Key takeaways:

• Income inequality has skyrocketed since 1979 because of intentional policy choices that suppressed wages for typical families to accelerate income growth at the top.
• Middle-class household incomes would be roughly $30,000 higher today if their incomes had simply kept pace with average income growth since 1979.
• Recognizing that today’s affordability problems are overwhelmingly inequality problems is the key to constructing the right policy solutions.
  • As a start, protecting workers’ right to organize unions, fostering long periods of very low unemployment, and keeping minimum wages high will help typical families claim their fair share of income growth.

When most people—including policymakers—complain about a lack of affordability, they think of prices being too high. But affordability is the outcome of a race between prices and incomes. After all, goods and services were a lot cheaper 90 years ago during the Great Depression, but we all know that nearly everybody is richer today than their peers back then. Bringing incomes into the affordability picture makes for better understanding and better policy.

New Congressional Budget Office (CBO) data show that rising income inequality is the main reason that affordability feels out of reach for too many U.S. families. For more than four decades, most of the income growth in the U.S. economy has been funneled to those at the very top, leaving typical families with far less than their proportionate share of the economy’s gains. If middle-class household incomes had simply kept pace with average income growth since 1979, their pay would be roughly $30,000 higher today. If we account for taxes and government transfers, incomes would still be $19,000 higher today for these middle-class households. Think of this gap as an “inequality tax”: the amount that rising inequality has cost the typical U.S. family. Life would be much more affordable for these families today if they hadn’t been hit by this inequality tax.

This inequality is not the result of competitive markets fairly rewarding people’s skills and hard work. Instead, it resulted from an intentional policy campaign of wage suppression. Labor markets in capitalist economies are inherently tilted toward employers. Fair pay and broadly shared prosperity only materialize when policy affirmatively aims to correct this power imbalance. This can happen—policy choices that bolstered workers’ leverage and bargaining power in labor markets kept growth fast and equal for decades following World War II, for example. But lawmakers rolled back these policies at the behest of capital owners and corporate managers.  

The latest CBO inequality data make the scale of this policy shift visible. Figure A shows the distribution of market income growth for non-elderly households by income group since 1979. We use market income to look at pre-tax, pre-transfer outcomes to assess the equality of outcomes generated by markets. We isolate non-elderly incomes because older households tend to have very low market incomes and these older households have grown as a share over time—so we don’t want any poor performance of market incomes documented here to simply be the outcome of natural population aging. Among this non-elderly group, the top 1% have captured a hugely disproportionate share of market income growth. Between 1979 and 2022, market income for the top 1% grew 277% (from $784,573 to $2.958 million) compared with just 26% growth for the middle fifth of households (from $76,359 to $96,335). This lopsided growth is the root of America’s affordability problem. Even as the economy grew and average incomes rose, typical families fell further behind those at the top who captured most of income growth.

Figure B shows the inequality tax over time, plotting actual market income for the middle fifth of households against what their income would have been if it had grown at the same rate as overall average income. By 2022, the inequality tax reached $30,676 per household, meaning middle-class families are forgoing that much income each year because of rising inequality. The gap has widened steadily since 1979, a sign that the affordability problem facing typical families is not a recent development but rather the cumulative result of decades of policies that have shifted income upward.

Because market income for middle-class families is driven predominantly by labor income, the inequality tax in Figure B reflects the consequences of decades of wage suppression. Of course, the United States has a system of taxes and means-tested transfers (safety net programs like Medicaid and food stamps, for example) that leads to post-tax and transfer income being more equal than market income in any given year. But the tax and transfer system did not ramp up in importance as market income inequality grew after 1979, and even after accounting for its effects, inequality increased significantly. Figure C shows that even when using post-tax and transfer income, the inequality tax remained substantial at $19,320 per middle fifth household in 2022.

Figure D shows who loses and who gains from rising inequality. While the inequality tax cost middle-income families $19,320 in 2022, families at the very top benefited enormously. The 96th to 99th percentiles gained about $88,000 from rising inequality, while the top 1% gained $1.1 million in 2022.

Perhaps surprisingly, the lowest quintile also slightly gained. For this group, lower taxes and higher levels of means-tested benefits counterbalanced a significant loss of market income due to inequality (their market income inequality tax would be around $4,000). The greater fiscal transfers to the bottom fifth are an under-recognized policy achievement of recent decades. It is also an achievement under constant threat, with the latest one being the large cuts to Medicaid and food stamps coming because of the Republican tax and spending bill that passed in 2025.

Figure D

U.S. families’ feeling that life is less affordable than it should be is grounded in objective realities about how the economy has failed them. And it’s understandable why so many of these families think about prices, which they see as the final barrier between them and being able to obtain what they need for a good life, whether the price is for a gallon of gas or a loaf of bread or a monthly health insurance premium.

But the forces causing this affordability crunch are far larger than any given set of prices. Instead, they are mostly the forces that led to rising income inequality by intentionally suppressing the power of workers in labor markets. This wage suppression meant that middle-class income growth was never going to outpace inflation consistently enough to ensure steadily improving economic security.

In short, today’s affordability problems are overwhelmingly inequality problems. Recognizing this fact is the key to constructing the right policy solutions. As a start, protecting workers’ right to organize unions, fostering long periods of very low unemployment, and keeping minimum wages high will help typical families claim their fair share of income growth.

Once the Assembly’s bill reached her desk, Virginia Governor Abigail Spanberger had the opportunity to strengthen it or sign it into law. Instead, Governor Spanberger put forward her own heavily amended version of the bill last week, weakening the proposed collective bargaining framework so extensively that her version would lock Virginia into an unstable, ineffective system in which collective bargaining would remain merely “optional” and where employers and workers would remain perpetually uncertain about what rules might apply to them from year to year depending on what appointees of future governors might decide. The governor’s amended bill will now be considered by the Assembly in its one-day veto session this week. Below, we analyze some of the many substantive differences between the Assembly bill and the governor’s bill, as well as the likely economic impacts.

Virginia’s ability to reap economic benefits of collective bargaining will depend on strength of any new law 

EPI has previously analyzed the economic importance of strengthening collective bargaining rights in Virginia, where the state’s long-standing ban on public-sector collective bargaining has suppressed workers’ wages and union membership. Our most recent analysis showed that state and local government employees in Virginia earn, on average, 26.7% less than private-sector peers with similar education and experience. Virginia’s public-sector pay gap is the second highest in the nation while its public-sector unionization rate (at 14.1%) is the fourth lowest, outcomes that our 50-state data show are closely correlated with the strength or weakness of a state’s collective bargaining laws. Recent EPI research further shows that beyond helping states narrow public-sector pay gaps and improve conditions for directly affected workers and the public they serve, stronger collective bargaining laws are highly correlated with widely shared benefits including higher wages, more equitable state economies, and healthier democracies.

State public-sector collective bargaining laws are complex and highly variable. In our prior research, we grouped state laws into three categories based on assessment of whether collective bargaining is:

1) illegal: state law prohibits public employers and unionized workers from entering into collective bargaining agreements.

2) permitted: collective bargaining is “optional” insofar as it is allowed in certain jurisdictions but occurs only if both parties agree to engage in it; whether parties are required to negotiate over wages or other terms and conditions of work is not defined in state law.

3) required: once a group of workers has gone through the process of forming a legally certified union, employers have a “duty to bargain” over pay (at a minimum), and there is a specified process for both parties to follow in negotiating to reach agreements that result in a legally binding collective bargaining agreement.

Currently, Virginia’s collective bargaining law straddles the first two categories: collective bargaining is illegal for units of state government in Virginia, but the state has recently (since 2021) permitted local governments to enact their own collective bargaining systems.

As shown in Table 1, data show that average public-sector pay gaps vary across states depending on the strength of their collective bargaining laws. Virginia’s large public-sector pay gap is an extreme outlier, currently exceeding even the average among all states with the weakest laws (where collective bargaining is illegal).

Table 1

Governor’s bill deletes essential elements of a strong collective bargaining system

Virginia lawmakers now face a choice between two dramatically different visions for collective bargaining: an Assembly bill that would move Virginia into the stronger “required” category, and the governor’s substitute bill that would lock Virginia into the weaker “permitted” category.

