Our decisions about whom and how to tax are decisions about which community needs we have the capacity to address and at what scale. Progressive taxes like personal, investment, and corporate income taxes generate more revenue from those who have the greatest ability to pay, and for whom the cost of losing the next dollar is small, relative to the last dollar of a family struggling to make rent and afford groceries. On the other hand, regressive revenue strategies like non-strategic tariffs, fees and fines, and an overreliance on sales taxes, especially when combined with cuts to social programs, heighten the sense that the system is unfair. Where progressive revenue strategies can bind a community together in mutual support and expand capacity to meet needs through good governance, regressive strategies erode people’s trust in the public sector.

H.R. 1 presents a vision of public finance that is unsustainable and erodes trust in government

Much of the federal tax code is in fact progressively structured, but for decades conservatives have weakened and attacked that progressivity. H.R. 1 (which the White House has referred to as the “One Big Beautiful Bill Act” or “OBBBA”) is the latest Republican-led effort toward breaking down trust in the public sector and social contract. H.R. 1 provides a suite of tax breaks to households across the income distribution; however, the wealthiest households and corporations see a far bigger tax cut from the package than the typical household does. In service to these tax breaks, the bill introduces devastating cuts to Medicaid, SNAP, and critical government agencies designed to help workers and their families thrive. Despite their size and the pain they will cause, these drastic cuts in the federal government’s capacity to serve and support working families are not enough to cover the costs of the corporate tax breaks; the Tax Policy Center estimates that H.R. 1 could increase the federal deficit by between $3.7 trillion and $5.1 trillion by 2034.

But unlike the federal government, states and localities cannot run budget deficits; their budgets must be balanced yearly. When major federal cuts happen, states and localities that rely on federal dollars to maintain critical services are forced to curtail and eliminate services, dive into emergency savings where they exist, or else shift to revenue generation strategies that often fall disproportionately on Black, brown, and poor households. The combination of directly hampering public services working people rely on while shifting more of the burden of raising revenue toward Black, brown, and poor workers and their families weakens worker power and exacerbates racial disparities.

H.R. 1 combines a shift toward regressive revenue strategies with massive tax breaks to corporations and the wealthiest households, in service to the Trump administration’s overarching goal: reasserting white, wealthy, and corporate privilege through tax cuts, deregulation, and the defunding of public institutions.

Regressive revenue strategies: Taking from the poor to give the rich even more breaks

The Trump administration has floated using tariffs as a replacement (either in full or part) for the federal income tax. This is not a new Republican strategy: Tariffs are a kind of consumption tax (on imported goods, along with the intermediate products businesses need to create goods and provide services domestically), and Republican-led state governments tend to rely more on consumption taxes1 (like sales taxes) and less on income taxes to increase revenue. Because poorer households spend a larger share of their income purchasing goods and services than the rich do, consumption taxes are inherently more regressive. The current federal income tax is progressively structured, in spite of the ways conservatives have attempted to weaken that progressivity over time. While tariffs can be a sensible part of a larger industrial policy strategy, governments place too large a burden on low- and moderate-income households when they try to use consumption taxes as a primary source of revenue. 

States and localities may turn to fines and fees to raise revenues in the absence of adequate federal support. These penalties are a poor substitute for progressive taxes. Fines and fees historically have only been able to cover a small fraction of state and local budget costs. And this is baked into the design: If the point of a fine or fee is to deter behavior, the best-case scenario (ending the behavior) would result in no revenue.

Even so, fines and fees cause significant economic pain for working-class families in the Black communities that are most affected by them. On an ethical level, a modern idiom applies: “If the penalty for a crime is a fine, that crime only exists for the poor.” The criminal justice system can trap poor folks in a cruel cycle of penalization for being unable to pay traffic tickets, court fees, and even their own surveillance through ankle monitors. Fines and fees increase the economic burden on those with the least ability to pay, all for a low return, making them a poor substitute for broad, progressive taxes.

Faux-progressive revenue strategies are ineffective and distract workers, their families, and policymakers from the need for real change

Ineffective tax gimmicks like temporary deductions on overtime and tipped income distract from the need for real reform around worker pay and scheduling. The point of requiring businesses to pay time-and-a-half for overtime is to discourage pushing workers to work beyond what we have collectively decided is a full and reasonable period of labor. Tipping is an outdated practice with racist roots, designed to shift the cost of maintaining a workforce onto consumers, rather than having employers properly compensate employees. Instead of cynically gesturing toward affordability through encouraging bad business practices, we should empower workers to fight for better wages and consistent scheduling.

Conservatives may also try to balance budgets by allowing progressive tax expenditures to expire (e.g., the recent expiration of the ACA premium tax credits or the expiration of the expanded child tax credits passed as pandemic relief). Temporary tax breaks themselves are not the most effective means of addressing structural economic issues; if health care or health insurance is persistently inaccessible to wide swaths of the population, we should seek to remedy that by making access universal—or, at the very least, making the credits that allowed greater access in the first place permanent. Allowing tax breaks implemented to address structural inequities to expire without an alternative solution to the problem being addressed is negligence. There are ways to balance budgets that do not involve reversing hard-won progress toward equity.

Progressive ways to generate revenue: Worker-centered tax policies can reduce inequality and expand the tax base

There are better ways of raising revenue that will support workers and their families, rebuild public trust in government, and get us the public goods and services we want and need. Since most Americans earn their living through selling their labor, it makes sense to keep some progressive tax on income to ensure people remain invested in the social contract. But with so much wealth and income concentrated amongst a few individuals, a necessary step is shifting more of the tax burden toward extremely high earners, wealth, and investment income. This will generate more revenue to improve public services and infrastructure, while tamping down on inequality. Adding tax brackets for the highest earners, adopting a legitimate tax on wealth holdings, and taxing the income made from investments at a rate closer to that of income from wages and salaries progressively raise revenues without increasing the burden on most U.S. households.

Proper enforcement of the current tax code would go a long way toward improving both our ability to raise funds and the public’s trust in public finance. The tax code is rife with opportunities for wealthy individuals and corporations to evade paying their fair share of taxes, allowing them to skirt holding up their end of the social contract. The IRS is also critically underfunded and recovering from recent staff reductions from the Trump administration. With enough resources to enforce existing tax law effectively, the IRS could go after the largest tax evaders and see returns that matter, as opposed to disproportionately targeting Black households without the funds to instigate a drawn-out legal battle over an audit.

Table 1

We need a tax code that supports states and localities and promotes full economic participation, not temporary tax gimmicks and handouts to the wealthiest

Taxpayers (literally) cannot afford to accept the conservative propaganda that all taxation is a burden on households. Taxes are one way of binding a democratic community together and allowing us to share in the costs of creating collective prosperity and community. Especially at the state and local levels, tax revenues are essential to providing the services people need to thrive. When federal funding gets pulled back and states and localities turn to regressive revenue strategies, it is working-class families who pay the price.

If we are going to rebuild a sense of trust in the social contract, we need to structure the tax code such that it becomes more progressive, tapping into a greater portion of the massive amounts of wealth and income that have pooled at the top. We can use that revenue to fund programs and new infrastructure that allow more people to fully participate in the economy:

• improved funding for public schooling, increasing teacher pay and quality of education
• a fully funded federal food assistance program, and/or adequate funding to states to support their own cash-assistance programs more comprehensive than Temporary Assistance for Needy Families (TANF)
• expanded access to and adequacy of Medicaid, or Medicare for All

Each of these initiatives could improve affordability and remove the need for state and local governments to pursue revenue regressive strategies that do more harm than good (like fines and fees). We won’t solve every structural inequality and eliminate all disparities through reforming the tax code; but building the resources and will to collect taxes in a progressive way are steps toward a fairer economy and a government that earns the public’s trust.

1. Consumption taxes have some potential uses. Carbon taxes, for example, tax the consumption of goods whose production intensively uses greenhouse gas-emitting inputs; if consumers look to avoid these goods by switching to others whose production involves fewer greenhouse gas emissions, we achieve an important social good.

Further, the Republican-led One Big Beautiful Bill (OBBB) that passed last year will sharply cut Medicaid and SNAP over the next decade by well over $1 trillion combined.

