This chartbook provides a comprehensive look at not only who domestic workers are and where they live, but also their economic vulnerability—their wage, income, benefit, and poverty levels relative to workers in other occupations.

We are updating this chartbook in the aftermath of the coronavirus pandemic—a crisis that has had particularly severe effects on care workers, institutions, and the industry as a whole (Wolfe et al. 2020).1 The economic struggles domestic workers continue to face, even two years after the outbreak of the pandemic, highlight the crucial role these workers play in sustaining quality of life in the United States for tens of millions of people. These workers’ contributions range from keeping our homes clean to providing child care—including care for children with complex medical needs—and delivering critical services to older adults and people with disabilities to allow them to live independently and thrive in home and community settings.

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Jump to the data tables

The ongoing pandemic and economic recovery serve as the backdrop for this chartbook, with data available through 2021. Given that we use pooled data to capture several years, the majority of the following charts and tables provide a snapshot of these occupations that includes the pre-coronavirus period, and which partially muffles the full impact of the pandemic on these jobs.

The COVID-19 crisis has laid bare the ways in which care work is undervalued—and that this workforce is underprotected. As a front-facing industry that requires high levels of personal contact, this industry was one of the hardest hit by the pandemic in 2020 (Wolfe 2020; Banerjee, Gould, and Sawo 2021). As private employers limited the number of people they came in close contact with, and care institutions—including child care centers and nursing homes—needed to socially distance or close temporarily to limit spread of the virus, many domestic workers were left without work, and without any indication of whether they would get their jobs back (NDWA 2020). Despite the impact of the pandemic on this workforce, many domestic workers were excluded from federal COVID-19 relief. At the same time, many domestic workers who were on the front lines of the pandemic, caring for the sick and keeping homes clean, lacked the protective equipment they needed.

The collapse in institutional care during the pandemic, including unpredictable closures of centers, cancellations from individual employers, and the sheer toll the virus itself took on this very at-risk workforce, worsened the economic situation of domestic workers—many of whom were already struggling with low pay and difficult working conditions pre-pandemic. While many sectors and occupations have seen strong economic recovery through 2021 and 2022, domestic work has had a rockier path, with staffing shortages and low pay being persistent problems.

The care industry is a broken economic model: while the social need for high-quality child or elder care is high, it is too expensive for most to afford, and the pay is too low for many workers to support themselves and their families (Banerjee, Gould, and Sawo 2021; Treasury 2021). In order to bring high-quality care to households who need it, while supporting and fairly compensating the vital labor of those domestic workers providing it, we need significant public investment. Public investment can ensure that domestic workers earn higher wages and that there is effective enforcement of labor standards, anti-discrimination in employment, and safe working conditions. Investing in the domestic workforce would drastically improve domestic workers’ financial security and could pave the way for more affordable child and elder care.

In addition to caring for children and helping households stay clean, domestic workers support older people and people with disabilities or illnesses by providing hands-on health care, running errands, making meals, and cleaning homes, allowing their clients to live as independently as possible in their own homes. These services are incredibly valuable to those who receive them and to the other workers who otherwise would be spending their time on this important work. Given continued gender disparities in home responsibilities for unpaid care work, working women and households with two parents working outside the home, in particular, rely on domestic workers. The need for care services touches nearly everyone’s life—whether we received care as a child, need care as we age, or seek care for children or other family members. This critical labor and service, and the workers who provide it, must be valued and compensated more highly.

Although domestic work is vital to everyday life, this chartbook shows that domestic workers face low pay, rarely receive benefits, and have less access to full-time work than other workers. Because they work in private homes, they are outside of public view and isolated from other workers, leaving them particularly vulnerable to exploitation (Dresser 2015). And many groups of domestic workers are explicitly left out of many federal labor and employment protections—a policy decision dating back to the New Deal, when the majority-Black domestic and farmworker workforces were excluded from landmark federal labor laws as a concession to racist Southern lawmakers (Burnham and Theodore 2012; Nilsen 2021).

Specifically, domestic workers are excluded from the National Labor Relations Act, enacted in 1935 to guarantee employees the right to form labor unions—or engage in other forms of collective action—to organize for better working conditions. And “live-in” workers—who reside in the employer’s home—are excluded from the overtime protections in the Fair Labor Standards Act, enacted in 1938.

The exclusions for domestic workers carried through to subsequent worker protection statutes. The Occupational Safety and Health Act does not apply to “individuals who, in their own residences, privately employ persons for the purpose of performing…what are commonly regarded as ordinary domestic household tasks, such as house cleaning, cooking, and caring for children” (OSHA 1975). Federal anti-discrimination laws, such as the Civil Rights Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act, all generally cover only employers with multiple employees, meaning many domestic workers are excluded from these protections. This exclusion is also part of the Family and Medical Leave Act.

A critical first step to providing domestic workers with the same protections as other workers is passing a National Domestic Workers Bill of Rights. This first-of-its-kind legislation would extend and strengthen core workplace protections. Ten states (California, Connecticut, Hawaii, Illinois, Massachusetts, Nevada, New Mexico, New York, Oregon, and Virginia), and the cities of Seattle and Philadelphia, have already passed such legislation, and other states and localities should follow suit.

Home care aides make up the majority of the nation's 2.2 million domestic workers: Employment in domestic worker occupations, 2021

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here are 2.2 million domestic workers in the United States and more than half are agency-based home care aides.2 Domestic workers do the vital work of cleaning homes, tending to children, and providing daily living and health assistance to people who are elderly, convalescing from illness, or have disabilities. The data from this chart are also available in Table 1, at the end of the chartbook.

It is highly likely this 2.2 million estimate is an undercount of domestic workers. Firstly, a significant proportion of domestic workers are paid “under the table,” which makes individuals who participate in surveys less likely to report these jobs. Secondly, the share of domestic workers who were born outside of the United States is higher than the share of workers overall who are not U.S.-born, and it is thought immigrants are underrepresented in national surveys.

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Women make up the vast majority of domestic workers: Share of workers who are women or men, for domestic workers, for all other workers, and by domestic worker occupation, 2021

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ore than 9 in 10 domestic workers (90.2%) are women—a gender imbalance that is even more pronounced for house cleaners (94.4% women) and child care providers (roughly 97% women). By comparison, women make up just less than half (46.3%) of the rest of the workforce. While men are somewhat more likely to be home care aides than house cleaners or child care providers, they still account for less than 15% of nonagency and agency-based home care aides.

See Table 2 at the end of the chartbook for a demographic breakdown of domestic workers by gender, nativity, race/ethnicity, education, and age.

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Black and Hispanic workers make up a disproportionate share of domestic workers: Share of workers who are of a given race or ethnicity, for domestic workers, for all other workers, and by domestic worker occupation, 2021

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ell more than half (56.6%) of domestic workers are Black, Hispanic, or Asian American and Pacific Islander (AAPI). In contrast, Black, Hispanic, and AAPI workers make up 36.7% of the rest of the workforce. House cleaners constitute the domestic worker occupation with the highest share of Hispanic workers (62.7%), while agency-based home care aides constitute the domestic worker occupation with the highest share of Black, non-Hispanic workers (29.9%).

See Table 2 for a demographic breakdown of domestic workers by gender, nativity, race/ethnicity, education, and age. 

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Black and Hispanic women make up a disproportionate share of domestic workers: The share of domestic workers who are Black, Hispanic, or AAPI women, 2021

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hile women of all races and ethnicities are overrepresented in the domestic employee workforce, this overrepresentation is particularly pronounced for Hispanic and Black women. A majority (51.3%) of domestic workers are Black, Hispanic, or AAPI women—more than a quarter (26.6%) are Hispanic women and nearly 1 in 5 (19.3%) are Black women. Most house cleaners are Hispanic women (59.4%) and more than a quarter (26.6%) of agency-based home care aides are Black women.

See Table 3 for a detailed demographic breakdown showing the race/ethnicity and nativity of domestic workers by gender.

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Domestic workers are more likely than other workers to have been born outside the United States: Share of workers with given nativity status, for domestic workers, for all other workers, and by domestic worker occupation, 2021

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ore than a third (34.8%) of domestic workers were born outside of the United States, compared with just 16.9% of the rest of the workforce. Just less than 1 in 5 is a foreign-born noncitizen (18.5%), while about 1 in 6 is a U.S. citizen who was born in a different country (16.3%). While noncitizens are overrepresented in all domestic worker occupations, they are particularly overrepresented in the house cleaner workforce, making up half (49.9%) of house cleaners.

See Table 2 for a demographic breakdown of domestic workers by gender, nativity, race/ethnicity, education, and age. Table 3 provides even more detail, showing the race/ethnicity and nativity of domestic workers by gender.

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Domestic workers tend to be older than other workers: Share of workers by age group, for domestic workers, for all other workers, and by domestic worker occupation, 2021

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wo in five domestic workers are age 50 or older (40.2%), while just one-third of all other workers are at least 50 years old (33.7%). Home care aides who aren’t agency-based are the domestic worker occupation with the highest median age (52). The exception to the tendency of domestic workers to skew older is the occupation of nannies, whose median age is 25. More than one-third of nannies are younger than 23 years old (37.8%), compared with 8.1% of nondomestic workers who are younger than age 23.

These data suggest that domestic work is often an important source of income for older workers. The reliance of some older workers on income from domestic occupations is particularly relevant during the coronavirus pandemic—older workers have a greater risk of severe illness from the virus—and underscores the need to provide domestic workers with access to paid sick leave and adequate protective equipment.

See Table 2 for more detailed age categories and the median ages of domestic workers.

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How many domestic workers are employed in your state?: Number of domestic workers working in each state, by occupation and compared with all workers, 2021

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his map is color-coded to show which states have the most domestic workers. You can click on a state to display how many domestic workers total are employed there, and how many are employed in each domestic worker occupation, and compare these with the number of workers in all other occupations. You can access the map data from Table 4, which also shows employment counts by region. Employment counts for selected metropolitan areas are available in Table 5.

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There is a wide and persistent gap between domestic workers’ wages and wages of all other workers: Median real hourly wages of domestic workers, by occupation, versus other workers, 2010–2021

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here is a large “domestic worker wage gap”—a wide gulf between the median hourly wage of domestic workers and the median hourly wage of all other workers. The wage gap for domestic workers is not only large, but it is also persistent. Like other typical workers, domestic workers have seen stagnant wages for decades (since well before 2010, which is the starting point in this chart because it is the first year for which data are available for the domestic worker occupations defined in our analyses). For an in-depth look at the sluggish wage growth of the last 40 years, see EPI’s 2019 report State of Working America Wages (Gould 2020).

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The pay gap for domestic workers is widest for house cleaners: Median real hourly wages, domestic workers (all and by occupation) versus other workers, 2021

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he typical domestic worker is paid $13.79 per hour, including overtime, tips, and commissions—36.6% less than the typical nondomestic worker, who is paid $21.76. This wide gap between domestic workers’ wages and the wages of all other workers is consistent across domestic worker occupations.

Table 6 shows the median real hourly wages of domestic workers, all other workers, and domestic workers by occupation broken out by gender, nativity, race/ethnicity, education, and age. 

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Domestic workers who are male, U.S.-born, AAPI, college-educated, or ages 50 and older have the biggest wage gaps relative to their peers in other professions: Median real hourly wages, domestic workers versus other workers, 2021

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Within every demographic category that we analyze, domestic workers are typically paid less than their peers. Male domestic workers face a larger wage gap relative to other men (a $9.10 gap, or a 37.9% decrease) than do female domestic workers (a $6.58 gap, or 32.8% decrease; not shown). Asian American and Pacific Islander domestic workers, older domestic workers, and domestic workers with at least a bachelor’s degree also face particularly large within-group wage gaps.

Table 6 shows the median hourly wages of all domestic workers versus all other workers, and by domestic worker occupation, broken out by gender, nativity, race/ethnicity, education, and age.

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Even when controlling for demographics and education, domestic workers are paid less than similar workers: Average domestic worker hourly wages as a share of wages paid to demographically similar workers in other professions, 2021

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Even when we control for demographics and educational background using regression analysis that holds these other influences constant, domestic workers face a big pay gap: The average domestic worker is paid 75 cents for every dollar that a similar worker would make in another occupation—or 25% less. Home care aides who are not agency-based face the largest wage gap: Their wages are two-thirds the wages of demographically similar workers—a third less. Although the regression-adjusted wage gap is smaller for nannies and house cleaners, they are still paid only about 80 cents for every dollar that a similar worker would make in another occupation.

Table 7 shows regression-adjusted hourly wage gaps for all domestic workers and for each domestic worker occupation, broken out by gender, nativity, race/ethnicity, education, and age.

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Domestic workers are more likely to work part time and more than twice as likely to work part time because they can't get full-time hours: Share of workers who work full and part time, for domestic workers, for all other workers, and by domestic worker occupation, 2021

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In addition to having lower hourly wages, domestic workers tend to work fewer hours than other workers. Nearly half of domestic workers work part time, compared with less than a quarter of all other workers. Much of this difference is at least somewhat “voluntary,” with domestic workers being more likely than other workers to have a part-time job because they want a part-time schedule (or need a part-time schedule to handle child care or other responsibilities). But domestic workers are also more than twice as likely as other workers to want a full-time job but to have to settle for a part-time job because they can’t get full-time hours. The greater likelihood of wanting but being unable to get full-time work is particularly acute for house cleaners, 17.6% of whom work part time but would like a full-time job. The greater incidence of part-time work among domestic workers is reflected in their average weekly hours on the job (not shown). While workers in other occupations put in just less than 40 hours a week on average, domestic workers spend an average of 33.6 hours on the job each week.

Table 8 displays the data from this chart, as well as the average weekly hours of domestic workers.

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Domestic workers are paid less in a year than other workers: Median annual earnings, domestic workers versus other workers, 2018

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The combination of lower average hours and much lower median wages (shown in Table 8 and Figure 8) results in substantially lower annual earnings for domestic workers relative to other workers. The typical domestic worker’s annual earnings are just two-fifths of a typical worker’s in another occupation. While typical agency-based home care aides have higher annual earnings than domestic workers in other occupations, they still are paid just half of what workers outside the domestic workforce are paid in a year.

Table 9 shows the median annual earnings of all domestic workers, domestic worker occupations, and all other workers, broken out by gender, nativity, race/ethnicity, education, and age.

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Even when controlling for demographics and education, domestic workers are paid less in a year than similar workers: Average domestic worker annual earnings as a share of earnings paid to demographically similar workers in other professions, 2018

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Even when we control for demographics and educational background using a regression, domestic workers face a big gap in annual pay as a result of lower hourly wages and fewer hours: The average domestic worker is paid less than half of what a similar worker would make in another profession on an annual basis. Nannies face the largest gap: Their annual earnings are less than one-third the earnings of a demographically similar worker. Although the regression-adjusted earnings gap is smaller for agency-based home care aides, they are still paid 42.8% less annually than a similar worker would be paid in another occupation.

