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
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.”
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 https://www.lisep.org/tru.
The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by 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, and seeks to advance the dialogue around policy solutions to improve the well-being of all Americans.
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 CEO of Promontory MortgagePath, a technology-based mortgage fulfillment and solutions company. 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. It was released in September 2020 by Disruption Books. On Twitter: @geneludwig.