More than 8 million workers will get a raise on New Year’s Day: 23 states and D.C. will see minimum wage hikes ranging from $0.23 to $1.50 an hour

On January 1, 23 states and Washington, D.C. will increase their minimum wages, raising pay for an estimated 8.4 million workers across the country.1 In total, workers’ wages will increase by more than $5 billion, with average annual raises for affected full-time workers ranging from $150 in Michigan to $937 in Delaware. In addition, 27 cities and counties will increase their minimum wages on January 1, adding to the number of workers likely to see increased earnings.

The state with the stingiest increase is Michigan with a 23-cent raise bringing the total to $10.10 an hour, while the biggest hike of $1.50 an hour is in Nebraska, raising the rate to $10.50 an hour.2 Washington, D.C. will not increase its regular minimum wage, but will increase its tipped minimum wage by 65 cents to $6.00 an hour as a result of a ballot measure to eliminate the tipped minimum wage by 2027. When the New Year’s celebrations die down, Washington will be the state with the highest minimum wage of $15.74 an hour.

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Proposed New York state minimum wage legislation would boost wages for nearly 2.9 million workers: Minimum wages would range by region from $20 to $21.25 per hour by 2026

Key takeaways:

  • Proposed Raise Up New York legislation, sponsored by State Senator Jessica Ramos and Assembly Member Latoya Joyner, would raise the minimum wage to $21.25 an hour in New York City and suburban Nassau, Westchester, and Suffolk counties by 2026. It would also raise upstate New York’s minimum wage to $20 an hour by 2026. 
  • Starting in 2027, upstate New York would catch up to the statewide wage, and both would be adjusted each year to keep up with rising consumer prices and worker productivity.
  • We find that nearly 2.9 million workers—32% of the state’s workforce—would receive raises averaging $3,307 a year.
  • These minimum wage increases would be a vital support for low-wage workers in one of the most expensive states in the nation and arrive at a time when the purchasing power of workers’ wages has been eroded rapidly by recent price increases.

Updated minimum wage legislation in the New York State Senate and Assembly (S3062D/A7503C) would secure much-needed wage increases for almost 2.9 million workers throughout the state. The proposed Raise Up New York legislation—which would index annual statewide increases to inflation and labor productivity—would help protect workers’ economic security as prices rise, and prevent inequality from widening as the economy grows.

A fair way of calculating the minimum wage

Currently, New York has distinct minimum wage schedules for three different regions in the state: New York City, the suburban counties of Nassau, Westchester, and Suffolk, and the remainder of upstate New York. As shown in Table 1, New York City’s minimum wage is $15 per hour, where it has stood since 2018. Nassau, Westchester, and Suffolk counties’ minimum wage reached $15 per hour at the end of 2021, while the minimum wage for the rest of the state is currently $13.20 with scheduled annual increases that will track nominal labor productivity (real productivity plus inflation) until it eventually reaches $15.00 per hour.

The proposed Raise Up New York legislation would increase the minimum wage for New York City and Nassau, Westchester, and Suffolk counties to $21.25 through 2026, and then increase the minimum wage annually by nominal labor productivity. The tipped minimum wage would also increase while remaining two-thirds of the regular minimum wage as stipulated in New York law.1 The minimum wage for the rest of the state would reach $20.00 an hour in 2026 before catching up to NYC and the suburban counties in 2027.2 The inflation and labor productivity adjustments would follow the same formula that New York has already been using for state minimum wage increases in recent years.

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Beyond the numbers: What teaching shortages look like in practice

In a recent report, we reviewed the size and scope of the national teacher shortage using data from a wide range of public and private sources, including the Bureau of Labor Statistics, the National Center for Education Statistics, the RAND Corporation, and others. The available data consistently point to a large and growing problem of teacher vacancies that looks unlikely to be filled without substantial efforts to increase job quality for teachers.

But in pulling together our report, we realized that the statistics we presented don’t fully capture what shortages actually look like—in practice—for school districts, teachers, and students. To convey at least a part of that missing texture, we’ve pulled together some recent journalistic and more granular accounts of how state and local school education officials have responded to the long-term rise in teacher vacancies. Unfortunately, almost all of these have proved to be less than ideal for teachers and students.

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EPI’s top charts of 2022: EPI’s most popular charts tell the story of how pandemic setbacks in income inequality were mitigated by pandemic relief

Rising CEO pay, a pandemic further undermining low and middle-income workers, and the growing gap between worker productivity and their pay continued to impede income equality.

