Wilbur Ross’s comments and Trump administration trade policies offer few answers for growing, job-destroying China trade deficit
This morning, Commerce Secretary Wilbur Ross claimed that the coronavirus outbreak in China “will help accelerate the return of jobs to North America.” This comment is not only cruel and inhumane, but it’s also a testament to just how little the Trump administration understands about America’s trade problems and how to solve them. Even the administration’s less off-the-cuff plans for rebuilding U.S. manufacturing have little chance of working. For example, as I noted previously, President Trump’s “phase one” trade deal with China is unlikely to significantly reduce the massive U.S. job losses that have resulted from growing U.S. trade deficits with China.
A new EPI analysis shows that growing trade deficits with China cost 3.7 million U.S. jobs between 2001 and 2018, including 700,000 jobs lost in the first two years of the Trump administration. Job losses occurred in all 50 states, every congressional district, and every industry. Manufacturing was hit the hardest, with 2.8 million jobs lost. Given this toll and the Trump administration’s rhetoric, you’d think they’d look for real solutions. Instead, Trump appears desperate to sign his deal, any deal, so that he can claim progress on reducing trade deficits. But he is shortsighted on trade because his arrangement with Beijing ignores at least two key problems. First, it assumes that China will suddenly obey trade rules and commitments it has never previously respected. And second, it limits Washington’s ability to respond to the currency misalignment currently hampering U.S. exporters.
Weakened labor movement leads to rising economic inequality
The basic facts about inequality in the United States—that for most of the last 40 years, pay has stagnated for all but the highest paid workers and inequality has risen dramatically—are widely understood. What is less well-known is the role the decline of unionization has played in those trends. The share of workers covered by a collective bargaining agreement dropped from 27 percent to 11.6 percent between 1979 and 2019, meaning the union coverage rate is now less than half where it was 40 years ago.
Research shows that this de-unionization accounts for a sizable share of the growth in inequality over that period—around 13–20 percent for women and 33–37 percent for men. Applying these shares to annual earnings data reveals that working people are now losing on the order of $200 billion per year as a result of the erosion of union coverage over the last four decades—with that money being redistributed upward, to the rich.
The good news is that restoring union coverage—and strengthening workers’ abilities to join together to improve their wages and working conditions in other ways—is therefore likely to put at least $200 billion per year into the pockets of working people. These changes could happen through organizing and policy reform. Policymakers have introduced legislation, the Protecting the Right to Organize (PRO) Act, that would significantly reform current labor law. Building on the reforms in the PRO Act, the Clean Slate for Worker Power Project proposes further transformation of labor law, with innovative ideas to create balance in our economy. Read more
The Trump administration’s new housing rules will worsen segregation
In “The Neighborhoods We Will Not Share,” an article published online at The New York Times, I describe how the Trump administration has proposed a rule that will make it virtually impossible to challenge many policies that reinforce residential racial segregation.
This is no small matter. Segregation underlies many of our most serious social problems. Educators can’t seem to make significant progress in their efforts to close the racial gap in academic achievement that persists in large part because we enroll the most socially and economically disadvantaged children in poorly resourced schools, located in poorly resourced neighborhoods. Health disparities by race stem, in part, from so many African Americans consigned to areas where they have less access to healthy air and healthy foods, and are more subject to stressful conditions. Black men’s high and unjustifiable rates of incarceration depend significantly on their concentration in segregated neighborhoods without good employment opportunities in the formal economy or the transportation to access good jobs. And segregation prevents us from overcoming our very dangerous and frightening political polarization, highly correlated with race. How can we ever develop the common national identity essential to the preservation of our democracy if so many African Americans and whites live so far from each other that we have no ability to understand and empathize with each other’s life experiences?
In my book The Color of Law, I described how 20th century federal, state, and local policies—explicitly racial—created, reinforced, and sustained racial boundaries in every metropolitan area in the United States. These unconstitutional government activities still predict today’s segregated landscape. For example, the explicit exclusion of black working class families from single-family homes, for which white working class family purchases were subsidized, bears substantial responsibility for the black-white wealth gap—while black family incomes are about about 60% of white family incomes, the median black household wealth is less than 10%of white household wealth, an enormous disparity that was propelled by the equity appreciation of white property while African Americans were consigned to neighborhoods where no similar appreciation occurred. The wealth gap predicts much of our contemporary racial inequality.Read more
Yes, David Brooks, there really is a class war
New York Times columnist David Brooks, in an article sub-titled “No, Virginia, there is no class war,” recently trotted out an old argument about why wage growth has been so sluggish for so many U.S. workers for so long: they’re just not very good workers. Specifically, he argues that “wages are still mostly determined by skills and productivity.” Ergo, if there is growing inequality in wages, it must be driven by inequality in workers’ own productivity.
But the evidence he cites is totally unconvincing on this.
First, he notes that wages for lower-wage workers have recently grown more rapidly than for middle-wage workers. But it’s been shown again and again that this is driven in large-part by those states that have raised their minimum wages. It’s also been shown that tighter labor markets disproportionately benefit the lowest-paid workers. The argument that changes in relative bargaining power and economic leverage have been the prime mover of wage trends in recent decades is not an argument that wages can never rise, period. When policies change—like minimum wages increase and the Fed allows labor markets to tighten without slamming on the interest rate brakes—good things happen. We just need to change a lot more policies.
Second, he cites a study that looks at wage and productivity growth in high-skill and low-skill industries between 1989 and 2017. The first odd bit of this evidence is that the wage growth he reports the study claims for high and low-skill industries is essentially identical: 26 percent versus 24 percent. The second odd bit is that this means even high-skill industries only gave average annual wage increases of 0.8 percent over that time, even as aggregate productivity grew by almost twice as fast over that time (about 1.4 percent annually). Finally, and most important, using industry-level productivity growth to infer anything about the productivity of individuals working in these industries cannot be done. To put it most simply, productivity growth within an industry can occur because each input used in production gets more productive, or, there is a shift in the mix of inputs. This might sound wonky but I’ll explain a bit more in the next paragraph:Read more
This MLK Day, remember Emmett Till and voter suppression
“We can never be satisfied as long as the Negro is the victim of the unspeakable horrors of police brutality…We cannot be satisfied as long as the Negro in Mississippi cannot vote and the Negro in New York believes he has nothing for which to vote.” —Martin Luther King Jr.
Two historic events occurred in American history in different years on August 28. In 1955, Emmett Till was lynched in Mississippi—and in 1963, Martin Luther King Jr. addressed the nation from Washington, D.C., with his “I Have a Dream” speech. While both events have been ingrained in many Americans’ memories, few are aware that they share a common link between brutality and voter suppression.
The prevailing belief of the circumstances surrounding 14-year-old Emmett Till’s killing is that he was accused of whistling at a white woman. Yet, the truth is he was lynched as an act of voter intimidation. After being acquitted by an all-white jury, one of Emmett Till’s killers confessed to the lynching and gave voting as the first reason he killed Emmett.
