Alabama’s and Maryland’s similar Black unemployment rates mask major differences in labor market conditions

Nationally, the Black unemployment rate remains below historic norms, averaging 6% in the first quarter of 2024. Since 2019, two states—Maryland and Alabama—stand out as consistently having Black unemployment rates below the national average. Among states where Black workers comprise at least 5% of the labor force, the state with the lowest Black unemployment rate has been either Maryland or Alabama for the last 13 quarters (back to 2021 Q1). In fact, these two states have had the lowest and second lowest Black unemployment rates (not always in the same order) for eight of the last nine quarters (from 2022 Q1 to 2023 Q4).

Figure A

Black unemployment rates in Maryland and Alabama have been consistently lower than the national average in recent years: Black quarterly unemployment rates, 2018 Q4–2024 Q1

Alabama Maryland United States
2018 Q4 6.70% 5.70% 6.40%
2019 Q1 6.30% 5.70% 6.50%
2019 Q2 5.80% 5.10% 6.20%
2019 Q3 5.30% 4.40% 6.00%
2019 Q4 4.80% 4.20% 6.00%
2020 Q1 4.70% 4.70% 6.30%
2020 Q2 15.00% 11.80% 18.40%
2020 Q3 9.90% 10.30% 12.50%
2020 Q4 7.20% 8.60% 9.60%
2021 Q1 5.90% 7.80% 8.80%
2021 Q2 5.30% 7.80% 9.00%
2021 Q3 4.30% 6.60% 7.90%
2021 Q4 4.20% 5.20% 6.70%
2022 Q1 4.10% 4.20% 6.30%
2022 Q2 4.20% 3.40% 6.10%
2022 Q3 4.00% 3.70% 6.00%
2022 Q4 3.60% 3.70% 6.00%
2023 Q1 3.20% 3.20% 5.70%
2023 Q2 2.70% 2.90% 5.80%
2023 Q3 3.10% 3.00% 5.90%
2023 Q4 3.70% 3.30% 5.80%
2024 Q1 4.30% 3.30% 6.00%
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Source: EPI analysis of Bureau of Labor Statistics Local Area Unemployment Statistics (LAUS) data and Current Population Survey (CPS) data.

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Despite the remarkable similarity in unemployment rates shown in Figure A, Black workers in Maryland and Alabama may not be as equally well off as they appear to be. Figure B reveals that between 2018 and 2023, a much larger share of Maryland’s Black population was employed than Alabama’s. In 2023, the employment-to-population ratio (EPOP) in Maryland was 64.6%, compared with just 55.5% in Alabama and 59.6% for the United States as a whole. 

Figure B

Employment-to-population ratios reveal Maryland employs a much larger share of Black residents than Alabama: Black employment-to-population ratios, 2018–2023

Year United States Maryland Alabama
2018 58.30% 61.10% 52.00%
2019 58.80% 66.20% 53.60%
2020 53.70% 62.40% 52.10%
2021 55.70% 62.20% 52.70%
2022 58.50% 62.50% 54.70%
2023 59.60% 64.60% 55.50%
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Source: EPI analysis of Current Population Survey microdata from the U.S. Census Bureau

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If Black unemployment rates are so similar in both states, why are employment-to-population ratios so different? Because of fundamental differences in each state’s approach to social and economic policy. While Alabama adopts the Southern economic development strategy, for example, Maryland does not. This strategy seeks to disempower workers—especially Black and brown workers—to ensure employers can extract their labor for as little compensation as possible. In practice, this translates to higher rates of incarceration in Alabama than in Maryland, especially for Black men. Alabama has no minimum wage, compared with Maryland’s $15 per hour wage floor. Alabama lacks pro-worker, family-supportive labor policies like Maryland’s paid sick days and paid family and medical leave laws. And Alabama underinvests in public services.

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Class of 2024: Young high school graduates have seen strong wage growth over the pandemic recovery

Key findings:

  • In the pandemic recovery, young high school graduates have experienced a much faster rebound in job prospects and stronger wage growth than any recovery in recent history.
    • The unemployment rate for young high school graduates—defined as workers ages 18 to 21—recovered in two years in the pandemic recovery compared with almost 9.5 years following the Great Recession of 2008–09. Meanwhile, the underemployment rate recovered more than five times faster in the pandemic recovery than the aftermath of the Great Recession.
    • Young high school graduates experienced 9.4% real (inflation-adjusted) wage growth between February 2020 and March 2024.
  • Gaps in labor market outcomes across race and ethnicity and gender persist even among high school graduates who have the same basic level of education and little variation in professional experience.
    • The unemployment and underemployment rates of Black, Hispanic, and AAPI young high school graduates are much higher than their white counterparts.
    • On average, Black workers are paid 93.2% of what white workers are paid per hour, while women are paid 87.6% compared with their male counterparts.

As with young college graduates, young high school graduates are experiencing a much stronger labor market today than before the pandemic and at any point since 2000. The fast economic recovery from the pandemic shock is a direct result of the aggressive fiscal policy response that matched the scale of the problem—in stark contrast to policy responses following previous recessions.

In this blog post, we start by examining employment and enrollment outcomes for young high school graduates, defined as workers ages 18 to 21. We then analyze their short- and long-run trends in unemployment, underemployment, and wages, looking at those with only a high school degree and who are not enrolled in further schooling.1

To most accurately capture the choices that young high school graduates are making, we include all young people between the ages of 18 and 21 who have less than a bachelor’s degree (including those with some college) in our initial sample. We group this population into four categories: “employed only” and not enrolled in further schooling, “enrolled only” and not employed, employed and enrolled, or “idled” (not enrolled and not employed, which includes the unemployed). Among these young high school graduates, most are either “employed only” and not enrolled in further schooling (32.7%) or “enrolled only” and not employed (31.1%). Since 1989, the share of young high school graduates who are “employed only” has fallen 11.8 percentage points, while the share of those who are “enrolled only” has risen 10.1 percentage points. As of March 2024, the share of young high school graduates who are employed and enrolled (21.5%) and idled (14.7%) remains roughly similar from 1989 (21.0% and 13.5%, respectively).

