LISEP Analysis Shows Living-Wage Job Growth for Black Workers for 4th Month

Racial gap narrows as gender gap grows, according to Ludwig Institute report

November 16, 2021

For Immediate Release

WASHINGTON, D.C. — For the fourth consecutive month a higher percentage of Black workers are finding living-wage jobs, according to the October True Rate of Unemployment (TRU) report from the Ludwig Institute of Shared Economic Prosperity (LISEP). That’s the modest good news.

But the bad news is that Black workers still have a lower percentage of living wage jobs than white workers. And, the living-wage job gap between female workers and their male counterparts has reached double digits, the largest disparity since the beginning of the pandemic.

“We are seeing some encouraging signs of an improving economy, with both Black and Hispanic workers narrowing the racial inequality gap in recent months and a general improvement in living-wage job prospects, though we have a ways to go to achieve equitable treatment,” said LISEP chairman Gene Ludwig. “Yet the widening gender gap is concerning, as a truly sustainable economic recovery must treat all participants equally.”

LISEP’s TRU report for October revealed that the overall percentage of “functionally unemployed” Americans — defined as those seeking, but unable to find, full-time employment paying above the poverty level — dropped to 23.5%, a 0.4 percentage point decline over the previous month. By comparison, the monthly unemployment rate released by the U.S. Bureau of Labor Statistics stands at 4.6% for October, a 0.2 percentage point drop from the 4.8% rate in September.

For the fourth consecutive month, Black workers have seen an improvement in living-wage job prospects, with functional unemployment for this group improving by 1.2 percentage points, from 27.9% to 26.7%. The Black TRU has improved more than 3 percentage points over the July 2021 level (29.8%), and is the lowest since December 2019, which was also 26.7%. Hispanic workers led all demographics with a 1.4 percentage point improvement in TRU (from 28.8% in September to 27.4% in October), while White workers lost ground with a TRU up 0.3 percentage points, 22.3% from 22.0% the previous month.

But even as the racial gap for living-wage jobs has narrowed, the same cannot be said for the gender gap. Male workers saw a significant improvement in the October TRU report, dropping 1.4 percentage points, from 19.9% down to 18.5%. Women, meanwhile, moved in the opposite direction, rising from 28.7% to 29.1%, a 0.4 percentage point gain. The 10.6 percentage point gap between male and female workers is the first time the differential has moved into double digits since the beginning of the pandemic, when the difference was 11.1 percentage points in May 2020.

Ludwig said that overall it was an encouraging report, but certain aspects — particularly the widening gender gap — should serve as a signal to policymakers.

“It is gratifying to see most numbers moving in the right direction, but we clearly have a lot of work to do for low- and middle-income America,” Ludwig said. “Without a doubt, final passage of President Biden’s infrastructure bill is a step in the right direction -- not only will this provide a pipeline of well-paying jobs into the foreseeable future, but it will develop the critical infrastructure necessary for our nation to aggressively compete in the global economy.

“But without a commitment to human infrastructure — child care, elder care, education, job training, and the like — we may very well see certain groups get left further behind. Policymakers should take note.”

LISEP Analysis Shows Living-Wage Job Growth for Black Workers for 4th Month

Racial gap narrows as gender gap grows, according to Ludwig Institute report

‍Jim Gardner

November 16, 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.

Ludwig said that overall it was an encouraging report, but certain aspects — particularly the widening gender gap — should serve as a signal to policymakers.

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.