Nation’s Largest Metro Areas Lose Living-Wage Jobs in First Year of Pandemic

South, Northeast had biggest increase in ‘functionally unemployed’ during pandemic

November 30, 2021

For Immediate Release

WASHINGTON, D.C. — Eighty-four of the nation’s largest metropolitan areas posted negative growth in living-wage jobs -- five by double digits -- during the first year of the pandemic, according to an analysis by the Ludwig Institute for Shared Economic Prosperity (LISEP).

“Too many Americans remain functionally unemployed in all regions of the U.S., but some regions have done better, proving that recessions, like economic recoveries, are not created equal,” said LISEP Chairman Gene Ludwig. “If policymakers are to make decisions to facilitate an equitable recovery, it’s important for them to be aware of the disparities these data show. And these data are much more revealing about the economic picture of these local areas than headline economic data.”

LISEP today released a comprehensive analysis of the True Rate of Unemployment (TRU) by Metropolitan Statistical Area (MSA), a more in-depth version of its monthly True Rate of Unemployment report. For the purpose of this analysis, LISEP highlighted TRU’s sister metric: the TRU Out of the Population. This is defined as the percentage of the MSA’s total population (age 16 and older) who do not hold a full-time job, works part-time but desires full-time, and does not earn a wage paying above the poverty level. The calculations are based on data compiled by the U.S. Bureau of Labor Statistics (BLS).

Analyses based on the employment status of the entire population, as opposed to only the civilian workforce, serves as a more revealing barometer of labor trends during the pandemic due to a spike in discouraged workers dropping out of the labor market, according to LISEP.

In the TRU by MSA report, which compares 2019 to 2020 rates, LISEP found that of the largest metropolitan areas in the country, the Atlanta-Sandy Springs MSA had the biggest increase in the functional unemployment rate among the most populous MSAs, with the TRU Out of the Population rate jumping by 12.39 percentage points from 2019 to 2020, followed by Boston-Cambridge at 11.61 percentage points. The functional unemployment rate jumped 11.33 percentage points in the Los Angeles-Long Beach MSA, followed by Bridgeport-Stamford, Conn. (up 10.86%), Memphis, Tenn. (up 10.78%), and Knoxville, Tenn. (up 9.54%) and Birmingham-Hoover, Ala. (up 9.06%).

On the opposite end of the spectrum, Richmond, Va., posted the most-improved TRU Out of the Population rate in the first year of the pandemic, improving by 7.4 percentage points. Tucson, Ariz., was the second-most improved MSA, with functional unemployment dropping 5.65%, followed by Virginia Beach-Norfolk with a 4.59% improvement, El Paso, Texas, improving by 2.7%, and Tulsa, Okla., with a 2.21% improvement in the living-wage job rate.

“Breaking the U.S. economy down into individual, local economies gives us a clearer picture of how prepared we were for the economic shock delivered by the pandemic, and may offer clues on how we can be better prepared when another major recession occurs,” Ludwig said. “However, COVID and people’s reluctance to come back to low-wage jobs paints a troubling picture about how low- and middle-income Americans have fared over the past 50 years.”

In addition to its monthly national TRU report, LISEP will continue to issue functional unemployment data by MSA following the annual release of self-employed earnings through the Annual Social and Economic Supplement (ASEC), released jointly by the U.S. Bureau of Labor Statistics and the U.S. Census Bureau each fall.

Nation’s Largest Metro Areas Lose Living-Wage Jobs in First Year of Pandemic

South, Northeast had biggest increase in ‘functionally unemployed’ during pandemic

‍Jim Gardner

November 30, 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.

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.