The economy isn’t sick right now—but it has chronic conditions that demand attention
Despite consumer sentiment about the economy improving through the end of 2023, there is still a disconnect between how people feel about the economy and what the data show. Consumer spending was up in 2023, especially through the holiday season, yet inflation anxiety and recession fears were still present. Where does this disconnect come from? Are people simply wrong about the economy, or are the numbers lying to us?
We can square this circle by acknowledging that two things can be true at once: The economic data showing low unemployment, rising wages, and slowing inflation are indeed accurate evidence that the economy is not in a crisis, and yet people’s anxieties reflect legitimate economic concerns. Those anxieties highlight a series of structural issues that have plagued the U.S. economy for decades. It is precisely because we are not currently in an acute crisis like a recession that people have the latitude to identify these chronic economic conditions that deserve to be addressed.
Let’s start by looking at what economists mean when rightly pointing out how strong our economy is right now, especially when compared with the past few years. Then, we can dig into the chronic problems that have been facing the U.S. economy for decades.
Job Openings and Labor Turnover Survey shows a strong—but not overheating—labor market
Below, EPI senior economist Elise Gould offers her insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for December. Read the full thread here.
Don’t wait on wage growth—the Fed should cut rates at this week’s meeting
Over the past six months, core inflation has risen exactly in line with the Federal Reserve’s long-run 2% inflation target. When this key measure of inflation (which excludes volatile food and energy prices) is neither above nor below this target, this is a good sign that the Fed’s policy should be roughly neutral—aiming to neither increase nor depress economic activity.
Yet Fed interest rate policy today is nowhere near neutral—instead it is putting a stiff drag on potential growth. The Fed’s main policy instrument—the federal funds rate—stands between 5.25 and 5.5%, its highest level since at least the business cycle peak of 2007 (and maybe even the peak of 2000). There are a lot of debates among economists about the correct “neutral” level of interest rates in the economy (and even debates about whether it exists or is a useful guide to policy at all), but nobody thinks today’s rates are even close to neutral. Instead, interest rates closer to 2.5-3% are likely needed to keep monetary policy from continuing to threaten growth. (Rates lower than this would likely start providing some stimulus to the economy, which does not seem needed at the moment.)
Given that inflation has been brought all the way back down to the Fed’s target, further economic cooling is no longer needed, and the Fed should move quickly to a more neutral stance.
Extending unemployment insurance to striking workers would cost little and encourage fair negotiations
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Unions and collective action have long served as a vehicle for ensuring prosperity for working families and creating a more equal economy. Despite these critical functions, workers engaged in collective action, like strikes, have historically been barred from accessing safety net programs like unemployment insurance (UI). In a welcome development, state lawmakers are beginning to rethink this convention, recognizing the dual roles of UI in stabilizing the economy and unions in securing broad-based economic growth.
A growing number of states are proposing legislation to extend unemployment insurance to striking workers
In just the past two years, lawmakers in nine states have introduced legislation aimed at granting or enhancing striking workers’ access to UI. As shown in Table 1, New York and New Jersey are currently the only two states where striking workers can apply for UI benefits following a 14-day waiting period. This month, New York legislators proposed a further reduction to seven days.
However, not all legislative efforts have been successful. The Connecticut Senate rejected a bill that would have permitted striking workers to access UI after 14 days, while California Governor Gavin Newsom vetoed a similar bill that passed in the state legislature. Presently, Massachusetts and Pennsylvania legislators are considering laws with 30-day waiting periods, Illinois and Ohio are considering bills with 14-day waiting periods, and Washington is considering a bill with a seven-day waiting period.
Decline of labor unions weakens American democracy
Earlier today, the U.S. Bureau of Labor Statistics (BLS) announced that the share of workers represented by unions was 11.2% in 2023, down slightly from 11.3% in 2022. This news of stagnation is especially sobering for the American labor movement because the past year was full of major victories and growing momentum. The UAW’s ‘stand up’ strike led to record contracts for autoworkers, graduate students around the country won union elections, and public support for labor unions reached near-record highs—especially among young Americans. The decline of the American labor movement since the 1970s has been a major cause of stagnating wages and rising income inequality, and contributes to U.S. workers facing more dangerous working conditions than their counterparts in other wealthy countries. With the 2024 presidential election approaching, however, it is crucial to look beyond these economic consequences—as important as they are—and to recognize that the decline of American labor unions also leaves American democracy vulnerable.
