The Trump-Vance administration has announced each of these charitable contributions with considerable fanfare, staging press and campaign-style events and promising that U.S. companies and other philanthropists will soon follow. What is often missing from the White House celebrations is an explanation of how exactly these gifts and the new Trump Accounts will alleviate child poverty and inequity.

The truth is that the U.S. falls behind peer countries from the developed world in its fight against child poverty. These deprivations are particularly harmful to children of color due to the deterministic role that structural racism plays in the American economy. A pretax and voluntary savings vehicle with little government support, and at the mercy of charitable inclinations, will do little for the millions of low-income families who can’t afford to save. In fact, these accounts are poised to compound structural inequities that have persistently delivered disparate outcomes for disadvantaged families. This is because the Trump Accounts fail to adequately account for the scope of child poverty and inequity. They also crudely overlook the root causes of these issues by framing them as the result of insufficient savings.

Child poverty is a defining feature of the U.S. economy

More than 9 million children struggle with poverty in the United States. This amounts to more than 1 in 10 children who live in households with insufficient resources to provide an adequate and dignifying standard of living in the world’s richest country. This is not a new economic reality. Since 2009, child poverty has declined by less than 4 percentage points in the U.S., leaving the country with the second-highest child poverty rate in the rich world—behind only Uruguay, a Latin American country with a significantly lower living standard.

Child poverty in the U.S. is especially harmful to children of color. More than 1 in 5 Black and Hispanic children struggle below the poverty line (see Figure A). Similarly, more than 1 in 6 (16.6%) American Indian and Alaska Native (AIAN) children are under the poverty line. Overall, children of color are more than twice as likely as their white peers to experience material shortcomings. This prolonged exposure to poverty is likely to translate into even broader disadvantages throughout these children’s lives, with relatively poorer outcomes than their more affluent peers in health, education, earnings, and even retirement.

Figure A

Making a significant dent in child poverty in the U.S. will require more than a voluntary savings vehicle backed by a one-time federal government contribution of $1,000 for each of the 3 million children born annually through 2028. This promise under the new Trump Accounts severely understates the problem of child poverty in the U.S. and it carelessly misidentifies the drivers of early deprivation and inequity.

Child poverty is a policy choice driven by a withering welfare state and structural inequities in the labor market

In 2021, the U.S. proved that it deliberately tolerates high poverty rates for children. The expanded welfare state that followed the pandemic led to a historic decline in child poverty. Economic relief measures and expanded access for low-income families to tax credits (like the Child Tax Credit) and basic needs programs (like SNAP) helped reduce the prevalence of child poverty by nearly half between 2020 and 2021. However, all these gains quickly vanished when this enhanced social safety net expired. Today, child poverty is higher than it was in 2019, and it is likely to worsen with major cuts to programs like SNAP and Medicaid the Trump-Vance administration signed into law last summer. These programs lifted 1.4 million and 6.1 million children out of poverty in 2024, respectively.

Alleviating child poverty in the U.S. will also require confronting the low-wage employment regime sustained by a federal minimum wage that officially became a poverty wage in 2025. Low-wage work leaves more than 10 million workers in poverty. The growing divergence between the productivity of the U.S. economy and the earnings of the typical worker leaves millions of workers vulnerable to poverty and economic insecurity. About 67 million workers earn less than $25 per hour, a threshold considerably lower than the hourly earnings of a typical worker had their pay kept pace with productivity.

The defining role of structural racism in the U.S. labor market means that workers of color are more likely than their white peers to be part of the low-wage workforce. These workers of color are also more exposed than their peers to unemployment and lack dependable and consistent income. Compared with less than 1 in 3 (31.5%) of their white peers, more than 2 in 5 Black (43.3%) and Hispanic (46.3%) adults report having difficulties paying their bills due to monthly fluctuations in income. This economic insecurity means that less than half of Black and Hispanic adults have enough savings to cover expenses for three months in case of a job loss or other emergency (see Figure B). A savings vehicle without continued government support for disadvantaged families will only deepen existing inequities for families who can’t even afford to maintain their living standard in the event of an unexpected economic shock. 

Figure B

Trump Accounts distract us from real solutions that lean on the functional power of wealth, a strong labor market and welfare state

Trump’s new savings vehicle for children falls short of the more ambitious Baby Bonds proposed by economists like Darrick Hamilton and William Darity. Since 2021, versions of Baby Bonds legislation have been introduced federally and in several states. Unlike Trump Accounts, national Baby Bonds commit the federal government to a publicly funded account beyond an initial endowment with additional contributions until the child reaches the age of 18. These continued contributions by the federal government would follow a progressive structure, with children from resource-constrained households receiving relatively larger endowments that they can later access at the age of 18 to purchase a home or start a business.  

The continued commitment to a federally funded and progressively seeded account means that Baby Bonds are intentionally designed to narrow racial disparities in wealth. Since families of color only have a fraction of the net worth that their white peers enjoy, the larger public contributions to children from resource-constrained households would disproportionately benefit children of color. This explains why impact assessments show that Baby Bonds can effectively narrow the racial wealth disparities that reflect a long history of economic exploitation and exclusion.

Without these characteristics, Trump’s voluntary savings accounts are poised to widen wealth disparities for generations. The more resource-constrained families will be unable to keep up with the contributions of their more affluent peers—broadening inequities in wealth even further. This is particularly true under the Trump-Vance economy, characterized by sluggish job growth and rising unemployment. Trump’s economy is also one in which food insecure families that rely on nutritional assistance programs like SNAP—and those that rely on Medicaid and CHIP for health coverage—face ever more stringent conditions intentionally designed to limit access to support and to raise questions about the deservingness of social assistance. At this rate, the Trump-Vance administration is looking to make the U.S. the leader of child poverty in the rich world.

Similarly, the Supreme Court will hear arguments later this month over President Biden’s student loan debt relief plan that would forgive at least $10,000, and up to $20,000, for tens of millions of federal student loan borrowers. The Supreme Court will likely strike down the plan.

Both affirmative action and student loan debt forgiveness are critical measures for college access and completion for students of color. Sadly, these statutes, along with many others, have been targeted and threatened within the courts over the years—leaving students of color to bear more acute barriers to higher education and more disparate socioeconomic outcomes.

Affirmative action increases access to higher education for students of color

Despite the United States being over half a century removed from the pivotal Brown v. Board of Education decision outlawing segregation, the legality of universities using affirmative action as a tool for broader integration and diversity within their student bodies has consistently been a topic of dispute. In 1978, the Supreme Court upheld the use of race as one factor in choosing among qualified applicants for admission in the Regents of the University of California v. Bakke ruling. In the several decades that followed, public and private universities have considered race and ethnicity as one of the many factors in their admissions process, but not without concerted efforts to roll back race-conscious admissions programs on the state level. 

Beginning in 1996, California was the first state to ban affirmative action in public universities for college admissions. As of now, seven additional states—Arizona, Florida, Michigan, Nebraska, New Hampshire, Oklahoma, and Washington—have banned public universities from considering race in admissions. Consequently, an abundance of research has indicated that college enrollment for racial and ethnic groups has decreased at selective universities and graduate programs following the enactment of these bans. One study estimated that students of color experience a 23 percentage point decline in likelihood of admission to highly selective public colleges after an affirmative action ban goes into effect. 

While numerous studies have indicated that state bans on affirmative action significantly hinder college diversity and hurt students of color the most, many state policymakers believe that race-neutral policy is a key solution to avoid further discrimination. These policymakers are wrong. Instead, race-neutral policy simply maintains longstanding inequities and operates within the parameters of existing inequality.

Many of the arguments against race-conscious decision-making in college admissions negate the systemic and structural hurdles that many students of color face within higher education. For example, although college enrollment and completion rates over the past few decades have increased, Black and Latino students are more underrepresented at top universities than they were 35 years ago. 

In many states, Black enrollment at flagship universities lags significantly behind the share of Black students completing their high school education. For example, in 2019, the share of Black public high school graduates was 17% in Michigan, 37% in South Carolina, and 49% in Mississippi. However, the share of Black college freshmen enrolled that fall semester at flagship universities was only 4% at the University of Michigan, 6% at the University of South Carolina, and 10% at the University of Mississippi. These gaps in high school completion and Black freshman enrollment demonstrate a concerning trend among top universities and their failure to admit more diverse student bodies.

Overall, the percentage of adults age 25 and older who had completed high school increased for all race and Hispanic origin groups from 2011 to 2021. During this period, high school completion rates increased from 92.4% to 95.1% for the non-Hispanic white population; from 84.5% to 90.3% for the Black population; from 88.6% to 92.9% for the Asian population; and from 64.3% to 74.2% for the Hispanic population. However, despite gains in high school completion, Black and Latino students continue to see double-digit differences in college completion compared with white and Asian graduates. In 2021, the percentage of adults age 25 and older with a bachelor’s degree or higher was 20.6% for Latino people, 28.1% for Black people, 41.9% for white people, and 61% for Asian people.

Student loan debt forgiveness is a gender and racial justice issue

While students of color face structural hurdles to gain admission to top universities, they are also more likely to face financial barriers to completing their degree. Compounding pressures—including the growing cost of college tuition and the crushing implications of high student loan debt—present additional intersectional implications for students of color within higher education.

While more than 44 million borrowers are struggling with student loan debt, Black college students are far more likely to take out federal student loans and owe an overall average of $25,000 more in student loan debt than white college graduates. Following graduation, 48% of Black students owe an average of 12.5% more than they borrowed, while 83% of white students owe 12% less than they borrowed four years after graduation. 

The outstanding debt Black students are taking to finance their education is also reinforcing the racial wealth gap. With less family wealth, Black and Latino students end up borrowing more to fund their college education while also taking longer to repay these debts. 

Women, and especially Black women, bear the brunt of the student debt crisis. Women hold nearly two-thirds of the $1.7 trillion in student debt in America. The American Association of University Women (AAUW) found that Black women had the largest average student loan debt ($41,466) in 2021, followed closely by Pacific Islander/Hawaiian women ($38,747), American Indian/Alaska Native women ($36,184), and white women ($33,852). Latina women borrowers were the next highest group at $29,302 and Asian women borrowers owed the lowest amounts at $27,606. Both the gender pay gap and racial wealth gap play a significant role in women borrowing more and struggling to repay student loan debt. Canceling student debt is as much a gender issue as it is a racial justice issue and is pivotal to address the intersectional inequalities these groups experience. 

As the Supreme Court prepares to hear arguments for and against President Biden’s student loan debt cancellation plan, Black and brown students, borrowers, and families hold their breath as they prepare for another blow to their access to higher education.

If the Supreme Court rules against both affirmative action and student loan debt forgiveness, communities of color would face widening gaps in college access and be further entrenched in a cycle of economic inequality. Race-neutral policy will always fail to reverse the gaps and barriers that exist because of structural racism. Racial equity and racial justice must center the lived experience of systematically excluded communities as well as bear in mind the policies, programs, and institutions that continue to intentionally disempower these communities to this day. Policymakers and the U.S. judicial system have a responsibility to redress the attacks on equal access to higher education and create broader pathways to earn a college degree and achieve economic prosperity.

For a variety of systemic reasons, including racism, misogyny, and xenophobia, there has never been a set of institutions that has managed to carve out decent wages and working conditions in care work. For example, the average hourly wages for home health care and child care workers are $13.81 and $13.51, respectively, which is roughly half the average hourly wage for the workforce as a whole. So, unlike in sectors like construction, a “prevailing wage” standard would just cement the industrywide insufficient wages currently experienced in care work.

But just because it’s challenging doesn’t mean it’s impossible to establish strong wage standards in this sector. All wages in the U.S. economy are politically and socially determined, but given that care work is heavily publicly financed, care wages are especially determined by political decisions (via commission or omission). As a result, there is a strong administrative responsibility and opportunity to set equitable wages in this sector. This research memo outlines a number of ways to improve the wage standard for care workers and is a preview to a forthcoming, more comprehensive research report.

Care work enables people to survive and thrive across generations, and it cannot be accomplished without workers. Yet our value systems and social relations acutely undervalue care work and discredit its importance to our lives. These phenomena are deeply rooted in misogyny, xenophobia, and in the U.S. context, anti-Blackness. We cannot recognize and remedy the precarious and immiserating wages of most care work without acknowledging and rectifying the roles these identities have played in shaping the conditions and workforce of care provision.

Care workers are overwhelmingly women and disproportionately Black, Hispanic, and immigrants, groups that have traditionally faced discrimination in labor markets and in the political process. As shown in Figure A, both the home health care and child care sectors are overwhelmingly women, and Black and Hispanic women are largely overrepresented relative to their share in the overall workforce. In addition to facing racism and sexism in the labor market, care workers—particularly home health care workers—are disproportionately more likely to be foreign-born (either naturalized or not), which gives them even less power to negotiate for higher wages or better working conditions. This necessitates a look at not only how we undervalue care itself, but also who care workers are and the historical and social discriminations they have faced and still face today.

Figure A

Care work being predominantly borne by women of color, and specifically Black women, dates back to slavery. The racial- and gender-motivated maltreatment of these workers translated into a lack of protection and abysmal pay in commodified versions of these roles post-slavery, including in the exclusion of domestic workers from most New Deal reforms. Working conditions and pay for such work reflect the societal views of care jobs and workers, including the extent of scrutiny on whether they are “skilled” jobs. There is a close link between care workers and care recipients, including people who are both. Ableist narratives and policies devalue and dehumanize people needing care and are inextricably linked to the racialized systems of oppression that devalue care workers’ labor. Consequently, the fight for better working conditions and pay for care workers is inseparable from also centering and improving conditions for care recipients.

Our forthcoming study aims to provide policymakers a broad economic framework for thinking about how to pay care workers, including both home health care and child care workers, who are extremely undervalued and underpaid in the United States and across the world.

Using the research literature and microdata, we provide several considerations for setting pay standards for both home health care and child care workers: a minimum standard for all workers; an estimated strong wage standard that reduces wage penalties currently faced for performing care work and reduces penalties associated with racial and gender discrimination; an additional estimated union wage premium for care workers; and a look at other countries or professions for reasonable benchmarks (summarized in Table 1). We conclude with a discussion of how these pay penalty calculations can serve to set equitable and sustainable wage standards and combat wage suppression.

Table 1

Key benchmarks for fairer wages:

• A minimum standard for all workers: The minimum starting place for all workers in today’s labor market should be no less than $15 an hour, but a full-time, full-year worker making $15 an hour cannot support a family at a decent standard of living anywhere in this country. Given the vital and demanding nature of care jobs and the increasing need for care workers because of demographic trends, care workers should be paid more. They should have the protection and dignity needed to make care work a desirable career. If we require a care worker to rely solely on their income to make ends meet, then we can assert that any care worker in the United States should at least earn a wage that would allow them to care for a young child on just their own wages in the least expensive metro area. This still-too-modest living wage standard would require full-time hourly wages of at least $21.11.

• Reduction of care and discrimination pay penalties: We adjust current pay for care workers by removing the estimated care pay penalty. Then, we adjust pay using a measure of pay gaps in the labor market at large, which account for lower outside options for historically disadvantaged demographic groups. We calculate a more appropriate wage of $20.20 and $19.87, for home health care and child care workers, respectively.

• Adding the union premium for a stronger wage standard: With additional bargaining power from unionization, reasonable wages for home health care and child care workers should be $22.26 and $21.90, respectively. In addition to boosting wages, unions help reduce gender and racial disparities, and unionized workers are more likely to have better benefits such as paid leave and health care.

• International comparisons for home health care workers: Although the undervaluation of care work is a global phenomenon, the situation for U.S. workers is particularly dismal when compared with peer countries. Across the current 27 E.U. member states, nonresidential long-term care workers are paid 80% of the average national hourly wage, and among the better performers, they are paid 95% of average wages. Extrapolating to the U.S. context, home health care workers should be paid in the range of $21.85 to $25.95.

• Comparisons with other teachers: Given similar skill sets and experience, child care workers are early educators and should be paid as much as similarly educated teachers of elementary and middle school students. Of course, school teachers face substantial wage penalties vis-à-vis other similarly credentialed workers in the economy. Taking these into account, we estimate a reasonable wage for child care workers in the range of $21.22 to $25.30.

Setting an equitable wage in the care sector—which our wage estimates and discussion above hope to help guide—is a first step in transforming a truly undervalued and undercompensated industry. It is important to note that given wage suppression factors and centuries of entrenched racial and gender discrimination, no single practice is perfect. None are likely to completely eliminate the structural disparities inherent in the care sector. However, reform and significantly higher wages are possible, necessary, and long overdue. Care workers improve countless lives, very often in poor working conditions and for low pay. At the same time, they face a myriad of penalties and have limited other options due to historical and current labor market discrimination. The economic exclusions endured for being a member of subordinated groups across gender, race, and migration status reinforce each other and are reflected in the observed outcomes and demographic breakdowns we see in these industries. These multiple penalties must be considered when determining just how much care workers should be paid. Active policies, such as strong legislative or regulatory wage standards, must be implemented to begin to eliminate these penalties.

