US Real Earnings Slip as Functional Unemployment Creeps Upward

The Institute’s True Weekly Earnings (TWE) metric, which accounts for the entire workforce including part-time and unemployed job seekers, fell to $1,033 in the second quarter. This contrasts with Bureau of Labor Statistics data for full-time workers, which showed a slight increase. The decline was most acute for low-wage earners, with those in the 25th percentile experiencing a 0.8 percent drop compared to the previous year. While quarterly earnings saw modest gains for some demographics, such as Asian and Black workers, the overall trend reflects a broad erosion of purchasing power.

Labor market strain is further evidenced by the True Rate of Unemployment (TRU), which has climbed for three consecutive months. The June figure reached 24.7 percent, up from 24.6 percent in May. Perhaps most concerning to analysts is the 0.7 percentage point increase in functional unemployment among prime-age workers—those between 25 and 54—which now sits at 17.9 percent. LISEP Chair Gene Ludwig noted that while these levels remain below the peaks observed in late 2025, the recent data serves as a reminder that economic progress is frequently non-linear and leaves vulnerable populations behind.