The combination of these trends—low-road employers paying insufficient wages and big upcoming cuts to Medicaid and SNAP—has led to a flurry of policy proposals at the state level to address them. One proposal—employer assessment fees (EAFs)—appears at first glance to address both problems by imposing a tax on firms that employ workers who receive Medicaid or SNAP, with the tax often calculated as the number of workers receiving these benefits multiplied by the average cost of those benefits. But EAFs are not the optimal solution to either problem and might cause undesirable collateral damage.

Here’s why:

• Medicaid and SNAP do not make it easier for employers to offer lower wages. In fact, they likely raise the wages needed to attract workers—and that’s a good thing.
  • This is not universal across all safety net and income support programs. Some of these, like the Earned Income Tax Credit (EITC), do see some of their benefits likely bypass workers and captured by low-wage employers.
• If you make Medicaid-receiving workers more expensive to employ, then employers will try to employ fewer of them and/or lower their market wages. And if the tax is proportional to the average cost of benefits like Medicaid, this incentive is large.
• Employer assessments fees are generally a large tax imposed on a small base. But revenue is maximized when tax bases are broad.
• The targets of EAFs can be more effectively reached with other policies.
  • Raising minimum wages and passing legislation to strengthen workers’ rights to unionize and bargain collectively are alternative policies for forcing employers to pay more.
  • Broad-based taxes are alternative polices for raising revenue.
    • Higher corporate income taxes or employer-side payroll taxes would be more progressive alternatives for taxing employers.
    • Another alternative would be to penalize firms that don’t offer employer-sponsored health insurance (ESI) to workers. This is not a huge base, but it is by definition wider than those who receive Medicaid (which is just a subset of all workers not receiving ESI through the firm.)

Below, we expand on these points.

Medicaid and SNAP do not make it easier for employers to offer lower wages

A concern is often expressed that Medicaid and SNAP “subsidize” low-wage employers by making it easier for them to offer lower wages. Intuitively, thinking that Medicaid and SNAP subsidize low-wage employers actually gives these employers far too much credit for caring about the living standards of their workers. Higher pay is not given out of the goodness of employers’ hearts—it happens when policy or market conditions change. Medicaid and SNAP do not change labor market conditions in any way that lowers workers’ pay, and when these programs are cut in coming years, low-wage employers are not going to think “we need to raise our wages to help these employees who are seeing cuts to other income sources.” They will instead raise wages only if policy mandates they do or if market conditions change.

In reality, Medicaid and SNAP actually boost lower-wage workers’ meager leverage to demand higher pay by making periods of non-work less miserable. This slightly improved fallback position for low-wage workers keeps them from being forced as quickly by material deprivation into accepting any possible wage offer from employers. Policy changes that reduce how many workers receive Medicaid or SNAP will put further downward pressure on wages. We should support policies that expand the number of workers who have their wages supplemented by safety net programs, not policies that penalize and stigmatize using benefits.

This wage-boosting effect is not universal among all public income support programs. The Earned Income Tax Credit (EITC), for example, pays more as workers supply more hours to the paid labor market. This boost to labor supply puts some downward pressure on market wages and can lead to some of the EITC benefits bypassing workers and being captured by employers (unless it is complemented by strong minimum wages.)

Making workers who receive safety net benefits more expensive will reduce demand for them

If you make workers who receive safety net benefits more expensive for employers to keep on payroll, then you increase the incentive for these employers to hire fewer of them or offer them lower wages.

Supporters of EAFs could argue this logic could be employed against any effort that made workers more expensive, like minimum wages. But minimum wages apply to all workers, and employers by definition cannot lower wages to absorb the higher costs minimum wages impose. Fully substituting away from workers whose pay has been lifted by minimum wages and toward other inputs essentially means employers would have to make costly investments in plant, capital, equipment, and processes.

Conversely, only a small fraction of workers receives safety net benefits. Absent binding minimum wages, employers can lower their market-based pay to recoup the EAFs (at least until they run into the relevant minimum wage in the labor market.) Trying to substitute away from workers who receive safety net benefits toward workers who are less likely to receive these benefits is more doable for employers than substituting away from all lower-wage labor.

These employer efforts to figure out who on their payroll is likely to trigger an EAF could lead to collateral damage. Workers from groups that are more likely to receive safety net benefits might be discriminated against across-the-board, regardless of whether or not they are actually enrolled in Medicaid or SNAP. Basically, EAFs mean that populations who are more likely to use benefits—like low-income single moms—would face even greater barriers in the labor market. Workers of color are also overrepresented among the families who use SNAP and Medicaid.

Further, the direct benefits of broad-based minimum wages to workers are large—all low-wage workers get a raise if their pay was lower than the new minimum. The direct benefits to any worker from an EAF is nonexistent—their pay does not rise, and they are not more likely to receive employer benefits.

The indirect benefits of EAFs are simply the revenue they raise, and if this revenue can be raised in less costly ways, then EAFs are not optimal.

EAFs are a large tax on a small base

Workers who receive Medicaid benefits constitute roughly 10% of the overall workforce (and their share of total hours is significantly less than this). This is a relatively small base for a tax. But the size of proposed EAFs is often quite large, sometimes as large as the average Medicaid benefit. This benefit can reach more than $9,000 annually in many states. For a full-time, year-round worker making $15 an hour, this constitutes a tax on employers equivalent to 30% of that worker’s entire earnings.

Large taxes on small bases often lead to behavioral responses that erode the revenue gained from the tax. The large value of the tax incentivizes this avoidance behavior, and the small base allows substitution away from workers who trigger the tax. This means that EAFs would raise—at best—a highly uncertain amount of revenue and could well end up raising small amounts.

Sometimes, behavioral responses to taxes that reduce the revenue they raise are socially useful. For example, when cigarette taxes lead to reduced smoking or even when workers facing higher taxes are able to voluntarily substitute more leisure for work. But the behavioral response to EAFs that lowers the revenue gained from them also directly inflicts harm on low-wage workers.

There are better alternatives for the policy goals of EAFs

The recent pushes to use EAFs come from very good impulses: the desire to force employers to pay more and stop defecting on the social contract, and the desire to raise revenue so that states can buffer their residents from the terrible coming effects of the OBBB.

But there are better alternatives to achieve these goals. To raise wages, higher minimum wages are an obvious first step. A second step is policy changes that better enable willing workers to form unions and bargain collectively, even in the face of steep employer resistance. Policymaker inaction has largely destroyed the fundamental right of association in much of the U.S. labor market. Reversing this would, in the long run, solve many of the problems of employer behavior that EAFs are trying to target.

There are also better sources to raise reliable revenue to buffer residents from the OBBB’s steep cuts. If the desired target for these revenue increases is employers, higher corporate income taxes or higher employer-side payroll taxes (for all workers) could be used. Another revenue source specifically targeted at low-road employers could be increasing penalties for firms based on the number of their employees who are not covered by employer-sponsored health insurance through the workplace. This is not a huge tax base, but it is by definition larger than just employers with workers receiving Medicaid, as it would also include workers with no coverage at all. Further, this tax would incentivize the provision of ESI to more workers, a good thing in itself.

What is happening?

At a time when working-class families are already facing a weakened job market, high prices, and general economic uncertainty due to erratic federal policy, Republicans in Congress seem committed to worsening their economic anxieties. The enhanced ACA premium tax credits, instituted with the American Rescue Plan (ARPA) and extended through the Inflation Reduction Act (IRA), were not extended through the Republican-led reconciliation budget. These credits have led to the largest increase in health insurance coverage since the ACA’s Medicaid expansion, and saved enrollees on average $705 annually in 2024.

Working-class families across the country will feel the implications of this policy failure as health insurance premiums rise (Groundwork Collaborative 2025). However, Black families, who face higher rates of poverty and uninsurance even under “normal” circumstances, are positioned to be hit especially hard by the loss of the enhanced subsidies. The loss of the premium tax credits is also set to economically drain the cities where lots of Black families live, especially those cities in states that neglected to expand health coverage through the ACA (Ortaliza 2025).