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Domestic workers are three times as likely to be in poverty and almost three times as likely to lack enough income to make ends meet: Poverty rates and twice-poverty rates of domestic workers versus other workers, 2018

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Domestic workers are much more likely than other workers to be living in poverty, regardless of occupation. They are also much more likely to have incomes that fall below the twice-poverty threshold, which is considered by many researchers a better cutoff for whether a family has enough income to make ends meet. The majority of house cleaners are struggling to make ends meet (their “twice-poverty” rate is 54.8%) and more than a quarter (25.4%) have incomes that put them below the official poverty threshold. Workers who provide child care in their own homes have somewhat lower poverty rates than other domestic workers, although a third of them (32.4%) still do not have enough income to make ends meet—about twice the share of the nondomestic workforce living below the twice-poverty line. Domestic workers who are not U.S. citizens and those without a high school diploma face particularly high poverty rates, as do Black and Hispanic domestic workers. (These data are shown at the end of the chartbook in Table 10 and Table 11, which provide poverty and twice-poverty rates for domestic workers and all other workers broken out by gender, nativity, race/ethnicity, education, and age.)

Poverty researchers generally do not consider the poverty rate to be a good measure of the share of families who cannot make ends meet in part because the poverty thresholds were set in the 1960s and have not evolved to reflect changing shares of spending on various necessities by low-income families. That is why “twice-poverty” is often used as a cutoff for whether a family is able to make ends meet.

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Even when controlling for demographics and education, domestic workers are more likely to live below the poverty line than similar workers: Percentage-point difference between the poverty rate of domestic workers and that of demographically similar workers in other occupations, 2018

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Even when we compare domestic workers exclusively with workers in other professions who are demographically similar, domestic workers are still much more likely to be living in poverty. House cleaners on average have a poverty rate that is 14.0 percentage points higher than the poverty rate of similar workers. Along with agency-based home care aides, house cleaners also have twice-poverty rates that are nearly 20 percentage points higher than you would expect these rates to be if these workers were employed in nondomestic occupations.

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Domestic workers are less likely to have health or retirement benefits: Employer-provided health insurance and retirement coverage rates, domestic workers versus other workers, 2018

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Just less than 1 in 5 domestic workers has employer-provided health insurance, a shockingly low coverage rate compared with the near-majority of other workers who receive health insurance through their job. Coverage rates are less than 10% for house cleaners and workers who provide child care in their own home. Even agency-based home care aides, the domestic worker occupation with the highest employer-provided health insurance coverage rate, are barely half as likely to be covered as nondomestic workers.

The coverage rates for employer-provided retirement plans are even more dismal—fewer than 1 in 10 domestic workers are covered. By comparison, about a third of other workers benefit from their employer contributing to their retirement savings.

See Table 12 and Table 13 for variations in employer-provided health insurance and retirement coverage rates for domestic and all other workers by gender, nativity, race/ethnicity, education, and age.

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Even when controlling for demographics and education, domestic workers are less likely to have benefits than similar workers: Percentage-point gap between the coverage rates of domestic workers and those of demographically similar workers in other occupations, 2018

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he glaring gaps in health insurance and retirement coverage rates are evident even when we compare domestic workers with demographically similar workers. The share of domestic workers with employer-provided health insurance is 21.4 percentage points lower than the share of all other workers with such coverage. Additionally, the share of domestic workers with employer-provided retirement plans is 17.1 percentage points lower than the share of all other workers with such coverage. Agency-based home care aides are more likely than other domestic workers to have employer-provided benefits, but the gap between these workers and nondomestic workers remains enormous even after controlling for demographic characteristics.

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Employment in domestic worker occupations is growing faster than the rest of the workforce: Projected employment change, domestic workers versus other workers, 2020–2030

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mployment in domestic worker occupations is projected to grow more than three times as fast as employment in other occupations over a decade—25.3% compared with 7.2%. This trend is driven by the expected large increase (37.9%) in agency-based home care aides, who make up about half of the domestic employee workforce. Given the increased social need for workers in this industry, it is all the more important that significant public investment help bolster higher wages and enforcement of labor standards, as so far, the market has failed to do so on its own. High consumer costs paired with the potential for positive spillover effects from domestic work makes this industry ideal for government support and investment.

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Table 1

Table 2

Table 3

Table 4

Table 5

Table 6

Table 7

Table 8

Table 9

Table 10

Table 11

Table 12

Table 13

Technical notes about data and definitions

The figures and tables in this chartbook use data from the Current Population Survey (CPS), a monthly survey of households in the United States sponsored jointly by the U.S. Census Bureau and the U.S. Bureau of Labor Statistics (BLS). Our CPS Basic and Outgoing Rotation Group (ORG) microdata are pulled from the Economic Policy Institute Current Population Survey Extracts, Version 1.0.32 (2022), https://microdata.epi.org.

In our analyses of hourly wages, we use data from the CPS’s Outgoing Rotation Group, a CPS subgroup of employed adults asked to answer a detailed set of questions about their earnings from work. Our analyses of annual earnings, benefits, and poverty rates come from the CPS’s Annual Social and Economic Supplement (ASEC). To ensure adequate sample sizes for these detailed analyses, we pool several years of CPS, CPS-ORG, or CPS-ASEC microdata. Most data sets are drawn from pooled 2019–2021 microdata. Given limitations in the 2020 ASEC, we use the 2018 data for those graphs on earnings, poverty rates, and benefit levels. Data sets that are broken down by geography are drawn from pooled 2010–2021 microdata. Even after pooling years together, we still do not have adequate sample sizes to report statistics for some demographic groups, as indicated in the tables by “NA.”

The CPS asks respondents about both race and ethnicity, so respondents may be categorized as having Hispanic ethnicity and being of any race. To avoid including observations in multiple categories, we create five mutually exclusive categories for race/ethnicity: white (non-Hispanic), Black (non-Hispanic), Hispanic (any race), Asian American and Pacific Islander (non-Hispanic; sometimes referred to as “AAPI” in this report), and “other.” Likewise, gender is restricted to the two predominant binary categories: women and men. Note that for clarity, when discussing our findings, we adhere to the category name of “Hispanic,” which is used in official government sources, rather than Latino, Latina, or Latinx.

In our charts, “foreign-born” refers to anyone who is not a U.S. citizen at birth. “Foreign-born noncitizen” includes foreign-born persons who are either lawful permanent residents, in a nonimmigrant status (migrants with temporary visas), or lacking an immigration status, including both unauthorized immigrants and those with lawful presence (such as Deferred Action for Childhood Arrivals recipients and asylum applicants whose cases are in process).

The data include all public- and private-sector workers ages 16 and older. Due to rounding, in a few cases sums that can be calculated by using the data in tables or figures vary slightly from sums cited in the text.

Conclusion

While many characteristics of the domestic workforce showed little change compared with pre-pandemic conditions, there are some notable differences between the pre-pandemic domestic workforce and the still-recovering current workforce. Namely, there was a decline in the number of domestic workers in the United States between 2019 and 2021. In 2019, there were 2,245,047 domestic workers employed and in 2021, there were 2,158,969. This represents about a 4% decrease compared with the pre-pandemic employment count. This aligns with reports of a severe shortage in child care and other care industries. The decrease also could reflect several “push-pull” factors: as institutional center-based child and elder care shut down, home-based care may have filled some of that gap, but also likely still fell due to labor supply considerations and other economic factors. This is likely due in part to the decimation and unpredictable closing and reopening of care institutions in 2020 and 2021, and the persistent low pay and burnout. Even after the pandemic, domestic workers continued to face persistent wage gaps compared with similarly credentialed workers.

At the same time, domestic work occupations are projected to grow at a faster pace than the rest of the workforce. The pandemic demonstrated just how crucial domestic workers are to supporting families and households across the country. We need serious investment and funding for the domestic workforce to ensure that new domestic work jobs are good jobs paying family-sustaining wages, and providing dignified protections and working conditions to workers, while allowing families to access quality, affordable care. The federal passage of a domestic workers’ bill of rights, or even the wider adoption of such a bill of rights by more states, would be a step toward acknowledging the value of this necessary facet of our economy, and toward improving working conditions for women older workers, and workers of color. Domestic work is vital labor, and it is long past time it is valued and compensated as such.

Acknowledgments

The authors would like to thank EPI Editor Krista Faries for improving the original chartbook through her careful editing and preparing of figures and tables for publication. And we are indebted to EPI’s Online and Creative Director, Eric Shansby, who created the awesome system that makes it possible to design and publish these interactive chartbooks.

Notes

1. See Wolfe et al. (2020) for the previous version of the Domestic Workers Chartbook, which used data from 2010–2019.

2. This figure comes from the Current Population Survey (CPS)—a monthly survey of the nation’s households that asks detailed questions about work.

References

Banerjee, Asha, Elise Gould, and Marokey Sawo. 2021. Setting Higher Wages for Child Care and Home Health Care Workers Is Long Overdue. Economic Policy Institute, November 2021.

Burnham, Linda, and Nik Theodore. 2012. Home Economics: The Invisible and Unregulated World of Domestic Work. National Domestic Workers Alliance, 2012.

Dresser, Laura. 2015. Valuing Care by Valuing Care Workers: The Big Cost of a Worthy Standard and Some Steps Toward It. Roosevelt Institute, October 2015.

Gould, Elise. 2020. State of Working America Wages 2019: A Story of Slow, Uneven, and Unequal Wage Growth over the Last 40 Years. Economic Policy Institute, February 2020.

National Domestic Workers Alliance (NDWA). 2020. 6 Months in Crisis: The Impact of COVID-19 on Domestic Workers. October 2020.

Nilsen, Ella. 2021. “These Workers Were Left Out of The New Deal. They’ve Been Fighting for Better Pay Ever Since.” Vox, May 18, 2021.

Occupational Safety and Health Administration (OSHA). 1975. “Policy as to Domestic Household Employment Activities in Private Residences.” Standard Number 1975.6.

U.S. Department of the Treasury (Treasury). 2021. The Economics of Child Care Supply in the United States. September 2021.

U.S. General Accounting Office (GAO). 1998. Immigration Statistics: Information Gaps, Quality Issues Limit Utility of Federal Data to Policymakers. July 1998.

Wolfe, Julia. 2020. “Domestic Workers Are at Risk During the Coronavirus Crisis: Data Show Most Domestic Workers are Black, Hispanic, or Asian Women.” Working Economics Blog (Economic Policy Institute), April 8, 2020.

Wolfe, Julia, Jori Kandra, Lora Engdahl, and Heidi Shierholz. 2020. Domestic Workers Chartbook: A Comprehensive Look at the Demographics, Wages, Benefits, and Poverty Rates of the Professionals Who Care for Our Family Members and Clean Our Homes. Economic Policy Institute, May 2020.

• establishing dedicated local labor standards offices that enforce workers’ rights laws 
• establishing ongoing worker boards or councils 
• passing local worker protection laws
• actively enforcing local worker protection laws 
• setting job quality standards for contractors with the municipal government 
• establishing legal consequences for labor violations among applicants for municipal permits or licenses 
• practicing high-road employment principles in relation to municipal employees
• championing worker issues through public leadership 

While other reports have done an excellent job of exploring local action on specific issues like paid sick leave, living wages, and creation of worker boards, this report identifies and examines the broader trend of increased local action and analyzes the landscape of cities and other localities’ pro-worker actions in a comprehensive way.

Why it matters: Policies and enforcement that protect the rights of workers, ensure workers are able to meet their basic needs, and support workers’ efforts to organize are foundational to building healthy, thriving, and equitable communities. Working people in the United States today face multiple crisis situations that not only adversely impact their well-being, but also undermine the health and well-being of communities. Outdated labor laws are skewed against workers trying to form and join unions, and workers who try often face retaliation and other violations by employers. Public enforcement resources are inadequate, and workers are increasingly unable to bring their claims in court because of forced arbitration. In this context, cities and localities are vitally important and necessary actors in the effort to expand and enforce workers’ rights. They are close to their residents, and often are nimble and fast-moving in responding to emerging needs. A few cities (along with a few states) are also at the vanguard of innovating on policy and piloting new approaches to expanding and protecting workers’ rights. There is very meaningful work currently happening at the local level, with untapped potential for much more local action. 

What can be done about it: Local policymakers, enforcers, advocates, and community members can work together to pilot new local laws, create dedicated labor enforcement agencies and worker boards, develop strategic community enforcement partnerships, and use permits to drive compliance. Localities can fight abusive state preemption that impairs the abilities of local governments to build upon minimum standards set at the state level. Unions, worker advocates, and the public can think creatively about how to enact measures within their own localities and press for action. Other actors and observers in this space—federal and state government, the media, funders, academics, and more—should develop a greater understanding of the emerging role of cities in protecting working people. They should work to institutionalize and chronicle protecting and supporting workers as part of our understanding of what localities do. This report offers a road map of opportunities to enact policies at the local level that advance workers’ rights and improve working conditions.

Executive summary

In recent years, cities, counties, and other localities have become innovators and leaders in standing up for working people. Responding to increased inequality, degraded working conditions, and insufficient or inconsistent worker protections at the state and federal level, localities have in many cases joined states as the “laboratories” of experimentation (as Supreme Court Justice Louis D. Brandeis described) in relation to workplace matters.1 A number of localities have come to view protecting workers and improving their conditions as part of their core municipal function.

This report provides an overview of some of the most noteworthy ways in which localities have taken action on behalf of working people in recent years:

• Some localities have established dedicated local labor standards offices that enforce workers’ rights laws; educate employers, workers, and the public about these laws; and in some cases help formulate or inform municipal policy in this area.
• Localities have established ongoing worker boards or councils to provide workers with a formal role in local government and/or access to local officials and agencies.
• Other localities have focused on passing local worker protection laws, including ordinances regarding minimum wages, paid sick leave, and fair scheduling; industry-specific protections for sectors with high violation rates or specific vulnerability (such as the domestic worker, gig, hotel, retail, fast-food and freelance industries); broader anti-discrimination protections; and specific laws responsive to the COVID-19 pandemic.
• Localities are actively enforcing local worker protection laws, including with funded community partnership models in some instances.
• Some localities have established job quality standards for contractors, while others have established legal consequences (including denial and revocation) for applicants for initial or renewed municipal permits or licenses who have a history of wage theft violations or unresolved labor standards orders.
• Localities are demonstrating how to be a high-road employer of municipal employees, including by incorporating labor standards like higher minimum wages and paid sick leave, and enabling or facilitating collective bargaining among workers in local government.
• Active localities and local elected and appointed government leaders are exerting leadership in the public sphere, through education and outreach about labor laws, issuance of reports, convenings and public hearings, and use of the bully pulpit.

Federal—and in some cases state—preemption creates some limitations on what localities can do to expand and protect workers’ rights. Preemption occurs when federal or state law prevents subordinate levels of government (in this case, municipalities) from legislating or acting on a given issue. Still, local governments have considerable opportunity to take meaningful action on behalf of the working people within their jurisdictions.

The time is ripe for local action to advance workers’ rights. Working people are expressing dissatisfaction with worsening working conditions by resigning, forming and joining unions, and demanding change. 

