Growth of Living-Wage Jobs Declines in February, LISEP Analysis Reveals

Creation of ‘quality jobs’ should be focus of stimulus efforts, says Ludwig Institute chair

March 17, 2021

For Immediate Release

WASHINGTON, D.C. — A new analysis of unemployment data further underscores the need for the strong relief measures included in the recently approved $1.9 trillion federal economic stimulus package, according to Gene Ludwig, chairman of the Ludwig Institute for Shared Economic Prosperity (LISEP).

In its monthly True Rate of Unemployment (TRU) report, LISEP found that the percentage of American workers unable to find a living-wage job grew to 25.1% for the month of February, an increase of 0.7 percentage points over the 24.4% January rate.

“Now is the time to work toward the creation of quality jobs, not just jobs that don’t pay a living wage,” Ludwig said. “These numbers underscore the serious economic hardship families are facing — even as they return to the workforce — and the need for a robust federal response. Our focus should not be to get back to where we were pre-pandemic — we have to do better.”

The February TRU, a measure of the “functionally unemployed” — defined as those who are jobless, or who are seeking full-time work but unable to secure a position that earns above poverty-level wages — shows a contradictory trend to the monthly unemployment report issued by the U.S. Bureau of Labor Statistics (BLS). The BLS reported an improvement in the U.S. jobless rate, from 6.3% in January, to 6.2% in February.

The disparity between the two reports is an indication that any new jobs created are failing to provide a living wage, previously discouraged workers reentering the workforce are still unable to find jobs, or existing positions are seeing reduced hours, according Ludwig.

“We must be cautious in interpreting encouraging economic blips as signs of an imminent recovery,” Ludwig said. “For a recovery to be sustainable, all segments of the population must have the opportunity to participate equally. We have no indication that is happening right now. With the tools available through the new economic stimulus package, that is where we should direct our energies.”

Ludwig noted that while some encouraging signs in the February report include an improvement in the TRU for Black workers, from 30.7% to 30.1%, it still remains alarmingly high and more than 7 percentage points higher than their White counterparts, which sits at 23.0%. And the gender gap continues to grow: The TRU for male workers was down slightly (from 20.9% to 20.8%), while the rate for women increased, from 28.5% to 30.0%.

Other findings include continued difficulty among workers with lower educational attainment. More than half of those without a high school diploma, 51.2%, are unable to find a living-wage job. This is a 4.5 percentage point increase over January.

Growth of Living-Wage Jobs Declines in February, LISEP Analysis Reveals

Creation of ‘quality jobs’ should be focus of stimulus efforts, says Ludwig Institute chair

‍Jim Gardner

March 17, 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.

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.