Denver is ‘the national leader for living wage jobs,’ according to a new study

This way of counting unemployment better reflects struggling workers, but it’s still a simple and somewhat misleading picture.
5 min. read
Alex Milyard (left) checks on recently poured concrete on the top of an I-70 tunnel in Elyria Swansea that will soon become a park. July 8, 2022.
Kevin J. Beaty/Denverite

The economic think tank Ludwig Institute for Shared Economic Prosperity made a claim that may surprise people struggling to afford life in Denver: “The Denver region was ranked as the national leader for living wage jobs.”

Denver's federal unemployment rate is just under 4%. However, according to the Ludwig Institute report, nearly 16% of the Denver area is “functionally unemployed.” 

That 4% unemployment rate makes it look like the Denver economy is rosy. In reality, evictions are up, and affordability is one of the dominant issues on the minds of the locals Denverite speaks with each month.

Ludwig’s number attempts to better represent working people’s struggles. The institute argues that the U.S. Bureau of Labor Statistics data overstates how well certain regions are doing based on the number of people who have jobs — even if those jobs are part-time and woefully inadequate for funding a comfortable life. 

So which metric should we trust to assess the city’s current economic situation? Well, neither. At least in totality.

So what does the Ludwig Institute’s True Unemployment Rate really count? 

The institute calls its “functional unemployment” figure number the “True Rate of Unemployment,” or TRU — and it’s always higher than the federal unemployment rate released by the Bureau of Labor Statistics.

“The TRU Out of the Population measures the percentage of people in the whole U.S. population that is functionally unemployed,” according to the study. “Using data compiled by the federal government’s Bureau of Labor Statistics, the True Rate of Unemployment Out of the Population tracks the percentage of the U.S. labor force that does not have a full-time job (35+ hours a week) but wants one, has no job, or does not earn a living wage, conservatively pegged at $25,000 annually before taxes.”

The institute developed the True Rate of Unemployment scale to create a more accurate picture of how many people are actually making a living at their jobs. That’s in contrast to the standard unemployment rate from the federal government.

“Generally speaking, the unemployment rate is calculated by simply dividing the number of unemployed persons — as defined by the U.S. Bureau of Labor Statistics (BLS) — by the number of persons in the labor force (employed or unemployed who are actively seeking employment) and multiplying by 100,” the study explains. “While [the BLS measure] may be elegant in its simplicity, it presents a very incomplete and, in many ways, misleading picture.”

But here's the thing

The Ludwig Institute’s numbers also present a simplistic, incomplete and somewhat misleading picture — even if the think tank does a better job of portraying the struggles of workers in the region than the federal statistics.

For anybody looking at Denver as a model: The $25,000 the institute counts as a living wage would be a stretch to live on. 

A full-time worker making minimum wage ($18.29 per hour) would earn roughly $38,043 annually — well over the $25,000 cited in the study.

In Denver, an annual income under $25,000 is less than 30% of the $91,280 area median income for an individual. A household in that situation would qualify for nearly all government-subsidized housing.  

In fact, housing is so expensive here that Denver offers some forms of government-subsidized housing for people making up to 80% of the area median income, which is $71,900 for a single person and $92,400 for a household of three.

Here’s what some private sector companies say people need to earn to live comfortably in the metro.

“Denver residents need an annual income of $167,562 to afford the median home,” according to a spokesperson for Clever Real Estate, a real estate data company.

That’s $76,282 more than the area median income for an individual. 

According to a study by GoBankingRates, a personal finance website, renters in Denver need to earn $101,726 yearly to live without stress over bills, while homeowners need $144,616.

In a 2022 study, the Ludwig Institute, looking at more localized data, stated that a household of four needed just over $101,000 to live comfortably in Denver — a jump of more than 60% since 2005. 

These studies offer some variation in their analysis of what it takes to live in the Denver area. Most people live here on less. 

Even so, by all counts, the Ludwig Institute’s $25,000 a year “livable” income — a national standard — would be a pittance of what a person needs in the Denver metro.

Still, the Ludwig Institute says their measure has value

The government’s liberal count of who is actually employed has given economists a false sense of what constitutes a functioning economy, the Ludwig Institute argues.

High employment rates, as measured by the Bureau of Labor Statistics, are generally considered a sign of good economic health.

Those numbers, according to the institute, give policymakers bad information about how everyday people are actually doing. 

“This continued dependence on aggregate U.S. economic data constructed for a bygone era has been clouding the basic understanding of what’s happening on the ground,” the study states. ”New measures are needed if we are to understand what’s really going on.”

Recent Stories