That distinction is what makes copyleft licenses. Free software is just as overarching as open source, see e.g. the FSF's list of free software licenses: https://www.gnu.org/licenses/license-list.html
MIT, BSD, and GPL are all on both OSI’s list of Open Source licenses and the FSF’s list of Free Software licenses.
Yes, the FSF has a general preference that people use copyleft licenses like the GPL, but they recognize that permissive licenses meet the Free Software Definition.
GPL is an open-source license, and MIT-licensed software is free software.
The difference between free software and open-source is a matter of marketing. Open-source is a way of presenting free software to businesses and investors. Free software is an unabashedly political movement, openly concerned first and foremost with the public good. But the licenses themselves and the software itself, those things are identical.