That is the conclusion of our recent EPI report on labor unions and the use of ballot drop boxes during U.S. elections. Since ballot drop boxes are a highly secure way to increase access to voting during elections, the Republican Party has sought to limit their use as part of a broad assault on voting rights. During the 2022 midterm elections, for example, we found that unified Republican control of a state government was associated with a 95% decrease in ballot drop boxes per capita. Seventeen states completely banned ballot drop boxes—and all but one of them had either a Republican governor or a Republican-controlled legislature. By contrast, Democrats championed the John Lewis Voting Rights Advancement Act (VRAA) of 2021—national legislation that included protections against numerous state-level voting restrictions, including those related to ballot drop boxes. Senators Joe Manchin and Kyrsten Sinema, however, joined Republicans to block these reforms in early 2022.
There’s no debate: Measurable income inequality has skyrocketed in recent decades
This is an excerpt from an op-ed that originally ran in CNN. Read the full op-ed here.
In recent years, researchers have debated the simple question of whether inequality has risen a lot or a little in the United States over the past half-century. Lots of arguments in this debate surround highly technical issues like, “Should the income of owners of ‘pass-through businesses’ be reported as wages or business profits?” or “Is income that is not reported on tax returns mostly earned by rich or middle-class households, and how do you know?”
But we’ve identified available data that sidesteps nearly all these complexities and demonstrates that inequality has indeed risen enormously: what individual Americans earn in the labor market.
State and local governments have only spent about half of American Rescue Plan funds as critical deadline nears
2024 is the last opportunity for state and local governments to make spending decisions on funds provided by the American Rescue Plan Act (ARPA). Many states, localities, and school districts still have considerable unspent ARPA funds. At a time when the public sector has still not fully recovered from the job losses of the pandemic, governments should use remaining ARPA funds to shore up public services and invest in education.
ARPA allocated $350 billion to state and local governments (State and Local Fiscal Recovery Funds, or SLFRF). While governments do not need to spend those funds until 2026, they must be obligated by December 31, 2024. ARPA also provided an additional $122 billion to school districts and state education authorities (Elementary and Secondary Schools Emergency Relief, or ESSER III). That money must be obligated by September 30, 2024, and must be spent by January 28, 2025.
The latest SLFRF spending data, covering the period ending June 30, 2023, show that roughly half of fiscal recovery funds had yet to be spent. The amount is even higher for local governments, with more than 56% of funds unexpended.
Youth subminimum wages and why they should be eliminated: Young workers face pay discrimination in 34 states and DC
In 2023, the issue of child labor re-emerged as a national crisis. Federal data on the rise of child labor violations and numerous investigative reports of widespread illegal youth employment garnered sustained media attention, sparking outrage from the public and lawmakers alike. At the same time, EPI has documented an ongoing, coordinated effort to roll back existing child labor protections that is gaining momentum in states across the country. Legislative proposals to weaken child labor protections—some of which have already been enacted—allow employers to hire teens for more dangerous jobs or extend the hours young people can work on school nights.
What has received far less attention is the long-standing system of pay discrimination against young workers under federal and state laws. These laws allow employers to pay youth less than adults in the same jobs and, in many cases, exclude young workers from the minimum wage protections that cover most adult workers.
In states across the country, advocates and lawmakers are working to eliminate subminimum wages for low-wage tipped or disabled workers. Amid increased child labor violations and a growing movement to roll back protections for working youth, lawmakers should also work to eliminate youth subminimum wages. Age-based pay discrimination is unfair and harms workers of all ages.
December jobs report caps another year of strong job growth
Below, EPI senior economist Elise Gould offers her insights on the jobs report released this morning, which showed 216,000 jobs added in December. Read the full thread here.
Job Openings and Labor Turnover Survey: Quits, layoffs, and hires all continued to trend down in November
Below, EPI senior economist Elise Gould offers her insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS). Read the full thread here.
Twenty-two states will increase their minimum wages on January 1, raising pay for nearly 10 million workers
On January 1, 22 states will increase their minimum wages, raising pay for an estimated 9.9 million workers. In total, workers will receive $6.95 billion in additional wages from state minimum wage increases. In addition, 38 cities and counties will increase their minimum wages on January 1 above their state’s wage floors, adding to the number of workers likely to see increased earnings. In the absence of federal action, states and localities continue to take the lead in advancing fairer wage floors via legislation, ballot measures, and automatic inflation adjustments.
