Below, EPI economists offer their initial insights on the September jobs report released today. After a relatively weak August, only 194,000 jobs were added in September.
Congress may have bought itself another month to negotiate over the Biden-Harris administration’s Build Back Better (BBB) agenda, but one thing is clear: Further reducing the scale and scope of the budget reconciliation package unequivocally means the legislation will support far fewer jobs and deliver fewer benefits to lift up working families and boost the economy as a whole.
How much will such compromise cost the U.S. economy? We crunched the numbers to find out what compromising on the BBB plan will mean for every state and congressional district in the United States. If the budget reconciliation package is cut from $3.5 trillion to $1.5 trillion—as Sen. Joe Manchin (D-W.V.) has called for—nearly 2 million fewer jobs per year would be supported.
On Friday, the Bureau of Labor Statistics (BLS) will release September’s numbers on the state of the U.S. labor market. August employment growth came in lower than June or July due in part to the Delta variant spreading quickly. Another sign of weakness in the August job report was the rise of Black unemployment, which remains significantly higher than other groups. The August jobs report showed us, once again, just how much the ebbs and flows of the pandemic are the dominant influence by far on trends in the labor market.
This pronounced August slowdown also came after more than half of all states prematurely ended the pandemic unemployment insurance (UI) programs. All of the pandemic programs ended in early September.
While no longer accelerating, COVID-19 caseloads were still high in mid-September compared with the early summer months, so that may once again slow the recovery. In this jobs report, one indicator I’m going to be paying close attention to is public-sector employment, specifically public-sector education employment.
Overall government employment is still down 790,000 jobs since February 2020—the third largest employment deficit in any economic sector—but this shortfall is entirely in state and local employment and much of those losses were in education employment. Local education employment—think the public K-12 school system—cratered in the spring of 2020, experiencing losses in excess of those suffered in the Great Recession and, as of mid-August, remained 219,600 short of its pre-pandemic level.
Abolish the debt ceiling before it commits austerity again: The GOP used the debt ceiling to force spending cuts in 2011. It can’t be allowed again.
- Measures no coherent economic value. The measure of debt it targets is not inflation-adjusted, would perversely make the debt situation look worse if there was a reform to Social Security that closed that program’s long-run actuarial imbalance, and ignores trillions of dollars in assets held by the federal government.
- Has no relationship to any economic stressor facing the country. Over the past 25 years, as the nominal federal debt rose from $5 trillion to $22.7 trillion, debt service payments (required interest payments on debt) shrank almost in half, from 3.0% of GDP to 1.8%.
- Can cause real damage if it’s not lifted in the next couple of weeks. It would only take a couple of months of missing federal payments due to the debt ceiling to mechanically send the economy into recession—and that’s without assessing damage it would cause from financial market fallouts.
- Has been used time and time again to enforce misguided austerity policies. The 2011 Budget Control Act (BCA) grew directly out of a GOP Congress threatening to not raise the debt ceiling absent spending cuts. The BCA provided an anti-stimulus about twice as large as the stimulus provided by the American Recovery and Reinvestment Act (ARRA—commonly known as “The Recovery Act”) and is largely responsible for the sluggish recovery from the Great Recession.
Given all of this, the debt ceiling should be abolished or neutralized in absolutely any way politically possible. It serves no good economic purpose and plenty of malign ones. Below we expand on these points.
According to a new report released yesterday from the Bureau of Labor Statistics (BLS), just over three-quarters (77%) of private-sector workers in the United States have the ability to earn paid sick time at work. But, as shown in Figure A below, access to paid sick days is vastly unequal, disproportionately denying workers at the bottom this important security. The highest wage workers (top 10%) are nearly three times as likely to have access to paid sick leave as the lowest paid workers (bottom 10%). Whereas 95% of the highest wage workers had access to paid sick days, only 33% of the lowest paid workers are able to earn paid sick days.