The Assembly’s collective bargaining bill includes clear language recognizing the rights of public employees to choose whether to unionize; setting forth consistent rules, timelines, and processes for workers and employers to follow for union elections and contract negotiations; and establishing a new, independent state labor board to support and administer the new framework across all covered state and local jurisdictions. The Assembly bill also has limitations—for example, it falls short of equalizing rights of all public employees by excluding most higher education workers—but it does provide a clear, strong roadmap for implementing a robust, effective collective bargaining system modeled on proven best practices from other states to serve as a solid foundation for Virginia to build on.

The governor’s amended version of the bill weakens all these key elements of the statutory framework proposed by the Assembly and the proposed labor board’s role in enforcing a clear statutory framework. In many important sections of the bill, the governor’s amendments include changing the word “shall” to the word “may”—a critical change that converts entire sections of statutory rules and requirements into mere suggestions, rather than legally enforceable expectations applying equally to all workers and employers. Another repeated pattern throughout the governor’s bill is the deletion and replacement of a host of detailed statutory guidelines with directives that such guidelines should instead be “determined by the board” or that the board “shall adopt regulations” to answer critical questions about workers’ rights and employer obligations in the unionization and collective bargaining process.

Table 2 summarizes just a few of the key differences between the Assembly bill and the governor’s bill. The Assembly bill proposes a framework similar to those successfully implemented in many other states, including statutory language defining the topics parties are required to negotiate over, clear rules for union elections and negotiations procedures, and binding arbitration to ensure that negotiations will eventually conclude with a contract settlement. These standard elements are essential to a strong, effective collective bargaining system that enables workers to have an equal voice at the bargaining table—but the governor’s bill removes all of these elements.

Table 2

The stark contrast between the scope of bargaining as defined in the Assembly bill versus the governor’s bill is especially salient. The strength of any collective bargaining system depends on clear, consistent rules for which topics unions and employers must be willing to discuss in negotiations and which subjects must (or may) legally be incorporated into a collective bargaining agreement. When subjects of bargaining are “permitted” but not required, parties may try to pick and choose what to discuss, one party may refuse to negotiate over matters that are important to the other, and non-mandatory topics are generally not considered as part of arbitration procedures and often therefore never get included in final contracts. Alarmingly, the governor’s bill leaves the scope of bargaining completely undetermined, giving the labor board discretion to determine when and whether it is “appropriate” to require parties to negotiate even over topics as basic as wages.

This change alone would lead us to categorize the governor’s bill as a model for “permitting” (but not requiring) collective bargaining, making it unlikely to significantly narrow Virginia’s public-sector pay gap or achieve other important economic outcomes associated with stronger collective bargaining laws. As shown above in Table 1, workers in states where collective bargaining is “permitted” but not required continue to experience pay gaps far above average (and far greater than in most states with strong collective bargaining laws).

At a minimum, any collective bargaining legislation in Virginia should be measured against the status quo and whether it represents progress toward achieving full and equal collective bargaining for all workers. Here, the governor’s bill falls woefully short and could even represent a step backwards for some workers. At best, the governor’s bill would lock Virginia into a system where collective bargaining becomes “permitted” for more workers than are currently covered by local collective bargaining ordinances. At worst—depending on rules yet to be determined by a future labor board—the governor’s bill could erode existing rights of some local government workers who might find themselves in the future governed by weaker state collective bargaining procedures than those they’ve been able to win at the local level since 2021.

The governor’s bill includes additional significant changes too numerous to cover in detail here. Among other notable amendments that weaken the proposed framework for collective bargaining or its implementation, the governor’s bill:

• delays application of the new law to January 1, 2030, for local governments
• excludes Virginia Port Authority workers from coverage
• maintains exclusion of most higher education workers from coverage (including faculty, professional staff, researchers, graduate assistants, etc.) and specifies that this exclusion extends to health care workers at university hospitals and health care facilities

In the short term, the numerous exclusions, delays, and weaknesses introduced or expanded by the governor’s bill would leave Virginia workers with a limited patchwork of different rights covering different localities and occupations. In the long term, this would create permanent uncertainty about whether and when various rules covering particular groups of workers might be changed by the labor board.

It’s clear that the fight to ensure every employee in Virginia has a voice on the job has only just begun. Collective bargaining is a fundamental right, not intended to be left up to the whims of individual local elected officials or to-be-determined future members of a new state labor board. Collective bargaining is both a labor issue and a civil rights issue, as NAACP Virginia State Conference leaders recently pointed out. Nowhere is this clearer than in Virginia, where the denial of collective bargaining rights to generations of workers is directly rooted in a history of white supremacist backlash against Black worker organizing. Virginia lawmakers still have a chance to enact meaningful collective bargaining legislation in 2026, but doing so will first require rejecting the damaging amendments put forward by Governor Spanberger.

But diverting public funds away from public K–12 schools and toward private schools does not guarantee educational opportunities will be expanded for all students—and this is especially true in rural communities. Most obviously, because students in rural communities often don’t have a private school option and therefore cannot use the vouchers, state voucher programs—which are financed by all the taxpayers in a state—amount to an education subsidy for wealthy urban families at the expense of strong public schools. Moreover, for rural areas that can support multiple school systems, voucher programs introduce a potentially large cost for the students that remain in public schools, as any sharp drop in public school enrollment will raise the fixed cost per pupil of running schools. For example, school facilities and staff that are efficient for 1,000 students in a school may no longer be efficient if enrollment were to drop to 800 or 900.

Voucher programs work like this: Parents who wish to send their kid to private school can receive public funding to cover part of the tuition or education-related expenses, rather than paying out of pocket. In states with vouchers programs, this added cost to government of paying for private educational expenses makes a big dent in state budgets—see examples here, here, and here. These programs also often entail fraud and abuse of funds and strip away funding for public schools. As a share of K–12 budgets, voucher spending accounted for as much as 26% in 2025, squeezing public schools of sorely needed funds. Moreover, recent reports have documented accounts of voucher funding getting used for high-end concert tickets and rideshare apps like Uber and Lyft. For wealthy parents in urban districts who were already planning to send their kids to private school, these slippery regulations and extra funding for education expenses are a feature, not a bug, of voucher programs. Vouchers are disproportionately taken up by students already attending private school, compared with those who consider a private school option when voucher laws get passed in their state.

For students in rural areas with no private school option, voucher programs simply mean there is less to spend on public schools, which leads to teacher shortages, fewer educational opportunities, and worse building maintenance. In rural communities with homeschooling or private school options, voucher programs impose an added cost to public education when students transition from public to private school.

We call this cost the fiscal externality of voucher programs, and it is borne by school districts, students, and their families when voucher-driven declines in student enrollment intersect with the fixed nature of many school costs. In rural districts, many key education costs—such as interest on bonds issued in the past, heating, electricity for school buildings, bus drivers, and even some staff—cannot easily adjust to student enrollment declines.

While public schools’ fixed costs do not decline when they lose students to voucher programs, their revenue does. Thus, when students in rural areas take up vouchers to leave public school for private school or homeschool, public schools have less revenue to cover the same level of fixed costs. The costs that can be adjusted—such as supplies or certain personnel—will get forced down due to shrinking school budgets. These variable costs are crucial for effectively educating children, meaning students who remain in public schools will pay the price of voucher program takeup.

This fiscal externality therefore leaves districts unable to deliver the same level of instruction to the remaining public school pupils. When students leave public schools in rural areas with voucher programs, there are fewer resources available on a daily basis to educate kids—fewer teachers and other staff members and fewer curriculum and education supplies. Education quality suffers.

How large is the fiscal externality that voucher programs impose on public schools in rural districts? Take the McComb Local School District in Ohio, which had 627 students in 2022 and is classified as a rural district according to the U.S. Census. Using EPI’s Fiscal Externality Calculator, we estimate that a 5% decline in enrollment would lead to an increased cost of $520 per pupil for the remaining students in the district, or a total of $309,530.

The key assumption is that there is some fraction of schools’ costs that is fixed and can’t be adjusted in the near term when enrollment falls. We assume that instruction and services costs (the cost of teachers and services like transportation, counseling, nurses, and school administrators) can only partially adjust to changes in enrollment. Specifically, we assume that when enrollment declines, instruction costs are only able to adjust by 50% of the enrollment decline, and service costs are only able to adjust by 20%. We assume that capital and building and maintenance costs can’t be adjusted at all. (Users can set their own adjustment rates for their school districts using the fiscal externality calculator here. The method behind this calculation is detailed in our report.)