This analysis will focus on 10 major metro areas: Atlanta, Chicago, Dallas, Detroit, Houston, Los Angeles, Miami, New York, Philadelphia, and Washington, D.C.

Impact on Black families across 10 major metro areas

The Affordable Care Act, largely through its Medicaid expansion in 2014, set in motion a decade-long trend of falling rates of uninsurance throughout the country (Ortaliza, McGough, and Cox 2025; Hill et al. 2025). However, some states, particularly those throughout the South where the majority of Black Americans live and work, refused to expand Medicaid through the ACA (Childers 2023). Southern states’ refusal to expand access to Medicaid has meant lower coverage rates in those states and that a large share of Black Americans fall into what is known as the health insurance “coverage gap”; that is, they qualify for neither Medicaid nor traditional ACA subsidies (Lukens and Harker 2024). Even outside the coverage gap, many individuals who do qualify for ACA subsidies remain uninsured due to cost and enrollment difficulties.

The enhanced ACA premium tax credits do not eliminate racial disparities in health insurance coverage, nor do they close the coverage gap faced by Black Americans. However, the tax credits do make insurance more affordable, and thus practically more accessible, for those individuals who qualify. This increase in accessibility has led to the largest increase in Marketplace enrollment since the Medicaid expansion, with outsized increases among low-income individuals and in states that did not expand Medicaid. The loss of the tax credits would reverse hard-won progress made in reducing racial disparities in uninsurance rates (Buettgens et al. 2025).

Table 1

Figure A

Younger and healthier individuals are more likely to forgo coverage when faced with a sharp increase in the price of insurance compared with those who are less healthy and for whom coverage is less optional (Monaghan 2014). The expiration of the tax credits will therefore likely bring a knock-on increase in premiums as younger enrollees forgo coverage, since insurance premiums are cheaper for everyone when there is a large pool of healthier enrollees.

The remaining enrollees in the insurance pool of each metro area will also see premiums, and thus their health care spending, increase. Given that the states where larger shares of the Black population live are those set to be hit hardest by increased rates of uninsurance, we anticipate that the impact on consumption in metro areas in those states will be more severe.

Table 2

Access to health care in the United States is largely mediated by health insurance coverage. As a result, losing coverage in most cases means losing access to adequate and necessary care. Indeed, though access to health insurance does not guarantee affordability, uninsured adults are nearly twice as likely to report some difficulty in affording health care compared with those with insurance, with three-quarters either skipping or postponing needed care due to cost (Sparks et al. 2025).

Over time, a lack of access to adequate health care contributes to excess mortality. Black Americans are more likely to be uninsured, more likely to face difficulties in affording health care, and are thus more likely to postpone or skip care due to cost. To the extent that the expiration of the enhanced premium tax credits does lead to reduced health care access, it will likely also lead to excess mortality (Sommers, Long, and Baicker 2014).

Table 3

The loss of the enhanced premium tax credits will have knock-on economic costs, in addition to the public health costs resulting from excess mortality and increased health care costs for remaining marketplace enrollees. We assume a multiplier of 1.8 for health care spending, meaning that every lost dollar in premium tax credits reduces economic activity in a given metro area by $1.80 (estimates range from a multiplier of 1.5 to 2; see methodology section). Metro areas with large Black populations in states that lack Medicaid expansion will face significant losses in economic activity from this reduction in federal spending.

Table 4

Metro areas with large Black populations will also suffer significant productivity losses due to diminished worker health, assuming a productivity loss of $1,650 per newly uninsured Black worker. Finally, we assume employers in these metro areas will pay an additional $4,000 annually due to increased costs associated with each newly uninsured Black worker. Each of these impacts is felt most acutely in places where losing the enhanced premium tax credits is most costly—that is, those MSAs with the largest Black populations facing precarity in their coverage status.

Table 5

Why is this happening?

The Republican reconciliation bill passed last summer gives a clear distillation of conservative priorities: They prioritize the well-being of the wealthiest households and corporations over that of working-class families (Acemoglu et al. 2025). As such, the new budget contains several provisions that provide disproportionate tax relief to the wealthiest households, at the expense of social programs designed to benefit working- and middle-class families.

Allowing the premium tax credits to expire also repeats an unfortunate pattern associated with pandemic-era expansionary policy aimed at easing economic conditions for American families. Through several provisions in the American Rescue Plan Act (namely the expansion of the Child Tax Credit), the scourges of poverty, child poverty, and child hunger were all drastically reduced in 2021 (Gould 2022). When those expansionary provisions were allowed to expire in 2022, these measures snapped back to their previously higher levels, erasing the progress that was made (Cid-Martinez and Zipperer 2023; Moore and Maye 2023). The ARPA and IRA policies provide clear evidence that policy can be used to effectively reduce poverty, hunger, and uninsurance rates in ways that close racial disparities; it is a matter of prioritization, not practicality.

Why does this matter for public health?

The loss of the premium subsidies will almost certainly lead to a reduction in insurance rates, concentrated amongst those with the least ability to pay. Even for those with more income, having to face increasing health care costs amid a broader affordability crisis will also likely lead those families to go uninsured at the margin. This reduction in insurance will lead to a reduction in families’ access to adequate and timely care. Writ large, reduced access to preventative, adequate, and timely care leads to a less healthy population overall. Moreover, when more individuals and families access health care on an emergency rather than preventative basis, it puts greater strain on the entire health care system, contributing to overcrowding in emergency departments and longer wait times, and reducing the quality of care possible for a broader population (Sartini 2022).

Whether health care is a necessary or luxury good within an economy is partially shaped by the extent to which health care is publicly subsidized (Khan and Mahumud 2015). This is because the income elasticity of demand for health care changes with income. With public support, many more individuals and families can purchase health services as they become necessary than would otherwise. In the absence of public support, and at lower income levels, many view health care much more as an optional purchase when weighed against other pressing costs like shelter and food. Structural changes to the social provision of health care, like allowing subsidies to expire, lead to direct changes in consumption of health services by families, and much more so by working- and middle-class families.

Why does this matter for racial health disparities?

Even among the working class, Black families are more likely to be uninsured compared with white families. Black families are more likely to live in states that did not accept the ACA’s Medicaid expansion, and they are less likely to work for employers that provide insurance coverage. Black families will therefore be impacted more heavily by policies that reduce access to insurance at the margin. This matters because, again, Black families are more likely than their white counterparts to forgo or delay access to adequate health care for financial reasons. Losing access to the enhanced tax credits will result in increased health costs, loss of coverage, diminished health, and excess deaths, concentrated amongst the most disadvantaged. This is in keeping with the Trump administration’s stance that racial equity is not a policy goal worth pursuing.

What will this mean economically for workers and their families?

Families facing economic precarity—those for whom even a relatively small negative economic shock could lead to a crisis—stand to lose the most from the expiration of the ACA premium tax credits. More families are in a precarious financial position than live below the poverty line, and the ongoing affordability crisis being exacerbated by erratic and harmful economic policy decisions increases that number. Black and brown families are more likely to be in the position in which losing the subsidies would be impactful because they are more likely to lack financial assets, even after earning a college degree and escaping income poverty.

The cities where Black workers and families reside will also face a negative shock due to the loss of the subsidies, resulting from lost worker productivity and a drop in revenue, as those families shift more of their spending toward maintaining health insurance and less on other locally purchased consumer goods. Reduced economic activity from Black workers and families will have a broader impact on economic growth and activity throughout these cities.

What should we do about it?

The enhanced ACA premium tax credits are a prime example of a policy used to address the income side of the affordability crisis. The credits work as an income transfer from the federal government to families, making purchasing health insurance more affordable; enhancing the credits allowed more families to access timely and adequate health care. Allowing those enhanced credits to expire imposes a major cost on American families and their local economies, especially those in states where Medicaid was not expanded through the ACA.

But temporary tax credits are weak policy tools for addressing structural affordability crises. When the credits inevitably expire and those federal dollars are taken away, families will face the same issues of affordability; only now their consumption will have adjusted around having the credits. The new “increase” in the cost of health insurance means families must decide whether to risk going without coverage or reduce spending elsewhere— a tough choice with no good outcomes for local economies. 