Our economic system, left to its own, has failed to recognize the worth of care work and maintain a well-functioning market. Securing living wages, dignity of work, and safe working conditions for care workers is necessary for our collective survival. Better pay and work standards unambiguously improve the lives of workers themselves. Further, they make the care provision better, secure a stable workforce, reduce turnover, and are good for the macroeconomy. These are all necessary amid demographic shifts that will increase the need for care work in coming years. Care work is valuable, demanding, and requires specialized skills, where workers are routinely making highly consequential decisions about and with care recipients. Addressing the wage suppression of care workers is unmistakably an intersectional gender, racial justice, disability, and immigrant rights issue. By making deliberate policy choices rectifying historical and current harms and grounding them in the experiences of the most marginalized of these workers, we are ensuring a shared prosperity for all.

Key takeaways:

• We need new narratives around Black economic disadvantage.
• In today’s heightened public awareness of racial inequalities, the ways we talk about racial economic disparities shape the solutions we develop for those disparities—and whether we consider disparities as problems worth solving at all.
• Americans have historically had a tendency to individualize both successes and failures—that is, to look at groups of individuals and assume their outcomes are just the combined result of individual decisions, something known as “methodological individualism.” It fails to account for the ways that structural features of the U.S. economy narrow the options for Black workers and their families.
• In this blog post, I offer tools for gaining the deeper understanding of statistics that allow us to actually tackle the problems of inequity with impactful solutions instead of explaining them away.

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.

And we knew that occupational segregation left Black workers disproportionately employed in more precarious forms of service work, with lower pay and less ability to negotiate the conditions of their work.

That’s why, when the pandemic hit, it was obvious on whom the brunt of the damage would fall—the same vulnerable groups who always face the worst of our crises. We simply have not prioritized the outcomes of those groups in our infrastructure planning—that is, we have not valued Black life and well-being to a great enough extent to preempt or prevent its loss.

There are several reasons why we as a country may have collectively failed to prioritize the protection of Black life—from abject animosity toward Black people, to a “zero-sum” understanding of governmental support that views relief for one group as necessarily taking from another.

One reason worth considering in the context of policy changes is that our collective understanding of Black social and economic plight is misinformed.

We must disabuse ourselves of the idea that the way to fix racial economic disparities in this country is to fix Black people—to train them more, to get more of them into college, to teach them financial literacy, to improve their health behaviors. It is not that these strategies can’t be beneficial at the level of the individual, or perhaps even good for their own sake. It’s that promoting these as the solution to the problems Black people as a group face relies on the inherent assumption that Black people are somehow different (and deficient) compared with other groups.

The tendency to individualize both successes and failures—that is, to look at groups of individuals and assume their outcomes are just the combined result of individual decisions made by members of that group—is one of the most pervasive tendencies in the American understanding of social and economic phenomena.

When we see white households consistently have more wealth at the median than Black households, for example, the American mindset leads people to assume that there must be something particularly efficient about the way white households manage their finances, or something deficient about Black people or Black culture.  It leads us to hyper-analyze Black behavior, and to ask questions like “What can we do to teach Black people to better manage their money?” rather than “What circumstances led one group to be so much wealthier than others?” The academic term for this frame of thinking is methodological individualism. It plagues our understanding of racial inequality, especially when it comes to the economy.

(Related Webinar Achieving Economic and Racial Justice for Black Workers: Policy Priorities for 2021 and Beyond.)

Here I want to provide something like a vaccine for individualist thinking—a framework that will allow people to recognize the tendency when they see racial disparities being reported and provide them with an alternative way to understand what they are seeing.

Key to this is the understanding that statistics do not speak for themselves.

For example, one can look at the unemployment rate in a given month, see that the Black rate is nearly double that of the white rate, and assume that it’s simply because Black workers are lazy or less willing to work for low pay relative to government benefits. But we can think deeper and realize that to be counted among the unemployed you must be searching for work.

We can dig deeper into the historical record and learn that the unemployment rate for Black workers has nearly always maintained this 2-to-1 ratio with white unemployment. We can look closer at the data and see that Black workers are less likely to be employed at every level of education, and that when employed they are more often employed in jobs that do not utilize their skill set—particularly Black women workers. We can dig into the research literature and see studies showing that when identical resumes are sent out with the only difference being an either Black or white coded name, white resumes receive more callbacks, even when the white resumes have a criminal record associated with them.

We can challenge false narratives about racial disparities by following the process outlined above:

• seeking a clearer understanding of what statistics are reporting;
• trying to grasp the history behind each statistic;
• and recognizing the context around each statistic.

This process of critical engagement with the data reveals the reduction of group-level statistics to individual deficits to be nonsense, unless one assumes that Black workers are somehow deficient en masse. When we reject this racist assumption, we are left with an alternative explanation: that our economic system produces worse outcomes for Black workers because of its structure.

Our economy is structured the way that it is because of a series of political economic decisions made across its history—conscious rules made and unmade, opportunities extended to certain groups and kept from others, and injustices allowed to persist without recourse or redress given to the victims of those injustices.

What, then, are the policy solutions that can lead toward economic justice for Black workers?

• In the short term, we must focus on relief and on protecting the front-line and essential workers who are keeping this economy running. Distributing the COVID-19 vaccines in an equitable way, prioritizing those with preexisting conditions that can lead to serious complications and those in occupations with a high exposure risk, will directly benefit Black workers. We should also ensure that employers provide access to personal protective equipment (PPE) on the job and take the necessary precautions to protect their workers. That may mean requiring all customers to wear masks upon entering places of business, providing free access to hand sanitizer for employees and customers, and issuing strict social-distancing guidelines. Our current patchwork set of norms and laws regarding mask-wearing puts workers at serious risk.
• The recently passed American Rescue Plan takes significant steps toward healing the damage caused by the pandemic recession, particularly in its extensions to unemployment insurance, expansion of the child tax credit, and the aid provided to state and local governments. While many of these fixes are unfortunately temporary, they should go some way toward improving conditions for workers, at least in the short term.
• In the medium-to-long term, we must focus on both healing from the damage of the crisis and shoring up our infrastructure to preempt the next once-in-a-lifetime event. Our goal should be an economy in which all workers are prepared and protected, not just the most fortunate among us. One policy that would disproportionately benefit Black workers in this regard is raising the federal minimum wage to $15 per hour. Black workers are more likely to work at or below the current federal minimum wage of $7.25 per hour, but also much more likely to receive a raise if the minimum wage rises to $15. A higher wage floor would improve the bargaining positions of all workers—particularly those in the South, where wage growth has been sluggish for decades.
• Any legislation that could make it easier for workers to form and maintain unions, to give workers a voice in their workplaces to bargain and protect themselves, will also help Black workers.

The leaders of the civil rights movement in the 1950s and 1960s recognized that labor rights were a key component of civil rights—to the extent that Black workers are being limited in their ability to organize in their workplaces, the promises of the civil rights era remain unfulfilled. Today Black workers are the most heavily unionized racial/ethnic group in the labor force. Where Black workers are given the opportunity and tools to unionize, they take advantage of those and strengthen the labor movement. It is not a coincidence that the regions of the country where policymakers and employers are most hostile to unionization efforts are also those where Black workers are most heavily concentrated—namely, the South.

The Protecting the Right to Organize (PRO) Act, which passed in the House in March, is one such example of legislation that would make it easier for workers who want union representation to organize. The PRO Act amends the National Labor Relations Act and makes it more difficult for employers hostile to unions to exploit shortcomings in the law to suppress and delay negotiating with their workers. It would create consequences for employers who interfere with workers’ right to organize and hold elections, and level the playing field between workers and employers in the campaigning process that leads to the establishment of a union.

Over the long term, achieving true economic and racial justice for Black workers will require bold polices that transform our economic system in such a way that it reflects equity as a priority moving forward. True employment equity would require a federal job guarantee, such that every person who sought employment would have a job provided to them by the government. True health equity would, as a start, require that health care be guaranteed to all as a right. Universal asset-building programs like “baby bonds” and the expansion of federal housing programs could be implemented to move us toward equity in assets across groups—that said, the history of the racial wealth gap and its maintenance over time suggest that a direct reparations program may be necessary in that regard.

And so I return to the “how do we fix Black people” fallacy. Black people are just people who have been made to endure a litany of injustices across generations that, were they experienced by other groups, would leave those groups in the same state. The solutions then must be focused on stopping those injustices where they exist today (in the labor market, criminal justice system, academia, the financial/banking system, etc.), redressing the harm caused by the past, and rebuilding our institutions, armed with the knowledge that will prevent them from reoccurring in the future.

If racial and economic justice are our goals, then we must reframe both our thinking about racial disparities and our policy priorities. We are at a unique moment in history, where our collective awareness of racial injustice may meet our willingness to enact change at a high enough level to translate into policy changes. If we can challenge conventional understandings of Black plight, protect Black workers, and give them a real voice in the workplace, then achieving those goals may just be possible.

• Boost wages and salaries by allowing employers to redirect money they are spending on health care costs to their workers’ wages.
• Increase job quality by ensuring that every job now comes bundled with a guarantee of health care—with the boost to job quality even greater among women workers, who are less likely to have employer-sponsored health care.
• Lessen the stress and economic shock of losing a job or moving between jobs by eliminating the loss of health care that now accompanies job losses and transitions.
• Support self-employment and small business development—which is currently super low in the U.S. relative to other rich countries—by eliminating the daunting loss of/cost of health care from startup costs.
• Inject new dynamism and adaptability into the overall economy by reducing “job lock”—with workers going where their skills and preferences best fit the job, not just to workplaces (usually large ones) that have affordable health plans.
• Produce a net increase in jobs as public spending boosts aggregate demand, with job losses in health insurance and billing administration being outweighed by job gains in provision of health care, including the expansion of long-term care.

While the overall effect of fundamental health reform on the labor market would be unambiguously positive, this does not mean policymakers should ignore the distress caused by job transitions forced by this reform. Specifically, policy support should be provided to help displaced health insurance and billing administration workers move into new positions. But we should not let critics of Medicare for All inflate the scale of this transition challenge or falsely present the number of jobs displaced in individual sectors as the net effect of reform on labor markets. The number of health insurance and billing administration workers who would need to transition implies an increase in the rate of overall job market churn that is relatively small: Job losses for these workers would be equivalent to one-twelfth the size of economywide layoffs in 2018.

Background: The need for fundamental health reform

Currently, despite the significant gains in health care coverage spurred by the passage of the Affordable Care Act (ACA) in 2010, roughly 23 million Americans between the ages of 19 and 64 are uninsured, and another 64 million are underinsured (Collins, Bhupal, and Doty 2019).1 In addition to problems with access, the American health care system also suffers from excess costs.2 While excess health care cost growth has slowed notably in the last decade, it would be prudent for policymakers to try to keep this cost growth in check with significant policy reforms rather than simply hoping for the best going forward. Some highly important health-related prices have begun rising rapidly in the very recent past. Insurance premiums, for example, rose 20% in 2019.3 Overall spending on prescription drugs rose more than 9% between the fourth quarter of 2018 and the fourth quarter of 2019—the largest year-over-year change since 2015.4

Bivens 2018b provides data demonstrating that health spending in the U.S. is higher than in advanced peer countries and has risen faster over time—and yet continues to buy worse health outcomes. The higher and faster-growing spending of the United States is driven by faster growth of prices, not by growth in the volume of health care goods and services consumed. Further, international evidence shows that a key component of controlling cost growth is a strong public role in setting and negotiating the prices of health care goods and services.

A fundamental reform like Medicare for All (M4A) would make coverage universal. Further, by providing a counterweight to (or outright eliminating) the substantial market power that keeps prices high and that is currently wielded by many key players in the health care sector (e.g., insurance companies, drug companies, specialty physicians, and device makers), such a reform could also have great success in containing health care cost growth. This could in turn provide relief from many of the ways that rising health costs squeeze family incomes.

An underappreciated benefit of such a reform is that it would also lead to a much better functioning labor market in many areas. Job quality would increase, job switching would become less stressful, better “matches” between workers and employers would boost productivity, and small businesses would be much easier to launch.

Despite the fact that M4A could deliver these large benefits to efficient labor market functioning, the policy often comes under fire from critics making highly exaggerated claims about the potential job loss that could occur under such a reform. The grain of truth in some of the claims is that, like any productivity improvement, the adoption of a reform like M4A would require the redeployment of workers from one sector (the health insurance and medical billing complex) to other sectors (mostly the delivery of health care). But there is little in the M4A-induced redeployment of workers that would greatly stress the American labor market over and above the uncertainty and churn that characterizes this labor market every year. Smart policy could make this redeployment eminently manageable for those workers who would be required to make the transition.

This brief highlights some labor market implications of M4A and critically examines claims that large job losses in the health insurance and billing administration sectors would make M4A an undesirable policy.

Health reform as labor market policy: Key effects for workers

Fundamental reforms like M4A could greatly aid labor market outcomes for U.S. workers. The most obvious benefits would be higher wages and salaries, increased availability of good jobs, reduced stress during spells of job loss, better “matches” between workers and employers, and greater opportunity to start small businesses.

Higher cash wages and salaries

Medicare for All could increase wages and salaries for U.S. workers by reducing employers’ costs for health insurance—freeing up fiscal space to invest in wages instead. The share of total annual compensation paid to American employees in the form of health insurance premiums rather than wages and salaries rose from 1.1% in 1960 to 4.2% in 1979 to 8.4% in 2018.5 If this post-1960 increase had been only half as large—and employers had spent the health cost savings on wages and salaries—the take-home wages of American workers would have been almost $400 billion higher in 2018.6 Given that the share of total compensation spoken for by health insurance premiums is starting from a high base today, any reform that managed to slow the excess growth of health spending going forward would go a long way in making space for faster growth of cash compensation.7

Increased availability of ‘good jobs’

Medicare for All could increase job quality substantially by making all jobs “good” jobs in terms of health insurance coverage and by increasing the potential for higher wages. While the definition of a “good job” is always going to be a bit imprecise, the vast majority of U.S. workers would say that a good job is one that pays decent wages and that also provides the health insurance coverage and retirement income benefits that most of today’s workers can only reliably access through employment. Nearly half of jobs fail this test on account of health care coverage alone: In 2016, 46.9% of workers held jobs in which their employer made no contributions to the workers’ health care; for workers in the middle fifth of the wage distribution, 42.9% held jobs in which the employer made no contribution to their health care (EPI 2017).

By making health coverage universal and delinking from employment, M4A would make it far easier for employers to offer good jobs in this regard, as every job would now be accompanied by guaranteed health care coverage. Further, as noted above, wages and salaries would have substantial room to grow if health care costs were taken off of the backs of employers. Schmitt and Jones (2013) estimate the share of good jobs—jobs that clear a specified wage floor8 and provide health and retirement coverage—in overall employment each year between 1979 and 2011. They then look at various policy changes that would boost this share. They find that providing universal health coverage would boost the probability that any given job in the economy is a good job by almost 20%—and that’s even before any potential boost to the share of jobs that are good jobs coming from cash wage increases provided as employers shed health care costs.9 The boost to job quality from making health coverage universal would be even greater for women workers, as women are currently less likely to receive employer-sponsored health insurance benefits from their own employers.10

Less damaging spells of joblessness

Medicare for All could make job losses and transitions less stressful by delinking employment and access to health insurance, emulating the universal access to health care offered by our rich country peers. The U.S. is unique among the rich countries of the world in how much it ties crucial social benefits—like health insurance and retirement income—to specific jobs. Hacker (2002) has referred to this arrangement as the “divided welfare state,” with some Americans having relatively full access to health and retirement security while others have access to virtually none, all based on the specific jobs they have. This makes some jobs in the U.S. economy especially valuable, and hence especially damaging to lose. Manufacturing workers without a college degree, for example, likely incur enormous income and social benefits losses in the event of job loss stemming from either automation or trade. The ability of universal, public social benefits to make individual job losses less damaging has been long recognized by social scientists (see, for example, Estevez-Abe, Iversen, and Soskice 2001).

Smooth job transitions contribute to economic dynamism by helping ensure that vacancies are filled quickly by appropriate workers and that unemployed workers can quickly find new jobs that make good use of their skills. Smooth job transitions will also be an important components of meeting crucial policy goals such as mitigating greenhouse gas emissions with wholesale changes in how energy is created. Policies that make job transitions easier and inspire less resistance from workers should be encouraged. Fundamental health reform that, like M4A, guarantees access to insurance regardless of one’s current job status is a key part of making such transitions easier.

Better labor market matches between workers and employers

Medicare for All could decrease inefficient “job lock” and boost small business creation and voluntary self-employment. Making health insurance universal and delinked from employment widens the range of economic options for workers and leads to better matches between workers’ skills and interests and their jobs. The boost to small business creation and self-employment would be particularly useful, as the United States is a laggard in both relative to advanced economy peers.

Substantial evidence indicates that our current system of employer-sponsored insurance (ESI) creates significant “job lock”—a condition in which workers who don’t want to lose their current ESI stay in their current jobs rather than make transitions that would better meet their needs. In a comprehensive review of this literature, Baker (2015) finds:

The likely range of a job-lock effect is a reduction in turnover—the rate at which people leave jobs—of 15–25 percent among workers with EPHI [employer-provided health insurance, or ESI]. With normal turnover for prime-age workers (people ages 25–54) in the range of 15–20 percent per year, this job-lock effect implies a reduction in annual turnover of around 4 percentage points among prime-age workers with [employer-provided health insurance, or ESI].

Making employment decisions based on access to ESI rather than on other criteria—such as work–life balance, cash wages, and commuting distance—can lead to employment “matches” that are less productive and that decrease overall worker welfare relative to job choices that are not constrained by the availability of health insurance.