Overview and introduction

Policies and enforcement that protect the rights of workers, ensure that workers are able to meet their basic needs, and support workers’ efforts to organize are foundational to building healthy, thriving, and equitable communities (Bhatia et al. 2013; USC ERI 2020). Working people in the United States today face multiple crisis situations that not only adversely impact their well-being, but also undermine the health and well-being of communities. The COVID-19 pandemic has led to many workplace clusters. Federal and state workplace measures have been varied, yet insufficient, to provide adequate protection from the virus.

Even before the pandemic, working people had been experiencing a multitude of serious challenges. Two widespread challenges are wage theft—the practice of employers failing to pay workers the full wages to which they are legally entitled—and misclassification of workers as independent contractors—the practice of employers labeling workers as independent contractors, rather than employees, to avoid paying unemployment and other taxes on workers and covering them with workers’ compensation insurance. Outdated labor laws are skewed against workers trying to form and join unions, and workers who try often face retaliation and other violations by employers (McNicholas 2019). Public enforcement resources are inadequate, and workers are increasingly unable to bring their claims in court because of forced arbitration (Hamaji et al. 2019). Employers who fail to pay unemployment or other taxes deprive public coffers of resources needed for programs serving important human needs (Erlich 2019). Meanwhile, the labor market itself is skewed—workers’ wages have not kept up with their productivity (Mishel 2021), and corporate concentration along with anti-competitive practices add to workers’ challenges in getting a fair wage (Stansbury 2021). These challenges have fallen hardest on workers of color and workers in low-wage industries.

Federal and state leaders who wish to take action on these thorny and deep-seated issues often face significant obstacles when they seek to pass laws, promulgate regulations, or take other steps responsive to workers’ needs. Such challenges can be even greater in relation to emerging developments in the workplace.

Supreme Court Justice Louis Brandeis famously described states as laboratories of public policy experimentation.2 In relation to workers’ rights, U.S. localities3 have been true laboratories of experimentation in recent years (Diller 2014).4 Historically, the federal government and states have been responsible for workplace regulation; over the years, cities and localities have not generally taken a leading role.5 But in roughly the past decade, cities and localities have become increasingly important actors in expanding and enforcing workers’ rights—what some commentators have called the “municipalization” of labor law (Sarchet 2021).

Cities and localities have introduced cutting-edge laws that do not exist at the federal or state level (including some responsive to newly emerging problems); established new offices devoted to protecting workers; used their contracting, licensing, and permitting powers to drive employer compliance; and implemented new methods of enforcement, including close and even funded partnerships with worker and community organizations. Such action by localities has occurred not only in traditionally worker-friendly regions, but also in progressive cities located within more conservative states. (Efforts in such locales have often, but not always, been met with state-level preemption measures, as noted by Blair et al. 2020 and Wolfe et al. 2021). And in some cases, such as the expansion of paid sick days, policy leadership at the local level has provided proof of concept and helped build momentum for states (and earlier in the pandemic, even the federal government) to take action. Local government action on workers’ rights also often reflects efforts to address local conditions when it comes to cost of living, dominant and emerging industries, and the needs and organizing of specific communities (especially communities of color and immigrant communities).

This report provides both an outline and a road map: an outline of actions that cities and localities have taken in recent years to protect workers, and a road map of possible policy and enforcement options for local leaders, both elected and appointed, to consider.6 Such actions include:

• establishing a dedicated department, office, or subagency within city government focused on worker issues
• creating boards or councils that provide workers with a voice, a role, and/or access to local government
• passing laws that create new and essential rights for workers
• enforcing worker protection laws, including through strategic, innovative, and/or collaborative approaches
• leveraging contracting, licensing, and/or permitting powers to raise and address worker issues
• incorporating high-road employment practices and labor policies in relation to their own municipal workforces
• using soft powers, including community education and outreach, issuance of reports, and other “bully pulpit” vehicles for reaching the community and highlighting worker needs and available resources

Notably, some cities and localities have taken meaningful action to protect workers and advance their rights and well-being during the COVID-19 pandemic; more should follow suit. This report also outlines a number of measures taken at the local level in response to COVID-19.

This report is intended not only for local leaders, but also for labor unions and worker advocates, to help deepen their understanding of policy and enforcement levers at the local government level in order to guide advocacy and collaborative governance efforts. This report can also inspire academics and other researchers to study local efforts to advance workers’ rights. Finally, policymakers at all levels of government should pay attention to the innovative solutions advanced by localities. ​​

At least 20 localities have created or are creating dedicated local labor agencies

A number of localities have created agencies specifically dedicated to enforcing workers’ rights under local ordinances, including laws addressing minimum wages,7 wage theft, paid sick and safe leave, fair scheduling/fair workweek requirements requiring advance notice of scheduling, fair chance hiring laws, gig worker rights, and more. Several of these agencies are also charged with analyzing and potentially proposing local labor policies. In other instances, localities do not have a dedicated stand-alone office, but units of other municipal agencies focus specifically on workers’ rights matters. And some localities without dedicated units have tasked specific government entities with enforcing wage theft or paid sick leave laws, such as a city manager, treasurer, or attorney; office of human rights; unit of the mayor’s office; or other officials (A Better Balance n.d.b.; Boulder 2022; Pinellas OHR n.d.; Miami-Dade WTP n.d.).8

Creation of a dedicated unit within local government focused on workers’ rights can be transformative. It ensures that municipal public servants will be involved in worker protection in a continuous, proactive, ongoing, and in-depth manner. It allows specialized staff to develop expertise on the relevant municipal laws and policies, as well as deep knowledge of issues affecting local workers. Where there is a dedicated worker-focused office in local government, staffers can develop ongoing relationships with relevant stakeholders like worker advocacy groups, unions, immigrant rights advocates or service providers, employment lawyers, and employer associations, as well as other relevant government enforcement agencies at the local, state, and federal levels. A dedicated office also can be mobilized to address emerging needs, including those that arose in the COVID-19 pandemic. Most importantly, establishment of a dedicated office institutionalizes and embeds the work within local government, ensuring the focus on workers and their challenges will continue beyond a particular administration.

Jurisdictions with dedicated agencies, subdivisions, or staff include Berkeley (California), Boston, Chicago, Denver, Duluth (Minnesota), Emeryville (California), Flagstaff (Arizona), Los Angeles City, Los Angeles County, Minneapolis, New York City, Philadelphia, San Francisco, San Jose, Santa Clara County (California), Seattle, St. Paul (Minnesota), and Tacoma (Washington).9 In addition, the San Diego County Board of Supervisors voted in 2021 to create a county labor office, and the San Diego City Council followed suit in 2022 by voting to create a labor enforcement office in a new Compliance Department.10 Tucson, Arizona, voters in 2021 passed a ballot initiative to create a local minimum wage and also a city Department of Labor Standards.11 Numerous Florida localities have created wage theft enforcement or mediation programs of various kinds: Broward County (complaint form), Miami-Dade County, and Pinellas County.12 Via court order, Palm Beach County created a Wage Dispute Division within the county civil court.13

More dedicated units to enforce workers’ rights are likely on the horizon. For example, a legislative proposal resulting from the work of an Earned Sick and Safe Leave Task Force is currently under consideration in Bloomington, Minnesota (population of approximately 90,000), home of the Mall of America.14 The city manager there has stated that two full-time equivalent staffers (one attorney and one paralegal) would be needed for this work.15

Snapshots of several local agencies in cities of varying size:

Berkeley, California (Pop. 124,321): The Workplace Enforcement and Standards Unit was created in 2014. It currently has a single full-time equivalent (FTE) employee, who also holds nonlabor-related responsibilities in addition to enforcing the city’s minimum wage, living wage, paid sick leave, and other laws (U.S. Census Bureau 2022a).

Chicago (Pop. 2.7 million): Chicago’s Office of Labor Standards, housed in the Department of Business Affairs and Consumer Protection, began operating in 2019 (its official launch date was in 2020). As of June 2022, the office has eight FTEs. It enforces the city’s minimum wage, wage theft, paid sick leave, fair workweek, COVID and vaccine anti-retaliation laws, as well as a law effective in January 2022 requiring employers of domestic workers to provide them with written contracts (U.S. Census Bureau 2022b).

Denver (Pop. 715,522): Denver Labor, created in 2019, is a division enforcing wage and hour laws located in the Denver auditor’s office. The office has 25 FTEs, and it enforces the city’s minimum wage laws, as well as a number of laws related to government work: a minimum wage applicable to city contractors, the city’s prevailing wage, the city’s living wage, and more. The office also has a community education emphasis: there are full-time community education staff and an annual outreach/education plan, including radio and internet ads, weekly online training, hundreds of outreach events, and multilingual written materials (U.S. Census Bureau 2022c).

Duluth, Minnesota (Pop. 86,697): Enforcement of Duluth’s earned sick and safe time law (effective in 2020) is handled through the equivalent of one employee housed in the city clerk’s office (U.S. Census Bureau 2022d).

Los Angeles City (Pop. 3.9 million): The Office of Wage Standards in the city of Los Angeles was created in 2015. It is authorized to have 30 FTEs, although in February 2022, this figure included nine vacancies. It enforces the city’s minimum wage, paid sick leave, and fair chance hiring laws (U.S. Census Bureau 2022f). (The county of Los Angeles has a separate enforcement agency that enforces the county’s own workplace laws.)

Minneapolis (Pop. 429,954): The Labor Standards Enforcement Division was created within the city’s Department of Civil Rights in 2016. The office has five FTEs, and it enforces the city’s paid sick and safe time, minimum wage, wage theft, and freelance worker protections laws, as well as a law giving hospitality workers the right of recall, which will sunset one year after the COVID-19 public health emergency (U.S. Census Bureau 2022g).

New York City (Pop. 8.8 million): New York City’s Office of Labor Standards and Policy was created in 2016, and is housed in the Department of Consumer and Worker Protection (DCWP). (That agency was long known as the Department of Consumer Affairs; its name changed in 2019 (Greenbaum 2019) in part to convey the agency’s focus on workers as well as consumers.) In 2021, the office had 33 FTEs. While it lacks jurisdiction to set a city minimum wage, the office enforces the city’s Paid Safe and Sick Leave Law, Freelance Isn’t Free Act, and the Fair Workweek Law in retail and fast-food, as well as several new cutting-edge laws, including a “just cause” termination law giving fast-food employees protections against arbitrary termination, and a law giving food delivery workers greater control over their working conditions and authorizing DCWP to set a minimum pay rate (U.S. Census Bureau 2022h).

Philadelphia (Pop. 1.6 million): In the June 2020 primary election, voters of Philadelphia overwhelmingly approved a ballot question to amend the city charter to create a city department of labor, demonstrating widespread public support for municipal involvement in workers’ rights issues (U.S. Census Bureau 2022i; Ballotpedia n.d.). The head of the Philadelphia Department of Labor is the deputy mayor for labor, holding a high-profile position within city government. The Office of Worker Protections, located within the department, has a total of nine FTEs, and enforces wage theft, paid sick leave, and fair workweek laws; laws covering specific industries (domestic worker bill of rights, wrongful discharge of parking employment, recall and/or retention of hotel, travel and hospitality workers); and more. The office established a domestic worker task force and has been tasked with creating a portable benefits system for domestic workers (Orso 2020), likely to be the nation’s first. In addition, in 2020 and 2021, the office partnered with worker organizations on a citywide effort on the Philadelphia Worker Relief Fund (MF Phila. n.d.; Cox 2020), which distributed more than $2.2 million to 2,820 families left out of COVID-19 government relief (Philadelphia 2020a). The office also collaborated on a referral system with the city health department’s COVID-19 containment unit to mediate paid sick leave when workers reported exposure.

San Francisco (Pop. 873,965): San Francisco’s Office of Labor Standards Enforcement (OLSE) was created nearly 20 years ago (San Francisco n.d.a; SF OLSE n.d.e). The office has 30 FTEs, and currently enforces more than 30 citywide laws, including ordinances on minimum wage, paid sick leave, fair chance employment, scheduling laws, and others, as well as a handful of other laws related to government contracting (SF OLSE n.d.f; U.S. Census Bureau 2022j).

San Jose (Pop. 983,489): San Jose’s Office of Equality Assurance, with a staff of eleven, implements, monitors, and administers the city’s wage policies, including the living wage law applicable to city service contracts, the prevailing wage law which covers public works (construction) projects, and the minimum wage ordinance applicable to employers for work performed within the city. The Office also contracts with a number of neighboring localities to provide minimum wage enforcement services for their own local minimum wages. For example, in 2020, the City of San Jose entered into contracts with the nearby cities of Burlingame, Cupertino, Milpitas, Redwood City, San Carlos, San Mateo, Santa Clara, South San Francisco, and Sunnyvale; maximum compensation under the contracts is $40,000 to $45,000 to cover a period of two and a half to three years. This arrangement allows smaller localities to functionally pool resources in order to have their local laws enforced (San Jose 2020; San Jose n.d.; U.S. Census Bureau 2022k).

Santa Clara County, California (Pop. 1.9 million): The County’s Office of Labor Standards Enforcement was created in 2017. The office has capacity for five FTEs; four were filled as of May 2022. Among other things, the office ensures that recipients of county permits, licenses, and contracts comply with labor laws and satisfy outstanding judgments issued by the California Labor Commissioner’s Office. The office also enforces wage theft prevention and living wage requirements related to contracting, contained in Chapter 5 of the Santa Clara Board of Supervisors Policy Manual (Section 5.5.5.4) (SC BOS 2020). In 2021, the office also enforced a hazard pay ordinance related to COVID-19 (SC OLSE n.d.c; U.S. Census Bureau 2022l).

A deeper dive into Seattle’s local labor agency

Seattle’s Office of Labor Standards has grown rapidly since its creation in 2015 as a division within the Seattle Office of Civil Rights. The Office of Labor Standards became an independent, standalone city agency in 2017, and the breadth and impact of its activities provide a useful example of the potential of municipal labor agencies.

Staffing: As of February 2022, the office had 34 FTEs and one full-time temporary position. These position include a director, deputy director, communications manager, seven outreach positions, four policy-focused positions, three operations and finance positions, and eighteen enforcement officials.

Ordinances: The office enforces 18 city laws. These include laws of broad application (paid sick and safe time, fair chance employment, wage theft, and commuter benefits ordinances); laws targeting specific industries (secure scheduling ordinance for retail and food services workers, as well as ordinances protecting domestic workers, transportation network company drivers, and hotel workers); and laws enacted during the COVID-19 pandemic (paid sick and safe time for gig workers, as well as premium/hazard pay for gig workers/grocery employees) (Seattle OLS 2012, 2013, 2015a, 2015b, 2017, 2020b, 2020d, 2020e, 2020h, 2021a). Finally, on September 1, 2022, the Independent Contractor Protections Ordinance (Seattle OLS 2021b) will take effect; it will require commercial hiring entities to provide certain precontract disclosures and payment disclosures, and also requires timely payment of contracts. See Section 6 for more in-depth discussion.

Enforcement: The office has brought a number of successful enforcement actions, including in fast-food, gig economy, construction, retail, grocery, and other industries. These cases are described in Section 7.

