Large annual gains in paid jobs, wages, says Ludwig Institute
Despite strong year-over-year gains, inflation looms
WASHINGTON, January 20, 2022 /PRNewswire/ — The percentage of Americans defined as “not functionally employed” has seen the largest year-over-year decline in more than 25 years, according to December 2021 True Rate of Unemployment (TRU), published today by the Ludwig Institute for Shared Economic Prosperity (LISEP). And while workers’ incomes have also seen significant gains over the past year, growth has stalled in the latter part of 2021 due to inflationary pressures, LISEP found.
LISEP has published its Monthly TRU for December in conjunction with the Quarterly Real Weekly Earnings (TWE) Report for the fourth quarter of 2021. TRU is a measure of the functionally unemployed – the unemployed, plus those seeking but unable to obtain full-time paying employment above the poverty line. The TWE is a measure of real median weekly earnings after adjusting for inflation and differs from data published by the Bureau of Labor Statistics (BLS) by including all members of the labor force, including part-time workers and the unemployed .
Overall, December TRU fell 0.3% to 23.3%, ending the year down 2.6% since January 2021. This is the largest single-year decline since 1995, the first year TRU data is available. The rise in living-wage jobs has led to an overall increase in median weekly earnings over the past year, with the TWE report rising from $844 per week in the fourth quarter of 2020 to $862 per week in the fourth quarter of 2021. But after three quarters of significant increases in the TWE in 2021, the fourth quarter saw inflation eat away at workers’ earnings: fourth quarter median weekly earnings, at $862was actually a dollar lower than the third quarter report, after adjusting for inflation.
“It is fantastic that we are starting the new year in better shape than we started the previous one in terms of income and paid employment, but trends are emerging that could threaten the gains we have seen for low-income workers. and middle income over the past year,” said the President of LISEP Gene Ludwig. “While inflation has affected everyone, it cannot be ignored that corporate profits are at an all-time high. This appears as an inflationary cycle mainly affecting the lower and middle class – giving rise to inflation inequalities. “
From the fourth quarter of 2020 to the fourth quarter of 2021, black workers saw their median weekly earnings increase from $691 at $708; Hispanics from $657 at $694. White workers were the only group to see a decrease, from $967 in the fourth quarter of 2020 at $956 in the fourth quarter of 2021. From the third to the fourth quarter of 2021, however, black workers saw only a slight gain, from $706 at $708while Hispanic workers saw their real earnings fall from $702 at $694 and white workers fell from $965 at $956.
On the employment front, January 2021 at December 2021 all major demographics recorded significant decreases in the number of workers classified as “functionally unemployed” – that is, unable to find full-time, paid jobs, as measured by LISEP’s TRU. The URR for black workers fell from 31.6% to 27.3% (4.3%); Hispanic workers fell from 30.8% to 27.7% (3.1%); and the UTR rate for white workers fell from 23.8% to 21.6% (2.2%). However, from November to December 2021changes in TRU were basically flat, with Black TRU dropping from 26.9% to 27.3% (up 0.4%), Hispanic TRU down from 28.1% to 27.7% (up 0.4%). down 0.4%) and white URR down from 21.7% to 21.6% (down 0.1%).
“While the one-year horizon certainly indicates a recovering economy, recent inflationary trends threaten the gains made by low- and middle-income workers over the past year,” Ludwig said. “Policymakers must recognize that the yardstick used to measure the economy as a whole is not a true indicator of the status of IMT families, and it is the success of this group that will be critical to a sustainable long-term economic recovery. .
LISEP published the white paper “Measuring Better: Development of ‘True Rate of Unemployment Data as the Basis for Social and Economic Policy” when the new statistical measure was announced in October. The document and the methodology can be consulted here. LISEP issues the TRU one to two weeks after 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.
LISEP publishes the quarterly TWE following the publication of the BLS Median Weekly Earnings report. The full white paper, “Understanding the Status of American Workers Through Analysis of Current Demographics,” can be viewed here. The TWE rate and supporting data can be found on the LISEP website at https://www.lisep.org/earnings.
The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by Ludwig and his wife, Dr. Carole Ludwig. LISEP’s mission is to improve the economic well-being of middle- and low-income Americans through research and education, and seeks to advance the dialogue around policy solutions to improve the well-being of all Americans.
On Gene Ludwig
In addition to his role as President of LISEP, Gene Ludwig is the founder of the Promontory family of companies and Canapi LLC, a fintech venture capital fund. He is the CEO of Promontory MortgagePath, a technology-based mortgage management and solutions company. Ludwig is the former Vice President and Chief Comptroller of Bankers Trust New York Corp., and served as Comptroller of the United States Currency from 1993 to 1998. He is also the author of the book The fading American dream, which studies the economic challenges faced by low- and middle-income Americans. He left in September 2020 by Disruption Books. On Twitter: @geneludwig.
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SOURCE Ludwig Institute for Shared Economic Prosperity