One year in, the American Rescue Plan has fueled a fast recovery: Policymakers should use remaining ARPA funds in 2022 to make transformative investments that will build a more equitable economy
March 11 marks the one-year anniversary of the signing of the American Rescue Plan Act (ARPA). This $1.9 trillion dollar relief package was both an emergency measure to help the nation through the worst pandemic in a century and an ambitious catalyst to jump-start efforts to redress the staggering economic inequalities in our economy. In its first year, ARPA helped the economy recover at a tremendous pace and aided working families through difficult times. In the year to come, state and local policymakers will have critical opportunities to use their substantial remaining ARPA funds to rebuild the public sector, support low-wage workers, and target systemic inequities.
ARPA supported a year of strong growth
A full labor market recovery took more than a decade after the Great Recession began in late 2007. Federal stimulus, needed to restart the economy in times of recession, was inadequate to circumstances throughout the 2010s. The slow recovery of the economy during the Great Recession also gave ammunition to political forces that supported austerity, the dismantling of labor unions, and the continued weakening of the social safety net.
With inadequate federal fiscal aid, many states faced large budget shortfalls in the wake of the Great Recession, and many state and local lawmakers responded by dramatically slashing budgets and cutting jobs. These cuts to state and local government had a disproportionate impact on women and Black and Hispanic workers, who are more likely to be employed in the public sector. This austerity was not only unnecessary, it also directly contributed to the slow pace of the economic recovery.
This long period of anemic growth also meant a lost decade of potential wage growth for low-income and middle-income workers, and racial employment and wage gaps continued to expand.
Along with COVID-related legislation like the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in 2020, ARPA has gone a long way to making sure the mistakes of the Great Recession were not repeated. Tens of millions were kept out of poverty because of social insurance programs from CARES, ARPA, and other relief legislation. Despite a catastrophic cratering of the economy in March 2020—with more than 20 million jobs lost—the country is on track to return to pre-COVID levels of employment before the end of 2022 (Figure A).
Equal Pay Day: There has been little progress in closing the gender wage gap
March 15 is Equal Pay Day, a reminder that there is still a significant pay gap between men and women in our country. The date represents how far into 2022 women would have to work to be paid the same amount that men were paid in 2021. Women were paid 22.1% less on average than men in 2021, after controlling for race and ethnicity, education, age, and geographic division.
What’s particularly troubling is there has been little progress in closing the gender wage gap over much of the last three decades, as shown in the figure below. The regression-adjusted pay gap narrowed between 1979 and 1994—falling from a 37.7% pay penalty to a 23.2% pay penalty. But the entirety of the narrowing gap between 1979 and 1994 can be attributed to men’s stagnant wages, not a tremendous increase in women’s wages. Since then, the gap between men’s and women’s pay has narrowed hardly at all. In 2021, the pay gap remained at 22.1%.
Little to no progress in closing the gender wage gap in three decades: Regression-adjusted gender wage gap, 1979–2021
| Date | Regression-adjusted gender wage gap |
|---|---|
| 1979 | 37.7% |
| 1980 | 36.8% |
| 1981 | 35.7% |
| 1982 | 34.5% |
| 1983 | 33.4% |
| 1984 | 33.1% |
| 1985 | 32.8% |
| 1986 | 32.6% |
| 1987 | 31.9% |
| 1988 | 31.2% |
| 1989 | 28.6% |
| 1990 | 27.3% |
| 1991 | 25.6% |
| 1992 | 24.1% |
| 1993 | 23.3% |
| 1994 | 23.2% |
| 1995 | 24.1% |
| 1996 | 23.4% |
| 1997 | 23.8% |
| 1998 | 23.4% |
| 1999 | 24.0% |
| 2000 | 23.9% |
| 2001 | 23.2% |
| 2002 | 22.5% |
| 2003 | 22.3% |
| 2004 | 22.6% |
| 2005 | 22.1% |
| 2006 | 22.4% |
| 2007 | 22.8% |
| 2008 | 22.7% |
| 2009 | 22.5% |
| 2010 | 21.3% |
| 2011 | 20.7% |
| 2012 | 22.0% |
| 2013 | 21.4% |
| 2014 | 21.2% |
| 2015 | 21.7% |
| 2016 | 21.9% |
| 2017 | 21.6% |
| 2018 | 22.6% |
| 2019 | 22.6% |
| 2020 | 23.0% |
| 2021 | 22.1% |
Notes: Wages are adjusted into 2021 dollars by the CPI-U-RS. The regression-based gap is based on average wages and controls for gender, race and ethnicity, education, age, and geographic division. The log of the hourly wage is the dependent variable.