More small-business formation

Despite policymakers’ frequent claims that they seek to support small businesses in the U.S. economy, the United States has a notably small share of small-business employment relative to our rich country peers. In 2018, for example, the U.S. was dead-last among the members of the Organisation for Economic Co-operation and Development (OECD) in its share of self-employment, at just 6.3% of employment. Countries that are frequently portrayed in U.S. business reporting as being choked by regulation—like Spain, France, and Germany—have far higher shares of self-employment, at 16.0%, 11.7%, and 9.9%, respectively (OECD 2020).

Besides a low share of self-employment, the U.S. also had significantly lower shares of overall employment in small businesses, across nearly all industrial sectors. The latest OECD data show that the U.S. share of employment in enterprises with fewer than 50 employees is lower than in any other country except for Russia (OECD 2018, Figure 7). In an earlier overview of trends in employment by firm size, Schmitt and Lane (2009) highlight how health care policy plays two key roles in potentially explaining cross-country trends. First, because health care is nearly universally provided in other rich countries, workers choosing to start their own businesses in those countries do not face a cost confronting would-be entrepreneurs in the U.S.: the loss of ESI. Second, small businesses in the U.S. are at a distinct disadvantage in recruiting employees because the cost of providing health care coverage is significantly higher for small companies.11

Employment effects of fundamental health reform: gains in health care, losses in insurance and billing—with likely economywide net job gains from rising economic demand

Like all positive productivity gains, Medicare for All would be more likely to increase the total number of jobs in the U.S. economy, even as health reform leads to the redeployment of workers from some sectors and into others.

Despite the many labor market benefits of fundamental health reform like M4A, many critics have claimed that such reform would lead to a loss of jobs. This claim is misleading. One small grain of truth to it is that the universal provision of health insurance would allow people who would strongly prefer not to work (or not to work full time), but who have remained in their current jobs in order to retain health insurance, to be free to quit. This type of voluntary reduction in labor supply following a health reform would be strongly welfare-improving. For example, the ACA was clearly associated with a large increase in parents with young children transitioning to part-time work (see Jørgensen and Baker 2014). To the degree this occurred because these parents no longer needed to work full time to obtain ESI, and they preferred spending more time with their children for reasons of work–life balance, it should be seen as a clear win for the policy.

Generally, people expressing concern about job loss stemming from a policy are concerned about involuntary job loss that leads to a higher level of unemployment in the economy. Unemployment is almost entirely a function of the level of aggregate demand: spending by households, businesses, and governments.12 The effect of fundamental health reform on the level of aggregate demand depends in turn on the balance of increased public spending and the means of financing this spending. All else equal, more public spending will boost aggregate demand and create jobs, while higher taxes will reduce aggregate demand and restrain job growth. Further, the progressivity of taxes used to finance fundamental health reform will also condition its effect on aggregate demand. The more progressive the taxes that finance health reform, the less they will drag on job growth. Increased public spending combined with progressive tax increases would almost certainly boost the level of aggregate demand and lead to lower unemployment, all else equal.

While the overall number of jobs and the level of unemployment in the economy is largely a macroeconomic issue determined by aggregate demand, claims that fundamental health reform like M4A will lead to job loss sometimes sound plausible because it is easy to envision the specific jobs that might be displaced: jobs in the health insurance and billing administration sectors. But these job displacements would be balanced by likely job gains in other sectors—most particularly in health care delivery. The health insurance coverage expansions of M4A will boost demand for health care goods and services, and workers will need to be hired to meet this demand.

Job losses in the health insurance and billing administration sectors

A recent analysis of the economic effects of M4A (Pollin et al. 2018) includes the projection that up to 1.8 million jobs in the health insurance and billing administration sector (the divisions of hospitals and doctors’ offices dedicated to administrative processing of bills and payments) could be made redundant. These potential 1.8 million lost jobs are frequently presented as if they constitute the net employment effect of M4A.13 This is a deeply flawed misrepresentation of Pollin and his colleagues’ work. In fact, their estimates are a gross (not net) measure of job displacement or “churn”—the regular process of workers starting and leaving jobs during the course of their work lives. Relative to the scale of other gross measures of job churn, the churn associated with M4A is not large.

It is true that one source of cost savings from the introduction of M4A is the reduced demand for insurance and billing administration. In turn, this reduced demand would shift employment out of these sectors. This could certainly cause challenges and economic distress for the workers within these sectors who are directly affected. But for some perspective, it is worth noting that 21.5 million workers were laid off in 2018 (BLS 2020b). If the 1.8 million workers that Pollin et al. (2018) identify as potentially being displaced by M4A were forced to transition over the four-year phase-in commonly identified with M4A plans, this would increase the national rate of layoffs by about 2%. It is also worth noting that even within just the finance and insurance sectors, there have been 1.7 million layoffs in the past four years (BLS 2020b). And yet it’s safe to say that very few people even in the business press have made any note of this. This is not a shock: Our economy generates a huge amount of job churn every year. This churn is the hallmark of growth in productivity—getting more economic output with fewer inputs. While productivity growth can indeed put downward pressure on jobs in the sector experiencing it directly, Autor and Salomons (2018) demonstrate that productivity gains within a given sector strongly boost job growth in other sectors, as the savings to households and businesses stemming from enhanced productivity increase purchasing power that supports demand for these other sectors’ outputs.

If workers in the insurance or billing administration sectors were particularly hard-pressed for reemployment prospects because of geographic isolation or low average levels of educational credentials, their displacement might pose particular concern to policymakers. But employment in the health insurance and billing administration sectors is not particularly geographically concentrated,14 and Pollin et al. (2018) show that 56.5% of workers in these sectors have a four-year college degree or more education, a far greater share than the overall labor force (in 2018, 37.6% of workers had a four-year degree or more education, according to EPI 2020b).

Substantial likely job gains in the health care sector

While it may seem counterintuitive, fundamental health reform like M4A is almost guaranteed to substantially expand employment in the health care sector overall, even taking reduced billing administration employment into account. Often people hear that fundamental reform is aimed at cost containment and then imagine that part of this cost containment will take the form of fewer jobs providing health care, but this is not necessarily the case. As noted before, the U.S. is an outlier in terms of how much it spends on health care, but its health care workforce as a share of the total workforce is not out of line with shares in other countries. For example, in 2017 the health care workforce in the U.S. was equal to 13.4% of the overall workforce, while the share averaged 12.9% in the 20 other richest OECD countries.15 Additionally, seven of these other countries had health care workforce shares equal to or higher than the U.S.’s 13.4%.16

Pollin et al. (2018) estimate that expanded access to health care could increase demand for health services by up to $300 billion annually. Given the current level of health spending and employment, this would translate into increased demand for 2.3 million full-time-equivalent workers in providing healthcare.17 Obviously all of the workers displaced from the health insurance and billing administration sectors could not necessarily transition into these jobs seamlessly, but well over 10% of workers in the health insurance sector, for example, are actually in health care occupations (e.g., they are doctors or nurses).18

Further, several M4A plans have provisions to pay for long-term care services. Reinhard et al. (2019) have estimated that in 2018, Americans provided roughly 34 billion hours in unpaid long-term care. If this care was divided up among full-time paid workers, it would require 17 million new positions. Of course, not all of this currently unpaid care would be converted into paid positions in the job market. But if even 10% of unpaid care translated into new jobs, it would create enough new demand for workers to essentially offset the displacement of workers in the health insurance and billing administration sectors.

The upshot: M4A creates a small amount of manageable churn but increases the overall demand for labor and boosts job quality

The job challenge relating to a fundamental health reform is managing a relatively small increase in job churn during an initial phase-in period. Most Medicare for All plans explicitly recognize and account for the costs of providing these workers the elements of a just transition. As noted previously, this sort of just transition is far easier when health care is universally provided.

Besides this challenge, the effect of fundamental reform like M4A on the labor market would be nearly uniformly positive. The effect of a fundamental reform like M4A on aggregate demand is almost certainly positive and will therefore boost the demand for labor. The number of jobs spurred by increased demand for new health care spending (including long-term care) will certainly be larger than the number displaced by realizing efficiencies in the health insurance and billing administration sectors.

Finally, the introduction of fundamental health reform like M4A—particularly reform that substantially delinks health care provision from specific jobs—would greatly aid how the labor market functions for typical working Americans. Take-home cash pay would increase, job quality would improve, labor market transitions could be eased for employers and made less damaging to workers, and a greater range of job opportunities could be considered by workers. The increased flexibility to leave jobs should lead to more productive “matches” between workers and employers, and small businesses and self-employment could increase.

Fundamental health reform would benefit typical American families in all sorts of ways. Importantly, contrary to claims that such reform might be bad for jobs, this reform could substantially improve how labor markets function for these families.

About the author

Josh Bivens joined the Economic Policy Institute in 2002 and is currently EPI’s director of research. His primary areas of research include mac­roeconomics, social insurance, and globalization. He has authored or co-authored three books (including The State of Working America, 12th Edition) while working at EPI, has edited another, and has written numerous research papers, including many for academic journals. He appears often in media outlets to offer eco­nomic commentary and has testified several times before the U.S. Congress. He earned his Ph.D. from The New School for Social Research.

Endnotes

1. Underinsurance includes coverage gaps throughout a year.

2. “Excess costs” typically refers to health care costs that are rising faster than other economic benchmarks, such as overall gross domestic product. The Congressional Budget Office, for example, defines excess costs as the percentage change in health care costs per beneficiary minus the percentage change in per capita gross domestic product (Banthin 2017).

3. Author’s analysis of data from BLS 2020a.

4. Author’s analysis of data from BEA 2020, Table 2.4.5U, line 120.

5. Data from BEA NIPA Table 7.8, line 17, divided by data from BEA NIPA Table 2.1, line 2 (BEA 2020).

6. If the share of total compensation directed toward premiums had grown by just 3.65 percentage points rather than the actual increase of 7.3 percentage points between 1960 and 2018, and the difference had all been directed toward increased wages and salaries, then wages and salaries in 2018 would have been higher by an amount equal to 3.65% of total compensation of employees in that year ($10.93 trillion), or $399 billion (BEA 2020).

7. A quick example may help make the point. If health insurance premiums rose by 7% per year, they would double in 10 years. If growth of other forms of compensation remained flat, this would lead to the share of health insurance premiums in total compensation doubling in 10 years. If premiums started from 1% of total compensation in the base year (as in 1960), this doubling would only “crowd out” 1% of total compensation that could be taken in the form of cash wages and salaries. If instead premiums started from a base of 8.4% of total compensation (as in 2018), this doubling would “crowd out” 8.4% of total compensation that could be taken in the form of cash wages and salaries.

8. The wage floor Schmitt and Jones specify for a good job is the median wage of men in 1979, adjusted for inflation. When adjusted for inflation into 2019 dollars using the CPI-U-RS, the 1979 men’s median hourly wage is $21.07 (EPI 2020a).

9. Specifically, in Table 1 Schmitt and Jones report that the share of good jobs would rise from 24.1% to 28.8% with the introduction of universal health coverage. Dividing this 4.7-percentage-point increase by 24.1% yields a 20% increase.

10. See Schmitt and Jones 2013, Table 2.

11. For evidence on the cost of providing health insurance by employer size, see Hertel-Fernandez, Gould, and Bivens 2009, Figure C.

12. For an explanation of how aggregate demand determines the level of unemployment, see Bivens 2018a.

13. See Pradhan 2019 for an example of these numbers being presented as the overall effect of M4A on jobs.

14. For example, if one sums the share of employment in health insurance, hospitals, and medical offices for each U.S. state, this share is essentially perfectly predicted by the state’s population share (correlation coefficient of 1.0). This is notably not true, for example, if one does the same exercise for manufacturing employment and state population shares (correlation coefficient of 0.8). Author’s analysis of data from BLS 2020c.

15. Data are from the OECD Health Statistics program (OECD 2019). The 20 OECD countries compared with the U.S. are Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, Luxembourg, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, and the United Kingdom. Data for Canada and Japan are from earlier years (2016 and 2015, respectively) because data for 2017 are unavailable. Without Italy and Spain (both of which have very low health care workforce shares, below 8%), the U.S. would be very slightly below the OECD average for its share of the health care workforce.

16. The seven countries are Denmark, Finland, France, Netherlands, Norway, Sweden, and Switzerland.

17. In 2018, spending on health care services was $2.35 trillion (data from BEA 2020, NIPA Table 2.3.5), while full-time-equivalent employment was 18.25 million (BEA 2020, NIPA Table 6.5D). This translates into $129,000 in health spending per full-time-equivalent job. Dividing $300 billion by $129,000 yields the 2.3 million new full-time-equivalent workers needed to satisfy this new demand.

18. Author’s analysis of BLS 2019.

References

Autor, David, and Anna Salomons. 2018. “Is Automation Labor-Displacing? Productivity Growth, Employment, and the Labor Share.” Brookings Papers on Economic Activity Conference Drafts, March 2018.

Baker, Dean. 2015. Job Lock and Employer-Provided Health Insurance: Evidence from the Literature. AARP Public Policy Institute, March 2015.

Banthin, Jessica. 2017. “Health Care Spending Today and in the Future: Impacts on Federal Deficits and Debt.” Congressional Budget Office briefing, presented to a conference organized by the Center for Sustainable Health Spending, Washington, D.C.

Bivens, Josh. 2018a. Recommendations for Creating Jobs and Economic Security in the U.S.: Making Sense of Debates About Full Employment, Public Investment, and Public Job Creation. Economic Policy Institute, March 2018.

Bivens, Josh. 2018b. The Unfinished Business of Health Reform: Reining in Market Power to Restrain Costs Without Sacrificing Quality or Access. Economic Policy Institute, October 2018.

Bureau of Economic Analysis (BEA). 2020. National Income and Product Accounts, NIPA Tables (online database), Tables 2.1, 2.3.5, 2.4.5U, 6.5D, and 7.8. Accessed February 2020.

Bureau of Labor Statistics (BLS). 2019. “National Industry-Specific Occupational Employment and Wage Estimates.” NAICS 524114 – Direct Health and Medical Insurance Carriers. Last modified April 2, 2019.

Bureau of Labor Statistics (BLS). 2020a. Consumer Price Index program, “Databases, Tables & Calculators by Subject” (interactive data retrieval portal), Series ID CUUR0000SEME. Accessed February 2020.

Bureau of Labor Statistics (BLS). 2020b. Job Openings and Labor Turnover Survey (JOLTS), “Databases, Tables & Calculators by Subject” (interactive data retrieval portal), Series ID JTU00000000LDL and JTU52000000LDL. Accessed February 2020.

Bureau of Labor Statistics (BLS). 2020c. Quarterly Census of Employment and Wages Data (interactive data retrieval portal).

Collins, Sara R., Herman K. Bhupal, and Michelle M. Doty. 2019. Health Insurance Coverage Eight Years After the ACA: Fewer Uninsured Americans and Shorter Coverage Gaps, but More Underinsured. The Commonwealth Fund, February 2019.

Economic Policy Institute (EPI). 2017. State of Working America Data Library, “Health Insurance Coverage.” Last updated February 13, 2017.

Economic Policy Institute (EPI). 2020a. State of Working America Data Library, “Median/Average Hourly Wages.” Last updated February 20, 2020.

Economic Policy Institute (EPI). 2020b. State of Working America Data Library, “Wages by Education.” Last updated February 20, 2020.

Estevez-Abe, Margarita, Torben Iversen, and David Soskice. 2001. “Social Protection and the Formation of Skills: A New Interpretation of the Welfare State.” In Varieties of Capitalism: The Institutional Foundations of Comparative Advantage, edited by Peter A. Hall and David Soskice. New York: Oxford Univ. Press. For a publicly available earlier version of the paper, see the 1999 paper prepared for presentation at the 95th American Political Association Meeting in Atlanta, Georgia: http://www.people.fas.harvard.edu/~iversen/PDFfiles/apsa992.pdf.

Hacker, Jacob. 2002. The Divided Welfare State: The Battle over Public and Private Social Benefits in the United States. Cambridge Univ. Press.

Hertel-Fernandez, Alexander, Elise Gould, and Josh Bivens. 2009. Health Care Reform—Big Benefits for Small Businesses. Economic Policy Institute, July 2009.

Jørgensen, Helene, and Dean Baker. 2014. The Affordable Care Act: A Family-Friendly Policy. Center for Economic and Policy Research, September 2014.

Organisation for Economic Co-operation and Development (OECD). 2018. Entrepreneurship at a Glance: 2018 Highlights. October 2018.

Organisation for Economic Co-operation and Development (OECD). 2019. OECD Health Statistics 2019 (online database). Last updated November 15, 2019 (accessed February 2020).

Organisation for Economic Co-operation and Development (OECD). 2020. “Self-Employment Rate” (interactive online data table). Accessed February 2020.

Pollin, Robert, James Heintz, Peter Arno, Jeannette Wicks-Lim, and Michael Ash. 2018. Economic Analysis of Medicare for All. Political Economy Research Institute, November 2018.

Pradhan, Rachana. 2019. “Medicare for All’s Jobs Problem.” Politico, November 25, 2019.

Reinhard, Susan, Lynn Friss Feinberg, Ari Houser, Rita Choula, and Molly Evans. 2019. Valuing the Invaluable 2019 Update: Charting a Path Forward. AARP Public Policy Institute, November 2019.

Schmitt, John, and Janelle Jones. 2013. Making Jobs Good. Center for Economic and Policy Research, April 2013.