Low-wage workers are also more likely to be found in occupations where they have contact with the public—think early care and education workers, home health aides, restaurant workers, and food processors. Workers shouldn’t have to decide between staying home from work to care for themselves or their dependents and paying rent or putting food on the table. But that is the situation our policymakers have put workers in. Meaningful paid sick leave legislation is incredibly important for low-wage workers and their families and important to reduce the spread of illness. At the same time, access to paid sick days has positive benefits to employers as it reduces employee turnover with no impact on employment.
High-wage workers have paid sick days; most low-wage workers do not: Share of private-sector workers with access to paid sick days, by wage group, 2021
|Category||Share of workers who have access to paid sick days|
Source: U.S. Bureau of Labor Statistics, National Compensation Survey 2021
All pain and no gain: Unemployment benefit cuts will lower annual incomes by $144.3 billion and consumer spending by $79.2 billion
Congress and the Biden-Harris White House have let expanded unemployment benefits expire in the middle of the ongoing COVID-19 pandemic, even while employment is still well below pre-pandemic levels. As a result, annual incomes across the U.S. will fall by $144.3 billion and annualized consumer spending will drop by $79.2 billion, according to the best available evidence on the effects of recent unemployment benefit cuts.
In March 2020, as the economic impact of the pandemic spread quickly, Congress critically expanded unemployment insurance (UI) benefits by providing $600 (and later, $300) monthly supplements, extending benefit periods, and making previously excluded workers—such as independent contractors and those with low incomes—eligible for UI.
However, about half of states prematurely terminated these programs between June and late July 2021, and then, by letting the federal law expire in September, Congress and the White House cut off pandemic UI entirely. In total, more than 10 million workers lost all of their unemployment benefits because of either the state-level program terminations or the September program expiration.Read more
Pandemic-related economic insecurity among Black and Hispanic households would have been worse without a swift policy response
The Census Bureau report on income, poverty, and health insurance coverage in 2020 reveals an expected shock to median household income relative to 2019 resulting from the COVID-19 pandemic and recession. Across all racial and ethnic groups, median household income either declined or was statistically unchanged from the previous year.
While Census cautions that the 2020 income estimates may be overstated due to a decline in response rates for the survey administered in March of this year, real median income declined 4.5% among Asian households (from $99,400 to $94,903), 2.6% among Hispanic households (from $56,814 to $55,321), 2.7% among non-Hispanic white households (from $77,007 to $74,912), and was statistically unchanged for Black households (from $46,648 to $46,600) as seen in Figure A.
In 2019, Black American households finally surpassed the median income peak they achieved prior to the Great Recession of 2008-2009. In 2020, however, the pandemic recession cut that long recovery short.
In 2020, the median Black household earned just 61 cents for every dollar of income the median white household earned (unchanged from 2019), while the median Hispanic household earned 74 cents (unchanged from 2019).
Black and brown workers saw the weakest wage gains over a 40-year period in which employers failed to increase wages with productivity
- Wage growth for typical Black and Hispanic workers fell far short of growth for white workers over the past 40 years.
- Increasing income inequality overall and racial discrimination in the labor market both play a role in limiting wage gains for Black and Hispanic workers.
- Women’s median wages have increased since 1979 but still lag those of men. Gains among women have not been equally shared, with white women seeing the largest wage increases.
- Create “high-pressure” labor markets by running the economy hot through expansionary macroeconomic policies; prioritizing low unemployment will help spur job growth as well as wage growth, especially for Black workers.
- Prioritize anti-discrimination enforcement.
- Pass the Raise the Wage Act and the Richard L. Trumka PRO Act. These would have a range of positive benefits for workers across the board, and especially for women, Black, and Hispanic workers.
Increasing income inequality has been at the forefront of economic policy conversations in the United States since at least the 2008 financial crisis. The roots of that inequality stretch back much further, though. Growing employer opposition to unions and the shift from manufacturing toward finance as a major growth industry over many decades has resulted in a separation between worker pay and productivity that has persisted to this day.
There has been growing concern about the wage stagnation faced by the typical American worker, and increasing attention paid to the need to rectify this—to ensure that workers reap the gains associated with their increased productivity.