Source: Author’s analysis of Current Population Survey, Outgoing Rotation Group (CPS-ORG), 1979–2021, and Economic Policy Institute, Current Population Survey Extracts, Version 1.0.26 (2022), https://microdata.epi.org/, 1979–2022.
Over this period of pay gap stagnation, women have consistently increased their investments in education to increase their pay. Back in 1994, as progress toward closing the gender wage gap stalled, men were more likely to have a college or advanced degree than women. A quarter of men (25.1%) had at least a four-year college degree compared with 23.8% of women. By 2021, women’s educational attainment had surpassed men’s educational attainment. In 2021, 37.4% of men and 43.8% of women had at least a college degree. Unfortunately, even with these advances in educational attainment, women still face a stark pay gap. Women with advanced degrees are paid less, on average, than men with bachelor’s degrees.
Job Openings and Labor Turnover Survey: Hires and separations were little changed as quits declined
Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for January. Read the full Twitter thread here.
The hires rate remains higher than the quits rate in every major industry. This indicates that when workers quit, they are taking other jobs-likely in the same sector-not dropping out of the labor force altogether. pic.twitter.com/PUUpL6fVv9
— Elise Gould (@eliselgould) March 9, 2022
Jobs report: The labor market continues its strong and speedy recovery because federal relief matched the scale of the crisis
Below, EPI economists offer their initial insights on the jobs report released this morning. The report showed a strong 678,000 jobs added in February, for a total of 7.9 million jobs added since the end of 2020.
What to watch on jobs day: The economy is recovering fast because federal relief matched the scale of the crisis
This is an excerpt from an op-ed in CNN Business. Read the full op-ed here.
When the coronavirus pandemic shut down businesses in spring 2020, the labor market lost 22 million jobs in just two months—more than twice as many jobs lost during the entire Great Recession and financial crisis of 2008–2009. Given that a full labor market recovery from the Great Recession took a decade, there were sincere worries that Covid-19’s economic wound could take even longer to heal. But because we undertook a radically different—and better—policy response to the latest crisis, the labor market is far healthier today than anybody expected it would be in those grim early days of the pandemic.
Over the last 12 months, the economy has added 6.6 million jobs, an astonishing pace. And while there is still a significant gap in the labor market, we are on track to return to pre-pandemic labor market conditions before the end of 2022—a recovery that is roughly eight years faster than the recovery from the Great Recession, as shown in the figure below.
Federal fiscal relief at the scale of the problem led to a faster recovery from the pandemic recession: Private-sector employment change since business cycle peak, December 2007 and February 2020
| Months since peak | 2007 | 2020 |
|---|---|---|
| 0 | 100 | 100 |
| 1 | 99.999138 | 98.8860174 |
| 2 | 99.9060474 | 83.7870781 |
| 3 | 99.8414012 | 86.1978785 |
| 4 | 99.6284995 | 89.6771456 |
| 5 | 99.44749 | 90.6746384 |
| 6 | 99.2707902 | 91.6104147 |
| 7 | 99.0578886 | 92.3502411 |
| 8 | 98.8191284 | 92.9666345 |
| 9 | 98.4484899 | 93.2798457 |
| 10 | 98.0235485 | 93.1965284 |
| 11 | 97.3874293 | 93.5228544 |
| 12 | 96.7823404 | 94.0574735 |
| 13 | 96.0867467 | 94.55892 |
| 14 | 95.4489036 | 94.7224687 |
| 15 | 94.7731347 | 95.0163934 |
| 16 | 94.0732313 | 95.4082932 |
| 17 | 93.8301614 | 95.9004822 |
| 18 | 93.4629706 | 96.2838959 |
| 19 | 93.2173149 | 96.5994214 |
| 20 | 93.0457868 | 97.134812 |
| 21 | 92.9121845 | 97.6185149 |