Schmitt, John, and Nathan Lane. 2009. An International Comparison of Small Business Employment. Center for Economic and Policy Research, August 2009.

Indeed, this is the first generation of Americans whose standard of living, on average, is unlikely to exceed that of their parents, if current trends continue. Instead, too many find themselves either treading water or losing ground financially, crushed by the cumulative weight of growing wealth and income disparities. I know you are aware of the role money and influence play in our politics, but the corrosive effects of growing inequality are pervasive throughout most people’s lives,1 including restricting the economic opportunities of a broad swath of Americans, from infancy through old age.

If there is one crucial message I can deliver to you at this hearing, it is this: The lack of economic opportunity for low-wage and middle-class American families is not an accident of history, not a nameless economic force against which we find ourselves powerless. Rather, the highly unequal distribution of resources and opportunities within our society is a direct result of a series of policy choices that, together, have had the effect of weakening the power of workers to defend their rights in the workplace and in the political arena, thereby tilting the playing field in favor of moneyed and corporate interests.

Moreover, historic and ongoing discrimination in many forms and in many areas—including education, housing, and the workplace—has created obstacles to economic advancement for working women, workers of color, LGBTQ workers, and their families.

So while the subject of this hearing is economic policy, we’re really here to discuss something much more fundamental: the idea of America as a nation, who we are, who we want to be, and whether we continue to strive to build a vibrant dynamic society filled with opportunity for all—or throw in the towel.

It turns out the mythology surrounding the U.S. economy is much rosier than the underlying reality. That is not to say our country does not have unique strengths, power, and resources, but rather that our failure to ensure equal opportunity across race, gender, and class both weakens our national potential and casts us in an unfavorable light compared with other wealthy nations.

Conventional wisdom holds that class barriers in this country are lower than in other advanced economies because of a perceived trade-off, which actually doesn’t exist, between economic equality and economic mobility. Rich European nations are in general characterized by higher taxes, more stringent regulation, higher union density, universal health care, and a more comprehensive social contract. Conservative economists and politicians have long denounced this set of policies as “inefficient” and as creating impediments to mobility, with the result that reasonable regulations and fair levels of taxation have become politically controversial in the United States.

But the data show the results quite clearly2:

To the surprise of many Americans, who your father was matters a lot more to your earnings in the United States than it does in several European countries with more extensive social safety nets and much higher rates of unionization. The correlation between father–son earnings, for example, is tighter in the United States than in almost every peer OECD economy. In France, Germany, Sweden, and Denmark, for example, the correlation between a father’s and a son’s earnings is much lower than it is in the United States, suggesting that a low-income child in those countries has a greater chance of making it to the top than a low-income child born in the United States.

Meanwhile, the chances of moving up the income ladder have not improved in the United States in recent years.3 Incomes at the bottom and middle of the income distribution have been squeezed while the benefits of economic growth and higher productivity have accrued largely to the wealthiest among us.

Choosing our terms carefully: Mobility as opportunity

Before I dig any deeper into the research that my colleagues and I at the Economic Policy Institute have been doing on these issues, I want to establish some basic terminology that will help inform today’s discussion. In the prevailing economics literature, “mobility” is often narrowly defined as the probability that a child who is born to parents with incomes in the bottom 20 percent of households can manage to end up with an income among the top 20 percent of households by the time they grow up.

While this is a useful tool for the study of certain shifts in the economy, I want to suggest we understand the concept of mobility more broadly: It’s really all about widespread economic opportunity, regardless of one’s starting point in life. That, by definition, requires significant government intervention in the form of an adequately resourced education system, a strong social safety net for families during their working lives and especially in retirement, strong labor standards, laws that ensure workers who want to join a union can do so, and the kind of health care access that a universal, single-payer system can provide.

The reason some economists focus on mobility is that if people have a chance to move up the income ladder, then presumably this points to a more equitable society and also, in principle, one that rewards merit. But “mobility” alone is a tricky concept. If people are moving up a few rungs in relative income, others must by definition be going down.

In that sense, there may be a misunderstanding about the differences between mobility and inequality.4 Mobility is the likelihood of changing one’s relative position in the income distribution over time, and inequality is the distance between various positions in the income distribution at a particular point in time. A huge amount of mobility would be required to counteract the unprecedented high and growing levels of outright income and wealth inequality we are now experiencing in the United States. And that mobility just isn’t there.

At the same time, surging inequality is not simply the result of poor income growth for families at the bottom and the middle. It has also been the product of runaway pay at the very top of the corporate ladder, often based on cozy relationships rather than merit, hard work, or even financial results. EPI has documented the surge in the CEO-to-worker pay ratio from around 20- or 30-to-1 in the 1960s and 1970s to between 200- and 300-to-1 in recent years.5

Let’s not give up on the American Dream

But I’m not here solely to be the bearer of bad news, despite all the awful headlines on inequality that show just how concentrated wealth is and how that imbalanced our economy has become. I am also here to give you some good news: There’s plenty we as a country, and you in particular as a legislative body, can do about the problem.

EPI has developed a wide-ranging policy agenda,6 but I will focus on a few key areas today: strengthening workers’ rights and bargaining power; using fiscal and monetary policy to the fullest extent possible to achieve and maintain full employment, which ensures that high-pressure labor markets are the norm; making the tax code more just by ensuring the wealthy pay their fair share; and implementing policies aimed at improving race and gender equity.

This hearing poses the question “Is the American Dream in Crisis?” I would answer that the American Dream is in jeopardy, but it is in our power to rescue that dream by reversing the policy choices that essentially took out a contract on the American Dream. When we review the policies needed, we need to focus especially on African Americans, who have experienced backsliding in economic opportunity, as our schools and neighborhoods have become both more segregated and more unequal.

The racial segregation of our economic system has itself been not just a stain on our history, but an active impediment, sometimes a vividly violent one, to the economic progress of people of color, particularly black Americans and many recent immigrants. White families today still possess about 10 times the wealth of black families at the median, and the black unemployment rate remains consistently about double that for whites.7 My colleague Valerie Wilson has done important work showing the racial wage gap actually rises with an individual’s educational level, countering the idea that greater educational attainment on its own can serve as an antidote to discrimination.

Race must be central to any debate on mobility

Valerie Wilson leads EPI’s Program on Race, Ethnicity, and the Economy (PREE), formed in 2008 for the specific goal of creating a more focused and integrated approach to exploring and explaining how race, ethnicity, gender, and class intersect to affect economic outcomes in the United States.

Her work finds that not only is racial inequality reflected in class inequality, but racial inequality also exists within class. This is true even within the middle class and, I would argue, is as much of a problem as the gaping inequalities between the super wealthy and everyone else.

Most Americans accept the fact that very few of us will become millionaires or billionaires, but we’d like to believe that we all have a shot at being middle class. That seems more attainable—we believe that if we finish school, get a good job, and continue to work hard, then we can attain a certain standard of living. This means more than just providing for our basic necessities like food and shelter, but also having some options in terms of the quality of those necessities (neighborhood; owning versus renting; fresh, healthy food versus processed food; providing our children with a good education). It means being able to acquire other things we enjoy that might be less essential (entertainment, a safe car, family vacations). And it means being in a position to prepare for the future (sending children to college, planning for retirement, providing assistance for an aged parent).

A solid, well-paying job is central to this vision. Household economic well-being in the United States is closely tied to the labor market because most of us get our income by working. Among the bottom 80 percent of nonelderly households, about 73 percent of household income is labor income.

So the most important pathway to the middle class is a healthy labor market that provides sufficient employment opportunities with good pay and benefits that are equally accessible to all people. Government, individuals, and institutions each play a role in creating and facilitating pathways to the middle class through the labor market.

The basic foundation of a healthy labor market is low unemployment. Until recently, the Federal Reserve often appeared resistant to keeping the monetary pedal to the metal in order to keep the job market running hot, but we welcome a recent change of tone by Chairman Jerome Powell and his colleagues. They seem to be reacting to years of disappointment in an economic recovery that is now the longest in history but was also one of the slowest, due in large part to the consistently timid commitment to full employment by policymakers starting very early in the recovery and continuing to the present. Notably, wage growth has been tepid for low- and middle-wage workers, indicating to us and many others that the job market is not quite as hot as the headline unemployment rate of 3.7 percent would indicate.

Individuals can increase their productivity and access to higher-paying jobs by acquiring more formal education or developing skills through various types of training. Institutions, like labor unions, help to create pathways to the middle class for those with and without a four-year college degree—the latter still making up a majority of the U.S. labor force—by giving workers a stronger voice with which to advocate for higher pay, better benefits, training and promotional opportunities, and protections against harassment and discrimination.

Even when these things function relatively well as pathways, we still have to contend with how the broader social structures confer advantages or disadvantages based on race/ethnicity, gender, or class that affect access to these pathways and affect how much they actually deliver to different groups.

I’m going to discuss some trends related to these three pathways, highlighting racial disparities within educational categories, which I will use as a rough proxy for class. The first trend I want to draw your attention to is the fact that there has been insufficient vigilance in fighting unemployment since the late 1970s, as seen in Figure A.8

Figure A

The most obvious reason a tighter labor market is important is that more people have jobs. A tighter labor market also means a better chance for faster wage growth because there is more competition among employers to attract and retain workers. More jobs and higher wages translate into improved living standards.

EPI and others have published research showing that full employment is particularly important for employment, wage, and income growth among African Americans.9 The years 2000 and 2018 are the two most recent years with the lowest annual unemployment rates—4.0 percent and 3.9 percent, respectively. Since this is the closest we’ve been to full employment in recent years, I’m going to focus on comparisons between 2000 and 2018 as an indication of how the pathway of education has functioned in the “best of times.”

Figure B shows education shares of the workforce by race and ethnicity.10 This chart demonstrates a few things.

Figure B

First, the 2018 workforce is more highly educated than the 2000 workforce. This is true for all racial and ethnic groups, but large racial and ethnic disparities in educational attainment persist.

Focusing specifically on college graduates, in 2018, 19 percent of Hispanic workers had a bachelor’s degree or higher, up from 11 percent in 2000. The share of black workers with a college degree rose from 18 percent to 29 percent over the same period, while for white workers the share rose from 30 percent to 43 percent.

It is worth noting that although educational attainment has increased, the majority of American workers still do not have a four-year college degree.

Given these racial differences in educational attainment and the many factors that affect patterns of college attendance, completion, and affordability, clearly a college degree is not the most widely accessible pathway to the middle class and should not be the primary pathway to the middle class.

Even more challenging than the issue of unequal access to higher education is the fact that a college degree does not necessarily deliver the same returns across racial and ethnic groups.

Figure C shows unemployment rates by race, ethnicity, and education.11 On average, college graduates fare better than those without a college degree, but outcomes are not necessarily equitable across racial and ethnic groups.

Figure C

In 2018, African American and Hispanic workers with a bachelor’s degree faced unemployment rates that were more similar to those of white workers who have attended some college but have not received a four-year degree.

This chart also shows that college graduates in the 2018 labor market had higher rates of unemployment than college graduates in 2000, even at essentially the same overall unemployment rate (3.9 percent and 4.0 percent). This is true for all racial and ethnic groups.

Figure D shows average hourly wages by race, ethnicity, and education in 2018.12 On average, white workers are paid more than black and Hispanic workers at nearly every level of education (except for those with less than a high school diploma). This is particularly pronounced among college graduates.

This statistic should really challenge us to consider what it takes to reach middle class status, and how that experience varies by race and ethnicity.

Figure D

The final trend I want to highlight as it relates to pathways to the middle class is the decline in union membership. Unions have played a critical role in opening pathways to the middle class because they improve wages and benefits for all workers, not just union members. On average, a worker covered by a union contract earns 13.2 percent more in hourly wages than someone with similar education, occupation, and experience in a nonunionized workplace in the same sector. This premium is even higher for African Americans (14.7 percent) and Latinos (21.8 percent).

Union membership has declined significantly since 1989, and especially among African Americans, who have had the highest rates of union membership throughout this period.13

What should we do? Some policy recommendations

I’d like to outline some key federal and state policies that would promote more widespread prosperity.

First and foremost, Congress must take the long-overdue step of raising the minimum wage to $15 an hour. The Raise the Wage Act is key to ensuring a floor for the pay of low-wage American workers, who have seen the value of their earnings erode dramatically over time.14

Extensive research from EPI and others has shown that a higher minimum wage would boost pay for some 27 million Americans and be unequivocal good news for working families. It would stimulate local economies by putting more money in the pockets of those who will spend it.

Second, legislators should pass the Protecting the Right to Organize (PRO) Act, since this would considerably boost workers’ ability to form unions and bargain collectively for wages and benefits.15 The erosion of union membership and organizing in this country compared with other rich nations can be directly tied to the much higher inequality and worse health and social outcomes the United States experience versus its rich peers.

Third, Congress should continue to hold the Federal Reserve accountable for the maximum employment side of its mandate. We are encouraged to see that years of research and activism from the Center for Popular Democracy’s Fed Up Coalition, which relied heavily on EPI research and assistance, appear to have strongly affected Fed officials’ views. Fed Chairman Jerome Powell recently stated, in agreement with EPI’s view, that the labor market should not be described as hot despite a historically low jobless rate of 3.7 percent—particularly given a lack of consistent and robust wage growth. This stands in sharp contrast to the many voices inside and outside of the Fed who, at an earlier time, believed there was no way the jobless rate could fall below 5 or even 6 percent without generating undue inflation.

Fourth, Congress must rediscover fiscal policy as a tool to not only address economic downturns but also to target government spending toward addressing structural needs, like infrastructure investment and employment programs targeted at poorer communities.

Fifth, the U.S. government must renew its commitment to a public education system, from early childhood through college, that is child-focused and that empowers teachers as professionals who are free to tailor their teaching rather than rely on pure standardization.

Last, but certainly not least, Congress must make a serious effort to address long-standing and ongoing racial inequities in housing, employment, and wealth. Employers must be compelled to implement intentional strategies to extend employment opportunities to a more diverse pool of applicants. The Federal Reserve must use all its powers under the Community Reinvestment Act to ensure redlining and lending discrimination does not persist or worsen.

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Sadly, the American Dream is in serious danger of slipping away. But we have an opportunity and a path forward to ensure that it stays alive for all Americans and for future generations.

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Thank you for the opportunity to speak to you today, and I look forward to your questions.

Endnotes

1. Paul Krugman, “Notes on Excessive Wealth Disorder,” New York Times, June 22, 2019.

2. Elise Gould, U.S. Lags Behind Peer Countries in Mobility (economic snapshot), Economic Policy Institute, October 10, 2012.

3. Raj Chetty, Nathaniel Hendren, Patrick Kline, and Emmanuel Saez, “Economic Mobility,” in Pathways’ State of the States: The Poverty and Inequality Report 2015, eds. David Grusky, Charles Varner, Marybeth Mattingly, Stanford Center on Poverty and Inequality, 2015, 55–60.

4. Elise Gould, “Mobility Needs to Do More Than Stagnate to Indicate U.S. Economy Is Performing for Low- and Moderate-Income Families,” Working Economics Blog (Economic Policy Institute), February 12, 2014.

5. Dean Baker, Josh Bivens, and Jessica Schieder, Reining in CEO Compensation and Curbing the Rise of Inequality, Economic Policy Institute, June 4, 2019; Lawrence Mishel and Jessica Schieder, CEO Compensation Surged in 2017, Economic Policy Institute, August 16, 2018.

6. Economic Policy Institute, Policy Agenda, last updated December 5, 2018.

7. Lisa J. Dettling, Joanne W. Hsu, Lindsay Jacobs, Kevin B. Moore, and Jeffrey P. Thompson, “Recent Trends in Wealth-Holding by Race and Ethnicity: Evidence from the Survey of Consumer Finances,” FEDS Notes (Washington: Board of Governors of the Federal Reserve System), September 27, 2017.

8. Chart appears in Josh Bivens and Ben Zipperer, The Importance of Locking in Full Employment for the Long Haul, Economic Policy Institute, August 2018.

9. Josh Bivens and Ben Zipperer, The Importance of Locking in Full Employment for the Long Haul, Economic Policy Institute, August 2018; Valerie Wilson, The Impact of Full Employment on African American Employment and Wages, report for the Full Employment Project at the Center on Budget and Policy Priorities, March 2015.

10. Data for this chart are from Economic Policy Institute, State of Working America Data Library, “Wages by Education,” 2019.

11. Source: EPI analysis of BLS Current Population Survey microdata, 2000 and 2018.

12. This chart appears in Elise Gould, State of Working America Wages 2018, Economic Policy Institute, February 2019.

13. EPI analysis of Current Population Survey microdata, 1989–2017.

14. See infographic at epi.org/171676.

15. Celine McNicholas and Lynn Rhinehart, “The PRO Act: Giving Workers More Bargaining Power on the Job,” Working Economics Blog (Economic Policy Institute), May 2, 2019.

Introduction

An economy that’s growing on paper is not translating into better jobs for America’s workers. Despite a tight job market and strong corporate profits, paychecks have barely budged. Much of the explanation lies with eroding worker bargaining power–which is resulting in a shrinking sliver of the benefits of prosperity being shared with working families. And the deep structural racism that still pervades our economy means that workers of color and immigrants are struggling the most. Black workers face the greatest of these economic disparities, including large gaps in pay and employment. And the Trump Administration is making matters worse by rolling back the worker protection gains of recent years, scapegoating immigrants, and attacking unions and others who seek to give workers a voice on the job. More than ever, states need to lead the way in fighting back and pioneering new solutions. This agenda for America’s workers outlines model policies and best practices for enabling governors and state legislatures to protect workers in their states so that all communities can thrive and grow.