Under these assumptions, aggregating all the rural Ohio districts using the rural categorization of school districts from the National Center for Education Statistics, a voucher-driven 5% enrollment decline would impose a fiscal externality of just over $206 million on Ohio public schools.

Rural districts have the most to lose when states enact voucher programs. For rural communities, vouchers are not a cost-free policy that simply expands education options for children—they are a subsidy for wealthy urban and suburban families at the expense of strong public schools. Voucher programs also introduce a large potential cost for the students that remain in rural public schools. The public spending declines associated with the introduction of vouchers will reliably cause significantly worse educational outcomes at a time when states should be spending more—not less—on public schools. States that promote voucher programs at the expense of funding for strong public education are signaling that rural students are not a priority. 

Key takeaways:

• Recent Democratic proposals to exempt broad swaths of the middle class from federal income taxes accept a damaging frame of taxes as a pure drain on affordability.
• But taxes aren’t a drain on affordability; they fund the public services and social insurance programs that make a decent life possible for middle-class families.
• Progressive taxes on the ultrarich and corporations are essential and should be the immediate priority, but they cannot sustain the public sector alone, let alone expand it in ways needed.
• Middle-class tax rates have fallen by a third since 1979, yet economic anxiety remains high. Tax-cutting has failed because it has left the private-sector drivers of inequality untouched and starved public services.

For decades, anti-tax politicians have tried to smuggle in large tax cuts for the ultrarich and corporations by loudly offering tax cut crumbs to the middle class. Key to this effort has been framing taxes as a pure drain on typical families’ ability to afford a secure economic life. Any success in this dishonest campaign to foster anti-tax sentiment is a disaster for working people—and that’s why some recent tax policy ideas from Democrats and the rhetoric around them are so deflating.

Two things are true about taxes in the United States. First, taxes on the richest families and corporations are far too low. Second, it is broad-based taxes on the middle-class that are the foundation of a functioning public sector and a decent society.

Progressive taxes on the ultrarich and corporations are mostly needed to reduce the potential gains to the rich and powerful from rigging the rules of markets. When the powerful rig these rules and hugely disproportionate shares of income concentrate at the top—like in the United States today—progressive taxes can also raise significant revenue.

But if sharply progressive taxes succeed in reducing the incentive for rigging the rules of markets and if other policies help lead to more broadly shared income growth in the country, this means that progressive taxes will raise a lot less revenue over time.

To be clear, this would be a victory for a better society. For example, the purpose of a carbon tax is to lower greenhouse gas emissions and if it’s highly successful, it will by definition stop raising much revenue. Progressive taxes aimed at reducing inequality will see the revenue they raise start to decline when they are their most successful. Right now, we do have deep inequality in the U.S. and progressive taxes will raise a lot of money—but we shouldn’t make the public sector’s resources dependent on this remaining true forever.

But more importantly, taxing only the very rich has never been the primary foundation of public-sector resources and can’t be going forward. The revenue needed to support programs that provide social insurance and income support (Social Security and Medicaid, for example), as well as public investment and services like highways, transit, and public education requires broad-based taxation. Without Social Security providing secure retirement, Medicare, Medicaid, and the Affordable Care Act providing access to health care, and public schools providing universal education, a decent life for the middle-class would be entirely unaffordable. And without middle-class taxes supporting all of these things, they would collapse.

If typical Americans lose faith that paying broad-based taxes to support public services and investments is a good deal, it will be a disaster for their ability to afford a decent life. Sadly, some recent Democratic proposals capitulate to this view of taxes as a “pure burden” rather than an investment in the country and its people.

Senators Chris Van Hollen (D-MD) and Cory Booker (D-NJ) have both floated ideas that would draw a line below which nobody would pay any federal income tax (Van Hollen’s line is $92,000 for a married couple while Booker’s is $75,000). Both proposals pay for this with tax increases on the rich. If these tax increases on the rich were standalone pieces of legislation, they’d be excellent. But they are instead paired with tax benefits that mostly miss the bottom of the income distribution. In Booker’s proposal, the gains from the higher standard deduction that zeroes out taxes for many are actually largest for families between the 60th and 80th percentiles, and gains persist on average through the 99th percentile. Van Hollen’s bill phases out the “alternative maximum tax” that zeroes out taxes for many, and the biggest gains hit in the middle of the income distribution, but the proposal still provides gains on average for families between the 60th and 80th percentiles.

Both proposals clearly aim to address the affordability challenge that politicians have seized on, but in doing so both frame taxes as a pure drain on affordability, with Booker even calling his the “Keep Your Pay Act.” But taxes aren’t a drain on affordability. They provide the resources needed to run the public sector, and the public sector in turn does a great deal to make life more secure and more affordable over people’s lifetimes.

Social Security and Medicare, for example, both rely on payroll taxes on workers’ wages. But they also provide income for these workers in retirement. Instead of draining affordability, these programs smooth income over the lifecycle to ensure working families can afford a decent life even when they can no longer work. Food stamps and Medicaid are financed by taxes and provide benefits to people who otherwise would not be able to afford the most basic necessities: food and health care. The same people who receive Medicaid and food stamps in one era of their lives will contribute to them through taxes in other periods when they have found steady work. Again, the taxes collected are recycled back into families’ incomes in ways that minimize suffering and severe affordability crises throughout their lives.

State and local taxes—often borne quite heavily by the broad middle class—pay for public education. This education—both K–12 and higher education—is incredibly valuable and necessary for anyone operating in modern economies. Without the taxes to support education, families would have to dig into their own pockets to pay for private schooling, and it would be delivered less efficiently and much less equitably.

Other taxes finance infrastructure and other key public goods and services, without which life would be harder and more expensive for most families.

Cutting taxes even fails on the crass political grounds of buying voters’ short-term goodwill. It’s often underrecognized (mostly, again, because of conservative campaigns to hide this fact), but taxes for the middle class have been cut a lot in recent decades. Figure A below shows the percentage point change in tax rates of households at different parts of the income distribution between 1979–2019. We stop at 2019 to compare equivalent points of the business cycle. Tax rates tend to fall sharply during recessions, which can obscure the full extent of legislative changes to tax rates. Further, cutting taxes temporarily during recessions can make some sense—tax cuts are one form of fiscal stimulus that can be used to fight recessions (unless these tax cuts are quite well-targeted on low- and moderate-income families, they tend to be less efficient stimulus than spending measures).

Figure A

The largest tax cuts have gone to the bottom fifth of households—a key policy victory of recent decades. The expansion of refundable tax credits like the Earned Income Tax Credit and the Child Tax Credit—credits that are paid directly to lower-income families even if their amount is greater than the families’ tax liability—have essentially made the problem of taxing families into poverty almost nonexistent. These tax cuts should clearly be kept. But all households, not just those with very low incomes, have seen sizable tax cuts. Tax rates for households in the middle of the income distribution have been cut by a third since 1979.

And yet, does anybody feel like this tax-cutting has led to most U.S. households feeling great about their place in the economy and their prospects for affording a decent life today? Do these voters express warm feelings about the policymakers from both parties who provided these middle-class tax cuts?

The tax-cutting strategy has failed to make these households happy for two reasons. First, it leaves the private-sector drivers of inequality untouched, and as governments have collected less in taxes, employers and corporations have contributed less to middle-class families’ wages. Second, lower taxes have starved public-sector capacity and led to a degradation of public services. Strangely, the newly fashionable “abundance” movement often frames this degradation as a problem of public-sector excesses, but it’s clearly driven by disinvestment. In short, middle-class families value public services and the decades-long campaign to cut taxes has harmed the ability to provide them. The lessons for today’s tax debates should be clear.

The failure of tax-cutting to foster economic security and happiness is not all that surprising for scholars of U.S. attitudes toward taxes, who argue that Americans are not universally anti-tax. Instead, Americans view paying taxes as a patriotic good and a moral obligation. But they are angry about paying their taxes when they think others are shirking their part of the social contract, particularly when they think the richest people and corporations aren’t paying their fair share.