The minimum wage continues to be a vital policy for creating a more equitable economy. According to our analysis:
- Women make up more than half (57.9%) of workers getting an increase on January 1.
- The minimum wage increases will also disproportionately benefit Black and Hispanic workers. Black workers make up 9.0% of the wage-earning workforce in the states with increases, but are 11.1% of the affected workers. Similarly, Hispanic workers are 19.6% of the workforce in these states, but 37.9% of the workers receiving wage increases.
- These increases will also bring important benefits to working families. More than a quarter (25.8%) of affected workers are parents, or more than 2.5 million people. In total, 5.6 million children live in households where an individual will receive a minimum wage increase.
- The increases will provide critical support to workers and families in need. Almost one in five (19.7%) workers getting a raise have incomes below the poverty line, and nearly half (47.4%) have incomes below twice the poverty line.
- More than half (51%) of workers getting minimum wage increases are in California, Hawaii, and New York, all high cost-of-living states.
Biden administration moves to protect vulnerable nursing home residents and workers
The Biden administration has issued a proposed rule setting minimum hours of care by registered nurses and nurse aides in nursing homes. Since nursing home owners can boost profits by reducing staffing levels to dangerous levels, this is a critical step toward protecting residents and workers.
The industry lobby says that low staffing levels aren’t due to profit-seeking, but rather a shortage of workers. However, the supposed “shortage” is self-inflicted. As we explained in a public comment on the proposed rule, nursing home workers are grossly underpaid and overworked. Declines in nursing home employment also reflect a shift toward home- and community-based services (HCBS) that accelerated in the wake of the COVID-19 pandemic, which devastated nursing home residents and staff.
The teacher shortage shows small signs of improvement, but it remains widespread
Key findings:
- New School Pulse Panel data show that educators’ feelings of being understaffed fell by eight percentage points in the past year, suggesting an improvement from pandemic heights of understaffing stress amid a widespread teacher shortage.
- Some improvement in feelings of being understaffed may be linked to American Rescue Plan (ARP) funds. SPP data show that 37% of public schools created positions with ARP funds.
- Of these schools, 15% created positions for academic interventionists, 14% for mental health professionals, and 6% for academic tutors.
- But disparities filling teaching vacancies remain: While difficulty filling vacancies declined in majority white schools and in schools in higher-income neighborhoods, it increased in schools in lower-income neighborhoods and in schools with greater than 75% minority students.
The COVID-19 pandemic greatly exacerbated a long-standing and widespread teacher shortage in schools. By mid-2022, several indicators of teaching shortages and staffing stress were at record highs. Recent data from the School Pulse Panel (SPP) show that understaffing stress in schools has relented somewhat in the past year, though progress remains modest and uneven. The SPP also indicates that funding from the American Rescue Plan (ARP) has helped close some of these staffing gaps and address pressing needs in the nation’s schools.
While schools have been struggling to fill vacancies long before the pandemic due to chronic low pay and compensation, the stress of teaching during the pandemic made the teacher shortage even worse. A RAND 2022 report showed that 73% of teachers reported having “frequent job-related stress” compared with 35% of working adults, which can contribute to otherwise qualified potential teachers taking positions in other fields. This degradation of non-wage-related working conditions means that schools need to pay teachers more to retain them and adequately staff schools, yet this salary increase has not happened. In 2022, the teacher pay penalty—the gap in pay between teachers and similarly educated workers in other professions—hit a new high of 26.4%.
New School Pulse Panel data allow us to assess how school staffing has fared in the aftermath of the pandemic. Administered by the National Center for Education Statistics, the SPP has sampled school and district staff on a monthly basis since 2021. In August 2023, they surveyed 3,998 public elementary, middle, and high schools about staffing needs. Given the long-standing teacher shortage, the latest SPP data can be seen as an indicator of how effective the nation has been in alleviating long-run school staffing stress over the past year.
Congress and President Biden should not trade away human rights and asylum protections for temporary defense funding
The Senate, House, and White House are embroiled in down-to-the-wire negotiations to trade harmful changes to the asylum system and draconian immigration enforcement measures in exchange for approving a one-time defense supplemental funding package. We urge members of Congress and the White House to reject any such deal.
If Congress passes the one-time defense supplemental, the money will likely run out in just a few months. But the major anti-immigrant policy changes that Congress and the White House are reportedly considering will be permanent. These policies include an updated version of Trump’s Title 42 policy, mandatory detention of migrants and asylum seekers while they adjudicate their claims (likely including children), increased power to deport people encountered beyond the border areas of the United States with little to no due process (known as “expedited removal”), and changing the legal standard for asylum to make it more difficult to prove an initial claim.