By the numbers
Wage growth by race/ethnicity, 1979–2020
- White workers: 30.1 %
- Black workers: 18.9%
- Hispanic workers: 16.7%
The productivity–pay gap
- Productivity growth, 1979–2020: 61.7%
- Typical worker wage growth, 1979–2020: 23.1%
However, there has not been as much attention paid to the distinct divisions that exist even among the generally undercompensated working class. While the typical worker has not seen their fair share of wage increases relative to the increase in productivity over the past 40 years, Black and Hispanic workers saw even smaller wage gains relative to their white counterparts.
These racial disparities in pay add another dimension to conversations about gaps between pay and productivity, and about income inequality in general. While policies designed to link the typical worker’s pay more closely with productivity are necessary to reduce income inequality overall, the persistence of disparities even within the working class shows us that targeted policies will be required in addition if we want to achieve the goal of true equity across the board.Read more
Immigration reform would be a boon to U.S. economy and must be part of the $3.5 trillion budget resolution: Senate parliamentarian would be wrong to rule otherwise
A path to citizenship for unauthorized immigrants is not “merely incidental” to the American economy—it’s primarily intended to provide labor and political rights and create the positive economic gains that come with it.
That’s why the Senate parliamentarian should rule to include immigration reform in the current $3.5 trillion budget resolution, which aims to provide a pathway to citizenship for many of the current unauthorized immigrants residing in the United States.
The Senate parliamentarian heard arguments about the inclusion of a pathway to citizenship from Democratic legislators on Friday, and on the same day, the House Judiciary Committee posted its version of the immigration provisions for the budget resolution. The following Monday, the Judiciary Committee voted to approve the immigration language, allowing it to be included in the overall budget resolution. Included in it are provisions that would put immigrant Dreamers, Temporary Protected Status and Deferred Enforced Departure recipients, farmworkers and certain workers deemed to have been employed in “essential” occupations during the pandemic onto a path to citizenship, as well as recapture unused immigrant visas from prior years, among other reforms.
Using reconciliation to pass these reforms would allow the Democrats to bypass Senate Republicans using the filibuster to prevent the legislation from passing. The Democrats’ budget resolution is an essential piece of legislation that must pass: It has the potential to make historic improvements in bolstering the social safety net, fighting climate change, and creating jobs. However, if it leaves millions of unauthorized immigrants without the civil, human, and workplace rights they would gain if they had a path to citizenship, the plan would fail to achieve its full potential.
Even in normal times, public safety net spending and social insurance programs are effective policy tools to reduce poverty and alleviate the economic distress of families. Census data released today also show that these programs kept tens of millions of people from severe economic deprivation during the first half of the ongoing COVID-19 pandemic. Remarkably, poverty rates were significantly lower last year than they were in 2019, after accounting for the scale of public assistance provided in 2020.
The poverty rate reduction highlights how much poverty the nation and its policymakers tolerate is a choice. It should not have taken a pandemic to make us realize this.
Last year, Economic Impact Payments (stimulus checks) and unemployment insurance (UI) benefits played larger than usual roles in reducing poverty. The Census Supplemental Poverty Measure (SPM) data show that the first two Economic Impact Payments and UI benefits reduced poverty by 11.7 and 5.5 million people, respectively (see Figure A).
This fact sheet provides key numbers from today’s new Census reports, Income and Poverty in the United States: 2020 and The Supplemental Poverty Measure: 2020. Each section has headline statistics from the reports for 2020, as well as comparisons with the previous year. This fact sheet also provides historical context for the 2020 recession by analyzing changes between the last business cycle peak in 2019 to 2007 (the final year of the economic expansion that preceded the Great Recession), and to 2000 (the prior economic peak). All dollar values are adjusted for inflation (2020 dollars). Because of a redesign in the Current Population Survey Annual Social and Economic Supplement (CPS ASEC) income questions in 2013, we imputed the historical series using the ratio of the old and new method in 2013. All percentage changes from before 2013 are based on this imputed series. We do not adjust for the break in the series in 2017 due to differences in the legacy CPS ASEC processing system and the updated CPS ASEC processing system, but these differences are small and statistically insignificant in most cases.
