The farmworker wage gap: Farmworkers earned 40% less than comparable nonagricultural workers in 2022
This is the second blog post in a series on farmworker employment and wages.
The public discourse around farmworkers’ wages has recently reached a fever pitch, with farm employers and industry associations arguing that wages have risen too quickly and are out of control. As a response, farm employers and industry associations have lobbied Congress to reduce the required wage rates for migrant farmworkers in the H-2A visa program—known as the Adverse Effect Wage Rate (AEWR)—and even sued the U.S. Department of Labor (DOL) to invalidate a new methodology for setting AEWRs.
But even a cursory review of the basic wage data on farmworkers and the H-2A program reveals that claims about farmworkers being overpaid are not based on any observable evidence, and in fact farmworkers are paid much less than similarly situated workers outside of agriculture. That is not to say that farmworkers’ wages have not increased over the past decade—they have risen in real terms—but farmworker wage growth must be viewed in the context of wage growth for other workers and employer claims of a labor shortage in agriculture.
In light of these claims and recent lobbying efforts, this next blog post in this series will examine the available evidence on farmworkers’ wages and wage growth compared with workers outside of agriculture. In subsequent posts, I’ll review changes in the AEWR over the past 10 years, and analyze the wages of directly hired farmworkers versus those who are employed by farm labor contractors.
The impact of the wave of strike activity goes far beyond the 2024 election: A revitalized labor movement could lead to a fairer economy for decades to come
Last week, both President Joe Biden and Donald Trump traveled to Michigan. Many in the media cast these visits as similar efforts to woo union voters for the 2024 election. But that is mostly wrong or misleading.
The visits were clearly not symmetric pro-union efforts. Biden walked a picket line in support of the United Auto Workers (UAW)—something no other president in history has done—and told them: “Folks, stick with it, because you deserve the significant raise you need.” Trump, on the other hand, accepted an invitation from the management of a non-union auto parts firm to appear at its factory. He then downplayed the UAW strike, telling his audience that the current negotiations “don’t mean as much as you think” while mostly ranting against electric vehicles.
The impact on next year’s election remains to be seen. But if working people vote based on who truly has their interests at heart—rather than who has repeatedly chosen to put corporate interests above those of workers—that will greatly favor Biden. If, instead, both candidates are portrayed as earnestly courting working-class voters, then the waters will be muddier.
But to assess the two visits to Michigan mainly in terms of their potential effect on the 2024 election is to think too small. The single most important trend in U.S. economic life in recent decades has been the rise of income inequality, which was overwhelmingly driven by anemic growth in wages for all but the very highest-paid workers.
In turn, perhaps the single largest driver of this rise in inequality has been the undermining of the power of organized labor and the subsequent decline of unionization and collective bargaining. If Biden’s walk on the picket line is one signal of a resuscitation of labor’s power, this could lead to a better economic life for low- and middle-income families for generations to come.
This is the first blog post in a series on farmworker employment and wages.
Basic facts about the employment of farmworkers, and the wages they earn, are often difficult to obtain and understand. Media coverage and even policymakers working on agricultural issues often mistake or confuse key data points. This is understandable, given that employment and wage data in agriculture must be pieced together from multiple data sets, which are often incomplete and inconsistent and provide information about different segments of the farm workforce.
This blog post is the first in a series that will attempt to address this information gap by providing some basic facts and information about farmworker employment and wages. I begin by addressing one of the most basic yet confusing questions about farmworkers: How many are employed in the United States?
Florida legislature proposes dangerous rollback of child labor protections: At least 16 states have introduced bills putting children at risk
Updated November 14, 2023
This post has been updated to reflect confirmation of the Foundation for Government Accountability’s role in drafting the proposal to roll back child labor protections in Florida. Previously, the post indicated the group’s support for similar bills in other states and the likelihood of their involvement in Florida.
