The Year in Review
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.
Gene Ludwig, Chairman
Perhaps more than in any year since the Great Recession, 2024 thrust economics and the economy to the forefront of American conversation, dominating conversations not only in the mainstream media but in coffee shops across the nation. This is to be expected in a presidential election year, but the post-pandemic climate—marked by runaway inflation, high interest rates, and employment uncertainty—made this year’s economic discourse particularly intense.
Exacerbating the frustration of the American public was the insistence among incumbent officeholders that the economy was booming: inflation was under control, wages were going up, and new job opportunities were plentiful. Meanwhile, low- and middle-income breadwinners were staring into empty wallets wondering just how they were going to make ends meet. There was an obvious disconnect between what the statistics were saying and how low- and middle-income (LMI) Americans were living.
This disconnect inspired the creation of the Ludwig Institute for Shared Economic Prosperity five years ago. Our mission is to engage in cutting-edge research that exposes the misleading nature of traditional headline statistics and develop better metrics to more accurately reflect the economic condition of LMI households. We started with the True Rate of Unemployment (TRU), now a monthly metric tracking both the quantity and quality of jobs. This was followed by the True Weekly Earnings (TWE) metric, designed to capture all participants in the workforce, and the True Living Cost (TLC) Index, which focuses on price increases of the necessities consuming the majority of household budgets. These metrics are regularly updated and available on the LISEP website.
Throughout 2024, our work continued releasing new and established research aimed at providing economic policymakers with nuanced insights into the challenges facing working Americans. Some of our findings from the past year include:
In addition, this past year LISEP released exclusive research revealing that the Gross Domestic Product (GDP)—the go-to measure of the nation’s economic health—is a poor measure of Americans’ lived experiences; LISEP’s study of the “informal economy” determined more Americans are turning to side gigs and other “off-the-books” income in an attempt to make ends meet; and an analysis of the nation’s 50 largest Metropolitan Statistical Areas revealed the severe economic plight of some regions compared to others. In the upcoming year, we will be releasing further research focused on the concepts of shared economic prosperity and quality of life.
It is gratifying to see the extensive discussion our research has generated since LISEP’s inception, including panel discussions and coverage in mainstream- and social media. We have been sought out by government agencies, think tanks, and non-profit organizations serving the LMI community. And following the last election, we even fielded inquiries from policymakers asking: What have we been missing?
This was our intent from the beginning—to start a dialogue and encourage a series of discussions that may contribute to a framework for shared prosperity, and we thank all of you who have taken the time to follow and comment on our efforts. Rest assured, we are committed to continuing this work well into 2025 and beyond.
We wish everyone a happy, healthy, and prosperous 2025.
Best,
Gene
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In this month’s edition of The Ludwig Report, The Year in Review:
Everyday Costs Double the Pace of Inflation; Purchasing Power of LMI Workers Down 3.6%?
Inflation disproportionately affected low- and middle-income (LMI) households in 2023, with the cost of basic necessities rising more than double the headline inflation rate, according to a new LISEP study.
This month LISEP issued data for its 2023 True Living Cost (TLC) Index, a cost-of-living metric tracking the change in prices for essential items and services needed to maintain a basic standard of living. The TLC shows a 9.4% increase in the cost of basic needs in 2023—more than double the 4.1% reported by the Consumer Price Index for All Urban Consumers (CPI). Median wages for full-time workers fell 3.6% based on the TLC—but rose 1.3% based on the CPI.
Unlike the CPI, the TLC focuses on the essential expenses consuming the budgets of most American households: housing, food, healthcare, childcare, transportation, basic technology, apparel, personal care, and household items that are more representative of the day-to-day household costs LMI Americans routinely face. 2023 marked the highest annual TLC increase since 2001.?
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‘Functional Unemployment’ Shows Little Change; Gender Gap Narrows
The overall “functional unemployment” rate remained largely unchanged in November, with a slight decline of 0.1 percentage points. However, the functional unemployment rate was marked by mixed trends across demographic groups, led by a 1.3 percentage point decrease for women—contributing to the narrowest gender gap in functional unemployment this year, according to LISEP’s latest True Rate of Unemployment (TRU) report.
The TRU—a measure of the “functionally unemployed,” defined as the jobless plus those seeking, but unable to find, full-time employment paying above poverty wages ($25,000 a year in 2024 dollars) after adjusting for inflation—improved slightly in November, dropping from 24% to 23.9%.In contrast, the official unemployment rate as reported by the U.S. Bureau of Labor Statistics increased by 0.1 percentage points, from 4.1% to 4.2%, over the same period.
Despite slight movement in the overall functional unemployment rate, some demographic groups experienced notable shifts. While the TRU for men increased 0.9 percentage points, to 20.8%—the highest for men in 2024—the rate for women dropped 1.3 percentage points, to 27.5%. This decrease marks the lowest TRU for women in 2024, resulting in the narrowest gender gap for living-wage jobs.
LISEP 2024: A Year in Numbers
It has been a productive year at the Ludwig Institute for Shared Economic Prosperity, and it has been our privilege to provide innovative original research, free of charge, to individuals, government agencies, and not-for-profit organizations concerned with the economic challenges facing our nation’s low- and middle-income (LMI) families. Over the past year, LISEP has produced:
In addition, LISEP has provided in-depth analysis of issues directly related to the financial realities facing LMI families, including:
And we are pleased to report our efforts have not gone unnoticed. Over the course of 2024, LISEP was mentioned in more than 3,000 news articles and broadcast reports in media outlets that include:
While we are pleased with our progress, we know there is much work to be done. Stay tuned for releases in early 2025 that include metrics designed to measure the percentage of Americans capable of maintaining a minimal quality of life, as well as a measure of shared economic prosperity in the U.S.
We would like to thank the numerous individuals, organizations, and agencies who have followed our work and taken the time to provide valuable feedback, and help us raise awareness of the economic realities of working families in the U.S. It has been our pleasure to serve. And we would like to encourage everyone to continue to promote transparency in economic statistical measures and awareness of the potential impact of misleading economic data. This will be of particular importance as we face new challenges going into the new year.
We wish you and your family a Happy New Year, and health and prosperity for 2025.
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