“But I just decided it was time a few people got put on notice. As long as I live and can do anything about it, [racial slur] are gonna stay in their place. [Racial slur] ain’t gonna vote where I live. If they did, they’d control the government.”—J.W. “Big Milam”
Although Emmett Till was brutally lynched 65 years ago, historical events like his killing continue to suppress the political participation of black Americans. Using data on historical lynchings and present-day voter registration of blacks in southern states, Figure A shows that blacks who live in counties that experienced more lynchings in the past are less likely to register to vote today.Read more
China trade deal will not restore 3.7 million U.S. jobs lost since China entered the WTO in 2001
The White House has announced plans for a ceremony to sign a “phase one” trade deal with China on Wednesday, although details of the agreement have yet to be announced. As one analyst noted, this deal may not amount to more than a hill of soybeans. It is unlikely to significantly reduce massive U.S. job losses due to growing U.S. trade deficits—the difference between imports and exports—which are dominated by trade deficits in manufactured goods. As shown in a forthcoming EPI report to be released later this month, growing U.S. trade deficits with China eliminated 3.7 million U.S. jobs between 2001 and 2018 alone (see Figure A), including 2.8 million jobs in manufacturing (details will be provided in the forthcoming report).
U.S. jobs displaced by the growing goods trade deficit with China since 2001 (in thousands of jobs)
| Year | Jobs displaced (thousands) |
|---|---|
| 2001 | 0.0 |
| 2002 | 218.1 |
| 2003 | 445.7 |
| 2004 | 852.1 |
| 2005 | 1,306.1 |
| 2006 | 1,651.5 |
| 2007 | 1,964.5 |
| 2008 | 2,030.4 |
| 2009 | 1,686.2 |
| 2010 | 2,295.0 |
| 2011 | 2,616.8 |
| 2012 | 2,764.6 |
| 2013 | 2,812.3 |
| 2014 | 2,993.2 |
| 2015 | 3,197.9 |
| 2016 | 2,965.2 |
| 2017 | 3,339.8 |
| 2018 | 3,704.7 |
Source: Authors’ analysis of U.S. Census Bureau American Community Survey data, Bureau of Labor Statistics Employment Projections program data, and U.S. International Trade Commission Interactive Tariff and Trade DataWeb database. Adapted from Rob Scott and Zane Mokhiber, Growing China Trade Deficits Cost 3.7 Million American Jobs between 2001 and 2018, Economic Policy Institute, forthcoming.
Trade deficits and jobs losses with China continued to grow during the first two years of the Trump administration—despite the administration’s heated rhetoric and imposition of tariffs. The U.S. trade deficit with China rose from $347 billion in 2016 to $420 billion in 2018, an increase of 21.0%. U.S. jobs displaced by those China trade deficits increased from nearly 3.0 million jobs lost in 2016 to 3.7 million jobs lost in 2018, an increase of more than 700,000 jobs lost or displaced in the first two years of the Trump administration.
Although the bilateral trade deficit with China has declined in 2019 (through November), the overall U.S. trade deficit in non-oil goods, which is dominated by trade in manufactured and farm products, has continued to increase, suggesting that trade diversion has grown in importance. These are important topics for future research.
While growing exports support some American jobs, growing imports eliminate existing jobs and prevent new job creation—as imports displace goods that otherwise would have been made in the United States by domestic workers. As a result, growing trade deficits result in increasing U.S. job losses. The top half of Table 1 shows just how much the trade deficit has grown: The U.S. trade deficit with China increased from $83.0 billion in 2001 to $420 billion in 2018. While U.S. exports to China increased in this period, growing exports were overwhelmed by the massive growth of imports from China, which increased by $437 billion in this period. Read more
The labor market continues to improve in 2019 as women surpass men in payroll employment, but wage growth slows
Today’s Bureau of Labor Statistics (BLS) jobs report provides the opportunity to look at 2019 as a whole and in comparison with previous years. As the recovery has strengthened over the last several years, we’ve generally seen improvements in most measures of the labor market: employment, unemployment, and wage growth. These measures tell a consistent story—an economy on its way to full employment, but not there yet. Wage growth continues to be the lagging indicator, which is not as strong as would be expected given the health of the labor market and actually slowed through much of 2019.
Payroll employment growth in December was 145,000, bringing average job growth in 2019 to 176,000. This is a bit softer than the 223,000 average for 2018, but still more than enough to keep up with growth in the working-age population and pull in thousands of workers off the sidelines every month.
Average monthly total nonfarm employment growth, 2006–2019
| Year | Average monthly total nonfarm employment growth |
|---|---|
| 2006 | 175 |
| 2007 | 95 |
| 2008 | -296 |
| 2009 | -421 |
| 2010 | 86 |
| 2011 | 173 |
| 2012 | 181 |
| 2013 | 192 |
| 2014 | 251 |
| 2015 | 227 |
| 2016 | 193 |
| 2017 | 179 |
| 2018 | 223 |
| 2019 | 176 |
Source: Data are from the Current Employment Statistics (CES) series of the Bureau of Labor Statistics and are subject to occasional revisions. This chart was based on data accessed in January 2020.
For the first time in nearly 10 years, women’s share of payroll employment has just surpassed that of men’s. The figure below shows payroll employment for both men and women since 2000. From 2000 to 2007, men’s share of total employment was about 1–2% higher than women’s. In the recession, employment fell markedly in male-dominated professions—notably manufacturing and construction—and women’s share of employment rose in kind. Since 2010, women’s and men’s employment have both increased, with men’s growing faster than women’s initially. In the last couple of years, women’s payroll employment has grown just a bit faster than men’s.
We can turn again to a sector approach as one explanation for why women’s employment has now just surpassed men’s in December. Men make up 77% of employment in construction and manufacturing combined. Coincidentally, women make up 77% of employment in education and health services. Between 2018 and 2019, construction and manufacturing together increased by 356,000, but education and health services employment increased much more—by 603,000. Furthermore, manufacturing employment has faltered late in the year, helping women’s employment eke ahead of men’s in December.
It is important to note that in absolute terms the shares of men’s and women’s employment haven’t changed that dramatically. But, it holds true that women’s payroll employment is now 50.04% of the total, the first time it has been a majority since the depths of the (construction and manufacturing-led) Great Recession.