Last week, Florida became at least the 16th state to introduce legislation rolling back child labor protections in the past two years, and the 13th state to introduce such legislation in 2023. Florida’s bill proposes eliminating all guidelines on hours employers can schedule youth ages 16 or 17 to work, allowing employers to schedule teens to work unlimited hours per day or per week—including overnight shifts on school days. The bill was drafted by the Foundation for Government Accountability (FGA)—a Florida-based right-wing dark money group that has lobbied for similar proposals in multiple states.
At a time when violations of child labor laws are on the rise nationally—and amid reports of serious violations in Florida—lawmakers must act to strengthen standards, not erode existing minimal standards designed to keep youth safe at work and guarantee all children equal access to education.
The expiration of pandemic-era public assistance measures fueled poverty increases in the majority of states (Corrected)
Poverty in the U.S. is a choice directly reflecting federal, state, and local policies. The expansion of safety net programs in response to the pandemic-driven recession reduced poverty rates nationally in 2021 to below pre-pandemic levels. However, because policymakers ended many of these programs—including expanded unemployment insurance, the expanded Child Tax Credit, and economic impact/stimulus payments—poverty rates rose from 7.8% in 2021 to 12.4% in 2022. Child poverty, which had fallen to record lows in 2021, increased from 5.2% to 12.4% in 2022.
In this post, we show poverty rates in each state. Data for the official poverty measure—the one most often quoted in media—are compared with the Supplemental Poverty Measure (SPM), which provides a more complete picture of the well-being of families in the states. When using the more comprehensive measure of poverty, we see that poverty rates increased in the majority of states after programs like the expanded Child Tax Credit were allowed to expire.
New data show that access to paid sick days remains vastly unequal: Amid federal inaction, 61% of low-wage workers are without paid sick days
The spike in child poverty highlighted in the latest Census release illustrated the consequences of allowing crucial government provisions to expire. Although less discussed, the Families First Coronavirus Response Act—a tax credit incentivizing employers to provide sick leave—was another important government provision that expired two years ago. Few policymakers seem intent on renewing it, though some have repeatedly proposed federal legislation that would make paid sick days a permanent benefit.
Absent federal action, new Bureau of Labor Statistics data released today reveal stark inequalities in access to paid sick leave. One that hits hard is the inability of 61% of the lowest-wage workers in the U.S. to be able to earn paid sick days to care for themselves or family members.
Figure A below breaks down access to paid sick days: Whereas 96% of the highest-wage workers (top 10%) had access to paid sick days, only 39% of the lowest-paid workers (bottom 10%) are able to earn paid sick days. That means the highest-wage workers are 2.5 times as likely to have access to paid sick leave as the lowest-paid workers.
Workers without paid sick leave often have to choose between going to work sick (or sending a child to school sick) or risk losing their job or forgoing a vital household expense. In a forthcoming EPI report, we will demonstrate that the costs of these expenses from not having paid sick leave can be high.
Despite a strong labor market, the choice to allow pandemic-era public assistance programs to expire increased poverty across all racial groups in 2022
The 2022 income and poverty report released last week by the Census Bureau offers an initial, authoritative insight into the economic well-being of U.S. households by race and ethnicity. This examination comes in the wake of a notable decrease in child poverty rates in 2021, primarily attributed to the expansion of safety net programs—like the Child Tax Credit (CTC)—that were an integral component of the COVID-19 economic recovery.
The report indicated that although real median household income fell 2.3% in 2022 for all households, there were notable differences across various racial and ethnic groups, as seen in Figure A. Specifically, Black households saw a modest 1.5% increase in real median household income, going from $52,080 to $52,860. Likewise, Hispanic households experienced a slight 0.5% uptick, with median income rising from $62,520 to $62,800. Asian households experienced a 0.6% dip in median household income, from $109,400 to $108,700. In contrast, white, non-Hispanic households experienced a more pronounced 3.6% decline in median household income, from $84,110 to $81,060.
