Wages keep pace with inflation, pay-for-life jobs rise, says Ludwig Institute
“It’s encouraging to see that even in the face of inflationary pressures, incomes for working families are holding up with some modest gains, and meanwhile, more Americans are turning to full-time, paid jobs,” said the President of LISEP. Gene Ludwig. “We hope this trend will continue beyond the current inflationary cycle, ultimately lifting IMT families out of poverty and into a better quality of life.”
LISEP has published its monthly Real unemployment ratet (TRU) for June in conjunction with the quarterly True Weekly Earnings (TWE) for the second quarter of 2022. TRU is a measure of the functionally unemployed – the unemployed, plus those seeking but unable to obtain full-time paid employment above the poverty line. The TWE is a measure of real median weekly earnings after adjusting for inflation, and differs from data published by the Bureau of Labor Statistics (BLS) by including all members of the labor force, including part-time workers partial and those who are actively looking for a job.
In the latest TWE report from LISEP, overall median weekly earnings remained unchanged during the first quarter of 2022 at $895 after adjusting for inflation. (These numbers, and all revenue numbers in this report, are recorded in Q2 2022 inflation-adjusted dollars). Meanwhile, the percentage of workers seeking but unable to find full-time, paid employment – the “functionally unemployed”, as defined by TRU – fell by almost a percentage point, from 23.0% at 22.1% – the lowest level since January 1995the first year for which LISEP calculated TRU.
In comparison, the BLS reported a drop in median earnings, from $1,063 at $1,041and a stable official unemployment rate for June, holding at 3.6% for the fourth consecutive month.
The encouraging report from the TRU is tempered somewhat by the TRU out of population (TRU OOP), defined as the percentage of the total adult population (aged 16+) who are not in full-time employment, work part-time but want to work full-time and do not earn a salary above the poverty level. The TRU OOP fell by only 0.5 percentage points, with the participation rate falling by 0.1 percentage points, indicating that a small percentage of workers left the labor force.
“It’s a move in the right direction,” Ludwig said. “We are cautiously optimistic that when inflationary pressures subside, it could mean real gains for middle- and low-income workers if this trend continues.”
Living wage employment improved for most major demographic groups, with the exception of black workers, who saw a slight increase in functional unemployment, from 25.2% to 25.5%. Hispanic workers saw the greatest improvement at 1.9 percentage points, from 27.1% to 25.2%, while white workers improved by 0.4 percentage points, from 21.1% at 20.7%. Both male and female workers improved, down 1.5 percentage points to 17.7% and 0.5 percentage points to 26.9%, respectively.
Q2 median weekly wages as reported by TWE, while completely flat from Q1 at $895, recorded notable gains for low-income workers. The bottom quartile of employees was up $18 one week (3.3%), from $552 at $570. The top decile of employees also increased, from $2,364 at $2,381, an increase of 0.7%. However, this was offset by a fall in inflation-adjusted earnings for the third quartile of wage earners – representing the middle and upper middle class – of 1.3%, from $1,500 at $1,479.
Ludwig noted that while the overall income and employment report is encouraging, there is still room for improvement.
“This report represents a significant improvement in income and paid employment for low-income workers, a trend that must be sustained if we are to continue on the path to equitable economic recovery,” Ludwig said. “Of course, rising costs of basic necessities will continue to be a factor in sustaining this trend, so we can only hope that policymakers take action to dampen inflation without killing jobs and people. wages.”
LISEP published the white paper “Measuring Better: Development of ‘True Rate of Unemployment Data as the Basis for Social and Economic Policy” when announcing the new statistical measure in October 2020. The document and the methodology can be consulted here. LISEP issues the TRU one to two weeks after 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.
LISEP publishes the TWE quarterly after the publication of the BLS Median Weekly Earnings report. The full white paper, “Understanding the Status of American Workers Through Analysis of Current Demographics,” can be viewed here. The TWE rate and supporting data can be found on the LISEP website at https://www.lisep.org/earnings.
The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by Ludwig and his wife, Dr. Carole Ludwig. LISEP’s mission is to improve the economic well-being of middle- and low-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 President of LISEP, Gene Ludwig is the founder of the Promontory family of companies and Canapi LLC, a fintech venture capital fund. He is the CEO of Promontory MortgagePath, a technology-based mortgage management and solutions company. Ludwig is the former Vice President and Chief Comptroller of Bankers Trust New York Corp., and served as Comptroller of the United States Currency from 1993 to 1998. He is also the author of the book The fading American dream, which studies the economic challenges faced by low- and middle-income Americans. On Twitter: @geneludwig.
SOURCE Ludwig Institute for Shared Economic Prosperity