Because we are starting with such high levels of inequality and because of this public cynicism about the rich ever being forced to pay their fair share, the first priority—by far—for policymakers today should be to enact significant stand-alone tax increases on the ultrarich and corporations. The revenue raised solely from the ultrarich could close today’s fiscal gap, the difference between today’s budget deficits and what is needed to put them on a sustainable path going forward. And this act would convince the rest of Americans that the ultrarich are not always prioritized in policymaking and would make future debates about the costs and benefits of higher taxes for higher levels of public goods much healthier.

But we can’t run a decent society based on just taxing the rich and telling everybody else that taxes are an unfair drain. Oliver Wendell Holmes famously said that taxes are the price you pay for civilization. But if the taxes are paid only by the rich, we will get the civilization they want. That doesn’t seem good enough to me.

Key takeaways:

• The growing revenue of college sports and the heightened attention on the experience of college athletes suggest that college athletics is far from the amateur endeavor it might have started as decades ago.
• Recent policy changes have allowed some college athletes to receive compensation, whether in the form of name, image, and likeness (NIL) rights or revenue sharing. However, not all college athletes have the right to be compensated.
• The NCAA has backed the SCORE Act, which would jeopardize college athlete compensation by prohibiting them from being classified as employees in the first place.
• Policymakers should consider proposals that strengthen rights for college athletes, including granting them employee status under federal labor laws.

Introduction

It has long been argued that college athletes should not receive compensation to maintain the “amateurism” of college sports. However, the growing revenue generated from college sports and heightened attention on the experience of college athletes suggest that college athletics is far from an amateur endeavor.

Only recently have college athletes been granted the right to be compensated for name, image, and likeness (NIL) rights. This decision came into effect after years of antitrust lawsuits against the National Collegiate Athletic Association’s (NCAA) compensation rules. These lawsuits culminated in the Supreme Court decision in NCAA v. Alston, as well as a growing number of states enacting their own compensation laws for college athletes. The recent House v. NCAA settlement allows Division I schools—those with the largest and most economically lucrative athletic programs—to share revenue with college athletes, and further expands opportunities for college athletes to receive compensation.

As a result of these policy changes and a growing movement among college athletes to demand fair compensation for their performance, federal policymakers have put forward proposals to address college athlete compensation. In this blog post, we examine these proposals and their impacts on college athletes and their labor/employment status.

A brief history of college athlete compensation

Despite claims of “amateurism” in college sports, the experience of college athletes showcases a reality in which athletics is prioritized over academics. For example, while the NCAA puts limits on how many hours college athletes can engage in athletic-related activities during playing season, many coaches create expectations for students to exceed these limits, with some athletes exceeding over 40 hours per week. News coverage has reported that coaches have issued fines to athletes who miss practices. Many college athletes are also required to travel for their games, forcing them to miss classes. If college athletes fail to meet these expectations, they may be cut from the team, which could jeopardize future scholarships and other academic opportunities.

Simply put, some college athletes are expected to perform a physical regimen that more closely resembles professional sports than amateur endeavors on top of their academic coursework. The athletic commitment is demanding enough to be its own job, yet college athletes are performing them without any meaningful compensation in return.

In recent years, there have been several policy changes related to college athlete compensation. In 2019, California became the first state to pass a law that granted college athletes NIL rights. The NCAA permitted NIL compensation in 2021 and since then, more than 30 states have enacted laws related to college athlete compensation, with remaining states deferring to NCAA rules to regulate such compensation.

A primary driver of the NCAA’s change of rules regarding NIL compensation was the 2021 Supreme Court decision in NCAA v. Alston. The unanimous decision upheld a lower court decision that found the NCAA’s rules restricting certain educational benefits for college athletes violated federal antitrust laws. In a concurring opinion, Justice Brett Kavanaugh questioned “whether the NCAA’s remaining compensation rules can pass muster under ordinary rule of reason scrutiny” and suggested collective bargaining as an avenue for college athletes to receive a fairer share of the revenue that they generate for their schools. Soon after the NCAA v. Alston decision, the National Labor Relations Board (NLRB) General Counsel Jennifer Abruzzo issued a memorandum taking the position that college athletes are employees under the National Labor Relations Act.

In response to this memo, men’s basketball players at Dartmouth College filed for a union election petition at the NLRB; however, the petition was withdrawn shortly after the 2024 presidential election. In January 2025, Acting General Counsel William Cowen rescinded Abruzzo’s memorandum, leaving college athletes’ employee status in limbo.

The House v. NCAA settlement, which allowed Division I schools to share revenue directly with college athletes, was another turning point in the college athlete compensation landscape. The majority of states with college athlete compensation laws have considered legislation to modify their statues to reflect the terms of the House settlement, but not all have done so.

Who are college athletes?

The National Collegiate Athletic Association is the governing body for college athletics in the United States, overseeing sports programs for 557,000 college athletes at more than 1,100 colleges. It organizes institutions into three divisions based on size, athletic scope, and financial resources. Division I schools are the largest, with the most extensive athletic programs and highest scholarship limits. Approximately 37% of college athletes compete for Division I schools. Division II schools offer fewer scholarships and financial resources, while Division III has the greatest share of college athletes (38%), but offers no athletic scholarships.

During the 2024–2025 school year, the college athlete population was 57% male and 43% female. These young men and women are diverse: 61% are white, 16% are Black, 7% are Hispanic or Latino, 7% report more than two races, and 2% are Asian. Breaking down demographics by race and gender, we find that white males make up the largest group at 32%, followed by white females at 28%, Black males at 12%, and Black females at 4%. The remaining athletes fall into other demographic categories. If we focus on men’s basketball and men’s football athletes at the highest revenue-earning,1 there are 11,504 total athletes, 32% of whom are white and 48% of whom are Black, with the remaining athletes falling into an “other” race category.

Figure A

In terms of geography, college athletes tend to be from the most populous states. According to estimates using NCAA data and population data from Census, most student-athletes are from California, Texas, Florida, New York, and Pennsylvania (in descending order). On a per capita basis, it is Georgia, North Carolina, and Michigan (in descending order) that produce the highest rates of college athletes. This is likely due to having several large state universities with strong athletic programs and an impressive high school sports infrastructure. NCAA-affiliated institutions are also concentrated in the populous states, but especially among states in the Northeast. The states with the most NCAA schools are Pennsylvania (96), New York (93), California (59), Texas (53), and Massachusetts (51).

Current policy landscape

As mentioned above, many states have enacted laws that grant college athletes NIL rights. In the wake of the House v. NCAA settlement, there have been calls for federal policymakers to pass legislation addressing college athlete compensation.

One of the most prominent pieces of federal legislation is the Student Compensation and Opportunity through Rights and Endorsements (SCORE) Act. Backed by the NCAA, this bill would prohibit college athletes from being classified as employees, denying basic labor rights to over half a million young people. The bill creates a federal standard for NIL rights. In doing so, the SCORE Act preempts state legislation concerning college athlete compensation, creating a ceiling rather than a floor for setting standards around college athlete compensation. Further, the SCORE Act limits the types of NIL deals athletes can enter, places caps on NIL payments, and restricts athletes’ abilities to transfer and play at new schools. Finally, the bill would grant the NCAA broad antitrust immunity by authorizing them to limit revenue sharing and education-related benefits to athletes.

On April 3, 2026, President Trump issued an executive order on college athletics. Similar to the SCORE Act, the order directs the NCAA to tighten rules on transfers, eligibility, and NIL compensation, threatening noncompliant schools with the loss of federal funding. It does not, however, address whether college athletes are employees (an earlier executive order from Trump directed the Department of Labor and National Labor Relations Board to clarify employee status of college athletes). Multiple lawyers have argued the latest executive order would not survive a legal challenge. The NCAA president nonetheless praised it, and both the administration and conference commissioners are using the order to push Congress to pass the SCORE Act.

The Student Athlete Fairness & Enforcement (SAFE) Act is another proposal that seeks to codify a federal standard for NIL rights. However, unlike the SCORE Act, the SAFE Act establishes strong health and safety protections for college athletes, allows flexibility for transfers, and places penalties on bad actor agents, among other reforms. Furthermore, the bill does not address college athletes’ employee status or shield the NCAA from antitrust liability.