Policymaking: The office has helped develop city labor policy in various ways. The office ran a broad policymaking process to develop two labor standards ordinances for transportation network companies (TNC) drivers, including contracting for a minimum compensation standard study (Reich and Parrott 2020). The office conducted an extensive stakeholder process and drafted the eventual TNC Driver Minimum Compensation Ordinance (Seattle OLS 2020i), which went into effect in 2021 and the TNC Driver Deactivation Rights Ordinance (DRO). The DRO provides drivers protection against unwarranted termination from companies’ platforms, a pathway to resolve deactivation disputes before a neutral arbitrator, and which created a first-in-the-nation Driver Resolution Center to provide consultation and direct representation to drivers facing deactivation, along with culturally relevant outreach and education, and other support. The Office of Labor Standards completed a request for proposal to award an 18-month contract for just more than $5 million to a community organization to get the Driver Resolution Center up and running (Seattle OLS n.d.h).16

In addition, pursuant to a city council resolution and recommendation by the city’s Domestic Workers Standards Board,17 the Office of Labor Standards will be crafting a proposal for portable paid time off for domestic workers.

Pandemic response: The Office of Labor Standards has taken numerous actions in response to the COVID-19 pandemic. In April 2020, following amendment of the city’s Paid Sick and Safe Time Ordinance (PSST) to expand PSST uses in response to COVID-19, the office conducted emergency rulemaking to ease the burden of verification for use of PSST on workers and the health care system. The office provided updated information in more than 11 languages and, with the city’s Department of Neighborhoods, increased access to this information through audio and video recordings, as well as through trainings and town hall meetings. Responding to the increase of domestic violence during the pandemic, the office also partnered on a safe leave training with a local community organization, API Chaya, and the Mayor’s Office on Domestic Violence and Sexual Assault.

The office also assisted in distribution of food vouchers and masks via community-based organizations, including the office’s Community Education and Outreach Fund partners, to workers who experienced structural or institutional barriers to accessing support from government (e.g., language barrier, fear of deportation, experienced domestic violence, did not qualify for other benefits). The community-based organizations enrolled more than 800 workers who had lost their jobs or experienced a decrease in hours or wages due to the pandemic. Each worker received $1,920 in grocery vouchers over a seven-month period.

Finally, along with the mayor’s office and the Office of Immigrant and Refugee Affairs, the Office of Labor Standards worked to increase access to unemployment funds for workers, especially for potentially misclassified gig workers and domestic workers, and also to enhance access to information about unemployment benefits in multiple languages. One effort included contracting with a community organization for three months to provide cultural- and language-specific outreach and referral assistance to transportation network company, taxi, and for-hire vehicle drivers seeking to access COVID-19-related relief resources. The community organization assisted 1,400 workers with their unemployment insurance claims in 12 languages, including Kiswahili, Nuer, Twi, and Hausa. Another effort included partnering with a local civil legal aid organization to provide training on unemployment insurance, and paid sick and safe time.

Several cities have created boards or councils to provide workers with a formal role and/or access to local government

Workers’ boards are bodies established by governments that include worker representation and that typically aim to provide workers with a voice and formal role in setting higher minimum standards for jobs in particular industries. These boards typically investigate challenges facing workers by conducting hearings and outreach activities, issuing reports on findings, and making recommendations regarding minimum wage rates, benefits, and workplace standards. By focusing on workers in specific industries, these boards are able to address industry-specific issues and involve workers and their organizations directly in governance decisions.

Professor Arindrajat Dube, based on his analysis of industry-specific wage boards in Australia, concludes that wage-setting boards “are much better positioned to deliver gains to middle-wage jobs than a single minimum pay standard” (Dube 2018); the local boards described here do not have wage-setting powers, but some may make recommendations. In 2019, the Center for American Progress issued a how-to guide for state and local governments and advocates interested in developing workers’ boards or similar structures (Andrias, Madland, and Wall 2019). The guide’s detailed recommendations include ensuring a broad mandate; requiring representative and democratic selection of members; granting boards authority to gather relevant information through hearings and investigations; granting boards authority to issue recommendations; creation of strong enforcement mechanisms to ensure compliance with new standards; and empowering worker participation in board activities by requiring employers to provide reasonable time to participate and compensating workers for their participation, among other things.

In some states, preemption of local wage or standard-setting limits potential recommendations a board could make that would result in material policy change; however, even then, workers’ boards may be able to impact local government purchasing and contracting policies, workforce development programs, tax abatement and incentive policies, economic development planning and community benefits agreements, distribution of local government funding, and workplace safety trainings. They may also be able to provide independent monitoring of local, state, and federal public health and labor laws, and inclusive economic development planning. Worker boards are a relatively new development, mostly established in the last five years.

The following are examples of several local worker boards or similar structures:

Seattle Domestic Workers Standards Board: In 2019, Seattle passed the Domestic Workers Ordinance, which along with establishing a minimum wage and entitling workers to rest and meal breaks, also created a Domestic Workers Standards Board (Seattle CC 2018). The board, members of which are appointed by the mayor and city council (and one member is appointed by the board itself), requires representation from domestic workers (including workers who are and are no members of worker organizations), employers, and the community (with an emphasis on vulnerable populations like people with disabilities) (Seattle OLS 2018a). The board is empowered to provide recommendations to the city council on workplace safety standards, discrimination and sexual harassment, training for workers and employers, access to leave, wage standards, workers’ compensation, hiring agreements, and other topics, and has been granted funding to implement these recommendations.

Detroit Industry Standards Boards: Detroit passed an ordinance in November 2021 creating a structure for industry standards boards (SEIU Healthcare 2021; Detroit 2021). A standards board in a specific industry can be established under the ordinance by the city council, at the request of the mayor, or by petition of at least 225 workers in a given industry. The standards boards are composed of workers, employer representatives, and other individuals appointed by the mayor and city council. The industry boards are tasked with investigating industry conditions, conducting outreach to workers, making recommendations as to pay, benefits, training opportunities and scheduling, and forwarding complaints to relevant enforcement agencies.

Harris County (Texas) Essential Workers Board: Harris County established an essential workers board in 2021 to advise the county on programs and policies that support essential workers. All members must be “low-income essential workers,” with at least one worker representative from each of the following essential industries: airport or transportation; construction; domestic work or home care; education or child care; grocery, convenience, or drug store; health care or public health; janitorial; food services, hospitality, or leisure services; and retail (Trovall 2021; Harris County 2021). In addition to advising the county on its overall approach to protecting essential workers’ rights and providing a public forum, the board is also tasked with providing feedback on the county’s “purchasing and contracting policies, workforce development programs, tax abatement and incentive policies, community benefits agreements, distribution of federal COVID-19 relief and recovery funds, disaster preparedness and recovery programs, OSHA trainings, independent monitoring of local, state, and federal public health and labor laws, and inclusive economic development planning.”

Durham (North Carolina) Workers’ Rights Commission: In 2019, Durham formed the Workers’ Rights Commission as an advisory body to the city council on working conditions in Durham. Except for a liaison to the city council, all members are workers appointed by the city council and must include workers from the largest employers in Durham, workers in low-wage industries, workers organized in unions, and unorganized workers. The commission aims to provide a public forum for discussion and exploration of workers’ rights, conduct studies, recommend pro-worker policies for the city council’s state legislative agenda, craft a workers’ bill of rights and develop a voluntary recognition program to reward employer compliance, propose standards to encourage all employers within the city to establish a minimum standard, support workers in union campaigns, and provide channels of communication between organized and unorganized workers (Durham WRC n.d.).

Twin Cities’ Workplace Advisory Committees: In 2016, Minneapolis created a Workplace Advisory Committee in connection with passing the city’s safe and sick time ordinance (Minneapolis 2016a). The committee is composed of representatives from organized labor, workers, and employer representatives, among others. The committee is tasked with providing advice on workplace initiatives, recommendations on community engagement, and monitoring and evaluating implementation of workplace policies (Minneapolis 2016a). St. Paul’s Labor Standards Advisory Committee (St. Paul n.d.a) advises and supports the city’s Labor Standards Enforcement and Education Division. The committee includes representatives of employers, employees, and the public, and advises in the development and implementation of policies, procedures, and rules related to the city’s minimum wage and earned sick and safe time ordinances; recommends actions to improve strategic community outreach and education efforts; supports strategic enforcement and strategic outreach; explores and recommends opportunities and resources to help small businesses; assists with community partnerships; and engages business owners, workers, and community stakeholders to gather feedback and recommendations.

Los Angeles County Public Health Councils (LA PHC n.d.): In November 2020, Los Angeles County approved a program establishing public health councils to help ensure that employers follow COVID safety guidelines. Implemented and overseen by the county’s Department of Public Health, the program empowers workers to form public health councils at their worksites to monitor compliance with county health orders in the following industries: food and apparel manufacturing, warehousing and storage, and restaurant (LA County BOS 2020). The Department of Public Health will enlist the help of certified worker organizations to conduct outreach and education to workers interested in forming public health councils.

Localities can serve as model employers in relation to their own workforces

Localities can support working people by creating good working conditions for their own municipal workforces. Nationally, about one-third of state and local employees are paid less than $20 per hour, and more than 15% are paid less than $15 per hour. In 13 states, more than 20% of state and local workers are paid less than $15 per hour (Sawo and Wolfe 2022). Women and Black workers are more likely to be employed by local and state governments, so improving working conditions for local government workers advances important equity goals (Cooper and Wolfe 2020).

A significant portion of local government employees are union members (40.2% in 2021) (BLS 2022); high unionization rates among law enforcement and teachers contribute to these numbers. Working conditions for these employees are established through collective bargaining agreements with the locality. Working conditions of nonunionized municipal workers are governed by applicable federal, state, and local laws, as well as municipal policy.

Localities can support workers by raising labor standards for their own employees regardless of union membership. They can also take steps to allow and facilitate collective bargaining by their employees.

Limited public funds can lead to concerns about the cost of supporting municipal workers in light of other pressing public funding needs. However, in addition to improving municipal job quality as a matter of values and commitment to working people, localities themselves can benefit from doing so. High-road job offerings can help attract better-qualified workers to local government and reduce turnover, both of which enable local governments to provide higher-quality public services, as well as avoiding the cost associated with employee turnover. Municipal employers are often the largest employers in many regions (Hain and Coffin 2020), and thus improved standards for municipal workers can also lead to additional benefits, like public health gains when paid sick leave prevents spread of illness, and stabilizing and stimulating the local economy in times of stagnation or recession. By exemplifying practices of a model employer, local governments also can play a leadership role for private and nonprofit employers, helping create local norms that lift local working standards generally. And collective bargaining in particular can help reduce racial and gender pay gaps, attract workers to local government, and create high-quality jobs (Morrissey and Sherer 2022).

Local governments can also support municipal workers by limiting and resisting privatization, defined as the shifting of governmental functions and responsibilities to the private sector through such activities as contracting out (Local Progress 2019). Privatization of local government functions has proliferated in the recent past, affecting services and infrastructure like water treatment, trash collection, and toll collection (Early 2021; Dutzik, Imus, and Baxandall 2009). Privatization not only denies opportunities to municipal workers who are more likely to be unionized and to have higher job standards, it also undermines democratic accountability. Moreover, projected cost savings from privatization often do not materialize, and service quality often declines under private provision (PWF n.d.b).18

Localities have raised labor standards for municipal employees

A number of localities have raised the minimum wage paid to their own municipal workforce; recent examples include Atlanta; Jersey City, New Jersey; Milwaukee; New Orleans; North Miami Beach, Florida; Tallahassee, Florida; and West New York, New Jersey (Noble 2021; Fox 2021a, 2021b; Atlanta 2017; Miami Times Staff 2021). More than 100 localities have passed paid family or parental leave policies for their municipal employees (NPWF 2020). Many local governments extended emergency paid sick leave to their municipal workers during the pandemic, and some front-loaded the annual sick leave allotment for all employees (Hain, Yadavalli, and Wagner 2020). The city of Austin distributed stipends to some city workers who continued to provide in-person services during the COVID-19 pandemic (Newberry 2020).

Localities can enable and support collective bargaining and union organizing by municipal workers

Localities also can enable or facilitate collective bargaining and unionizing among their municipal workforce. Public employee unions can be stable bargaining partners to local governments, promote labor peace, and ensure the delivery of high-quality services.19 In addition, unions reduce inequality as well as race and gender disparities (EPI 2021; Bivens et al. 2017) and boost democratic participation (McElwee 2015).

Whether or not local government workers can form and join unions varies by state and by the type of municipal worker. Many state statutes expressly authorize collective bargaining by teachers, police officers, and firefighters (Sanes and Schmitt 2014). In some states, local governments are permitted to collectively bargain with all municipal workers (Monroe 2018; Vermont 1973).20 In some states, local governments are prohibited from doing so.21 In states where collective bargaining for local employees is neither guaranteed nor prohibited by state law, localities can facilitate unionizing and collective bargaining by their own workforces by passing local ordinances permitting collective bargaining. Two states where there has been heightened attention to this issue in recent years are Virginia and Colorado. In Virginia, the General Assembly in 2020 passed a law lifting a previous ban, thereby allowing localities to recognize and collectively bargain with unions by passing an ordinance. A number of Virginia localities have since passed collective bargaining ordinances, including the city of Alexandria, Arlington County, Fairfax County, Loudoun County, and the Richmond School Board (Alexandria Magazine Living Staff 2021; Armus 2021; Olivo 2021; Loudoun 2021; Hunter 2021). In 2022, the Colorado state legislature passed a bill granting public employees the right to collectively bargain; previously localities could decide whether to grant such rights, and out of approximately 270 localities in the state, only 16 had collectively bargained contracts with any of their workers (Colorado General Assembly 2022; Miller 2022; Vo 2022; Kenny 2021). For example, Adams County, Colorado, had passed a resolution in 2017 authorizing collective bargaining for county employees.22 In states such as Colorado and Virginia, localities can explicitly grant their municipal workforce the right to collectively bargain. Cities like Louisville, Kentucky, Memphis, Tennessee, Salt Lake City, Utah, and Tulsa, Oklahoma, have recognized and entered into collective bargaining agreements with municipal unions (Louisville HR n.d.; AFSCME 1733 2021; SLC HR n.d.; Tulsa HR n.d.).

In addition, localities can emulate legislative measures taken by certain states to facilitate public employee union access to government workers in response to the Supreme Court’s decision in Janus v. American Federation of State, County, and Municipal Employees, Council 31, et al. That case held that requiring public employees to pay union fair share agency fees to cover the costs of collective bargaining violates the First Amendment (McNicholas 2018).23 The decision bars unions from requiring workers who benefit from union representation to pay their fair share of that representation, thereby reducing public employee union resources and potentially their stability. In the wake of the Janus decision, a number of states, including California, Massachusetts, New Jersey, Washington, and several others, passed measures to reduce barriers to public-sector unionization, such as by requiring public employers to allow public employee unions access to new employee orientations, and to provide public employee unions with lists of new and current employees with contact information (NCSL 2019).

