More Americans in Living-Wage Jobs for January; ‘Discouraged’ Workers Coming Back

Job market improves for LMI families, but gender gap persists, says Ludwig Institute

February 16, 2022

For Immediate Release

WASHINGTON, D.C. — More American workers are in living-wage jobs than any time since 2019, with even those previously labeled as “discouraged workers” returning to the labor force, according to an analysis by the Ludwig Institute for Shared Economic Prosperity (LISEP). But meanwhile, a huge gap remains between the ability of men and women to secure and retain employment paying above the poverty line.

“While the news is good overall for low- and middle-income families, the extreme living-wage employment gap between men and women is concerning,” Ludwig said. “The pandemic has obviously had a disproportionate impact on women in the workforce, with policymakers and employers alike slow to respond.”

LISEP’s True Rate of Unemployment (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. In addition, LISEP measures the TRU Out of the Population (TRU OOP), the percentage of the total U.S. population (age 16 and older) that is seeking but unable to find a full-time job paying above the poverty level. While the TRU measures the percentage of functionally unemployed for the entire active labor force, TRU OOP gauges the entire potential labor force, including discouraged workers and others who have dropped out of the labor pool.

For January, LISEP found that the TRU OOP is now at its lowest level since October 2019, meaning that not only are workers returning to the workforce, but they are finding living-wage jobs.

In January, all major demographics posted TRU increases in living-wage job growth, with a composite rate of 22.5%, down 0.8 percentage points from the December rate. This is in contrast to the government rate released by the U.S. Bureau of Labor Statistics (BLS), which reported an unemployment rate of 4%, up 0.1 percentage points from January. But the gender gap persists, with the male TRU dropping 0.6 percentage points and now standing at 17.7%, while the TRU for women, although down 0.8 percentage points, remains more than 10 percentage points above their male counterparts at 28%.

January to February, all major demographics saw decreases in the number of workers classified as functionally unemployed, as measured by LISEP’s TRU. The TRU for Black workers fell from 27.3% to 25.8% (1.5 percentage points); Hispanic workers dropped 27.7% to 25.4% (2.3 percentage points); while the White worker TRU basically remained stable, decreasing 0.1 percentage points, from 21.6% to 21.5%.

“Even after adjusting for inflation, low- and middle-income workers continue to make gains, which will be critical to a full economic recovery,” said LISEP chair Gene Ludwig. “And the fact that formerly discouraged workers are coming back — and coming back to living-wage jobs – is an encouraging sign. While we seem to be headed in the right direction, still too many Americans are living on the edge.”

More Americans in Living-Wage Jobs for January; ‘Discouraged’ Workers Coming Back

Job market improves for LMI families, but gender gap persists, says Ludwig Institute

‍Jim Gardner

February 16, 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.

For January, LISEP found that the TRU OOP is now at its lowest level since October 2019, meaning that not only are workers returning to the workforce, but they are finding living-wage jobs.

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.