The Denver region was ranked as the national leader for living-wage jobs, while two Texas markets posted worrisome “functional unemployment” rates of well over 30%, according to a new Ludwig Institute for Shared Economic Prosperity (LISEP) analysis.
LISEP released its 2023 True Rate of Unemployment (TRU) by Metropolitan Statistical Area (MSA) analysis — an in-depth study of the TRU for the nation’s 100 most populous MSAs. TRU tracks the “functionally unemployed,” defined by LISEP as the jobless, plus those seeking, but unable to find, full-time employment paying above poverty level, pegged at $25,000 a year after adjusting for inflation. LISEP’s MSA analysis considers both the TRU, as well as TRU Out of the Population (TRU OOP) — a metric that measures the functional unemployment rate of the entire working-age (16+) population, a better indicator of overall labor-market strength.
With the nation’s second-lowest TRU — at 16%, down two percentage points over last year — the Denver-Aurora-Lakewood MSA featured growth in higher-paying education and health-services jobs, along with a higher citywide minimum wage, according to LISEP. Education and health services grew by 3.4%, with government jobs growing by 6%. The region also had the nation’s lowest TRU OOP, thus earning the top ranking.
Other MSAs leading the nation with low functional unemployment rates are Washington-Arlington-Alexandria, DC-VA-MD-WV, ranking second, followed by Nashville-Davidson-Murfreesboro-Franklin, TN; San Jose-Sunnyvale-Santa Clara, CA; Minneapolis-St. Paul-Bloomington, MN-WI; Kansas City, MO-KS; Richmond, VA; Raleigh-Cary, NC; Dallas-Fort Worth-Arlington, TX; and Virginia Beach-Norfolk-Newport News, VA-NC.
At the opposite end of the spectrum, the McAllen-Edinburg-Mission, TX, MSA remains at the bottom of the list with the nation’s highest TRU at 48%, unchanged from last year. This means nearly half of the workforce is unable to find living-wage jobs. LISEP’s analysis noted two key factors contributing to McAllen-Edingburg-Mission’s struggles: the region’s prevalence of low-paying industries and a low educational attainment level. Nearly 35% of the population aged 25 and over has no high school diploma.
Also on the list of regions with high functional unemployment rates is the El Paso MSA, fourth highest at 32%. Like McAllen, El Paso also has a concentration of low-skill jobs with notable declines in manufacturing positions over the past year. Other MSAs with the nation’s highest functional unemployment rates include Fresno, CA (second); Dayton-Kettering, OH (third); Springfield, MA (fifth); followed by Greensboro-High Point, NC; New Orleans-Metairie, LA; Buffalo-Cheektowaga, NY; Tucson, AZ; and Akron, OH.
“Our data again reveal crucial dynamics at play. Local communities investing in infrastructure, housing, and future-oriented industries consistently outperform those more reliant on low-wage jobs,” said LISEP Chairman Gene Ludwig. “These findings show that some regions are enabling middle- and working-class families to thrive — while others grapple with financial security.”
Ludwig also pointed to President Joe Biden’s recent announcement of a new “place-based” economic strategy, which acknowledges the uneven economic landscape across the country, with some communities thriving while others struggle. The strategy aims to direct resources to the areas where they are needed most. That, Ludwig said, is a step in the right direction.
“Breaking the U.S. economy down into individual, local economies gives us a clearer picture of these contrasting realities,” Ludwig said. “The challenge for policymakers lies in embracing real-world data to craft workable solutions — which begins with a clear picture of what works, what doesn’t, and what’s needed.”
A full breakdown of the True Rate of Unemployment by Metropolitan Statistical Area is available at lisep.org/local.
