In the first 100 days, the Biden-Harris administration has taken a number of promising steps toward crafting an economic policy approach that would boost living standards and security for all U.S. families. But much remains to be done.

In this post, we highlight—in very broad strokes—what is needed to build an economy that generates faster, more sustainable, and more equitably distributed growth. We then identify where the administration has made progress in the first 100 days and where more forceful action is needed.

Building an economy that works for everyone requires the following:

• Pursuing a “go-for-growth” approach to macroeconomics that aims for labor markets where jobs are plentiful and employers have to work hard (including offering higher wages) to attract workers, so-called “high-pressure” labor markets.
• Crafting and enforcing fairer rules for markets, particularly through labor market institutions and standards that provide workers a more level playing field when bargaining with employers for better pay and working conditions.
• Constructing deeper and more protective social insurance systems that use a larger public role in providing unemployment benefits, health coverage, and retirement income security— including long-term care for older adults and people with disabilities.
• Undertaking ambitious public investments in both people and physical capital, including physical infrastructure, early child care and education, higher education, and green investments.
• Reforming taxes in a way that helps finance the needed fiscal spending in this program, curbs growing inequality, and discourages the economic “bads” of greenhouse gas emissions and financial speculation.

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Today the Biden-Harris administration issued an executive order requiring federal contractors to pay a minimum wage of $15 per hour. This is very welcome news. We estimate that up to 390,000 low-wage federal contractors will see a raise under this policy, with the average annual pay increase for affected year-round workers being up to $3,100. Roughly half of workers who would see a raise will be women and roughly half will be Black or Hispanic workers.

To arrive at these estimates, we first estimate the state- and industry-specific shares of federal contract employment using FY2020 federal contract obligations from USA Spending and input-output tables from 2019 Bureau of Labor Statistics employment requirements data. We then combined these results with the EPI Minimum Wage Simulation Model, assuming that the state- and industry-specific wage distributions for federal contractors are similar to the state- and industry-specific overall wage distributions. Following this methodology, we project that the policy will raise wages of up to 390,000 federal contractors in 2022. We say “up to” 390,000 to account for the fact that some workers who would otherwise be affected by a $15 minimum wage will already be receiving a higher wage as a result of the Davis-Bacon Act or the Service Contract Act. An extreme lower bound for the number of contract workers affected by this executive order after accounting for these other wage standards is 226,000. (This lower bound is generated by entirely excluding the construction industry and, outside of construction, raising the underlying wage distribution by an industry-specific union wage premium.)

We are thrilled that the administration is increasing the minimum wage for workers on federal contracts to $15 per hour and raising wages for hundreds of thousands of workers, and we encourage the administration to go further to help ensure that the estimated two million total jobs held by federal contract workers are good jobs. This would include steps like ending practices that allow low-road contractors to win bids that are so low they are inconsistent with decent pay and working conditions, and banning federal government contractors from requiring contract workers to sign forced arbitration and class action waivers, which limit the ability of these workers to challenge illegal practices.

Recently released data from the U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) show that unemployment insurance (UI) made up an unprecedented share of total wage and salary income1 in 2020—reflecting the immense economic fallout from the pandemic and the large federal response to the crisis.

Importantly, more than 70% of UI dollars during the pandemic have come from emergency federal programs to prop up the inadequate state-run UI systems, revealing the gross inadequacy of existing UI benefits, the scale of the ambitious but temporary federal response, and the resulting obvious need for broad structural reform of the UI system. Key findings are:

• Nationally, UI benefits as a share of total wage and salary income peaked at over 10% in the second quarter of 2020. Before 2020, UI benefits had never been as high as 3% of total wage and salary income.
• At the state level, UI benefits had never exceeded 6% of any state’s wage and salary income before 2020. But in the second quarter of 2020, four states saw UI benefits exceed 20% of state wage and salary income.
• State UI programs could not meet the needed support for an unprecedented number of unemployed workers. Two key pieces of federal legislation helped fill the gap. The Federal Pandemic Unemployment Compensation (FPUC)—mostly the extra $600 in weekly benefits included as part of the CARES Act in March 2020—contributed the most federal dollars in 2020. But the Pandemic Unemployment Assistance (PUA) program (which expanded eligibility to workers traditionally left out of UI benefits) was also hugely important. In 13 states, PUA accounted for more than 45% of total UI dollars received in the fourth quarter of 2020.
• These pandemic-related UI programs greatly equalized the protectiveness of the UI system as a whole across groups. In particular, states with a higher share of Black residents were more reliant on federal assistance to provide UI benefits. But if the pandemic programs fade with no structural reforms, the UI system will revert to being one that sees stingier benefits precisely in those states with higher Black population shares. This disparate racial impact is a key reason why reforms are needed.