Women’s share of payroll employment ekes ahead of men’s in December 2019: Payroll employment, men and women, 2000 to 2019
| Date | Payroll employment, women | Payroll employment, men |
|---|---|---|
| Jan-2000 | 62861 | 68159 |
| Feb-2000 | 62936 | 68200 |
| Mar-2000 | 63087 | 68522 |
| Apr-2000 | 63294 | 68606 |
| May-2000 | 63499 | 68619 |
| Jun-2000 | 63457 | 68622 |
| Jul-2000 | 63444 | 68803 |
| Aug-2000 | 63521 | 68719 |
| Sep-2000 | 63635 | 68729 |
| Oct-2000 | 63624 | 68741 |
| Nov-2000 | 63755 | 68815 |
| Dec-2000 | 63791 | 68931 |
| Jan-2001 | 63863 | 68849 |
| Feb-2001 | 63922 | 68882 |
| Mar-2001 | 63894 | 68867 |
| Apr-2001 | 63964 | 68511 |
| May-2001 | 63995 | 68431 |
| Jun-2001 | 63951 | 68361 |
| Jul-2001 | 64022 | 68165 |
| Aug-2001 | 63979 | 68064 |
| Sep-2001 | 63958 | 67833 |
| Oct-2001 | 63790 | 67678 |
| Nov-2001 | 63676 | 67482 |
| Dec-2001 | 63619 | 67378 |
| Jan-2002 | 63645 | 67223 |
| Feb-2002 | 63622 | 67130 |
| Mar-2002 | 63627 | 67105 |
| Apr-2002 | 63593 | 67043 |
| May-2002 | 63569 | 67078 |
| Jun-2002 | 63582 | 67113 |
| Jul-2002 | 63572 | 67032 |
| Aug-2002 | 63621 | 66982 |
| Sep-2002 | 63573 | 66951 |
| Oct-2002 | 63600 | 67043 |
| Nov-2002 | 63630 | 67002 |
| Dec-2002 | 63574 | 66914 |
| Jan-2003 | 63592 | 67004 |
| Feb-2003 | 63604 | 66857 |
| Mar-2003 | 63489 | 66757 |
| Apr-2003 | 63501 | 66693 |
| May-2003 | 63472 | 66738 |
| Jun-2003 | 63429 | 66780 |
| Jul-2003 | 63421 | 66786 |
| Aug-2003 | 63308 | 66859 |
| Sep-2003 | 63460 | 66819 |
| Oct-2003 | 63523 | 66950 |
| Nov-2003 | 63551 | 66939 |
| Dec-2003 | 63604 | 67001 |
| Jan-2004 | 63645 | 67142 |
| Feb-2004 | 63666 | 67178 |
| Mar-2004 | 63773 | 67383 |
| Apr-2004 | 63873 | 67553 |
| May-2004 | 63996 | 67714 |
| Jun-2004 | 64036 | 67771 |
| Jul-2004 | 64037 | 67827 |
| Aug-2004 | 64007 | 67948 |
| Sep-2004 | 64135 | 67977 |
| Oct-2004 | 64287 | 68179 |
| Nov-2004 | 64327 | 68194 |
| Dec-2004 | 64397 | 68247 |
| Jan-2005 | 64512 | 68279 |
| Feb-2005 | 64611 | 68439 |
| Mar-2005 | 64662 | 68510 |
| Apr-2005 | 64823 | 68713 |
| May-2005 | 64895 | 68811 |
| Jun-2005 | 65025 | 68932 |
| Jul-2005 | 65121 | 69193 |
| Aug-2005 | 65171 | 69346 |
| Sep-2005 | 65276 | 69307 |
| Oct-2005 | 65214 | 69459 |
| Nov-2005 | 65321 | 69691 |
| Dec-2005 | 65327 | 69841 |
| Jan-2006 | 65394 | 70052 |
| Feb-2006 | 65466 | 70287 |
| Mar-2006 | 65552 | 70511 |
| Apr-2006 | 65587 | 70634 |
| May-2006 | 65546 | 70715 |
| Jun-2006 | 65577 | 70765 |
| Jul-2006 | 65811 | 70727 |
| Aug-2006 | 65938 | 70775 |
| Sep-2006 | 66064 | 70796 |
| Oct-2006 | 66180 | 70690 |
| Nov-2006 | 66317 | 70765 |
| Dec-2006 | 66468 | 70800 |
| Jan-2007 | 66585 | 70908 |
| Feb-2007 | 66733 | 70840 |
| Mar-2007 | 66835 | 70975 |
| Apr-2007 | 66916 | 70944 |
| May-2007 | 67058 | 70954 |
| Jun-2007 | 67135 | 70953 |
| Jul-2007 | 67174 | 70881 |
| Aug-2007 | 67273 | 70759 |
| Sep-2007 | 67352 | 70762 |
| Oct-2007 | 67417 | 70773 |
| Nov-2007 | 67484 | 70815 |
| Dec-2007 | 67623 | 70786 |
| Jan-2008 | 67630 | 70792 |
| Feb-2008 | 67662 | 70678 |
| Mar-2008 | 67703 | 70589 |
| Apr-2008 | 67683 | 70373 |
| May-2008 | 67671 | 70201 |
| Jun-2008 | 67627 | 70079 |
| Jul-2008 | 67628 | 69880 |
| Aug-2008 | 67480 | 69749 |
| Sep-2008 | 67349 | 69420 |
| Oct-2008 | 67166 | 69122 |
| Nov-2008 | 67018 | 68543 |
| Dec-2008 | 66805 | 68052 |
| Jan-2009 | 66554 | 67520 |
| Feb-2009 | 66317 | 67015 |
| Mar-2009 | 66068 | 66461 |
| Apr-2009 | 65822 | 66013 |
| May-2009 | 65704 | 65787 |
| Jun-2009 | 65550 | 65476 |
| Jul-2009 | 65423 | 65262 |
| Aug-2009 | 65348 | 65153 |
| Sep-2009 | 65239 | 65020 |
| Oct-2009 | 65173 | 64888 |
| Nov-2009 | 65128 | 64945 |
| Dec-2009 | 65063 | 64741 |
| Jan-2010 | 65082 | 64725 |
| Feb-2010 | 65006 | 64709 |
| Mar-2010 | 65072 | 64823 |
| Apr-2010 | 65076 | 65056 |
| May-2010 | 65296 | 65370 |
| Jun-2010 | 65168 | 65362 |
| Jul-2010 | 65080 | 65362 |
| Aug-2010 | 65026 | 65411 |
| Sep-2010 | 64956 | 65417 |
| Oct-2010 | 65047 | 65595 |
| Nov-2010 | 65085 | 65680 |
| Dec-2010 | 65106 | 65733 |
| Jan-2011 | 65115 | 65744 |
| Feb-2011 | 65157 | 65915 |
| Mar-2011 | 65237 | 66067 |
| Apr-2011 | 65391 | 66234 |
| May-2011 | 65364 | 66356 |
| Jun-2011 | 65443 | 66512 |
| Jul-2011 | 65466 | 66550 |
| Aug-2011 | 65484 | 66654 |
| Sep-2011 | 65558 | 66816 |
| Oct-2011 | 65654 | 66924 |
| Nov-2011 | 65712 | 66998 |
| Dec-2011 | 65777 | 67137 |
| Jan-2012 | 65952 | 67317 |
| Feb-2012 | 66061 | 67470 |
| Mar-2012 | 66147 | 67622 |
| Apr-2012 | 66187 | 67665 |
| May-2012 | 66289 | 67662 |
| Jun-2012 | 66316 | 67707 |
| Jul-2012 | 66402 | 67774 |
| Aug-2012 | 66463 | 67883 |
| Sep-2012 | 66543 | 67992 |
| Oct-2012 | 66617 | 68076 |
| Nov-2012 | 66704 | 68147 |
| Dec-2012 | 66791 | 68297 |
| Jan-2013 | 66876 | 68407 |
| Feb-2013 | 66956 | 68606 |
| Mar-2013 | 67067 | 68631 |
| Apr-2013 | 67189 | 68701 |
| May-2013 | 67265 | 68849 |
| Jun-2013 | 67332 | 68963 |
| Jul-2013 | 67449 | 68951 |
| Aug-2013 | 67593 | 69049 |
| Sep-2013 | 67688 | 69143 |
| Oct-2013 | 67767 | 69289 |
| Nov-2013 | 67920 | 69403 |
| Dec-2013 | 67967 | 69423 |
| Jan-2014 | 67977 | 69590 |
| Feb-2014 | 68054 | 69681 |
| Mar-2014 | 68156 | 69829 |
| Apr-2014 | 68309 | 70003 |
| May-2014 | 68395 | 70138 |
| Jun-2014 | 68491 | 70366 |
| Jul-2014 | 68567 | 70517 |
| Aug-2014 | 68657 | 70615 |