Through it all, however, government pandemic stimulus programs gave a lifeline to many of those struggling to make ends meet, helping keep millions out of poverty.

All these important topics were among the Economic Policy Institute’s top charts this year.

Here’s a rundown on what saw the most engagement among EPI’s readers:

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Inflation is easing: Fed should slow rate hikes

Inflation numbers out Tuesday are encouraging, providing more evidence that any movement to continue raising interest rates at breakneck speed and potentially slow the economy needs to be squashed. The Consumer Price Index (CPI)—released by the U.S. Bureau of Labor Statistics—rose 0.1% in November, and the all-items index increased 7.1% year-over-year. EPI research director Josh Bivens breaks down what the data tell us about rising prices.

“Inflation can normalize without taking a hammer to the head of the economy,” stresses EPI Research Director Josh Bivens, about the report and any steps by the Federal Reserve to push for steep interest rate hikes at its meeting this week.

“It was a very good report,” he explained. “The remaining inflation in this report was essentially food and shelter.” While rising food prices harm consumers, there’s no policy lever that the Fed has to usefully target these. These price increases are related, he added, to Russia’s invasion of Ukraine and global commodity markets more generally, not to any overheating of the U.S. economy.

“On shelter,” he continued, “the data strongly indicate that large rental inflation declines are on the way in 2023—they’ve already shown up in industry data, and these very reliably show up 6-12 months later.” 

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What’s at stake for state and local governments in the year-end government funding negotiations

As the clock ticks toward the end of the 117th Congress, legislators on Capitol Hill are reportedly still locked in negotiations on how to fund the government for 2023. Congress faces the deadline this week—December 16—to pass a plan for government funding, when the short-term continuing resolution (CR) to fund the government will expire.

The federal appropriations fight has serious stakes for state and local governments. Democrats in Congress, in particular, are pushing to not merely pass another short-term CR to keep the funding as is, but to pass a comprehensive spending bill, or omnibus, that fully appropriates funding that meets the realities of the moment. The outcome of these negotiations will, as always, have real consequences for working people and our economic stability overall.

The appropriations debate has especially high economic stakes because of long-standing inaction on Capitol Hill to address the debt limit. The new House Republican majority in the 118th Congress has already signaled their willingness to once again use the debt ceiling to force harmful spending cuts.

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Top five EPI blog posts of 2022: Inflation and minimum wage increases among the most-read posts

Inflation concerns were top of mind for workers and their families across the country, but misinformation on the cause of rising prices was rampant. To figure out what was really going on, many readers turned to the Economic Policy Institute for research-based answers. 

The majority of EPI’s top blog posts this year dealt with inflation, including how corporate profits, not workers’ wages, were contributing to bigger price tags. 

But the top post in 2022 was on minimum wage increases in 21 states, a welcome pay hike for workers struggling to make ends meet. 

Here is a rundown of the top five posts: 

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Illinois Workers’ Rights Amendment sets new bar for state worker power policy: Other state legislatures should seize the moment to advance worker, racial, and gender justice in 2023

On election day, Illinois voters approved a constitutional amendment guaranteeing all workers organizing and collective bargaining rights, setting a new high bar for state labor policy at a moment when policymakers should prioritize empowering workers to address historic levels of income inequality and unequal power in our economy.

The Illinois Workers’ Rights Amendment adds language to the state constitution affirming that “employees shall have the fundamental right to organize and to bargain collectively through representatives of their own choosing for the purpose of negotiating wages, hours, and working conditions, and to protect their economic welfare and safety at work.” The new clause also specifies that “no law shall be passed that interferes with, negates, or diminishes the right of employees to organize and bargain collectively.”

The amendment’s expansive language creates a legal backstop against two persistent lines of state legislative attack on U.S. workers’ basic rights to unionize: 1) threats to repeal or erode public-sector workers’ collective bargaining rights, and 2) threats to constrain private-sector workers’ collective bargaining rights with so-called “right-to-work” (RTW) restrictions that prohibit unions and employers from negotiating union security agreements into union contracts. Just as importantly, the Illinois Workers’ Rights Amendment opens up promising new pathways for additional groups of long-excluded workers to unionize and pursue collective bargaining with their employers.

Heading into 2023, state legislators in the Midwest and across the country should follow Illinois’ example by restoring workers’ rights after a decade under threat from extreme anti-union state legislation that has already suppressed wages and eroded job quality in many states. Long-overdue action to remove existing restrictions and affirmatively extend union rights to all workers is a first, essential policy step states can take to reverse growing inequality and end long-standing racist and sexist occupational exclusions in existing labor law.