Finally, the 2022 Report of the White House Task Force on Worker Organizing and Empowerment (Harris and Walsh 2022) contains a number of recommendations for the federal government to increase unionization rates among federal employees. While some of the measures contained in the report would potentially be preempted by the National Labor Relations Act, many of them could be adopted readily by local governments, such as:

• facilitating exposure to unions during the hiring process for job applicants and onboarding process for new employees, including listing information about whether a position is in a bargaining unit and the relevant union in job opportunity announcements, and encouraging agencies to offer their unions more opportunities to communicate with new hires during onboarding
• developing guidance and labor relations materials for agencies to use in trainings for managers and supervisors regarding unfair labor practices and neutrality in union organizing campaigns
• increasing and visibly supporting workers’ right to organize, including a know-your-rights initiative on the right to organize and collectively bargain

The report contains extensive analysis and practical suggestions about ways to encourage and facilitate collective bargaining.

Localities have enacted worker protection laws on a range of topics

Local governments typically have some authority to initiate legislation, subject to their authority under the relevant state constitution, state statutes, and city charters. In recent years, local governments have increasingly used this power to pass laws to advance workers’ rights.24

Laws setting higher minimum wages

In recent years, localities have often led the nation in policymaking to raise workers’ wages. The Fight for 15 campaign and other worker advocates and organizations have played a key role in seeking increased local minimum wage floors, which has paved the way for more innovative policymaking to advance workers’ rights by local governments (Meyerson 2019).25 Local wage and hour laws exist in a statutory landscape, including the federal Fair Labor Standards Act (FLSA), which establishes a federal minimum wage, overtime pay, record-keeping, and youth employment standards, and state laws that similarly establish their own state-level minimum wage and hour standards. The FLSA, and in some cases state law, acts as a floor, permitting local governments to provide more generous protections for workers. Some states, however, preempt local governments from setting higher local requirements, as discussed in further detail below (EPI 2019).

Currently, 52 cities and counties have local minimum wage laws that raise the minimum wage above the level established by state and federal governments (UC Berkeley Labor Center 2022; Lathrop 2021).26 Local minimum wages aim to keep workers out of poverty and to increase consumer purchasing power to spur economic growth. Such wages sometimes are enacted in metropolitan areas where the costs of living are higher relative to the rest of the state or region. Local minimum wages may vary in terms of wage levels, implementation timelines, and exemptions (for example, based on the size or classification of an employer, such as employers with more than 25 employees or nonprofits). Since 2012, local minimum wage increases have affected more than 4 million workers, more than half of whom are workers of color, and generated more than $33 billion in additional income for these workers each year (Lathrop, Lester, and Wilson 2021).

One way to increase the wages of many service workers without setting a higher minimum rate is for a locality to disallow the lower minimum wage that is permitted in many states and under federal law for workers who customarily and regularly receive tips (USDOL 2022b). Tipped workers are more likely to be women and people of color, and more likely to be subject to sexual harassment (Schweitzer 2021).27 In 2016, the city of Flagstaff eliminated the tipped minimum wage by referendum (Results for America n.d.). Las Cruces, New Mexico, also has enacted a higher tipped minimum wage than the state.28

In some instances, laws setting local minimum wage rates have focused on particular industries. Seattle’s Domestic Workers Ordinance requires domestic workers be paid at least the city’s minimum wage (Seattle OLS 2018a). At least four California cities—Los Angeles, Oakland, Santa Monica, and West Hollywood—have required a higher minimum wage for their hotel workers (LA DPW n.d.; Oakland n.d.; Santa Monica n.d.; West Hollywood n.d.).29

Laws addressing wage theft

Wage theft occurs when employees do not receive wages to which they are legally entitled for their work, including paying workers less than the minimum wage, not paying overtime premiums to workers who work more than 40 hours a week, or asking employees to work “off the clock” before or after their shifts. Cooper and Kroeger (2017) investigated just minimum wage violations, and found that in the 10 most populous states in the country (California, Florida, Georgia, Illinois, Michigan, New York, North Carolina, Ohio, Pennsylvania, and Texas), 17% of eligible low-wage workers reported being paid less than the minimum wage, amounting to 2.4 million workers losing $8 billion annually. Cooper and Kroeger estimate that workers nationwide lose $15 billion annually from minimum wage violations alone. A 2021 study found that more than $3 billion was recovered on behalf of workers by federal and state enforcers and through private litigation (Mangundayao et al. 2021).

In addition to setting up dedicated enforcement agencies and ensuring that these agencies are robustly funded to pursue violations, local governments can pass laws to address the problem of wage theft. For example, Denver passed a wage theft ordinance that classifies wage theft as a criminal misdemeanor and empowers the city attorney’s office to prosecute claims of $2,000 or less and seek restitution (Denver 2021).

In some instances, such measures may be a way for cities preempted from setting minimum wage rates to nonetheless have an impact on wage-related concerns and to protect workers within their jurisdiction from predation and abuse. Numerous localities in Florida have passed ordinances setting up administrative processes that make it easier for workers to file a complaint and recoup stolen wages without retaining a lawyer. In Florida, Miami-Dade County led the way, followed by Alachua County, Broward County, Hillsborough County, Osceola County, Pinellas County, and the city of St. Petersburg (Huizar 2019b). These ordinances set out a procedure for administrative resolution of wage theft claims by first allowing workers with claims of more than $60 in unpaid wages to settle claims with the city’s help. If those claims are not resolved, workers then may proceed to a hearing where the employer may be exposed to additional penalties (Miami-Dade WTP n.d.). An analysis of the Miami-Dade County Wage Theft Program found that between its adoption in 2010 and September 2014, workers recovered $2,039.83 in unpaid wages, on average, an amount researchers found was “well above the average recovered by federal enforcement” (RISEP-FIU 2014).

Finally, more wage theft protections at the city level may be on the horizon. The Austin (Texas) City Council passed a resolution in early 2022 directing the city manager to develop an ordinance on wage theft, with stakeholder input.30 Houston and El Paso, Texas, had previously passed similar resolutions (Ramirez 2022).

Paid sick and safe leave

Presently, 19 cities and counties have laws requiring employers to permit workers to take time to recover from an illness or care for a sick loved one and to be compensated for that time (A Better Balance n.d.b, 2021).31^, 32 Now 14 states and Washington, D.C., also have passed laws requiring paid sick leave (A Better Balance n.d.b), but local governments first led the way. For example, Jersey City, New Jersey, first enacted a paid sick leave ordinance in 2013, followed by 12 additional cities before a statewide law took effect in 2018.33 Research shows that paid sick leave ordinances effectively slow and reduce the spread of contagious illnesses by reducing the likelihood that workers will go to the workplace sick (otherwise referred to as sick presenteeism) (WCEG 2020). Especially for workers in low-wage industries, paid sick leave provides economic security when facing illness. Meanwhile, research has shown that businesses do not find such laws to be particularly burdensome once they are in effect. For example, a study of New York City employers revealed that “[b]y their own account, the vast majority of employers were able to adjust quite easily to the new law, and for most the cost impact was minimal to nonexistent” (Appelbaum and Milkman 2016). Moreover, 86% of the employers surveyed expressed support for the paid sick days law.

Local paid sick leave laws vary—i.e., exemptions for smaller employers, how family and loved ones are defined, the rate at which workers accrue sick time, and when workers start to earn sick time and whether it rolls over. However, many of them were developed with the technical assistance of groups like the nonprofit organization A Better Balance (A Better Balance n.d.a), and therefore have similar features. They generally provide somewhere in the range of 40 to 48 hours of leave annually, and prohibit retaliation against workers for taking leave.

Some of these laws also create a right to “safe leave” for situations in which workers or their family members are victims of domestic violence, stalking, and sexual assault (A Better Balance 2019). Safe leave laws can be used, for example, to obtain a protective order, access social services, or relocate.

Fair scheduling

Eight cities—Chicago; Emeryville, California; New York City; Philadelphia; San Francisco; San Jose, California; SeaTac, Washington; and Seattle—have laws to ensure workers have predictable schedules, more opportunities for existing employees to work, and sufficient periods of rest between shifts (A Better Balance 2022c). This set of policies, which have commonly been referred to as fair workweek or fair scheduling laws, have been championed and implemented because workers, particularly in the service sector, commonly receive their weekly work schedules only a few days in advance, and their scheduled work hours and workdays often change substantially from week to week. Fair workweek laws were first passed at the local level (Fair Workweek Initiative n.d.), paving the way for state-level action; Oregon has now adopted a statewide fair scheduling law.

Research suggests that unstable and unpredictable work scheduling practices undermine workers’ health and well-being and also lead to economic insecurity and income volatility, and that the fair workweek law in Seattle increased not only schedule predictability, but also subjective well-being, sleep quality, and economic security (Harknett, Schneider, and Irwin 2021). Most fair scheduling laws cover specific industries, such as retail or fast-food. They require covered employers to provide an initial estimate of a worker’s schedule upon hiring, advance notice of schedules, and compensation (predictability pay) for employer-initiated schedule changes with less than the requisite notice; workers also typically have the right to decline shifts that do not allow for a requisite period of rest, and the right to request a modified schedule.

In addition, because many workers in the relevant sectors seek additional work hours, fair workweek laws generally require employers to offer additional hours to existing employees before hiring new staff. Such laws also typically include provisions that prohibit employers from retaliating against workers for exercising rights under fair scheduling laws. Fair scheduling laws differ as to which employers are covered (typically limited by size and industry), notice and rest times, the level of predictability pay, and the like. San Francisco’s Family Friendly Workplace Ordinance specifically entitles workers to request a flexible or predictable schedule to assist with caregiving responsibilities, and requires employers to engage in an interactive process with the worker (San Francisco 2013).

Laws governing platform companies in the ‘gig’ economy

Almost all federal and state laws governing the workplace protect employees and not independent contractors. Platform companies in the so-called “gig” economy, in which workers are hired via apps, treat workers as independent contractors instead of as employees, thereby avoiding the obligations of an employer. This practice has led to considerable litigation, including lawsuits by the attorneys general of California and Massachusetts, alleging that such workers are misclassified (Gerstein 2020). Employer misclassification of workers as independent contractors is a longstanding, pervasive problem affecting millions of workers annually (Rhinehart et al. 2021).

New York City and Seattle have both passed ordinances creating various rights and protections for these workers, even as the cities have refrained from determinations about employee status. In 2018, New York City passed legislation34 empowering the relevant regulatory agency, the Taxi and Limousine Commission (TLC), to set minimum pay rates; accordingly, later that year, the TLC issued a rule (NYC TLC 2018) setting a minimum pay standard based on a study it had commissioned (Reich and Parrott 2020). In 2020, Seattle passed a similar ordinance (Seattle OLS 2020i) setting minimum pay for transportation network company drivers. New York City has also passed legislation35 allowing a city agency to set minimum payments for third-party (typically app-based) food delivery and courier providers. A comprehensive proposal to improve pay and transparency about working conditions for such workers was passed in 2022 by the Seattle City Council (Bull 2022, Taylor 2022a).

Seattle also passed a Transportation Network Company (TNC) Driver Deactivation Rights Ordinance (Seattle OLS 2021l), which grants drivers the right to challenge unwarranted deactivations before a neutral arbitrator, and creates a Driver Resolution Center to provide representation for drivers.36

Finally, in 2021, New York City passed a series of policies to protect delivery workers whose precarity was made clear during the COVID-19 pandemic (Figueroa et al. n.d.). An organization of bicycle delivery workers, Los Deliveristas Unidos, played a significant role in advocating for the new law (Los Deliveristas Unidos n.d.; City Staff 2021). The policies include a requirement that restaurants allow delivery workers to use their restrooms as long as they are picking up an order; minimum per-trip payments; transparency for customers and workers about tips (whether the tip goes to workers, in what form, and on what timeline); a prohibition on fees for receiving payment and a requirement that payments are made weekly, including at least one option that does not require a bank account; a prohibition on charging workers for insulated delivery bags; and permission for workers to limit their personal delivery zones (Sugar 2021).

Protections for freelancers or independent contractors

Minneapolis, New York City, and Seattle have passed laws to aid freelancers and independent contractors in securing timely payment for their work. Because such workers are not generally protected by employment law, they often face challenges in securing payment for their work, which is enforced by contract law and therefore typically requires securing legal counsel for any enforcement action (Yang et al. 2020). These local ordinances protecting freelancers require a written contract that includes certain written terms (e.g., pay rate and payment schedule) for a value greater than a minimum amount, require payment within 30 days of completion of the contract, offer protection against retaliation, and set up an administrative enforcement process. In 2022, the New York State legislature passed a state-level Freelance Isn’t Free Act based on New York City’s model (Maher 2022).

Protections against discrimination

Although the focus of this report is labor standards, not discrimination, it is worth noting that local governments have passed laws to expand protections from employment discrimination beyond what is protected under federal and state law. These local laws are typically enforced by local fair employment practices agencies (FEPAs), which are typically separate from agencies that enforce labor laws that regulate workers’ wages, hours, and benefits. For example, at least 330 local governments have passed nondiscrimination ordinances protecting workers from discrimination at work on the basis of sexual orientation, and at least 225 have done so to protect workers from discrimination on the basis of gender identity as well (MAP n.d.; HRC n.d.). Some local ordinances also protect workers from discrimination on the basis of marital or partnership status, family status, immigration status, status as a veteran, credit history, caregiver status, sexual and reproductive health decisions, salary history, weight and height, and status as a victim of domestic violence, stalking, or sex offenses (Vanderbilt 2012; Eidelson 2022; Brown 2002). In addition, federal employment discrimination protections only apply to employers with 15 or more workers, and local ordinances also often cover smaller workplaces (Clampitt n.d.). New York City in 2022 included domestic workers in the law prohibiting workplace discrimination (NYC CHR 2021). In addition, San Francisco in 2017 passed a law requiring employers to provide a reasonable break for a worker desiring to express breast milk for their child and to provide a space for lactation, other than a bathroom, that is shielded from view and intrusion (San Francisco 2017).

Several types of local anti-discrimination laws are described in more detail below.

Fair chance hiring

At least 22 local governments have passed laws requiring private and public employers to consider a candidate’s job qualifications before inquiring about a candidate’s criminal history—commonly referred to as “ban-the-box” or “fair chance” policies (Avery and Lu 2021). They may also prohibit consideration of certain types of past offenses, or require hiring entities to consider evidence of an applicant’s rehabilitation. Even more cities and counties have adopted fair chance hiring for their vendors’ or their own hiring. Fair chance policies vary as to the size of covered employers, when a background check is permitted in the job application and interview process, penalties, and enforcement.

Salary history bans

At least 20 local governments have passed laws prohibiting employers from inquiring about a job applicant’s salary history during the hiring process (HR Dive 2022; AAUW 2022).37 These ordinances seek to remedy systemic pay discrimination against women and people of color by allowing applicants to negotiate a salary based on their qualifications and earning potential, rather than being measured by their previous salary. Some local ordinances apply to private employers operating in the jurisdiction, whereas others apply only to local government hiring processes.

Pay transparency law

In January 2022, New York City became the first city38 to enact a pay transparency law,39 which requires employers to list a minimum and maximum salary for positions located in the city. This type of pay transparency law helps curb pay inequities. The law amends the New York City Human Rights Law (NYCHRL), the city’s ordinance that protects against employment discrimination, and makes any failure to post salary ranges an “unlawful discriminatory practice.” Ithaca, New York also passed a similar pay transparency law in May 2022 that applies to any employer with more than three permanent workers based in Ithaca (Zerez 2022).