1. Jump-Start Stalled Paychecks

Raise the Stuck Minimum Wage. At the federal level and in 21 states the minimum wage has been stuck at a paltry $7.25 since 2009, causing extreme hardship for the nearly one in three U.S. workers who struggle in low-paying jobs. States representing 21% of the U.S. workforce are already gradually ramping up their minimum wages to $15 an hour—which is what single workers will soon need to afford the basics everywhere in America.

The rest of the states should do the same—and where legislatures won’t act, states should put the minimum wage on their state ballots in 2020, the way that Missouri, Arkansas, Arizona, Colorado, Washington, and Maine voters did in 2016 and 2018.

Restore Overtime Pay to Deliver a Middle-Class Raise. It used to be that if your boss asked you to put in extra hours at work, you got overtime pay in return. Not anymore. The share of salaried workers guaranteed overtime pay when they work more than 40 hours a week has plummeted from almost 63% in 1975 to less than 7% today. That’s because the salary threshold under which salaried workers are guaranteed overtime when they put in long hours hasn’t been updated in years and remains less than $24,000.

This means that millions of U.S. workers are working 50 or 60 hours a week, losing time with their families, and not getting any overtime pay for their hard work and dedication. It also means that employers aren’t hiring workers to do the extra work. The Obama administration ordered a long-overdue updating of the overtime threshold to about $48,000 a year. But a group of Republican state attorneys general blocked the increase, and the Trump Labor Department is expected to water it down.

California, New York, Pennsylvania, and Washington are already acting to deliver this long-overdue middle-class overtime raise for workers in their states. Governors and legislatures in other states should do the same–and should set a salary threshold of at least $55,234 by 2022–which is the equivalent of the 2016 Obama overtime salary threshold updated for wage growth. Importantly, in many states such as New Jersey, Michigan, Wisconsin, Minnesota, Colorado, Oregon, Montana, Pennsylvania, and Washington State, governors can expand overtime pay on their own through their state labor agencies without need for action by the legislature.

2. Get States Back in the Business of Fighting Wage Theft and Enforcing Other Worker Protections

Every week millions of workers are cheated when employers short their paychecks, force them to work off the clock, fail to pay even the minimum wage, or skirt employment laws by denying that they are employees. This type of wage theft is a national epidemic that robs U.S. workers and our economy of billions of dollars a year and hurts law-abiding employers that can’t compete with wage chiselers. But in many states, the agencies responsible for cracking down on employers that cheat their workers have been neglected and defunded. Governors and legislatures need to get their states back in the business of fighting wage theft and enforcing other worker protections, ranging from combatting independent contractor misclassification to preventing employers from defrauding the workers’ compensation system. Key best practices for restoring effective enforcement include:

• First and foremost, increasing labor agency budgets to ensure adequate staffing and enforcement capacity
• Developing strategic enforcement priorities, in partnership with worker organizations
• Cracking down on retaliation against workers who speak up
• Reviewing and updating regulations and administrative guidance—for example, to provide clear guidance on business’s responsibilities for contract workers, as detailed below.

3. Protect Contracted Workers in our Fissured Economy

A major driver of unstable and insecure work is our increasingly “fissured” economy. Today, much of the workforce for major corporations is employed indirectly through temp and staffing agencies or other contract firms, or labeled—and often mislabeled—as independent contractors. Employees wrongly treated as independent contractors are excluded from the protections of our core labor laws, such as the minimum wage, overtime, anti-discrimination protections, workers’ compensation, unemployment insurance, paid sick leave, and paid family leave. And employees working for major companies indirectly through what are often thinly capitalized, fly-by-night contractors are left wondering who’s the boss. The practice is of particular concern in sectors where workers of color are relegated to low-paid and often dangerous work, such as janitorial, delivery, home care, agriculture, landscaping, security, hospitality, trucking, transportation, and warehousing.

Corporations’ use of these work structures—subcontracting, temp and staffing, and calling workers “franchisees” or “independent contractors”—are key drivers of eroding labor standards and occupational segregation. They shift power away from workers toward corporations, and in many cases, are employed as a tactic to side-step compliance with labor laws.

As their workforces struggle with increasingly unstable work, states are responding with policy solutions to hold major companies that are the real economic actors accountable for the treatment of these workers.

Issue Clear Guidance on Business’s “Joint Employment” Responsibilities and Misclassification of Independent Contractors. Under existing employment laws, companies that use contracted workforces to staff their operations can already be held responsible as “joint employers” for those employees’ labor standards. And many purported independent contractors are, in fact, misclassified. Tightening up joint employer and independent contractor standards and improving their enforcement are key strategies for improving accountability and job standards in the fissured economy.

In 2016, the Obama Labor Department issued guidance outlining the basis for broad joint employer enforcement under the Fair Labor Standards Act, and companion guidance on independent contractor misclassification. However, the Trump Administration withdrew both. Governors and their state labor agencies should protect workers in their states against the Trump rollback by adopting similar guidance or regulations to guide agency personnel, businesses, and workers in interpreting coverage of state employment laws such as wage and hour, anti-discrimination, unemployment insurance, and workers’ compensation.

Adopt Temp and Staffing Agency Worker Protection Laws. In 2017, Illinois adopted model temporary agency worker protection legislation. It ensures that temp and staffing agencies report demographic information about the workers they hire; never charge workers for background checks, drug tests, and credit checks; notify temp workers about the types of equipment, protective clothing, and training needed to perform the job; provide transportation back from a job site if transportation was provided to the job site; and place their temporary workers into permanent positions when they become open. Other states should follow Illinois’ lead—and build on it with additional key protections to ensure that temp and staffing agency workers receive wages and benefits comparable to that received by direct employees at the companies that employ them.

Make Host Company Responsible for Labor Violations by Contractors. In 2014, California tackled the problem of fly-by-night labor contractors cheating their workers by passing new protections making host companies jointly responsible when their contractors fail to comply with minimum wage, health and safety, and workers’ compensation laws. Other states should replicate this best practice for cracking down on wage theft in our fissured economy.

4. Protect On-Demand Platform Workers and Workers Labeled–and Often Mislabeled–Independent Contractors

For decades, corporations have characterized workers as “self-employed” as a tactic for shifting economic risk downwards onto workers while maximizing revenue for investors and CEOs. In the past, it was sectors like home care, trucking, and delivery that used these tactics. Today it is also the companies that dominate the platform economy (sometimes called the “on-demand” or “gig” economy) that are aggressively seeking to shed responsibility for the employees performing work for them. By attempting to sidestep basic employment protections—from employer social insurance program contributions, to the minimum wage and overtime, to anti-discrimination and health and safety protections—these companies are leaving their workforces impoverished and vulnerable.

As the platform economy matures, the public is gaining a clearer understanding of the poor quality of these jobs. States and cities are responding by clarifying that these workers are employees covered by our nation’s baseline employment protections, and by promoting innovative sectoral solutions to improve wages and benefits for workers in sectors where work is dispatched both on- and off-platform, including transportation and domestic work. At the same time, the multi-billion-dollar platform corporations are mounting an aggressive lobbying push to try to exempt themselves from responsibility for the well-being of their workers. Governors and legislatures should adopt the following best practices to protect this growing workforce, while fighting carve-out efforts.

Clarify That the Rights and Protections of Employees Apply to Platform Workers. States should start by clarifying—through interpretation of existing laws or by amending those laws—that state employment laws (such as state minimum wage and overtime, anti-discrimination, unemployment insurance, and workers’ compensation laws) protect platform workers. This will ensure that platform workers are treated as employees, and that platform businesses are accountable for the protections that all other employers provide.

For example, in April 2018 the California Supreme Court issued a unanimous decision in the Dynamex case that will make it harder for companies, including digital platform companies, to misclassify their employees as independent contractors. Under the “ABC” tested adopted in Dynamex, businesses that seek to treat workers as independent contractors have to show that the workers are (A) free from control and direction by the hiring company; (B) perform work outside the usual course of business of the hiring entity; and (C) are independently established in that trade, occupation, or business. This test is simple, clear, and easy to enforce. More than half of the states already have the ABC test in their state unemployment insurance laws, and several including Massachusetts, New Jersey and Connecticut have adopted it for use under their wage and hour protections.

Similarly, Oregon’s labor agency issued an opinion advising that drivers at transportation network companies such as Uber and Lyft qualify as employees who are covered by the state’s employment laws. New York has ruled that platform employers are covered under the state’s unemployment insurance law. San Francisco amended its minimum wage protections to clarify that they apply to independent contractors and employees alike. The New York City Council recently passed a slate of laws meant to guarantee a $15 minimum wage to transportation network company (TNC) drivers and to stop the race to the bottom that has impoverished taxi and TNC drivers alike. Through amendment or interpretation, states should do the same for all baseline employment laws.

Promote Innovative Sectoral Solutions. In addition to clarifying that platform workers are covered by employment laws, states should promote sectoral solutions to improve jobs, including platform jobs. For example, in 2018 Seattle passed an innovative domestic worker bill of rights that requires “hiring entities” to pay domestic workers the municipal minimum wage, allow them meal and rest breaks, and protect them from retaliation. The Seattle ordinance also sets up a system for setting industry-wide standards for domestic workers, in which domestic workers themselves will have a seat at the table. Portland, Oregon has launched a similar initiative with a newly constituted board to develop standards for drivers for transportation network company (TNC) such as Uber and Lyft.

Fight Employment Protection Carve-Out Bills. On defense, states should fight back against stealth attacks on platform worker rights, such as the “marketplace platform bills” that online platform employers have passed in several states to carve their workforces out of basic protections such as the minimum wage, unemployment insurance, and workers’ compensation. The idea that it is excessive or burdensome for the multi-billion-dollar tech giants of the platform economy to provide the same basic employment protections that all other employers must follow is outrageous, and should be rejected—as Colorado and other states have done.

5. Leverage State Employment and Contracting Power to Improve Jobs and Crack Down on Mistreatment of Workers

States have a significant impact on workforce standards in their capacities as employers, and through their contracting and purchasing programs. In their own employment, states should lead by example by adopting model employment practices around fair pay and benefits. And in contracting, states should leverage their vast economic footprint to improve jobs and crack down on mistreatment of workers.

Adopt Labor Standards for Public Employees and Employees of Contractors. Governors and legislatures should start by adopting model employment practices for their own direct employees, for employees of major state-linked institutions, such as state universities, and for vendors performing state contracts. These standards should include: (1) a $15 minimum wage for state employees, state university employees, and state contractors, as states such as Massachusetts, North Carolina, and New York have done in various forms; (2) paid sick leave as the Obama Administration required for federal contractors; and (3) other core employment standards, such as “ban the box” fair hiring protections, as detailed below. In addition, preferences for contracts should be given to unionized workplaces.

Require Public Contractors to Disclose Employment and Labor Law Violations and Related Practices. In addition, states should crack down on employment and labor law violations by state contractors by adopting state responsible contracting rules, following the model of President Obama’s Fair Pay and Safe Workplaces executive order, which the Republican Congress rolled back. States can and should require companies seeking state contracts to disclose all recent federal, state, and local employment and labor law violations, ranging from wage and hour and workers’ comp, to OSHA and NLRA violations, and discourage agencies from awarding contracts to vendors with significant or repeated violations. In addition, as noted below, states should discourage the use of forced arbitration and other coercive waivers by state contractors.

6. Fight Coercive Waivers that Prevent Workers from Enforcing their Rights and Lock Them in Poverty-Wage Jobs

Bad corporate actors are increasingly using forced arbitration and other coercive waivers of worker protections to mask wrongdoing and block working people from vindicating their rights in court. According to the Economic Policy Institute, more than 60 million U.S workers are blocked from suing their employers due to forced arbitration clauses, with women, people of color, and low-wage workers disproportionately impacted. And the U.S. Supreme Court recently ruled in its Epic Systems decision that employers can force workers into private arbitration with class and collective waivers, meaning each worker has to go it alone or, more likely, not at all.

This employer-dominated process, where settlements are secret and workers are barred from joining together to seek relief as a group, allows years of abusive treatment to remain hidden. A bipartisan group of all 50 state attorneys general in 2018 called for an end to forced arbitration for sex harassment claims. But the problem extends beyond just sex harassment and equally prevents workers who have been cheated out of their paychecks from seeking justice.

Issue Forced Arbitration Executive Orders. First, governors should push back against this abusive practice by following the lead of Washington State Governor Jay Inslee and issue executive orders ensuring that tax dollars are not invested in businesses that use forced arbitration, and that companies seeking state contracts must disclose details around their use of this abusive practice.

Adopt Whistleblower Enforcement Laws. Second, to really tackle this urgent problem, governors and legislatures should restore the ability of workers and members of the public to go to court to fight wage theft, racial and sexual harassment and discrimination, and other workplace violations on behalf of the state, by adopting whistleblower enforcement laws as California has done. Model legislation, the EMPIRE Worker Protection Act, is currently pending in New York.

Ban Non-Competes and No Poaching Policies. Third, governors, legislatures, and attorneys general should fight other coercive waivers of workplace rights such as non-compete and no-poaching requirements imposed by employers on a wide swath of low-wage and other workers. These two increasingly common practices have come under growing criticism as unfair and unnecessary limits on employees’ job mobility that are contributing to stagnant wages across our economy. There is growing recognition that non-compete and no-poaching requirements are pervasive, abusive, and not necessary, as legitimate employer concerns about trade secrets held by higher-paid employees can more appropriately be addressed through non-disclosure requirements. Governors and legislatures should join California, Oklahoma, and North Dakota by prohibiting non-compete and no-poaching requirements and include a private right of action to facilitate the enforcement of such prohibitions.

7. Rebalance our Economy by Restoring Workers’ Bargaining Power

Union popularity is the highest it has been since the Great Recession: recent polls show that 62 percent of adults support unions, including an overwhelming 75 percent of young adults aged 18 to 29. With inequality at record levels and weak wage growth for most workers despite a tight labor market, there’s a growing consensus we need strong action to restore workers’ bargaining power. By joining together through unions, U.S. workers built the middle class and expanded access to good jobs, especially for women and workers of color. Strong unions raise pay and improve workplace standards not just for their members, but across the economy.

But decades of corporate-funded attacks culminated in the Supreme Court’s anti-union Janus decision in 2018, and in a spate of attacks on unions and workers by the Trump Administration and by legislatures in several states. Workers need governors and legislatures to defend the right to organize and roll back past legislative attacks.

Restore Bargaining Power for Public Sector Workers. States directly regulate collective bargaining for public sector workers, which means governors and legislatures have a significant role to play. They should step in to defend the public sector workers who deliver the vital services that sustain our communities but who are under siege and today struggle to afford the basics for their families. Governors and legislatures should use their executive and legislative powers to reverse past state attacks that restrict public sector workers’ ability to bargain collectively for fair pay, benefits, and treatment on the job, and adopt best practices to promote workable collective bargaining in the face of the Janus decision.

Support Union Efforts to Promote Good Jobs for Private Sector Workers. While states do not regulate collective bargaining for private sector workers, they can and should play a role in supporting efforts by unions in the private sector to promote good jobs. For example, in state financed and regulated sectors, such as airports, health care, and subsidized caregiver jobs, which have been characterized by low pay and poor working conditions, unions in many states are pushing to improve wages and benefits. Governors should support these efforts, as leaders in many states are doing.

Repeal Right to Work. So-called “right-to-work” laws, passed in 27 states, make it harder for workers to form strong labor unions through which they can organize and speak with one voice on the job. These laws have led to declining union membership as well as declining wages and benefits for union and nonunion workers alike. At a time of extreme inequality in our country, governors and legislators should make it easier, not harder, for workers to unite. Governors and legislatures should repeal state right to work laws currently on the books and should fight any new right to work efforts–including efforts to adopt right-to-work at the local level.

Expand Collective Bargaining Rights for Agricultural Workers and Other Workers Not Covered by the NLRA. The agricultural workers who grow the food that sustains our communities are some of the lowest paid workers in our economy. Largely migrant immigrant workers, they face not only high poverty, but grueling and dangerous working conditions. And they are excluded from the National Labor Relations Act—meaning that they have no right to join together in a union and negotiate for fair treatment. States, however, are able to regulate collective bargaining for agricultural workers, as well as other workers such as domestic workers and independent contractors who are excluded from federal protections. States should follow the lead of California, which more than 40 years ago adopted the California Agricultural Relations Act. A campaign for similar agricultural workers labor relations legislation is underway in New York.

8. Promote Fair Hiring for People with Arrest or Conviction Records

Roughly one in three adults in the U.S. has an arrest or conviction record that can show up on a routine criminal background check for employment, undermining the job prospects of the 70 million men and women who have been caught up in the criminal justice system. This legacy of mass incarceration has an especially devastating impact on the employment prospects of people of color, who are 40 percent less likely than white applicants with a record to receive a positive response from a prospective employer.

Adopt Fair Chance Hiring. In response, 33 states, including Georgia, Kentucky, Louisiana, North Carolina, Tennessee, and Virginia, have adopted “ban the box” policies to open up job opportunities in state and local government for people with arrest or conviction records and set an example for private sector employers. Eleven states, including large states like California, and more than a dozen major cities across the U.S. extend fair chance hiring protections to private sector employers, in addition to the public sector. Governors from states that haven’t yet joined them should start by issuing executive orders adopting this reform for all state hiring. Then they and their legislatures should push for legislation to extend this best practice to the private sector, as more and more states and cities are doing.

