WASHINGTON, D.C. — 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.
“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 whet 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.