The U.S. Department of the Treasury last week released its final rule for the $350 billion in State and Local Fiscal Relief Funds (SLFRF) provided by the American Rescue Plan Act (ARPA). This rule provides clarity to states and localities, including tribal and territorial governments, on what they can do with the substantial federal resources made available to them through the ARPA. The rule also encourages state and local governments to spend the fiscal relief rapidly and directly, prioritizing economic recovery and equity.

This final rule replaces the interim final rule that has been in place since May 2021, and in this final guidance from Treasury, three new elements stand out. First, the rule expands governments’ ability to use the funds to hire and retain public-sector employees. Second, the rule provides new options to assist low-income workers and families dealing with the economic impact of COVID. Finally, the rule recognizes “the disproportionate impact of the pandemic on people of color,” and adds additional uses for ARPA funds to address inequities exacerbated by the pandemic.

The $350 billion, passed as part of the American Rescue Plan signed into law by President Biden in March 2021, is designed to help state and local governments mitigate the public health and economic impact of COVID. More than $200 billion has already been distributed, with the rest being disbursed starting in May of this year. Recipient governments can use the funds for many purposes, so long as they fall under one of these broad categories:

• Fighting the pandemic
• Addressing the economic impacts of the COVID pandemic
• Replacing lost revenue for state and local governments
• Providing premium pay for essential workers
• Strengthening water, sewer, and broadband infrastructure

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In March 1965, Dr. Martin Luther King Jr., John Lewis, and several other civil rights activists and leaders led thousands of nonviolent demonstrators on a march from Selma to Montgomery, Alabama. This five-day, 54-mile march was conducted in an effort to register Black voters in the South safely and campaign for broader voting rights regardless of race and ethnicity. The Civil Rights Act of 1964—passed only a few months before—prohibited unequal application of voter registration requirements, racial segregation in schools and public accommodations, and employment discrimination. However, the law was inadequately enforced and had done very little to ensure and protect Black people’s right to vote.

The culmination of literacy tests, economic retaliation, and racial terrorism prevented many Black people from registering to vote and fully participating in our democracy, particularly in Southern states. The inexplicable link between brutality and voter suppression is deeply entrenched in American history and has shaped many of the historical events within the civil rights era.

The racial violence and tension that many Black people had experienced daily reached a boiling point during the first attempt at marching from Selma to Montgomery where demonstrators, led by John Lewis and others, were beaten and tear-gassed by state troopers and Ku Klux Klan members, leaving them unable to progress forward.

Infamously known as “Bloody Sunday,” the events of this gruesome demonstration shocked the nation. The fierce outrage led to a federal court order permitting the voting right marchers to finish their journey while under the protection of the National Guard. The events in Selma and the growing public support for the protestors later motivated Congress to pass the Voting Rights Act of 1965 prohibiting racial discrimination in voting and barring voter registration loopholes like poll taxes and literacy tests. Following the passage of the Voting Rights Act, voter registration increased significantly as seen in Figure A.

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Below, EPI economists offer their initial insights on the December jobs report released this morning.

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On January 1, minimum wages went up in 21 states. The increases range from a $0.22 inflation adjustment in Michigan to a $1.50 per hour raise in Virginia, the equivalent of an annual increase ranging from $458 to $3,120 for a full-time, full-year minimum wage worker. The updates can be viewed in EPI’s interactive Minimum Wage Tracker and in Figure A and Table 1 below.

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Recent cases brought by state and local enforcers address a host of violations: a lack of COVID-19 workplace safety at Amazon; failure to pay freelance workers on time or at all; terminating fast food workers without just cause (now illegal in New York City); misclassifying construction workers as independent contractors instead of as employees; and the consistent lack of justice for victims of wage theft.    

Here’s a snapshot of some enforcement actions across the country at the end of 2021: 

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In an unprecedented change, the Bureau of Labor Statistics (BLS) released the monthly Job Openings and Labor Turnover Survey (JOLTS) the same week as the monthly employment situation report. Given this new release schedule, I’m going to talk about what we learned from this week’s JOLTS report, which provides data for the full month of November (or the end of November, depending on the specific measure) as a preview for the jobs day release on Friday, because the reference week for Friday’s numbers is shortly after at December 5-11. This means that the rapid Omicron variant surge in the United States will not affect the trends released on Friday, as job growth is expected to approach 7 million for 2021 as a whole.

