Earnings Up for Q2 as June 'Functional Unemployment' Declines, Says Ludwig Institute

Overall improvement for Black, Hispanic workers; gender pay gap widens

WASHINGTON, July 17, 2024 /PRNewswire/ -- Overall labor market indicators point to improvements for middle- and lower-income workers, with "functional unemployment rates" declining and earnings rising for key demographics, according to a report by the Ludwig Institute for Shared Economic Prosperity (LISEP). But the report also reveals gains are unevenly distributed, with women in the workforce losing ground for the second consecutive quarter, resulting in the widest gender pay gap in two years.

(PRNewsfoto/Ludwig Institute for Shared Economic Prosperity)

LISEP issued its monthly True Rate of Unemployment (TRU) for June in conjunction with the Q2 2024 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 (pegged at $25,000 a year in 2024 dollars), while TWE is a measure of median weekly earnings (after adjusting for inflation) for all members of the workforce. This includes part-time workers and the jobless who are seeking work. By comparison, the Bureau of Labor Statistics headline numbers only include those who are employed at full-time jobs.

The TWE rose $3 a week in Q2, from $958 to $961 — but it remains 2% lower than its Q4 2023 levels ($20/week). Black workers experienced the most significant quarter-over-quarter growth at 3.1%, rising to $810, a $24/week increase — but their earnings remain 2.9% below Q4 2023 levels. Hispanic workers also saw gains, with earnings up 2.9% ($12/week) to $788. White workers lost ground, dropping 1.5% ($16/week) to $1,064.

Meanwhile, women's earnings declined for the second consecutive quarter, dropping 1.4% ($12/week) to $846, while men saw a 0.9% increase ($10/week) to $1,096. This disparity equates to women earning 77 cents for every dollar earned by men — resulting in the widest gender pay gap since 2022. Low-wage workers also experienced a setback, with earnings for the bottom quartile falling 0.1% to $599, declining for the third consecutive quarter.

"While median wage growth is encouraging, a closer examination reveals some alarming trends," said LISEP Chairman Gene Ludwig. "Even though Black and Hispanic workers experienced wage gains, these increases were not sufficient to close the persistent income gap. Moreover, women and low-wage workers face declining earnings. Overall improvement does little for those who continue to lose ground in an otherwise strong economy."

The overall TRU also improved in June, falling 0.1 percentage points to 24.5%, primarily due to easing pricing pressures. Black and Hispanic workers experienced TRU decreases of 1.2 and 2.1 percentage points, respectively, to 26.9% and 26.8%. The TRU for White workers rose 1.1 percentage points, to 23.8%. But unlike the TWE, the TRU for men increased 0.3 percentage points to 20.2%, while the rate for women improved, dropping 0.5 percentage points, to 29.4% — largely driven by a rising labor force participation rate for men and a declining participation rate for women. This month's slight improvement diverges from the TRU's rising trajectory since the beginning of the year.

"While we would like to see a silver lining in even modest improvements, more sustained progress needs to be made to reverse the worsening economic picture faced by low- and middle-income workers over the last year," Ludwig said. "If we are to right the ship, we need a wholesale shift in how we manage the economy. And that begins with policymakers focusing economic stimulus efforts on those individuals, and communities, that need it the most."

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 X (formerly Twitter): @geneludwig.

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