If passed, the measures under consideration would go even further than some of the Trump administration’s harsh and brutal actions—and because they will carry statutory weight, it’s unlikely that immigrant rights advocates will have a path to challenge them in court. Further, it should be apparent to any reasonable legislator or administration official that these policy changes will not improve the situation at the southern border and will have harmful impacts on migrant and U.S. workers alike.
Wage inequality fell in 2022 because stock market declines brought down pay of the highest earners: But top 1% wages have skyrocketed 171.7% since 1979 while bottom 90% wages have seen just 32.9% growth
Key findings:
- Average inflation-adjusted annual earnings fell across the board in 2022, but the losses were far smaller among the bottom 90% of wage earners. The disproportionate losses for the highest earners—driven by stock market declines—led to a compression in the overall wage distribution over the year.
- Over the pandemic labor market, annual earnings growth was fairly consistent for high earners and the bottom 90%, averaging about 2.6% between 2019 and 2022.
- Over the long run, however, earnings growth has been vastly unequal. From 1979 to 2022:
- Wages for the top 1% and top 0.1% skyrocketed by 171.7% and 344.4%, respectively.
- Wages for the bottom 90% grew just 32.9%.
- The top 1% earned 12.9% of all wages in 2022—up from 7.3% in 1979. The bottom 90% received just 60.1% of all wages in 2022, far lower than their 69.8% share in 1979.
Newly available wage data from the Social Security Administration (SSA) allow us to analyze wage trends through 2022 for the top 1% and other very high earners, as well as for the bottom 90%. Average earnings for all groups fell in 2022, likely due to unusually high inflation. Year-over-year inflation was 8.1% because of supply chain bottlenecks, shifting demand during the pandemic, and energy price shocks from the Russian invasion of Ukraine which began in February 2022.
Table 1 shows average annual earnings by wage group for each of the business cycle peaks since 1979, as well as for the last two years (in 2022 dollars). Average real earnings for the bottom 90% of the wage distribution experienced the smallest losses in 2022 (–0.2%), 10 times smaller losses than the 90th-99th percentile (–2.2%) and 70 times smaller losses than the top 1% (–14.3%). This is consistent with other research finding that low-wage workers had the strongest hourly wage growth over the last three years, leading to significant wage compression.
At the very top of the earnings distribution, however, the losses far exceed what would be expected from this period of high inflation alone. SSA pay not only includes wages, salaries, commissions, bonuses, and severance pay; it also includes exercised stock options, which is not a small share of very high-end compensation. Given that 2022 saw stock prices fall considerably (especially relative to strong growth in 2021), these stock market declines pulled down top 1% pay in the SSA data and also explain why CEO pay fell in 2022.
Jobs report shows a sustainably strong labor market—not a coming recession
Below, EPI senior economist Elise Gould offers her insights on the jobs report released this morning, which showed 199,000 jobs added in November. Read the full thread here.
New York’s minimum wage law has a loophole that could freeze increases starting in 2027: This “off-ramp” provision must be repealed
This blog was produced in collaboration with the National Employment Law Project.
In a public opinion poll released earlier this year, more than two-thirds of New York voters expressed a belief that workers need to earn at least $20 an hour to live at a decent level. In response, a worker-led campaign, Raise Up New York, advocated for a $21.25 minimum wage in the Empire State.
Yet, despite overwhelming public support for a significant minimum wage raise, New York Governor Kathy Hochul demanded that the state legislature slash the target rate under consideration by more than $4 an hour, and she ultimately signed into law an inadequate minimum wage of just $16 by 2026 in upstate New York and $17 downstate. In addition, the law includes a dangerous “off-ramp” provision that could freeze any increase to the state’s minimum wage starting in 2027.
Top EPI reports and blogs in 2023: Child labor, economics of abortion bans, and teacher pay among the most read EPI research
It’s hard to imagine the plight of child labor would again emerge as a major problem in the United States, but that’s exactly what happened this year.
Economic Policy Institute researchers tracked the growing list of states moving to weaken child labor laws, and readers flocked to our research on the topic, making it the most read EPI report published this year.
The economics of abortion bans, teacher pay, and a host of other issues were also among the most read content on our website.
Here are the top five reports and the top five blog posts published this year.
Job openings continue to head toward pre-pandemic levels
Below, EPI senior economist Elise Gould offers her insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for October. Read the full thread here.