The JOLTS report for November continued to show high levels of churn in the labor market and strong net job growth. Job openings ticked down a bit, while hires ticked up and quits hit another series high. The media has focused on the high quits rate, but what’s often missing from that coverage is that workers who are quitting their jobs aren’t dropping out of the labor force, they are quitting to take other jobs. Hiring continues to outpace the number of quits, and the labor force continues to claw its way back after a huge drop in the spring of 2020. While the majority of job losses added to the ranks of the unemployed (+17.4 million), the labor force fell by nearly 8 million workers in March and April 2020 and has regained about 70% of those losses since then, including an increase of 1.8 million over the last nine months, when the quits rate has been so high.

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Trapped at work during an intense storm that generated multiple tornadoes, six Amazon workers in Illinois and eight workers at a Kentucky candle factory died tragic, preventable deaths at the end of 2021. Their deaths brought brief visibility and attention to the reality that unless workers have a union, many lack the power to refuse unsafe work even in the face of extreme hazards.

As we enter year three of the COVID-19 pandemic, there likewise remains no refuge from the ever-present hazard of coronavirus exposure for millions of front-line workers whose jobs often require in-person work, long hours in unventilated spaces, frequent contact with co-workers or the public, and no guarantee of paid leave or health insurance.

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The Omicron variant of COVID is surging throughout the world, including in the United States, which is still being hit hard by the Delta variant, too. New cases in the United States are up more than 20% from two weeks prior.

There is strong evidence that financial challenges for low-wage workers are both reducing vaccination rates and hindering the success of COVID mitigation strategies. With soaring budget surpluses and plenty of unspent American Rescue Plan Act (ARPA) funding available, states should invest in paid sick and family leave, financial support to low-wage workers, and active vaccination efforts to protect lives and public health.

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Public discussions about the U.S. economic recovery fail to adequately portray the vastly uneven recovery that has been occurring since pandemic shutdowns began. Black women, who are pushed to the periphery of policymaking priorities, are among those whose experiences are most obscured by headline statistics.

The employment-to-population ratio (EPOP) of Black women in their prime working years (ages 25 to 54) in the past year is still 3.4 percentage points below their rate one year before the pandemic began, compared with 2.3 percentage points for all other women and 1.9 percentage points for white women. There are currently roughly 257,700 fewer employed prime-age Black women than a year before the pandemic. If Black women’s EPOP remained at their pre-pandemic level, there would over 312,500 more employed Black women due to population growth. Furthermore, the employment gap varies significantly across the country’s nine Census divisions. Black women in the Mountain, New England, and East North Central divisions suffer the biggest gaps in their employment ratios, ranging from an astonishing 10.7 percentage points in the Mountain division to 4.9 percentage points in the East North Central division.

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The economic fallout from the COVID-19 pandemic exposed a range of stark inequalities in American society. Besides highlighting these inequalities, EPI’s research over the past year has identified the clear fingerprints of intentional policy decisions in driving the inequalities.

Building a better and fairer economy in the pandemic’s wake will require a fundamental reorientation of economic policy along many dimensions. While 2021 has seen a decent start in some of this reorientation, much more remains to be done. Here are the charts that we selected as our top ones of 2021.

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The Occupational Safety and Health Administration (OSHA) has proposed an emergency temporary standard (ETS) for employers to cope with the health dangers posed by COVID-19. The centerpiece of the ETS is a vaccine-or-test mandate for employees working at firms with over 100 employees to be vaccinated against COVID-19. The mandate is good public policy: it will reduce deaths and hospitalizations, and it will also increase economic growth and reduce the main inflationary pressures facing the U.S. economy.

The proposed ETS has spurred a large legal battle and its eventual fate is uncertain, even though exemptions for religious and health reasons are possible, and a version of these standards is already in effect for federal government employees, government contractors, and health care workers. In early November, the U.S. Court of Appeals for the Fifth Circuit stayed the ETS pending judicial review. However, over this past weekend, the stay was removed by the court with current jurisdiction over the case (the U.S. Court of Appeals for the Sixth Circuit).

