A Job By Any Other Name...Still Won't Pay The Bills
Ludwig Institute for Shared Economic Prosperity
Our mission is to improve the economic well-being of middle- and lower-income Americans through research and education.
March 27, 2024
By Gene Ludwig, Chairman
A job is just not what it used to be.
Of the many memorable lines from Shakespeare’s Romeo and Juliet, the phrase “What’s in a name?” is particularly enduring. The Bard seemed to be implying that a name itself has little worth. Rather, its value lies in distinguishing one thing from another in the simplest of terms.
The same concept can be applied to not just names, but words in general. Which got me thinking: “What’s in a job?”
Folks from my generation have something of an established concept of what a job is — a perception that has, to some degree, been passed down through time. It’s a vision of Ralph Kramden and Ed Norton heading off each morning, lunchbox in hand, to a secure job for life. But this concept of a job is almost as painfully outdated as that very reference — yet the government’s definition of “employed” predates even Ed and Ralph.
The U.S. Bureau of Labor Statistics (BLS) definition of “employed” was developed in the late 1800s and first officially measured, using the same methods we use today, during the Great Depression. Under this definition, anyone who performed any work in the previous two weeks, even for just an hour or two, was considered “employed.” This made sense when full-time jobs in factories and mills were the norm and those working less than full-time often did so by choice. However, today's reality is vastly different. Gig work and working multiple part-time jobs are increasingly common, leaving the BLS definition outdated and unable to accurately reflect the modern workforce.
This was once again evident in LISEP’s February True Rate of Unemployment (TRU) report, which jumped a startling 1.6 percentage points, from 23.3% to 24.9% — the highest level since July 2021. Unlike the BLS headline unemployment statistic, LISEP’s TRU measures the “functionally unemployed,” defined as the jobless plus those seeking, but unable to find, full-time employment paying above poverty wages (pegged at $25,000 a year in 2024 dollars). In essence, LISEP defines a “job” as a position offering more than just an hour or two of work every two weeks — it must offer compensation that approaches a living wage.
During the same period, the BLS unemployment rate edged up only slightly, from 3.7% to 3.9%.
Upon a deeper dive into the numbers, LISEP researchers surmised that increases in employment were strong in low-wage service industries, with more low-income workers joining the workforce. This, when combined with higher inflation in February, means a lower percentage of workers are holding living-wage jobs. While it can be reasonably argued a low-wage job is better than no job at all, it can also be argued working for less than poverty wages stretches the definition of “gainful employment” — the traditional definition of a job.
While this concept may not be top-of-mind for policymakers yet, we hope there is a growing openness to viewing the economy through a more contemporary lens — as opposed to applying decades-old metrics and economic philosophies. Earlier this month, President Biden announced a new “place-based” economic strategy, recognizing that while many American communities are doing well, others lag. This aligns well with LISEP’s Local Analysis, released in November, which demonstrated the need to direct resources where they are needed the most, considering that not all regions have shared equally in recent overall economic growth.
Likewise, this month MarketWatch published an in-depth analysis of the gender wage gap and how it varies from state to state. And while it is undeniable the gap has narrowed significantly since 1960, that narrowing has slowed over the past decade. LISEP’s most recent True Weekly Earnings report reveals women in the workforce currently earn only 79 cents on the dollar compared to men.
Just as Juliet questioned the inherent meaning of a name, we must challenge the outdated definition of a "job." The traditional model of a secure, full-time position no longer reflects the realities of today's workforce. Policymakers, much like the Bard himself, need to consider the "what" behind the "job" title. Only then can we develop economic policies that address the needs of a modern and diverse working population.
Best,
Gene
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In this month’s edition of The Ludwig Report:
‘Functional Unemployment’ Reaches Highest Level Since July 2021
February’s job market expanded, but there’s a concerning trend hiding beneath the surface: a smaller percentage of those positions are paying living wages. The result is the highest “functional unemployment” rate since July 2021, according to LISEP’s True Rate of Unemployment report. The February TRU jumped 1.6 percentage points, from 23.3% to 24.9%, and increased for all major demographic groups.
LISEP researchers suspect rising costs, coupled with job growth in low-wage occupations, are contributing factors. For Black and Hispanic workers, the higher TRU seems to be driven in part by a higher labor force participation rate, suggesting that many new workers were unable to secure living-wage jobs.
Biden Administration Adopts ‘Place-Based’ Economic Strategy ?
President Joe Biden’s administration’s new approach to economic policy, as reported by the Washington Post, warrants close attention. This “place-based” strategy, focused on “shared prosperity,” offers a promising shift from the decades-old one-size-fits-all approach.?
Directing resources where they’re most needed aligns well with the LISEP Local Analysis which, echoing the sentiment “all economics is local,” demonstrated how some regions are doing remarkably well while others are in the economic doldrums. For instance, LISEP research found that among the 50 largest Metropolitan Statistical Areas, the high cost of living is more-than offset by high wages in the San Jose and San Francisco markets. Meanwhile, a net loss in real wages and the skyrocketing price of housing pushed Fresno, Calif., to the bottom of the list.
Recognizing the United States as a collection of thousands of local economies is crucial for achieving shared prosperity. ?
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MarketWatch Takes In-Depth Look at Gender Pay Gap by Region
?An excellent in-depth analysis by MarketWatch takes a detailed look at America’s gender pay gap by state. Research by LISEP, in its most recent True Weekly Earnings report, similarly reveals that while there has been some narrowing in the gap over the years, the fact remains that women in the workforce still earn only 79 cents on the dollar compared to men — a significantly larger gap than the 84 cents reported by the BLS. Similarly, LISEP’s February True Rate of Unemployment (TRU) report shows a widening of the living-wage employment gap for women in the workforce. The TRU for female workers jumped 2 percentage points to 30%, while the male TRU increased by just 1.1 percentage points, to 20.2% — leaving a living-wage gender gap of nearly 10%. This indicates that female workers are more likely to earn poverty wages or have no alternative but to take part-time positions even though they are seeking full-time employment.
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