| Sep-2014 | 68833 | 70750 |
| Oct-2014 | 68964 | 70877 |
| Nov-2014 | 69097 | 71030 |
| Dec-2014 | 69246 | 71150 |
| Jan-2015 | 69327 | 71282 |
| Feb-2015 | 69478 | 71379 |
| Mar-2015 | 69538 | 71396 |
| Apr-2015 | 69660 | 71574 |
| May-2015 | 69831 | 71722 |
| Jun-2015 | 69930 | 71793 |
| Jul-2015 | 70052 | 71964 |
| Aug-2015 | 70108 | 72030 |
| Sep-2015 | 70202 | 72069 |
| Oct-2015 | 70378 | 72232 |
| Nov-2015 | 70503 | 72342 |
| Dec-2015 | 70646 | 72479 |
| Jan-2016 | 70762 | 72453 |
| Feb-2016 | 70950 | 72497 |
| Mar-2016 | 71100 | 72581 |
| Apr-2016 | 71213 | 72679 |
| May-2016 | 71296 | 72611 |
| Jun-2016 | 71454 | 72735 |
| Jul-2016 | 71672 | 72853 |
| Aug-2016 | 71783 | 72877 |
| Sep-2016 | 71931 | 72999 |
| Oct-2016 | 71968 | 73090 |
| Nov-2016 | 72017 | 73211 |
| Dec-2016 | 72133 | 73310 |
| Jan-2017 | 72208 | 73487 |
| Feb-2017 | 72285 | 73551 |
| Mar-2017 | 72327 | 73636 |
| Apr-2017 | 72399 | 73777 |
| May-2017 | 72453 | 73851 |
| Jun-2017 | 72546 | 73987 |
| Jul-2017 | 72683 | 74054 |
| Aug-2017 | 72761 | 74163 |
| Sep-2017 | 72795 | 74147 |
| Oct-2017 | 72885 | 74317 |
| Nov-2017 | 73012 | 74410 |
| Dec-2017 | 73098 | 74498 |
| Jan-2018 | 73234 | 74533 |
| Feb-2018 | 73421 | 74676 |
| Mar-2018 | 73520 | 74759 |
| Apr-2018 | 73646 | 74829 |
| May-2018 | 73837 | 74908 |
| Jun-2018 | 73999 | 75008 |
| Jul-2018 | 74091 | 75094 |
| Aug-2018 | 74229 | 75238 |
| Sep-2018 | 74329 | 75246 |
| Oct-2018 | 74480 | 75372 |
| Nov-2018 | 74605 | 75443 |
| Dec-2018 | 74724 | 75551 |
| Jan-2019 | 74890 | 75697 |
| Feb-2019 | 74994 | 75649 |
| Mar-2019 | 75119 | 75677 |
| Apr-2019 | 75233 | 75779 |
| May-2019 | 75329 | 75745 |
| Jun-2019 | 75381 | 75871 |
| Jul-2019 | 75549 | 75869 |
| Aug-2019 | 75668 | 75969 |
| Sep-2019 | 75832 | 75998 |
| Oct-2019 | 75958 | 76024 |
| Nov-2019 | 76107 | 76131 |
| Dec-2019 | 76246 | 76137 |
Source: EPI analysis of Bureau of Labor Statistics' Current Employment Statistics public data series
Turning to the household survey, the labor market continues to not only absorb population growth, but also chip away at the slack remaining in the labor market—namely workers who continue to be sidelined and who I expect will enter or re-enter the labor market as opportunities for jobs and better pay expand. As the unemployment rate has continued to fall between 2018 and 2019, labor force participation has increased as people re-enter the labor market and find jobs. Since December 2018, the unemployment rate dropped 0.4 percentage points (3.9% to 3.5%) while the employment-to-population ratio, or the share of the population with a job, rose 0.4 percentage points (60.6% to 61.0%). This means the unemployment rate over the last year fell for the right reasons—not because workers gave up looking, but because more would-be workers actually found jobs.
What to watch on jobs day: An assessment of the 2019 labor market
The last Bureau of Labor Statistics (BLS) jobs report of 2019 comes out on Friday, giving us a chance to step back and look at how working people fared over the entire year. The report also marks the 12th anniversary of the official start of the Great Recession. My expectation is that the December data will confirm that the economy has nearly recovered its immediate pre-Great Recession health—the last year before the Great Recession hit. Wage growth, which slowed over the last year, is a notable exception.
However, as I have often noted, 2007 should not be considered a benchmark for a fully healthy economy for America’s workers. Almost all labor market measures were notably weaker in 2007 than they were at the previous business cycle peak in 2000. There was very little reason to think that the U.S. economy in 2007 was at full employment. If one looks at the stronger business cycle peak of 2000 as a more appropriate benchmark, the economy in 2019 looks even further from full employment. Many working people are still not seeing the recovery reflected in their paychecks—and the economy will not be at genuine full employment until employers are consistently offering workers meaningfully higher wages.
In this blog post—and Friday when the December numbers come out—I’m going to look at average payroll employment growth over the last several years. Because there is always a bit of volatility in the monthly data—especially in the household series that has a smaller sample size—taking a year-long approach allows us to smooth out the bumps and take stock of the key measures: payroll employment growth, the unemployment rate, the employment-to-population ratio, and nominal wage growth.
The figure below shows average nonfarm employment growth for 2007–2018 and for the first 11 months of 2019. With an average of 180,000 new jobs being added each month, job growth in 2019 is a bit softer than 2018 and more in line with what we saw in 2017. This pickup in 2018 can be attributed to the shift in federal policy from austerity to stimulus in the form of both tax cuts and an increase in government spending. In particular, Congress boosted spending by almost $150 billion, contributing significantly to economic growth in 2018. But, in 2019, spending held steady at $150 billion, meaning there was no additional government spending to continue stimulating demand, and we saw a mild softening of employment growth.