Remove Occupational Licensing Barriers for People with Records. Today, more than 25 percent of U.S. workers must obtain a state license or certification before they can work in their chosen occupation, and onerous criminal background check restrictions often accompany these state licensing mandates. With broad bipartisan support, over the past year about a dozen states have taken bold steps to remove unfair restrictions against hiring people with records from their occupational licensing laws. In 2018, the governors of several states (Michigan, New Mexico, and Pennsylvania) took executive action directing licensing boards or other state entities to take action to address unnecessary restrictions that limit qualified people from fairly competing for jobs in their chosen professions. Governors and legislatures should follow their lead with executive action and legislation to remove unnecessary licensing obstacles to employment for people with records.

Adopt a Clean Slate Policy for People with Records. Having even a minor criminal record can be a life sentence to poverty; in addition to being a barrier to employment, it is increasingly a barrier to housing and even education as landlords and colleges use background checks to screen applicants’ criminal records. While most states allow people to petition to have their records expunged or sealed, only a tiny fraction of people eligible ever get the relief they need because they can’t afford a lawyer, pay the court fees, or figure out how to navigate the complex court petition process. Many are not even aware it’s an option. Governors and legislatures should adopt “clean slate” policies that provide for automatic record clearing once someone remains crime-free for a designated period of time. People with criminal records who have remained crime-free for four to seven years are no more likely than the general population to commit a new crime. Pennsylvania enacted clean slate legislation in 2018, and several other states, including Colorado, Michigan, and South Carolina, are considering it. A majority of voters–across party, racial, gender, and education lines–support the policy.

9. Fight Racial and Gender Discrmination on the Job and Combat High Unemployment in Communities of Color

Structural racism and gender discrimination still pervade our economy and labor markets. African American men are paid just 71 cents for each dollar that white men are paid. African American women are paid even less—just 66 cents, while white women earn 78 cents. And despite a tight labor market and record low unemployment in general, the African American unemployment rate remains nearly double the white rate.

The drivers of these deep racial and gender disparities in our job market include discrimination in hiring and pay, occupational segregation, and weak enforcement systems. Governors and legislatures should work to dismantle them with a multi-pronged approach.

Banning Employers from Asking About Salary History. There is growing national recognition that the common practice of employers basing employees’ pay in part on their salary history perpetuates unequal pay for women and workers of color, since gender and racial pay gaps are often present, even among new entrants to the workplace. In response eleven states and nine cities have banned employers from inquiring about salary history and basing compensation on it. Governors and legislatures should follow their example and adopt these sensible prohibitions–and require that employers seeking state contracts refrain from such practices.

Strengthening Civil Rights Enforcement. State human rights agencies are a first line of defense in the fight against discrimination on the job. But many have seen their budgets and staff slashed or stagnant and as a result have long backlogs and little capacity to engage in strategic enforcement. At the same time, human rights agencies are reporting a spike in discrimination and harassment complaints—a trend that is likely fueled by President Trump’s hostility to immigrants and people of color. Governors and legislatures should rebuild their state human rights agencies by restoring adequate staffing and budgets—and promoting strategic, targeted enforcement programs by these agencies to help them more effectively combat discrimination in hiring, promotions and pay, as well as workplace harassment. This includes implementing reporting systems that create greater pay transparency and deepening partnerships with community based organizations. In order to bolster enforcement of civil rights laws, states should also ensure that localities are not preempted from expanding protections beyond what the state law may provide and enforcing local anti-discrimination laws consistent with the state protections.

In addition, in recent years states have begun to enact stronger laws prohibiting unequal pay for similar work—but have not always included race-based pay inequality in these protections. California recently expanded its equal pay law, the California Fair Pay Act, to include race-based pay inequality. Governors and legislatures in other states should follow California’s lead and adopt state-of-the-art equal pay protections—and be sure that they tackle pay inequality based not just on gender, but on race and other protected statuses as well.

Promoting Targeted Hiring of Workers from High Unemployment Communities. Many cities are successfully using “targeted hiring” or “first source hiring” programs to ensure that tax-payer funded projects expand access to jobs for workers from communities with high unemployment rates. Given the disproportionately higher rates of unemployment in Black communities that have been shut off from economic opportunity for decades, these targeted hiring programs are an important step toward greater employment equity. For example, on publicly funded development projects, these programs typically require that construction contractors or end-user occupants like stadiums, hotels or retailers on development projects target a share of their hiring at workers from high-unemployment or high-poverty zip codes, by partnering with community-based job training and referral agencies. Other cities are encouraging publicly linked “anchor institutions” like universities or hospitals to enter into similar partnerships to fill health sector and service jobs, or requiring that major government service contractors hire from targeted, high unemployment communities. Examples include New York City’s multi-pronged HireNYC Program, which combines targeted hiring for construction jobs, end-user jobs on subsidized development projects, and jobs with major city service contractors.

Governors and legislatures should scale these programs up to the state level by adopting targeted hiring programs for state-linked projects and institutions that generate significant numbers of jobs, such as state-financed economic development, state service contracting, direct state civil service hiring, and state-financed institutions like universities and hospitals. In all of these spheres, states should develop systems for filling a portion of jobs with workers from high-unemployment zip codes, and develop a system of partnerships with community-based job training and referral agencies to make it work.

Inclusive Procurement and Contracting. Another key strategy for ensuring that employment and wealth-building opportunities generated by states’ infrastructure and contracting programs are shared equitably with disadvantaged communities is inclusive procurement and contracting. Inclusive procurement and contracting involves a suite of policies to ensure that minority and women-owned businesses enterprises (M/WBE’s) are fairly represented among firms selected for contracts or subcontracts on state-financed procurement and infrastructure projects. Because minority-owned firms are more likely to employ a diverse workforce, inclusive contracting programs can be an effective approach for ensuring that workers of color benefit from the jobs generated by state spending. Governors and legislatures should review their contracting programs and implement recommended strategies for ensuring equitable inclusion of M/WBE’s. At the same time, they should ensure that state-financed contracting and infrastructure projects are covered by strong labor standards, including prevailing wages, community workforce agreements for construction projects, and $15 minimum wages for service contracting, to ensure that they generate quality jobs and do not undercut high road standards.

10. Protect Workers’ Health and Safety

Nearly 50 years after Congress adopted the Occupational Safety and Health Act (OSHA) requiring employers to provide safe workplaces, more than 5,000 U.S. workers are killed on the job every year, and nearly three million are seriously injured. Many low-wage jobs are dangerous jobs, including jobs in the poultry and meat industries, agriculture, construction, and home care, where workers suffer much higher rates of serious job injuries. Yet the Trump Administration is rolling back workplace health and safety protections, leaving workers even more vulnerable.

Adopt Responsible State Health and Safety Contracting. Governors and state legislatures should fight these rollbacks by promoting model protections for workers. For example, Massachusetts is considering a model responsible contracting law for health and safety. It requires contractors and subcontractors bidding on state-funded projects to submit their health and safety violations histories—and bars contracting with companies with poor records. Legislatures and governors using their executive authority over contracting should adopt this model.

Stronger State Workplace Protections on Heat Exposure. With climate change, heat exposure is emerging as a very serious workplace health hazard in sectors from agriculture to day labor. But currently there are few standards or protections. Governors and legislatures should adopt new standards and programs to provide stronger protections for workers exposed to dangerous levels of heat, especially farm workers but also workers in construction, manufacturing, and warehousing—all sectors where workers of color and immigrants are concentrated.

Strengthen Workers’ Compensation Laws. Over the past two decades, state legislatures have engaged in a race to the bottom by hollowing out their workers’ compensation laws, resulting in unfair, weak, or nonexistent benefits for injured workers. Governors and legislatures should work together to prevent any further weakening of benefits and coverage–especially since workers’ compensation premiums and benefits are now at a 30 year low. Key workers’ compensation reforms that are needed in most states include: (1) strong anti-retaliation protections for injured workers; (2) insurance coverage for prompt medical care in contested cases; (3) extending coverage to all workers, including domestic workers, farm workers, and temporary workers; and (4) ensuring that workers have the right to choose their own doctor.

Fighting Sexual Violence on the Job. Low-wage workers such as janitors, hotel room cleaners, and waitresses are especially vulnerable to sexual assault and violence in the workplace, as many work in isolation and feel powerless to speak up. California responded in 2016 with the Property Services Worker Protection Act, which helps protect janitors from rape on the job by mandating sexual harassment and assault prevention training, and registration of property services contractors. Similarly, cities including Chicago, Seattle, Oakland, and Long Beach, California have enacted measures to protect hotel room cleaners that require that they be provided panic buttons to use when they enter rooms alone, and also establish workload standards to protect room cleaners. Governors and legislatures should follow the lead of these states and cities in protecting low-wage workers from assault at work.

11. Promote Quality Caregiver Jobs

Our nation is facing a care crisis. States are struggling to provide adequate access to quality affordable home care and child care services for seniors, people with disabilities, and working families, at the same time that they struggle to improve the quality of these vital caregiving jobs. A big part of the problem is chronic underinvestment in the home care and child care workforces, which are some of the lowest paid in our economy, promoting high poverty rates and workforce instability among these vital caregivers–many of them women of color and immigrants.

Governors and state legislatures should join the states and cities that are tackling this crisis with new approaches that expand access to these vital services for all families, while investing in upgrading the jobs.

Expand, Enforce and Adequately Fund Minimum Wage, Overtime and Paid Sick Days Protections for Caregivers. States finance and regulate a large swath of the home care workforce through their Medicaid long-term services and supports programs. Governors and legislatures should ensure that these vital caregivers receive an adequate minimum wage, overtime pay coverage, and paid sick days protections, along with any other benefits. First, they should ensure that their Medicaid home care programs are implementing–and adequately budgeting for–the Obama Labor Department’s 2015 “companionship” rule that finally extended federal minimum wage and overtime protections to homecare workers. For example, they should follow the lead of states such as California, which budgeted extra funding for its consumer-directed Medicaid funded home care program to account for overtime and travel time between consumers. States must also ensure that consumers have access to quality and adequate home care services that allow for them to remain at home and within the community. Second, they should guarantee a $15 minimum wage for Medicaid home care workers–which governors can do by executive action and negotiate funding for as part of the budget process, as Massachusetts Governor Charlie Baker did. Third, they should extend similar $15 minimum wage to workers in the state’s subsidized family child care provider program–as Massachusetts also recently did as part of a 2018 minimum wage package. Lastly, states should ensure that their state laws cover home care, child care, and other domestic workers–and that they provide robust enforcement mechanisms to ensure workers’ rights are upheld.

Raise Caregiver Wages by Increasing Medicaid Reimbursement Rates for Long-term Care Services. The rates at which Medicaid reimburses providers for the long-term care services they provide seniors and people with disabilities can factor into caregivers’ low-wages. In many states, Medicaid reimburses homecare expenses at hourly rates that may provide too little to adequately pay these workers living wages or even cover homecare agency operating expenses. Increasing these reimbursement rates to ensure workers can earn living wages and have benefits, and requiring that the majority of the increase go to workers’ wages, will ensure that homecare jobs can provide workers with a decent living. States should also ensure that their consumer-directed rates are adequate to ensure home care workers make a living wage.

Create Universal Home Care with Quality Jobs. In Maine, an innovative campaign seeks to establish a Universal In-Home Care Program. It would expand access to subsidized home care services for all Mainers, regardless of income, while simultaneously creating a program board charged with improving wages, benefits, and working conditions for the home care workforce. The campaign to adopt this policy by ballot initiative fell short in 2018, but advocates are hopeful about pursuing similar legislation in the state legislature in 2019.

Expand Affordable Child Care with Quality Jobs. In Alameda County, California, a similar campaign is proposing to create an expanded subsidized child care program for lower income and middle-class families. It combines opening up affordable child care to more of the working class, with upgrading subsidized child care jobs significantly, financed by a half-cent sales tax increase.

12. Update and Defend Social Insurance Programs for All Workers

Vital social insurance programs on which working families rely have been under attack by the Trump Administration and by governors and legislatures in many states in recent years. As new governors and legislatures take office, they should take strategic action to restore these vital programs for workers in their states–and prepare their economies for the next recession or natural disaster.

Repeal Medicaid Work Requirements. Several states have instituted or are seeking federal permission to impose short-sighted and punitive work requirements on residents seeking health care coverage under Medicaid. These policies aim to take basic health care away from low-income workers and people with disabilities, many of whom work but are unable to keep up with the burdensome documentation requirements under such programs. New governors and legislatures should reverse such waivers and restore health care access for low-incomes residents in their states.

Restore a Strong Unemployment Insurance System. After poor financing decisions caused more than 40 states to bankrupt their unemployment insurance (UI) trust funds during the Great Recession, many states slashed their UI programs. Even before the recession, the UI program needed reform; that’s even truer today, with only about one in four unemployed workers receiving UI benefits. With another cyclical recession likely in the coming years, states should act to restore hard-earned benefits under their programs to protect workers, their families, and their communities from the inevitable downturn. NELP’s extensive toolkit details a full range of key UI reforms that many states have already implemented. Key reforms include a minimum uniform 26 weeks of benefits, work-sharing programs to preserve jobs in times when companies are struggling or during a recession, and reforms to provide UI protection for part-time workers who lose their jobs–a significant segment of the workforce, where women and low-wage workers are concentrated.

Prepare for Disaster Unemployment Assistance. For states that face regular natural disasters, modernizing Disaster Unemployment Assistance (DUA) systems is crucial for helping workers who lose their jobs during disaster recover from such devastating losses. All states affected by disasters should make key reforms. First, they should suspend or get rid of the “waiting week,” which only delays support to workers. Second, given the difficult realities and limitations facing those seeking work in a disaster area, the affected states and territories should significantly relax or suspend their work-search mandates. States should also take steps to boost UI benefits and authorize “non-charge” benefits paid as a result of a disaster.

Protect Public Sector Pensions. As the United States faces a looming retirement crisis, many states are looking to slash guaranteed retirement plans for the one segment of the population that still has a modest but secure benefit–public sector workers. While some states skipped contributions to their pension funds, workers have always paid their share. But some policymakers are asking workers to sacrifice their future for the mistakes past lawmakers made. A solid retirement plan is a public good. It helps states and cities attract and retain great teachers, firefighters, and caregivers while also providing a boon to the local economy when those workers retire in their communities. States should maintain and fund secure public sector retirement plans–and work simultaneously to develop new retirement options for private sector workers.

13. Empower Local Communities by Fighting Preemption

In recent years, big corporations and their lobbyists have not only blocked state efforts to raise the minimum wage, guarantee paid sick days, or address other worker needs, but when cities and counties have tried to tackle these problems, the corporations and their lobbyists have stepped in to tie their hands with “preemption laws.” Like voter disenfranchisement and political gerrymandering, these preemption laws are part of a corporate strategy by groups like the Koch Brothers-funded American Legislative Exchange Council (ALEC) to stymie progressive action. These preemption efforts are disproportionately impacting efforts by communities of color to improve local economic conditions and address specific localized concerns. Governors and legislatures should pledge to block or veto any new attempts to limit local power to address worker needs, and should work to roll back existing limits. For example, they should follow the lead of Colorado Governor-elect Jared Polis, who is backing a campaign in the legislature to repeal wage preemption in that state. At the same time, however, state leaders should fight any local efforts to undercut established worker protections, such as illegal local “right to work” efforts, or punitive local anti-immigrant measures.

14. Enable Workers to Balance Work and Family Demands by Guaranteeing Paid Sick Days, Paid Family Leave and Fair Scheduling

The U.S. lags far behind the rest of the world in ensuring basic protections to allow workers to balance the demands of work and family life such as earned paid sick days and paid family leave. And the growing problem of irregular and unpredictable work schedules, fueled by new scheduling technology, is posing serious hardship for working families. Governors and legislatures follow the lead of the growing numbers of states and cities that are responding by guaranteeing paid sick days and paid family leave, and by adopting fair workweek scheduling legislation.

Paid Sick Days. More than 34 million workers in this country don’t have a single paid sick day — and each time they take needed time off, they risk their families’ economic security and jeopardize the public’s health. Governors and legislatures should join the eleven states and dozens of cities that have adopted earned paid sick days laws to ensure that all workers have access to this most basic of protections.

Paid Family Leave. Sixty percent of the U.S. workforce does not have access to paid family leave when they need to take time off from work after the birth or adoption of a baby or in case of illness. As a result, millions of workers either cannot take the time they need, or must take it with no pay–and with no guarantee that their employer will hold their job for them when they return. In response, more and more states are establishing paid family leave insurance programs to provide workers with a share of their wages when they need time to care for a family member with a serious health condition, bond with a new child or deal with their own serious medical issue. Governors and legislatures should follow their lead and adopt paid family leave for their states.

Fair Workweek. There is growing recognition that unpredictable, unstable, and often insufficient work hours are a key problem facing many U.S. workers, particularly those in low-wage industries. Volatile hours not only mean volatile incomes, but add to the strain working families face as they try to plan ahead for child care or juggle schedules in order to take classes, hold down a second job, or pursue other career opportunities. The problem has been made worse by new scheduling technology that has enabled many retail and fast food employers to adopt last minute, “just in time” scheduling.