A better policy strategy for addressing an affordability or accessibility problem with health insurance is to make structural changes to the program ( i.e., permanent changes that expand affordability and accessibility). In this case, extending the premium subsidies to become standard policy would be the strategy that creates the least harm for workers and their families.

Extending the tax credit subsidies would still leave millions of Americans and their families without access to health insurance, and thus facing diminished access to timely and affordable health care. The ACA, even in the expanded form adopted by many states throughout the country, is an imperfect system for achieving the goals of health equity. Moving our health care system in the direction of single-payer health insurance in which access to affordable and high-quality health care is given as a right not contingent on wealth, income, or employment is the strategy most consistent with reducing economic and health disparities across race and improving our overall economic and public health.

Allowing the ACA premium tax credits to expire would make it harder for American families to access health care, worsen an ongoing affordability crisis, and have a knock-on negative impact on local economies. Black workers and their families would feel these shocks most acutely because even under normal circumstances, Black families are less likely to live in states with expanded access to Medicaid, less likely to work in jobs that provide access to health insurance, and more likely to forgo or delay health care due to financial challenges.

The Trump administration has continually shown its disdain for the pursuit of equity as a policy goal through dismantling institutions committed to reducing disparities, rescinding executive orders and federal commitments to set higher standards for equity, and failing to maintain policies that brought us closer to those goals. The pursuit of equity in this moment requires us to hold fast to the progress we have made thus far, both so that we limit the suffering of as many American workers and families as possible, and so that when we do have the opportunity to build toward further progress, those families will be in the best position to help us do so.

Methodology

This analysis uses publicly available data and fixed parameter assumptions alongside author calculations to produce annual, metro-level estimates for Black coverage losses and related economic impacts for 10 metropolitan areas. Demographic and labor market statistics are derived from 2023 IPUMS American Community Survey microdata and aggregated from the county to the metropolitan level using Census Core-Based Statistical Area definitions (Ruggles et al. 2025). Coverage data is derived from the 2024 CMS OEP county-level public use file for states using the federally facilitated Marketplace (CMS 2025). For states operating state-based exchanges in which county-level Marketplace data are unavailable, enrollment and subsidy totals are derived from Kaiser Family Foundation (KFF) state-level estimates and allocated to metropolitan areas based on Marketplace-eligible population shares calculated from ACS microdata (KFF 2025). Projected coverage losses are derived from Commonwealth Fund estimates of coverage loss at the state level and allocated to metropolitan areas based on each metro’s share of state Marketplace enrollment (Ku et al. 2025). Parameter assumptions for economic activity and public health multipliers are drawn from literature listed in the references, including estimates of lost economic activity from reduced health care spending, productivity losses and employer costs associated with uninsurance, and preventable mortality linked to coverage loss (Chernew 2016; Ortaliza 2025; Sommers, Long, and Baicker 2014; EBRI 2000; O’Brien 2003).

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Buettgens, Matthew, Michael Simpson, Jason Levitis, Fernando Hernandez-Lepe, and Jessica Banthin. 2025. 4.8 Million People Will Lose Coverage in 2026 If Enhanced Premium Tax Credits Expire. Urban Institute and the Commonwealth Fund, September 2025.

Centers for Medicare and Medicaid Services (CMS). 2025. 2024 “OEP County-Level Public Use File” [data set], 2024 Marketplace Open Enrollment Period Public Use Files. Last modified March 3, 2025. 

Chernew, Michael E. 2016. “The Economics of Medicaid Expansion” (blog post). Health Affairs Forefront, March 21, 2016.

Childers, Chandra. 2023. Rooted in Racism and Economic Exploitation: The Failed Southern Economic Development Model. Economic Policy Institute, October 11, 2023. 

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Ku, Leighton, Taylor Gorak, Kendal Orgera, Kristine Namhee Kwon, Maddie Krips, and Joseph J. Cordes. 2025. Expiring ACA Premium Tax Credits Could Lead to Nearly 340,000 Jobs Lost Across the U.S. in 2026. The Commonwealth Fund (issue brief), October 16, 2025.

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O’Brien, Ellen. 2003. “Employers’ Benefits from Workers’ Health Insurance.” Milbank Quarterly 81, no. 1: 5–43. doi: 10.1111/1468-0009.00037. 

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While acknowledging that these legislative achievements led to “some very wonderful things,” President Trump recently mischaracterized this historic period as one in which white people “were very badly treated” amid “reverse discrimination.” The president’s unfounded remarks explain why this administration has directly attacked more than half a century of progress toward racial and economic justice. 

Here are six ways the Trump-Vance administration worked to undermine Dr. King’s legacy and curtail economic justice for people of color in 2025:

1. Making it easier for employers to discriminate by undermining the effectiveness of the Equal Employment Opportunity Commission (EEOC) to enforce Title VII of the Civil Rights Act of 1964 for historically marginalized workers, and by gutting the Office of Federal Contract Compliance Programs (OFCCP). 
2. Hindering equal access to education by dismantling the Department of Education and pushing policies that could limit diversity in higher education, a critical pathway to economic mobility.
3. Effectively eliminating the Minority Business Development Agency, the only economic development agency created to help minority-owned businesses overcome social, economic, and legal discrimination.
4. Cutting spending on the Supplemental Nutrition Assistance Program (SNAP) amid persistently high rates of poverty for children of color and rising food insecurity.
5. Slashing funding for Medicaid and the Children’s Health Insurance Program (CHIP), programs that disproportionately help families and children of color access health care.
6. Undermining health equity through massive cuts to the country’s public health infrastructure, setting the stage for the next health crisis.

The emboldened assertion of white supremacy in our political economy demands a renewed commitment to Dr. King’s legacy of racial and economic justice. In a 1966 essay, Dr. King described economic justice and security as rightful aims in the transition from equality to opportunity. Contrary to Trump’s unsubstantiated claims of pervasive discrimination against white people, both equality and opportunity continue to elude people of color at far greater rates as evidenced by disparate and suboptimal outcomes in employment, earnings, wealth, and even health. Moreover, none of those indicators suggest that white people have been disadvantaged by civil rights enforcement. The immortal words of Coretta Scott King capture the true spirit and impact of the civil rights era and expose Trump’s error and hypocrisy: “Freedom and justice cannot be parceled out in pieces to suit political convenience. I don’t believe you can stand for freedom for one group of people and deny it to others.”

The relentless attack of the Trump-Vance administration on basic needs programs, access to data, and economic equity will harm the well-being of Native families and children even more. This is evident when we examine the impact of the administration’s cuts to vital programs like Medicaid and SNAP. The ongoing government shutdown threatens to further exacerbate the gaps in the provision of quality services that Native communities rely on for their health and nutritional needs.

Poverty continues to disadvantage AIAN children and their families

More than 1 in 6 (16.6%) AIAN children continued to live under the poverty line last year. This figure has remained statistically unchanged since 2022 (see Figure A) and is much higher than it was in 2021 when fewer than 1 in 10 AIAN children wrestled with poverty. The big difference in the numbers from 2021 and 2022 was due to pandemic relief efforts like the enhanced Child Tax Credit (CTC), which helped thousands of AIAN families with children meet their basic needs and avoid material shortcomings. But these gains for AIAN families and children were short lived. By 2022, AIAN child poverty rates climbed again, more than doubling after the expiration of the expanded social safety programs.

The situation of these economically vulnerable families and children has not changed since then and is only likely to deteriorate further with the historic cuts to basic needs programs (like Medicaid and SNAP) that the Trump-Vance administration passed this year. These cuts will disproportionately harm economically vulnerable families of color, such as AIAN families who are more likely than their peers to have a parent or child with a disability and who are still recovering from the impact of the last two recessions.

Figure A

Native families are more likely to suffer food insecurity than their peers

Early this year, we wrote about the rising threat of food insecurity for families of color. The persistent experience of AIAN families with poverty leaves them disproportionately affected by these concerns surrounding their ability to meet the nutritional needs of their household. Between 2016 and 2021, for example, AIAN households recorded a much higher prevalence of food insecurity relative to other groups (see Figure B). During this period, nearly 1 in 4 (23.3%) AIAN families struggled with food insecurity, compared with fewer than 1 in 10 (8%) white households.