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November jobs report a tale of two conflicting surveys: Payroll survey shows steady job growth, but household survey shows a continued decline in employment

Below, EPI economists offer their initial insights on the jobs report released this morning, and it was a tale of two conflicting employment surveys. The payroll survey—a survey of employers—showed 263,000 jobs added in November, but the household survey showed a decline in employment.

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Job Openings and Labor Turnover Survey: Job openings declined in October

Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for October. Read the full Twitter thread here. 

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Voters turned out for economic justice: A review of key ballot measures from the 2022 midterm elections

In this year’s midterm elections, voters showed a strong level of support for progressive ballot measures across the country. These victories were tempered by the defeat of worthwhile ballot measures in some states and the uncertainty of progress under a divided Congress. Nonetheless, voters across the country approved minimum wage increases, protected access to abortion, supported cannabis legalization, and approved measures to increase housing affordability and promote good union jobs.

Though much work remains to be done to enact a progressive economic agenda, this midterm election showed clear signs of support for a policy agenda that prioritizes economic, racial, and gender justice for working families.

Minimum wage

Nebraska: Voters approved Initiative 433, which will increase the state’s minimum wage to $15 by 2026.

Nevada: Voters approved Question 2, which will increase the state’s minimum wage to $12 in July 2024. The measure also removed a provision that allows employers to pay workers $1 less if they offer health insurance.

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Labor market showed more signs of cooling in October: Wage growth continues to decelerate

Below, EPI economists offer their initial insights on the jobs report released this morning, which showed 261,000 jobs added in October.

From EPI senior economist, Elise Gould (@eliselgould):

Read the full Twitter thread here. 

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Moving beyond fake education debates to focus on student success: Time to deal with lagging teacher pay, shortages, and rising stress among students and teachers

There are a great deal of systemic issues plaguing the public education system today that require systemic solutions. To do so, the nation needs to move beyond fake education debates and find ways to address the teacher pay gap, one cause of worsening shortages in education, and the growing stress among students and teachers, which has only been exacerbated by the ongoing pandemic.

That was the consensus among a recent gathering of parent and educator experts, focused on what matters most for student success this school year and into the future.

A recent Economic Policy Institute (EPI) webinar featured Becky Pringle, President, National Education Association; Randi Weingarten, President, the American Federation of Teachers; Ailen Arreaza, Co-Director, ParentsTogether; and Heidi Shierholz, President, EPI. During the virtual discussion, they focused on how we can come together to ensure student success in the classroom and beyond.

Below we include excerpts of their perspectives, including solutions that will drive student success. (You can also view the full webinar here.)

Heidi Shierholz

“How much less do teachers make than their peers? That pay penalty was large in 1979 at 7.1%, but it more than tripled to 23.5% over the following four-plus decades. So young people who may have gone into teaching knowing they would make just 7% less than their peers may understandably be unlikely to go into teaching when they know they will make 23.5% less than their peers.

“This problem is poised to get worse if nothing is changed. There’s been a large drop in the number of people completing teacher preparation programs over the last 15 years.

“What can be done?

  • Most immediately, COVID relief and federal relief and recovery funds, which include a substantial amount of aid to states and localities, can and should be used to raise pay for teachers and other education staff so that schools can attract and retain the staff that they need.
  • In the longer run, we need to change school funding so that, among other things, teachers and other education staff can be paid fairly.
  • Public-sector collective bargaining should be expanded in places where it’s restricted. Unions help bolster job quality for teachers and advocate for adequate school resources so teachers can teach effectively.”

Becky Pringle

“When we talk about a 24% wage gap for teachers, it’s gotten worse but it’s not new. So, as we think about the why, you know the systemic issues around the why, the fact that this is a predominantly overly super majority female profession, we can’t ignore that.

“When we think about the rising costs of higher education and the fact that we’re asking our young people to choose a profession that already has a wage gap and saddle them with all kinds of debt, especially for our Black and brown and indigenous students of color who we know don’t have that generational wealth that would allow them to choose teaching and stay in teaching.

“It’s not one issue with one solution. There are things that we can take steps on right away, but we’ve got to do it from a systemic place and we have to acknowledge that it is our shared responsibility, to make sure when we say every student is excelling, and everyone knows it; every educator is excelling, and everyone knows it; every school is excelling, and everyone knows it.