The 2020 Census report highlights the costs of the pandemic and benefits of early policy safety net measures
This morning, the Census Bureau released its report on income, poverty, and health insurance for 2020. These data provide insights into the effects of the COVID-19 pandemic on earnings and incomes as well as the vital measures put in place to reduce economic insecurity during the steep economic downturn.
Median household income fell 2.9% as millions lost their jobs and poverty rose by 1.0 percentage point. The losses to income and increases in poverty would have been far worse if not for the rapid and large boosts to vital safety net programs legislated by Congress in 2020. The stimulus payments moved 11.7 million people out of poverty and unemployment insurance—expanded in 2020—lifted 5.5 million out of poverty in 2020.
Overall, median earnings for full-time workers rose 6.9% largely in response to a composition shift in who was more able to retain employment (and who did not). Since a disproportionate share of workers who lost their jobs were lower paid, the remaining workers in the economy are higher paid, on average, leading to a mechanical increase in earnings. This does not reflect an increase in living standards for those working, rather it’s just a quirk of arithmetic.
Here are some key takeaways from the 2020 report.
Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Jobs and Labor Turnover Survey (JOLTS) for July. Read the full Twitter thread here.
Hires ticked down slightly in July but remains up 645k since May. Total separations rose for two months running due to an increase in both layoffs and quits. Quits are high by historical standards as workers may be concerned about rising covid cases or are finding better jobs. pic.twitter.com/H1likO3kS6
— Elise Gould (@eliselgould) September 8, 2021
Using the last three months of data by sector to smooth data volatility, it’s clear that there are still many sectors with more unemployed workers than job openings. To be clear, these comparisons only include those who are in the official measure of unemployment. pic.twitter.com/r6C1aR3NX1
— Elise Gould (@eliselgould) September 8, 2021
#JOLTS provides a different picture of the labor market, with its data on job openings, hires, quits, and layoffs, but it is decidedly a bit out of date as fast changing as the recovery and pandemic has been the last year and a half. https://t.co/zBNnd11mGR
— Elise Gould (@eliselgould) September 8, 2021
Below, EPI economists offer their initial insights on the August jobs report released this morning, which showed an increase of 235,000 jobs—a notable slowdown from June and July.
Growing inequalities, reflecting growing employer power, have generated a productivity–pay gap since 1979: Productivity has grown 3.5 times as much as pay for the typical worker
- Productivity and pay once climbed together. But in recent decades, productivity and pay have diverged: Net productivity grew 59.7% from 1979-2019 while a typical worker’s compensation grew by 15.8%, according to EPI data released ahead of Labor Day.
- If median hourly compensation had grown at the same rate as productivity over the 1979-2019 period, the median worker would be making $9.00 more per hour.
- This divergence has been primarily driven by intentional policy choices creating rising inequality: both the top 10% and especially the top 1% and top 0.1% gained a much larger share of all compensation and labor’s share of income eroded.
- Public policies which restore worker power and balance in the labor market can provide robust, widely shared wage growth.
The growth of inequalities is the central driver of the widening gap between the hourly compensation of a typical (median) worker and productivity—the income generated per hour of work—in recent decades. Specifically, this growing divergence has been driven by the growth of two distinct dimensions of inequality: the surge of compensation received by the top 10%—particularly the top 1.0% and top 0.1%—and the erosion of labor’s share of income and the corresponding growth of capital’s share. This post documents these trends by presenting an updated account of the U.S. productivity-pay divergence originally analyzed in both Mishel and Gee 2012 and Bivens and Mishel 2015.
The key metric, as explained below, is the lag between the growth of net productivity (taking into account depreciation and evaluated using consumer prices) and hourly compensation (wages and benefits) of a typical or median worker. Between 1979 and 2019, net productivity grew 59.7% while a typical (median) worker’s compensation grew by 15.8%, a 43.9 percentage point divergence driven by inequality. The effects have been felt broadly: During this period, 90% of U.S. workers experienced wage growth (26%) far slower than the economywide average, while workers in the top 1% (mostly highly credentialed professionals and corporate managers) saw 160% wage growth (Mishel and Kandra 2020) and owners of capital reaped large rewards made possible only by this anemic wage growth for the bottom 90%.