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How much do companies spend on union-busters? The Department of Labor has improved reporting requirements and enforcement—but more is needed

Companies spend hundreds of millions of dollars each year hiring professional union-busters to campaign against and defeat union organizing drives. However, only a fraction of this spending is publicly reported because of loopholes and other weaknesses in the law and its enforcement.

A new report by the Inspector General at the U.S. Department of Labor (DOL) found that the Office of Labor Management Standards (OLMS)—which oversees and enforces the union-buster (persuader) reporting requirements—“did not effectively enforce persuader activity requirements to protect workers’ rights to unionize.” While the report rightfully explains that more work must be done, there are many reasons the current OLMS should be commended for taking meaningful steps toward meeting its responsibility, and the report should be viewed as a roadmap for the agency moving forward. 

OLMS is a tiny agency of fewer than 200 employees charged with enforcing the many provisions of the Labor Management Reporting and Disclosure Act (LMRDA), which include persuader reporting, union financial reporting, ensuring fair union elections, certifying compliance with labor standards as a condition of federal transit funding, and more. However, since its inception, OLMS has overwhelmingly prioritized enforcing the LMRDA’s union compliance provisions while failing to apply the same level of scrutiny required under the law to employers and union-busters. The Inspector General (IG) report makes clear that OLMS must begin allocating its resources more equitably to fulfill its obligation to protect the right of workers to engage in collective bargaining, mutual aid, and union representation.

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Just by having a union vote, Mercedes workers in Alabama won major concessions and proved the importance of worker power

Last week, more than 4,500 workers at Mercedes-Benz’s plant in Vance, Alabama, voted on whether to organize with the United Auto Workers (UAW). After Mercedes and Republican elected leaders in Alabama waged a vicious anti-union campaign, the workers narrowly voted against the union. While this result shows the power of corporations and state governments to smother worker efforts to unionize, even in defeat the UAW helped Mercedes workers win substantial improvements in pay and benefits. Worker organizing can benefit workers whether or not they end up with a union.

As EPI has long documented, U.S. labor laws are heavily stacked against workers. Evidence suggests that more than 60 million workers wanted to join a union in 2023 but couldn’t do so. Employers spend more than $400 million annually on consultants to oppose worker organizing efforts, and employers are charged with violating the law in more than 40% of all union election campaigns. Many states, including Alabama, have helped employers by passing so-called “right-to-work” (RTW) laws; on average, workers in RTW states are paid 3.2% less than similar workers in non-RTW states, which translates to $1,670 less per year for a full-time worker. RTW laws have always been intended, first and foremost, to prevent workers from successfully organizing.

The workers at the UAW campaign in Alabama experienced a full-court press from the state and the company. In the run-up to the election, Governor Kay Ivey joined five other Southern Republican governors in issuing a statement warning that “unionization would certainly put our states’ jobs in jeopardy.” This was part and parcel with the South’s long history of anti-union efforts motivated by racial animus. While the statement rebuked the UAW for supposed “scare tactics,” it was Ivey who made the most of scare tactics, signing a law during the union campaign to punish companies that voluntarily agree to work with unions.

Mercedes subjected workers to a constant barrage of “captive audience” meetings where anti-union talking points and videos were repeated ad nauseam (at least seven states have banned captive audience meetings in order to protect workers’ freedom of thought and association). Mercedes workers report that company management targeted team leaders, who often have hopes of promotion, and applied daily pressure to get them to change their minds and vote against the union.

Focusing solely on the anti-union efforts of Alabama and Mercedes, however, misses a vital point: Even when workers lose union elections, they can still win substantial improvements in their working conditions. Just a month after the UAW announced that 30% of Mercedes workers had signed union cards, the company gave a $2-per-hour raise to the highest-paid workers, and eliminated the two-tier wage system that had prevented many workers from reaching that higher pay level. The company also fired its longtime U.S. CEO, ridding the workers of an unpopular boss. The new CEO made promises to “create a culture that puts you [the workers] first” and to “make decisions that are in your best interest.” If the company doesn’t live up to its promises, the workers may try again and win, just like workers did at Volkswagen’s Chattanooga, Tennessee, plant earlier this year.

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Vouchers undermine efforts to provide an excellent public education for all

Since the early 2000s, many states have introduced significant voucher programs to provide public financing for private school education. These voucher programs are deeply damaging to efforts to offer an excellent public education for all U.S. children—and this is in fact often the intention of those pushing these programs. In this post we argue that: 

  • Public education is worth preserving—it should be seen as one of the most important achievements in our country’s history and crucial for the social and economic welfare of future generations. 
  • The economic logic behind voucher programs is weak; it rests on ideological commitments to markets over public provision of goods and services, even in realms of activity where the virtues of markets do not hold—like public education. 
  • Most damagingly, introducing significant voucher programs has gone hand in hand with steep declines in public school spending relative to states that have not adopted these policies.
    • This spending stagnation has had profound effects in generating larger “adequacy gaps” in school funding in voucher states. 
  • Paradoxically, even while they take resources away from public schools, many newly introduced voucher programs could result in more total state spending in coming years.  
    • This would be a particularly perverse result given the expansive research literature showing that vouchers do not improve educational outcomes. In essence, states that have introduced large-scale voucher programs are looking to substitute a more expensive and less effective system for educating kids than public education. The only reason for this policy thrust is ideology rooted in hostility to public education. 

