Rising prices and workers moving to involuntary part-time status impact living-wage jobs
Even though government-reported statistics show inflation easing and jobs being added, the percentage of the American workforce unable to find and maintain living-wage jobs inched upward slightly for July, according to an analysis by the Ludwig Institute for Shared Economic Prosperity (LISEP).
In its monthly True Rate of Unemployment (TRU) for July, LISEP reported that 22.3% of American workers are now classified as “functionally unemployed,” defined as the jobless, plus those seeking but unable to secure full-time employment paying above the poverty line after adjusting for inflation. This is an increase of 0.2 percentage points over the June TRU and is in contrast to the official unemployment report issued by the U.S. Bureau of Labor Statistics (BLS), which showed an improving jobless rate, dropping from 3.6% to 3.5%.
According to LISEP, the difference between the TRU and the BLS-reported unemployment numbers is the growing number of workers being involuntarily moved to part-time status (part-time employment grew by 303,000 in July, according to the BLS) which, when combined with lingering inflationary pressures, has forced a growing number of low-wage workers below the poverty line and thus into the ranks of the functionally unemployed. Some dropped out of the workforce altogether, with the labor force participation rate down 0.1 percentage points in July.
“While we are seeing some positive signs this summer pointing toward a stabilizing economy from an inflationary perspective, there remains a segment of the population that has been hit disproportionately hard by rising prices, which is the very same segment with a less stable employment situation,” said LISEP chair Gene Ludwig. “This is why policymakers must dig deeper than just the headline statistics. They do not tell the entire story.”
Ludwig noted that according to LISEP’s True Living Cost (TLC) Index – a metric that tracks price changes for a basket of items that includes only minimum adequate needs – over the last 20 years expenses for middle- and low-income families has risen 40% more than what has been reported by the Consumer Price Index (CPI).
Demographically, the only groups with an improved TRU were White workers, dropping from 20.7% to 20.5%, and males, improving from 17.7% to 17.5%. Hispanic workers saw the biggest jump in functional unemployment, climbing from 25.2% to 26.3%, with Black workers also posting an increase in TRU, from 25.5% to 25.8%. Functional unemployment also increased for women, from 26.9% to 27.5%.
The TRU for workers without a high school diploma and those with some college, but no bachelor’s degree, jumped by 1.6% (45.7% to 47.3%) and 1.8% (23.8% to 25.6%), respectively. All other educational groups saw an improved TRU.
“A sustainable recovery must be equitable, and we are witnessing real disparity between improving headline statistics and the facts on the ground for millions of American families,” Ludwig said.
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