Growth of Living-Wage Jobs Stalls in February, Says Ludwig Institute

  • More Black Workers Returning to Workforce, but Unable to Find Living-Wage Jobs

After nearly a year of improvement in the ability of Americans to find full-time, living-wage jobs, the percentage of workers classified as “functionally unemployed” inched upwards in February, according to the Ludwig Institute for Shared Economic Prosperity (LISEP).

The True Rate of Unemployment (TRU), a measure of the "functionally unemployed" -- defined as the jobless, plus those seeking but unable to find full-time jobs paying above the poverty level -- rose to 22.6%, the first increase since May 2021, according to the Ludwig Institute for Shared Economic Prosperity (LISEP).

LISEP’s True Rate of Unemployment (TRU) for February – a measure of the functionally unemployed, defined as the jobless, plus those seeking but unable to secure full-time employment paying above the poverty line – ticked upward, from 22.5% to 22.6%. This is the first TRU increase since May 2021, and is in contrast to the government-issued unemployment rate by the U.S. Bureau of Labor Statistics, which reported a decrease in the jobless rate, from 4% to 3.8%.

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All major demographics either improved as compared to January or held steady, with the exception of the TRU for Black workers, which posted a significant 0.5 percentage point jump in the functionally unemployed, from 25.8% to 26.3%. But at the same time the Black TRU Out of Population – a measure of the functionally unemployed out of the entire adult population (age 16 and over), not just active labor force participants – remained unchanged. This is an indication that formerly discouraged Black workers are returning to the workforce, but are not finding full-time, living-wage jobs.

“While the steady TRU rate and the return of discouraged workers to the labor force can be viewed as encouraging signs, the fact is, more than one-fifth of the workforce is still unable to find living-wage jobs,” said LISEP Chair Gene Ludwig. “That number jumps to one-fourth for Black workers. This is concerning, and will become even more concerning if wages fail to keep pace with current inflationary trends – thus pushing more workers into the realm of the functionally unemployed.”

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But as the functional unemployment rate for Black workers climbed, the rate for Hispanic workers fell, from 25.4% down to 25.1%. The TRU for white workers held steady at 21.5%. And while the TRU for women dropped, from 28% to 27.7%, the rate for men increased, from 17.7% to 18.1%.

Ludwig notes that even a stable TRU can spell bad news for low- and middle-income workers, with inflationary pressures taking an ever-growing bite out of household budgets. Last week LISEP released data supporting its True Living Cost (TLC) Index, a measure of the effect of rising prices on the ability of families to pay for minimum adequate needs in seven categories: food, housing, healthcare, transportation, basic technology, childcare, and apparel/personal care. LISEP found that over the last 20 years the cost of these minimum adequate needs – which account for most, if not all, of the budget of LMI households – increased 40% more than the rate reported by the Consumer Price Index (CPI).

“A large percentage of America’s working families are under financial pressure on multiple fronts – the inability to find a living-wage job, wages failing to keep up with inflation, and the ongoing increase in the cost of living, which they have endured for 20 years,” Ludwig said. “While some progress is being made, it can’t come quickly enough for low- and middle-income households. Policymakers should recognize this, and act accordingly.”

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