The lifting of the ETS stay is welcome news. The vaccine-or-test mandate is a key plank in an effective public health response to the continuing havoc wreaked by COVID-19. For example, a recent paper examining the introduction of vaccine mandates at the provincial level in Canada, France, and Germany found “that the announcement of a mandate is associated with a rapid and significant surge in new vaccinations (more than 60% increase in weekly first doses)…” Higher vaccination rates will contribute meaningfully to reducing deaths and hospitalizations from COVID-19.

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In 2021, many readers were looking to make sense of worries around potential labor shortages, despite little evidence that shortages in leisure and hospitality that popped up would spill over into the rest of the economy.

Aside from interest in labor shortages, what also got the attention of our readers was a post on how to fix the H-1B visa program, an important program that allows U.S. employers to hire college-educated migrant workers.

In addition, we saw a focus on the importance of state-level policy change amid federal inaction on a number of issues. Some states raised their own minimum wage above the federal level, included undocumented immigrants in critical pandemic aid, and extended unemployment benefits to school workers during the summer.

Here’s a countdown of the five most-read EPI blog posts in 2021. 

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As the nation pivoted to recovery, readers sought information on ways to remedy the economic injustices laid bare by the pandemic. Given the heavy burden borne by low-wage front-line workers, it is no surprise that raising wages, boosting worker power, and scrutinizing excessive compensation of people at the top were highest on the reading list. Here’s a countdown of EPI’s most-read reports in 2021.

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Newly available wage data from the Social Security Administration allow us to analyze wage trends for the top 1.0% and other very high earners as well as for the bottom 90% during 2020. The upward distribution of wages from the bottom 90% to the top 1.0% that was evident over the period from 1979 to 2019 was especially strong in the 2020 pandemic year, yielding historically high wage levels and shares of all wages for the top 1.0% and 0.1%. Correspondingly, the share of wages earned by the bottom 95% fell in 2020.

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Recent cases brought by state and local enforcers address a host of violations. These include extreme underpayment of immigrant detainees; failure to pay overtime or provide paid sick leave to home health aides; unsafe working conditions at Amazon; failure to provide hotel workers with advance notice of a jobsite closure; and underpayment of construction workers on a public university building. State and local enforcers also weighed in on federal policy issues, sending a letter to the Department of Homeland Security (DHS) about how DHS enforcement could facilitate labor protections, and announcing the resolution of a lawsuit challenging a Trump-era rule weakening tipped workers’ rights. 

Here’s a snapshot of some enforcement actions across the country:

Protecting the labor rights of immigrant detainees in Washington: The Washington State Attorney General’s Office in late October obtained a unanimous federal jury verdict determining that GEO Group, a for-profit prison company, violated state minimum wage laws by paying immigrant detainees as little as $1/day. The company owes workers over $17 million in back wages, plus $5.9 million in unjust enrichment restitution, for a total exceeding $23 million.

Ensuring paid sick leave and overtime pay for 12,000 home health aides in New York: On November 16, the New York State Attorney General and the New York City Department of Consumer and Worker Protection jointly announced an agreement resulting in recovery of up to $18 million for 12,000 home health aides. The case involved two large home health agencies that underpaid workers and failed to provide required paid sick leave. The agencies were jointly owned and operated as a single enterprise but failed to combine all hours worked (for both agencies) for purposes of calculating overtime pay.

Ensuring that Amazon notifies workers and public health agencies of COVID-19 cases in California: The California State Attorney General on November 15 announced a stipulated judgment with Amazon, based on the AG’s complaint alleging that the company failed to notify warehouse workers and local health agencies of COVID-19 case numbers. The judgment requires Amazon to modify its notifications to workers and local health agencies, submit to monitoring about these practices, and pay $500,000.

Recovering restitution for New York hotel workers laid off without required warning: On October 27, the New York State Attorney General announced the recovery of $2.7 million for 250 Westchester hotel workers who were laid off without the notice required by the state’s Worker Adjustment and Retaining Act (WARN Act), which requires employers with 50 or more employees to give 90 days of notice to workers and to the state labor department before a mass layoff.

Criminally prosecuting wage theft in Maryland: On November 5, the Maryland Attorney General announced the guilty plea of a labor broker in the office’s first criminal labor case. Workers performed public construction on a state university building and the payroll records appeared to be compliant with prevailing wage laws. But in reality, workers were required to kick back money to the labor broker each week. (Prevailing wage laws require contractors on government construction projects to pay workers on those projects at a rate higher than minimum wage, specifically, the wage and benefits that are commonly paid in the region for a given type of work. These laws ensure that contractors cannot gain an unfair advantage in bidding for government contracts by paying sub-par wages.)        

