More Americans in Living-Wage Jobs as Year-End Approaches, Says Ludwig Institute

All major demographics see decline in ‘functional unemployment’ to kick off holiday season

December 14, 2022

For Immediate Release

WASHINGTON, D.C. — Just in time for the holiday season, American workers saw an increase in the number of living-wage jobs available for November, with functional unemployment dropping for all major demographics, according to the monthly True Rate of Unemployment (TRU) report by the Ludwig Institute for Shared Economic Prosperity (LISEP).

The TRU for the month of November dropped 0.7 percentage points from October to November, from 23.6% to 22.9%. TRU tracks the “functionally unemployed,” defined by LISEP as the jobless, plus those seeking, but unable to find, full-time employment paying above the poverty line after adjusting for inflation.

The drop in TRU reverses the uptrend from September to October, when the rate jumped 1.3 percentage points with the conclusion of summer. The November TRU correlates with the trend toward increased employment reported by the official Bureau of Labor Statistics jobless report for November. However, the BLS pegs the unemployment rate at 3.7% — significantly lower than the TRU due to its designation of part-time and occasional workers, as well as those with earnings below the poverty line, as “employed.”

“This is an encouraging TRU report, as it indicates that all demographics have improved their opportunity to earn a living wage, not just a select few,” said LISEP Chairman Gene Ludwig. “If this trend continues it will be a good way to close out the year, and give us something to build on in 2023.”

Black workers enjoyed the biggest improvement in TRU, dropping 1.4 percentage points. But with a TRU at 26.8%, Black workers are still at the highest rate of any demographic category. White workers improved by a full percentage point, dropping from 22.5% to 21.5%, with Hispanic workers dropping half of a percentage point, from 25.9% to 25.4%.

The gender gap improved a bit, with the female TRU dropping 1.3 percentage points and the male TRU remaining unchanged. But a significant gender gap still exists, with a male TRU of 19.1%, versus 27.2% for females.

“The numbers are moving in the right direction, but there are some notable areas of concern, and much, much room for improvement in the upcoming year,” Ludwig said. “It is encouraging that in spite of inflationary trends, we are seeing wage earners hold their own and a decrease in functional unemployment. But meanwhile there remains a segment of the population who still faces substantial challenges, with more than one-in-four Black and Hispanic workers either unable to find a job, or are working in poverty.

“Policymakers should work to address these concerns in a targeted yet thoughtful way so that we have an economy that benefits all Americans.”

More Americans in Living-Wage Jobs as Year-End Approaches, Says Ludwig Institute

All major demographics see decline in ‘functional unemployment’ to kick off holiday season

‍Jim Gardner

December 14, 2022

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.

“Policymakers should work to address these concerns in a targeted yet thoughtful way so that we have an economy that benefits all Americans.”

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.

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.