The labor market recovery and pandemic relief measures lifted Black and Brown workers and families in 2021
The 2021 Census Bureau reports on income and poverty provide a first official glimpse at the economic condition of U.S. households by race and ethnicity in the first full year of the COVID-19 economic recovery, which reached people of color much faster than the recovery from the Great Recession.
The faster pace of this recovery can be attributed to the strong pandemic policy response that not only contributed to robust job growth throughout 2021, but also provided critical income supports to economically vulnerable families and children.
However, along with these positive outcomes came a spike in inflation that threatened to chip away at any income gains. As a result, in 2021, real median household income ($70,784) was not statistically different from 2020 ($71,186). Real median household income was also statistically unchanged across all racial and ethnic groups. Reported income estimates reflect the Census Bureau’s inflation adjustment for 2021 – an annual increase of 4.7% between 2020 and 2021 and the largest annual increase since 1990. While this suggests that median incomes essentially kept pace with the 2021 rise in prices, these estimates do not reflect the more rapid increase in inflation in 2022.
Census data show health insurance coverage gains for Black workers and children in 2021, but we can go further with better policy
The number of workers with health insurance coverage grew between 2020 and 2021 as the economy recovered from the massive job losses associated with the coronavirus pandemic. Most people (91.7%) had health insurance coverage at some point during the year and the share of uninsured people fell from 8.6% in 2020 to 8.3% in 2021.
Notably, the share of Black people who were uninsured fell from 10.4% in 2020 to 9.0% in 2021, marking a rare occurrence in which the Black uninsured rate fell below double digits.
In 2021, most people (54.3%) had health insurance through an employer (either their own employer or a family member). The share of people with private health insurance of any kind (employment-based or through individual purchase) fell slightly to 66.0%, while the share of those with a public plan rose to 35.7% (note that coverage types are not mutually exclusive – one person can have two types of health insurance coverage).
Pandemic safety net programs kept millions out of poverty in 2021, new Census data show
It should not have taken a pandemic to realize poverty is a public policy choice.
Public investments in safety net programs continue to be extremely effective poverty reduction tools, as newly released Census income data show. Government social programs kept tens of millions of people out of poverty in 2021. Because of expansions to programs like unemployment insurance benefits and the Child Tax Credit, poverty rates were actually lower in 2021 than they were prior to the COVID-19 pandemic.
The poverty reduction achieved through expanded social insurance programs highlights how much policymakers’ choices can impact poverty.
Unfortunately, some of the program expansions enacted in the pandemic have already been reversed, and cuts to programs like unemployment benefits and the Child Tax Credit will increase household economic distress going forward.
The 2021 Census report highlights how government relief measures played a vital role in reducing poverty
Below, EPI senior economist Elise Gould offers her initial insights on the Census Bureau’s latest data on earnings, incomes, poverty, and health insurance for 2021. Read the full Twitter thread here and follow along for more to come.
The federal government played a vital role in reducing poverty in 2021. While Social Security remains the largest poverty reducer in the U.S.—reducing the number who would have been in poverty in 2021 by 26.3 million—the relief measures in 2021 were vital. pic.twitter.com/zYDwW87lIT
— Elise Gould (@eliselgould) September 13, 2022
Even with the rise in inflation, the bounce back in the labor market and strong safety net programs such as the child tax credit meant a reduction in poverty between 2020 and 2021. Remember SPM poverty includes those safety net programs while the Official Pov Measure does not. pic.twitter.com/4TA7YVekbs
— Elise Gould (@eliselgould) September 13, 2022
Today, the Census Bureau also released valuable statistics on earnings for men and women in 2021. A bit surprising to me that there was little change in the overall number of workers, but a notable increase in full-time, year-round workers in 2021, for both men and women. pic.twitter.com/iep9KUELX7
— Elise Gould (@eliselgould) September 13, 2022
Median earnings for all workers (regardless of work hours) rose between 2020 and 2021 by 4.6%, in part because of the shift from part-time to full-time work. The 4.5% rise in women’s earnings was particularly good news given that theirs is still significantly lower than men’s . pic.twitter.com/WIrGOBAmej
— Elise Gould (@eliselgould) September 13, 2022
August CPI data will likely show a second straight month of overall price declines: New interest rate hikes may be harmful
Below, EPI director of research Josh Bivens offers his predictions for tomorrow’s release of the consumer price index (CPI) for August. Read the full Twitter thread here.
