Weekly Earnings Decline for Second Consecutive Quarter, Ludwig Institute Reports

'Functional unemployment' improves slightly but remains over 24%

WASHINGTON, July 22, 2025 /PRNewswire/ -- Weekly earnings declined for the second straight quarter, and 'functional unemployment,' while slightly improved in June, has remained at or above 24% for five consecutive months. Conditions are particularly worsening for Black and Hispanic workers, according to a new report from the Ludwig Institute for Shared Economic Prosperity (LISEP).

LISEP issued its June True Rate of Unemployment (TRU) in conjunction with the Q2 2025 True Weekly Earnings (TWE) report. TRU is a measure of the "functionally unemployed" —defined as the jobless plus those seeking but unable to find full-time employment paying above poverty wages ($25,000 a year in January 2024 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.

TWE declined by 0.4% in Q2, with the median wages dropping from $1,005 to $1,000. This figure is notably16% less than the $1,194 reported by the BLS, which also reported a 0.4% drop in its median wages. Despite the quarterly decline, both metrics are higher than this time last year, with the TWE up 1.6% ($16, from $984) over Q2 2024.

Across income distributions, earnings for higher-wage earners fell by 0.1% to $1,682 for the 75th percentile, and $2,683 for the 90th percentile from Q1 to Q2. In contrast, earnings for lower-wage workers at the 25th percentile improved by 0.5%, to $615 over the quarter, but this still represents a very small movement in purchasing power. By demographic, median weekly earnings for Black workers decreased 3.5% (from $862 to $832), while the median TWE for Hispanic workers increased by 0.8% (from $800 to $807) during that time period. There was little quarterly change in the median TWE for White workers, which decreased 0.1%, from $1,125 to $1,124.

The gender pay gap widened in Q2 as earnings for men increased by 0.7% to $1,142, while earnings for women decreased by 0.8% to $891. This disparity means that, at the median, women are now earning 78 cents for every dollar earned by men in the workforce.

"It is encouraging to see weekly earnings in Q2 up compared to last year, but back-to-back quarterly declines are a signal we can't afford to ignore," said LISEP Chair Gene Ludwig. "When low- and middle-income workers begin to lose buying power, it's often more than a data point—it's an early warning. These early signs of strain can precede broader economic challenges."

LISEP's TRU saw a slight improvement in June, falling 0.2 percentage points to 24.1%. Despite this, the rate remains high relative to the second half of 2024, topping the 24% mark for the fifth consecutive month.

The gains were primarily concentrated with White workers, whose TRU dropped by 0.9 percentage points to 22.7%. Meanwhile the TRU for Black workers increased, jumping 1.9 percentage points to 27.9%. The TRU for Hispanic workers also saw an increase, rising 0.5 percentage points to 27.8%.

By gender, the TRU for men saw a 0.3 percentage point increase to 19.6%, while women saw a 0.3 percentage point improvement, dropping to 29.6%.

"We are starting to see potential warning signs in the labor market, from wage stagnation to persistently high levels of functional unemployment," Ludwig said. "Perhaps most concerning is the breakdown across key demographics, where some groups aren't just being left behind, they are losing ground. Absent a reversal of these trends, low- and middle-class families could face increasing pressure in the months ahead."

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. On X: @LISEP_org.

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. His forthcoming book, The Mismeasurement of America, will be published in September 2025 and is available for pre-order wherever books are sold. On X: @geneludwig.

SOURCE Ludwig Institute for Shared Economic Prosperity