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It has been my honor, privilege, and joy to lead the Economic Policy Institute for the last three and a half years. For me, EPI has been a vibrant intellectual community for more than 30 years. I wandered in the door as an inexperienced trade economist in the 1990s, consumed and distributed EPI’s excellent research during the 20 years I was at the AFL-CIO, and then became president of EPI in 2018.

During my tenure, with the invaluable partnership of Vice President John Schmitt, EPI has grown its staff, expanded its work, strengthened its voice and impact, forged new partnerships, deepened its state policy work via the EARN network, and sharpened its focus on racial justice through expansion of the Program on Race, Ethnicity, and the Economy, as well as throughout our work.

So it is with a heavy heart that I announce that I will be leaving EPI on May 7. I have accepted a job in the Biden/Harris administration. It is not easy to leave an organization like EPI—and the extraordinarily brilliant, insightful, and delightful staff—but I believe there is a short window that provides an opportunity for me to contribute to work I care deeply about.

I have complete, unshakable confidence in EPI, its staff, and its work. I know how valuable, timely, and thoughtful that work has been and will continue to be—especially now. EPI is well positioned to shape and inform the bold, ambitious policy agenda laid out by the new administration and Congress.

EPI’s wonderful board of directors, led by Board Chairman Richard Trumka and the executive committee, will organize a national search for the next president, who will have the good fortune to lead this stellar organization on to do the Research that builds Worker Power so we can achieve Justice. For the duration of the search, John Schmitt has generously and graciously agreed to step in as interim president. With his deep experience, John will ensure a smooth and successful transition.

I know EPI will continue to advance its mission to strengthen workers’ voice and power at the workplace and beyond and to make the world fairer and more humane. I will be eternally grateful that I had the opportunity to work alongside EPI’s amazing staff, and I look forward to staying connected in this next chapter for me and for EPI.

(On May 10, Thea Lee joined the U.S. Department of Labor as Deputy Undersecretary of Labor to lead International Labor Affairs Bureau.)

In all of the coverage about how Amazon and its relentless anti-union campaign defeated the union organizing drive at its fulfillment center in Bessemer, Alabama, one key feature of Amazon’s campaign deserves highlighting—namely, Amazon’s countless tactics to try and delay the vote and dilute the union’s support by adding thousands of workers to the bargaining unit who hadn’t previously been involved in the organizing drive. This common tactic, which is straight out of the standard union avoidance playbook, unquestionably played a significant role in defeating the organizing drive. Yet the tactic is perfectly legal under our current labor law. The Protecting the Right to Organize (PRO) Act would put a stop to this tactic and put voting decisions back in the hands of workers and the National Labor Relations Board (NLRB).

First, some background. When workers want to form a union, they typically gather signatures on a petition or cards indicating their support for union representation. If workers and their union gather signatures from at least 30% of the group—known as the “bargaining unit”—the NLRB will process a petition for a representation election. The NLRB will hold a hearing on the petition and issue a decision setting an election date, the voting bloc, the method of voting (mail ballot or in person), and other details.

When employers are notified of an election petition, their first play when they want to defeat an organizing drive is to stall the election and give themselves time to campaign against the union, as Amazon did in Bessemer. A common employer tactic—and one employed by Amazon—is to use the NLRB hearing to argue that the voting bloc should be different from the group described by workers in their election petition. Typically, employers will argue that the voting bloc/bargaining unit should be larger than the one sought by workers, because employers know they can dilute the union’s support by adding workers who haven’t previously been involved in the organizing drive.

Employers slow down the process by asking for a hearing on the proposed bargaining unit, which can take weeks or even months. In the meantime, the employer holds mandatory meetings where workers are required to listen to anti-union speeches by the company. Employers hire professional “union avoidance” consultants, who are paid thousands of dollars a day to script and run anti-union campaigns. The longer the employer can delay, the longer the employer can run its campaign. Meanwhile, the union has no similar access to the facility to talk with workers about the benefits of organizing.

This is precisely what Amazon did in Bessemer. The Retail, Wholesale and Department Store Workers Union (RWDSU) filed a petition with the NLRB on November 20, 2020, seeking an election to represent a unit of 1,500 full-time and part-time workers at the Bessemer fulfillment center. The petition excluded temporary and seasonal employees from the bargaining unit, which is typical, because these short-term employees do not have the same permanent attachment to the job as regular employees. If Amazon had not intervened, an election would likely have been held among the 1,500-person voting bloc in late December.