Background on public education and the voucher debates 

Universal public education was perhaps the most important reason why the United States became the richest country in the world in the 20th century. As Claudia Goldin, the most recent Nobel Prize winner in economics, has written:  

At the dawn of the twentieth century the industrial giants watched each other cautiously. The British sent high-ranking commissions to the United States and the United States sent similar groups to Britain and Germany. All were looking over their shoulders to see what made for economic greatness and what would ensure supremacy in the future… Earlier delegations focused on technology and physical capital. Those of the turn-of-the-century turned their attention to something different. People and training, not capital and technology, had become the new concerns…For the twentieth century to become the human capital century required vast changes in educational institutions, a commitment by governments to fund education, a readiness by taxpayers to pay for the education of other people’s children, a belief by business and industry that formal schooling mattered to them, and a willingness on the part of parents to send their children to school (and by youths to go). The transition occurred first in the United States and was accompanied by a set of “virtues” or principles, many of which can be summarized by the word “egalitarianism.” 

In the 21st century, unfortunately, too many policymakers seem determined to squander this legacy by starving public education of money and legitimacy, often in the name of “school choice.” Their central claim (when they bother to make one with any clarity) is that public provision of goods or services is ineffective by definition and that a dose of private, market-like competition will lead to better schooling outcomes for the nation’s children.  

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Average wages have surpassed inflation for 12 straight months

Average hourly wage growth has exceeded inflation for 12 straight months, according to new Bureau of Labor Statistics data released this morning. This real (or inflation-adjusted) wage growth is a key indicator of how well the average worker’s wage can improve their standard of living. As inflation continues to normalize, I’m optimistic more workers will experience real gains in their purchasing power.

The dark blue line in the figure below plots year-over-year real hourly wage changes for all private-sector workers.

Figure

Average real wages rise for 12 straight months as prices decelerate faster than nominal wage growth: Year-over-year changes in nominal wages, inflation, and real (inflation-adjusted) wages, 2019 to 2024

date Nominal wage growth Real wage growth Inflation
2019-01-01 3.2% 1.6% 1.6%
2019-02-01 3.6% 2.0% 1.5%
2019-03-01 3.5% 1.6% 1.9%
2019-04-01 3.2% 1.2% 2.0%
2019-05-01 3.3% 1.4% 1.8%
2019-06-01 3.4% 1.7% 1.6%
2019-07-01 3.4% 1.6% 1.8%
2019-08-01 3.4% 1.6% 1.7%
2019-09-01 3.1% 1.4% 1.7%
2019-10-01 3.1% 1.4% 1.8%
2019-11-01 3.3% 1.2% 2.1%
2019-12-01 3.0% 0.7% 2.3%
2020-01-01 3.1% 0.6% 2.5%
2020-02-01 3.0% 0.7% 2.3%
2020-03-01 3.5% 1.9% 1.5%
2020-04-01 8.0% 7.7% 0.3%
2020-05-01 6.7% 6.6% 0.1%
2020-06-01 5.1% 4.4% 0.6%
2020-07-01 4.9% 3.8% 1.0%
2020-08-01 4.8% 3.4% 1.3%
2020-09-01 4.8% 3.3% 1.4%
2020-10-01 4.6% 3.4% 1.2%
2020-11-01 4.5% 3.3% 1.2%
2020-12-01 5.4% 4.0% 1.4%
2021-01-01 5.2% 3.8% 1.4%
2021-02-01 5.3% 3.6% 1.7%
2021-03-01 4.5% 1.8% 2.6%
2021-04-01 0.7% -3.4% 4.2%
2021-05-01 2.3% -2.6% 5.0%
2021-06-01 3.9% -1.4% 5.4%
2021-07-01 4.3% -1.0% 5.4%
2021-08-01 4.4% -0.8% 5.3%
2021-09-01 4.9% -0.5% 5.4%
2021-10-01 5.5% -0.7% 6.2%
2021-11-01 5.4% -1.3% 6.8%
2021-12-01 5.0% -1.9% 7.0%
2022-01-01 5.7% -1.7% 7.5%
2022-02-01 5.3% -2.4% 7.9%
2022-03-01 5.9% -2.4% 8.5%
2022-04-01 5.8% -2.3% 8.3%
2022-05-01 5.6% -2.8% 8.6%
2022-06-01 5.4% -3.3% 9.1%
2022-07-01 5.5% -2.8% 8.5%
2022-08-01 5.4% -2.6% 8.3%
2022-09-01 5.1% -2.8% 8.2%
2022-10-01 5.0% -2.6% 7.7%
2022-11-01 5.1% -1.9% 7.1%
2022-12-01 4.9% -1.5% 6.5%
2023-01-01 4.6% -1.7% 6.4%
2023-02-01 4.7% -1.2% 6.0%
2023-03-01 4.6% -0.4% 5.0%
2023-04-01 4.7% -0.3% 4.9%
2023-05-01 4.6% 0.5% 4.0%
2023-06-01 4.7% 1.6% 3.0%
2023-07-01 4.7% 1.4% 3.2%
2023-08-01 4.5% 0.8% 3.7%
2023-09-01 4.5% 0.8% 3.7%
2023-10-01 4.3% 1.0% 3.2%
2023-11-01 4.3% 1.1% 3.1%
2023-12-01 4.3% 0.9% 3.4%
2024-01-01 4.4% 1.2% 3.1%
2024-02-01 4.3% 1.1% 3.2%
2024-03-01 4.1% 0.6% 3.5%
2024-04-01 3.9% 0.5% 3.4%
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Source: EPI analysis of Bureau of Labor Statistics Current Employment Statistics and Consumer Price Index public data series.

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Year-over-year real wage changes measure the percent change in wages in one month compared with the same month a year prior. Monthly or even quarterly changes in wages are notably more volatile. While shorter-term measures are valuable to capture very recent changes, this year-over-year measure provides a more stable and longer-term perspective on the state of real wage growth.

