Nearly 25% of U.S. workers are "functionally unemployed," economic analysis finds
Updated on: August 21, 2026 / 4:14 PM EDT / CBS News
TL;DR
- The official U.S. unemployment rate fell to 4.1% in July, considered healthy by economists.
- LISEP's "True Rate of Unemployment" (TRU) includes those involuntarily working part-time or earning less than $26,000 annually, defining them as "functionally unemployed."
- Functional unemployment climbed for four consecutive months, reaching 24.9% in July.
- This trend suggests the labor market may be losing strength, as workforce participation is decreasing.
- Wage growth is lagging behind inflation (3.2% vs. 3.4% in July), which can dampen consumer spending, a key driver of economic activity.
- Some economists caution against overemphasizing alternative metrics like TRU, stating they do not align with observed economic data.