Despite overall improvements, Black workers experienced lower wages and a higher rate of functional unemployment. Washington, October 22 (Reuters/PR Newswire)—According to the Ludwig Institute for Shared Economic Prosperity (LISEP), the rate of functional unemployment declined slightly for the second consecutive month in September, and real median weekly earnings improved marginally in the third quarter; however, wages for Black workers fell and their rate of functional unemployment rose.
LISEP released its September True Rate of Unemployment (TRU) and Q3 2026 True Weekly Earnings (TWE) reports. TRU measures the population experiencing "functional unemployment"—individuals who are unemployed, underemployed involuntarily, or earning poverty-level wages (defined as an annual income below $26,000 in 2025 USD). TWE measures the inflation-adjusted median weekly earnings for the entire labor force, including part-time workers and those unemployed but actively seeking employment.
Overall, inflation-adjusted TWE increased by 0.6% from Q2 to Q3, rising from $1,035 to $1,041, but showed little change compared to a year ago. In contrast, the U.S. Bureau of Labor Statistics (BLS) median income metric—which includes only full-time workers—reported a weekly wage of $1,232, a 1.5% decline from the $1,251 reported a year earlier. This difference primarily reflects income trends among part-time workers; such trends may differ from those of full-time workers but are not captured in the BLS’s headline metric.
TWE improved for the low-wage group (25th percentile), both quarter-over-quarter and year-over-year, rising 1.3% to $643 in Q3, a 1% increase compared to a year ago. Incomes at the 75th and 90th percentiles both declined. The weekly wage at the 75th percentile fell 0.5% quarter-over-quarter and 2.1% year-over-year to $1,735. The weekly wage at the 90th percentile decreased 1.9% year-over-year to $2,723.
By demographic group, the median weekly earnings for Black workers increased 0.5% year-over-year but decreased 0.6% quarter-over-quarter to $866. Hispanic workers saw strong wage growth in the third quarter, rising 1.7% to $868 and up 3.4% year-over-year. Earnings for White and Asian workers both declined over the past year. Asian workers’ weekly earnings fell 1.8% quarter-over-quarter and 2.2% year-over-year to $1,352. White workers’ weekly earnings rose 0.7% in the third quarter to $1,177, but remain 0.9% lower than the same period last year.
The gender pay gap narrowed in the third quarter, with male TWE decreasing 0.7% to $1,175, while female earnings rose 1.5% to $934. Women now earn 80 cents for every dollar men earn.
LISEP Chair Gene Ludwig said: “The wage growth we’ve seen this quarter may help some workers return to levels roughly comparable to a year ago, but that doesn’t necessarily mean they’re better off. The cost of living has certainly not stood still, and for too many Americans, making ends meet remains a real challenge. We need to see more than one or two quarters of improvement—we need wage growth that allows more Americans to move forward, not just keep up.”
The functional unemployment rate in September also showed signs of improvement, declining for the second consecutive month following months of pressure in the labor market. TRU fell by 0.3 percentage points to 24%, reversing most of the increases seen earlier this year, but remains above the 23.6% recorded in March.
By demographic group, the TRU for Black workers rose significantly by 2.9 percentage points to 30.1%, the highest level since July 2021. This increase was also reflected in the BLS’s headline unemployment rate, which rose a full percentage point from 6% to 7%. Meanwhile, the TRU for Hispanic workers declined by 1.7 percentage points to 25.5%, a drop of 3.4 percentage points from the peak of 28.9% in May 2026. The TRU for White workers fell by 0.9 percentage points to 23.1%, marking the first decline after four consecutive months of increases from May to August.
The functional unemployment rate for women decreased by 0.7 percentage points to 28.8%, while for men it increased by 0.2 percentage points to 19.8%.
Gene Ludwig said: “These figures remind us that there is no single experience in the U.S. labor market. We’ve seen improvements in overall unemployment and wages, but the situation can vary significantly depending on where you stand in the workforce. The income trends of full-time and part-time workers are a prime example. That’s why it’s important to look beyond headline numbers and understand the real conditions of workers in different groups.”
About TWE
LISEP releases TWE quarterly following the BLS median weekly earnings report. The full white paper, “Understanding the State of American Workers Through Analysis of Current Population Data,” is available here. The TWE ratio and supporting data can be found on the LISEP website at https://www.lisep.org/twe.
About LISEP
The Ludwig Institute for Shared Economic Prosperity (LISEP) was founded in 2019 by Ludwig and his wife, Dr. Carol Ludwig. LISEP’s mission is to improve the economic well-being of low- and middle-income populations in the United States through research and education. LISEP’s original economic research includes new metrics for unemployment, income, and cost of living. These metrics aim to provide policymakers and the public with a more transparent understanding of the economic conditions facing all Americans—particularly low- and middle-income households—rather than being obscured by misleading headline statistics. X handle: @LISEP_org
About Gene Ludwig
In addition to serving as Chairman of LISEP, Gene Ludwig is a managing partner at Canapi LLC, a fintech venture fund. He is also the founder and CEO of Ludwig Advisors, which provides strategic advisory services to financial institutions. Ludwig is the founder of the Promontory family of companies. He previously served as Vice Chairman and Chief Control Officer of Bankers Trust New York Corp. and was Comptroller of the Currency from 1993 to 1998. He is the author of The Vanishing American Dream, a book examining the economic challenges facing low- and middle-income Americans. His new book, The Mismeasurement of America, will be published in September 2025 and is currently available for purchase online and at major bookstores. X handle: @geneludwig.