As the figure shows, average real wages rose sharply at the onset of the pandemic, but that’s because the bottom dropped out of the labor market when millions of lower-wage workers lost their jobs. Average real wages then fell sharply in the pandemic recovery as many of those lower-wage workers returned to work, pulling down the average. Real wage growth continued to decline as inflation rose steadily due to supply chain bottlenecks and shifts in consumer demand. As quickly as inflation rose—peaking at 9.1% in June 2022—it fell, hitting 3.0% in June 2023.

Nominal wage growth is the year-over-year growth in wages, not adjusted for inflation. The Federal Reserve looks at that measure for signs of wage-driven inflationary pressures. What’s clear is that nominal wage growth has been steadily decelerating over the last two years, as shown in the lightest blue line in the figure. The latest data find nominal wage growth at 3.9%, just a bit above the 3.5% long-run target for wage growth that is consistent with the Fed’s inflation target (2.0%) plus productivity growth (likely around 1.5%).

While nominal wage growth is an important indicator for Fed policymakers to measure signs of labor market slack and inflationary pressures (and these remain relatively muted), real wage growth is what matters for workers’ living standards. On average, the data are clear: wages have been beating inflation for 12 months now.

Looking beyond the average, production/non-supervisory workers—roughly the bottom 82% of the wage distribution—started seeing positive real wage growth two months earlier in March 2023, now 14 months in a row (not shown). It’s not surprising that those more moderate-wage workers experienced faster wage growth as other research has shown that lower-wage workers had the strongest wage growth during the pandemic, which is quite unusual in recent U.S. history. These gains for workers are encouraging—and something I hope continues.

Operation Dixie failed 78 years ago. Are today’s Southern workers about to change all that?

Rooted in Racism Logo. Map of the 16 U.S. States in the south, underlayed by blue roots.Volkswagen workers’ decisive recent union election victory in Chattanooga, Tennessee, makes them the first Southern U.S. auto workers to unionize a foreign-owned auto factory. Their success could also mark a historic turning point for generations of Southern workers seeking to improve their jobs and transform their states’ economies.

There are also signs that vigorous enforcement of federal labor law and other pro-worker federal policies, bolstered by the Biden administration, are contributing to a more level playing field for workers attempting to organize in the South.

But a long history of exploitation will take a strong, national labor movement to overcome. For decades, Southern state governments have promised corporate employers the opportunity to profit from the exploitation of local workers. The promise has hinged on a package of state policies designed to enrich the powerful few and maintain economic and racial inequalities, at the expense of all workers. As detailed in a new series of EPI reports, this Southern economic development model has been characterized by low wages, low corporate taxes, lax regulation of businesses, and extreme hostility toward unions. 

Despite this hostility, generations of Southern workers have fought to organize unions, at times achieving important but limited success. More often, intense employer repression of unions has blocked or crushed Southern workers’ organizing efforts, while state lawmakers have enacted policies to restrict collective bargaining rights in the South. As a result, Southern states have some of the lowest rates of union coverage in the country. Figure A shows that, while union coverage rates stand at 11.2% nationally, rates in 2023 were as low as 3.0% in South Carolina, 3.3% in North Carolina, 5.2% in Louisiana, and 5.4% in Texas and Georgia.

Figure A

Less than 10% of workers have union coverage across most of the South: Union coverage rate for the U.S. and for Southern states, 2023.

Geography Share of workers covered by a union contract
South Carolina 3.0%
North Carolina 3.3%
Louisiana 5.2%
Georgia 5.4%
Texas 5.4%
Virginia 5.6%
Arkansas 5.8%
Florida 6.1%
Tennessee 6.9%
Oklahoma 7.7%
Alabama 8.6%
Mississippi 9.8%
Delaware 10.1%
West Virginia 10.1%
District Of Columbia 10.4%
United States 11.2%
Kentucky 11.3%
Maryland 12.8%
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Note: Union coverage refers to share of workers who are members of a union or represented by a union contract.

Source: Bureau of Labor Statistics Union Members - 2023.

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Perhaps the most ambitious of past efforts to organize Southern workers was Operation Dixie, launched 78 years ago this month, when multiple unions committed to organizing millions of workers in major Southern industries. Though well-resourced and determined, the unions that embarked on Operation Dixie were ultimately defeated by Southern economic and political elites, who used state power to assist employers in opposing unions while stoking racism to divide Black and white workers.

The failure of Operation Dixie allowed Southern elites to further entrench racism and exploitation in state economic policies for subsequent generations. Today, however, emerging successful efforts to organize Southern workers—despite familiar opposition from employers and Southern Republican elected officials—suggest that the present could be a new moment of opportunity for workers to build the collective power necessary to upend the failed Southern economic development model.

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Tight labor markets are essential to reducing racial disparities and within the purview of the Fed’s dual mandate

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This essay was originally published in the Point/Counterpoint section of the Journal of Policy Analysis and Management and can be accessed at https://doi.org/10.1002/pam.22545.

Key findings

  • Growing evidence shows that monetary policy decisions have a measurable impact on racial disparities in the labor market. This evidence challenges long-held beliefs about the purview of the Federal Reserve (“the Fed”)’s mandate and the limits of macroeconomic policy. These findings deserve serious consideration as the Fed begins review of its monetary policy framework.
  • Monetary policy decisions can help sustain tight labor markets, which can significantly reduce the Black unemployment rate and narrow the Black-white unemployment rate gap.
  • In addition, tight labor markets have great potential to reduce racial wage inequality by boosting bargaining power and supporting faster wage growth for Black and low-wage workers.
  • In recent years, tight labor markets have facilitated greater racial equity and increased economic security for Black Americans without triggering a corresponding spike in inflation.

How to fix it

Proposals to make racial equity a more explicit consideration of the Fed include having Congress require the Fed chair to report on racial gaps in employment and wages, and the actions being taken to reduce them. The Fed can also center equity by engaging in research on the causes of the racial gaps.

