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‘Functional unemployment’ rises for Latino Workers in December, Wages Down in Q4

Gaby M. Rojas

Inflation-adjusted wages for Latino wage earners declined 2.4 percent for the fourth quarter of 2022, with the percentage of Latino workers seeking, but unable to find, living-wage jobs rising from 25.5 percent to 26.4 percent, according to a report by Ludwig Institute for Shared Economic Prosperity (LISEP).

The negative trend for Latino wage earners outpaced, and in some instances ran counter to, other demographic groups. Black and White workers saw slight gains in real wages, and those groups also saw growth in living-wage job opportunities.

“Overall, top-line numbers may indicate that wages and living-wage employment is more or less stable, but a deeper dive into the numbers tells a different story,” says LISEP Chairman Gene Ludwig. “Clearly there are segments within the workforce that are losing ground, a situation that must be addressed if we are to head off a recessionary trend and move toward growing a more equitable, sustainable economy.”

LISEP issued its monthly True Rate of Unemployment (TRU) for December in conjunction with the quarterly True Weekly Earnings (TWE) report for the fourth quarter of 2022. TRU is a measure of the functionally unemployed—the jobless, plus those seeking but unable to secure full-time employment paying above the poverty line. TWE is a measure of median weekly earnings after adjusting for inflation and differs from the data issued by the U.S. Bureau of Labor Statistics (BLS) through inclusion of all members of the workforce, including part-time workers and those actively seeking employment.

LISEP’s TWE report is in stark contrast to an analysis issued by the BLS, which indicates that inflation-adjusted median weekly wages for Q4 trended upward. Unlike the BLS analysis, the entire labor force is considered in LISEP’s number—not just full-time earners. When this is taken into account, real median wages were outpaced by inflation and decreased by 0.4 percent.

The overall TWE fell from $927 to $923 a week for Q4, in spite of the rate for Black workers remaining steady at $767 a week, and the TWE for White workers rising from $1,019 to $1,022 a week, primarily due to a significant drop in Latino weekly earnings—from $760 to $742. Workers in the lower end of the distribution saw earnings fall more rapidly, with those in the 25th percentile seeing their real wages fall by 0.8 percent ($589 to $585/week).

A similar pattern emerged with LISEP’s December employment report, with the overall TRU dropping 0.4 percentage points, from 22.9 percent to 22.5 percent. All major demographics—with the exception of Latino workers—showed positive trends. The TRU for Black workers dropped 0.5 percentage points, from 26.1 percent to 25.6 percent, with the TRU for White workers falling 0.4 percentage points, from 21.6 percent to 21.2 percent. The rate for Latino workers jumped nearly a full percentage point, from 25.5 percent to 26.4 percent.

“Households across the nation are facing substantial financial challenges, and while many families are holding their own, at best this simply means they are no worse off. Things are just not getting better,” Ludwig says. “Policymakers must be attuned to this growing inequality, which by any measure is unsustainable in a healthy society.”

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