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I am the author of a book, The Color of Law, that disproves the myth of de facto segregation. In truth, we are residentially segregated, not naturally or from private bigotry, but primarily by racially explicit policies of federal, state, and local governments designed to prevent African Americans and whites from living as neighbors; these 20th-century policies were so powerful that they determine much of today’s residential, social, and economic inequality.

Because powerful government policy segregated us, racial boundaries violate the fifth, 13th, and 14th amendments. Our nation thus has a positive constitutional obligation to redress segregation with policies as intentional as those that segregated us.

The federal government made housing and homeownership critical to families’ economic stability and upward mobility. But we routinely excluded African Americans from government benefits that propelled whites into the middle class.

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Black workers disproportionately experienced the darkest side of 2020, both in terms of health and labor market outcomes—a reality that was not unexpected.

Researchers, advocates, and activists have spent years pointing out that Black Americans are more likely to have the health conditions that significantly increase the mortality rate of COVID-19 infection. We have known for years that Black American households have a fraction of the wealth that white American households do, meaning that in the event of an economic shock they would be less resilient, more likely to default on loans, and unable to draw upon savings to pay rent, possibly leading to evictions.

The last 50 years of labor market data have given us two recognizable facts:

1. The Black unemployment rate is consistently around double the white unemployment rate under normal economic conditions.
2. Black workers find employment more slowly, especially in the wake of an economic downturn.

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Correction: The first paragraph of this blog post has been updated with the correct overall consumer price index (CPI) in March 2021 of 2.6% and “core” measure of the CPI of 1.6%. The initial analysis had accidentally switched the two numbers. The numbers in Figure A remain the same.

Today, the Bureau of Labor Statistics (BLS) reported that the overall consumer price index (CPI) in March 2021 was 2.6% higher than in March 2020, while the “core” measure of the CPI (which excludes volatile food and energy prices) was 1.6% higher than a year ago. Given that these are noticeable (if modest) increases over recent months’ year-over-year inflation rates, some might be tempted to argue that this data should make policymakers worry about economic “overheating” stemming from “too much” fiscal support provided in recent recovery legislation. This is clearly wrong, for a number of reasons:

• The data released today do not show that prices have risen rapidly since recovery legislation passed—instead they just show that prices plummeted during the near-total shutdown of large swaths of the economy a year ago in response to the COVID-19 shock.
  • Measured on an annualized basis from February 2020—before the COVID-19 economic shock—inflation in March 2021 was running at just 1.5%.
  • Measured since October—shortly before the $2.8 trillion in additional relief spending provided by legislation in December 2020 and the American Rescue Plan (ARP) in March—inflation is running at an annualized rate of 1.3%.

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The spending in the American Jobs Plan (AJP) is well targeted to meet several (but obviously not all) pressing social needs. Because so much of the spending is temporary and provides needed investments, there is no pressing economic need to “pay” for it with tax increases. Yet the tax provisions in the AJP are also smart and valuable. This post discusses some of the economics of the AJP, with a special focus on these tax provisions. Its main findings are:

• The bulk of these tax provisions undo some of the worst parts of the Tax Cuts and Jobs Act (TCJA) passed in the first year of the Trump administration. Given this, to make the case that rolling back these parts of the TCJA will harm the U.S. economy, one has to believe that the passage of the TCJA benefited the U.S. economy. There is no evidence this is the case.
• The entire case for corporate tax cuts benefiting the U.S. economy hinges on the effects on business investment. But business investment growth in the two years following the TCJA’s passage (even before the COVID-19 shock) was cratering, not rising.
• The vast majority of new revenue that will be raised from the AJP tax provisions will come from taxing “excess profits”—profits accrued by virtue of monopoly or other privileged market positions. As such, this extra revenue will have little to no effect on economic decision-making and hence will not reduce business investment or economic growth more generally.
• Two “model-based” analyses of the AJP find very different things: Moody’s Analytics forecasts strong positive effects on economic growth over the next 10 years, while the Penn Wharton Budget Model forecasts very slight negative growth effects by 2030. The finding that the AJP might reduce economic growth rests on a number of bad assumptions: that the corporate tax changes will significantly affect economic decision-making and reduce investment; that the productivity gains stemming from public investment are small; that budget deficits will crowd out large amounts of private capital formation over the next decade; and that AJP’s care investments will reduce labor supply. None of these assumptions are likely to be correct.

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