 

Racial disparities in unemployment are a defining feature of the U.S. labor market. Since the U.S. Bureau of Labor Statistics (BLS) began reporting a Black unemployment rate in 1972, it has consistently been about double the white unemployment rate. On average, since unemployment rates decline with increasing levels of education, racial disparities in unemployment have commonly been attributed to observed racial differences in educational attainment or skills. However, the persistent 2-to-1 Black-white unemployment ratio is largely unexplained by observable factors like education or skills. In fact, the 2-to-1 ratio between Black and white unemployment rates exists at each level of education, across age cohorts, and for men and women, suggesting that broader structural factors, including racial discrimination and unequal bargaining power, lie at the root of persistent inequality in labor market outcomes between Black and white Americans.

The persistence of the Black-white disparity in unemployment makes it an ideal target for equity-focused policymaking. However, the idea that the unemployment rate gap is largely the result of a Black-white human capital gap has dominated decisions about the appropriate policy levers for closing the gap. As a result, most interventions focus on individual acquisition of additional skills or education rather than removing structural barriers to more equitable outcomes. This human capital-centered approach also undergirds the long-standing view that narrowing racial disparities in unemployment is outside the purview of the Federal Reserve (“the Fed”)’s legal mandate to maximize employment while maintaining price stability.

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Class of 2024: Young college graduates have experienced a rapid economic recovery

Key findings:

  • Following the pandemic economic shock, young college graduates have experienced a much faster bounceback in the labor market and stronger wage growth than any recovery in recent history.
    • The unemployment rate for college graduates—defined as workers ages 21 to 24—has recovered more than 2.5 times faster than the aftermath of the Great Recession of 2008–09 (3.3 years versus 8.5 years). Meanwhile, their underemployment rate has recovered in 2.25 years after the onset of the pandemic but never fully recovered following the Great Recession.
    • Young college graduates experienced 2.2% real wage growth between February 2020 and March 2024.
  • Racial and gender wage gaps remain large even among college graduates beginning their careers. On average, women are paid $5.30 less per hour than their male counterparts, while Black and Hispanic workers are paid $3.24 and $2.07 less per hour, respectively, than white workers.

The labor market for young college graduates today is stronger than it was before the pandemic and has been for quite some time. This strong recovery was not guaranteed—instead, it was a direct result of an aggressive fiscal policy response to the pandemic’s economic shock. This bounceback—not just for young college graduates but for all workers—has been much faster than recoveries following recessions over the past 30 years, when fiscal policy was not used at scale.

In this blog post, we first examine employment and enrollment outcomes to determine what young college graduates are doing. We then analyze the short- and long-run trends in unemployment, underemployment, and wages for young college graduates—defined as workers ages 21 to 24—with only a four-year college degree and who are not enrolled in further schooling.1

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Cities and counties might be at risk of losing billions if they don’t obligate American Rescue Plan funds correctly: Advocates should pay close attention to the 2024 obligation deadline

State and local governments have until December 31, 2024, to “obligate” the State and Local Fiscal Recovery Funds (SLFRF) they received as part of 2021’s American Rescue Plan Act. Community partners and other stakeholders are concerned that some recipient governments will not obligate their full allotment of funds, perhaps through misunderstandings of the rules. With time running short, it is imperative that advocates take steps to encourage governments in their area to make certain they have obligated the funds correctly.

State and Local Fiscal Recovery Funds have helped fuel today’s strong economy

State and local governments received $350 billion in funding through SLFRF. Unlike most federal money, which is routed to cities and counties through state agencies or the state legislature, the funds were given directly to every state and local government. The rules put out by the U.S. Treasury Department gave those governments great flexibility to make spending choices that met their particular needs.

The result has been myriad instances of innovative, equity-enhancing uses of SLFRF—from providing premium pay for frontline workers to building community-run grocery stores in food deserts to protecting tenants from unjust evictions with the right to counsel. These investments have helped boost our economy: Whereas it took nearly a decade to restore levels of public services following the Great Recession, state and local governments have already fully recovered the jobs lost during the pandemic.

The looming obligation deadline and what it means

State and local governments will be “required to return to Treasury any SLFRF funds that have not been obligated by the obligation deadline of December, 31, 2024,” according to Treasury’s rules. They have until December 31, 2026, to spend their allocated SLFRF.

In conversations with advocates, community organizations, labor unions, stakeholders, and policymakers, there are widespread concerns that many recipient governments will not make this obligation deadline, either because they may not realize the full meaning of “obligation” or because they will not act quickly enough.

Obligation means “an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment.” That is to say, obligating funds requires taking specific steps to ensure the money is used as intended, and that those decisions are memorialized in a contract or subaward or some other documented fashion. Passing a budget that allocates SLFRF to a specific purpose—on its own—is insufficient to constitute obligation.

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Waffle House strike highlights the harms of the Southern economic development model

Rooted in Racism Logo. Map of the 16 U.S. States in the south, underlayed by blue roots.

In March, workers at the Waffle House in Conyers, Georgia, went on strike. It’s not difficult to see why: They are paid wages as low as $2.90 per hour before tips, with a $3.00 per shift “meal credit” taken from their already meager wages regardless of whether they have eaten a meal at the restaurant.    

But that is not all—worker safety is also at issue. Waffle House workers report working in dangerous environments and point to the constant threat of violence and the lack of trained security in the restaurants. Unfortunately, it is not uncommon for customers to start fights with or to attack workers. Waffle House staff is expected to deescalate these fights and call police rather than the store ensuring their safety and the safety of other customers. There are also robberies—one Waffle House worker was shot and killed during an armed robbery in Tifton, Georgia.  

