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Living-Wage Job Market Takes a Hit; Hispanic Workers Bear the Brunt

Gaby M. Rojas

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).

By contrast, the U.S. Bureau of Labor Statistics (BLS) reported a decrease in the official jobless rate, from 3.6 percent to 3.5 percent.

The Ludwig Institute of Shared Economic Prosperity’ s (LISEP) True Rate of Unemployment — a measure of the percentage of Americans seeking, but unable to find full-time, living-wage jobs — jumped 1.2 percentage points in July. By contrast, the official unemployment rate as reported by the U.S. Bureau of Labor Statistics indicates a 0.1 percentage point decrease.

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 percent to 22.9 percent from June to July. While White workers saw only a modest increase of 0.4 percentage points (from 20.7 percent to 21.1 percent) and Black workers saw a 0.6 percentage point improvement (dropping from 25.5 percent to 24.9 percent), Hispanic workers saw a whopping 3 percentage point increase – from 24.9 percent to 27.9 percent.

“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,” says 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.”

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 percent to 18.9 percent), while women saw a 1.3 percent increase (26.4 percent to 27.7 percent).

“When one demographic group continues to be disproportionately affected by current economic conditions, it’s a concerning trend well worth watching,” Ludwig says. “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.”

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