By far the most effective policy solution for college athletes to be fairly compensated is to grant them the right to form unions and bargain collectively. Legislation like the College Athlete Right to Organize Act  would classify college athletes as employees, granting them the right to form unions and bargaining collectively under the National Labor Relations Act. The bill would also amend the NLRA to define public colleges—in addition to private colleges—as an employer in the context of intercollegiate sports so that all college athletes have the right to organize and collectively bargain.

Below we evaluate whom these proposals impact and estimate how much revenue the college sports industry generates under current compensation policies.

College athlete demographics versus college attendee demographics

College sports are frequently presented as disproportionately Black, but the data show a slightly different story. Black college athletes make up roughly 16% (89,000) of all college athletes compared with 13% (3.31 million) of the total college student population, not significantly different from the NCAA share. Hispanics are drastically underrepresented in the NCAA, accounting for only 7% of college athletes, despite representing over 20% of total college enrollment. In fact, it is white college athletes, and white male athletes in particular, who are disproportionately represented in college athletics: While 61% of college athletes are white and 32% are white males, only 48% of all college students are white and only 19.1% are white males. Notably, it is Black female athletes who are left out of NCAA college athletics at the highest rates. While they account for 8.3% of total college enrollment (2.14 million), they are only 4.5% of total college athletes in the NCAA (25,000).

Figure B

How much do collegiate sports make?

By far, the most economically lucrative division in the NCAA is Division I sports, which includes 37% of total athletes but generates 96% of total revenue across the three divisions, according to the NCAA. According to the Knight-Newhouse College Athletics Database (an authoritative source on college athletics finances and a better representation of self-generated revenue), Division I schools generated $14.6 billion during the 2024 fiscal year. For context, of the five major professional sports leagues in the United States, only the NFL generated more revenue than Division I schools did during the same time period. The NFL, MLB, NBA, NHL, and MLS generated $22.2 billion, $12.8 billion, $12.3 billion, $6.6 billion, and $2.2 billion, respectively, in fiscal year 2024. The primary revenue sources for NCAA Division I are media rights (27%), donor contributions (22%), ticket sales (15%), and institutional support (14%). NCAA Division I revenue has grown 115% (in 2024$) since 2015.

Figure C

Due to the House v. NCAA settlement, schools gained the ability to share revenue directly with athletes beginning in the 2025–2026 school year, adding to any third-party NIL earnings athletes may receive. Though official figures for both revenue sharing and NIL deals are unavailable, schools are currently capped at $20.5 million under the revenue-sharing agreement. Not every university joined the new revenue-sharing arrangement, but every Power 4 school did (the 68 universities in the four highest revenue-generating conferences). Under the generous assumption that all Power 4 schools share the full $20.5 million with their athletes, this would amount to approximately $1.394 billion in athlete earnings, or about 15.1% of total revenue across these conferences. For comparison, coaches at the same set of schools receive $2.3 billion in compensation or 19% of total expenditure. However, if implemented as intended, the revenue-sharing agreement would be a step-up for revenue-generating athletes. Prior to House v. NCAA, the most Power 4 schools could provide the athletes was $2 to 4 million dollars in athletic scholarship money.

Conclusion

Despite the growing revenue that athletes are generating for college sports, many college athletes are not being compensated for their work. Recent policy changes have allowed some college athletes to receive compensation, whether in the form of NIL rights or revenue sharing. However, the reality is that not all college athletes have the opportunity to be compensated. Federal policy proposals, such as the SCORE Act, would further jeopardize college athlete compensation by prohibiting them from being classified as employees in the first place. It is bad policy to deny any worker basic labor rights. Policymakers should consider proposals that strengthen rights for college athletes, including granting them employee status under federal labor laws.

Acknowledgments

The authors thank the Notre Dame Student Policy Network (SPN) for their contributions to the background research for this blog post. The authors would like to thank Billy Bonnist and Liesl Erhardt for leading the SPN team, which included Sarah Francis, Evan Fitzpatrick, Ciara Gilligan, Anvita Jaipura, Owen Murphy, and Caroline Streicker.

1. Defined as the Football Bowl Subdivision (FBS) autonomy schools or schools in the Power 4 (formerly Power 5) conferences. It is worth acknowledging that other sports also produce significant revenue, including women’s basketball, softball, men’s baseball, and women’s volleyball.

The provocation was the “every president tries” part. If “trying” is defined as changing policy to consistently support employment growth in U.S. manufacturing, no president has tried in my lifetime to do this. Amazingly, doing nothing has indeed failed. Doing nothing was also the wrong choice.

The loss of manufacturing jobs

First, some data to define the problem. Furman focuses on the share of total employment that is in manufacturing. He notes that many structural non-policy forces (like technology and what people demand as countries get richer) put steady downward pressure on this in any growing country. There’s a lot of truth in that.

But the U.S. got much richer between 1965 and 2000—in fact it got richer at a far faster pace than it has since, so both technology and the different demands of a richer society should have been operating a lot less intensely since then. And yet the level of U.S. manufacturing employment was steady during that period, fluctuating roughly between 17.0 and 19.5 million depending on the state of the business cycle (see Figure A). After 35 years of stability, manufacturing jobs then cratered: 3 million manufacturing jobs were lost after the recession of 2001, and the 2003–2007 recovery saw essentially no gain at all in manufacturing jobs—the first manufacturing jobless recovery we’ve ever experienced. Then another 3 million jobs were lost during the Great Recession of 2008–09.

After falling from over 17 million to just over 11 million between 2000 and 2010, the sector has seen only very slow growth since. The new high point of manufacturing employment in the recent past was 12.9 million workers in early 2023.

Figure A

Manufacturing historically lost a disproportionate share of jobs during recessions, but what kept it from gaining jobs back quickly in the early 2000s and 2010s recoveries the way it usually had? One huge influence was the emergence of a large trade deficit in manufactured goods. In those decades, the deficit peaked at 4.4% of GDP in 2005 (see Figure B). After being forced into improvement by the Great Recession and the collapse of American spending on all goods and services (including imports), it has steadily moved back toward this peak and surpassed it in recent years.

Figure B

Policy measures can close the trade deficit and reshore manufacturing jobs

Tolerating this rise of the U.S. trade deficit was a policy choice. The deficit’s rise was driven by a dollar whose value is too high to allow balanced trade. A high dollar makes our exports expensive to foreign consumers and makes foreign imports cheap for U.S. residents. Hence, it leads directly to chronic trade deficits (see Figure C). Any serious effort at boosting manufacturing employment would require using policy levers to reduce the value of the U.S. dollar.

Figure C

What are these currency policy levers? First, policy would need to prevent other countries’ governments from actively managing the value of their currency to give their exports a competitive advantage against U.S.-produced goods. There are many ways to do this. Currency management is done through other countries’ governments (or their proxies) buying U.S. dollar-denominated assets (like Treasury bonds or mortgage-backed securities) to bid up the demand for dollars. There’s no particular reason the U.S. couldn’t undertake countervailing currency intervention and buy other countries’ assets whenever they bought ours in an effort to manage their currency’s value. Or we could tax foreign purchases of U.S. assets.

Second, we could raise taxes domestically to close fiscal deficits. In coming years unless we run into a recession (which the Iran conflict makes more likely), there is likely to be sustained upward pressure on interest rates stemming from the big increases in fiscal deficits locked in by the Republican mega tax and spending bill. Higher interest rates in the U.S. will attract foreign investors to U.S. assets, which will bid up the value of the U.S. dollar further and harm manufacturing.

Third, we could hasten the inevitable deflation of the AI-driven stock market bubble, which has attracted foreign investors looking to make high returns. All else equal, there would be less upward pressure on the U.S. dollar if foreign investors were not rushing in to buy dollars to purchase U.S. stocks.

Fourth, we could accelerate the transition to cleaner energy. The U.S. has swung from being a large net importer to a net exporter of oil and natural gas. This has greatly increased foreign demand for U.S. dollars simply to buy our energy supplies, which pushes up the value of the dollar and hurts U.S. manufacturing.

Finally, we could reform our corporate tax code to stop its bias toward offshoring both paper profits and real production. The swing toward a large trade deficit in the pharmaceuticals sector, for example, can be linked directly to the first Trump administration’s changes in the corporate tax code.