The price decline will be driven overwhelmingly by commodity price softening. But even core inflation (excluding food and energy) fell in the PCE index last month to its lowest level since 2020. 2/
— Josh Bivens (@joshbivens_DC) September 12, 2022
What should policymakers if they get another month of breathing room on inflation? Many people will be persuaded by a view that the responsible thing to do here is maintain the fight to cram price pressure down as far as possible. 4/
— Josh Bivens (@joshbivens_DC) September 12, 2022
But, the “maintain pressure” view is only responsible if one thinks measurably-greater economic slack (higher unemployment, for example) is needed to pull inflation back down to more-normal levels (say around 2-3%) in a reasonable time-span. 6/
— Josh Bivens (@joshbivens_DC) September 12, 2022
Goods prices are set to post outright falls going forward. Supply chain pressure seems to unwinding – even in the face of China’s continued Zero Covid approach. The normalization of pre-pandemic spending patterns (more services and less goods) is continuing. 8/
— Josh Bivens (@joshbivens_DC) September 12, 2022
In the labor market, over the past 6 months, average hourly earnings are growing at a 4.8% annualized pace, down a full percentage point from January – a pronounced fall even with low unemployment. 10/
— Josh Bivens (@joshbivens_DC) September 12, 2022
About those profits – while the most recent quarter saw a huge increase in the contribution of profits to price growth, this was almost surely mostly in the energy sector. 12/
— Josh Bivens (@joshbivens_DC) September 12, 2022
What all this tells us is that something close to the current state of economic slack is consistent with moderating price pressures – even outside of food and energy. 14/
— Josh Bivens (@joshbivens_DC) September 12, 2022
For example, real final sales to domestic purchasers (domestic demand) grew by just 1.2% between 2021q2 and 2022q2. That’s a growth rate that should have substantially “cooled” the economy by any measure. 16/https://t.co/IBH0CQv4qe
— Josh Bivens (@joshbivens_DC) September 12, 2022
A month of flat prices would mean that the inflationary outlook has meaningfully changed. So, policy should change too. Hiking by 0.75 in the face of flat monthly prices tilts risks too-sharply in the direction of recession, and isn’t needed to keep tamping down inflation. end/
— Josh Bivens (@joshbivens_DC) September 12, 2022
2021 Census Data Preview: A growing economy and government relief measures matter for earnings, incomes, and poverty
The vast majority of families and households in the United States rely on a combination of labor earnings from work and public assistance to make ends meet, especially throughout the pandemic recession and recovery.
Next week, the Census Bureau will release their latest data on earnings, incomes, poverty, and health insurance for 2021, which will inform our understanding of people’s economic wellbeing last year. Below, I provide context for the data next week by looking at how an expanding economy—the robust bounce-back in the labor market— and vital public programs sustained workers and their families in 2021.
These two phenomena are related, as public policy directly led to the robust recovery we experienced in the wake of the pandemic recession. Public policy further helped workers and their families stay afloat with expanded and enhanced unemployment insurance, economic impact payments, and child tax credits, to name a few.
California is on the brink of enacting the first significant law to combat international labor recruitment abuses and protect 300,000 temporary migrant workers. Will Governor Newsom sign the bill?
Key takeaways:
- There are at least 310,500 migrant workers in California—employed through temporary work visa programs—making it the largest host state. These temporary migrant workers are vulnerable to abuses of labor recruiters that connect workers to jobs in the United States.
- The abuses of labor recruiters have included requiring the payment of illegal fees to obtain jobs which can result in debt bondage, as well as cases of wage theft, discrimination, human trafficking, and other abuses. But since these U.S. work arrangements are being set up abroad, it is difficult to regulate the behavior of recruiters.
- Congress has failed to act to protect workers who are recruited abroad through temporary work visa programs. A California law was enacted in 2014 to fill this gap. Senate Bill (SB) 477 created a registration system for labor recruiters, providing transparency and tools to hold recruiters accountable for abuses. However, that law has been interpreted to apply only to the H-2B visa program, one of the many visa programs that are used to hire workers in California. H-2B workers only account for a small share of the state’s temporary migrant workers, less than 1%.
- Assembly Bill (AB) 364, which passed the California Assembly and Senate, would expand the reach of SB 477 to nearly all temporary work visa programs, thus protecting an estimated 300,000 migrant workers. It would also give California the authority to monitor and regulate labor recruiters doing business in the state and more proactively prevent labor abuses and trafficking.
- California is on the brink of passing the first significant reform of the international labor recruitment process. But will Governor Newsom sign AB 364? He must decide whether to sign it by September 30, and immigrant and worker advocates are calling on him to do so.
Tying minimum-wage increases to inflation, as 13 states do, will lift up low-wage workers and their families across the country
The original version of this post inadvertently left New Jersey off the list of states that will raise their minimum wage in response to inflation, it has since been updated.
13 states and the District of Columbia have policies that increase (or index) their state’s minimum wage based on inflation. Most of those indexed increases are based on the August-to-August change in the Consumer Price Index, which will be announced sometime in mid-September. With inflation higher than it has been in recent years, the indexed inflation increases in these states will be higher than usual as well. Still, these indexed increases are similar in size to other legislated minimum wage increases in recent years and they will help reduce the burden of rising prices for low-wage workers and their families.
