Living-Wage Job Market Improves in May, Says Ludwig Institute

'Functional unemployment' drops for all demographics, men and women

WASHINGTON, June 14, 2023 /PRNewswire/ -- The percentage of Americans with living-wage jobs improved significantly from April to May, with "functional unemployment" dropping to its lowest level in months for all major demographic groups, according to the monthly True Rate of Unemployment (TRU) report by the Ludwig Institute for Shared Economic Prosperity (LISEP).

LISEP's TRU, a measure of the "functionally unemployed" – defined as the jobless, plus those seeking, but unable to find, full-time employment paying above the poverty line after adjusting for inflation – dropped 0.7 percentage points for the month of May, improving to 22.4%. By contrast, the U.S. Bureau of Labor Statistics (BLS) reported an increase in the official jobless rate, from 3.4% to 3.7%. This is primarily due to the loss of low-wage part-time workers, counted as "employed" by the BLS – but classified as "functionally unemployed" by LISEP in previous monthly reports.

"This month is a perfect example of the shortcomings of government headline statistics in assessing the status of the economy," said LISEP Chairman Gene Ludwig. "The loss of low-wage, part-time jobs should come as no surprise, and in fact, jobs incapable of lifting workers out of poverty should not even be considered employment for the purpose of setting economic policy."

In addition to the improvement of the overall TRU by 0.7 percentage points (dropping from 23.1% to 22.4%), all major demographics posted improvement in their respective functional unemployment rates. Black workers saw a 0.5 percentage point improvement (24.5% to 24%), while the rate for Hispanic workers improved by 0.1 percentage points, from 26.2% to 26.1%. The TRU for White workers improved by 1.1 percentage points, from 22% to 20.9%, with the TRU for male workers improving by 0.9 percentage points (18.9% to 18%), and improved by 0.4 percentage points for women (27.9% to 27.5%).

According to LISEP, a cooling of inflation combined with wage gains for low-income earners helped increase the availability of living-wage jobs across all demographics.

"This month's TRU report provides the basis for some real optimism, as we can now see gains across the board, with a stable workforce that is slowly moving toward living-wage employment," Ludwig said. "That said, this optimism must be tempered with reality: there are key demographic groups that still have functional unemployment rates in excess of 25%. While progress is to be applauded, the key to shared prosperity is to sustain that progress. This should be top priority for policymakers."

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.

SOURCE Ludwig Institute for Shared Economic Prosperity