Weekly Earnings Down for Third Consecutive Quarter, According to Ludwig Institute

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Ludwig Institute for Shared Economic Prosperity

Apr 18, 2023, 11:30 ET

LISEP True Weekly Earnings analysis runs counter to BLS report

WASHINGTON, April 18, 2023 /PRNewswire/ -- Inflation-adjusted wages for the median American worker decreased by $10 a week since the third quarter of 2022, marking the third straight quarter of declines, according to a report by Ludwig Institute for Shared Economic Prosperity (LISEP). Low wage workers, along with Black and Latino populations, fared even worse.

On the positive side, LISEP's True Rate of Unemployment (TRU) remained unchanged overall, with notable improvement in the "functional unemployment" rate for women and Latino workers.

Inflation-adjusted wages for the median American worker decreased by $10 a week since the third quarter of 2022, marking the third straight quarter of declines, according to a report by Ludwig Institute for Shared Economic Prosperity (LISEP).

"Government-issued headline statistics are shielding us from the reality that overall, low- and middle-income families are losing ground in today's economy," said LISEP Chairman Gene Ludwig. "This is undoubtedly a concerning trend as it pertains to both the social and economic health of the nation as a whole."

LISEP issued its monthly True Rate of Unemployment (TRU) for March in conjunction with the quarterly True Weekly Earnings (TWE) report for the first quarter of 2023. TRU is a measure of the functionally unemployed -- the jobless, plus those seeking but unable to secure full-time employment paying above the poverty line. TWE is a measure of median weekly earnings after adjusting for inflation.

LISEP's TWE report is in stark contrast to an analysis issued by the U.S. Bureau of Labor Statistics (BLS), which indicates that inflation-adjusted median weekly wages for Q1 trended upward. Unlike the BLS analysis, the entire labor force is considered in LISEP's number – not just full-time earners. When this is taken into account, real median wages were outpaced by inflation and decreased by 0.7%. According to LISEP, median weekly earnings have been gradually declining since Q2 2022.

For Q1 2023, the overall TWE fell from $933 to $927 a week over Q4 2022, and is down for all racial/ethnic demographics. Median wages for Latino and Black workers took the biggest hit by 2.4% and 1.2%, respectively, while the TWE for White workers fell 0.8%. Median wages for Latino workers declined from $750 to $732; for Black workers, from $775 to $766; and for White workers, from $1,033 to $1,024. Earnings for male workers dropped 2.4% (from $1,049 to $1,023), while for female workers, the decline was 0.8% ($820 to $814).

The largest drop was for lower-wage earners, with the TWE for the bottom 25th percentile dropping 1.9%. Higher-wage earners in the 75th percentile saw a 1% gain; 90th percentile workers saw a 2.5% gain.

The TRU, meanwhile, was stable at 22.9% from February to March. The TRU for women went down 1.9 percentage points, from 28.9% to 27%, while the male TRU went up 1.8 percentage points, from 17.5% to 19.3%. The TRU for Black workers increased 0.8 percentage points (24.6% to 25.4%) while the TRU for Hispanic workers decreased 1.4 percentage points (28.6% to 27.2%). The White TRU held fairly constant, dropping 0.1 percentage points (21.6% to 21.5%).

"At first glance one may think this report is a mixed bag – functional unemployment holding steady while earnings decline – but nothing could be further from the truth," Ludwig said. "We have seen three straight quarters of workers losing ground, which is an alarming trend. If it continues, functional unemployment will inevitably rise. Policymakers should heed this warning before it is too late."

About TRU

LISEP issued the white paper "Measuring Better: Development of 'True Rate of Unemployment' Data as the Basis for Social and Economic Policy'' upon announcing the new statistical measure in October 2020. The paper and methodology can be viewed here. LISEP issues TRU one to two weeks following the release of the BLS unemployment report, which occurs on the first Friday of each month. The TRU rate and supporting data are available on the LISEP website at https://www.lisep.org/tru.

About TWE

LISEP issues the TWE quarterly following the release of the BLS Median Weekly Earnings report. The full white paper, "Understanding the Status of American Workers Through Analysis of Current Population Data," can be viewed here. The TWE rate and supporting data are available on the LISEP website at https://www.lisep.org/twe.

About LISEP

The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by Ludwig and his wife, Dr. Carol Ludwig. The mission of LISEP is to improve the economic well-being of middle- and lower-income Americans through research and education. LISEP's original economic research includes new indicators for unemployment, earnings, and cost of living. These metrics aim to provide policymakers and the public with a more transparent view of the economic situation of all Americans, particularly low- and middle-income households, compared with misleading headline statistics.

About Gene Ludwig

In addition to his role as LISEP chair, Gene Ludwig is founder of the Promontory family of companies and Canapi LLC, a financial technology venture fund. He is the founder and CEO of Ludwig Advisors, which counsels financial firms on critical matters. Ludwig is the former vice chairman and senior control officer of Bankers Trust New York Corp. and served as the U.S. Comptroller of the Currency from 1993 to 1998. He is also author of the book The Vanishing American Dream, which investigates the economic challenges facing low- and middle-income Americans. On Twitter: @geneludwig.

SOURCE Ludwig Institute for Shared Economic Prosperity