In short, taking currency seriously would mean going against some very powerful economic interests—finance, tech, pharmaceuticals, and fossil fuels—in the name of helping U.S. manufacturing. But it would be a good trade to make. And to be clear, dollar weakness that is caused not by intentional policy decisions but is simply an outcome of erratic policy decisions will not provide any sustained benefits to U.S. manufacturing. U.S. manufacturing needs a competitive value of the dollar and a healthy and stable domestic economy. Engineering dollar decline by sabotaging the stability of the domestic economy does not help.

How many jobs could be reshored if currency policy somehow closed the U.S. manufacturing trade deficit? Very roughly it would be close to 3 million. This would not change the long-run trend in the manufacturing share of employment, but it would boost manufacturing-based communities around the country.

Indifference to manufacturing was bad for economic dynamism

The long-run gains to rebuilding communities of manufacturing process knowledge in the U.S. could be large. U.S. losses and China’s growing dominance in manufacturing are in large part a story of deconstructing communities of process knowledge in the U.S. and building them in China. These communities are geographic clusters where firms and workers specialize in particular manufacturing sub-sectors. The agglomeration of knowledge and skills leads to steady innovation which further locks in the competitive advantage of the cluster and raises productivity growth.

Currency policy destroyed these clusters in the U.S. and provided ample space for them to grow in China. The large and constant pressure of an overvalued dollar in the U.S. imposes a heavy drag on the prospects of new manufacturing firms setting up shop and becoming a center for clusters like these. The currency policy of China surely acted as the reverse of this, clearing huge competitive space for new entrants and for further growth in communities of process knowledge.

Currency management was not China’s only industrial policy measure, but it is the one that allowed an across-the-board competitive advantage in all manufacturing industries. And it is the only industrial policy in the U.S. that would reclaim some of the across-the-board manufacturing disadvantage we’ve allowed to be imposed on our domestic industry. Targeted protection and subsidies for particular sub-industries in manufacturing have been important in crafting the exact patterns of trade, but it is currency policy that largely explains the manufacturing-wide trade deficit that the U.S. runs with China and other countries that manage their currency.

How big is this problem of losing expertise and process knowledge in manufacturing for the overall economy? Another sign of the indifference towards manufacturing shown by successive U.S. policymakers is that we don’t even really know—and this indifference and the ignorance it generates has grown over the past year of the Trump administration. The manufacturing sector used to be a source of productivity dynamism in the U.S. economy, but recent data indicate that as we hemorrhaged millions of jobs we also saw declining productivity growth in the sector. This productivity decline might not be entirely genuine—it might be a problem with statistical measurement. It would be nice to invest in our data-gathering infrastructure to shed more light on this issue, but instead the parts of the Bureau of Labor Statistics who have the expertise to do this have been gutted by the Trump administration and longer-run cuts. Another angle of taking manufacturing seriously would be supporting the public structures that provide needed inputs to know what’s even happening in the sector.

Doing nothing was a mistake

U.S. presidents have made the implicit judgement over the past 50 years that it’s a good trade for Americans to have a smaller domestic manufacturing sector in return for cheap imports of manufactured goods, even if that means we’re running chronic large trade deficits. It’s not so obvious to me that’s a good trade, and there’s one last angle that makes it even less obvious.

The foreign inflow of capital that is the mirror image of the trade deficit in manufactured goods is essentially investors abroad bidding against Americans who are looking to buy stocks and bonds and other assets to build their wealth. Bidding up the price of these assets means long-run returns will be lower. In short, this current system of trade imbalances lowers the returns to holding wealth for U.S. residents. One could argue that this is mostly a problem for wealthy U.S. households, who own the lion’s share of assets.

But there is also the issue of why the valuation of U.S. assets has grown in recent decades even aside from increased foreign demand. A huge part of this growth is a zero-sum transfer of income from labor earnings to corporate profits: Recent estimates have this transfer accounting for almost half of the entire nominal growth in the value of U.S. corporate equities in the last 40 years.

Absent foreign demand for U.S. assets, some of this loss to wages would have been counterbalanced for at least some subset of U.S. households by higher rates of return to their savings. To be clear, this zero-sum transfer from wages to wealth still would have been a negative development for the vast majority within the U.S. economy. But this transfer combined with the fact that most of the gains accrue to investors outside of the U.S. because of imbalances in trade and investment flows make it even more damaging. Essentially, U.S. households as workers feel all the pain of a campaign of wage suppression, but U.S. households as investors do not claim all of the benefits of this wage suppression.

Presidents have not tried to reverse manufacturing job loss

In the end, no president in my lifetime has made a serious and consistent effort to do what is necessary to make the U.S. dollar stay at values commensurate with balanced trade in manufacturing. Ronald Reagan famously negotiated the Plaza Accord, which pressured Germany and Japan (our two biggest trade-deficit partners at the time) to reflate their own economies and to stop currency intervention. But at the same time, Reagan ramped up military spending and made large tax cuts that put huge upward pressure on interest rates and led to huge trade deficits in the early 1980s. Bill Clinton oversaw smaller fiscal deficits but actively encouraged a “strong dollar policy” which saw the dollar hit some of its highest levels on record. This strong dollar policy and support for a punitive rescue package for countries slammed by the Asian financial crisis of the late 1990s led to another large increase in U.S. trade deficits. The Clinton administration’s support for permanent normalized trade relations (PNTR) with China and for China’s entry into the World Trade Organization (WTO) made it harder for subsequent administrations to apply pressure to China to abandon its significant currency management in the 2000s.

George W. Bush refused to address the Chinese currency management and undertook large tax cuts and increased military spending again, pushing up interest rates and leading to another round of large trade deficits. Barack Obama similarly failed to address currency management, even leaving it out of the Trans-Pacific Partnership (TPP) agreement he pushed hard in his final years in office. Donald Trump passed corporate tax changes that actively incentivized offshoring in his first term in office. His major trade policy change in the second term has been chaotic and fluctuating—though generally high and broad—tariffs across manufacturing. Manufacturing employment in 2025 averaged 157,000 lower than in 2024 even as the administration trumpeted these large tariff increases. That constitutes the worst non-recessionary year for manufacturing since 2004.

Furman is right that we have seen consistent presidential failure to support employment in manufacturing. And he’s right that most of these presidents made some rhetorical commitment to manufacturing that makes this failure jarring. But nothing serious was ever really tried, and that was a costly mistake.

Today’s jobs report came in stronger than expected with an increase of 178,000 to payroll employment. However, much of the gain was a bounce back to February declines (now a loss of 133,000 jobs). As a result, average monthly growth the last two months was only 22,500 jobs.

#NumbersDay #EconSky

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— Elise Gould (@elisegould.bsky.social) Apr 3, 2026 at 8:41 AM

On the household side, the unemployment rate ticked down slightly to 4.3%. However, it's important to note that this happened for the "wrong" reasons as both the labor force participation and the share of the population with a job also ticked down.
#EconSky

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— Elise Gould (@elisegould.bsky.social) Apr 3, 2026 at 8:51 AM

On the household side, the unemployment rate ticked down slightly to 4.3%. However, it’s important to note that this happened for the “wrong” reasons as both the labor force participation and the share of the population with a job also ticked down.
#EconSky<
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— Elise Gould (@elisegould.bsky.social) Apr 3, 2026 at 8:51 AM

Payroll employment is experiencing large swings month to month, not surprising between February and March given weather and striking workers returning to the job. To get a better sense of the jobs picture, best to look at a smoothed series. Here we see three-month average growth at 68k.
#EconSky

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— Elise Gould (@elisegould.bsky.social) Apr 3, 2026 at 8:51 AM

Overall job gains were 178k in March after a -133k loss in February. Job gains were strongest in health care as striking workers returned to work. Gains also noted in leisure and hospitality as well as construction. Job losses in the federal government as well as financial activities.
#NumbersDay

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— Elise Gould (@elisegould.bsky.social) Apr 3, 2026 at 8:57 AM

Attacks on the federal workforce continue (down 18k jobs in March). Federal employment has shrunk an alarming 352k jobs since Jan 2025. The vital services federal employees provide cannot be done without these essential workers. The cost of these losses are only just beginning.
#EconSky #NumbersDay

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— Elise Gould (@elisegould.bsky.social) Apr 3, 2026 at 9:01 AM

Manufacturing rose 15,000 jobs in March, but still has a huge deficit since Trump took office. Since January 2025, the manufacturing sector has lost 82,000 jobs.