While the official pandemic recession ended two months after it began, it is clear that the pandemic is not behind us and its ebbs and flows exert powerful effects on economic growth. The seven-day moving average of U.S. COVID-19 cases rose more than fivefold, from 24,000 per day to 126,000 per day between July 12 and August 12, 2021, roughly representing the reference period for each month’s labor market report. The economic effects of this surge will likely be reflected in the jobs numbers we receive on Friday as segments of the U.S. workforce still face health and safety risks of continuing to work in person. This emphasizes the importance of continuing to provide a safety net for workers and their families—including by keeping in place federal pandemic unemployment insurance (UI) benefits—as health and safety-related closures and protective measures are reinstated.
While the job growth numbers in June and July (938,000 and 943,000, respectively) provided strong evidence that the labor market is revving back up in response to fiscal stimulus and widespread vaccinations, it is likely that the August job growth numbers may be more muted. The fivefold increase in COVID-19 cases is likely one of the reasons that restaurant seating appears to have softened between July and August.
Bargaining over COVID-19 vaccine requirements doesn’t mean unions oppose mandates: EPI’s Dave Kamper provides a Twitter reality check
Unions across the country are working on doing what’s right for society and their members when it comes to COVID-19 vaccine mandates. But there has been some misplaced criticism directed toward unions, especially public-sector unions who engage in “impact bargaining” with their employer over COVID-19 vaccine mandates.
To put it all in perspective, Dave Kamper, senior state policy coordinator for the Economic Analysis and Research Network (EARN) at the Economic Policy Institute, took to social media to break down the mandate issue and also to explain how impact bargaining isn’t about refusing to follow mandates, but about how changes are implemented and how they impact working conditions.
A century after the Battle of Blair Mountain, protecting workers’ right to organize has never been more important
Thousands are expected this week in the forested hills of southern West Virginia to commemorate the 100th anniversary of the Battle of Blair Mountain—a key conflict in labor history.
In the late summer of 1921, at least 7,000 coal miners affiliated with the United Mine Workers of America (UMWA) fought for their rights and their livelihoods in a weeklong fight against a private army that was raised by the coal companies and supported by the National Guard and the U.S. Army Air Force. The battle was the climax of two decades of low-intensity warfare across the coalfields of Appalachia, and it remains the largest battle on U.S. soil since the end of the Civil War.
The battle is also a stark reminder of the importance of protecting workers’ right to organize. It’s not simply about balancing the economic scales; it’s about power. When workers do not have power—when they have no voice in their workplace and no voice in how the nation is governed—exploitation and violence by the state are the inevitable result.
Today, workers still face a lack of power. A great way to empower workers would be through passing the Protecting the Right to Organize (PRO) Act, which is currently being considered by Congress and was renamed after former UMWA President Richard Trumka following his passing earlier this month. The story of the Battle of Blair Mountain demonstrates how, a hundred years on, workers are at the mercy of the powerful unless they have unions and power of their own.
Cutting unemployment insurance benefits did not boost job growth: July state jobs data show a widespread recovery
- The July state employment and unemployment data released Friday showed that strong job growth is widespread throughout the country, including in leisure and hospitality and state and local governments.
- States that chose not to cut federal pandemic unemployment insurance (UI) benefits have, on average, experienced greater job growth since April than the 26 largely Republican-controlled states that cut benefits to unemployed workers.
- Leisure and hospitality employment has grown at a quicker rate in states that preserved full UI benefits than in those that cut federal assistance.
- However, with a nationwide jobs shortfall of between 6.6 and 9.1 million jobs, the economic recovery is still far from complete. Policymakers at every level of government should take action to help speed the recovery.
The July state employment and unemployment data released Friday by the Bureau of Labor Statistics (BLS) showed that the strong job growth reported earlier this month in the national jobs data was widespread throughout the country. And, notably, the states that chose not to cut pandemic unemployment insurance (UI) benefits have experienced, on average, greater job growth in recent months than states that cut benefits to unemployed workers.
