conditions are not counted in the official unemployed population.

Another organization called LISEP launched its own True Rate of Unemployment. The purpose of developing this indicator is to include more people facing employment difficulties so that those truly struggling to find work are not omitted from the data.

The coverage of this set of statistics is much broader than the official version. In addition to the group of unemployed people defined by the official criteria, it adds two more categories: one is people who wanted to find a full-time job but could only secure part-time work, and the other is people whose monthly salary falls below the poverty wage threshold set by LISEP itself.

Precisely because their statistical scope and original intentions are completely different, neither indicator can replace the other, and it is impossible to fully present the full picture of the labor market by relying on a single set of data.

BLS's official unemployment rate is the long-standing government standard unemployment statistic that has remained the core official employment reference, while LISEP's TRU serves as an independent alternative indicator. Its purpose is to examine employment quality and the practical economic difficulties faced by ordinary people from a broader perspective, filling in the blind spots not covered by official statistics.

US Workers Face a Mixed Labor Market

Turning back to the employment environment that U.S. workers face, the overall situation is a mixed labor market, which cannot be summarized as uniformly positive or uniformly negative. The July employment data did not show a one-sided, clear trend, and the signals from all indicators combined are chaotic.

Specifically, the official unemployment rate edged down, which sounds like positive news, but the number of employed people fell by 23,000 in the same period, and the labor force participation rate, that is, the proportion of the population willing to work, has not yet returned to the level seen at the start of this year.

Meanwhile, LISEP's TRU, which has a broader statistical scope, has risen for the fourth consecutive month, with a growing number of people facing employment difficulties who were not counted in official statistics now coming to light.

Whether you are an office worker already employed or a job seeker currently looking for work, if you encounter these mismatched job market figures, you must understand one thing: you cannot only focus on whether the overall unemployment rate rises or falls.

Simply looking at the fluctuation of the unemployment rate makes it impossible to fully grasp whether the job market is truly good or bad. You must also keep track of information from several other dimensions. Only the complete picture pieced together by combining all this information is reliable.

Only by combining the number of full-time positions, the median hourly wage, the average number of hours worked per week, and the career development opportunities for corresponding positions across different industries can you see the real state of the domestic job market.

These scattered details can tell you more accurately than a single unemployment rate figure how hard it is to find a job right now and what the situation is like for those who are employed.

The next U.S. Employment Situation report, which compiles data for August 2026, will be released by the Bureau of Labor Statistics on September 4, 2026.