Crown Act

Twenty eight municipalities, including New York City, have passed laws prohibiting discrimination based on a worker’s hairstyle or hair texture (NYC CHR 2019). Often known as the Crown Act (NAACP LDEF n.d.), these laws aim to address the impact of natural hair-based discrimination Black workers face in the workplace.

Protections against wrongful termination

Throughout the United States, almost all states have what is known as at-will employment; employers may terminate workers for reasons unrelated to job performance, as long as they are not discriminatory, retaliatory, or otherwise violative of the law. Just cause protections prevent employers from legally firing workers without warning or explanation (Tung, Sonn, and Odessky 2021). Such laws promote economic security and stability for workers and their families; they also protect workers from retaliation for raising concerns about violations of workplace laws.

Both Philadelphia and New York City have adopted ordinances that prohibit employers in certain industries from arbitrarily terminating employees. In Philadelphia, parking workers may only be terminated for just cause (which requires progressive discipline) or a bona fide economic reason (Philadelphia DOL 2021). New York City passed similar legislation applicable to fast-food workers (NYC OM 2021e).40 That legislation was recently upheld in the face of a legal challenge.41

In addition, in the wake of Hurricane Irma in 2017, the Miami-Dade Board of County Commissioners passed an ordinance (Miami-Dade Cty. 2018) prohibiting employers from retaliating or threatening to retaliate against nonessential employees for complying with county evacuation or other county executive orders during a declared state of local emergency.

Worker retention laws

Some localities have passed laws to protect workers’ employment when services are contracted out or when a contract changes hands (see Weil 2014, Weil n.d. on the “fissured workplace”). At least four cities (Hoboken, Newark, New York City, and Philadelphia) have passed laws that generally require successor contractors that operate in those cities to retain employees for at least 90 days, provide written offers of employment, retain employees by seniority, and maintain a preferential hiring list of employees not retained (Keon 2021; Kiefer 2022; Hoboken n.d.b., Jackson Lewis P.C. 2016). These laws differ in the categories of workers that are covered; Philadelphia’s ordinance provides the broadest coverage including security, janitorial, building maintenance, food and beverage, hotel service, and health care services workers (Keon and Sopher 2021). Unlike the policies addressing contractors discussed in Section 8, these ordinances apply to all contractors and subcontractors, not only those contracting with the relevant local government.

Industry-specific protections

Workers in certain industries may be subject to specific harms or be especially vulnerable to violations of the law. As a result, some local governments have passed laws specifically protecting workers in those industries.

Domestic workers

Chicago, Philadelphia, and Seattle have passed laws to provide domestic workers’ rights. In Seattle and Philadelphia, domestic worker bills of rights seek to ensure healthy working hours, sufficient earnings, and protections from sexual harassment and other exploitation. There are 2.2 million domestic workers in the United States—these housekeepers, child care workers, and home care workers are overwhelmingly (91.5%) women and are likely to be people of color, born outside of the United States, and older than other workers (Wolfe et al. 2020). Domestic workers are three times as likely to be living in poverty as other workers, and often are not protected by federal and state labor laws (Wolfe et al. 2020).42 Bill of rights ordinances typically provide domestic workers with meal and rest breaks, paid time off, and protections from sexual harassment and discrimination. Seattle’s law also created a Domestic Workers Standards Board, which provides a forum for employers, domestic workers, worker organizations, and the public to consider, analyze, and make recommendations to the city on other possible legal protections and standards for domestic workers (Seattle OLS 2018a). Chicago and Philadelphia have laws that provide domestic workers with the right to a written contract in English, as well as the language preferred by the worker (Chicago Dept. BACP 2021b; Philadelphia 2021b; Esposito 2021).

Hotel workers

At least seven cities have passed laws requiring hotels to equip workers with panic buttons, GPS-enabled devices that alert security when activated, and other protections (Hotel Tech Report 2022; Oakland OCA 2019). Entering a hotel room occupied by a visitor often places workers at risk of sexual harassment and assault, and data show that women in the hospitality and restaurant industries have the highest rates of sexual harassment on the job (Campbell 2019). In addition to requiring panic buttons, local ordinances typically require notice in each hotel room indicating that workers are equipped with panic buttons, and, in some cases, require hotel employers to develop and comply with a sexual harassment policy, take safeguarding steps after receiving an allegation of harassment, and prohibit retaliation for reporting sexual harassment or assault (UNITE HERE Local 1 2022; West Hollywood CC 2021). At least five cities have also passed laws regulating workloads, including regulation of hours and amount of work denoted in maximum square footage cleaned in a day (Stokes and Sarchet 2018; Santa Monica 2019; Sarchet 2021; Wagner 2020; Seattle OLS 2020f; Emeryville 2022). A few localities require additional payments from employers to increase health care access, and preferential hiring to retain workers when hotel ownership changes (Wagner 2020; Sarchet 2021; Santa Monica 2019).

Fast-food workers

New York City in 2017 passed a law, which is no longer in effect, requiring fast-food employers, upon authorization by an employee, to deduct voluntary contributions from workers’ paychecks and remit them to a nonprofit organization (not a labor union) designated by the employee (NYC n.d.c).43 The voluntary contributions were intended to enable and facilitate such workers having support and assistance from an organization advocating on their behalf, addressing work-related issues and other matters affecting working people.

Grocery workers

Los Angeles, New York City, and San Francisco have grocery worker retention policies that require new grocery store owners to retain employees of the previous owner for a 90-day transitional period after a change in ownership of the grocery store (NYC OLPS n.d.a; PWF n.d.e).44 The ordinances also establish a review process through which workers will be considered for continued employment.

Car wash workers

New York City’s car wash accountability law requires car washes to obtain a license to operate (NYC DCWP n.d.a). In addition to a license application, car washes must provide proof of workers’ compensation insurance, proof of disability benefits insurance, proof of commercial general liability insurance, and proof of unemployment insurance. Notably, car washes must also post a surety bond (also known as a wage bond) to cover potential wage claims as a condition of doing business.

Adult entertainment workers

Minneapolis in 2019 passed an ordinance requiring adult businesses to give workers copies of their contracts, post rules for customer conduct and workers’ rights, and prohibit retaliation against workers who report violations (Otárola 2019). Under the law, managers and owners are also prohibited from taking tips from workers, and workers will be provided security escorts when leaving after a shift. The ordinance also requires businesses to follow standard cleaning procedures, clear tripping hazards, and install security cameras to monitor all areas where entertainers interact with customers.

Wage standards and other requirements for local contractors or license/permit holders

Many localities have placed requirements on their contractors, including prevailing wage laws, living wage laws, and responsible bidder rules. In addition, some localities have created requirements for license or permit holders, in relation to compliance with labor laws or disclosure of past violations. Section 7 contains a detailed discussion of local laws affecting government contractors, and those affecting license and permit applicants and holders.

Higher labor standards for airport workers

Airports throughout the country are owned and operated by public entities—local and state governments, and regional entities composed of such governments (NASEM 2017).45 These public entities have required minimum wages for contractors and vendors at airports as a condition of being permitted to operate there. Many airport workers are low-paid; research has shown declining or stagnant wages, and poor working conditions (Sainato 2018; Editorial Board NYT 2018; Houston n.d.; Dietz, Hall, and Jacobs 2013). The Service Employees International Union (SEIU) has catalyzed airport-driven wage increases as a way to improve the working conditions of poorly paid janitorial, catering, food service, and other workers in airport facilities.

In places where local governments have authority to regulate the airport, many localities have exercised this authority to require all airport contractors to pay a higher minimum wage than the wage broadly required within the surrounding jurisdiction. Counties that have taken such action include Broward County (Fort Lauderdale, Florida) and Miami-Dade County, Florida (Miami-Dade Cty. n.d.a, n.d.b; Broward 2021). Cities taking similar action include Chicago, Denver, Houston, Los Angeles, Oakland, Philadelphia, Portland, Oregon, St. Louis, San Francisco, and San Jose, California (Spielman 2022; SEIU 2019; Houston n.d.; LAWA n.d.; Philadelphia CC 2021b; Holton 2021; Philadelphia CC 2021a; Port of Portland 2020; Port of Oakland 2001, 2021; STL Air Portal n.d.; SF OLSE n.d.d; Aitken 2021). In some instances, additional labor standards are required of airport contractors; for example, San Francisco also applied its health care ordinance to airport workers (San Francisco 2020), and the city of Los Angeles includes a worker retention provision (LAWA n.d.).

Some localities like Miami-Dade County, Philadelphia, and San Francisco, require certain contractors operating at the airport to enter into labor peace agreements with labor unions (LAWA n.d.).46 A labor peace agreement generally requires the employer and union to waive certain rights under federal law with respect to union organizing (for example, neutrality and nonopposition to the union on the employer side and a promise not to strike, picket, or disrupt the employer’s operations on the union side) to ensure uninterrupted workflow or, in the case of government, uninterrupted delivery of public services. In addition, the city of SeaTac, Washington, does not contain Seattle’s airport, but largely surrounds the airport; it passed an ordinance setting minimum employment standards for hospitality and transportation industry employers that requires higher wages for hotels and other businesses in the airport’s immediate vicinity (SeaTac n.d.).

Protecting workers and public health during the COVID-19 pandemic

Local governments have played a crucial role in protecting public health and worker safety during the COVID-19 pandemic. Especially given the failure of the federal government to take actions to protect worker safety in the beginning of the pandemic—and then subsequent action by the U.S. Supreme Court preventing the federal government from implementing a vaccine-or-test standard for workplaces—local and state governments have had to take emergency action to protect workers and public health (Rosenberg 2021; Totenberg 2022). Given that COVID-19 spreads through airborne transmission of respiratory droplets from infected people, protecting workers from contracting and spreading COVID-19 also plays an important role in protecting overall community public health and safety. Moreover, because of racial health disparities and the overrepresentation of people of color as essential workers, Black and Latino workers have been and remain at higher risk of contracting and developing serious complications from COVID-19 (UIC SPH 2021).

Local governments have used myriad authorities and programs to address the challenges facing workers during the pandemic, including emergency authorities often pegged to the duration of a local public health emergency order.47 Local governments—most typically by mayoral executive order—have used these emergency authorities to issue stay-at-home orders, as well as masking, testing, quarantine, and vaccination requirements (Foster n.d.; Kim and Romero 2021). For example, in December 2021, New York City’s mayor issued an order requiring all workers who perform in-person work or who interact with the public to be vaccinated (NYC DOH n.d.). These orders were typically enforced by local public health departments which, in some places, have taken complaints from workers and taken enforcement actions to stop workplace spread. Although these local public health measures are not always tied to the workplace, they are crucial to worker health and safety by ensuring that workers can stay home when necessary and reducing the likelihood of unmasked interactions.

In addition to the specific policies and programs intended to protect workers and public health during the pandemic outlined below, local governments also have established worker boards to hear from workers affected by the pandemic;48 mounted public education campaigns to inform workers, employers, and patrons about COVID safety at work (SAW LA n.d.); provided personal protective equipment (PPE) to employers for distribution to workers (St. Louis 2020); and set up funds for undocumented workers who were excluded from unemployment insurance and other federal funding (MF Phila. n.d.).

Paid sick leave: Modifications, enforcement, and emergency policies

As discussed above, 19 local governments have permanent paid sick leave laws. At least 16 local governments have made clear that paid sick leave may be used when their workplace or their child’s school or child care facility is closed due to a public health emergency (A Better Balance 2020, 2022b).49 Philadelphia, San Francisco, and Seattle temporarily limited employers from requiring a doctor’s note for employees to take sick leave (Philadelphia OMD 2020; SF OLSE 2020; Seattle OLS 2020g).

In addition to clarification and enforcement of permanent paid sick leave policies, local governments have also enacted emergency paid sick leave policies to supplement or extend federal emergency protections.50 For a period, the federal Families First Coronavirus Response Act required employers with fewer than 500 employees to provide workers with paid sick leave or expanded family and medical leave for reasons related to COVID-19, including the need to quarantine, care for an individual in quarantine, or care for a child whose care or schooling has been disrupted by the pandemic. Several local governments have passed paid sick leave legislation that supplements federal protections, for example by applying to employers with more than 500 workers, adding eligibility by permitting workers to take paid leave because they are older than 65 or are particularly vulnerable to COVID-19, and expressly permitting workers to take leave for vaccination-related illness (A Better Balance 2020). Local governments like Burlington, Vermont; Flemington, New Jersey; Shelby County, Tennessee; and Wilmington, North Carolina, enacted such emergency paid sick leave policies for their local government employees (A Better Balance 2020). Philadelphia51 and Seattle52 have passed emergency paid sick leave policies that extend to food delivery and transportation gig workers. Los Angeles County passed legislation requiring employers to provide additional paid leave for vaccination and recovery for workers who had exhausted their paid leave (LA County LED 2021).

Protection against retaliation in connection with workplace safety

Los Angeles County and Philadelphia passed ordinances prohibiting employer retaliation against workers in connection with workplace safety and compliance with COVID-19 public health orders. Los Angeles County’s law prohibits any adverse action by an employer against a worker for blowing the whistle on noncompliance with public health orders; discussing any perceived noncompliance with the county, other employees, or members of a public health council; belonging to a public health council; or informing employees of their rights under this ordinance (LA LED 2020; LA County n.d.). Notably, Los Angeles County’s law does not sunset. Philadelphia’s law53 prohibits employers from taking any adverse action against a worker for refusing to work in unsafe conditions if the worker reasonably believes the employer is operating in violation of a public health order and has notified the employer. An anti-retaliation law passed in Chicago (Chicago Dept. BACP 2022) protects against retaliation in relation to compliance with COVID-19 public health orders.

Hazard and premium pay

More than two dozen local governments in California and in the Seattle metropolitan area passed laws mandating hourly hazard pay bonuses of typically $4 or $5 per hour for grocery store workers (Egan et al. 2021; King 5 Staff 2021). Some laws also cover drugstore employers and vary as to the size of the employer covered (Kinder and Stateler 2021). Seattle also passed an ordinance providing food delivery gig workers premium pay on a per pick-up and drop-off basis (Seattle OLS 2020c).

Right to recall

At least 18 cities (Fair Hotel 2021) have passed laws—commonly referred to as “right to recall” or “right to return” laws—to protect workers in certain affected industries that were laid off during the pandemic. In particular, the leisure and hospitality sector accounts for 39% of total jobs lost due to the pandemic, which disproportionately affected workers of color (Huang 2021). These laws require employers to offer positions that become available first to qualified laid-off workers, typically in order of seniority. The laws vary as to which employers are covered (hospitality, event centers, commercial real estate), and whether laid-off workers can become qualified for the position with the same training that would be provided to a new employee hired into that position, enforcement, and notice. Detroit also passed a resolution in support of the right of recall, but is preempted by the state of Michigan from enacting an ordinance to that effect (DeVito 2021). Five cities have also applied this right to recall to changes in ownership of the employer (Fair Hotel 2021).

Severance

Shortly after emergency federal unemployment insurance relief in response to the COVID-19 pandemic expired, New York City passed a severance law requiring hotels with at least 100 rooms to pay a weekly severance of $500 per employee per week to laid off-employees for up to 30 weeks until the hotel has recalled 25% or more of its employees or reopened to the public (Moss 2022).

