Even though inflation has moderated significantly in recent months, it appears to have been at the expense of low-wage workers, with the “functional unemployment” rate jumping by 1.2 percentage points for July, according to the True Rate of Unemployment (TRU) report by the Ludwig Institute for Shared Economic Prosperity (LISEP).
Recommended HR Tech Insights: HR Tech Interview With Katie Obi, Chief People Officer At Beamery
By contrast, the U.S. Bureau of Labor Statistics (BLS) reported a decrease in the official jobless rate, from 3.6% to 3.5%.
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 – jumped from 21.7% to 22.9% from June to July. While White workers saw only a modest increase of 0.4 percentage points (from 20.7% to 21.1%) and Black workers saw a 0.6 percentage point improvement (dropping from 25.5% to 24.9%), Hispanic workers saw a whopping 3 percentage point increase – from 24.9% to 27.9%
“While we can appreciate the efforts put forth by policymakers to get a grip on inflation, it appears the end result has been an erosion of the ability of lower-wage workers to earn a living wage,” said LISEP Chairman Gene Ludwig. “While boosting interest rates has had the intended effect of curbing higher prices, it has had a detrimental impact on those who can least afford it. It’s a situation where the cure may be just as deadly as the ailment.”
Recommended HR Tech Insights: To Adapt To Hybrid Work You’ll Need To Overcome Productivity Paranoia
Ludwig continued, noting that unlike months when the TRU increased due to individuals entering or returning to the labor force, the participation rate is flat – meaning the inability of more workers to earn a living wage is entirely due to loss of living wage employment, reduction in hours, or loss of buying power due to rising prices.
The gender gap remained relatively unchanged for the month of July, with men seeing a 1.2 percentage point increase in TRU (17.7% to 18.9%), while women saw a 1.3% increase (26.4% to 27.7%).
“When one demographic group continues to be disproportionately affected by current economic conditions, it’s a concerning trend well worth watching,” Ludwig said. “It’s also a sign that perhaps policymakers should be doing something a little bit differently, as the policy toolbox of 50 years ago just doesn’t work as well in today’s economy.”
HR Technology News: Importance Of Employee Training Program During Crisis
[To share your insights with us, please write to sghosh@martechseries.com]