| 22 | 92.6777341 | 98.0065574 |
| 23 | 92.68032 | 98.3490839 |
| 24 | 92.4924148 | |
| 25 | 92.4863812 | |
| 26 | 92.420011 | |
| 27 | 92.5398221 | |
| 28 | 92.6949731 | |
| 29 | 92.7923735 | |
| 30 | 92.8932216 | |
| 31 | 92.9682113 | |
| 32 | 93.0923321 | |
| 33 | 93.1854227 | |
| 34 | 93.3733278 | |
| 35 | 93.4896911 | |
| 36 | 93.5698524 | |
| 37 | 93.5931251 | |
| 38 | 93.8129224 | |
| 39 | 94.0353055 | |
| 40 | 94.3128534 | |
| 41 | 94.4473176 | |
| 42 | 94.6205696 | |
| 43 | 94.7714108 | |
| 44 | 94.907599 | |
| 45 | 95.1377396 | |
| 46 | 95.3006482 | |
| 47 | 95.4376982 | |
| 48 | 95.6264653 | |
| 49 | 95.9384912 | |
| 50 | 96.1634602 | |
| 51 | 96.373776 | |
| 52 | 96.4547993 | |
| 53 | 96.5582333 | |
| 54 | 96.6047787 | |
| 55 | 96.7504482 | |
| 56 | 96.8961178 | |
| 57 | 97.0495449 | |
| 58 | 97.2055579 | |
| 59 | 97.3572611 | |
| 60 | 97.5598193 | |
| 61 | 97.7399669 | |
| 62 | 97.9692456 | |
| 63 | 98.0985381 | |
| 64 | 98.2640325 | |
| 65 | 98.4596952 | |
| 66 | 98.636395 | |
| 67 | 98.7544821 | |
| 68 | 98.9492829 | |
| 69 | 99.1070197 | |
| 70 | 99.3052682 | |
| 71 | 99.5216177 | |
| 72 | 99.6009171 | |
| 73 | 99.7569301 | |
| 74 | 99.8905323 | |
| 75 | 100.102572 |
Source: EPI analysis of Bureau of Labor Statistics' Current Employment Statistics public data series.
Congress should boost NLRB funding to protect workers’ well-being
The National Labor Relations Board (NLRB) enforces the National Labor Relations Act (NLRA), the nation’s fundamental labor law that guarantees most private-sector workers the right to organize and the right to collective bargaining. Years of static funding has undermined the Board’s ability to fulfill its statutory mission, to the detriment of workers and the economy. The chronic under-resourcing of the Board has created challenges in its enforcement capacity amid the surge of union interest—and unfair labor practices. As Congress debates upcoming budget and spending legislation, it is critical that lawmakers boost NLRB funding to protect workers’ well-being.
NLRB funding has remained flat
The Board’s staffing level has not kept up with the growth in the national private-sector workforce. The number of full-time employees at the NLRB dropped by nearly 31% from 1,789 to 1,320 between 2006 and 2019. During the same period, the number of covered workers per NLRB staff increased by 50%, from one full-time employee per 74,809 workers to one full-time employee per 112,201 workers, as shown in the figure below. Further, staffing levels at regional offices, which typically handle the intake of complaints filed by workers, dropped by 33% between 2010 and 2019.
Enforcers take action to protect workers from workplace violations at Domino’s and Family Dollar stores: A snapshot of state and local enforcement actions across the country
Series: The New Labor Law Enforcers
State attorneys general, district attorneys, and localities like cities are increasingly key players in protecting workers’ rights. This new series by Terri Gerstein provides snapshots of enforcement and other actions to protect workers’ rights by these new and emerging labor law enforcers at the state and local level. Gerstein is an EPI senior fellow and director of the state and local enforcement project at the Harvard Labor and Worklife Program, who has chronicled the growing influence of these new enforcers.
Recent cases brought by state and local enforcers include the recovery of $2 million for workers of a Seattle Domino’s franchisee that underpaid workers and didn’t give required notice of schedules; citation of Massachusetts Family Dollar stores for $1.5 million for thousands of meal break violations; and prosecution of several cases involving egregious violations of wage payment, unemployment insurance, and workers’ compensation laws.
Here’s a snapshot of some enforcement actions in early 2022.