Figure B

The situation of AIAN parents is even worse. During the six-year period referenced, more than 1 in 4 AIAN households with children under 18 (27.8%) and families with children under 6 (27.4%) did not feel secure in their ability to provide their families with an adequate and balanced diet. Irrespective of the characteristics of the household, AIAN families are significantly more likely than all families to struggle with food insecurity.

This disadvantage will likely compound in the years ahead as the Trump-Vance administration cuts funding for the Department of Agriculture (USDA), further restricts eligibility for programs like SNAP, and limits public access to crucial data about hunger. This year, for example, Trump’s USDA canceled the country’s leading survey that helps us understand the magnitude and severity of hunger and food insecurity in the U.S., on the grounds that it was “redundant” and “politicized.”

Lack of access to health insurance leaves Native communities disproportionately vulnerable to an early death

The well-being of Native communities is also threatened by lack of access to health insurance. Relative to peers, AIAN individuals suffer the highest uninsured rate in the U.S. Nearly 1 in 5 (18.9%) AIAN individuals (amounting to more than half a million people) lacked access to health insurance last year (see Figure C). While the Affordable Care Act (ACA) helped reduce the uninsured rate for AIAN individuals (nearly 3 in 10 AIAN individuals lacked health insurance in 2010), disparities in access have persisted over the years. Compared with their non-Hispanic white peers, AIAN people have been more than twice as likely to lack access to health insurance in just the last decade. These inequities also translate into disparities in life expectancy. AIAN men and women, for example, record a lower life expectancy at birth than their peers. Trump’s attacks on public health agencies, their personnel, research infrastructure, and programs for the needy threaten to exacerbate these disparities for years to come. 

Figure C

The Trump-Vance administration has weakened the agencies and programs that help the U.S. meet its obligations to Native communities

In less than a year, the Trump-Vance administration has weakened every aspect of the U.S. social safety net that helps AIAN families and children escape poverty, hunger, and disease. Trump began his second term by cutting staffing and funding for public health agencies and programs. By April 2025, the administration had reduced the Department of Health and Humans Service by more than 20%. Trump’s attack on equity also targeted workplace safety regulations and the broader research infrastructure for public health that works to identify and address the structural barriers that yield and widen racial and ethnic disparities in health. 

To top this off, Trump’s most significant legislative achievement this year delivered historic cuts to health programs (like Medicaid and CHIP) that are estimated to strip 10 million people of their health insurance coverage by 2034. More than 1 million AIAN individuals rely on Medicaid and CHIP. While AIAN individuals will be exempt from the new Medicaid work requirements, public health experts have warned that cuts to the program can widen gaps in tribal health services and disparities that already exist due to chronic federal underfunding of AIAN communities.

Trump’s major legislative achievement this year also weakened SNAP, the country’s most important nutritional assistance program. In FY 2023, more than 500,000 AIAN households relied on SNAP to meet their nutritional needs and avoid deeper economic insecurity. Trump’s reconciliation legislation from this summer is estimated to impact the benefits of millions of SNAP recipients. While pre-existing work requirements exemptions partially mitigate the harmful impact of Trump’s law on AIAN individuals, the phasing out of culturally relevant initiatives (such as SNAP-Ed) and cuts to the broader program weaken an important vehicle through which the U.S. delivers its obligations to Native communities.

In addition, beginning on November 1 of this year, the Trump-Vance administration has been denying access to SNAP benefits to millions of people due to the administration’s unwillingness to use SNAP’s contingency reserve funds during the government shutdown. In doing so, the administration is removing a critical safety net for Native American tribes and for over 1 in 5 Native American households more broadly.

States with some of the largest Native American populations are also states with higher overall population shares participating in SNAP. Oklahoma and New Mexico have some of the highest Native populations and more than 16% of their population receive SNAP benefits. Native Americans living in Oklahoma, on reservations, and other designated areas may be able to continue to receive food assistance through the Food Distribution Program on Indian Reservations (FDPIR). However, that program may face constraints due to additional demand and is not accessible for many Native people who do not live near federally recognized tribes that participate in FDPIR.

With every step this year, the administration has weakened the capacity of the federal government to meet the needs of Native communities. And families and children are being hurt in the process because they are disproportionately vulnerable to costly disparities in poverty, food insecurity, and health care access.

It’s worth emphasizing that the upcoming Census data do not reflect any economic developments in 2025. Some policymakers will attempt to claim any good news from the data as validation of the current U.S. policy path, but this would be completely misleading given the radical policy shifts in 2025 under the Trump administration. In this piece, we argue:

• Data for 2024 will likely reflect continued labor market strength. Inflation decelerated rapidly in 2024, which should boost last year’s income growth. 
• Even the likely strong 2024 income and poverty data will still show an economy that has left many workers, families, and children in an economically precarious position. Racial disparities in income, for example, leave people of color much more vulnerable to economic insecurity and poverty.
• Trump administration policies—including chaotic and historically high tariffs, mass deportations, and attacks on the federal workforce—have already led to a softening labor market and more inflationary pressures in the economy. Given this, income and poverty measures are likely to worsen when these data are released next year for 2025.  
• In 2026 and beyond, cuts to food assistance and Medicaid that were part of the Republican-passed spending bill will increase food insecurity and the number of people without health insurance, particularly for families of color.
• The Census data are incredibly valuable and provide transparent and non-politicized data that allow Americans to make informed decisions about what policies are delivering economic security for working people. The Trump administration has begun attempting to politicize and erode trust in federal statistical agencies and to manipulate the reporting of anything that seems like bad news for the economy. This is deeply undemocratic.

The labor market mostly held strong in 2024 

Between 2021 and 2023, the labor market rebounded dramatically from the pandemic recession as large-scale policy interventions—like expanded unemployment insurance—helped families stay afloat and drove a recovery several times faster than the Great Recession. In 2024, the labor market remained relatively strong, growing by 2 million jobs over the year. The unemployment rate rose slightly but maintained a 4.0% average over the year. 

The prime-age employment-to-population ratio—the share of workers between the ages of 25 and 54 with a job—held steady at a high level of 80.7% in 2024. Prime-age Hispanic workers saw their employment rise, as prime-age Hispanic men increased their employment rates by 0.7 percentage points. Employment also rose slightly for prime-age Black and white women by 0.2 and 0.3 percentage points, respectively. At the same time, Black and white men experienced mild declines in their employment rates. 

Real (inflation-adjusted) wages continued to increase in 2024. Figure A shows that inflation fell sharply from 3.9% to 2.6% over the course of the year. At the same time, the strong labor market allowed workers to maintain a solid pace of nominal wage growth: nominal hourly wages and weekly earnings growth decelerated by much smaller amounts than price growth for goods and services. This combination of inflation falling faster than nominal wage growth is exactly the macroeconomic “soft landing” from the COVID-19 inflation shock that so many thought would be impossible to achieve. Together, this translated into a 1.4% increase in average real hourly wages over the year. Average real weekly earnings—perhaps a better signal for the annual income data out next week—rose by 0.9%. 

While these are meaningful averages, we also know that real wage growth was particularly strong for lower–wage workers and workers with lower levels of educational attainment. Along with steady employment, these advances bode well for improvements to income and poverty rates in next week’s report.

Figure A

Persistent economic disparities leave families of color disproportionately vulnerable

The upcoming Census release will continue to show persistent racial inequities that can only be corrected through years of sustained progress. In 2023, typical Black and Hispanic households were paid just 63 cents and 74 cents, respectively, for every dollar paid to the median non-Hispanic white household. These disparities are especially harmful to low-income families of color who live in a constant state of economic insecurity. In a new report, we find that Black and Hispanic families with children make up more than half (61.1%) of economically vulnerable families, defined as those with incomes below 200% of the federal poverty line. Even within the group of economically vulnerable families, Black and Hispanic workers are also more likely to have incomes below the poverty line (see Figure B below). Narrowing these racial disparities will demand stronger and more persistent income gains for these families in the years to come.  