Average monthly total nonfarm employment growth, 2006–2019
| Year | Average monthly total nonfarm employment growth |
|---|---|
| 2006 | 175 |
| 2007 | 95 |
| 2008 | -296 |
| 2009 | -421 |
| 2010 | 86 |
| 2011 | 173 |
| 2012 | 181 |
| 2013 | 192 |
| 2014 | 251 |
| 2015 | 227 |
| 2016 | 193 |
| 2017 | 179 |
| 2018 | 223 |
| 2019 | 180 |
Note: Because full 2019 monthly employment data are not yet available, the chart compares average monthly job growth between January and November for 2019.
Source: Data are from the Current Employment Statistics (CES) series of the Bureau of Labor Statistics and are subject to occasional revisions. This chart was based on data accessed in January 2020.
At the current pace of growth, however, the labor market continues to not only absorb population growth, but also chip away at the slack remaining in the labor market—namely workers who continue to be sidelined and who I expect will enter or re-enter the labor market as opportunities for jobs and better pay expand. As it turns out (and what we’ve long argued), workers who left or never entered the labor force during the Great Recession and its aftermath were not necessarily permanently sidelined, but have systematically been returning to the labor market as job opportunities have strengthened. Over the last few years, the newly employed have been coming both from the ranks of the unemployed as well as from outside the labor force, those who were not actively seeking work the month prior to finding a job. In fact, as the figure below illustrates, the share of newly employed workers who did not look for work the previous month is at a historic high. About three-fourths of newly employed workers are coming from outside the labor force.
Share of newly employed workers who said that they were not actively searching for work in the previous month
| date | Share of newly employed workers who said that they were not actively searching for work in the previous month |
|---|---|
| Apr-1990 | 61.9% |
| May-1990 | 62.6% |
| Jun-1990 | 62.0% |
| Jul-1990 | 62.0% |
| Aug-1990 | 61.6% |
| Sep-1990 | 62.3% |
| Oct-1990 | 61.0% |
| Nov-1990 | 61.2% |
| Dec-1990 | 60.4% |
| Jan-1991 | 59.9% |
| Feb-1991 | 59.0% |
| Mar-1991 | 58.5% |
| Apr-1991 | 57.7% |
| May-1991 | 57.6% |
| Jun-1991 | 57.2% |
| Jul-1991 | 58.0% |
| Aug-1991 | 57.8% |
| Sep-1991 | 57.7% |
| Oct-1991 | 57.3% |
| Nov-1991 | 56.9% |
| Dec-1991 | 57.0% |
| Jan-1992 | 56.8% |
| Feb-1992 | 57.1% |
| Mar-1992 | 57.1% |
| Apr-1992 | 57.2% |
| May-1992 | 57.3% |
| Jun-1992 | 56.6% |
| Jul-1992 | 56.4% |
| Aug-1992 | 56.1% |
| Sep-1992 | 55.9% |
| Oct-1992 | 55.7% |
| Nov-1992 | 55.8% |
| Dec-1992 | 56.1% |
| Jan-1993 | 56.6% |
| Feb-1993 | 57.7% |
| Mar-1993 | 58.3% |
| Apr-1993 | 58.4% |
| May-1993 | 58.2% |
| Jun-1993 | 58.1% |
| Jul-1993 | 57.5% |
| Aug-1993 | 57.5% |
| Sep-1993 | 58.0% |
| Oct-1993 | 58.9% |
| Nov-1993 | 58.5% |
| Dec-1993 | 58.3% |
| Jan-1994 | 58.8% |
| Feb-1994 | 59.2% |
| Mar-1994 | 59.1% |
| Apr-1994 | 58.7% |
| May-1994 | 58.3% |
| Jun-1994 | 58.5% |
| Jul-1994 | 58.6% |
| Aug-1994 | 59.0% |
| Sep-1994 | 59.1% |
| Oct-1994 | 59.8% |
| Nov-1994 | 60.1% |
| Dec-1994 | 60.3% |
| Jan-1995 | 60.4% |
| Feb-1995 | 59.5% |
| Mar-1995 | 59.7% |
| Apr-1995 | 59.7% |
| May-1995 | 59.2% |
| Jun-1995 | 59.5% |
| Jul-1995 | 59.5% |
| Aug-1995 | 60.0% |
| Sep-1995 | 60.2% |
| Oct-1995 | 59.9% |
| Nov-1995 | 60.6% |
| Dec-1995 | 59.9% |
| Jan-1996 | 59.8% |
| Feb-1996 | 60.3% |
| Mar-1996 | 60.7% |
| Apr-1996 | 61.0% |
| May-1996 | 60.7% |
| Jun-1996 | 60.8% |
| Jul-1996 | 61.5% |
| Aug-1996 | 60.8% |
| Sep-1996 | 60.9% |
| Oct-1996 | 60.2% |
| Nov-1996 | 60.6% |
| Dec-1996 | 59.6% |
| Jan-1997 | 59.1% |
| Feb-1997 | 58.9% |
| Mar-1997 | 60.3% |
| Apr-1997 | 61.4% |
| May-1997 | 61.8% |
| Jun-1997 | 61.1% |
| Jul-1997 | 60.4% |
| Aug-1997 | 61.3% |
| Sep-1997 | 61.9% |
| Oct-1997 | 62.5% |
| Nov-1997 | 62.7% |
| Dec-1997 | 62.8% |
| Jan-1998 | 63.3% |
| Feb-1998 | 62.7% |
| Mar-1998 | 62.9% |
| Apr-1998 | 62.4% |
| May-1998 | 63.5% |
| Jun-1998 | 63.2% |
| Jul-1998 | 64.2% |
| Aug-1998 | 64.0% |
| Sep-1998 | 65.2% |
| Oct-1998 | 65.1% |
| Nov-1998 | 65.1% |
| Dec-1998 | 64.9% |
| Jan-1999 | 65.6% |
| Feb-1999 | 65.5% |
| Mar-1999 | 64.2% |
| Apr-1999 | 65.3% |
| May-1999 | 66.1% |
| Jun-1999 | 67.4% |
| Jul-1999 | 66.4% |
| Aug-1999 | 65.7% |
| Sep-1999 | 65.3% |
| Oct-1999 | 65.5% |
| Nov-1999 | 65.3% |
| Dec-1999 | 65.1% |
| Jan-2000 | 64.4% |
| Feb-2000 | 65.4% |
| Mar-2000 | 65.7% |
| Apr-2000 | 65.9% |
| May-2000 | 65.6% |
| Jun-2000 | 65.9% |
| Jul-2000 | 65.4% |
| Aug-2000 | 65.5% |
| Sep-2000 | 65.6% |
| Oct-2000 | 66.5% |
| Nov-2000 | 67.4% |
| Dec-2000 | 68.1% |
| Jan-2001 | 69.0% |
| Feb-2001 | 68.6% |
| Mar-2001 | 67.9% |