Advocating for workers in federal policy: On November 15, a coalition of 11 attorneys general and eight local labor enforcement agencies and prosecutors sent a letter to the Department of Homeland Security (DHS) supporting the agency’s plan to change its approach to worksite enforcement to support labor rights, and recommending changes to DHS policies and practices to facilitate the ability of state and local labor officials to enforce workplace laws. The letter was in response to a recent DHS memorandum to Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP), and U.S. Citizenship and Immigration Services (USCIS) calling on them to adopt practices and policies to deliver more severe consequences to exploitative employers and increase workers’ willingness to report violations of worker protection laws.

Lastly, on November 16, the attorneys general of Pennsylvania and Illinois announced the stipulated dismissal of a lawsuit filed by a multi-state attorney general coalition against the U.S. Department of Labor challenging a Trump-era rule that would have allowed employers to pay workers a lower “tipped” minimum wage for significant time spent doing non-tipped work. A new Biden administration regulation adopts the 80/20 rule, under which workers can be paid the tipped minimum wage only for tasks that directly support tipped work and take up no more than 20% of a worker’s time. In other words, the new regulation allows payment of the lower tipped wage only when the vast majority of their work generates tips. The new regulation removes the need for the attorney general lawsuit challenging the prior rule.  

Job growth will likely top 6 million this year by November, putting us well on track for a full recovery by the end of 2022. Ahead of Friday’s release of the jobs report, I want to put the pace of this recovery in perspective compared with the much slower recovery from the Great Recession. Spoiler: If we continue with the average job growth we’ve seen already in 2021—581,600 per month—we would return to pre-pandemic labor market conditions by December 2022 (while also absorbing population growth). This job growth would be at a pace more than twice as fast as the strongest 10-month period in the recovery from the Great Recession (4.9% job growth versus 2.3%).

In October, job growth was 531,000. Even with the slower job growth in late summer due to the Delta-driven five-fold increase in caseloads, the overall pace of the recovery is promising. Back in June, my colleague Josh Bivens and I wrote that restoring pre-COVID labor market health by the end of 2022 would require creating 504,000 jobs each month from May 2021 until December 2022. In 2021 so far, job growth has averaged 581,600 jobs, and it’s been an even greater 665,500 jobs per month since May.

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Recent cases brought by state and local enforcers include a host of violations: construction companies engaging in “a pattern of deceit” to misclassify and underpay workers; unsafe working conditions at Amazon; failure to provide paid sick leave; and the chronic problem of employers misusing interns and not paying for their work.

Here’s an snapshot of some enforcement actions across the country:

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Below, EPI economist Ben Zipperer responds to the U.S. Department of Labor’s final rule requiring federal contractors to pay a minimum wage of $15 per hour starting January 30, 2022. Zipperer estimates the rule will benefit up to 390,000 federal contractors, half of whom are Black or Hispanic.  

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Because the COVID-19 pandemic and ensuing recession led to skyrocketing unemployment rates in early 2020, 23 states were forced to take out federal loans to continue paying out unemployment insurance (UI) benefits. While interest was initially waived on these loans, these debts started to collect interest after Labor Day of 2021. In recent months, many states have chosen to use federal fiscal relief funds given to state and local governments by the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 and the 2021 American Rescue Plan (ARP) to pay off accumulated UI trust fund debt.

This blog will detail why this is a poor use of federal recovery funds. Our main arguments are:

• Paying off UI trust fund debt accumulated in the past with fiscal relief funds means that these funds are not being used to support current investment or employment,
  • Several key areas of state and local government investment have been deprived of funding for over a decade—using ARP relief funds to make up for this past investment deficit would spread the benefits of the fiscal aid much more broadly.
  • State and local government employment remains steeply depressed from the COVID-19 economic shock. Restoring these jobs—and the full value of services these workers provided—should be a much higher priority for these governments than paying off UI debt.
• Paying down accumulated trust fund debts should be done by collecting more revenues from the employer payroll taxes earmarked for the UI system. These taxes have been kept far too low for too long and the result has been a dysfunctional UI system in many states.