Figure B

Policy changes are weakening the economy in 2025

There are several reasons to suspect that 2025 will be a worse year for incomes and poverty. For one, labor market indicators have weakened: unemployment inched up to 4.2% by July 2025, and job growth slowed to 85,000 per month compared with 168,000 in 2024. The last three months saw average job growth of just 35,000 per month. While layoffs have not yet surged, both employers and workers appear to be sitting tight in anticipation of a weaker economy going forward. Federal employment has fallen by 84,000 since January, which doesn’t include the many workers who will leave federal payrolls on September 30 at the end of the fiscal year. According to Trump official Scott Kupor, 2025 will end with 300,000 fewer federal workers.

The Trump administration’s damaging and chaotic tariff policy also threatens economic security, with nearly universal tariffs set at the highest level in a century or more. This is causing severe business uncertainty and already leading to higher prices for households because tariffs are taxes on both imported and domestically produced goods. Since lower-income families spend a higher share of their income on goods consumption, these tariffs will disproportionately harm their real incomes.

In addition, the administration’s mass deportation agenda will substantially harm the labor market. The damage will not just be felt by immigrant workers and their families—they will spill over and hurt U.S.-born workers as well. If the Trump administration successfully follows through on its goals of deporting 1 million people each year during their term, there will be 3.3 million fewer employed immigrants and 2.6 million fewer employed U.S.-born workers by 2029.

Health insurance coverage and access to food assistance will fall over the next several years

Health insurance, Supplemental Nutrition Assistance Program (SNAP) coverage, and Supplemental Poverty Measure (SPM) rates in 2024 will likely represent high-water marks over the next few years. That’s because the Republican spending bill passed in July cuts Medicaid spending by $793 billion and SNAP benefits by $186 billion over the next decade—all to pay for tax cuts for the richest Americans.

The share of the population without health insurance was 8.0% in 2023, or about 26.5 million people. This ranked near historic lows in the United States—driven by a strong labor market, enhanced Affordable Care Act (ACA) subsidies, and pandemic-era coverage protections (particularly in Medicaid). 2024 saw a slight rollback in some of the pandemic-era coverage protections, but the strong labor market and ACA subsidies likely kept uninsurance rates relatively low. However, we can expect uninsurance rates to climb in 2025 and beyond because the Republican spending bill both cut Medicaid and allowed the enhanced ACA subsides to lapse. This will lead to more than 14 million people losing health insurance coverage by 2035, increasing the number of uninsured people by more than 40%.1

The Republican budget will also lower incomes and increase food insecurity by cutting SNAP. Benefit reductions and more stringent eligibility requirements will reduce SNAP participation by an average of 2.4 million in the next decade. A weakening labor market will exacerbate this problem by making it more difficult to satisfy new SNAP work requirements as people work fewer hours due to shrinking job opportunities.

Black and Hispanic households will likely represent a disproportionate share of those losing health insurance coverage and access to SNAP benefits. Figure C below shows that people of color are more likely to rely on Medicaid and SNAP benefits. In 2023, SNAP lifted more than 3 million people out of poverty—over half of those were Black or Hispanic, and nearly 40% were children. Cuts to Medicaid, SNAP, and other government support programs mean that the 2024 rate of poverty as measured by the Supplemental Poverty Measure will also likely be the lowest for many years to come.

Figure C

Timely and accurate data are essential but under threat

Next week’s release will also mark the last year in which data from federal statistical agencies could be reliably assumed to be completely free of politicization or manipulation. Staffing cuts and politically motivated firings at government agencies threaten the credibility of future data releases. On August 1,^, Trump fired the Bureau of Labor Statistics Commissioner because he did not like the jobs numbers they released. High-quality public data inform how well the economy is delivering for the majority of working people—whether job opportunities exist, how families make ends meet, and whether families have access to vital services such as nutrition and health care. There is simply no substitute for the government data infrastructure, and pressure from the executive branch to alter data to fit political aims will damage a valuable public good that is critical for business decisions, policymaking, and planning by all stakeholders in the economy.

It is possible that the extreme competence and professionalism of federal workers who staff the statistical agencies will shield most of the data they release from manipulation or quality-erosion. But this will take near-heroic measures and is too much to ask of our civil service—they work hard enough collecting and analyzing this data in professional and non-politicized ways, they should not also have to be activists safeguarding its integrity.

Note

1. CBO projected that 32.4 out of 363.3 million people would be uninsured in 2034. Adding 10 million uninsured due to Medicaid cuts brings the uninsurance rate to 11.7%, compared with the actual 2023 uninsurance rate of 8.0%.

The tax breaks for the rich are so huge—$100,000+ per year for the richest 0.1%—that even after gutting aid for the most vulnerable, this bill will still increase the national debt by nearly $4 trillion. To cover up how grotesque this is, Republicans have invented a new, completely bogus way to measure the bill’s costs.

The bill also turbocharges an authoritarian-style immigration regime—funding internment camps, mass surveillance, and waves of deportations that will kill millions of jobs.

And, surprise, the GOP structured the bill’s provisions along deeply cynical political timelines. The rich get their tax cuts before the midterms. Some of the most painful (and unpopular) cuts to families? Not until after. It is shameless. And that means that—by design—this bill will cause economic pain that will unfold slowly but steadily over many years. It’s engineered to dodge accountability.

But make no mistake—the pain will be devastating. Kids will lose food assistance. Families will lose health care. The economic shock will hit hardest in communities least equipped to withstand it.

It’s a perfect storm of long-term economic sabotage. This bill will weaken economic growth over the next decade, making this country poorer. All to give huge tax cuts to the richest.

House Republicans wanted to find a way to defray the cost of the tax cuts they passed for the richest households in the country. They chose to slash programs helping some of the most vulnerable families—including Medicaid and subsidies that let people buy health insurance through the Affordable Care Act (ACA). This direct transfer of income from vulnerable families to the richest can be summarized in a striking symmetry: If the bill becomes law, the annual cuts to Medicaid would average over $70 billion in coming years—the same amount millionaires and billionaires would gain in tax cuts each year.

These health care spending cuts would lead directly to millions of people losing health insurance. A widely cited Congressional Budget Office (CBO) estimate of 13.7 million people losing coverage was preliminary, and the CBO noted that more-precise estimates to come would “somewhat further increase the estimated number of people without health insurance.” More recently, the Center on Budget and Policy Priorities estimated coverage losses of at least 15 million.

The cuts to Medicaid would also damage local economies and workers throughout the United States. Even during times when the national unemployment rate is low, tens of millions live in weaker local economies with higher county unemployment rates and far less ability to weather sharp spending shocks like a Medicaid cutback would provide. In fact, a disproportionate share of the House bill’s Medicaid cuts would almost surely fall exactly on these weaker local economies. We estimate that roughly 27 million workers are in these weaker local economies, and that Medicaid cuts could depress local spending enough to force the loss of 850,000 jobs.

Download the Unemployment rates and Medicaid coverage by US county spreadsheet

Republicans believe their strongest argument in favor of the health insurance cuts in this grotesquely unequal bill is that they’re simply demanding that able-bodied adults receiving Medicaid must work. Every part of this argument falls apart once the details of this bill’s cuts and their ripple effects are examined. Concretely:

• The bill’s cuts are broader and more expansive than just the work requirements for able-bodied adults.
• It is decisions made by employers and policymakers, not individual workers, that are most responsible for any particular worker being able to rack up enough work in a given month to satisfy the work requirements in the House bill.
• The more workers that are covered by public insurance programs like Medicaid, the better it is for workers’ wages—cutting Medicaid hence will harm wages going forward.
• Taking health insurance away from 15 million people will impose costs on other groups—insurance premiums for other workers could rise and state and local government contributions for uncompensated care will increase.
• Health care providers and hospitals will be forced to downsize and close, particularly in rural areas. This will not just reduce residents’ access to care—it will cause huge disruptions to local economies.

House budget cuts are not just work requirements

The House budget would cut roughly $715 billion from Medicaid over the next decade, according to preliminary estimates. The House bill also fails to extend premium tax credits that made insurance more affordable through the Affordable Care Act, constituting an additional $335 billion cut over the next decade. Adding these health insurance cuts together implies more than $1 trillion in cuts over the next 10 years. The work requirement provisions in the House bill are scored to yield $280 billion in savings. In short, the House bill’s cuts are far more expansive than just the work requirements.

