WASHINGTON, D.C. — Middle-income workers are earning less than they were a year ago, and “functional unemployment” is approaching 25%, according to new data from the Ludwig Institute for Shared Economic Prosperity (LISEP).

LISEP has released its September True Rate of Unemployment (TRU) and Q3 2025 True Weekly Earnings (TWE) reports, both delayed by nearly two months due to the federal government shutdown, which halted access to key labor department data. With government data collection suspended during the shutdown, no TRU report will be issued for October.

TRU is a measure of the “functionally unemployed” — defined as the jobless plus those seeking but unable to find full-time employment, or those earning poverty wages (capped at $26,000 a year in 2025 dollars). TWE is a measure of median weekly earnings (adjusted for inflation) for all members of the workforce, including part-time workers and the unemployed seeking work. By comparison, the Bureau of Labor Statistics (BLS) headline numbers only include those employed at full-time jobs.

Weekly earnings continue to lag behind last year, with TWE down 0.1% year-over-year despite a slight 0.1% uptick from Q2 (from $1,008 to $1,009). This decline stands in sharp contrast to BLS figures, which show a 0.7% quarterly increase (from $1,205 to $1,214) and a 1.3% year-over-year gain for full-time workers. LISEP attributes the gap primarily to rising unemployment — an effect masked by wage metrics that count only full-time, employed workers.

“The data make clear that America’s low- and middle-income households are being squeezed from both sides: essentials are getting more expensive, while wages have struggled to keep up,” said LISEP Chair Gene Ludwig. “Taken together, these indicators highlight a deepening affordability challenge for working families.”

Across income distributions, the 25th-percentile TWE declined 0.5% in Q3 and 2.1% since Q3 2024, falling to $617 a week. Meanwhile, weekly earnings at the 75th percentile increased 1.3% in Q3 to $1,717, up 2.1% from a year ago. The 90th percentile also saw a quarterly decline, down 0.6% to $2,689, but is unchanged compared to last year.

By demographic group, the Q3 median TWE declined 0.4% for Black workers and is down 1.4% year-over-year, to $835. For Hispanic workers, the TWE rose a scant 0.1% in Q3 and 0.2% over the past year, to $814. White workers saw a 1.6% quarterly and a 1.7% increase since Q3 2024, to $1,151, while Asian workers experienced a 2% quarterly increase but only a 0.4% year-over-year gain, to $1,340.

The TWE rose 1.1% in Q3 for men and 2.2% over the past year, to $1,163, while women saw a Q3 increase of only 0.3% and a decline of 0.2% for the year, to $900.

Functional unemployment, as measured by LISEP’s TRU, increased 0.2 percentage points in September, to 24.9%. By demographic group, the TRU improved slightly for Black and Hispanic workers and for women, despite remaining at levels higher than the overall labor force. Functional unemployment for Black workers edged down 0.1 percentage points to 27.7%, while the rate for Hispanic workers fell 0.4 percentage points to 27.5%. Among White workers, the TRU increased 0.3 percentage points to 23.6%.

The TRU for women decreased 0.6 percentage points to 29.8%, while the rate for men jumped a full percentage point to 20.5%.

“The fact that one in four workers cannot secure full-time, above-poverty employment underscores the seriousness of the current labor market,” Ludwig said. “As the holidays approach, the data signal that many families will be navigating increased financial pressure.”