The Seattle Office of Labor Standards obtained a $2 million settlement with a Domino’s franchisee that violated fair workweek, minimum wage, and overtime laws. The employer, with 14 locations in Seattle and more than 30 through the Puget Sound area, allegedly violated the city’s Secure Scheduling Ordinance, which requires large retail and food service employers to provide workers with their schedules at least 14 days in advance and provide workers with good-faith estimates of their work schedules, among other requirements. Domino’s also allegedly paid below Seattle’s minimum wage for all time worked in Seattle, and didn’t pay overtime when workers were assigned to multiple locations for over 40 hours per week. The Seattle Office of Labor Standards also reached a settlement for more than $250,000 with a national traffic control company that paid below the city’s minimum wage, among other violations.Read more
How public-sector workers are building power in Virginia
Until recently, the Commonwealth of Virginia was one of three states in the country with a state prohibition on local public-sector bargaining. In 2020, a coalition of labor advocates and public-sector unions representing thousands of working families across Virginia joined together as the “Stronger Communities, A Better Bargain” coalition and successfully lobbied the Virginia General Assembly to approve legislation (H.B. 582/S.B. 939) repealing the prohibition on local public-sector bargaining.
The repeal permits local governments to bargain collectively with their employees upon the approval of a collective bargaining ordinance or resolution. Since the repeal took effect in May 2021, multiple Virginia localities have seen remarkable organizing efforts by and for public-sector workers to pass strong collective bargaining ordinances.
Alongside these efforts, we at The Commonwealth Institute for Fiscal Analysis (TCI) have provided timely and accessible research on how collective bargaining helps close disparities in pay and benefits for public employees in specific communities.
U.S. trade deficits hit record highs in 2021: More effective trade, industrial, and currency policies are needed to create more domestic manufacturing jobs
The U.S. goods trade deficit reached a record $1.09 trillion in 2021—an increase of $168.7 billion (18.3%) from the 2020 trade deficit—according to new U.S. Census Bureau data. The broader goods and services deficit reached $859.1 billion in 2021, an increase of $182.5 billion (27.0%). These records were driven by a $576.5 billion increase in goods and services imports, including a $501.8 billion increase in goods imports.
The surge in the U.S. goods trade deficit extends a surge in offshoring that has eliminated more than 5 million manufacturing jobs and nearly 70,000 factories since 1998, with overlooked costs for Black workers and other workers of color, as we describe in this new EPI report.
While both imports and exports were depressed in 2020 due to the COVID recession, U.S. trade deficits increased sharply in both 2020 and 2021, as shown in the figure below. This is because the United States was unable to produce the goods needed to respond to the pandemic and to meet increased domestic demand for consumer goods.
However, contrary to popular opinion, the growth in U.S. imports was not just caused by increased domestic goods consumption coming out of the 2020 COVID recession. Imports explained more than 60% of the growth in U.S. goods consumption in 2021, and U.S. goods imports increased faster (21.3%) than domestic goods consumption (17.8%).
Profits, wages, and inflation: What’s really going on
If you’re following debates over inflation, you’ve probably read contradictory things in recent weeks about the relationship between it and whether it is workers (labor) or their bosses (capital) who will be able to protect their incomes from rising prices.
For example, some well-known economists have mocked the idea that inflation is related to corporate profiteering. Yet some of the world’s most influential policymakers have expressed concern that inflation could spark an outbreak of excessive wage growth. One of these policymakers essentially pled with workers to moderate their wage demands in coming months in the name of slowing inflation. Finally, a Nobel Prize-winning economist claimed not only that inflation has nothing to do with the distributional conflict between labor and capital, but that even raising the specter of this will make it harder for policymakers to tamp inflation back down.
So what is the real story about profits, wages, and inflation? Simply put, while changes in the relative bargaining power of labor versus capital are not the root cause of the inflationary shock in 2021, this relative bargaining power will crucially determine whether or not inflation sustains momentum throughout 2022 and requires more sharply contractionary macroeconomic policy to slow.
In turn, policy efforts (like, for example, transformative reform to labor law or ramping up anti-trust enforcement) to change the relative bargaining position of labor vis-à-vis capital would be highly desirable for lots of reasons—but they wouldn’t take effect quickly enough to be relevant to the current inflationary episode. Jawboning from policymakers is unlikely to stop any incipient wage-price spiral—but jawboning only workers and not capital owners to stand down in the distributive conflict is particularly perverse.