Policymakers and employers, not workers, decide if work is available for all who want it

Work requirements are often defended as providing an incentive to work. But the U.S. provides essentially no cash welfare at all to non-workers—the incentive to work is that it is the only way for the non-wealthy to live free of grinding poverty. Policy failures and the whims of employers—not insufficient incentives—are what stop people from engaging in steady work.

Only policymakers—like the Federal Reserve, Congress, and the president—have the power to ensure that unemployment remains low and jobs remain plentiful in the U.S. economy. When they do this, hours of work in the poorest families rise sharply—proving that it is availability of jobs, not individual incentives, that determine how much work these families can secure.

But even when the national unemployment rate is low, the low-wage labor market—the one most relevant to those facing Medicaid’s work requirements—sees huge amounts of churn. About 20% of workers in the bottom quarter of the overall wage distribution will see a spell of joblessness in the next three months.

Another way to illustrate this churn: About 2 million workers are laid off in the U.S. economy every single month. If these workers do not near-miraculously find new jobs instantly, they will risk being ineligible for Medicaid while having no access to employer-based coverage either. Again, it is failures by policymakers and the decisions of employers that create an unstable and insecure low-wage labor market that are the real barriers to steady work, not individual incentives.

More public health insurance coverage—like Medicaid—is good for workers

U.S. workers would benefit greatly if health coverage was delinked from specific employers and instead provided by the public sector. A pro-worker policy would be expanding the coverage provided by public plans like Medicaid, not cutting it.

Most fundamentally, the labor market is unequal—employers clearly have power advantages relative to most workers. Aside from collective bargaining, the main way workers should in theory be able to wring better conditions and wages from employers is by threatening to quit and move to other jobs. But this threat is not credible if overall unemployment is high (which it is far too often in the U.S.), and it is often not credible due to all sorts of frictions in the job market keeping workers from seamlessly changing jobs.

These frictions can stem from all sorts of mundane sources like low information about other opportunities, too few employers in their field, or insufficient child care resources near employers. But because access to health insurance for non-elderly people in the U.S. runs mostly through employers, workers’ need to assess what any new employer’s health insurance policies might mean for their well-being is a huge friction. If more U.S. workers relied on public insurance like Medicaid, this reduced friction could lead to a better-functioning labor market and allow workers to wield greater power in securing wage increases from employers.

Further, public insurance programs like Medicaid and Medicare have historically done a much better job in containing costs than employer-based plans. Every $1 saved in health care costs is $1 that could instead go into workers’ paychecks. Getting more workers covered by public plans that are better at saving these dollars would be good for wage growth.

Finally, employer-based health insurance is not free—it is paid for in the long run by extraordinarily large subsidies from the federal government and workers foregoing wages in lieu of health insurance coverage. The public subsidies stem from workers not having to pay taxes on the compensation they receive in the form of employer contributions to health insurance premiums. The value of this public subsidy is more than half as large as federal Medicaid spending. This subsidy for employer-provided health insurance is greater for more highly paid workers, and given the higher cost of employer-based insurance, can easily be greater on a per-worker basis than the average cost of Medicaid.

The wages foregone in lieu of employer contributions to health insurance premiums are also large. In 2023, employers paid over $900 billion in insurance premiums, an amount that would likely have gone to wages if employers were not the main payers of health insurance in the United States. Further, because the cost of any individual health insurance policy is a fixed amount, employer-provided health insurance is essentially financed by a flat tax on workers, which means it takes a much higher share of wages from lower-paid workers. It has been estimated that this implicit flat tax system costs non-college workers roughly $1,700 per year relative to a system of public insurance (like Medicaid) financed by proportional taxes.

All in all, workers should want more people in the labor force able to be covered by public plans, not fewer. Unraveling the too-small public coverage we already have will just see increasing downward wage pressures from rising health care costs and frictions in the labor market.

Removing health insurance from 15 million people could raise health care costs for all

Taking health insurance coverage away from 15 million people will obviously impose the greatest harm on the newly uninsured group. They will face greater financial stress and likely forego needed health care. Their health and living standards will suffer.

But as much as House Republicans want to defect from the social contract regarding health coverage, it remains the case that there is widespread agreement among Americans—enshrined in law and policy—that simply withholding needed health care from sick and injured people who cannot pay for it should not be done. So, if somebody with diabetes is kicked off Medicaid and can no longer access their insulin and falls into an acute medical crisis, they will be cared for—too late to salvage their full health and at much greater expense—in emergency rooms. All of this will greatly exacerbate a significant problem with emergency department overcrowding, boarding, and wait times. And it should be obvious that this irrational deferral of care until more damage has been done is not helping this person become a more productive potential worker.

All of this means that the rise of uninsurance stemming from the House bill will cause a flood of uncompensated care—health care delivered in places like emergency rooms that the patient themselves cannot pay for because they’re uninsured. State and local governments will foot the bill for much of this uncompensated care. Some of it might be passed on to higher prices generally for health care, pushing up premium costs and out-of-pocket costs for even those who remain insured.

It is worth noting the main target of the House bill’s Medicaid cuts are the Medicaid expansions that were passed as part of the Affordable Care Act—and these Medicaid expansions made a huge dent in the problem of uncompensated care that was endemic before the ACA’s passage. Uncompensated care costs essentially fell by a third due to the ACA’s passage, almost entirely because of its Medicaid expansions.

Health care is a key engine of local economies that will be damaged by these cuts

The House bill would lead to health care providers losing $770 billion in payments over the next decade. Because the ACA’s Medicaid expansion was so crucial to keeping rural hospitals afloat in the past decade, a sharp rollback would inevitably force shutdowns and cutbacks at medical providers and hospitals, particularly in these rural regions.

This would be a disaster not only for access to health care but also for local economies. Health care is by far the largest employer of any sector in the United States, employing 18 million workers. It’s also a key source of good jobs—the unionization rate in the hospital sector is twice as high as the rest of the private sector.

In 2009, the Obama administration used increased federal payments to Medicaid as a key strategy in their American Recovery and Reinvestment Act, a plan to boost employment and end the Great Recession. This worked spectacularly well—the gold standard study examining this policy found that that each $1 billion in additional spending to Medicaid resulted in 38,000 jobs gained, with more than 75% of the jobs being gained outside of the health sector as Medicaid coverage boosted disposable incomes and hence consumption spending across all sectors. Adjusting for inflation, this would imply that each $1 billion spent on Medicaid in 2025 would see 25,000 jobs gained. This result means that Medicaid cuts will impose a sharp anti-stimulus to local economies. Jobs in health care will be cut, and three times as many jobs outside of health care will be cut.

It is true that overall macroeconomic conditions are different now than in 2009—a year that saw the steepest recession to that point since the Great Depression of the 1930s. It is possible that some local economies today might be strong enough to weather a Medicaid spending shock. But overall economic strength is not guaranteed to hold in coming years when these cuts will take effect. Several economic forecasters are predicting a high chance of recession over this time.

Further, even when the national economy is strong, there are still hundreds of counties with weaker economies. For example, the national unemployment rate was 3.6% in 2023. A rough rule of thumb holds that an unemployment rate that is 0.5% above the minimum rate it hit over the past year indicates a weak economy likely to enter recession. If we take this rule about unemployment rates over time and apply it to unemployment rates across space, we see that about a quarter of counties had unemployment rates 0.5% above the national average, with 27 million workers living in these counties. Medicaid cuts hitting these places—already economically weak and considerably more recession-prone than the nation as a whole—will absolutely trigger the strong anti-stimulus effects described above.

Worse, there is a strong positive relationship between higher-than-average unemployment rates and the share of a county’s population that is covered by Medicaid—as shown below in Figure A. In other words, the Medicaid cuts will destroy health care jobs and cause other spillover job loss in exactly those areas that can weather this the least.