Native American child poverty more than doubled in 2022 after safety net cutbacks: Child poverty rate is higher than before the pandemic
This November, the U.S. observes National Native American Heritage Month. This commemoration celebrates the sovereignty, contributions, and resilience of tribal nations and Native people in the face of a violent, painful, and ongoing history.1 The enduring effects of colonialism, genocide, and state-sanctioned theft and violence continue to shape the socioeconomic outcomes of Native people. Today, the Native American community makes up a diverse and growing share of the U.S. population, with children accounting for more than one-quarter of the American Indian and Alaska Native (AIAN) population.2
Poverty increased sharply for AIAN children in 2022, as policymakers allowed key economic relief measures to expire that helped families absorb the shock of the pandemic. Native American children have historically been painfully exposed to economic vulnerability. Structural inequities in the labor market and the broader economy continue to limit the earnings of AIAN families and leave workers in this community unfairly exposed to job losses.
If you must argue about the economy over Thanksgiving dinner, at least get the facts right
How the economy is doing has always been a contentious topic, particularly when friends and family with different politics gather for Thanksgiving dinner. And the question has gotten even thornier this year, with consumer sentiment and polling data about the economy becoming historically de-linked from official measures of economic health like GDP. It’s not our job to tell people how they should feel about the economy, but we can at least add some facts as context to common complaints.
Myth: “The economy is simply bad under the Biden administration”
In January 2020, the share of Americans saying that the U.S. economy was in “poor” shape was below 10%, but in recent months that share was above 40%. However, the unemployment rate in early 2020 and the middle of 2023 was essentially identical. The share of adults between the ages of 25 and 54 with a job was actually higher in the more recent period. Economic growth in the last quarter of 2019 was 2.6%, while it was 4.9% in the third quarter of 2023. The economy is growing (at least) as fast as it was pre-pandemic, and jobs are more plentiful.
This higher-pressure labor market has substantially eroded inequality in wages. Consider one metric of inequality—the ratio of the 90th-percentile wage (the wage earned by the worker who has higher pay than 90% of the workforce) to the 10th-percentile wage. Between 1980 and 2019, this ratio rose enormously by about 34%. But a full third of this 39-year increase has been erased in less than three years after 2019 because of rapid growth in pay for low-wage workers, which has not been a historical norm. If this inequality reduction sticks, it could well be the single most important development in the economy in decades.
The school bus driver shortage remains severe: Without job quality improvements, workers, children, and parents will suffer
When students returned to school in August and September, numerous media reports drew attention to school bus driver shortages across the country. The turbulence resulting from these shortages has at times been dramatic. In Louisville, Kentucky, school district leaders fumbled the rollout of an expensive new routing software intended to reduce the number of school bus drivers needed, leading to misplaced students and forcing the school district to halt classes for more than a week. Meanwhile, in New York City, the union contract for school bus drivers expired, with contentious negotiations resulting in a narrowly averted strike.
School bus drivers remain a vital part of the education system. Roughly half of school children rely on bus services to get to school. Interrupted services and instability can disrupt learning time and contribute to absenteeism. Reduced bus services can be a particularly challenging hurdle for children with disabilities, who sometimes travel far distances for specialized education. With many students and families already trying to recover from challenges and learning disruptions caused by the pandemic, it is more important than ever to have services as basic as bus transportation to school functioning effectively.
As some states attack child labor protections, other states are strengthening standards
Amid increasing child labor violations and ongoing attempts to roll back protections for child labor in states across the country, bills to strengthen protections in multiple states and at the federal level are a welcome and long-overdue development. State lawmakers have especially important roles to play in addressing the urgent need to protect youth workers in dangerous jobs like agriculture, meatpacking, and construction.
In the past two years, seven states have introduced bills to strengthen child labor protections and four have enacted them
In the past two years, seven states have introduced bills to strengthen protections for child labor and four have enacted them (Arkansas, Colorado, Illinois, and California). In June 2023, Colorado enacted a law that allows a family to sue the employer of a child who was injured at work while employed in violation of the law. In September, Illinois passed a law mandating that child influencers and children who appear in their parents’ monetized digital content must be fairly compensated—the first of its kind in the nation. And in October, California’s governor signed into law a measure that will teach high school students about their workplace rights and right to join a union—also the first of its kind. Earlier this year, Arkansas passed a harmful bill eliminating youth work permits, which informed families of a child’s rights at work and provided documentation that can be used to aid compliance with the law. A week later—following a slew of negative press attention and alarm raised by child welfare advocates—Arkansas lawmakers passed a bill to increase penalties for child labor violations, though without adding any new enforcement funding or capacity.