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The free market won’t solve our nationwide housing affordability problem: Equity-focused policy is the solution

Access to affordable housing is integral to economic security, and homeownership is often a precondition for economic mobility. Sadly, the prospect of homeownership remains increasingly elusive for potential homebuyers due to high home prices and interest rates. Prospective Black buyers face additional obstacles, including the burden of student loan debt and discrimination in mortgage lending.  

The rising cost of homeownership is also having spillover effects in the rental market as more families have had to resort to renting, thus increasing the demand and prices for rental units. The primary issue leading to America’s housing crisis—for buyers and renters—is a shortage of affordable housing that has major implications for equitable access to shelter and wealth. 

Outlining the problem 

In Figure A, the Consumer Price Index (CPI) for rent of primary residence reveals a significant surge in the cost of renting across U.S. cities over time. Since 2009, the cost of rent has climbed 67%—with nearly half of that increase occurring in the last five years. The cost of rent has increased faster than the cost of most consumer goods. Such a steep increase underscores the mounting financial burden on renters and the challenges they face in securing affordable housing. 

The problem of rising rent is most acute in growing metro areas with a greater concentration of employment opportunities. The result is lower-income workers and their families are being pushed further out into the suburbs where they face longer commutes and higher transportation costs, while families who remain in the cities find housing costs are consuming more of their monthly income as the threat of eviction and homelessness rise.

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Jobs report shows the labor market is strong but decidedly not hot: 175,000 jobs added in April while wage growth continues to decelerate

Below, EPI senior economist Elise Gould offers her insights on the jobs report released this morning. Read the full thread here

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The inspiring wave of student worker organizing that the Trump administration tried to stop

Nearly 45,000 student workers at private colleges and universities have formed unions since 2022, seeking to bargain with their employers over wages, health care, protections from harassment and discrimination, and other issues. These student workers include graduate student teaching assistants, undergraduate and graduate student resident assistants, and student dining workers. They are organizing across the country, from Duke University in the South to Northwestern University in the Midwest, Boston University in the Northeast, and California Institute of Technology in the West.

This surge in student worker organizing reflects a recent trend, with support for unions at record highs, especially among young workers. Petitions for union representation elections are up 35% at the National Labor Relations Board (NLRB) compared with last year, building upon significant increases over the last few years. The NLRB has also helped streamline the representation election process by adopting new rules that have cut the time between election petition and election from 105 days last year to 59 days.Young workers, including student workers, were a large part of the increase in union membership last year.

But none of these student workers would have had a right to a union under the Trump administration. The Trump NLRB proposed, and was on the verge of finalizing, a rule that excluded private college and university student workers from coverage under the National Labor Relations Act (NLRA), taking the position that student workers are not “employees.” The Trump NLRB rule would have stripped 1.5 million student workers of their organizing rights. Fortunately, in March 2021, the NLRB withdrew this wrongheaded rule following the election of President Joe Biden and his appointment of a democratic chair, Lauren McFerran. Dozens of petitions for representation elections among student workers have followed. 

This action is one of many detailed in a new report by EPI contrasting the actions of President Biden’s NLRB appointees with the Trump NLRB. Our report finds that the Biden NLRB has made great progress undoing the damage inflicted by the Trump NLRB and has taken additional actions to support workers’ organizing and bargaining rights under the NLRA.

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Job openings continue to normalize to pre-pandemic levels

Below, EPI senior economist Elise Gould offers her insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for March. Read the full thread here.

 

Recapping a great week for workers

Last Friday, the United Auto Workers (UAW) scored a historic win in the South after a decade-long campaign to organize a Volkswagen plant in Tennessee. The UAW is hoping momentum from the Volkswagen vote as well as last year’s successful strike at the “Big Three” automakers will help them win representation at a Mercedes-Benz plant in Alabama next month.

Meanwhile, this week the Biden administration announced four long-awaited protections for workers that have been EPI policy priorities:  

On Monday, the Centers for Medicare and Medicaid Services for the first time issued a final rule requiring nursing homes to provide minimum hours of nursing care per resident (3.48 hours) and to have a registered nurse available around the clock. In addition to protecting residents, the rule will improve the lives of underpaid and overworked nursing home workers and reduce staff turnover that exceeds 50% annually.

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Explaining the Department of Labor’s new overtime rule that will benefit 4.3 million workers

The U.S. Department of Labor issued a final rule today making changes to the regulations about who is eligible for overtime pay. Here’s why this matters:

How the overtime threshold works

Overtime pay protections are included in the Fair Labor Standards Act (FLSA) to ensure that most workers who put in more than 40 hours a week get paid 1.5 times their regular pay for the extra hours they work. Almost all hourly workers are automatically eligible for overtime pay. But workers who are paid on a salary basis are only automatically eligible for overtime pay if they earn below a certain salary. Above that level, employers can claim that workers are “exempt” from overtime pay protection if their job duties are considered executive, administrative, or professional (EAP)—essentially managers or highly credentialed professionals.

The current overtime salary threshold is too low to protect many workers

The pay threshold determining which salaried workers are automatically eligible for overtime pay has been eroded both by not being updated using a proper methodology, and by inflation. Currently, workers earning $684 per week (the equivalent of $35,568 per year for a full-time, full-year employee) can be forced to work 60-70 hours a week for no more pay than if they worked 40 hours. The extra 20-30 hours are completely free to the employer, allowing employers to exploit workers with no consequences.

The Department of Labor’s new final rule will phase in the updated salary threshold in two steps over the next eight months, and automatically update it every three years thereafter.

  • Effective on July 1, 2024, the salary threshold will be raised to $844 per week.
    • This is the equivalent of $43,888 per year for a full-time, full-year worker.
    • In 2019, the Department updated the salary threshold to a level that was inappropriately low. Further, that threshold has eroded substantially in the last 4+ years as wages and prices have risen over that period, leaving roughly one million workers without overtime protections who would have received those protections under the methodology of even that inappropriately weak rule. This first step essentially adjusts the salary threshold set in the 2019 rule for inflation.
  • Effective on January 1, 2025, the salary threshold will be raised to $1,128 per week.
    • This is the equivalent of $58,656 per year for a full-time, full-year worker.
    • This level appropriately sets the threshold at the 35th percentile of weekly wages for full-time, salaried workers in the lowest-wage Census region, currently the South.
  • The salary threshold will automatically update every three years thereafter, based on the methodology laid out in the rule, to ensure that the strength of the rule does not erode over time as prices and wages rise.