In response, states and cities are starting to adopt “fair workweek” laws that provide workers with greater stability, predictability, and flexibility in their work schedules. In many cases, they also require employers to give part-time staff opportunities to increase their hours before adding new staff. Governors and legislatures should follow their lead and push for fair workweek legislation to protection workers in their states.

15. Protect Immigrant Workers

Immigrant workers are vital members of our communities and contributors to state economies. But President Trump is bent on scapegoating immigrants and driving them back into the shadows. Governors and legislatures should take a strong stand to support immigrant workers rights and protect workers against immigration-based retaliation.

Ensure That Employment and Labor Laws Protect All Workers and Fight Retaliation. States should affirm that their employment and labor laws, such as the minimum wage and workers compensation, protect all workers regardless of immigration status. All workers need basic protections–and failing to enforce the law for undocumented workers hurts responsible employers and documented workers alike. It also creates incentives for employers to exploit undocumented workers in their workforces. States should also adopt strong anti-retaliation policies to protect workers who come forward against employer retaliation or ICE interference.

Provide Guidance for Employers About Immigration Status Verification and Worksite Immigration Enforcement. Employers need guidance on immigration status issues to help them avoid over-reacting and inadvertently cooperating with anti-immigrant attacks. States should provide guidance on best practices for responding to ICE workplace enforcement and immigration status verification, including educating employers that there is no need to re-verify DACA or TPS holders’ workplace authorization, and that Social Security Administration no-match letters are not proof of undocumented status.

Protect Civil Rights and Public Safety. States should also promote civil rights and public safety in their communities by keeping immigration enforcement out of policing. As law enforcement leaders have explained, allowing police departments and other state or local officials to cooperate with ICE seriously compromises public safety by eroding immigrant communities’ trust in law enforcement. Governors and legislatures should prevent state taxpayer money from being used to enforce the Trump Administration’s xenophobic agenda and refuse to subsidize immigration enforcement or incarcerate individuals because of an ICE detainer.

Promote Access to Drivers’ Licenses. States should also expand access to drivers’ licenses for all workers, regardless of immigration status to promote public safety. Ensuring that all workers can obtain drivers’ licenses improves traffic safety, reduces uninsured motorist accidents, and benefits the economy.

16. Protect Savers from being Ripped Off by Wall Street

In 2016, the Obama Labor Department issued a new rule requiring financial professionals to put their customers’ interests first when providing retirement investment advice. This “fiduciary rule” required financial professionals to rein in conflicts of interest, like kick-backs and sales contests, that encouraged them to cheat their clients. Every year, retirement savers alone lose more than $17 billion due to financial advisors’ conflicts of interest, and the losses are much greater when one considers all accounts and all products.

Wall Street and its allies in the insurance industry mounted a relentless attack on this common-sense ban on predatory investment practices, since it would have cut into their profits. They challenged the rule in court and found a sympathetic panel that was willing to block the rule. Siding with the industry, the Trump Administration abandoned the rule. Now the Securities and Exchange Commission is in the process of replacing it with a far weaker, watered-down rule backed by the same industry groups that fought against real protections in the first place.

Governors, legislatures, and state regulators can and should step in to protect investors against this Trump rollback by adopting a strong fiduciary rule for financial professionals in their state. Unlike the Labor Department rule, which applied only to retirement accounts, and the SEC proposal, which would apply only to securities accounts, states can adopt a fiduciary rule that applies to all financial professionals who provide investment advice, including both securities and insurance professionals, and that protects all investors, retirement and non-retirement alike.

17. Promote Economic Development That Generates Broadly Shared Prosperity

After decades of income inequality and wage stagnation, it is increasingly clear that topline economic growth does not produce bottom line prosperity. As a result, states need to pursue equitable economic development policies that spread the benefits of GDP growth more widely, especially to communities of color, which thanks to historically-rooted patterns of discrimination continue to lag the national average in wages, wealth, and social mobility. This kind of equitable economic development is focused not just on topline GDP growth or the total number of jobs in a community, but on the quality of the jobs—their wages, benefits, and prospects for upward mobility. It focuses on boosting the capacity of communities to build their own economic momentum and seeks to bring marginalized and disconnected workers into the labor market, rather than relying solely on outside capital to fuel growth and prosperity. In turn, this requires leveraging existing assets that train these workers, boost the productivity and innovative capacity of existing businesses, and leverage the critical supply chains and industry clusters that globally competitive businesses need to thrive. And it means intentionally extending these efforts into underserved communities, including rural areas and communities of color. This kind of economic development starts with the basic objective of making sure these programs actually deliver on their promises through better accountability and transparency, and then takes a step forward by incorporating equitable development practices into the state economic policy toolbox.

Improve Transparency for Economic Development. Each year, states spend tens of billions of dollars in economic development subsidies designed to lure businesses—and theoretically jobs—to their states. As the highly publicized Amazon HQ2 tax-break sweepstakes has revealed, big economic development decisions are made largely behind closed doors, leaving taxpayers with little to no input. When taxpayers do seek to participate, they often find that they cannot obtain even the most basic information about the deals being considered. The result is that a company’s announcement to build in an area, accompanied by the government’s announcement of a large subsidy package, is often the first official word the public hears about a development project.

Far too frequently, press announcements of economic development deals tout the projected number of jobs that will be created, but the fine print is full of loopholes. Even if a development deal is tied to jobs created or dollars invested, other big accountability safeguards are often missing. Will the actual jobs created and wages paid be publicly disclosed? Will the jobs pay living wages? Provide health and retirement benefits? Give local residents a chance to get hired? Be accessible via public transit? Be environmentally responsible? Create affordable housing? Preserve open space?

All too often, governments overspend on development deals, starving the public services communities rely on. Revenue lost to tax breaks would otherwise improve schools, roads, transit, public safety, and other public services that benefit all employers and working families.

Require Every Economic Development Project to Actually Create the Promised Jobs Before Awarding Public Dollars. All too often, companies never deliver on the jobs and investment they’ve promised in exchange for public subsidies. Governors and legislatures should protect taxpayers and ensure these programs are effective by requiring every company that receives a subsidy award to actually create the jobs they promised before they receive any public dollars. In some states, these programs also “clawback” or take back any public dollars that were given to companies once the company fails to meet job creation milestones.

Disclose Economic Development Deals. In many states, governors will inherit an incentive system where economic development deals are poorly disclosed. According to Good Jobs First, only one in four major state development programs reports on the number of jobs actually created or workers trained, and only one in eleven reports on wages actually paid. Alabama, Georgia, Hawaii, Idaho, Kansas, Maine, Nebraska, New Hampshire, New Mexico, Nevada, South Carolina, and South Dakota all rank in the bottom 15 among the states according to a national survey by the group. Governors should use their administrative powers to disclose the costs and benefits of every economic development deal, online, as has been common practice in many states for many years. Since economic development is an executive branch function, many states have first disclosed incentive deals pursuant to executive action. Some have later codified the practice in law, but legislation is not typically necessary.

Adopt a Unified Economic Development Budget (UEDB). UEDBs compile every kind of state spending for economic development: tax expenditures, program and agency appropriations, grants, loans, and even workforce development. Invariably, they show that tax breaks are literally the bottom of the iceberg, bigger than appropriations by ratios of 4:1, 6:1 and even higher. Yet tax breaks are far less likely to be disclosed, receive a performance audit, or be sunsetted. Governors should require the state Revenue Department to publish a Unified Economic Development Budget, so that lawmakers can see the big picture and make sure priorities are correctly balanced.

Report Tax Revenue Lost to Corporate Tax Breaks. In 2015, the Governmental Accounting Standards Board (GASB) issued Statement 77 on Tax Abatement Disclosures, which requires most localities (including school districts) and states to disclose the amount of tax revenue they lose annually to economic development tax abatement programs. Only one year’s data is out yet, however compliance with Statement 77 is uneven so far. Governors should propose legislation, or when possible direct the state auditor, comptroller, or treasurer to improve compliance with Statement 77, and also to put the new disclosures online. Bernalillo County, New Mexico, issued a recent report than can serve as a model for cities, counties and states around the country.

Combine Equitable Development Practices with Traditional Economic Development Tools Like Business Incentives. Alongside strong accountability measures, traditional tools like business incentives can be dramatically improved by adopting key equitable development practices. The first is to target incentives to retaining and supporting existing, locally-owned businesses, rather than relying on branch plants and headquarters from outside the state. Dollars spent on locally-owned businesses have long been understood to have a bigger economic impact as they circulate through the local economy than mobile firms based in other states.

A second key strategy is to direct incentives to firms in key supply chains or in industries supported by comprehensive development strategies that combine workforce training, research and development, and small business development to build out entire sectors. The growth of biotech and aerospace in North Carolina are good examples. These sector development efforts have been shown to improve the job creation and investment outcomes for the incentive projects in those industries.

Connect Marginalized Workers to Jobs Through First Source Hiring Agreements with Employers. As discussed above, targeted or first source hiring is a policy designed to ensure that private sector businesses and local governments recruit and hire disadvantaged employees. Local governments and community-based organizations across the country have successfully used first source hiring as a way of targeting training, economic development, public jobs, and public contracts to residents of the economically distressed areas or neighborhoods that most need job training and employment opportunities. First source hiring policies often require businesses receiving economic development incentives to give preference in their pre-employment screening and hiring processes to potential employees recommended by a specific, named intermediary, often a community college or community-based training organization. For example, a local community college could recruit students from a distressed neighborhood into a customized training program created for a specific employer. The students receive customized training and then are given preference for interviews and screening with the employer once they’ve completed the program.

18. Promote and Fund Affordable Housing

There is an unprecedented national housing affordability, habitability, and eviction crisis that requires a bold statewide response. Across the country, nearly 11 million renters pay over half of their income for rent and utilities, and tenants, manufactured homes residents, and low-income homeowners are rising up for housing justice in response. The affordable housing and eviction crises have grown significantly worse with no minimum wage worker able to afford a 2 bedroom apartment anywhere in the country without paying more than 30% of their income in rent. At the same time, the vast majority of tenants are without rent or eviction protections, leaving them at the whim of corporate landlords to raise rents, decreasing families’ economic security. According to the Eviction Lab, one out of four severely rent-burdened families spends over 70% of their income on rent and utilities and only one in four families who qualify for affordable housing receive housing assistance.

Key best practices for state based interventions to significantly address the affordable housing crisis and alleviate evictions are (1) expanding state funding for affordable housing, and (2) passing a comprehensive program of tenant protections including rent controls and just cause eviction protections.

Fund Affordable Housing. The greatest housing crisis exists for the lowest income renters who are most at risk of homelessness and displacement. States can alleviate the housing crisis through fully funding public housing and preserving at-risk affordable housing, as well as through fully funding housing trust funds, rental assistance programs, and state-based affordable housing programs. States should prioritize housing programs for both preservation and new construction for low-income and extremely low-income tenants, defined as those earning under 50% of Area Median Income, with a priority for those earning under 30% of Area Median Income.

Protect Tenants. The vast majority of renters live in unregulated housing without tenant protections, leaving them at great risk to housing insecurity. States should expand and strengthen tenant protections through implementing state-based rent control and just cause eviction protections to limit rents and increase eviction protections—and by repealing preemption to empower cities to adopt such protections. Rent control is a system of tenant and rent protections that can curb the crisis of evictions, displacement, and housing unaffordability. It protects tenants from profiteering landlords through a combination of rent restrictions, just cause eviction protections, and a system of holding landlords accountable for poor and uninhabitable conditions. Beyond rent control, states should increase resources to legal services for eviction defense; implement renters’ tax credits; create anti-discrimination protections for those using Section 8 and other assistance programs; and fund robust code enforcement to improve conditions and services for substandard and uninhabitable housing.

Paul Sonn, National Employment Law Project (NELP), psonn@nelp.org

Naomi Walker, Economic Analysis and Research Network (EARN),
Economic Policy Institute (EPI), nwalker@epi.org

The same year, the National Advisory Commission on Civil Disorders, better known as the Kerner Commission, delivered a report to President Johnson examining the causes of civil unrest in African American communities. The report named “white racism”—leading to “pervasive discrimination in employment, education and housing”—as the culprit, and the report’s authors called for a commitment to “the realization of common opportunities for all within a single [racially undivided] society.”1 The Kerner Commission report pulled together a comprehensive array of data to assess the specific economic and social inequities confronting African Americans in 1968.

Where do we stand as a society today? In this brief report, we compare the state of black workers and their families in 1968 with the circumstances of their descendants today, 50 years after the Kerner report was released. We find both good news and bad news. While African Americans are in many ways better off in absolute terms than they were in 1968, they are still disadvantaged in important ways relative to whites. In several important respects, African Americans have actually lost ground relative to whites, and, in a few cases, even relative to African Americans in 1968.

Following are some of the key findings:

• African Americans today are much better educated than they were in 1968 but still lag behind whites in overall educational attainment. More than 90 percent of younger African Americans (ages 25 to 29) have graduated from high school, compared with just over half in 1968—which means they’ve nearly closed the gap with white high school graduation rates. They are also more than twice as likely to have a college degree as in 1968 but are still half as likely as young whites to have a college degree.
• The substantial progress in educational attainment of African Americans has been accompanied by significant absolute improvements in wages, incomes, wealth, and health since 1968. But black workers still make only 82.5 cents on every dollar earned by white workers, African Americans are 2.5 times as likely to be in poverty as whites, and the median white family has almost 10 times as much wealth as the median black family.
• With respect to homeownership, unemployment, and incarceration, America has failed to deliver any progress for African Americans over the last five decades. In these areas, their situation has either failed to improve relative to whites or has worsened. In 2017 the black unemployment rate was 7.5 percent, up from 6.7 percent in 1968, and is still roughly twice the white unemployment rate. In 2015, the black homeownership rate was just over 40 percent, virtually unchanged since 1968, and trailing a full 30 points behind the white homeownership rate, which saw modest gains over the same period. And the share of African Americans in prison or jail almost tripled between 1968 and 2016 and is currently more than six times the white incarceration rate.

Educational attainment

The most important development since 1968 is that African Americans today are much better educated than they were in 1968. These absolute improvements in educational attainment—including substantial increases in both high school and college completion rates—have opened important doors for black workers compared with their counterparts 50 years ago. In relative terms, African Americans today are almost as likely as whites to have completed high school. But even though the share of younger African Americans with a college degree has more than doubled, African Americans today are still only about half as likely to have a college degree as whites of the same age.

High school graduation rates. Over the last five decades, African Americans have seen substantial gains in high school completion rates. In 1968, just over half (54.4 percent) of 25- to 29-year-old African Americans had a high school diploma. Today, more than nine out of 10 African Americans (92.3 percent) in the same age range had a high school diploma. (See Table 1 for all data presented in this report.)

The large increase in high school completion rates helped to close the gap relative to whites. In 1968, African Americans trailed whites by more than 20 percentage points (75.0 percent of whites had completed high school, compared with 54.4 percent of blacks). In the most recent data, the gap is just 3.3 percentage points (95.6 percent for whites versus 92.3 percent for African Americans).

College graduation rates. College graduation rates have also improved for African Americans. Among 25- to 29-year-olds, less than one in 10 (9.1 percent) had a college degree in 1968, a figure that has climbed to almost one in four (22.8 percent) today.

Over the same period, however, college completion expanded for whites at a similar pace, rising from 16.2 percent in 1968 to 42.1 percent today, leaving the relative situation of African Americans basically unchanged: in 1968 blacks were just over half (56.0 percent) as likely as whites to have a college degree, a situation that is essentially the same today (54.2 percent).2

We would expect that these kinds of increases in the absolute levels of formal education would translate into large improvements in economic and related outcomes for African Americans. The rest of our indicators test the validity of this assumption.

Unemployment

The unemployment rate for African Americans in 2017 (the last full year of data) was 7.5 percent, 0.8 percentage points higher than it was in 1968 (6.7 percent). The unemployment rate for whites was 3.8 percent in 2017 and 3.2 percent in 1968.3

The unemployment data for these two years, almost 50 years apart, demonstrate a longstanding and unfortunate economic regularity: the unemployment rate for black workers is consistently about twice as high as it is for white workers.

Wages and income

Hourly wages. The inflation-adjusted hourly wage of the typical black worker rose 30.5 percent between 1968 and 2016, or about 0.6 percent per year. This slow rate of growth is particularly disappointing given the large increase in educational attainment among African Americans over these decades.

Even slower real wage growth (about 0.2 percent per year) for the typical white worker—albeit starting from a higher initial wage—meant that African Americans did modestly close the racial wage gap over the last five decades. But, in 2016, by the hourly wage measure used here, the typical black worker still only made 82.5 cents on every dollar earned by the typical white worker.4

Household income. The inflation-adjusted annual income of the typical African American household increased 42.8 percent between 1968 and 2016, slightly outpacing income growth for the typical white household (36.7 percent). But the typical black household today still receives only 61.6 percent of the annual income received by the typical white household.5

Poverty rates. The share of African Americans living in poverty has declined substantially in the last five decades. Using the official federal poverty measure as a benchmark, over one-third (34.7 percent) of African Americans were in poverty in 1968. Today, the share in poverty is just over one in five (21.4 percent). For whites, the decline in the poverty rate was much smaller, from 10.0 percent in 1968 to 8.8 percent in 2016. In the most recent data, African Americans are about 2.5 times as likely to be in poverty as whites. (In 1968, they were 3.5 times as likely to be in poverty.)6

Family wealth

The typical black family had almost no wealth in 1968 ($2,467; data refer to 19637). Today, that figure is about six times larger ($17,409), but it is still not that far from zero when you consider that families typically draw on their wealth for larger expenses, such as meeting basic needs over the course of retirement, paying for their children’s college education, putting a down payment on a house, or coping with a job loss or medical crisis.