| Apr-2001 | 66.9% |
| May-2001 | 65.8% |
| Jun-2001 | 65.3% |
| Jul-2001 | 65.7% |
| Aug-2001 | 66.2% |
| Sep-2001 | 66.6% |
| Oct-2001 | 65.5% |
| Nov-2001 | 64.4% |
| Dec-2001 | 62.9% |
| Jan-2002 | 62.6% |
| Feb-2002 | 62.3% |
| Mar-2002 | 61.7% |
| Apr-2002 | 61.9% |
| May-2002 | 62.8% |
| Jun-2002 | 64.4% |
| Jul-2002 | 64.5% |
| Aug-2002 | 64.0% |
| Sep-2002 | 63.1% |
| Oct-2002 | 63.1% |
| Nov-2002 | 63.7% |
| Dec-2002 | 64.1% |
| Jan-2003 | 64.2% |
| Feb-2003 | 64.2% |
| Mar-2003 | 64.5% |
| Apr-2003 | 64.3% |
| May-2003 | 63.7% |
| Jun-2003 | 63.5% |
| Jul-2003 | 63.1% |
| Aug-2003 | 63.2% |
| Sep-2003 | 63.4% |
| Oct-2003 | 64.3% |
| Nov-2003 | 64.7% |
| Dec-2003 | 63.7% |
| Jan-2004 | 63.6% |
| Feb-2004 | 63.4% |
| Mar-2004 | 64.9% |
| Apr-2004 | 64.3% |
| May-2004 | 64.3% |
| Jun-2004 | 63.7% |
| Jul-2004 | 64.2% |
| Aug-2004 | 64.5% |
| Sep-2004 | 64.1% |
| Oct-2004 | 64.2% |
| Nov-2004 | 64.0% |
| Dec-2004 | 64.4% |
| Jan-2005 | 64.6% |
| Feb-2005 | 64.8% |
| Mar-2005 | 64.9% |
| Apr-2005 | 65.1% |
| May-2005 | 65.8% |
| Jun-2005 | 66.1% |
| Jul-2005 | 66.6% |
| Aug-2005 | 65.9% |
| Sep-2005 | 66.5% |
| Oct-2005 | 66.2% |
| Nov-2005 | 66.0% |
| Dec-2005 | 65.9% |
| Jan-2006 | 65.8% |
| Feb-2006 | 67.3% |
| Mar-2006 | 67.3% |
| Apr-2006 | 67.6% |
| May-2006 | 67.3% |
| Jun-2006 | 67.2% |
| Jul-2006 | 66.7% |
| Aug-2006 | 66.4% |
| Sep-2006 | 65.9% |
| Oct-2006 | 66.9% |
| Nov-2006 | 67.6% |
| Dec-2006 | 68.3% |
| Jan-2007 | 68.0% |
| Feb-2007 | 67.0% |
| Mar-2007 | 66.5% |
| Apr-2007 | 65.8% |
| May-2007 | 66.2% |
| Jun-2007 | 67.6% |
| Jul-2007 | 67.7% |
| Aug-2007 | 67.6% |
| Sep-2007 | 66.9% |
| Oct-2007 | 67.0% |
| Nov-2007 | 67.5% |
| Dec-2007 | 66.6% |
| Jan-2008 | 66.4% |
| Feb-2008 | 65.4% |
| Mar-2008 | 65.6% |
| Apr-2008 | 64.7% |
| May-2008 | 65.1% |
| Jun-2008 | 64.9% |
| Jul-2008 | 65.3% |
| Aug-2008 | 64.2% |
| Sep-2008 | 62.9% |
| Oct-2008 | 62.1% |
| Nov-2008 | 61.9% |
| Dec-2008 | 62.3% |
| Jan-2009 | 62.2% |
| Feb-2009 | 61.6% |
| Mar-2009 | 60.8% |
| Apr-2009 | 59.8% |
| May-2009 | 59.6% |
| Jun-2009 | 58.3% |
| Jul-2009 | 57.5% |
| Aug-2009 | 57.0% |
| Sep-2009 | 56.8% |
| Oct-2009 | 57.6% |
| Nov-2009 | 56.7% |
| Dec-2009 | 57.7% |
| Jan-2010 | 57.9% |
| Feb-2010 | 58.8% |
| Mar-2010 | 58.7% |
| Apr-2010 | 57.4% |
| May-2010 | 56.4% |
| Jun-2010 | 56.6% |
| Jul-2010 | 57.2% |
| Aug-2010 | 58.4% |
| Sep-2010 | 58.8% |
| Oct-2010 | 58.9% |
| Nov-2010 | 58.9% |
| Dec-2010 | 58.4% |
| Jan-2011 | 59.1% |
| Feb-2011 | 59.5% |
| Mar-2011 | 60.1% |
| Apr-2011 | 60.4% |
| May-2011 | 60.2% |
| Jun-2011 | 59.7% |
| Jul-2011 | 59.8% |
| Aug-2011 | 59.6% |
| Sep-2011 | 60.6% |
| Oct-2011 | 59.8% |
| Nov-2011 | 59.8% |
| Dec-2011 | 59.1% |
| Jan-2012 | 59.2% |
| Feb-2012 | 59.1% |
| Mar-2012 | 59.4% |
| Apr-2012 | 60.3% |
| May-2012 | 60.9% |
| Jun-2012 | 61.6% |
| Jul-2012 | 61.8% |
| Aug-2012 | 62.3% |
| Sep-2012 | 62.3% |
| Oct-2012 | 62.0% |
| Nov-2012 | 61.8% |
| Dec-2012 | 62.5% |
| Jan-2013 | 62.2% |
| Feb-2013 | 61.5% |
| Mar-2013 | 61.6% |
| Apr-2013 | 63.1% |
| May-2013 | 63.5% |
| Jun-2013 | 63.2% |
| Jul-2013 | 62.3% |
| Aug-2013 | 62.9% |
| Sep-2013 | 63.5% |
| Oct-2013 | 64.3% |
| Nov-2013 | 64.1% |
| Dec-2013 | 63.6% |
| Jan-2014 | 63.9% |
| Feb-2014 | 63.6% |
| Mar-2014 | 63.9% |
| Apr-2014 | 62.8% |
| May-2014 | 64.2% |
| Jun-2014 | 64.5% |
| Jul-2014 | 66.0% |
| Aug-2014 | 65.5% |
| Sep-2014 | 65.3% |
| Oct-2014 | 64.9% |
| Nov-2014 | 65.3% |
| Dec-2014 | 65.8% |
| Jan-2015 | 67.2% |
| Feb-2015 | 67.8% |
| Mar-2015 | 68.4% |
| Apr-2015 | 68.0% |
| May-2015 | 68.5% |
| Jun-2015 | 68.2% |
| Jul-2015 | 69.0% |
| Aug-2015 | 68.6% |
| Sep-2015 | 68.8% |
| Oct-2015 | 68.6% |
| Nov-2015 | 68.6% |
| Dec-2015 | 69.0% |
| Jan-2016 | 68.6% |
| Feb-2016 | 69.8% |
| Mar-2016 | 70.5% |
| Apr-2016 | 70.7% |
| May-2016 | 69.7% |
| Jun-2016 | 69.1% |
| Jul-2016 | 68.9% |
| Aug-2016 | 69.4% |
| Sep-2016 | 69.2% |
| Oct-2016 | 68.2% |
| Nov-2016 | 67.7% |
| Dec-2016 | 68.8% |
| Jan-2017 | 69.4% |
| Feb-2017 | 69.1% |
| Mar-2017 | 68.8% |
| Apr-2017 | 69.4% |
| May-2017 | 70.2% |
| Jun-2017 | 70.7% |
| Jul-2017 | 70.2% |
| Aug-2017 | 70.7% |
| Sep-2017 | 70.4% |
| Oct-2017 | 70.7% |
| Nov-2017 | 70.8% |
| Dec-2017 | 70.7% |
| Jan-2018 | 71.2% |
| Feb-2018 | 71.0% |
| Mar-2018 | 70.6% |
| Apr-2018 | 70.7% |
| May-2018 | 71.2% |
| Jun-2018 | 72.6% |
| Jul-2018 | 73.1% |
| Aug-2018 | 73.0% |
| Sep-2018 | 72.9% |
| Oct-2018 | 73.0% |
| Nov-2018 | 73.3% |
| Dec-2018 | 73.1% |
| Jan-2019 | 72.5% |
| Feb-2019 | 72.4% |
| Mar-2019 | 71.6% |
| Apr-2019 | 71.7% |
| May-2019 | 72.7% |
| Jun-2019 | 73.6% |
| Jul-2019 | 74.2% |
| Aug-2019 | 73.9% |
| Sep-2019 | 73.7% |
| Oct-2019 | 74.6% |
| Nov-2019 | 74.6% |
Note: Because of volatility in these data, the line reflects three month moving averages
