Living-Wage Job Market Growing Stronger, Says Ludwig Institute

Overall rate of ‘functional unemployment’ drifts to lowest level since June

December 20, 2023

For Immediate Release

WASHINGTON, D.C. — On average workers appear to be benefitting from a robust job market, with the percentage of workers unable to find a living-wage job at the lowest level in six months, according to the monthly True Rate of Unemployment (TRU) report by the Ludwig Institute for Shared Economic Prosperity (LISEP).

The November TRU — a measure of the“functionally unemployed,” defined as the jobless plus those seeking, but unable to find, full-time employment paying above the poverty line — decreased 0.3 percentage points, from 22.7% to 22.4%. This is the fourth consecutive month the TRU has trended downward, and the lowest level since the June rate of 21.7%.

While most demographic groups saw negligible changes, with the TRU for Black workers remaining unchanged at 25.2% and Hispanic workers seeing a slight uptick, from 26.3% to 26.4%, White workers saw a significant improvement, with the TRU dropping by a half of a percentage point, from 21.6% in October to 21.1% in November. The TRU for women was unchanged at 26.8%, while the TRU for men dropped 0.6 percentage points, from 19% to 18.4%.

Among groups by education level, those without a high school diploma saw the biggest improvement, dropping by 2.7 percentage points, although their rate of functional unemployment remains extremely high at 44.4%. Groups with a high school diploma but no college and those with some college both saw a 0.4 percentage point improvement to 26.1% and 25.1%, respectively. Meanwhile, those with college degrees saw an increase in the functional unemployment rate: the TRU for those with bachelor’s degrees increased 0.2 percentage points, from 14.6% to 14.8%, while those with advanced degrees increased 0.3 percentage points, from 12.2% to 12.5%.

LISEP Chairman Gene Ludwig said a declining TRU is always welcome news, and it is noteworthy most are holding their own, even in the face of rising prices. But he added a lack of overall improvement among those groups who need it the most is concerning.

“While we are pleased to see an overall gradual improvement in the living-wage job prospects for middle- and working-class Americans, the improvement is so slight as not to put a dent in the losses we have witnessed over the last two decades, and minority populations are seeing no progress at all,” Ludwig said. “Simply ‘not falling behind’ is not good enough. It should be our collective resolution for the upcoming year to focus our efforts on helping those who need it the most.”

Living-Wage Job Market Growing Stronger, Says Ludwig Institute

Overall rate of ‘functional unemployment’ drifts to lowest level since June

‍Jim Gardner

December 20, 2023

For Immediate Release

Additional Resources

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 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.

Please Note:

The Ludwig Institute for Shared Economic Prosperity continuously revises and updates its data. As a result, data presented in this release may no longer reflect the latest estimates. Find the most current data at lisep.org.