Over the same period, the wealth of the typical white family almost tripled, from a much higher initial level. In 2016, the median African American family had only 10.2 percent of the wealth of the median white family ($17,409 versus $171,000).8

Homeownership. One of the most important forms of wealth for working and middle-class families is home equity. Yet, the share of black households that owned their own home remained virtually unchanged between 1968 (41.1 percent) and today (41.2 percent). Over the same period, homeownership for white households increased 5.2 percentage points to 71.1 percent, about 30 percentage points higher than the ownership rate for black households.9

Health

Infant mortality. Over the last five decades, African Americans have experienced enormous improvements in infant mortality rates. The number of deaths per 1,000 live births has fallen from 34.9 in 1968 to 11.4 in the most recent data. Over the same period, whites have also seen dramatic reductions in infant mortality, with rates falling from 18.8 to 4.9 by the same measure.

In relative terms, however, African Americans have fallen behind. In 1968, black infants were about 1.9 times as likely to die as white infants. Today, the rate is 2.3 times higher for African Americans.10

Life expectancy. African Americans’ life expectancy at birth has also increased substantially (up 11.5 years) between 1968 and today, outpacing the increase for whites (up 7.5 years). But an African American born today can, on average, still expect to live about 3.5 fewer years than a white person born on the same day.11

Incarceration

The share of African Americans in prison or jail almost tripled between 1968 (604 of every 100,000 in the total population) and 2016 (1,730 per 100,000).

The share of whites in prison or jail has also increased dramatically, but from a much lower base. In 1968, about 111 of every 100,000 whites were incarcerated. In the most recent data, the share has increased to 270 per 100,000.

In 1968, African Americans were about 5.4 times as likely as whites to be in prison or jail. Today, African Americans are 6.4 times as likely as whites to be incarcerated, which is especially troubling given that whites are also much more likely to be incarcerated now than they were in 1968.12

Table 1

Appendix: Data notes

Making comparisons over five decades is challenging. Data sources collected across so many years are not always directly comparable. One issue is that most government data in the 1960s grouped the population into only two groups: “white” and “nonwhite.” Following the Kerner Commission and other researchers, our figures here use the “nonwhite” data as a proxy for the circumstances of African Americans at the time. We are confident that the “nonwhite” data do a reasonably good job capturing the experience of African Americans. The 1970 census, which included more detailed information on race than most government data in the 1960s, estimates that people from races other than white and African American (primarily Native Americans and Asians) constituted only about 1.4 percent of the U.S. population at the time. The 1980 census allowed respondents of any race to identify themselves as Hispanic, and in that year only about 7 percent did so.

A second issue is that data specifically for 1968 are not always available. In these cases, we either use data for the closest available year, or we use data for years before and after 1968 (usually 1960 and 1970) and interpolate. Our data for “2018” are the most recent data available for each of the indicators we examine, typically either 2015, 2016, or 2017 data.

Endnotes

1. Report of the National Advisory Commission on Civil Disorders: Summary of Report (U.S. Government Printing Office), downloadable at www.hsdl.org.

2. Data for high school and college graduate rates among adults ages 25–29 are from the National Center for Education Statistics, “Table 104.20. Percentage of Persons 25 to 29 Years Old with Selected Levels of Educational Attainment, by Race/Ethnicity and Sex: Selected Years, 1920 through 2017,” 2017 Tables and Figures, accessed February 4, 2018, at nces.ed.gov/programs/digest. The most recent year is 2016. The 1968 figure is estimated as 0.2 times the figure for 1960 and 0.8 times the figure for 1970.

3. For 1968, unemployment data are from the Council of Economic Advisers, “Table B-43. Civilian Unemployment Rate by Demographic Characteristic, 1968–2009,” in Economic Report of the President 2010 (U.S. Government Printing Office), accessed February 4, 2018, at www.gpo.gov/fdsys. For 2018 (2017 data), we use Bureau of Labor Statistics data, data tools, www.bls.gov/data/#unemployment, series ID LNU04000003 and LNU04000006, accessed February 4, 2018.

4. Median hourly wage data are from EPI analysis of March Current Population Survey data for calendar years 1968 and 2016. Data for 1968 are converted to 2016 dollars using the CPI-U-RS chained to the CPI-U-X1.

5. Median household income data are from the U.S. Census Bureau, “Table H-5. Race and Hispanic Origin of Householder—Households by Median and Mean Income: 1967 to 2016,” Historical Income Tables, accessed February 4, 2018, at www.census.gov. The most recent year is 2016. Data for 1968 are converted to 2016 dollars using the CPI-U-RS chained to the CPI-U-X1.

6. Poverty rate data are from the U.S. Census Bureau, “Table 2. Poverty Status of People by Family Relationship, Race, and Hispanic Origin: 1959 to 2016,” Historical Poverty Tables, accessed February 4, 2018, at www.census.gov.

7. As noted in the appendix, data for 1968 are not always available. In this case, we use data for the closest available year, 1963.

8. Median household wealth data are from an Urban Institute analysis of Survey of Consumer Finances data, presented in “Chart 3: Average Family Wealth by Race/Ethnicity, 1963–2016,” in Nine Charts about Wealth Inequality in America, updated October 24, 2017. Data refer to 1963 and 2016. Data for 1963 are converted to 2016 dollars.

9. Homeownership rate data are from Laurie Goodman, Jun Zhu, and Rolf Pendall, “Are Gains in Black Homeownership History?” and accompanying downloadable spreadsheet, Urban Institute, February 15, 2017. The 1968 figure is estimated as 0.2 times the figure for 1960 and 0.8 times the figure for 1970. Most recent data refer to 2015.

10. Infant mortality rate data are from the Centers for Disease Control and Prevention, “Table 11. Infant Mortality Rates, by Race: United States, Selected Years 1950–2015,” Health, United States, 2016—Individual Charts and Tables, accessed February 4, 2018, at www.cdc.gov/nchs/hus. The 1968 figure is estimated as 0.2 times the figure for 1960 and 0.8 times the figure for 1970. Most recent data refer to 2015. The 1968 data are based on the race of the child; the 2015 data are based on the race of the mother.

11. Life expectancy data are from the Centers for Disease Control and Prevention, “Table 15. Life Expectancy at Birth, at Age 65, and at Age 75, by Sex, Race, and Hispanic Origin: United States, Selected Years 1900–2015,” Health, United States, 2016—Individual Charts and Tables, accessed February 4, 2018, at www.cdc.gov/nchs/hus. The 1968 figure is estimated as 0.2 times the figure for 1960 and 0.8 times the figure for 1970. Most recent data refer to 2015.

12. Incarcerated population data are from the authors’ calculations based on unpublished tabulations by Kris Warner of the Center for Economic and Policy Research, using Bureau of Justice Statistics and U.S. Census Bureau data.

First, there was no mincing of words as to what has happened:

“It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation’s history, among them the high value Americans have traditionally placed on equality of opportunity.”

I appreciate both the straightforward description of the rise of both income and wealth inequality, and the explicit connection between these growing inequalities and the threat this poses to future generations’ upward mobility and opportunity. Our current economic discourse on these matters is very confused. Let’s be clear on our terms. When we talk about social mobility, or ”opportunity,” we are talking about the ability of the members of the next generation who are starting at the bottom of the income ladder (i.e. growing up poor) to climb that ladder and be better off than their parents in either an absolute sense (having more money) or a relative one (ranking higher in the income distribution, such as being in the middle or the top fifth rather than the bottom fifth). Income inequality, meanwhile, is how far apart the rungs on the income ladder are, and whether the incomes produced over the next ten or twenty years are narrowly or widely shared. Conservatives seem to only be concerned with facilitating opportunity or social mobility, and consider income inequality itself not a worthy focus of policy—presumably because markets have produced these outcomes and markets know best. Some on the center-left also seem to want to focus solely on social mobility, because they think ”income inequality” polls poorly. Or perhaps they want to help the poor, and feel that we can do so without addressing income inequality more generally, which would involve tackling the oversized income gains of the top one percent (after all, one must raise campaign funds from them). Along these lines, various reporters have noted the Obama administration backing away from making ”income inequality” a key issue and shifting to a focus on opportunity or mobility.

Is this tenable, deciding to focus on the upward mobility of today’s poor children without any focus on the incomes and wealth of their parents and the circumstances of their lives—where they live, in what housing, with what safety, and so on? Janet Yellen would say no, you cannot address social mobility without also addressing income inequality. As she noted this week, “to the extent that opportunity itself is enhanced by access to economic resources, inequality of outcomes can exacerbate inequality of opportunity, thereby perpetuating a trend of increasing inequality.” Later in the speech, she pointed out “that economic mobility and income inequality among advanced countries are negatively correlated.”

She’s saying that today’s poverty limits the upward mobility of those growing up in poverty, which surely makes sense, besides being validated by reams of research. It is great to teach children “grit”, to instruct them to avoid having children in their teens, to provide the best teachers and schooling possible. At the same time, children’s lived experiences matter and frequently limit their ability to advance educationally. Success in school is not as easy for someone who frequently changes schools, has no one to help them with homework, has few role models of success, has more exposure to lead and asbestos, has untreated vision, ear, dental or other health problems, lives in a chaotic and frequently unsafe environment where stress is high and choice (and the experience of choosing) must be limited, spends afternoons and summers hanging out rather than attending a high quality after-school program and  summer camp, is not provided tutors when struggling and has parents with little literacy themselves so is read to infrequently (if at all),  is engaged in less complex conversation at home, and has limited access to books.

Acknowledging that income inequality and poverty greatly affect schooling success does not mean we should not invest in schools, early childhood education, and good teachers. Rather, it means we need to take income disadvantage into account as we provide compensatory education programs for low income children, providing them and their families with the needed social services and medical supports (health clinics in schools, for instance), providing after-school and summer programs, and providing quality early childhood educational experiences so that the inequalities we observe in kindergarten can be reduced. Acknowledging that income inequality and poverty greatly affect schooling success also means we need to improve the circumstances of poor children’s lives by moving them out of poverty and providing stable, adequate housing, health and safe environments. We should be bold enough to acknowledge that if we fail to improve these circumstances, having “high expectations” for disadvantaged children’s success is little more than self-delusion and posturing.

Besides, does it really make sense to be concerned about how fast someone can climb the income ladder but have no concern with what it means to live on the lower or middle rungs? After all, some people are always going to end up on the bottom and middle rungs. Seems to me that we should also be concerned that low and moderate income families have a decent life, which means we must be concerned with their incomes, which means, in effect, the wages they earn on their jobs.

Tackling income inequality necessarily moves us into some issues that many seem to want to avoid. One is that we will need to restrain the income growth of the top one percent, which primarily means getting executive pay and the size and pay of the financial sector under control. After all, if the top one percent keeps receiving twenty-to-twenty-five percent of all income (rather than the ten percent share in the late 1970s) there is much less available for low and middle-income families. The other is that we will need to focus on generating broad-based wage growth. Wages provide the vast majority of the incomes of the broad middle class, and the bottom fifth of households receive about seventy percent of their income from wages and the wage-related safety net (i.e. the EITC). Generating broad-based wage growth is how we can lift people out of poverty and build middle class incomes. (That is why EPI launched our new initiative, Raising America’s Pay.)

The only race-conscious admissions programs the Court continues to permit is the pursuit of “diversity.”  Universities may seek to ensure that their entering classes include a few violinists, jai-alai players, modern dancers, chess whizzes, computer nerds and, oh yes, some African Americans as well. This is a very small hoop through which admissions officers can jump.

In response, many liberals have attempted to develop a proxy for affirmative action—policy to increase the admission of African Americans by selecting characteristics that are not specifically black, but that in practice heavily favor blacks. The most common proxy is favoring the admission of low-income students of all races, or the admission of students of all races who live in low-income communities. As Justice Ginsburg has observed, “only an ostrich” can pretend that such policy is colorblind, because everyone knows that its true purpose is to evade the Court’s prohibition of affirmative action for African Americans.

But so far, the subterfuge has worked. The academic top-tier public universities in Texas, California, and Florida have guaranteed admission to graduates with the best grade-point averages from each high school in their states. Because large numbers of African Americans in these states are trapped in segregated low-income neighborhoods, the top students from ghetto high schools are guaranteed university admission, even if their academic qualifications are weaker than those of students who are not guaranteed admission but who attend high schools in middle class communities. Some private colleges have also developed policies that favor low-income students and these, too, necessarily enroll a disproportionate number of African Americans.

The most articulate defense of this approach is a book published earlier this year by Sheryll Cashin, Place, Not Race. In a blog post here, and in a review in The American Prospect, I criticized it because a focus on low income communities bypasses middle class African Americans who are fully qualified for elite universities but who remain under-represented at those institutions from the continued effects of centuries of public policy, first to enslave and then to subjugate African Americans. In consequence, black families and their children suffer from compounded and inherited disadvantages that are unique, not like those of white or immigrant families who happen to be from lower social classes or who happen to live in low income neighborhoods.

Professor Cashin has now written a letter to The American Prospect, taking issue with my review. I replied, she responded to my reply, and I then responded to her. The full exchange is on the magazine’s website.

There is a sharp distinction between policies to enhance upward mobility for all children who are socio-economically disadvantaged, and policies (like affirmative action) to compensate for the nation’s relegation of African Americans to lower-caste status. It is desirable, and admirable, for selective colleges and universities to contribute to efforts to make the social class structure more fluid by recruiting socio-economically disadvantaged students, regardless of race. Seeking such students is a policy choice on the institutions’ part, and while admirable, there is no legal requirement that they pursue it.

Specific recruitment of African Americans, in contrast, should not be seen as a voluntary policy choice but rather as a Constitutional obligation to remedy past discrimination. That our reactionary Supreme Court has misinterpreted the Constitution to deny this obligation is no excuse for progressives to forget the distinction.

My magazine review of Place, Not Race described how federal housing policy in the mid-twentieth century explicitly forbad suburban developers from selling homes to African Americans, how black working class families consequently did not acquire wealth from housing equity appreciation as did white working class families, and how, as a result, African American families who were denied the opportunity to move to the suburbs have been less able to afford to send their children, and their children’s children to college. Race-based affirmative action can help to remedy this result.

Professor Cashin’s letter proposes that recruitment of students from low-income communities could “help the vast majority of black and Latino children who currently suffer the disadvantages of segregation.” I reply that it is inappropriate to expect selective universities to help the vast majority of such children. We have an unfortunate tendency to place the burden of solving our social and economic inequalities too heavily on educational institutions, while ignoring social and economic policies that government should be taking to reduce inequality and enhance social mobility.

Attempting to help the vast majority of disadvantaged children by reforming the admissions policies of elite universities is of a kind with contemporary federal policy for K-12 education, which expects greater accountability for educators to close the academic achievement gap, without remedying the causes of low performance of disadvantaged children – parental unemployment and low wages, poor health care, unstable housing, inadequate early childhood literary experiences, residential segregation, and absence of high-quality after-school and summer experiences.

Our regular elementary and secondary schools should certainly try to do a better job of educating disadvantaged children. And selective colleges and universities should seek out and recruit academic high-performers from disadvantaged communities. But the chief responsibility for narrowing economic inequality and enhancing upward mobility lies elsewhere—as I write on the American Prospect website, the solution to inequality and blocked mobility is not affirmative action but progressive economic policy: “a more redistributive tax system, higher minimum wages, support for collective bargaining, reducing the cost of higher education, refinance of sub-prime mortgages, labor market reform (like current campaigns against arbitrary and flexible part-time work schedules), legalization of ‘dreamers,’ expansion of Medicaid in states that have refused it, etc. Such policies will enable many more students from low-income neighborhoods to succeed in K-12 schools and then in post-secondary education and will make it more likely that in the next generation their own children will become competitive for the most selective colleges. Affirmative action cannot shoulder the entire burden of the fight against American inequality and blocked mobility.”

Sheryll Cashin’s attempt to find ways around the Supreme Court’s colorblindness is not objectionable. It is necessary. For the time being, the current Court majority defines the outlines of permissible policy. Rather, what is objectionable is accommodation to the Court majority without protest.

It is one thing to seek alternatives to race-based affirmative action that approximate affirmative action’s goals. It is quite another to defend such alternatives as the most desirable policy, to suggest (as Professor Cashin and her many allies do) that preferences for students from socio-economically disadvantaged families are superior to preferences for African Americans, and that, as I wrote in my response to Professor Cashin, if Justice Roberts hadn’t given us colorblind policy restrictions, we should have invented them ourselves: “We are, after all, possibly one Supreme Court vote away from a return to enforcing the intent of the 13th and 14th Amendments not only to abolish slavery but to abolish what an earlier and more faithful court majority called the ‘badges and incidents’ of slavery and of subordinate caste status, and their ongoing effects. The election of a Democratic president in 2016 and the retirement of a Republican justice will not, however, guarantee such a return. A new court majority will not proclaim loudly what liberals fear to whisper. If progressives follow Professor Cashin’s lead and now throw in the towel on race-based affirmative action, we can be assured that a better Supreme Court majority will not dare to correct them.”