#EconSky #NumbersDay

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— Elise Gould (@elisegould.bsky.social) Apr 3, 2026 at 9:05 AM

Folks, today's jobs report is not good. Avg job growth over the last two months was just 22,500. The March drop in unemp was people leaving the labor force—not finding jobs. Wage growth slowed, esp for nonsupervisory workers.

And the effects of our war in Iran aren’t even in these numbers yet.

— Heidi Shierholz (@hshierholz.bsky.social) Apr 3, 2026 at 9:34 AM

The unemployment rate for U.S.-born workers was 4.0% in 2024 under Biden’s administration, and it has risen under Trump. With today’s jobs report, the three-month average for 2026 shows the U.S.-born unemployment rate is at 4.3% (the non-seasonally adjusted average for 2026 is 4.6%).

Claims that mass deportations have helped U.S.-born workers are simply inconsistent with the data. This is no surprise, given that economic research has repeatedly shown that increased immigration enforcement harms everyone in the labor market, including U.S.-born workers. Part of the explanation for this is that immigrants are not only workers, but also consumers, which generates demand and helps the economy grow. Another part is that immigrants and U.S.-born workers complement each other in the labor market. For example, when immigrant roofers and framers disappear, there is less work available for the native-born electricians and plumbers. And when child care workers and cleaners are detained, deported, or terrorized by the Trump administration’s reckless and indiscriminate immigration enforcement, U.S.-born mothers work fewer hours to cover increased care responsibilities at home.

U.S.-born workers are faring worse under Trump’s assault on immigrants–which has included going after not just undocumented immigrants, but also those with green cards, temporary statuses like parole and DACA, and refugees and asylum-seekers. Mass deportations, arrests, detentions, and the stripping of work permits from millions have devastated communities and failed to deliver the promised jobs boom.

Key takeaways:

• The U.S. is the only OECD country that does not provide a national paid family and medical leave program, leaving it to states to ensure workers are protected when they need to take time off from work to care for themselves or a family member. 
• Some states—including eight across the South—have adopted voluntary private insurance models of paid leave that allow private insurance companies to sell insurance policies directly to employers and/or workers themselves. 
• But this approach provides less coverage, covers fewer workers, widens already large disparities in access, and is likely to be more expensive than comprehensive state paid family and medical leave (PFML) plans. 
• Other states should follow the model of proven success from 13 states and Washington, D.C. that have implemented comprehensive PFML programs. 

Comprehensive, universal Paid Family and Medical Leave (PFML) programs are powerful tools to safeguard and improve the economic well-being and overall health of workers and their families. Research shows that PFML improves health for both mothers and infants, reduces poverty and economic insecurity for low-income families, and increases labor force participation rates for mothers for up to five years after the birth of their child. In states that do not have a PFML program, workers lose an estimated $34.3 billion annually in wages due to leave-related absences from work, including $18.8 billion lost by women. 

PFML programs also benefit employers and the broader economy, in part by improving recruitment of talented workers, especially among small businesses, reducing turnover, and increasing worker productivity. The National Partnership for Women and Families estimates that U.S. women’s lower labor force participation—due in part to a lack of paid leave—has cost the broader U.S. economy more than $6.7 trillion in economic activity over the last decade. This is economic activity the U.S. economy would have experienced if American women’s labor force participation rates were the same as those of women in Canada.

Despite PFML’s clear benefits, the U.S. is the only OECD country that does not provide a national paid family and medical leave program—leaving it to states to ensure workers are protected when they need to take time off from work to care for themselves or a family member. 

Lawmakers in 13 states and D.C. have met this responsibility by passing comprehensive paid family and medical leave programs that guarantee coverage. Lawmakers in 10 other states have chosen weaker, much less effective voluntary approaches that defer to employers, leaving many workers uncovered. Vermont and New Hampshire, for example, have implemented public-private voluntary paid leave models where the state contracts with private insurance companies to provide paid leave for public-sector workers and private-sector employers may opt in voluntarily.1 

Across the South, Alabama (2023), Arkansas (2023), Florida (2023), Kentucky (2024), South Carolina (2024), Tennessee (2023), Texas (2023), and Virginia (2022) have adopted voluntary private insurance models of paid leave that allow private insurance companies to sell insurance policies directly to employers and/or workers themselves. 

While the private insurance model has been embraced by the insurance industry—the National Conference of Insurance Legislators adopted a voluntary paid family leave model bill in 2022 at its annual meeting—it fails workers and families. Not only do these programs fail to require employers to provide any coverage to their workforce, but the relevant laws in these states also typically provide few, if any, requirements for what types of leave are covered, the duration of coverage, or wage replacement rates.

This approach to paid family and medical leave provides less coverage, provides it for fewer workers, increases already large disparities in access, and is likely to be more expensive than comprehensive state PFML plans. 

Less coverage 

State PFML programs typically provide workers with 8–12 weeks of paid, job-protected leave to bond with a new child (birth, adoption, or foster), to care for themselves or a family member with a serious illness or injury, or for military caregiving and exigency leave. Wage replacement rates are typically at 90% or higher, at least for low-wage workers, in most states with a paid leave program, including California, Colorado, Connecticut, Minnesota, Oregon, Washington, and the District of Columbia. Maine and Maryland will also pay out at this rate when they begin paying benefits later in 2026. 

Because voluntary models do not require employers to provide coverage for their workers, there is no guarantee that they will. And when employers do purchase paid leave insurance for their workforce, they are unlikely to provide the same level of coverage as comprehensive state programs. The amount of leave provided, the wage replacement rate, and even what life events are covered depend on the employer and/or the insurance company. The New Hampshire plan, which does provide details on requirements for paid leave coverage, only requires 6 weeks of paid leave with wage replacement of just 60%. 

Finally, in direct contrast to comprehensive, universal state paid leave programs, it is unclear how voluntary insurance models of paid leave could provide a job guarantee for workers taking paid leave. In the public-private model offered in New Hampshire, workers are not provided with job protection but may qualify for protection under the federal Family and Medical Leave Act (FMLA), so long as they meet the requirements of FMLA (i.e., they must work at a firm with 50+ employees, and must have worked for the employer for 1,250 hours over the preceding 12 months). 

Covering fewer workers

An estimated 46.2 million workers—almost one-third (32%) of the private-sector workforce in the U.S.—are eligible for coverage under one of the 14 PFML programs in the country. That leaves tens of millions of workers without a guarantee of paid time off when they need to provide for their family’s needs. This reflects, in large part, the lack of a federal universal, comprehensive PFML program and the failure of most states to implement such a plan. Unfortunately, when participation is voluntary, many employers are unlikely to offer this benefit to their workers. 

For example, in the New Hampshire voluntary program, public-sector workers are automatically covered, and private employers and individual workers can voluntarily participate. After three years, just 2.3% of private-sector workers are covered by this PFML plan through their employer. And in the eight states that authorize private insurance paid leave, researchers are unable to determine whether employers are actually purchasing insurance coverage for their workers, but it appears that few insurance companies are even selling policies in these states. It is therefore not surprising that fewer than 1 in 4 workers are covered by PFML through their employer in most of these states, including Alabama, Arkansas, Florida, South Carolina, and Tennessee. In contrast, the 14 state PFML programs cover 93% of all workers in their jurisdictions. 

Increasing disparities

It is not just that fewer workers are covered by voluntary paid leave models, but coverage rates vary dramatically by income, occupation, race and ethnicity, and other characteristics. According to the Department of Labor, 95% of the lowest-wage workers—mostly women and workers of color—lack access to paid family leave. Many of these workers are in occupations with low access to paid leave, including jobs in leisure and hospitality (8%), accommodation and food service (7%), and transportation and warehouse work (9%). 

American Indian/Alaska Native (18%) and Black (23%) workers have some of the lowest PFML coverage, while Asian American, Native Hawaiian, and Pacific Islander (55%) and Hispanic (41%) workers have some of the highest coverage rates. Racial differences reflect, in part, differences in where workers live. For example, more than half of the Black population lives in one of the 16 Southern states or the District of Columbia, where only two states and D.C. have a state paid leave program.