Over the last three months (from April to July), all but three states—Alaska, Kentucky, and Wyoming—added jobs, with particularly strong growth in Hawaii (4.0%), Vermont (3.5%), North Carolina (2.7%), Arizona (2.6%), and New Mexico (2.5%). Figure A shows each state’s July unemployment rate and the change in employment over the past three months, 12 months, and since February 2020 (the month before the recession.)
Richard Trumka was a champion for workers’ rights: Passing the PRO Act was one of his top priorities
The labor movement lost a giant last week. Richard Trumka was a champion for workers’ rights and a passionate leader of the labor movement. In addition to serving as President of the AFL-CIO, Trumka served as Chairman of EPI’s board of directors since 2012. Under President Trumka’s leadership, EPI and AFL-CIO have shared an unwavering commitment to advancing workers’ rights and strengthening unions.
For President Trumka, “the next frontier” for U.S. workers was the Protecting the Right to Organize (PRO) Act. Passing the PRO Act would restore workers’ ability to organize with their co-workers and would allow them to negotiate for better pay, benefits, and fairness on the job. Passing the PRO Act would also promote greater racial economic justice because unions and collective bargaining help shrink the Black–white wage gap.
Every day, corporations openly bust unions and retaliate against working people without consequence. President Trumka spent his career fighting these attacks on working people’s right to organize and collectively bargain. We need meaningful policy changes to restore a fair balance of power between workers and employers. That is why Congress must pass the PRO Act.
As President Trumka said on June 29, “the single best agent for change is the PRO Act.” We at EPI will honor his memory by continuing to advance policies like the PRO Act that are critical to workers and a fair economy.
Below, EPI director of research Josh Bivens offers his initial insights on today’s release of the Consumer Price Index (CPI) for July. The data show the lowest monthly gain in consumer prices (0.5%) since February and ultimately support a transitory view of inflation. Read the full Twitter thread here.
The core index (excluding food and energy) saw an even much larger deceleration – rising 0.3% in July from 0.9% growth the month before. The big story in the data is that the used car price spike finally flattened out. 2
— Josh Bivens (@joshbivens_DC) August 11, 2021
June Job Openings and Labor Turnover Survey shows an uptick in hires and quits, while layoffs dropped
Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Jobs and Labor Turnover Survey (JOLTS) for June. Read the full Twitter thread here.
The uptick in the quits rate is notable, likely due in part to increased opportunities for workers to find better job matches, potentially with higher wages or safer working conditions in the lingering pandemic (which had not worsening as much during the June reference period). pic.twitter.com/bYOCIhlEYy
— Elise Gould (@eliselgould) August 9, 2021
Over the past several months, conservative lawmakers and activists have carried out a concerted assault against a wide range of efforts and ideas that raise awareness about the history of racial injustice in the United States, its embeddedness in our society, and the resulting inequities observed today. Attackers have grouped and conflated all these concepts and ideas into what they are dubbing “critical race theory.” But those carrying out this campaign are not interested in what the actual academic critical race theory (CRT) says.
In fact, what is actually under attack is the reinvigorated movement across the United States to engage in dialogue about our country’s continuing legacy of racial hierarchy and oppression—and the policy choices that could finally begin to redress that legacy. And while the campaign against critical race theory is recent, it is merely the latest tool many states have wielded in order to disempower and further disenfranchise Black people as well as cut off any broad-based support for structural reform.
July jobs report shows an economy on track to recover five times as fast as the Great Recession recovery
Below, EPI economists offer their initial insights on the July jobs report released today, which showed an increase in 943,000 jobs. They see strong growth in employment, including in leisure and hospitality, and an economic recovery on track to pre-COVID health by the end of 2022.
From EPI senior economist, Elise Gould (@eliselgould):
After ticking up in June, the unemployment rate fell for the right reasons in July as more people found work rather than left the labor force.
