Fewer Living-Wage Jobs in Spite of Record Low Unemployment, Says Ludwig Institute
WASHINGTON, Feb. 15, 2023 /PRNewswire/ -- Even though the government-reported rate of unemployment is at near record lows, many of those new positions are insufficient to lift workers out of poverty, according to the monthly True Rate of Unemployment (TRU) report issued by the Ludwig Institute for Shared Economic Prosperity (LISEP).
'Functional unemployment' on the rise as workers struggle to find good-paying jobs
WASHINGTON, Feb. 15, 2023 /PRNewswire/ -- Even though the government-reported rate of unemployment is at near record lows, many of those new positions are insufficient to lift workers out of poverty, according to the monthly True Rate of Unemployment (TRU) report issued by the Ludwig Institute for Shared Economic Prosperity (LISEP).
While the U.S. Bureau of Labor Statistics (BLS) reported a jobless rate of 3.4% for January – an improvement of 0.1 percentage points over the previous month, and the lowest rate in 54 years – LISEP's TRU increased 0.6 percentage points, from 22.5% to 23.1%. TRU tracks the "functionally unemployed," defined by LISEP as the jobless, plus those seeking, but unable to find, full-time employment paying above the poverty line after adjusting for inflation.
This is an indication that even though more jobs are being created, a lower percentage of those jobs are classified as paying a living wage, according to LISEP Chairman Gene Ludwig.
"While at first glance these headline statistics look great, a deeper dive into the numbers shows that there are too many working families that are still struggling just to get by," Ludwig said. "Policymakers should be looking at these numbers and planning the next steps to create an economy with more opportunity. They should be considering quality of jobs – not just quantity."
Across the board, all major demographics experienced an increased TRU of about a half of a percentage point: the TRU for Black workers increased from 25.6% to 26.1%; White workers saw an increase from 21.2% to 21.7%; and Hispanic worker TRU jumped from 26.4% to 26.8%. The TRU for male workers increased from 18.1% to 18.6%, and for women, the increase was from 27.6% to 28.0%. Among education categories, only bachelor's degree holders saw an improved TRU, dropping a negligible 0.1 percentage points, from 15.1% to 15.0%.
Ludwig noted that as reported by the BLS, the labor participation rate increased slightly from 62.3% to 62.4% – a positive sign for the economy. But a large percentage of those workers entering or returning to the job market are finding it difficult to secure a living-wage job, which is a reason for concern.
"As the rise in TRU indicates, more Americans are entering or reentering the workforce only to be greeted by bad jobs – a situation that does not bode well for the long-term viability of our economy," Ludwig said. "Policymakers should work to address these concerns in a targeted yet thoughtful way with a strategy that not only creates jobs, but good-paying jobs, and thus building an economy that benefits all Americans."
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 https://www.lisep.org/tru.
About LISEP
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. 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 a managing partner of 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 also the founder of the Promontory family of companies. He 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.
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SOURCE Ludwig Institute for Shared Economic Prosperity