The final rule will benefit 4.3 million workers

  • 2.4 million of these workers (56%) are women
  • 1.0 million of these workers (24%) are workers of color
  • The largest numbers of impacted workers are in professional and business services, health care and social services, and financial activities.
  • The 4.3 million represents 3.0% of workers subject to the FLSA.

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A tight labor market and state minimum wage increases boosted low-end wage growth between 2019 and 2023

The labor market recovery from the pandemic recession has been tremendous and low-wage workers have been key recipients of those gains, with dramatically fast real wage growth between 2019 and 2023 as we found in our recent report. These gains were due in part to several large spending bills passed during the pandemic—including the vital American Rescue Plan—which provided relief to workers and their families to help them weather the recession and fed the surge in employment. After losing their jobs in record numbers during the initial shock of the pandemic, low-wage workers found better job opportunities and experienced unusually strong leverage to see fast wage growth as employers scrambled to hire workers in the recovery.

At the same time, 29 states and the District of Columbia raised their minimum wages between 2019 and 2023—either through legislation, ballot referendums, or indexing to inflation. We found that these state minimum wage increases also boosted low-end wage growth: 10th-percentile wages grew about 50% faster in states with minimum wage increases compared with states without any change in their minimum wage (see Figure A). It is also the case that low-wage workers experienced relatively fast wage growth in all states, regardless of changes to their minimum wage.

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Will Illinois be next to tackle the problem of ‘captive audience’ meetings?: Rights and freedoms of 22.7 million workers now protected in seven states

U.S. employers have tremendous power over worker conduct. Under federal law, employers can require workers to attend “captive audience” meetings—and force employees to listen to political, religious, or anti-union employer views—on work time.

Fortunately, a growing number of states are now seeking to address the threat of political and religious coercion in the workplace. This month, Washington state Governor Jay Inslee signed the Employee Free Choice Act into law, making Washington the seventh state to protect workers’ rights to opt out of captive audience meetings. The Illinois legislature is now considering whether to send similar legislation to Governor J.B. Pritzker before month’s end. Washington and Illinois are among the 18 states that have so far introduced or enacted bills to protect workers from offensive or unwanted political and religious speech unrelated to job tasks or performance.

Importantly, these bills do not limit employer rights to express opinions, or even to invite employees to political or religious meetings during work time. Instead, this legislation is designed to prohibit employers from threatening, disciplining, firing, or retaliating against workers who choose to not attend mandatory workplace meetings focused on communicating opinions on political or religious matters.  

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Another strong jobs report: Unemployment has remained at or below 4% for 28 months running

Below, EPI senior economist Elise Gould offers her insights on the jobs report released this morning, which showed 303,000 jobs added in March. Read the full thread here

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A record-breaking recovery for Black and Hispanic workers: Prime-age employment rates have hit an all-time high alongside tremendous wage growth

U.S. labor market strength in the recovery has been extraordinary because policymakers addressed the pandemic and subsequent recession at the scale of the problem. Unemployment has been at or below 4.0% for 27 months running, the longest such stretch since the late 1960s. Low-wage workers experienced an unprecedented surge in wage growth over the last four years, as shown in our new report.

These historically robust outcomes extended to Black and Hispanic workers. In 2023, the share of Black and Hispanic people ages 25-54 with a job hit an all-time high. Further, real wage growth among Black and Hispanic workers experienced a significant turnaround from the stagnant wage growth they suffered in much of the prior four decades.

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Job Openings and Labor Turnover Survey shows an uptick in hiring

Below, EPI senior economist Elise Gould offers her insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for February. Read the full thread here.

Loc-ing students out: Darryl George, the CROWN Act, and the need to combat racial discrimination in the classroom

This piece was published in collaboration with the Albert Shanker Institute.

For some students and workers, hair is a trivial wardrobe decision, while for many Black and Brown people, their hairstyle can be a consequential element of class participation and a job offer. School dress codes and “business appropriate” dress often put high stakes and severe restrictions on how Black and Brown people can express their culture and identity through their hair.

Over the last several years, lawmakers in 24 states have sought to combat this problem by passing the “Creating a Respectful and Open World for Natural Hair” (CROWN) Act. The CROWN Act is a law that protects against discrimination based on hairstyle and texture in schools, workplaces, and beyond by extending the definition of racial expression to include wearing braids, locs, twists, and other culturally significant hair styles.

Yet the recent court case of Texas high school junior Darryl George reveals that even in states that have adopted versions of the CROWN Act, as Texas has, Black and Brown people can still face educational and career disadvantages for their hairstyles when discriminatory systems—in this case a school dress code—are validated by judicial interpretation that ignores the intent of the law.

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Middle-out economics is good for workers, their families, and the broader economy

This piece was originally published in Democracy Journal. 

In the decades following World War II, the U.S. economy thrived. Economic growth was strong and the fruits of that growth were broadly shared. Not everything in the economy was perfect in the 1950s and ’60s—far from it. There were massive inequities by race and gender, marked by the exclusion of people of color and women from countless labor market opportunities. Nevertheless, a crucial dynamic was in place: As the economy grew, workers all across the wage distribution—low-wage, middle-wage, and high-wage—saw gains. Racial and gender gaps shrank. Growth was strong, and living standards improved across the board.