Personal reflections on the life and legacy of Bill Spriggs
This piece was originally published in the Review of Black Political Economy.
The Economic Policy Institute’s public statement on the death of Dr. William E. Spriggs characterizes his professional legacy as follows:
“A fierce proponent of racial and economic justice whose influence as a public intellectual and economist reached across academia, labor, think tanks, positions in the Clinton and Obama administrations, and the civil rights community. In addition to broadening discussions about race and economics within these critical institutions, Dr. Spriggs worked tirelessly behind the scenes to expand representation of people of color within the economics profession and to mentor future generations of economists.”
At the end of his life, his resume included titles, such as chief economist of the AFL-CIO, economics professor, and former chair of the Howard University economics department. His research was frequently published in The Review of Black Political Economy, covering topics such as occupational segregation, the returns to HBCU graduation, and the impact public policies like affirmative action and welfare reform have on economic inequality. His most cited article according to Google Scholar, “What Does the AFQT Really Measure: Race, Wages, Schooling and the AFQT Score”, was co-authored with William Rodgers and published in June 1996 volume of The Review of Black Political Economy.
This impressive but incomplete listing of professional accomplishments speaks volumes of the friend, colleague, and mentor many of us simply called Bill. In the field of economics—a discipline reputed to be impersonal, abstruse, and at times detached from reality on issues of racial, gender, and worker justice—Bill’s approach to economics was the complete opposite. His clear understanding of economic issues was always communicated with a level of honesty and in a manner that reflected Bill’s internal guiding truth and personal commitment to making life better for Black Americans and working people from all backgrounds.
In honor of Bill’s legacy, the following are personal reflections from Larry Mishel and Valerie Wilson—two people who witnessed, learned, and benefited from that commitment throughout his career.
The economy added 150,000 jobs in October as labor market remains resilient
Below, EPI economists offer their insights on the jobs report released this morning, which showed 150,000 jobs added in October.
Tackling the problem of ‘captive audience’ meetings: How states are stepping up to protect workers’ rights and freedoms
An updated version of this blog was published in April 2024.
Political and religious coercion in the workplace is a growing problem affecting workers from all backgrounds and across the political spectrum. U.S. employers have tremendous power over worker conduct under current federal laws. For example, employers can require workers to attend “captive audience” meetings—and force employees to listen to political, religious, or anti-union employer views—on work time.
In the face of this growing threat, legislators in 18 states have advanced bills to protect workers from offensive or unwanted political and religious speech unrelated to job tasks or performance. These bills are designed to prohibit employers from threatening, disciplining, firing, or retaliating against workers who refuse to attend mandatory workplace meetings focused on communicating opinions on political or religious matters.
Importantly, these state laws do not limit employers’ rights to express their beliefs freely or even to continue inviting employees to attend workplace political or religious meetings. These laws simply empower workers to opt out of unwelcome political speech by protecting them from financial harm or retaliation if they choose not to attend such meetings.
The strong labor market recovery has helped Hispanic workers, but the end of economic relief measures has worsened income and poverty disparities
The U.S. recently celebrated the rich contributions and diverse heritage of the Latinx community by observing National Hispanic Heritage Month.1 Diverse and fluid identity terms are a hallmark of the Latinx community and are often the subject of debate. This reflects the size and diversity of the Hispanic community, which is the second-largest ethnic and racial group in the United States, representing 19.1% of the population. In addition to their contribution to our nation’s social fabric, these workers continue to help power the U.S. economy and have the highest labor force participation rate among all racial and ethnic groups.
We find that following the severe impact of the pandemic, Hispanic workers have enjoyed a strong rebound as a result of a historic stretch of job creation. But persistent labor market disparities continue to translate into broader income and poverty disparities for Hispanic people. Narrowing these disparities, which leave Latinx workers and families vulnerable to economic shocks, will require a commitment to strengthen the U.S. social safety net once again and to bolster labor laws to protect the right of Latinx workers to organize and join unions.
Job growth is strong, wage growth continues to normalize
Below, EPI senior economist Elise Gould offers her insights on the jobs report released this morning, which showed 336,000 jobs added in September. Read the full thread here.
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
This op-ed was originally published in The Financial Times. Read it here.
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.