Notably, one of the key factors explaining why Black household median income was seemingly less affected than that of white households is the increased employment of Black workers in the labor market, which managed to counteract the negative impact of inflation on income. In 2022, the number of Black full-time, year-round earners increased by 1.3 million—or 9%— compared with an increase of 450,000 white earners—or 0.6%.
Microsoft’s proposed acquisition of Activision Blizzard could well close in the next month because the regulatory process is ending. In this case, the European Commission has shown even more creativity than the newly-energized U.S. Federal Trade Commission (FTC), approving the transaction in May with some structural consumer protection provisions that are likely to be amplified by the United Kingdom’s Competition and Markets Authority. (Fun fact, an economics dissertation in 2012 argued the merger made sense.)
European Union (EU) and UK authorities basically require the proposed merged company to ensure equal access for consumers and improve consumers’ experience. According to these two European regulators, the merger is allowed only if Microsoft helps consumers. To satisfy the UK, Microsoft is divesting the cloud licensing business of Activision Blizzard to Ubisoft. This apparently addresses the antitrust agency’s demands that consumers get more choice and better outcomes under the merger.
The FTC should act now to be part of the global merger settlement that protects consumer, community, and worker interests.
But, I worry. My concern is that the FTC (and progressive pro-consumer and antitrust economists) will stick to old-fashioned frameworks that assume enforcing smallness equates to enhancing competition. A “break ‘em up no matter what” stance would miss the opportunity to get the best of what well-regulated large firms have to offer. Also, the “small is always beautiful” approach to antitrust defies modern labor and industrial economics research. This modern research highlights that real-world markets—even those with many players operating in a given market—allow for significant exercise of market power, particularly employers’ power over wage-setting for employees.
UAW-automakers negotiations pit falling wages against skyrocketing CEO pay: U.S. auto companies have the means to invest in EVs, pay workers a fair share, and still earn healthy profits
- Profits at the “Big 3” auto companies—Ford, General Motors, and Stellantis— skyrocketed 92% from 2013 to 2022, totaling $250 billion. Forecasts for 2023 expect more than $32 billion in additional profits.
- CEO pay at the Big 3 companies has jumped by 40% during the same period and the companies paid out nearly $66 billion in shareholder dividend payments and stock buybacks.
- Autoworker concessions made following the 2008 auto industry crisis were never reinstated, including a suspension of cost-of-living adjustments. As a result, workers’ wages in the union and nonunion sector alike are falling farther behind inflation: Across the U.S., auto manufacturing workers have seen their average real hourly earnings fall 19.3% since 2008.
- Broadly sharing profits with workers will be even more critical as the industry focuses on becoming greener—both in what and how they produce cars and trucks. The Big 3 firms are set to receive record taxpayer-funded incentives to support their expansion into electric vehicle (EV) manufacturing. EV transition policies and the economic and climate potential they promise will not be sustained if auto workers and auto communities are again asked to sacrifice good jobs.
United Auto Workers (UAW) members at the “Big 3” companies—Ford, General Motors (GM), and Stellantis—are poised to strike this week when their contracts expire September 14. It’s a historic and economically momentous time for this foundational industry in America’s industrial-technological base, and the outcome of the negotiations has potentially profound implications for how successfully we tackle the climate crisis.
The deep roots of the UAW’s current dissatisfaction share much with those taking labor actions to fight back after decades of rising inequality: The pay of typical workers has lagged far behind more-privileged actors in our economy, and the reason for this growing inequality is an erosion of workers’ leverage and bargaining power in labor markets. After surveying here the recent trends in auto industry wages, corporate profits, and executive compensation, it’s hard to blame workers for standing up now. It’s also clear that the companies have more than enough means to meet worker demands, remain profitable, and make the necessary investments to grow into electric vehicles. In fact, the “Big 3” companies can ill-afford not to recruit and retain talented workers in a rapidly transforming industry.