Vaccination

In addition to providing emergency paid sick leave for vaccination and recovery, local governments also have partnered with worker organizations to promote vaccination. Philadelphia partnered with the National Domestic Workers Alliance to transport workers to vaccine sites, where city officials addressed concerns by providing information about paid sick leave laws. Houston partnered with SEIU to deliver vaccines to janitors (Gerstein and Salas 2021).

Discrimination

San Francisco ​​enacted an ordinance prohibiting employers from discrimination based on exposure to or having tested positive for COVID-19 (SF OLSE n.d.b). Employers are prohibited from taking any adverse action (i.e., firing, threatening to fire, suspending, disciplining, rescinding an offer) against a worker because the worker tested positive for COVID-19 or is isolating or quarantining due to COVID-19 symptoms or exposure.

Federal and state preemption should be considered but still permit considerable action on workers’ rights matters

Preemption occurs when a higher level of government (for example, the federal or state government) restricts or withdraws the authority of a lower level of government (such as a city council) to act on a particular issue. While a detailed discussion of preemption is beyond the scope of this report, it is important for local governments to consider potential preemption by federal or state law.

Federal preemption

An analysis of federal preemption starts with the question of congressional intent: Did Congress intend to displace state or local law? Federal preemption limits some possibility for local action on workers’ rights, but still leaves significant room for legislation, enforcement, contracting consequences, and other local innovation. Some relevant federal laws and points to consider are as follows:

• The National Labor Relations Act (NLRA) guarantees and regulates the right of private-sector workers to organize into unions, bargain collectively, and take collective action to improve their working conditions. NLRA preemption is quite broad, and for workers covered by the NLRA, local and state governments are preempted from regulating workers’ rights to form and join labor unions or to bargain collectively with their employers, employer speech about unionization, and bargaining rules and obligations (Sachs 2011). Notable exceptions are when a state exercises traditional police powers; also when a state or local government acts as a “market participant,” it enjoys the same freedom to structure its labor policies as a private party and is not limited by NLRA preemption. Thus, local governments can require contracts to honor prehire agreements, for example.57 Moreover, local governments are free to enact labor laws that otherwise would be preempted by the NLRA for workers who are not covered by the law (i.e., farmworkers and domestic workers).
• The Occupational Safety and Health Act (OSH Act) regulates workplace safety nationally. It only preempts local and state action when there is a standard set by the Occupational Safety and Health Administration (OSHA) addressing a particular and specific workplace hazard (Flanagan, Gerstein, and Smith 2020). However, even if there is an OSHA standard, a local law, regulation, order, or government action will not be preempted if it protects the general public; to wit, laws of “general applicability (such as laws regarding traffic safety or fire safety) that do not conflict with OSHA standards and that regulate the conduct of workers and non-workers alike would generally not be pre-empted.”58 For example, a New York City building code provision regulating cranes was found not to be preempted because it protected not only workers, but also the “safety of the general public in the vicinity.”59 In addition, 21 states and Puerto Rico have become OSHA-approved “state plans” (USDOL OSHA n.d.) that regulate private-sector workplace safety and health themselves; they are subject to OSHA oversight and their provisions must be as protective of workers as OSHA standards and regulations (USDOL OSHA n.d.).60 In such states, federal OSHA preemption would not apply.
• There is no preemption of local standards that are more protective of workers under the Fair Labor Standards Act (FLSA), which sets the floor for minimum wage, overtime pay, record-keeping, and youth employment standards nationwide.61 In other words, the FLSA does not preempt higher minimum wages at the state and local levels.
• As a general matter, exercise of traditional police powers (civil or criminal) does not lead to preemption concerns. Longstanding principle in preemption cases requires courts to “start with the assumption that the historic police powers of the states are not to be superseded…unless that was the clear and manifest purpose of Congress.”62 For example, criminal prosecutions of employers, or civil tort lawsuits, for conduct that would also give rise to occupational safety and health violations generally would not be preempted (Flanagan, Gerstein, and Smith 2020).

State preemption

Local policymaking to advance and expand and protect workers’ rights, as well as other progressive causes, is substantially hindered by the emergence of state preemption used in a punitive manner (Briffault 2018).63 In particular, conservative state legislatures have increasingly preempted local efforts to increase the minimum wage, guarantee paid sick leave, require fair scheduling, regulate gig employers, and set prevailing wages for municipal contracts (Wolfe et al. 2021). For example, at least 26 states have passed preemption laws to prohibit local governments from setting minimum wages higher than the state minimum wage (EPI 2019). The preemption of local policies to support workers’ rights is most common in the South and Midwest, where these laws are part of a long history of efforts to limit the rights and freedoms of Black people (Blair et al. 2020; Wolfe et al. 2021). Even a progressive state like Washington recently moved in this problematic direction when the state legislature passed a bill on transportation network companies (like Uber and Lyft) that preempts any local regulation of the industry.64

An encouraging development in this area occurred in Colorado, when the state in 2019 reversed its prior preemption of local labor standards, providing cities and worker advocates in other states with potential lessons in how to do the same elsewhere (Huizar 2019a).

Even in the face of state and local preemption, there are still opportunities for localities and local government leaders to take action to protect workers: passing legislation that is not preempted; setting high standards in relation to local government employees; conducting extensive know-your-rights outreach and public education about workers’ rights; supporting pro-worker state legislation; conducting research and issuing reports on worker issues; documenting the extent of labor violations; promoting labor compliance by local government contractors, permit-holders, and licensees; and advocating for an end to state-level preemption. In addition, the Local Solutions Support Center and National Employment Law Project have created resources to assist localities in making assessments regarding preemption of desired action (Huizar 2021; LSSC 2020a, 2020b).

Enforcing local worker protection laws

This section provides examples of the enforcement cases brought by local labor agencies in recent years. However, it is important to note that the case descriptions are just a sampling of enforcement work performed at the city level, based on publicly available media coverage and press announcements. Only a few city agencies routinely issue news releases or disclose employer information about their investigations. More could recognize news releases as a tool in their worker protection toolkit, given the documented impact (Johnson 2020) of deterring employer violations by issuing press releases in workplace enforcement.

Some office websites include dashboards, posted annual reports, or other compilations of enforcement work, which should be consulted in conjunction with the below case descriptions, in order to obtain a fuller picture of the work being done. For example, Denver Labor, a division of the Denver Auditor’s office created in 2019, posts restitution stories (Denver n.d.b) on its website, summarizing the office’s enforcement work, including industry of employers, type of work, amount of money recovered, and the number of workers involved, although it does not mention specific employer names. The Seattle Office of Labor Standards has a Resolved Investigations (Seattle OLS n.d.e) section of its website, with detailed information about closed cases, and in 2021 released a press announcement (Seattle OLS 2021h) commemorating the office’s six-year anniversary and detailing accomplishments in that time. In addition, a number of offices post annual or periodic reports that include information not only about enforcement actions, but also about legal developments, outreach and public education activities, regulations issued, and more. (See Section 9 for more detail).

In addition to dedicated labor standards offices, it should be noted that city and county attorneys, who represent local government entities in legal proceedings, have sometimes enforced local worker protection laws. Some city and county attorneys have criminal authority to prosecute misdemeanors, but they typically bring and defend civil suits on behalf of local governments. Many city and county attorneys have the authority to enforce local ordinances to protect workers, although such enforcement is uncommon in many jurisdictions. In some states, they also have the authority to enforce select state laws,65 and they also can bring impact litigation on behalf of local governments (Justice Catalyst et al. 2019). In some cases, city or county attorneys have enforced workplace laws, either independently or in conjunction with municipal labor standards offices or other government entities.66 District attorneys, and in some places county or state’s attorneys, are responsible for criminal enforcement, and are increasingly using those powers to prosecute employer crimes involving serious violations of workers’ rights. In some jurisdictions, they have authority to bring civil cases as well.67 Criminal prosecutors have also been increasingly active in bringing charges against employers to protect workers’ rights (Gerstein 2021). In addition, some local auditors and controllers also enforce workplace laws. For example, in New York City, the comptroller plays a significant role in enforcing prevailing wage and other laws within the city (NYC Comptroller n.d.), and the city controller also enforces Pittsburgh’s prevailing wage ordinance (Pittsburgh 2010). Local departments or agencies that focus on contract enforcement may also enforce worker protections and standards in local governments contracts (LA City BCA n.d.). While enforcement action by these various officials is noteworthy, the cases outlined below generally include those brought by local labor standards agencies.

Examples of enforcement

In the compilation of cases below, where the same employer has committed multiple violations of law, to avoid duplication, cases are listed in one category only.

Paid sick leave

Enforcing paid sick leave laws has been a significant focus for many local agencies, particularly since these laws often exist only at the local level. New York and Seattle have been particularly active in this area. Agencies have obtained restitution for workers, as well as reinstatement in some cases. In some instances, settlements have also included crediting workers with additional paid sick leave in the future. New York City required Starbucks to educate the public about paid sick leave laws through posters in public areas, and Minneapolis required a home health agency to train all managers and staff on the relevant law.

New York City’s Department of Consumer and Worker Protection has enforced paid sick leave laws in multiple industries, with noteworthy cases involving fast-food, home care, and airline industry workers.

• The department conducted multiple investigations of paid sick leave violations involving home health agencies, including a 2021 collaborative case with the New York state attorney general’s office resulting in the recovery of up to $18 million for 12,000 home health aides at two agencies that underpaid workers and did not provide paid sick leave. In 2022, the department also reached settlements involving two domestic workers who had been denied paid sick leave (NYC DCA 2018a; NYC OM 2020a, 2021c; NYC DCWP 2022).
• Fast-food industry cases include a $155,000 settlement with a McDonald’s franchisee in 2019 (also involving fair workweek violations); an ongoing case against Chipotle, in the midst of which the city obtained reinstatement for a worker who had been unlawfully terminated; and a 2019 settlement with Starbucks, jointly with the New York state attorney general’s office, in which the company agreed to create a $150,000 restitution fund for employees whose rights had been violated, and to promote public education about the paid sick and safe leave law by requiring Starbucks to post an educational poster about paid sick leave in public locations in all New York City stores (NYC OM 2019b, 2020c NYC OM 2019c).
• The department in 2019 sued American Airlines for violating the paid sick and safe leave law by assigning disciplinary points and thereby illegally retaliating against workers for taking leave. American Airlines later sued New York City challenging the law. The case was ultimately settled in 2021; the airline agreed to pay workers restitution and to comply with the law going forward. The department in 2021 also settled a case involving a Southwest Airlines ground crew worker who was illegally fired for using sick leave; the resolution required reinstatement and payment of restitution. And in 2020, the department settled a case with an American Airlines contractor that staffed wheelchair attendants, customer service representatives, baggage handlers, and cargo agents; the contractor was required to pay more than $100,000 in restitution, and also to credit workers with additional prospective paid sick leave (NYC DCWP 2019b, NYC OM 2021b, 2021d, 2020b).
• In one case involving a law firm that violated the paid sick leave laws, the department obtained a hearing officer decision requiring payment of $172,000 to the worker (NYC DCWP 2019a).
• The Department of Consumer and Worker Protection settled two cases involving domestic workers who were denied paid sick leave (one was fired for using sick leave and for filing a complaint, ultimately losing their housing as a result) (NYC DCWP 2022).
• New York City’s law also requires paid safe leave to be used by those experiencing domestic violence, human trafficking, stalking, or similar offenses; the office in 2020 obtained a $25,000 settlement in its first paid safe leave case (NYC DCWP 2020b).

The Seattle Office of Labor Standards in 2011 recovered (Seattle OLS 2021i) more than $290,000 from a cleaning company for paid sick leave and other violations, including not paying for all hours worked, paying subminimum wages, and making unauthorized deductions from workers’ pay for training and other costs. In 2021, Seattle’s Office of Labor Standards resolved a paid sick and safe leave (Seattle OLS 2021c) involving Compass, a multinational food service company with hundreds of thousands of employees worldwide.

The Labor Standards Enforcement Division of the Minneapolis Department of Civil Rights has brought a number of paid sick leave enforcement cases, including against the national sandwich shop Jimmy John’s (Mahamud 2021) and a local gas station (Minneapolis 2018), as well as a home care business (Du 2021). In that last settlement, the division required the employer to train managers and staff on the relevant law, and to credit all workers with 80 hours of sick leave.

Chicago’s Office of Labor Standards in 2021 reached (Chicago OM 2021) paid sick leave settlements (Channick 2021) with a Burger King franchisee, recovering more than $458,000 in restitution for workers plus $100,000 in city fines, and with global snack food company Mondelēz Global LLC, recovering $476,000 in restitution for workers plus $95,000 in fines.

Wage theft

Some city agencies have authority to enforce municipal minimum wage or other wage-related laws. Wage theft68 cases brought by city enforcement agencies include the following.

Seattle’s Office of Labor Standards has been a national leader in enforcement activities in this area. Cases include:

• a $2 million settlement with a Domino’s franchisee in 2022 based on the employer paying workers below the city’s minimum wage and failing to pay overtime when employees’ work at multiple locations led to workweeks in excess of 40 hours; the case also involved fair scheduling violations (Seattle OLS 2022a)
• a 2022 settlement for more than $250,000 with a national traffic control company that paid below the city’s minimum wage, among other things (Seattle OLS 2022b)
• a finding in 2021 that construction contractors and subcontractors were jointly and individually liable for $2 million in underpayment based on a host of violations, including unauthorized deductions from workers’ paychecks, subminimum wages, uncompensated work time, nonpayment of overtime, and failing to provide paid sick and safe time (Seattle OLS 2021g)
• a 2021 settlement for more than $290,000 with a cleaning company for minimum wage paid sick and safe time violations, and retaliating against workers (Seattle OLS 2021i)
• a 2019 settlement for $182,000 with two Hyatt hotels that were paying a lower minimum wage for small employers instead of the applicable higher wage, and a $686,000 settlement, also in 2019, with a staffing company based on similar violations; the office also reached a $120,000 settlement for underpaid home care providers (Seattle OLS 2019d, 2019c, 2019b)
• after finding wage theft and other violations by two painting contractors, the office provided trainings in 2018 to the industry trade association
• the office also recovered more than $40,000 on behalf of workers with disabilities after the city eliminated a previously existing subminimum wage for such workers
• in one 2018 case involving a restaurant that had retained workers’ tips and failed to provide paid sick time, the employer apologized to employees (Seattle OLS 2018c, 2018d, 2018b)

Other local enforcement actions include a 2018 settlement (Minneapolis 2018) for $20,000 with McDonald’s by the Labor Standards Enforcement Division of the Minneapolis Department of Civil Rights, and a 2021 lawsuit (Chicago Dept. BACP 2021c) by the city of Chicago against DoorDash that focused on other legal issues, but also contained allegations that the company illegally retained workers’ tips.

