A low unemployment rate typically signals that an economy is generally healthy. The unemployment rate in the U.S. remained near a 50-year-low in April 2025 at 4.2% — plus, American employers added 177,000 jobs in April despite the uncertainty of Trump’s tariffs and trade wars.

This all sounds good, right? Not so fast.

The “true” rate of unemployment in April, according to the Ludwig Institute for Shared Economic Prosperity (LISEP), was 24.3%, up 0.03% from the previous month. LISEP’s True Rate of Unemployment (TRU) includes the unemployed, as well as workers who are employed but still struggling.

“We are facing a job market where nearly one-in-four workers are functionally unemployed, and current trends show little sign of improvement,” said LISEP Chair Gene Ludwig in a statement published on PR Newswire.

“The harsh reality is that far too many Americans are still struggling to make ends meet, and absent an influx of dependable, good-paying jobs, the economic opportunity gap will widen.”

That could help explain why, despite the supposedly healthy employment rate, consumer confidence in the American economy has been plunging.

What is ‘functional unemployment’?

So, why is there a 20-point difference between the LISEP and Bureau of Labor Statistics (BLS) unemployment numbers? The BLS collects a massive amount of data on unemployment, but some of that data is excluded from the official unemployment rate.

For example, BLS found that 5.7 million people who aren’t employed do, in fact, want a job — but they weren’t counted as unemployed because “they were not actively looking for work during the four weeks preceding the survey or were unavailable to take a job,” according to BLS.

LISEP uses data compiled by BLS, but instead of simply measuring unemployment, LISEP measures what it calls the “functionally unemployed.” This is defined as the portion of the U.S. labor force that “does not have a full-time job (35+ hours a week) but wants one, has no job, or does not earn a living wage, conservatively pegged at $25,000 annually before taxes.”

Its metrics capture not only unemployed workers, but also those stuck in poverty-wage jobs and those working part-time but can’t get full-time work. LISEP’s measurements aim to include these functionally unemployed Americans to provide a more complete picture of unemployment across the country, including the nuances that other (Yahoo Finance)