In the 2008 auto industry crisis, GM and Chrysler (now Stellantis) agreed to bankruptcy and government-supported restructuring. While this deal saved jobs throughout the auto sector, it came with steep costs to workers. Union workers agreed to a wage freeze, entry of lower-wage “tiered” workers, and other concessions affecting retiree pensions and health care benefits.1 In 2009, the companies suspended contractual cost of living adjustments and have not had one since. Since that time, average consumer prices have increased nearly 40% and autoworker wages have not come anywhere close to keeping up.
As unionized auto wages fell behind, so did non-unionized auto wages. This spillover effect whereby wage suppression of union workers filters out into the broader economy and damages the wages of non-union workers as well is a key dynamic driving U.S. inequality in recent years. Bureau of Labor Statistics data in Figure A show that production and non-supervisory workers across the broader motor vehicle industry, union and non-union, have taken it on the chin since the 2009 deal. Those working in motor vehicle manufacturing saw their average hourly earnings fall a staggering 19.3% since 2008, after adjusting for inflation. Including the broader motor vehicle parts industries—where outsourcing strategies have long compressed industry wage structures and thus didn’t have as far to fall—average earnings fell 10% in real terms.
Economic relief measures enacted in response to the pandemic strengthened the U.S. social safety net and made a historic dent on poverty in 2021. New Census Bureau data show that the expiration of these key programs caused a significant increase in poverty last year, with the number of children in poverty more than doubling.
Bold policy initiatives such as economic impact/stimulus payments and the expansion of the Child Tax Credit (CTC) helped to shelter millions of people from poverty during a time of social and economic uncertainty at the beginning of the COVID-19 pandemic. For example, the Census Bureau’s most accurate measure of poverty—the Supplemental Poverty Measure—showed that poverty declined by more than 30% between 2019 and 2021, reaching a historic low of 7.8% in 2021. During the same three-year period, child poverty declined by more than half, reaching a historic low of 5.2% in 2021. Importantly, gains during this period were observed across all racial and ethnic groups.
New poverty data for 2022 show that all these gains in poverty reduction have now disappeared. More than 40 million people in 2022 fell below the poverty line, an increase of over 15 million (see Figure A). The substantial weakening of welfare state programs that had protected families from economic deprivation in 2021 resulted in poverty increases across all major racial and ethnic groups last year, further deepening the disadvantages of historically marginalized individuals and families.
2022 Census data preview: Poverty rates expected to increase as high inflation and the loss of safety net programs overshadow labor market improvements
Bold fiscal relief and recovery measures passed in response to the pandemic boosted the economy and helped millions of Americans avoid joblessness and poverty in 2020 and 2021. While the economic recovery has continued to strengthen since then, most of the government relief measures that helped workers and families weather the economic shock have now expired. Upcoming Census Bureau data on earnings, income, and poverty for 2022—released on Tuesday—will reflect how these policy choices impacted the economic well-being of workers, families, and children across the country.
To help place the upcoming data release in context, we highlight key economic trends that have characterized the recovery since 2021. We also show how the current labor market is already on pace to becoming a better year for workers and families with expanding job opportunities and falling inflation.
Extraordinary fiscal recovery measures during the COVID-19 pandemic pushed U.S. public debt to levels rivaling its historic highs. Interest rates are significantly higher than they have been in over a decade. Many projections—including near-canonical graphs of debt as a share of gross domestic product (GDP) produced by the Congressional Budget Office—look extremely daunting, with debt ratios skyrocketing over the next few decades. In short, the benefits of measures to reduce budget deficits appear higher than they have in years.
However, without context, these presentations of debt can make the overall fiscal challenge look near-hopeless and create an environment where any measure to reduce debt seems necessary—no matter its other costs.
This post aims to do two things: (1) bring some context to the size of the policy adjustments needed to stabilize the U.S. debt-to-GDP ratio (or just debt ratio); and (2) compare the size of this policy adjustment with plausible efforts to stabilize the U.S. debt ratio using tax increases alone.