The unemployment rate fell for all race/ethnic groups in July, but the unemployment rate for Black male workers remains high at 8.4%. pic.twitter.com/CONN2kcadk
— Elise Gould (@eliselgould) August 6, 2021
State and local American Rescue Plan funds should be used to support an equitable recovery for workers
Last month, we at the Economic Policy Institute submitted a public comment on the U.S. Department of the Treasury’s guidance regarding the Coronavirus State and Local Fiscal Recovery Funds. These funds are part of the American Rescue Plan (ARP) Act’s resources for state and local communities to respond to the public health and economic crisis. The funds—nearly $350 billion—may be used to support public health responses, mitigate negative economic impacts, replace public-sector revenue lost due to the pandemic, provide premium pay for “essential” workers, and make necessary investments in water, sewer, and broadband infrastructure.
The current public health and economic crisis is happening in the wake of more than a decade of underinvestment by state and local governments. During the Great Recession, cuts to jobs and state and local spending delayed a full recovery to pre-recession unemployment rates by more than four years. Public-sector job losses, especially in state and local education, were among the highest during the pandemic. Cuts to public services and staffing have been especially harmful for women and Black workers, who are disproportionately employed in the state and local public sectors.
This year, Black Women’s Equal Pay Day arrives 10 days earlier than in 2020 (August 13). If this seems inconsistent with current realities, it is. That’s because the August 3, 2021, date is based on the comparison of median annual earnings for full-time, year-round workers reported in the 2020 Annual Social and Economic Supplement of the Current Population Survey (CPS). Since the reference year in that survey is the previous year—2019—the earlier date is more a statement about pay equity during the pre-COVID period of historically low unemployment than the impact of the pandemic.
Based on hourly wages available for 2020, the pandemic’s effect on pay inequality in 2020 is challenging to interpret since job losses were concentrated among low-wage occupations, which has the effect of skewing the distribution toward a higher average that is less representative of the workforce as a whole. These lower-paying jobs were concentrated in leisure and hospitality and education and health services—industries that employ a disproportionate share of women.
In fact, the pandemic’s effect on pay equity during 2020 is less about a relative difference in dollars per hour and more a matter of a disproportionate share of women—and Black women in particular—becoming unemployed and thus wageless. Nearly one in five Black women (18.3%) lost their jobs between February 2020 and April 2020, compared with 13.2% of white men (see figure below). As of June 2021, Black women’s employment was still 5.1 percentage points below February 2020 levels, while white men were down 3.7 percentage points.
The COVID-19 pandemic has exacerbated the widespread dangers and injustices that workers face every day. For too long, workers have been forced to work in unsafe conditions, suffered from excessive wage theft, and been subjected to discrimination and harassment. While laws aimed at deterring these workplace abuses already exist, enforcement efforts have been woefully insufficient because the agencies tasked with protecting workers are chronically under-resourced. As Congress and the Biden administration work on budget spending and COVID-19 recovery legislation, there is an urgent opportunity to correct these inadequacies in our labor law system and boost funding for enforcement agencies.
The Department of Labor (DOL) and the National Labor Relations Board (NLRB) enforce major worker protection laws, including the Fair Labor Standards Act, the Occupational Safety and Health Act, and the National Labor Relations Act. These statutes guarantee U.S. workers a minimum wage, a safe and healthy workplace, and the right to collective bargaining, respectively, but weak enforcement has led to pervasive and repeated violations of these laws. Despite inflation, a growing workforce, and increasingly complex workplaces, funding for agencies like the Wage and Hour Division (WHD), Occupational Safety and Health Administration (OSHA), and the NLRB has largely remained stagnant over the last decade, as shown in Figure A.
- As the Delta variant of COVID-19 spreads throughout the United States, Arkansas and Missouri are facing an even more dramatic spike in COVID-19 cases, in part due to lower vaccination rates. This puts many at risk and may contribute to long-term economic problems in the region.
- To mitigate these effects, Missouri and Arkansas policymakers must take immediate action to strengthen public health and the economy, including:
- Expanding Medicaid and eliminating barriers to benefits.
- Recommitting to the federal expansion of unemployment benefits to cushion the economic harm as business disruptions grow.