“That’s the story I would want them to tell so that we work toward those solutions. We know it has to be systemic, and it has to be sustained, and we have to collaborate to do it.”

Randi Weingarten

“There’s a whole bunch of investment things that can be done, but at the root what we need to do right now is reestablish relationships, confidence, and a sense of joy; and I don’t mean going back to a status quo. I mean a sense that people can work together, play together, learn together, want to be in school together, trying to create that hope that is the antidote to anxiety, that hope and transparency, which is the antidote to anxiety and to trauma.

“That’s why we have a mental health crisis right now. We had one before COVID, but the isolation exacerbated it. That’s why really being intentional about relationship building is really important.

“I’ll give you an example of one of the things we’re doing in Medina, Ohio. It’s simple but it’s pretty awesome. A teacher came up with this idea where she has had her students, 7th and 8th graders, read inspirational books. Some of them were about faith, and some of them were about other things. The adult reads the same book, the kids read the same book. They talked to each other.

“What’s happening now is that it has rippled through this whole Medina School District, a rural and pretty conservative school district. They are really doing all the social emotional work. As others are saying, ‘we don’t want teachers to talk to each other or talk to kids about emotional work,’ here you have this really conservative school district where they’re doing it.”

Ailen Arreaza

“When it comes to schools, parents are really concerned about adequate funding, and they’re concerned about safety and security in schools.

“You’ll notice that I didn’t say anything about banning books or censoring what teachers are talking about in the classroom. That’s really not what parents care about. We think that is a strategy that is being used to try to divide and distract parents at a time when parents are feeling really stressed and anxious.

“It’s been two years of COVID, closed schools, and economic insecurity. So these made-up controversies about book bans and censoring history are just a ploy to try to get us distracted from the things that really matter.

“What parents are telling us that they’re feeling anxious about is how to provide for their families. The solutions that they need are things like expanding the child tax credit, for example, and adequately funding schools, and having their kids feel safe in schools.”


Job openings increased in September, partially offsetting the sharp drop in August

Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for September. Read the full Twitter thread here. 

Recent data indicate that a “soft landing” is still in reach—the Fed should try to secure it: Ignoring disinflation signs heightens risk of recession

Last week’s release of data on gross domestic product (GDP) and employer costs are sending a message to the Fed as it meets to set interest rates: There is substantial disinflation in the pipeline that will allow inflation to normalize in coming months even if the labor market remains strong. But securing this “soft landing” will require patience.

  • In the most important markets for normalizing inflation, the housing and labor markets, there are signs of noticeable disinflation happening.
  • Further, the Fed has not been the only source of macroeconomic policy tightening this year—the fiscal contraction in 2022 has been highly significant and underappreciated. This contraction has, in turn, contributed to the very slow pace of demand growth over the past year.
  • Combined, these facts give the Fed some breathing room to slow the pace of rate hikes, even if these disinflationary trends have yet to show up in the consumer price index (CPI). In short, the “soft landing,” wherein inflation normalizes without sabotaging today’s strong labor market, is still possible and the Fed should try hard to secure it. 

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Victory on overtime for New York farmworkers

After a long and hard struggle, farmworkers in New York State recently won the right to overtime pay after a 40-hour workweek. There is still, however, a long path to economic fairness for these critically important workers.

Without a doubt, the overtime pay increase is a substantial victory that was a long time coming. Once fully phased in, it will give farm laborers a raise of $34 to $95 per week

Overtime pay will also nudge farm owners onto the economic high road, as Immigration Research Initiative and Economic Policy Institute have argued. By raising wages, it will reduce turnover and save significantly on recruiting and training costs. Where farm owners have the option, it will also nudge them toward more effective use of work time and investments in equipment that increase productivity, making farming in New York more sustainable in the long run. 

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Not So Free to Contract: The Law, Philosophy, and Economics of Unequal Workplace Power

Note: This blog is cross-posted to the Law and Political Economy blog.

Running through the fields of employment law, philosophy, political science, and economics is the pervasive assumption that employers and employees share equal power. This assumption, which distorts employment law so as to undercut worker protections, contradicts common sense, and evidence as well as any reasonable interpretation of recent history. Despite notable gains in worker power over the past two years, the erosion of worker power and the suppression of wages during the preceding four decades is welldocumented. Substantial evidence shows that employer power is pervasive, especially relative to those without college degrees, minorities, and women—in other words, the vast majority of workers.

