Black Workers Lose Ground on Living-Wage Jobs in March, According to LISEP

‘Functional unemployment’ for Blacks reaches six-month high

April 22, 2021

For Immediate Release

WASHINGTON, D.C. — The percentage of Black Americans unable to find a living-wage job climbed to its highest level in six months, even while other segments of the population enjoyed marginal improvement, according to an analysis released today by the Ludwig Institute for Shared Economic Prosperity (LISEP).

In its monthly True Rate of Unemployment (TRU) report, LISEP determined that for the month of March, 31.8% of Black workers are “functionally unemployed,” defined as seeking but unable to find full-time employment that lifts them over the federal poverty line. This is a 1.7 percentage point increase over February, and the highest Black TRU rate since the 32.7% reported in September 2020.

This is in stark contrast to the official unemployment report issued by the Bureau of Labor Statistics (BLS), which pegged the March Black unemployment rate at 9.6%, a 0.3 percentage point improvement over February. One possible explanation for the disparity between the LISEP TRU and the BLS-reported unemployment rate is that while more Black workers are finding employment, these new jobs are largely low-wage positions that fail to raise workers above the federal poverty level, according to LISEP.

“We continue to see a huge disconnect between the reported economic numbers, and the reality for the majority of Americans,” said LISEP Chairman Gene Ludwig. “Policymakers shouldn’t be fooled by a bullish stock market or what appears to be plummeting unemployment rates. The economic crisis continues for so many American families.”

The overall TRU improved from February to March, dropping from 25.1% to 24.4%, while the BLS rate also showed improvement, dropping from 6.2% to 6.0%. LISEP reports an improving TRU for other demographics: Whites (22.8%, down from 23.0%); Hispanics (from 30.9% to 28.5%); men (20.8% to 20.3%); and women (30.0% to 29.3%).

“What these numbers show is a troubling trend toward an unequal economic recovery, with one-fourth of the workforce still unable to secure a job that will feed a family,” Ludwig said. “The jobs package under consideration by Congress is a step in the right direction, as a lasting recovery needs more than jobs – it needs quality jobs.”

Black Workers Lose Ground on Living-Wage Jobs in March, According to LISEP

‘Functional unemployment’ for Blacks reaches six-month high

‍Jim Gardner

April 22, 2021

For Immediate Release

Historically, systemic barriers have disproportionately hampered Black farmers’ ability to retain land ownership.

Despite this tragic history, there is still time and economic incentive to set some of the inequities right.

In 2021, working mothers with children under 18 earned just 61.7 cents for every dollar a father made. Much wider than the overall gender wage gap, this difference highlights both the motherhood penalty and the fatherhood premium.

Female-dominated, low-paying, part-time occupations are overrepresented among informal workers who also have a formal job.

We need to create an economic environment where companies can hire these workers as employees and pay them a living wage. There are steps policymakers can take to change the gig economy dynamic.

Dependency on tips over base pay is growing because of actions taken by gig companies to institute tipping.

Even for those lucky enough to be making what amounts in many states to the poverty wage of $15 per hour, many will get nothing but a week’s notice before being out on the street.

One study shows that consistent involvement in extracurricular activities increased a child’s likelihood of attending college by a whopping 400% compared to not being involved at all.

Studies have found that both men and women are paid less if they work in “nurturant” occupations.

Since 2015, the correlation between LISEP’s functional employment to population ratio and the inflation rate was more than four times as strong as the BLS’s employment to population ratio, which is depicted in the graph below.

The employment to population ratio settles the discrepancy between what we see around us and what the data says.

The NBER paper defines employment using the traditional BLS U-3 rate. However, the often-used U-3 number fails to capture the quality of jobs.

Among states with stricter COVID-19 policies, reducing unemployment benefits had little to no effect. The average effect of increased employment seems to have occurred only in those states with looser COVID protocols.

Press Contact:

‍Jim Gardner

press@lisep.org

(573) 680-1822

Additional Resources:

TRU Summary

TRU White Paper

TRU & TWE Methodology

TRU & TWE Source Data

About TRU

LISEP issued the white paper Measuring Better: Development of “True Rate of Unemployment” Data as the Basis for Social and Economic Policy upon announcing the new statistical measure in October 2020. The paper and methodology can be viewed here. LISEP issues TRU one to two weeks following 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 lisep.org/tru.

About LISEP

The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by Gene Ludwig and his wife, Dr. Carol Ludwig. The mission of LISEP is to improve the economic well-being of middle- and lower-income Americans through research and education. LISEP’s original economic research includes new indicators for unemployment, earnings, and cost of living. These metrics aim to provide policymakers and the public with a more transparent view of the economic situation of all Americans, particularly low- and middle-income households, compared with misleading headline statistics. On X: @LISEP_org.

About Gene Ludwig

In addition to his role as LISEP chair, Gene Ludwig is founder of the Promontory family of companies and Canapi LLC, a financial technology venture fund. He is the founder and CEO of Ludwig Advisors, which counsels financial firms on critical matters. Ludwig is the former vice chairman and senior control officer of Bankers Trust New York Corp. and served as the U.S. Comptroller of the Currency from 1993 to 1998. He is also author of the book The Vanishing American Dream, which investigates the economic challenges facing low- and middle-income Americans. On Twitter: @geneludwig.