Official unemployment falls while broader measure of joblessness rises

July’s official unemployment rate slipped to 4.1%, down from 4.2% in June, marking a reversal of last year’s upward trend, and payrolls are projected to add about 50,000 jobs after a July loss. Federal Reserve officials, citing the low rate, view the economy as near full employment and are concentrating on curbing inflation, as highlighted by Kevin Warsh’s remarks in Jackson Hole, Wyo. Meanwhile, the Ludwig Institute for Shared Economic Prosperity’s alternative “True Rate of Unemployment,” which includes the jobless, involuntary part-timers and low-wage earners, rose for the fourth straight month to 24.9%, with the share of the working-age population not functionally employed climbing to 53.8%.

Gene Ludwig emphasized that functional unemployment is increasing while labor-force participation declines, suggesting the labor market may be losing strength despite favorable headline numbers. Demographic breakdowns showed the rate stable for Black workers, up for white workers, and down for Hispanics, while women’s functional unemployment rose sharply. These trends reflect divergent forces such as the AI-driven construction boom and a shortage of family-care services.