#USA #Washington #Functional Unemployment #Ludwig Institute #earnings decline

Weekly Earnings Down for Second Straight Quarter

On July 22, 2025, the Ludwig Institute for Shared Economic Prosperity (LISEP) released alarming figures indicating that weekly earnings had declined for a second consecutive quarter. Furthermore, the concept of 'functional unemployment,' while showing slight improvements in June, has consistently held at or above the 24% mark for five months straight. This trend is particularly worrying for Black and Hispanic workers.

LISEP's report included two key measures: the True Rate of Unemployment (TRU) and the True Weekly Earnings (TWE). TRU is designed to account for those who are unemployed, as well as those who are seeking full-time work but unable to secure positions that offer wages above the poverty line (defined as $25,000 annually in January 2024 dollars). TWE reflects the median weekly earnings for all working members, including part-time employees and those who are actively looking for jobs. In contrast, the more commonly cited Bureau of Labor Statistics (BLS) statistics focus solely on full-time employment.

The True Weekly Earnings took a 0.4% hit in Q2, slipping from $1,005 to $1,000. This amount is significantly lower than the BLS-reported median of $1,194, despite both reports indicating a similar 0.4% quarterly drop. However, it is noteworthy that the TWE shows a year-on-year increase of 1.6%, up $16 from $984 at the same quarter last year.

When dissecting the earnings data, it's clear that higher-income earners are also feeling the pinch: those at the 75th percentile saw a slight decrease to $1,682, while those at the 90th percentile fell to $2,683. In contrast, lower-paid employees in the 25th percentile enjoyed a modest 0.5% improvement, climbing to $615, but this shift still barely captures any real change in purchasing power.

Examining median earnings reveals concerning demographics trends: Black workers experienced a 3.5% reduction in weekly earnings, dropping from $862 to $832. In contrast, Hispanic workers saw their earnings tick up by 0.8%, from $800 to $807. The median earnings for White workers decreased marginally by 0.1%, from $1,125 to $1,124.

In an additional troubling indicator, the gender pay gap has widened. Earnings for men increased slightly by 0.7% to $1,142, while women's earnings decreased by 0.8% to $891. This disparity demonstrates that women are now earning just 78 cents for every dollar made by men in similar positions.

Gene Ludwig, Chair of LISEP, remarked, "It's encouraging that we see an increase in weekly earnings compared to last year, but back-to-back quarterly declines are a signal we can't overlook. When low- and middle-income workers' financial power diminishes, it's not just statistics—it's an early warning of potential trouble ahead."

The report also mentioned a slight improvement in the TRU, which fell by 0.2 percentage points to 24.1%. Nevertheless, this level remains high compared to the latter half of 2024, consistently exceeding the 24% threshold for the fifth month in a row. The decline in TRU primarily benefitted White workers, whose rate dipped by 0.9 percentage points to 22.7%. Meanwhile, Black workers saw an increase in TRU to 27.9%, and Hispanic workers also experienced a rise to 27.8%.

Gender differences in TRU results showed that men's rates increased by 0.3 percentage points to 19.6%, whereas women's TRU improved slightly to 29.6%.

These findings strongly point to warning signs in the labor market, with significant wage stagnation and persistently high levels of functional unemployment. Gene Ludwig stresses that the disparities among demographics highlight a growing divide, especially as some groups are not just falling behind but are indeed losing ground. Should these trends continue without intervention, low- and middle-income families may face increasing economic pressure in the coming months.

About LISEP

Founded in 2019 by Gene Ludwig and Dr. Carol Ludwig, the Ludwig Institute for Shared Economic Prosperity aims to enhance the economic security of middle- and lower-income Americans through meticulous research and education. By providing metrics that encompass unemployment rates and earnings, LISEP seeks to offer a clearer understanding of the economic landscape and social welfare challenges that affect numerous American households.

Gene Ludwig, also a financial technology venture investor and author, continues to advocate for policy improvements that can help bridge these gaps and restore economic parity for all.