Job Market Robust, But Wages Failing to Keep Up, Says Ludwig Institute

Nearly one-fourth of earners still unable to find living-wage jobs, according to report

WASHINGTON, Oct. 18, 2023 /PRNewswire/ -- By all outward measures the jobs market remains robust, but that is not translating into higher wages for most American workers, according to a report by Ludwig Institute for Shared Economic Prosperity (LISEP).

LISEP issued its monthly True Rate of Unemployment (TRU) for September in conjunction with the third quarter True Weekly Earnings (TWE) report. 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, and unlike the Bureau of Labor Statistics (BLS) analysis, the entire labor force is considered in LISEP's number, not just full-time earners.

"We are seeing increases in weekly earnings, which is good news, but these gains are in no way reflective of what we are seeing in the job market," said LISEP Chair Gene Ludwig. "A competitive job market should bring more living-wage jobs. And that is simply not the case."

Ludwig noted unemployment, as reported by the BLS, has been below 4% for the past seven quarters, yet the TWE is up only 1.7%. During the last streak of a sub-4% jobless rate — from Q2 2018 to Q4 2019 — wages rose more than 5%. Similarly, since October 2021, the TRU has been below 24% for the longest streak since 1995, the earliest year for which LISEP has data. Yet over this same period, TWE has only increased by 0.5%.

The Q3 TWE increased 1.1%, from $943 a week to $954, while the BLS reported an increase of 0.8%, from $1,110 to $1,118. The slow wage growth was consistent among all levels of income earners, with an increase of 0.3% (from $598 to $600) for the 25th percentile, 0.5% for the 75th percentile ($1,555 to $1,563) and 0.2% for the 90th percentile ($2,499 to $2,505).

From the employment standpoint, LISEP's  September TRU stands at 22.8%, a meager 0.2 percentage point improvement over the August rate. In spite of the overall improvement, the TRU for Hispanic workers jumped 0.8 percentage points, to 26% — an indication that more Hispanic workers are entering jobs paying less than a living wage. The TRU for Black workers improved slightly, dropping 0.3 percentage points, to 25.1%. The TRU for White workers saw the biggest improvement, with 0.4 percentage point drop, to 21.5%. And the gender gap has grown even wider, with 0.7 percentage point improvement for men, while the female TRU remained unchanged at 27.4%.

"We applaud efforts to raise wages and create more living-wage jobs, but at the current rate, it will take generations for most working- and middle-class Americans to reach an acceptable standard of living," Ludwig said. "I truly believe both sides of the political aisle are intent on some level of shared economic prosperity. Now is the time for action through sound, thoughtful economic policy based on real-world data."

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