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USPS has a public service mandate to provide a similar level of service to communities across the country regardless of local economic conditions. In addition to daily mail delivery to far-flung locations, the Postal Service maintains post offices even in low-income urban neighborhoods and small towns that lack other basic services. The Postal Service is able to fulfill its mission while keeping postage rates low due to economies of scale.

Once the fixed costs of post offices and delivery are covered, the additional cost of new services is often minimal. If it weren’t prevented from doing so, the Postal Service could take advantage of underused capacity and build on Americans’ trust in the Postal Service to offer new services to the public while bringing needed revenue to the agency. But first we need to jettison a regulatory framework that protects private-sector rivals at the expense of consumers.

[Related: The war against the Postal Service: Postal services should be expanded for the public good, not diminished by special interests]

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Inflation has jumped up beyond what many expected earlier in this year. While there are plenty of good reasons to think it will begin decelerating by early 2022 and settle into more normal ranges rather than continuing to spiral upward, it has already proven more stubborn than many (well, at least I) expected.

This raises two key questions: Does rising inflation mean critics of the American Rescue Plan (ARP) have been vindicated, as is often claimed lately? And does this mean that the Build Back Better Act (BBBA) currently being debate should be shelved and/or radically trimmed down in size?

The respective answers to these questions are “mostly not” and “absolutely not.”

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The Build Back Better Act, while still not a done deal, now has a path toward passage in the House of Representatives, with a vote expected mid-November. The political wrangling to reach this moment has been tortuous. But the promise of the pending bill that could transform millions of lives—with meaningful investments in child care, long-term care, and universal pre-K, among others—is critical for a thriving modern economy that will boost productivity and deliver relief to strained family budgets.

Here, we update a previous analysis to reflect the latest state of the legislation and assess its potential impact on U.S. labor markets. Overall, we estimate that the Build Back Better Act (BBBA) will provide support for 2.3 million jobs per year in its first five years, shown in detail in Table 1, below. Add to this an estimated 772,000 jobs per year supported by the bipartisan infrastructure deal, also referred to as the Infrastructure Investment and Jobs Act, passed last Friday in the House, and you get more than 3 million jobs supported per year.

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Below, EPI director of research Josh Bivens offers his insights on today’s release of the Consumer Price Index (CPI) for October, which showed a 6.2% rise compared with a year ago. As Bivens explains, the inflation spike we’ve seen in 2021 is not driven by macroeconomic overheating. Instead, this spike is largely driven by COVID-related factors: a reallocation of spending away from face-to-face services and toward goods combined with supply-chain bottlenecks. Read the full Twitter thread. 

Core inflation up less, at 4.6% y-o-y, but, still a large number. And yet the main determinants of this rise still look to me to not include macroeconomic overheating. 2

— Josh Bivens (@joshbivens_DC) November 10, 2021

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Below, EPI economists offer their initial insights on the October jobs report released this morning. After disappointing job growth numbers in August and September, a solid 531,000 jobs were added in October.

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Over the last couple of months, the resurgence of the Delta variant has made it abundantly clear that the ebbs and flows of the pandemic continue to exert powerful effects on the labor market. After increasing, on average, over 1 million jobs in June and July, job growth slowed to less than 300,000, on average, for August and September. While COVID-19 caseloads have slowed between September and October, they continue to be higher than experienced in June and July, suggesting that we will see a mild improvement—not a huge windfall—when the latest employment data are released on Friday.

For the reference week of the October jobs data, average daily COVID-19 caseloads stood at 78,987. This is a significant (43.5%) improvement over the average daily COVID-19 caseloads during the September reference week: 139,920. All else equal, this should translate into economic growth, as workers begin to feel it is safer to resume in-person job search and employment and consumers become more willing to purchase in-person services. The decline in October COVID-19 caseloads, however, does not mean we are back to the levels earlier in the summer. October’s levels were over twice as high as the average daily caseloads during the reference week in July (33,711 cases).

Similarly, OpenTable shows mild improvement in restaurant customers between September’s and October’s reference weeks. While seated diners in September were down 12.6% compared with the same week in 2019, the number of diners was down 8.4% in October. Although the 8.4% drop in seating relative to the pre-pandemic period is less than what we saw in September, it is still not as promising as the smaller 5.7% drop in July’s reference week compared to July 2019. This likely means the October labor market did not see the kind of growth we experienced in June or July, but some improvement from the disappointing September level is likely.

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