Higher costs

In states where PFML is voluntary, there is little transparency, especially related to costs. We know from the private health insurance model, however, that introducing a profit motive into the provision of care is a terrible way for policymakers to provide workers with the protection they need at affordable costs. A profit-seeking insurance company is going to look for ways to reduce its costs and maximize profits; this inevitably means seeking to reduce payouts, whether through claim denials or other means. There is no scenario in which the profit-seeking model results in both high-quality, comprehensive leave coverage and low costs for workers, employers, or the public. 

In New Hampshire, for example, only one insurance company bid for a contract to provide paid leave benefits, and its estimated rates were generally higher than the payroll contributions in states with PFML programs. 

Further, an insurance industry stakeholder expressed concern about the lack of incentives for private employers to participate in these plans. In both the New Hampshire and Vermont cases, they reported that the models were unsustainable because most employers did not participate in the plans and individual workers whose costs are capped by the state plans would only participate when they anticipated needing coverage—meaning that the insurance pools would never be adequately financed. 

A better model exists

In recent years, challenges facing workers with care responsibilities have rightfully garnered greater public attention, especially in the wake of the COVID-19 pandemic. Many policymakers have taken notice. Unfortunately, in some states—frequently those that have long opposed strong worker protections, a robust safety net, and workplace regulations—lawmakers have opted for voluntary models of paid family and medical leave that are fundamentally flawed. 

Voluntary models allow businesses to decide whether their workers should be paid when they need to take time to care for themselves or their families. Without mandatory coverage, too many workers will not have access to the leave they need, and this is especially the case for those workers who need paid leave the most. 

Instead, we should follow the model of proven success from 13 states and D.C. that have implemented comprehensive PFML programs, including some that have improved programs over time, incorporating lessons and best practices from other states. These programs provide more inclusive coverage for personal illness or injury, bonding with a child, caring for an ill or injured family member, and military deployment.

Universal programs also provide coverage for more workers, including employees, both full- and part-time, both public- and private-sector workers, and in some cases, independent contractors are allowed to opt in. The best programs provide workers with 12 weeks of job-protected leave—i.e., workers are guaranteed their same job or a substantially similar job with comparable pay and benefits when they return from leave and have wage replacement rates of at least 80% of the state median and 100% for low-wage workers. 

These programs have been proven to expand access at a reasonable cost and with a broad range of benefits for workers, businesses, and states overall.

These are benefits that voluntary private insurance models have failed to provide in part because the goal of private insurance is to make a profit, not to ensure the overall well-being of workers and families or their communities. 

1. Lawmakers in New Hampshire introduced a new bill in February 2026 that will extend paid family leave to a full comprehensive state paid leave program, if it is enacted.

Table 1

The benefits of raising the minimum wage

Raising the minimum wage is a research-backed policy that increases earnings for low-wage workers without causing increases in unemployment or other negative economic side effects. A strong wage floor is also a powerful tool for making a more equitable economy. Almost two-thirds of the workers who would be affected by SQ 832 are women (63.3%). The policy would also disproportionately benefit workers of color. Hispanic workers make up 18.2% of the affected workers, compared with 11.0% of the total Oklahoma workforce. Black workers would be 10.6% of affected workers, while only making up 7.1% of the workforce (see Table 3).

The policy would also provide critical support to workers experiencing significant economic insecurity. Nearly three-fifths (59.3%) of the affected workers have incomes below 200% of the poverty line. Research shows that raising the minimum wage significantly reduces poverty, even as higher wages simultaneously reduce some workers’ and families’ eligibility for, and reliance on, public assistance programs.

A higher minimum wage would help combat the affordability crisis

While dozens of states and cities have passed minimum wage increases over the past 15 years, Oklahoma is one of 20 states that still uses the dismally low federal minimum wage of $7.25 an hour. Policymakers have not raised the federal minimum wage since July 2009, meaning that as prices throughout the economy have risen, the buying power of a paycheck at the federal minimum wage has fallen—substantially. Adjusting for inflation, the federal minimum wage is worth 30% less than it was in 2009. In fact, since 2025, the federal minimum wage has officially been a poverty-level wage under the Department of Health and Human Services’ guidelines. The stagnant federal minimum wage is one example of how economic policy in recent decades has suppressed workers’ wage growth, squeezing them as prices have continued to rise and creating the affordability crisis.

Fortunately, SQ 832 would not only raise the state minimum wage to more adequate levels, but also automatically adjust it for inflation beginning in 2030. Twenty-one states already use these automatic increases to ensure that low-wage workers don’t lose ground over time as prices rise.

SQ 832 would go a long way toward improving conditions for the lowest-paid workers in the state as they contend with rising housing, energy, and health insurance costs. However, the reality is that most Oklahoma workers face higher living costs than can be supported by a $15-per-hour wage. Figure A shows estimates of a living wage for a single adult in different Oklahoma metro areas using EPI’s Family Budget Calculator. All Oklahoma metro areas have living wages above $16 an hour. Workers in Tulsa, Oklahoma City, and Lincoln County must earn at least $18 an hour to meet the Family Budget Calculator threshold. Even the lowest-cost county in the state (McIntosh County, not shown) has a living wage greater than $15 an hour.

Figure A

SQ 832’s $15 target would help hundreds of thousands of Oklahoma workers earn closer to a living wage and put Oklahoma’s wage standards more in line with many other states. As of January 2026, 17 states and the District of Columbia had at least a $15 minimum wage—including states such as Arizona, Missouri, and Nebraska.

Lawmakers and voters in many states have adopted higher state and local minimum wages both in response to federal inaction and because economic research has reached a strong consensus that raising the minimum wage, at least to levels attempted thus far, has not caused any measurable harm to employment.  

A $15 minimum wage in Oklahoma is not an outlier compared with policies in other states, even after accounting for differences in the labor markets of different jurisdictions. Economists use the minimum-to-median wage ratio (sometimes called the Kaitz index) to assess the “bite” or strength of the wage floor relative to wage levels in the area where the policy is taking place. This measure allows us to see how a $15 minimum wage compares in New York and Oklahoma, where the overall distribution of wages is substantially different. Most minimum wage research has studied policies with minimum-to-median wage ratios of .67 or less (i.e., a minimum wage raised as high as two-thirds the median wage in the same jurisdiction.) Table 2 shows the current and projected path of Oklahoma’s minimum-to-median wage ratio if SB 832 passes. The ratio would grow as the policy goes into effect, but it would likely never exceed 60%—meaning it is solidly in the range of policies that economists have studied and found no negative effect on employment.

Table 2

Oklahoma’s current minimum wage suppresses pay for workers

Establishing and periodically raising a strong wage floor is necessary to counteract employers’ excess market power over workers, which keeps wages lower than they would be in a truly competitive market. Workers face a multitude of barriers which provide wage-setting leverage for employers. Workers often have limited information about wages and work policies at alternative employers and can be constrained in their job choices by limited transportation options or the need to maintain specific schedules for child care and other family needs. Low-wage workers typically have less financial ability than higher-wage workers to overcome these obstacles, and are more likely to encounter take-it-or-leave-it wage offers that prevent them from negotiating pay. These challenges (sometimes called “frictions”) add up, providing leverage for employers to pay lower wages than workers need—and lower than what is optimal for the local economy.

Oklahoma’s weak wage floor suppresses pay for hundreds of thousands of workers. The state has the third-highest share of workers earning less than $15 an hour (21%). Although there are relatively few workers who earn exactly $7.25 an hour, one undervalued benefit of a strong wage floor is that it supplies upwards pressure on the wages of low-wage workers who earn more than the minimum wage. These “spillover effects” mean that workers above the new minimum wage threshold also see wage increases as employers adjust other workers’ pay to maintain wage ladders and preserve seniority.

Oklahomans have a consequential opportunity to strengthen the wage floor and deliver a meaningful raise to hundreds of thousands of workers. A $15 minimum wage is evidence-backed, both by rigorous economic research and the recent experience of many other states. SQ 832 would support families as they struggle with the affordability crisis and generate lasting improvements to the health and equity of the economy.

Table 3