The minimum wage is a New Deal era policy established initially through the Fair Labor Standards Act of 1938 (FLSA). The original bill set a wage floor, instituted a 44-hour work week, and protected children from prematurely entering the workforce. Since its inception, the FLSA has been amended multiple times, with added exemptions and expansions specifying which groups of workers are covered under different aspects of the law. The latest proposed changes in Congress—the Raise the Wage Act of 2023—would increase the federal minimum wage to $17 per hour.
In light of this new legislation, we take a look back at the 85-year history of the minimum wage, how it differs in states and localities, and how minimum wage laws continue to have implications for racial, gender, and economic justice today.
Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for July. Read the full thread here.
The mild drop in hiring puts the hires rate solidly in pre-pandemic territory. While quits edged down, the quits rate remains consistent with a tight labor market; less churn than in the height of the great reshuffling, but still a positive sign for workers. Layoffs remain low. pic.twitter.com/LvdZYhgfVz
— Elise Gould (@eliselgould) August 29, 2023
Even as hires have softened, hiring remains above the quits rate in every sector. The great reshuffling isn’t what it was two years ago, but it continues as workers look and find better job opportunities. pic.twitter.com/xW9o2JCznG
— Elise Gould (@eliselgould) August 29, 2023
Inflation—both overall and core—has been steadily normalizing from its elevated levels of the past two years. Notably, this has happened without any pronounced slowdown in economic growth or any rise in unemployment. In short, the much-discussed “soft landing” seems to be happening. Many have declared this a highly unexpected development that was unforeseen by any economists. This is obviously not true—there have been plenty of us making the case that inflation would indeed likely normalize even without a rise in unemployment.
That said, it has been a highly unusual few years and no economic analyst has called every zig and zag of the inflation debate exactly. Given that this unusual period seems to be ending, it’s a useful time for a retrospective look at predictions I made. This retrospective can be divided into four categories:
- Unambiguously wrong: I predicted a relatively short and narrow burst of inflation, with very little spillover into faster nominal wage growth. Much of this was wrong due to new shocks occurring after this initial prediction, but not all of it.
- Unambiguously right: Higher unemployment was not needed to pull down inflation or even the pace of nominal wage growth.
- Probably wrong: I thought interest rate increases as fast and high as what was done over the past year would have appreciably slowed the economy far more than they have so far.
- Probably right: The role of generic macroeconomic overheating in driving inflation has been far overemphasized. Instead, the evidence is more consistent with a story of extreme shocks causing unexpectedly large ripple effects in the wider economy.
- Totally mixed: What role, if any, did higher interest rates contribute to normalizing inflation?
Below, I’ll say a bit more about each of these.
The Inflation Reduction Act (IRA) was signed into law a year ago this week. It is widely seen as the crown jewel of the “industrial policy” agenda of the Biden administration. While no piece of legislation is perfect, the full potential of the IRA to deliver a radically better future is often underrated. In this post, we highlight many of the IRA’s huge steps forward and also talk about the unfinished agenda for securing faster, fairer, and greener growth in the U.S. economy.
Put simply, the IRA puts the U.S. on a path where meeting its global climate change commitments is within reach—commitments which would provide a genuine chance at securing a livable planet for future generations if they are kept. At the beginning of August 2022, there was no such path to secure this livable future, but there is now—and that is a mammoth victory.
The IRA was essentially a climate change bill that included extraordinarily important health and tax changes as ride-alongs. If the bill had only included these health and tax policy changes, it would have been eminently worthy of applause. The fact that these changes were essentially side-shows to the IRA’s climate impacts is one clue about how transformative it might turn out to be.