This blog post draws upon and serves to introduce a new issue of the Journal of Law and Political Economy, which aims to elaborate the role that the equal-power assumption plays in employment law and policy, and to provide new social science evidence challenging that assumption. The essays contained in this issue, as I describe below, demonstrate that the power to quit does not prevent worker exploitation and that the circumstances that inhibit workers from quitting contribute to substantial, systematic employer power over wages and working conditions. They also show that restricting the power of management—through minimum wage policies, collective bargaining, and codetermination—benefits workers without causing adverse economic outcomes for firms or the economy, contrary to oft-made claims made by jurists.

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Labor market strong, but cooling in September: Public-sector employment continues to falter

Below, EPI economists offer their initial insights on the jobs report released this morning, which showed 263,000 jobs added in September.

From EPI senior economist, Elise Gould (@eliselgould):

Read the full Twitter thread here. 

From EPI president, Heidi Shierholz (@hshierholz):

Read the full Twitter thread here. 

What to Watch on Jobs Day: Signs of life in stalled public-sector employment?

Over the last few months, we’ve seen signs of labor market cooling (though from a very strong base): the historic decline in job openings in August; moderating wage growth; and employment losses in interest-rate-sensitive jobs.  

Private-sector employment rebounded fantastically following the pandemic recession because Congress made fiscal investments at the scale of the problem, and employment in the private sector exceeded pre-pandemic levels by July 2022. While the recovery continues to chug along, with rising labor force participation and prime-age employment-to-population ratio approaching pre-pandemic levels, the one sector that has failed to recover and has actually stalled for much of this year is state and local government employment.  

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In a year of tremendous legislative gains for California workers, Governor Newsom was wrong to veto a bill to protect 300,000 migrant workers

California’s Governor Gavin Newsom deserves credit and praise for signing into law a number of bills that will improve the lives of workers over the past few weeks. He signed legislation that will expand paid family leave, improve wages and working conditions in the fast food industry, and protect the right to organize for California’s farmworkers. Unfortunately, however, Gov. Newsom vetoed AB 364, a bill that would protect 300,000 temporary migrant workers. 

Last month, I published an analysis of the components of AB 364 and its positive impact if it became law, including creating a system of transparency and accountability to prevent fraud and exploitation committed against migrant workers who are vulnerable to abuses by international labor recruiters. The abuses often include wage theft, debt bondage, and human trafficking of the migrant workers recruited to work in California through temporary work visa programs. AB 364 was introduced to combat those abuses in California, the biggest host state for migrants working with temporary visas—with a rapidly increasing population.  

Below, I’ll discuss Gov. Newsom’s veto of AB 364 and critique the reasoning behind it. 

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Job openings fell while net job growth remained strong in August

Below, EPI senior economist Elise Gould offers her initial insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for August. Read the full Twitter thread here. 

Overtime pay will help, not hurt, New York’s farms

This op-ed was originally published in the Times Union

Farm workers have long demanded overtime pay that kicks in after working 40 hours a week, just like other workers get. This year’s state budget included—at Gov. Kathy Hochul’s urging—a subsidy that will compensate farm owners for 100 percent of the cost of paying overtime, plus a little more to cover whatever extra is involved. Yet, farm owners are still resisting.

They’re wrong to do so.

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Over 60% of low-wage workers still don’t have access to paid sick days on the job

The pandemic highlighted vast inequalities in the United States, especially in the U.S. labor market. Striking disparities were magnified in who could work from home and who had to go into work in person, who was able to keep their job and who suffered from lost work hours or employment altogether, who had health insurance to seek care when they needed it and who didn’t, and who had the ability to take paid sick days to stay home when sick, get vaccinated, or take care of loved ones and who did not. Yesterday, the latest data on employer benefits was released by the Bureau of Labor Statistics. Stark inequalities persist in access to workplace benefits. One that hits hard is the inability of over 60% of the lowest-wage workers in the U.S. to be able to earn paid sick days to care for themselves or family members.  

Figure A  below shows access to paid sick days is vastly unequal: Workers at the bottom are disproportionately denied this important security. The highest-wage workers (top 10%) are two and a half times as likely to have access to paid sick leave as the lowest-paid workers (bottom 10%). Whereas 96% of the highest-wage workers had access to paid sick days, only 38% of the lowest-paid workers are able to earn paid sick days. 

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Child Tax Credit expansions were instrumental in reducing poverty rates to historic lows in 2021

Government policies enacted in the wake of the pandemic have proven critical for reducing child poverty in the United States. Census Bureau data released last week showed that government social programs kept tens of millions of people out of poverty in 2021.