- Enacting paid sick leave and paid family and medical leave.
As COVID-19 cases and hospitalizations begin to rise again across the country, some states are more vulnerable than others. Neighboring states Missouri and Arkansas are in the middle of a serious COVID-19 spike along with Louisiana, Florida, and Mississippi. The number of cases per capita in the two states—about 52 new cases daily per 100,000 residents in Arkansas and 40 per 100,000 residents in Missouri—is more than twice the national average of 19. The seven-day rolling average of deaths in the two states is rising rapidly and is three times the national average. Mercy Hospital in Springfield, Missouri, ran out of ventilators over the Fourth of July weekend. Hospitals across the state of Arkansas are already reaching maximum capacity—even as a record number of COVID-19 hospitalizations are anticipated in the coming weeks.
Saturday marks 12 years since the last federal minimum wage increase on July 24, 2009, the longest period in U.S. history without an increase. In the meantime, rising costs of living have diminished the purchasing power of a minimum wage paycheck. A worker paid the federal minimum of $7.25 today effectively earns 21% less than what their counterpart earned 12 years ago, after adjusting for inflation.
After the longest period in history without an increase, the federal minimum wage in 2021 was worth 21% less than 12 years ago—and 34% less than in 1968. : Real value of the minimum wage (adjusted for inflation)
Notes: All values are in June 2021 dollars, adjusted using the CPI-U-RS
Source: Fair Labor Standards Act and amendments
As a result of Congressional inaction, over two dozen states and several cities have raised their minimum wage, including 11 states and the District of Columbia that have adopted a $15 minimum wage. These higher wage standards have increased the earnings of low-wage workers, with women in minimum wage-raising states seeing the largest pay increases. In the rest of the country, however, states have punished low-wage workers by refusing to raise pay standards. As many as 26 states have gone so far as to pass laws prohibiting local governments from raising their minimum wage.
The farmworker wage gap continued in 2020: Farmworkers and H-2A workers earned very low wages during the pandemic, even compared with other low-wage workers
- More than two million farmworkers were deemed “essential” amid the pandemic in order to sustain food supply chains, but the latest wage data show that farmworkers were not rewarded adequately: They earned just $14.62 per hour on average in 2020, far less than even some of the lowest-paid workers in the U.S. labor force.
- At this wage rate, farmworkers earned just under 60% of what comparable workers outside of agriculture made in 2020—a wage gap that was virtually unchanged since the previous year. They also earned less than workers with the lowest levels of education.
- The wage paid to most farmworkers with H-2A visas—known as the Adverse Effect Wage Rate (AEWR)—was even lower, with a national average of $13.68 per hour. (The AEWR is based on a mandated wage standard that varies by region and is intended to prevent underpayment.) But many H-2A farmworkers earned far less in some of the biggest H-2A states. In Florida and Georgia—where a quarter of all H-2A jobs were located in 2020—H-2A workers were paid the lowest state AEWR, at $11.71 per hour.
- Farmworkers are employed in one of the most hazardous jobs in the entire U.S. labor market and suffer very high rates of wage and hour violations, and the majority of farmworkers who are unauthorized migrants or on H-2A visas are even worse off, with limited labor rights and heightened vulnerability to wage theft and other abuses due to their immigration status. Congress should take immediate action to improve labor standards for all farmworkers and provide migrant farmworkers with a path to citizenship.
Near the start of the pandemic in 2020, numerous work and travel restrictions were implemented in the United States to slow the spread of COVID-19. But for most workers, including farmworkers, options like remote work were either not permitted or not feasible. The more than two million farmworkers who grow, harvest, and pack the crops that end up on grocery store shelves were deemed “essential” and expected to work to keep food supply chains up and running.
Were those farmworkers ultimately rewarded and valued for their massive contributions to society? It appears not—the latest wage data show that farmworkers continued to earn far less than even some of the lowest-paid workers in the U.S. labor force, which suggests their important work continues to be undervalued. This post reviews the wages that farmworkers earned in 2020 relative to other comparable sets of workers.