Economist Larry Summers made waves with highly critical remarks about the Biden administration’s economic policies while attending a Peterson Institute for International Economics event on industrial policy and U.S. foreign policy last month. Although Summers expressed support for the trio of industrial policy bills that the Biden administration has passed—the Infrastructure Investment and Jobs Act (IIJA), the CHIPS and Science Act, and the Inflation Reduction Act (IRA)—he strongly criticized the “doctrines” (his word) of the Biden administration.
For now, we’ll set aside the question of whether supporting the administration’s concrete actions but disliking their rhetoric merits this level of blistering criticism. Instead, we’ll point out two things. First, Summers’s description of the aims of these industrial policy bills (and hence the “doctrine” of Bidenomics) is obviously inaccurate. Second, to the degree that the administration really has made an intellectual break with the past (including past Democratic administrations), it’s a welcome and necessary break. This is especially true regarding Summers’s claim that the pre-Trump approach to trade policy is a model that should be restored.
New data show that state and local governments still have not spent a majority of American Rescue Plan funds: Important opportunities remain to invest in public services
The U.S. Department of the Treasury has released new data on how state and local governments are spending the $350 billion of State and Local Fiscal Recovery Funds (SLFRF) allocated by the American Rescue Plan Act (ARPA), covering expenditures through March 31, 2023. Less than half of the money has been spent: States have spent 45% of the $195 billion they were allocated and local governments have spent 38%, both slight increases from the previous quarter. However, these data do not include most spending decisions made during spring state legislative sessions, which may change the situation somewhat.
Fiscal recovery funds can be used for myriad purposes related to the COVID-19 pandemic and its economic impacts. While the official pandemic state of emergency has come to a close, the economy and public services are still dealing with the negative economic impacts, including a loss of public-sector jobs. We find that the 10 states that have spent the least amount of their fiscal recovery funds have state job vacancies twice as high as the 10 states that have spent the most.
Governments should prioritize rebuilding public services and filling state and local government job vacancies with their remaining funds. Fiscal recovery funds must be obligated (designated for specific uses) by December 31, 2024, and must be spent by December 31, 2026.
States across the country are quietly lowering the alcohol service age: An industry already rife with abuse—including child labor law violations—would like your server to be an underage teenager
In states across the country, lawmakers are engaged in a coordinated, corporate-backed campaign to weaken child labor protections. One type of protection—minimum ages to serve alcohol in bars and restaurants—has been eroded in seven states since 2021. While lowering the age to serve alcohol may sound benign, it is not. It puts young people at risk of sexual harassment, underage drinking, and other harms.
The restaurant industry is already plagued by labor violations. In fact, it is the industry with the highest incidence of child labor law violations. Laws that lower the alcohol service age will subject more young people, at younger ages, to potentially dangerous working conditions at low wages—all in service of employers’ pursuit of cheap labor.
- The restaurant industry is engaged in a coordinated multistate effort to lower the age at which young workers can serve alcohol in restaurants and bars.
- Since 2021, at least nine states have introduced bills to lower the alcohol service age. Seven states have enacted them.
- Wisconsin is seeking to lower the alcohol service age to 14.
- In West Virginia, 16-year-olds can serve alcohol and bartend.
- These same nine states have a pattern of low minimum wage rates and subminimum wages for tipped workers and youth.
- Serving alcohol puts underage workers at risk of sexual harassment and increases the likelihood that underage workers and customers will consume alcohol.
Supreme Court decision affirms President Biden’s power to set immigration enforcement priorities and protect labor standards through deferred action
One of the U.S. Supreme Court’s final decisions this term was in U.S. v. Texas, a dispute between the executive branch and two U.S. states—Louisiana and Texas—regarding whether President Biden had the authority to set priorities for how his administration conducts immigration enforcement. In other words, the states challenged the extent of prosecutorial discretion that can be exercised by a U.S. president when enforcing immigration statutes. The Supreme Court ruled by an 8–1 vote that U.S. states do not have the necessary standing to challenge the federal government’s immigration enforcement priorities—thereby affirming the president’s ability to exercise prosecutorial discretion.
