Living-Wage Job Market Rebounds in January, Says Ludwig Institute

‘Functional unemployment’ drops for women as gender gap narrows

February 14, 2024

For Immediate Release

WASHINGTON, D.C. — The living-wage job market rebounded in January with White and Black workers posting gains and the gender gap closing, according to the monthly True Rate of Unemployment (TRU) report by the Ludwig Institute for Shared Economic Prosperity (LISEP).

The TRU measures the “functionally unemployed,” defined as the jobless plus those seeking, but unable to find, full-time employment paying above the poverty line (pegged at $25,000 a year in 2024 dollars). In January, the TRU decreased half a percentage point, from 23.8% to 23.3%. With the official Bureau of Labor Statistics (BLS) unemployment rate holding steady at 3.7% and a 62.5% Labor Force Participation Rate, LISEP suggests more workers transitioned to full-time, living-wage jobs in January.

LISEP Chairman Gene Ludwig said that while positive, it's crucial to consider other data points for a comprehensive analysis and advises interpreting the January TRU report within its context.

“While the first TRU report of 2024 brings us some good news, job creation alone falls short. We need stable, living-wage jobs capable of supporting families,” Ludwig said. “We must dig deeper to better understand the economic realities of working families and establish long-term policies that are truly beneficial.”

Black workers posted the most significant reduction in functional unemployment, with a TRU that dropped from 27.1% to 26.2%, a 0.9 percentage point improvement. The TRU for White workers improved by half a percentage point, dropping from 22.2% to 21.7%, while the TRU for Hispanic workers was basically flat with a 0.1 percentage point drop in functional unemployment, from 27.9% to 27.8%.

Meanwhile, women in the workforce saw a significant improvement in living-wage employment. This, when combined with an increase in functional unemployment for men, led to a 2 percentage point closure of the functional employment gender gap. The TRU for men jumped 0.8 percentage points, from 18.4% to 19.2%, while the TRU for women improved by 1.3 percentage points, dropping to 28%.

“This improvement in living-wage employment is encouraging, but we still have a long way to go to get where we want to be,” Ludwig said. “Decades of declining living-wage opportunities cannot be reversed overnight. Policymakers must commit to sustained action, acknowledging the struggles of working families and building the foundation for greater prosperity and upward mobility.”

Living-Wage Job Market Rebounds in January, Says Ludwig Institute

‘Functional unemployment’ drops for women as gender gap narrows

‍Jim Gardner

February 14, 2024

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.

LISEP Chairman Gene Ludwig said that while positive, it's crucial to consider other data points for a comprehensive analysis and advises interpreting the January TRU report within its context.

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.