Child poverty reached its lowest level on record, as calculated by the Supplemental Poverty Measure (a measure that includes both cash and noncash benefits). This new historic low is largely thanks to the expanded Child Tax Credit (CTC), a key component of the 2021 American Rescue Plan (ARP) that has since expired. Without additional action by Congress to renew the expanded Child Tax Credit, we should expect higher child poverty in future years.

Let’s start with the outstanding role the Child Tax Credit played in reducing child poverty. The Child Tax Credit is a payment to support families raising children under 17 years of age of up to $2,000 per qualifying child. The 2021 ARP expanded the credit to increase the level of earnings to families receiving the credit (up to $3,600 per child under age 6) and to make the credit more widely available and fully refundable.

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Inflation, minimum wages, and profits: Protecting low-wage workers from inflation means raising the minimum wage

There are two main debates about what to do about inflation. One is mostly good-faith (if highly contested): It concerns the actions of the Federal Reserve. Another is mostly bad-faith: It uses the existence of elevated inflation as a cudgel against any progressive policy change and as a justification for long-standing ideological priorities. This is most visible in fiscal policy debates, with some people claiming simultaneously that spending must be restrained (a contractionary move in fiscal policy), but taxes must be cut (an expansionary move). 

This bad-faith will certainly rear its head in debates on attempts to move forward on stronger labor standards as well—say by increasing the federal minimum wage. Even under normal circumstances, opponents of minimum wage increases claim that they will be inflationary, so they will almost certainly exaggerate these effects today. In this blog post, I make the following points about the relationship between minimum wages and inflation:  

  • Faster inflation makes it more important, not less, to raise the federal minimum wage. Every year lawmakers don’t raise the minimum wage is a year that they have effectively cut the purchasing power and living standards of this country’s lowest wage workers. 
  • Even under a worst-case inflation scenario where every penny in extra pay that results from moving the federal minimum wage to $15 by 2027 is passed on in the form of higher prices, the result would be a five-year stretch of inflationary pressure equal to 0.1% per year (or about 1/100th of the increase we’ve seen since 2021), then the inflationary effect would return to zero. 
  • Even this extremely mild inflation could be substantially blunted by other margins of adjustment to a higher minimum wage—including a retreat from today’s still sky-high profit margins. During normal times, profits account for about 13% of the price of goods and services, but since recovery from the COVID-19 recession began in the second quarter of 2020, rising profit margins have accounted for roughly 40% of the rise in prices. When these margins normalize, there will be ample room for noninflationary wage growth.  

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Poverty is a policy choice: State-level data show pandemic safety net programs prevented a rise in poverty in every state

The year 2021 proved to be a remarkable showcase of the power of public policies in alleviating economic hardship. This week, the Census Bureau released data from the 2021 Current Population Survey Annual Social and Economic Supplements (CPS ASEC) detailing poverty and other economic conditions across the country. The data revealed that social insurance programs—like Social Security, economic stimulus checks, a strengthened unemployment insurance (UI) system, and the expanded Child Tax Credit—kept more than 25 million people out of poverty. State lawmakers should do everything in their power to revive these programs. 

Differences in the supplemental and official poverty measures highlight the impact of pandemic support programs 

In 2011, the Census Bureau began annually releasing an additional poverty measure called the Supplemental Poverty Measure (SPM). Although imperfect, the SPM is a much better measure of poverty than the official poverty rate. SPM accounts for major government benefits like Social Security and child tax credits, and uses a more holistic measurement of modern costs of living and geographical differences in those costs. The latest data show that the 2021 SPM rates are the lowest on record for all years for which SPM estimates are available, starting from 2009. This is even more remarkable considering that the economic hardships and disruptions brought on by the COVID-19 pandemic were still very present during 2021.  

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Household incomes have fallen since 2019 despite growth in workers’ earnings

On Thursday, the U.S. Census Bureau released 2021 household income and household earnings data for states from the American Community Survey (ACS). National averages hide the wide disparities experienced by workers and families across states while state-level data can help us understand how policy choices impact income and earnings. According to the ACS, inflation-adjusted median household income in 2021 was $69,717 nationally with large differences across states. Nineteen states and the District of Columbia had median household incomes above the national average with the highest being Maryland ($90,203), The District of Columbia ($90,088), and Massachusetts ($89,645). However, 31 states had median household incomes below the national median with the lowest being in Mississippi ($48,716), West Virginia ($51,248), and Louisiana ($52,087).

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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.   

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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).  

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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. 

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