Most of the media coverage and analysis of the decision has glossed over one major impact the decision could have: it could help the Biden administration better protect labor standards for all workers, including migrant workers. While helping workers was not the rationale of the decision, it could be one of its lasting impacts.
Celebrities like Fran Drescher got a lot of media attention last week when they went on strike. The 160,000+ members of the Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) joined 11,000 already striking film and television writers in the first industrywide shutdown in 63 years.
But it is not just actors—workers across the economy are either walking a picket line or preparing for labor actions later this summer. This has led many to wonder: Why do so many workers feel their only option this summer is to strike?
To us, the real question is: Why didn’t we see more of these actions sooner? For decades, the U.S. economy has been churning out radically unequal incomes. Further, essentially all of this increased inequality has come from unbalanced bargaining power in the labor market. Profit margins have increased at the expense of typical workers’ wages, and only the pay of the most highly privileged workers—corporate managers and executives and a select slice of other highly credentialed professionals—has managed to grow as fast as overall economic growth. The overwhelming majority of U.S. workers have not seen their wages grow at pace with their employers’ profits or executive pay scales.Read more
The equalizing effect of strong labor markets: Explaining the disproportionate rise in the Black employment-to-population ratio
Earlier this year, the share of the adult Black population with a job—or the Black employment-to-population ratio (EPOP)—surpassed the share of the adult white population with a job for the first time in modern history. While the Black EPOP has since declined somewhat, it’s worth examining the reasons behind the sharp increase in employment over the pandemic recovery and the narrowing of the gap between Black and white workers in 2023. In my analysis, I conclude the following:
- The Black EPOP appears close to the white EPOP in recent years in part because the Black population is significantly younger (i.e., more likely to work) than the white population. After accounting for their different age distributions, Black workers have significantly lower EPOPs than white workers.
- However, the tremendous bounceback in the labor market was a significant boon for Black workers. While Black workers suffered greater losses in the pandemic recession, the employment gap narrowed because Black workers experienced a stronger jobs recovery than white workers.
Guest post: New York City’s app-based delivery workers will receive a long overdue pay raise to nearly $18 an hour: Pay ordinance creates important policy model for states and cities across the country
In 2021, New York’s City Council passed a set of laws to protect app-based delivery workers, including a bill intended to set a wage standard for some 65,000 delivery workers—the majority of whom are immigrants—following a study from the city’s Department of Consumer and Worker Protection (DCWP).
Now, more than six months after DCWP released its initial findings, the city is following through on its promise to raise wages for delivery workers on apps like DoorDash, Grubhub, and Uber Eats. The new pay scale in New York City starts at $17.96 per hour on July 12, and will increase to $19.96 per hour by April 2025. That’s a big step forward from the $7.09 per hour delivery service workers are currently paid before tips, according to DCWP’s findings.
It is a huge milestone after years of work by the Worker’s Justice Project, Los Deliveristas Unidos, and their allies to improve working conditions for a workforce that helped keep New York afloat through the pandemic. Thanks to the detailed DCWP analysis of confidential data provided by Grubhub, Uber Eats, and DoorDash, we finally have an accurate accounting of the number of workers in this industry, their wages, and expenses and risks they incur on the job. Los Deliveristas are rightly celebrating a victory.
At the same time, there is a long way to go to really get this right. After accounting for expenses that DCWP estimates at $2.82 per hour, $17.96 is just higher than New York’s minimum wage (currently $15 per hour, rising to $17 per hour by 2026). It’s a lot less than the $23.82 per hour that DCWP recommended in November. And now, DoorDash and others have sued the City of New York in an attempt to avoid paying these fairer wages.
