While overall inflation-adjusted wages for the median American worker remained flat, low-wage workers saw a notable increase in the second quarter of 2023, with the rate of "functional unemployment" in the U.S. at an all-time low, according to a report by Ludwig Institute for Shared Economic Prosperity(LISEP).

But even in the midst of overall good news, LISEP noted there was one concerning observation: the True Rate of Unemployment (TRU) for Black workers jumped 1.5 percentage points — now at its highest rate since the beginning of the year and erasing several months of gains.

"Overall, the news is good – Americans are holding their own in the face of inflation, and low-income workers are actually gaining ground. But we can't overlook those segments of the population that continue to struggle," said LISEP Chairman Gene Ludwig. "The goal of shared economic prosperity is to create an environment where everyone has an opportunity to succeed. This is progress, but we're still not there yet."

LISEP issued its monthly TRU for June in conjunction with the second quarter True Weekly Earnings (TWE) report. 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 unlike the Bureau of Labor Statistics (BLS) analysis, the entire labor force is considered in LISEP's number, not just full-time earners.

For Q2 2023, the overall TWE rose from $933 to $935 a week over Q1, a negligible 0.2% increase. Yet low-wage workers (25th percentile) experienced a notable 1.7% increase after adjusting for inflation, from $583 to $593 a week. Meanwhile upper-middle income earners (75th percentile) saw a 1.3% decrease, from $1,561 to $1,541 a week, and the highest wage earners (90th percentile) experienced a 1% decrease, from $2,501 to $2,477.

TWE growth was notably better for ethnic minorities, with Black workers seeing a 1.7% increase in earnings ($771 to $780) and Hispanic earners experiencing a 1.2% gain ($737 to $746). The gain for White workers was 0.5%, from $1,031 to $1,037. But the gender pay gap continues to widen, with women gaining a scant 0.2% ($819 to $821), while men saw a 2.2% gain ($1,030 to $1,053).

The TRU, meanwhile, dropped by 0.7 percentage points, from 22.4% to 21.7% – the lowest functional unemployment rate since January 1995, the earliest LISEP has data. And while Black workers saw a significant 1.5 percentage point spike (from 24% to 25.5%), the composite TRU number was offset by a 1.2 percentage point improvement for Hispanic workers (from 26.1% to 24.9%), and a 0.2 percentage point decrease in the TRU for White workers (20.9% to 20.7%).

Women in the workforce also saw a significant improvement in TRU, dropping 1.1 percentage points, from 27.5% to 26.4%. For men, the rate dropped from 18% to 17.7%, a 0.3 percentage point improvement.

"There are a lot of data this month, and fortunately most of it represents good news," Ludwig said. "But we can't ignore the bad news simply because it is inconvenient. This is the time for policymakers to take a closer look at what is working and apply it in a manner that enhances opportunity across the board."