Source: Bureau of Labor Statistics, Labor Force Flows: Unemployed to Employed (16 Years and Over) [LNS17100000], and Not in Labor Force to Employed (16 years and over) [LNS17200000], retrieved from FRED (Federal Reserve Bank of St. Louis).
Further evidence of a steadily improving economy is the unemployment rate, which—after falling steadily for eight years from its peak in the fourth quarter of 2009—continued to fall through 2019 to a low of 3.5% in November, an average of 3.7% for the first 11 months of the year. It is now far below its Great Recession peak (10.0%), and significantly below its pre-Great Recession low of 4.4% in the spring of 2007. But despite today’s low water mark, there is still room for improvement. And evidence suggests that the unemployment rate may be overstating the strength of the labor market. The previous figure supports this claim, given that a record high share of newly employed workers are coming from outside the labor force and are not counted in the official measure of unemployment in the previous month, despite clearly being ready and willing to work.Read more
College athletes and Ph.D. students both work for the university, but only one earns a salary
Beginning in January 2021, new rules will go into effect that will allow NCAA student-athletes to profit from the use of their names, images, and likeness. While the details of these new rules will require much deliberation among each NCAA division, one thing will not be considered—salaries for college athletes from the universities.
Why won’t college athletes be paid a salary?
Several reasons are floating around. One reason is the NCAA does not consider college athletes employees of the universities. Another reason is that these players are given a lot of perks. In a recent Los Angeles Times article, Dan Radakovich, athletic director at Clemson University, argued against paying college athletes since they have access to “world-class facilities, world-class coaching, and incredible academic support.”
But there already exists a group of students who are employees of the university, have access to world-class facilities, teaching, and academic support, and no one calls them selfish when they receive their salaries. Who are these students? Ph.D. students.
Wait, are you saying Ph.D. students receive a salary?
Yes, because they work for the university. A large percentage of Ph.D. students are funded via fellowships or assistantships. Funding, which covers tuition and provides a stipend, varies across institutions and doctoral programs due to what can be viewed as “educational hierarchy.” Assistantships require that Ph.D. students’ work anywhere from 20 to 40 hours per week that include duties such as grading, managing labs, or lecturing. Additionally, doctoral students are awarded (or sometimes apply for) money that allows them to attend international or out-of-state conferences to present their research and network with others in their field.
In short, Ph.D. students sign a contract with an institution, agree to work a certain number of hours per week, maintain a certain GPA, and conduct research. In exchange, the university covers their tuition and pays them a salary. What do college football players do? Sign a contract (you may have seen signing day on ESPN), maintain a certain GPA, and kick butt on Saturday, which requires countless hours of practice! Additionally, their success can help recruit up to tens of thousands of students and generate millions of dollars for the institution.
Nearly 7 million workers will start the new year with higher wages
Note: This post was updated to clarify that Delaware’s minimum wage increase took effect on October 1, 2019.
At the start of the new year, minimum wages will have gone up in 22 states, lifting pay for 6.8 million workers across the country.i In total, workers affected by the increases will earn an extra $8.2 billion over the course of 2020 as a result of the changes. The increases range from a $0.10 inflation adjustment in Florida to $1.50 per hour raises in New Mexico and Washington. Affected workers who work year-round will see their annual pay go up between $150 and $1,700, on average, depending on the size of the minimum wage increase in their state.
The map and table below describe the increases in each state. Note that these estimates do not account for changes in local minimum wages separate from state law.ii There are 22 cities and counties with higher minimum wages taking effect on January 1, all of which can be found in EPI’s Minimum Wage Tracker. The estimates also do not include any “indirectly affected workers” making just above the new minimum wage who may receive raises as employers adjust their overall pay scales.