After heavy lobbying by app companies, the new city standard will also allow companies to opt out of a requirement to pay for total hours worked, and instead companies can pay only for the time workers have an order in hand. This loophole leaves the worst actors in this industry free to continue using a predatory pay model that makes it impossible for workers to earn a decent wage unless they go out under the most dangerous conditions like heat waves, flash floods, and cold snaps.
June jobs numbers signal a growing economy: Gains for women and strong public sector growth, but losses for Black workers
Below, EPI senior economist Elise Gould offers her initial insights on the jobs report released this morning.
From EPI senior economist, Elise Gould (@eliselgould):
Labor market continues to be strong, mostly positive signals from today’s report with some notable trends to watch:
– Payrolls up 209k (+60k public sector), unemployment down to 3.6%, prime-age women’s EPOP highest on record
– Black and young unemployment ticked up again in June
— Elise Gould (@eliselgould) July 7, 2023
The gains in public sector employment over the last few months are a welcome trend for the workers in those jobs and the vital services they provide. The public sector job shortfall is down to a deficit of 161k jobs. State and local jobs are still 1.1% below pre-pandemic levels. pic.twitter.com/7PfECgXXsP
— Elise Gould (@eliselgould) July 7, 2023
As the unemployment rate ticked down to 3.6% in June, the share of 25-54 year olds with a job continued to rise, hitting 80.9% in June, its highest level in over 20 years. pic.twitter.com/s2dtypt06E
— Elise Gould (@eliselgould) July 7, 2023
Concerning is the continued rise in Black unemployment. While it’s important not to make a big deal from one-month of data, I expected Black unemployment would be revised down last month and continue falling. That did not happen. Hopefully it’s not a sign of things to come. pic.twitter.com/53q2wFEWen
— Elise Gould (@eliselgould) July 7, 2023
After hitting a 70 year low in April, the unemployment rate for young workers (16-24 years old) rose in May and ticked up slightly in June. Youth unemployment (16-19 year olds) rose sharply the last two months, from 9.2% in April up to 11.0% in June. pic.twitter.com/KYqXd0rrN8
— Elise Gould (@eliselgould) July 7, 2023
The Black-white wealth gap is staggering. In our recently released book, Just Action, Richard Rothstein and I describe how this gap is at the root of our nation’s most serious problems of racial inequality. While wealthy white families often use their economic resources to segregate and create unique advantages for themselves, lower-wealth African American families are limited to living in lower-resourced, more disadvantaged areas. Partly because the differences in household wealth between typical African American and white families determine the neighborhoods in which they live, this wealth disparity is a key factor in Black youths’ poorer academic outcomes, Black adults’ greater health challenges, and young African Americans’ disproportionate exposure to police abuse and higher incarceration rates.
As we note in Just Action, African American household income is about 60% of white household income. That discrepancy is concerning in itself, but the wealth gap is much, much worse: African American household wealth is only 5% of white household wealth.
Government housing policy exacerbated the wealth gap
While many factors have contributed to the troubling disparity between the income and wealth gaps, one factor stands out: government housing policy in the early- to mid-twentieth century.
Policies that subsidized homeownership for white working- and middle-class households during that period allowed those families to buy homes. They accumulated wealth over decades as their homes appreciated. They then passed on that wealth to their children and grandchildren.
This summer, Connecticut, Nevada, Oregon, and Washington D.C. will raise their minimum wages, boosting pay for 765,000 workers who will collectively gain more than $615 million in wages. Meanwhile, 15 cities and counties will implement minimum wage increases, providing timely relief for low-wage workers facing rising prices. These updates can all be viewed in EPI’s interactive Minimum Wage Tracker and in Figure A and Table 1 below.
Beginning July 1, Oregon will increase its hourly minimum wage by $0.70 to $14.20, while Nevada’s will increase by $0.75 to $11.25. Washington D.C. will increase its regular minimum wage by $0.90 to $17.00 while increasing its tipped minimum by $2.00 to $8.00. Connecticut increased its minimum wage on June 1 by $1.00 to $15.00 an hour.