This positive dynamic was not a foregone conclusion. It was the result of “middle-out” policy choices that ensured that economic growth was both robust and broadly shared (though the term “middle-out” would not be coined until much later). Macroeconomic policymakers targeted sustained low unemployment, the federal minimum wage increased rapidly and regularly and was well enforced, the federal government actively safeguarded workers’ rights to unionization and collective bargaining, and regulations protected many other labor rights.

Starting in the late 1970s, however, policy began to shift in an ill-fated direction. As a neoliberal paradigm took hold and trickle-down economics secured its dominance among members of both parties as the proper way to manage the economy, policymakers went about dismantling the policy bulwarks that were the crucial foundation of robust, broadly shared growth. Macroeconomic policymakers began to tolerate excess unemployment, increases in the federal minimum wage became smaller and rarer, lawmakers failed to update labor law to keep up with relentless attacks on unionization and collective bargaining, and anti-worker deregulatory pushes succeeded again and again.

We all know what happened in those years. Workers lost ground dramatically. In the earlier era, from the postwar period through the late 1970s, productivity had grown 2.5% per year on average, while the typical worker’s compensation grew at an average of 2.4%. This parity led to life-changing improvements in living standards for working people from generation to generation. But as the policy regime shifted away from the middle-out economics of the New Deal to neoliberal economics, productivity growth slowed dramatically and compensation growth for typical workers absolutely tanked. From 1979 to 2022, productivity grew 1.2% per year on average—less than half the pace of the prior period—and the typical worker’s compensation grew by an average of just 0.3%. And—after improving in the earlier period—the Black-white wage gap widened.

In 2022, “production and nonsupervisory employees”—a Bureau of Labor Statistics designation covering some 80% of the workforce—earned an average of $57,300. If productivity and pay had not diverged since the late 1970s, and instead the average wage for this group had grown at the rate of productivity, a typical worker would have been making $82,000—a 43% bump that would equate to nearly $25,000 annually. That would be a life-changing amount of money for working families.

One of the core pillars of middle-out economics is empowering workers—giving them the tools they need to claim their fair share of economic growth. It’s worth emphasizing that there is no silver bullet here: There was a sweeping transformation to neoliberal economics, and we need another sweeping transformation to set us on a path of robust, broadly shared growth. In what follows, I detail some middle-out economic policies that will help close the productivity-pay gap, and what they would mean for working people.

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The estate tax should help to level the playing field. Instead it’s letting the rich get richer.

This is an excerpt from an op-ed that originally published in CNN. Read the full op-ed here.

The federal estate tax should be an effective tool to slightly level the playing field between those who inherit wealth and those who have to work for a living. It should also ensure that family dynasties who’ve amassed enormous fortunes pay their fair share in taxes.

But because policymakers have repeatedly doubled and tripled the immense sums that can be passed on before the tax kicks in, the estate tax today affects almost no one.

The estate tax exemption—the value of an estate that a mega-millionaire can own before facing taxes—has grown so much over the past quarter century that just eight of every 10,000 people who died in 2019 left behind an estate that was large enough to be subject to the tax, currently at 40%.

Read the full op-ed here.

Gender wage gap persists in 2023: Women are paid roughly 22% less than men on average

March 12 is Equal Pay Day, a reminder that there is still a significant pay gap between men and women in our country. The date represents how far into 2024 women would have to work on top of the hours they worked in 2023 simply to match what men were paid in 2023. Women were paid 21.8% less on average than men in 2023, after controlling for race and ethnicity, education, age, and geographic division. 

There has been little progress in narrowing this gender wage gap over the past three decades, as shown in Figure A. While the pay gap declined between 1979 and 1994—due to men’s stagnant wages, not a tremendous increase in women’s wages—it has remained mostly flat since then.

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February jobs report: The labor market is strong—but decidedly not overheating as wage growth continues to moderate

Below, EPI economists offer their insights on the jobs report released this morning, which showed 275,000 jobs added in February.

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What’s behind the corporate effort to kneecap the National Labor Relations Board?: SpaceX, Amazon, Trader Joe’s, and Starbucks are trying to have the NLRB declared unconstitutional—after collectively being charged with hundreds of violations of workers’ organizing rights

Workers want unions now more than they have in a generation. Evidence suggests more than 60 million non-union workers would like a union at their workplace. The National Labor Relations Board (NLRB)—the agency established by Congress in 1935 to protect workers’ organizing rights—is handling more union representation elections and unfair labor practice charges than they have in years.

So how have companies responded to this surge in worker organizing?

Some have honored their workers’ choice and tried to start a positive labor-management relationship, as Microsoft, New Flyer, Ben & Jerry’s, and other companies have done. These companies see the value of a constructive relationship with their employees to their bottom line.

Others have taken the opposite tack—to the extreme. Led by Elon Musk’s SpaceX, and joined by Amazon, Trader Joe’s, and Starbucks, these companies are engaged in a legal battle trying to have the NLRB declared unconstitutional, by resurfacing long-rejected constitutional arguments about the agency’s structure. If they succeed, it would kneecap the agency and its operations at the very time workers need it the most.

Why are these companies taking this scorched-earth approach? What is motivating these attacks? 

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Job Openings and Labor Turnover Survey: Labor market remains strong—but not hot

Below, EPI senior economist Elise Gould offers her insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for January. Read the full thread here.

Immigrants are not hurting U.S.-born workers: Six facts to set the record straight

The immigrant share of the labor force reached a record high of 18.6% in 2023, according to our analysis of Current Population Survey (CPS) data from the Bureau of Labor Statistics.1 Anti-immigration advocates have been out in full force, using this as a talking point for deeply misguided commentary and analysis that roughly translates to “immigrants are taking all our jobs.” 

The reality is that the economy does not have a fixed number of jobs, and what we see today is a growing economy that is adding jobs for both immigrants and U.S.-born workers. Here are six key facts that show immigrants are not hurting the employment outcomes of U.S.-born workers.

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