The federal minimum wage has remained at $7.25/hour for the past fifteen years. Since then, its purchasing power or real value has dropped by 27% because of increases in the cost of living. As a result, the value of the minimum wage is the lowest since 1956. In response, thirty states, Washington D.C., and dozens of local governments have introduced their own minimum wages that are higher than the federal minimum wage. Workers in many of those states still experience the same problem – if the state doesn’t raise its minimum wage on a regular basis, its value will decline.
Jobs report doesn’t show signs of recession as labor market remains strong in August
Below, EPI economists offer their initial insights on the jobs report released this morning, which showed 315,000 jobs added in August.
From EPI senior economist, Elise Gould (@eliselgould):
Read the full Twitter thread here.
In August, most jobs were added in education and health services and professional and business services. While govt jobs increased by 7,000 in August, they remain 645,000 below pre-pandemic levels, a concerning phenomenon for those workers and the vital services they provide. pic.twitter.com/wMoqhfZhNg
— Elise Gould (@eliselgould) September 2, 2022
With the August increase, private sector employment is now 0.7% above pre-pandemic levels while state and local jobs remain stubbornly 3.2% below its February 2020 level with little improvement in recent months. pic.twitter.com/VS9ICLnRre
— Elise Gould (@eliselgould) September 2, 2022
The latest quarterly change (annualized) in average hourly earnings for all private-sector and production-nonsupervisory workers shows no signs of acceleration and demonstrates, once again, that wages in the labor market are pulling down (not pushing up) inflation. pic.twitter.com/dc1OcLulbi
— Elise Gould (@eliselgould) September 2, 2022
Troubling trend in Black unemployment, which rose 0.6 pps over the last two months to 6.4%. It’s a more volatile series, but labor force participation and EPOPs for Black workers have declined in each of the last three months as well. pic.twitter.com/YpVKSfijag
— Elise Gould (@eliselgould) September 2, 2022
The rise in Black unemployment and fall in participation and employment in August was experienced by both Black men and Black women.
The rise in Hispanic unemployment was accompanied by an increase in participation and employment for both Hispanic men and Hispanic women. pic.twitter.com/cqGR6WjUVm
— Elise Gould (@eliselgould) September 2, 2022
From EPI president, Heidi Shierholz (@hshierholz):
Read the full Twitter thread here.
We added 315,000 jobs in August. This is down substantially from the blistering average pace of 561,000 per month for the 12 months ending in February of this year, but remains solid. 2/
— Heidi Shierholz (@hshierholz) September 2, 2022
Wage growth dropped in August and has clearly not accelerated in 2022. 4/ pic.twitter.com/4QTO3gVadZ
— Heidi Shierholz (@hshierholz) September 2, 2022
Though today’s release underscores we’re almost surely not in a recession now, the fed may have already overshot and secured a recession in coming months. Regardless, they should slow the pace of rate increases substantially and be ready to go into neutral or even cut rates. 6/
— Heidi Shierholz (@hshierholz) September 2, 2022
The private sector has gained back all the jobs it lost in the covid recession, and more. State and local governments have gained back less than 60%. I’m a broken record on this, but we have to push state and local govts to use their ARPA funds to raise pay & hire workers. 8/
— Heidi Shierholz (@hshierholz) September 2, 2022
The overall numbers mask big disparities for different groups. Due to the impact of structural racism on the labor market, people of color have much higher unemp rates than white workers. For example, the unemp rate is currently 6.4% for Black workers, 3.2% for white workers. 10/
— Heidi Shierholz (@hshierholz) September 2, 2022
But it’s worth noting that all groups are seeing far faster recoveries *than they did following the Great Recession.* From the start of the Great Recession, it took more than 10 years for Black unemployment to get down to 6.4%, but this time around it took just over 2 years. 12/
— Heidi Shierholz (@hshierholz) September 2, 2022
Of course, a recession caused by the fed raising rates too aggressively would undo a great deal of the enormous gains that have occurred in the current recovery. 14/
— Heidi Shierholz (@hshierholz) September 2, 2022
Union approval hits highest point since 1965: Here’s why this isn’t surprising
It’s been nearly 60 years since approval for unions in the U.S. has been this high.
More than 70% of Americans now approve of labor unions. Those are the findings of a Gallup poll released this morning, and they shouldn’t be surprising.
Why? U.S. workers see unions as critical to fixing our nation’s broken workplace—where most workers have little power or agency at work.
The pandemic revealed much about work in this country. We saw countless examples of workers performing essential jobs—such as health care and food service. They were forced to work without appropriate health and safety gear and certainly without pay commensurate with the critical nature of the work they were doing.
