For Immediate Release
April 15, 2022

Wages Fail to Keep up with Inflation, Functional Unemployment Grows, says Ludwig Institute

Inflation-adjusted earnings show workers losing ground in first quarter, with fewer living-wage jobs

WASHINGTON, D.C. — Inflation-adjusted earnings for the first quarter of 2022 show that American workers are losing ground, forcing a larger percentage of the workforce out of living-wage job status for the month of March and into the ranks of the “functionally unemployed,” according to an analysis by the Ludwig Institute for Shared Economic Prosperity (LISEP).

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 2022. 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 real median weekly earnings after adjusting for inflation, and differs from the data issued by the Bureau of Labor Statistics (BLS) through inclusion of all members of the workforce, including part-time workers and those seeking employment.

In LISEP’s latest TWE report, overall median weekly earnings are down over the fourth quarter of 2021, dropping from $881 to $873 (These numbers, and all earnings numbers in this report, are recorded in inflation-adjusted 2022 Q1 dollars). Likewise the percentage of workers seeking but unable to find a full-time, living-wage job — the “functionally unemployed,” as defined by TRU — increased nearly a full percentage point, from 22.6% to 23.5%. The increase in functional unemployment was universal across all demographics, male and female, while earnings dropped for all demographics with the exception of Black workers, who saw a modest increase, from $723 a week to $725.

Both of these numbers moved in the opposite direction from the metrics released by the BLS. TRU went up 0.9% while the official BLS unemployment rate went down 0.2%, and TWE decreased by 0.9%, with the BLS reporting an inflation-adjusted earnings increase of 0.5%.

“Families across America are struggling to make ends meet in the current economy, with rising costs forcing hard decisions that could have generational implications,” said LISEP Chair Gene Ludwig. “Being forced to make decisions between food and shelter versus healthcare and education is not a sustainable long-term situation for a healthy society.”

A somewhat positive note in the earnings report is that lower-income workers — those at the 25th percentile of the distribution — did not lose ground from Q4 2021, remaining steady at $538 a week. But the 0.9 percentage point increase in the March TRU indicates that more recently, workers with earnings near the poverty level ($20,000 a year in 2020 dollars) are being hit the hardest by inflation and thus will be unable to maintain a wage level that maintains a minimal standard of living. This is further exacerbated by the failure of the Consumer Price Index (CPI) to accurately measure the impact of rising prices on middle- and low-income households, as indicated by LISEP research released in March showing that over the last 20 years, the CPI has understated the impact of inflation on LMI households by 40%.

From a demographic standpoint, women saw the largest decrease in median earnings during Q1 2022, falling from $771 to $760, followed by men, dropping from $991 to $983. White workers saw their earnings decline from $976 to $971, with Hispanic workers seeing a drop from $709 to $705. Americans without college degrees — those with no high school diplomas, with only a high school diploma, or with some college education but no degree — saw their earnings decrease across the board.

On the employment front, from February to March all major demographics saw notable increases in the number of workers classified as “functionally unemployed” — that is, unable to find full-time, living-wage jobs, as measured by LISEP’s TRU. The TRU for Hispanic workers had the biggest spike, increasing from 25.1% to 27.3%, a 2.2 percentage point increase, followed by Black workers with a 1.6 percentage point jump, from 26.3% to 27.9%. White workers saw a modest 0.3 percentage point increase, from 21.5% to 21.8%. The TRU for women is up 0.5 percentage points (27.7% to 28.2%); for men the TRU increased 0.9 percentage points, from 18.1% to 19%.

“While we might otherwise glean some encouragement that, even in the face of inflation, earnings for Black and middle- and low-income workers held steady during the first quarter, last month’s jump in functional unemployment more than offsets that optimism,” Ludwig said. “This may be a harbinger of tougher times ahead for middle- and lower-income families, and a clear signal that policymakers must take immediate proactive steps.”

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

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


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, and seeks to advance the dialogue around policy solutions to improve the well-being of all Americans.

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 CEO of Promontory MortgagePath, a technology-based mortgage fulfillment and solutions company, and chairman of Promontory Financial Group. 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. It was released in September 2020 by Disruption Books. On Twitter: @geneludwig.


Jim Gardner
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