State minimum wage increases will raise pay for nearly 7 million workers on January 1: States with minimum wage increases effective January 1, 2020, by type of increase
| State | Share of workforce directly benefiting | Type of increase | New minimum wage as of Jan. 1, 2020 | Amount of increase | Total workers directly benefiting | Total increase in annual wages | Average increase in annual earnings of year-round workers | |
|---|---|---|---|---|---|---|---|---|
| Alabama | -1 | 0.00% | ||||||
| Connecticut | 0 | 0.00% | ||||||
| Georgia | -1 | 0.00% | ||||||
| Hawaii | 0 | 0.00% | ||||||
| Idaho | -1 | 0.00% | ||||||
| Indiana | -1 | 0.00% | ||||||
| Iowa | -1 | 0.00% | ||||||
| Kansas | -1 | 0.00% | ||||||
| Kentucky | -1 | 0.00% | ||||||
| Louisiana | -1 | 0.00% | ||||||
| Mississippi | -1 | 0.00% | ||||||
| Nebraska | 0 | 0.00% | ||||||
| Nevada | 0 | 0.00% | ||||||
| New Hampshire | -1 | 0.00% | ||||||
| North Carolina | -1 | 0.00% | ||||||
| North Dakota | -1 | 0.00% | ||||||
| Oklahoma | -1 | 0.00% | ||||||
| Oregon | 0 | 0.00% | ||||||
| Pennsylvania | -1 | 0.00% | ||||||
| Rhode Island | 0 | 0.00% | ||||||
| South Carolina | -1 | 0.00% | ||||||
| Tennessee | -1 | 0.00% | ||||||
| Texas | -1 | 0.00% | ||||||
| Utah | -1 | 0.00% | ||||||
| Virginia | -1 | 0.00% | ||||||
| Washington D.C. | 0 | 0.00% | ||||||
| West Virginia | 0 | 0.00% | ||||||
| Wisconsin | -1 | 0.00% | ||||||
| Wyoming | -1 | 0.00% | ||||||
| Ohio | 1 | 1.60% | Inflation adjustment | $ 8.70 | $ 0.15 | 84,000 | $ 12,303,000.00 | $ 150.00 |
| South Dakota | 1 | 1.70% | Inflation adjustment | $ 9.30 | $ 0.20 | 7,300 | $ 1,560,000.00 | $ 220.00 |
| Florida | 1 | 1.90% | Inflation adjustment | $ 8.56 | $ 0.10 | 160,700 | $ 23,766,000.00 | $ 150.00 |
| Montana | 1 | 1.90% | Inflation adjustment | $ 8.65 | $ 0.15 | 8,900 | $ 1,588,000.00 | $ 180.00 |
| Minnesota | 1 | 2.40% | Inflation adjustment | $ 10.00 | $ 0.14 | 68,100 | $ 11,030,000.00 | $ 162.00 |
| New Mexico | 2 | 2.70% | Legislation | $ 9.00 | $ 1.50 | 22,900 | $ 20,736,000.00 | $ 900.00 |
| Alaska | 1 | 3.00% | Inflation adjustment | $ 10.19 | $ 0.30 | 10,500 | $ 5,348,000.00 | $ 510.00 |
| Illinois | 2 | 3.30% | Legislation | $ 9.25 | $ 1.00 | 192,900 | $ 173,533,000.00 | $ 900.00 |
| Michigan | 2 | 3.40% | Legislation | $ 9.65 | $ 0.20 | 147,000 | $ 32,907,000.00 | $ 220.00 |
| Delaware | 2 | 4.00% | Legislation | $ 9.25 | $ 0.50 | 17,200 | $ 10,811,000.00 | $ 630.00 |
| New York | 2 | 4.00% | Legislation | $ 11.80 | $ 0.70 | 411,700 | $ 399,246,000.00 | $ 970.00 |
| Vermont | 1 | 5.20% | Inflation adjustment | $ 10.96 | $ 0.19 | 16,200 | $ 3,932,000.00 | $ 240.00 |
| Missouri | 3 | 5.40% | Ballot measure | $ 9.45 | $ 0.85 | 153,600 | $ 123,505,000.00 | $ 800.00 |
| Maryland | 2 | 7.60% | Legislation | $ 11.00 | $ 0.90 | 204,300 | $ 216,530,000.00 | $ 1,060.00 |
| Arkansas | 3 | 11.00% | Ballot measure | $ 10.00 | $ 0.75 | 119,300 | $ 113,142,000.00 | $ 950.00 |
| Washington | 3 | 11.60% | Ballot measure | $ 13.50 | $ 1.50 | 386,000 | $ 655,972,000.00 | $ 1,700.00 |
| New Jersey | 2 | 11.70% | Legislation | $ 11.00 | $ 1.00 | 460,400 | $ 480,308,000.00 | $ 1,040.00 |
| Massachusetts | 2 | 12.00% | Legislation | $ 12.75 | $ 0.75 | 420,600 | $ 409,981,000.00 | $ 970.00 |
| Colorado | 3 | 12.10% | Ballot measure | $ 12.00 | $ 0.90 | 318,400 | $ 382,354,000.00 | $ 1,200.00 |
| California | 2 | 16.90% | Legislation | $ 13.00 | $ 1.00 | 2,950,200 | $ 4,376,241,000.00 | $ 1,480.00 |
| Maine | 3 | 16.90% | Ballot measure | $ 12.00 | $ 1.00 | 102,900 | $ 130,250,000.00 | $ 1,270.00 |
| Arizona | 3 | 17.70% | Ballot measure | $ 12.00 | $ 1.00 | 511,900 | $ 653,915,000.00 | $ 1,300.00 |
Notes: *The New York minimum wage changes take effect on December 31, 2019. Delaware's minimum wage increase took effect on October 1. “Legislation” indicates that the new rate was established by the legislature. “Ballot measure” indicates the new rate was set by a ballot initiative passed by voters. “Inflation adjustment” indicates that the new rate was established by a formula, reflecting the change in prices over the preceding year.
Directly affected workers will see their wages rise because the new minimum wage rate exceeds their current hourly pay. This does not include additional workers who may receive a wage increase through “spillover” effects, as employers adjust overall pay scales.
Estimates for New York reflect changes in the minimum wage applicable to upstate New York ($11.80) and Nassua, Suffolk, and Westchester counties ($13.00). New York City's minimum wage reached $15 at the end of 2018 and there are no further increases scheduled.
Population growth between the data period and January 2020 estimated using state-specific projections for growth in the total population or the population ages 15—69, where available. Nominal wage growth between the data period (2017) and January 2020 estimated using the 3-year average of nominal wage growth of the bottom 20 percent of wage earners in each state from 2015 to 2018. A full methodology is available in Minimum Wage Simulation Model Technical Methodology.
Source: Economic Policy Institute Minimum Wage Simulation Model using data from the Census Bureau, Bureau of Labor Statistics, and Congressional Budget Office. See Minimum Wage Simulation Model technical methodology [https://www.epi.org/publication/minimum-wage-simulation-model-technical-methodology/].
In seven states, the changes are the result of automatic annual inflation adjustments. Alaska, Florida, Minnesota, Montana, Ohio, South Dakota, and Vermont all have provisions in their state minimum wage laws that require the wage be adjusted annually to reflect changes in prices over the preceding year. Doing so ensures that the minimum wage never declines in purchasing power, and workers paid the minimum wage can afford the same amount of goods and services year after year. 10 other states and the District of Columbia have enacted similar automatic adjustment provisions in their minimum wage laws that will begin after their minimum wages reach a higher statutory level in the coming years.
The increases in nine states—California, Delaware, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New Mexico, and New York—are the result of legislation passed by state lawmakers to raise their state’s wage floors. Lawmakers in six of these states—California, Illinois, Maryland, Massachusetts, New Jersey, and New York—enacted legislation that will eventually bring their state minimum wages to $15 an hour. For 2020, minimum wages in these states will range between $11.00 and $13.00.
In six states—Arizona, Arkansas, Colorado, Maine, Missouri, and Washington—the January 1 raises result from ballot measures passed by the state’s voters. In the last several election cycles, voters have increasingly passed higher minimum wages, often in the face of inaction by their state legislatures. In fact, voters in Missouri passed a higher state minimum wage at the ballot box after state lawmakers nullified city minimum wage ordinances that had been enacted by local governments in Kansas City and St. Louis.Read more