Figure A

Let’s assume that the research showing 25,000 jobs are lost for every $1 billion cut in Medicaid spending held today only in those counties with unemployment rates at least 0.5 percentage points higher than the national average. Assume as well that Medicaid cuts will fall in proportion to a county’s share of adults ages 19–64 who are enrolled. This implies that roughly half of the spending cuts (48.5%) will fall on counties whose local economies are not strong enough to weather them without seeing job losses in response. Multiplying the size of these cuts in billions of dollars by 25,000 jobs implies that 850,000 jobs in weaker local economies could be lost—a number that would increase the number of unemployed in these counties by upwards of 40%.

Conclusion

The damage from the House bill’s cruel and logic-free cuts to Medicaid and other health services will fall mostly heavily on the 15 million who will lose health insurance. But the damage won’t be contained there—nearly everybody else in the U.S. will feel the harms of less efficient health care and labor markets, higher needs to pay for uncompensated care, closures and cutbacks in health care providers and hospitals, and even damage to entire local economies that are reliant on this health spending. For the very rich who will see enormous tax cuts from this bill, it all might end up being a good deal. For everybody else, it will not.

In direct contradiction to promises from President Trump and the reconciliation bill’s backers that they won’t cut Medicaid or cause pain for working-class families, this bill would:

• Kick millions of low-income people off of Medicaid and threaten operations for strained hospital systems across the country, particularly in rural areas;
• Make it harder for parents of children as young as age seven to qualify for food stamps;
• Put millions of kids at risk of poverty by excluding their families from the Child Tax Credit.

In exchange for these massive spending cuts to justify a $3.8 trillion tax cut for the wealthy, this bill offers workers almost nothing—just paltry tax gimmicks that put pennies into the pockets of a small sliver of the working class. The bill’s immigration provisions are purely punitive—imposing fees on migrants making asylum claims and giving the Trump administration billions of dollars to unleash internal immigration enforcement within our borders, looking for any excuse to deport or harass immigrants and their families. Voting for this bill’s passage represents an ultimate betrayal of U.S. workers and the economy. The Senate should reject this bill.

Key findings:

• Young workers—those 16–24 years old—have experienced historically strong real wage growth (9.1%) since February 2020, exceeding the wage growth for workers ages 25 and older (5.4%).
• Wages for young workers have also grown faster than the prices of rent and college tuition since February 2020.
• A smaller share of young adults is unemployed, underemployed, or “idled”—neither employed nor enrolled in further education—than their averages over the prior three decades.
• However, recent Trump administration policy actions could be devastating for young adults trying to get a foothold in the labor market as they enter the workforce following graduation.

Young workers have experienced a strong labor market coming out of the pandemic recession, with better job opportunities and faster wage growth than they experienced in much of the prior four decades. However, the Trump administration’s recent attacks on the federal workforce, higher education, and registered apprenticeships—as well as imposing extreme tariffs—threaten to reverse these gains. In this first post in a series on young adults, we examine their labor market prospects as they graduate from high school and college this spring and discuss how policy changes might impact their prospects.1

Young adults have experienced historically fast wage growth in this business cycle

Figure A shows that real (inflation-adjusted) wage growth has been strong for workers of all ages in the pandemic recovery, but young workers have experienced faster wage growth (9.1%) than workers ages 25 and older (5.4%). Compared with the previous four business cycles, real wage growth in this recovery has been extraordinarily fast for young workers. It was not only significantly above zero for the first time in the early stages of a recovery, but also 14.4 percentage points faster than the recovery following the Great Recession of 2008.

Though the difference is not as stark, it is worth noting that workers ages 25 and older have also experienced faster wage growth this business cycle than in prior business cycles. This is no accident—all age groups have seen strong wage growth during the pandemic recovery because of intentional policy decisions.

After the huge job losses in March and April 2020 (specifically in industries most likely to employ young workers), policymakers passed large fiscal recovery packages that spurred rapid rehiring efforts, which gave workers leverage to secure higher wages and better working conditions. Further, pandemic relief efforts like expanded unemployment insurance coverage and economic impact payments gave these workers the economic security to be more selective than normal when job hunting.

Figure A

Wages for young workers have grown faster than rent and college tuition

We also compare nominal wage growth with the growth in prices of goods and services that stress the budgets of young adults. In addition to exceeding overall inflation, nominal wage growth for young workers (40.3%) has significantly outpaced growth in the cost of rent (27.4%) and college tuition (8.6%) since February 2020 (Figure B).

While rent and college tuition are unaffordable for many young adults and their families, the rate of growth since 2020 suggests they have not become any more unaffordable over this period. This is a crucially under-recognized achievement: strong labor markets directly made both college attendance and the cost of rent more affordable for young workers in recent years.

Figure B

Young adults are less likely to experience unemployment and underemployment now than in the past

Labor market outcomes for young workers have also been more promising recently than on average over the prior three decades. Figure C below shows the unemployment rate, underemployment rate, and “idling” rate in March 2025 and the average in the July 1990 to March 2024 period.2

The unemployment rate for young workers now is 9.2% compared with 12.1% on average between 1990 and 2024. The underemployment rate is also lower today compared with the prior three decades. The underemployment rate is the share of the labor force that either 1) is unemployed, 2) is working part time but wants and is available to work full time (an “involuntary” part timer), or 3) wants and is available to work and has looked for work in the last year but has given up actively seeking work in the last four weeks (“marginally attached” worker).

Another important measure of opportunities for young adults is what we call the idled rate—the share of young adults who are neither employed nor enrolled in school. This idled rate is useful because it is often hard to judge whether higher employment of young people is unambiguously good. For example, in some states that have weakened child labor laws, 16- and 17-year-olds are now at higher risk of facing exploitative conditions like subminimum wages, safety hazards, or long hours that interfere with high school completion. But it is almost always unambiguously bad when young people lack opportunities to either work or be enrolled in school—and this is what the idled rate measures. The share idled in 2025 is lower than on average between 1990 and 2024.

Figure C

Recent Trump policy decisions could harm the economic futures of young adults

These promising outcomes for young workers are a tremendous policy achievement. The decision to use large fiscal relief and recovery packages to heal the labor market as quickly as possible after the pandemic recession has paid off enormously for the nation’s young workers. However, recent actions by the Trump administration threaten to reverse these gains.

Specifically, attacks on higher education in the form of cuts to university funding and uncertainty around student loans will make college less attainable for all, but in particular for young women and Black and Hispanic people. This will only further exacerbate significant gaps in education, wages, and lifetime earnings across race/ethnicity and gender.

The administration has also attacked federal initiatives to expand access to registered apprenticeships, another accredited system through which young workers advance their careers and reach higher earnings. Data show that union registered apprenticeships are increasingly important pathways to living-wage skilled trades careers for young and low-income people, women, and Black and Hispanic workers, illustrating the disproportionate harm that these attacks will have.

Additionally, the current administration has launched large-scale attacks on the federal workforce, supported drastic cuts to Medicaid, pursued mass deportations, and imposed extreme tariffs.

Cuts to the federal workforce mean that young people interested in public service careers will have fewer opportunities. Further, major staffing cuts to the Department of Labor and National Institute for Occupational Safety and Health will weaken the enforcement of laws that keep workers safe and investigate wage violations (which disproportionately harm young workers, women, people of color, and immigrants). Meanwhile, Medicaid cuts would directly harm young people who are lower income and rely on Medicaid to meet their health care needs, including the high share of women who depend on Medicaid for their pregnancy.

Those cuts—combined with current immigration and tariffs policies—could lead to an economic recession. Young workers are often hurt more in a recession due to the “last hired, first fired” phenomenon and their lack of a significant foothold in the labor market. Graduating into a recession can set them back for years to come, depending on the depth and duration of the recession. To prevent a recession and remove the threat of undoing gains made over the pandemic recovery, these policy actions must be halted immediately.

In the next blog post in this series, we will delve deeper into the wages of high school and college graduates, respectively, and discuss gaps that exist across race and ethnicity and gender.

1. We define young workers as 16–24 years old. For all of our data in this post we use 12-month moving averages. For example, March 2025 data represent the average of April 2024 to March 2025. Smoothing over 12 months allows for sufficient sample sizes for analysis and to account for seasonal fluctuations throughout the year. Data for young workers, in particular, may vary by season given changes in their schedule between the academic year and the summer.

2. The idling data are available starting in 1984, but we use July 1990 as the start date to capture only full business cycles.