In addition, Denver Labor reported (Denver OA 2021a) multiple successful enforcement actions in 2021 involving cases under the city’s minimum wage law, contractor minimum wage law, and prevailing wage law. Minimum wage cases included investigations involving a local restaurant, home improvement sales workers, a national retailer, a janitorial company, a fast-food chain, and a hair salon; sample prevailing wage cases involved a custodial contractor at the Denver Zoo, a crane contractor on a federal prevailing wage project, and solar power contractors at Denver International Airport.

COVID-19 pandemic-related enforcement

Seattle’s Office of Labor Standards has brought several actions enforcing the city’s gig worker paid sick and safe time law passed in June 2020. These enforcement actions have resulted in a $3.4 million settlement with Uber (Seattle OLS 2021d), a nearly $1 million settlement (Seattle OLS 2021e) with Postmates, and a $160,000 settlement (Seattle OLS 2021f) with DoorDash, all in 2021. In addition, the office recovered (Seattle OLS 2021j) more than $330,000 for 101 wine and alcohol shop workers who did not receive hazard pay as required by city law, as well as more than $100,000 (Seattle OLS n.d.g) for workers for the gig delivery company Go Puff. Los Angeles County also took enforcement (LA County CBA 2021b) actions against a number of employers based on pandemic-specific workplace protections, including a grocery store that failed to pay “hero pay” (also known as premium pay during the pandemic), and a construction company that terminated a worker for requesting indoor use of face coverings. Pursuant to New York City’s Grocery Worker Retention Act, the city’s Department of Consumer and Worker Protection filed a case (NYC DCWP 2020c) against a Bronx supermarket in 2020 and resolved it several months later (NYC DCWP 2021a) with payment of restitution and reinstatement of most of the discharged workers.

Protections for gig workers and freelancers

The broader issue of classification of workers for app-based driving and delivery companies generally has been playing out at the federal and state, and not local, level. The issue has emerged, for example, in relation to state laws on wages, workers’ compensation, and unemployment insurance (NELP 2019).69 However, there have been some instances of localities challenging misclassification of such workers as independent contractors rather than as employees. In other cases, several cities have created municipal-level wage, paid sick leave, or other protections that apply broadly, including for so-called gig workers, and have taken action to enforce those municipal laws in relation to app-based companies.

In addition to the COVID-19-related cases brought by Seattle described above, other cases include a civil lawsuit (SF ODA 2021) against the cleaning company Handy filed in 2021 by the district attorneys of Los Angeles and San Francisco, as well as a 2021 letter inquiry (Fox, Marchese, and Shimko 2021) regarding Handy’s potential misclassification, sent by the Seattle and Chicago Offices of Labor Standards and the Philadelphia Office of Worker Protections. Also, in 2021, the San Francisco city attorney, San Francisco Office of Labor Standards and Enforcement (OLSE) and a city supervisor announced (SF OCA 2021) a $5.3 million settlement with DoorDash, the largest in the OLSE’s history, after an investigation into allegations of violations of San Francisco’s paid sick leave law and a separate health care security ordinance (SF OLSE 2022), which creates an employer spending requirement to fund health care benefits (health insurance, dental, or vision coverage) for employees in the city. In 2020, OLSE reached a settlement of nearly $750,000 with grocery delivery company Instacart (Said 2020).

In addition, New York City agencies have taken action to enforce the city’s Freelance Isn’t Free Act (NYC DCWP n.d.e), which gives freelance workers (NYC DCA 2018c) the legal right to written contracts, timely payment, and freedom from retaliation. In late 2021, the New York City Law Department and Department of Consumer and Worker Protection announced (NYC OM 2021f) a lawsuit (NY Supreme Court 2021) against French global fashion media company L’Officiel, based on a pattern of failing to pay freelancers on time or at all, including writers, editors, photographers, videographers, graphic designers, and illustrators. According to DCWP, the agency has received 2,024 complaints from freelancers since the law’s inception in 2017, and has helped freelancers recover more than $2.1 million in owed compensation for their work.

Fair scheduling laws

Several cities have fair scheduling or fair workweek laws, which require employers in certain industries (usually retail and/or fast-food) to provide workers with their schedules with advance notice. These laws ensure that workers can plan for child care, elder care, education, second jobs, and other responsibilities, without having the insecurity of unstable and unpredictable schedules. In some cases, fair workweek laws also require employers to offer current part-time workers additional hours before hiring new employees, thereby increasing opportunities for full-time employment.

Seattle’s Office of Labor Standards has resolved a number of investigations under its secure scheduling ordinance, including recovery (Seattle OLS n.d.f) in 2020 of nearly $2 million from Macy’s in a case involving more than 800 workers, and recovery (Seattle OLS 2020a) that same year of more than $600,000 from Fred Meyer’s supermarkets in a case involving approximately 750 workers. In 2019, Seattle resolved a secure scheduling case (Seattle OLS 2019a) involving two franchises operating nine Jack in the Box locations and employing more than 500 workers.

New York City’s fair workweek law applies only to fast-food employers, and the Department of Consumer and Worker Protection has brought a number of actions. Most notably, in 2021, the department sued (Scheiber 2021) fast-food chain Chipotle for extensive and ongoing violations at several dozen stores, alleging that workers are owed $150 million as a result. The 2021 filing followed a prior case (NYC OM 2019a) in 2019. New York City also enforced its fair workweek law in cases involving McDonald’s and Pizza Hut (NYC OM 2021a) locations, the owner of 30 KFC stores (NYC DCA 2018b), and multiple other fast-food employers (NYC DCWP 2020a).

Philadelphia’s fair workweek law covers service, retail, and hospitality workers. A 2021 case involved the resolution (Reyes 2021a) of allegations of violations by a local Target.

Additional cases: Just cause termination rights, health care, and consumer protection

In addition to the broad categories described above, offices also have brought cases under other laws to protect workers and consumers. For example, in 2021, the New York City Department of Consumer and Worker Protection announced (NYC DCWP 2021b) the resolution of its first investigation of a termination of two Subway workers in violation of a new city law (NYC OM 2021e) protecting fast-food workers from being fired without just cause or for a bona fide economic reason. And in a consumer-related case, the department settled charges against (NYC DCA 2017) a large New York City parking garage company that began charging monthly customers an additional “living wage fee” after an increase in the city’s minimum wage under state law. The San Francisco city attorney has worked with the Office of Labor Standards in bringing cases under the city’s health care security ordinance, including a 2019 lawsuit (SF OCA 2019) against a tour bus company, and recovery in 2014 of $1.34 million from a janitorial company (SF OCA 2014).

Funded strategic enforcement partnerships with worker organizations

Some local labor agencies have explicitly and formally included worker organizations in aspects of the labor law enforcement process, by contracting with community organizations to support community partnerships that conduct public education and outreach, and refer violations to the enforcement agencies. Such relationships are sometimes referred to, most commonly by worker advocates, as “co-enforcement.”

This model has long existed at the federal level: The Occupational Safety and Health Administration (OSHA)’s Susan Harwood Training Grant Program since 1978 has awarded grants to nongovernmental entities, including worker organizations, “to provide training and education programs for employers and workers on the recognition, avoidance, and prevention of safety and health hazards in their workplaces and to inform workers of their rights and employers of their responsibilities” under the Occupational Safety and Health Act.

Several local agencies in more recent years have created similar formal, funded partnerships with worker organizations, including unions, worker centers, and community-based organizations. Some of these organizations played a role in advocating for what is now the longest-standing local program of this type, in San Francisco (Patel and Fisk 2017). The city was a forerunner in creating its community partners program was established under a 2006 amendment to the city’s minimum wage law, requiring the Office of Labor Standards Enforcement to create a community-based education and outreach program focused on workers in particular industries (San Francisco 2011).

The Office of Labor Standards in Seattle has a Community Outreach and Education Fund that grants money to community organizations focused on workers who experience high rates of workplace violations, including women, workers of color, immigrants and refugee workers, LGBTQ workers, workers with disabilities, veterans, and youth workers. The most recent round of grants was announced (Seattle OLS 2021k) in December 2021; nearly $3 million in funding will be provided over two years to nine organizations that will provide outreach, education, and support to low-wage workers. The office also has a Business Outreach and Education Fund (Seattle OLS n.d.a), which provides assistance and outreach to small businesses owned by low-income and historically disenfranchised communities, in order to increase their compliance with city labor laws. For the two-year period starting in January 2021, the fund committed $1.1 million to five organizational grantees. In 2021, the office also granted $50,000 to an organization to provide outreach to domestic employers about their obligations.

In 2021, the Chicago Office of Labor Standards announced (Chicago Dept. BACP 2021a) a $100,000 grant, funded in part by the city and in part by the Chicago Foundation for Women, to the nonprofit Arise Chicago. The funding is for outreach and education on city labor laws, with additional activities focused on domestic workers: providing trilingual trainings in developing contracts, and offering template contracts in Spanish, Polish, and English, among other things.

A Minneapolis ordinance requires the development and implementation of “a multilingual and culturally specific outreach and community engagement program to educate employees and employers about their rights and obligations under this chapter…[with] media, trainings and materials accessible to the diversity of employees and employers in the city.”70 Accordingly, the Office of Labor Standards has devoted $300,000 annually to contracting with community organizations for these purposes. The Centro de Trabajadores Unidos en La Lucha (CTUL)(CTUL n.d.) is a grantee and also helps administer the contract; in 2021, CTUL subcontracted also to Awood (a worker center serving the East African community) (Awood n.d.) and the local chapter of Restaurant Opportunities Centers United (ROC-United n.d.; Walsh 2021).

Finally, the Santa Clara County Office of Labor Standards Enforcement also provides funding for education and outreach to community-based organizations providing services to workers and businesses in Santa Clara County (SC OLSE n.d.e, n.d.b, and n.d.a).

Localities have created labor standard requirements and consequences for their government contractors, and for applicants/holders of licenses and permits

A considerable number of businesses interact with localities not just as regulated entities, but also as government contractors or vendors, or as holders of local government-issued permits or licenses. These relationships present opportunities for localities to improve working conditions or drive compliance with worker protection laws. Local governments may have more ability or leverage to positively affect employer conduct in these situations, when businesses are actively seeking approval, funding,71 or a contract from the government.

In relation to contractors or vendors, localities may wish to ensure their contracting funds family-supporting employment, not low-road, underpaid, precarious jobs. They may wish to ensure contractors do not win contracts through a race to the bottom on working conditions. They may also be aware of the practical benefits of contracting with companies that employ highly skilled unionized workers, where turnover and job disruptions may be reduced and product quality may be higher. Or they may wish to ensure their contractors—even if they are not high-road employers—at the very least do not have a history of violating basic workplace and other laws. This report provides a general overview of some options, but localities wishing to achieve these goals should consult more comprehensive and informative resources on this topic (Walter and Madland 2015; Walter, Rowell, and Wall 2020; IIIFFC 2017).

Before approving license/permit applications or renewals, localities may wish to ensure that applicants and license/permit holders are financially responsible, and that they are at least in compliance with the basic applicable workplace statutes.

In relation to contracts, permits, and licenses, localities also may wish to have laws and operations in place to allow termination of such relationships in the event of established and unremedied violations.

Accordingly, localities have passed laws and taken other actions in relation to their contractors, as well as license and permit holders.

Localities have imposed requirements related to public projects or projects seeing public approvals

Localities have imposed prevailing wage and living wage requirements on contractors, passed responsible bidder ordinances, and used project labor and community benefits agreements

Prevailing wage

Prevailing wage laws require covered government contractors to pay a wage and benefit rate based on similarly employed workers in a given geographic region (ILEPI n.d.a; Mahalia 2008). Sometimes ordinances also will require payment of prevailing wages by entities like developers and owners that receive local subsidies or tax abatements. These laws can help make sure that public funds support good jobs, and that bidders do not win government contracts through race-to-the-bottom labor practices. The federal prevailing wage laws (the Davis-Bacon and Service Contract Acts) cover federally funded construction and service contracts. Roughly half of U.S. states (USDOL 2022a) have prevailing wage laws. A number of localities do as well; for example, New York City requires payment of prevailing wage on city-contracted construction projects, to service workers (such as security guards) working for city contractors, and to service workers in residential projects that receive more than $1 million in city financial assistance with 120 or more residential units (Wall, Walter, and Madland 2020; NYC DHPD n.d.). In early 2022, San Diego County passed the “Working Families Ordinance,” which requires contractors for construction projects on county land working on projects of more than $1 million to use skilled, trained workers and pay prevailing wages. It also requires employers on county-leased land to provide paid sick leave. (Brennan 2022). Local prevailing wage laws more commonly cover construction of “public works,” or public buildings, roads, and structures, but they also may be enacted to cover service contracts with the locality as well (Walter, Rowell, and Wall 2020). Studies have found that prevailing wage laws have an overall positive economic impact, and also that costs savings were not realized in jurisdictions where such laws were repealed (Manzo IV 2018). The Center for American Progress in 2020 published a how-to guide with information for states and localities wishing to enact or expand prevailing wage laws within their jurisdictions (Walter, Rowell, and Wall 2020).

Living wage

Living wage laws require employers who receive contracts, tax benefits, or government subsidies from a locality to pay their workers a higher-than-minimum wage (PWF n.d.d; Bernstein 2002). These policies are meant to cover the cost of living, and the wage rates are often calculated based on ensuring that a family would be raised to or above the poverty threshold. Living wage policies in some cases establish different wage levels for employers who provide health insurance and those who do not. A 2011 compilation by the National Employment Law Project (NELP 2011) reported there were more than 120 localities with living wage requirements at that time.

As an example, Boston’s living wage law, enacted in the late 1990s, has as its purpose “to assure that employees of vendors who contract with the City of Boston to provide services earn an hourly wage that is sufficient for a family of four (4) to live at or above the Federal poverty level. This Chapter is also designed to maximize access for low- and moderate-income Bostonians to the jobs that are created, maintained or subsidized through service contracts with the City of Boston.”73 It covers city vendors and beneficiaries of city financial assistance. The law defines financial assistance broadly (Boston n.d.a),74 and covers any employer with at least 25 employees who has been awarded a service contract or subcontract with the city (Boston n.d.a).75 The law contains employee notice and employer reporting requirements, and a mechanism for enforcement, with potential penalties and remedies including fines, restitution, suspension of ongoing contracts and subcontract payments, and ineligibility for future city contracts for three years or until all penalties and restitution have been fully paid (Boston n.d.b).76 Companies bidding or negotiating on a service contract must complete an affidavit regarding the living wage (Boston 2022) prior to the awarding of the contract.

A major shortcoming of Boston’s law is that its formula for calculating the living wage can result in a relatively low dollar amount (the 2022 living wage is $15.87 per hour (Boston OWD n.d.), compared with the state’s 2022 minimum wage (Massachusetts n.d.b) of $14.25.

By contrast, the County of Santa Clara for 2021–2022 has a living wage set at $25.31 per hour (SC OCE n.d.) for employers who do not provide health or retirement benefits; employers who provide such benefits may pay a lower rate ($23.31 per hour with either health or retirement benefits; $21.31 per hour with both). In addition, Santa Clara County’s living wage requires77 provision of up to 12 paid days off to be used either as paid sick leave for the worker or for that worker to care for a family member or designated person.

Some city living wage laws incorporate other kinds of requirements, such as worker retention policies (PWF n.d.e). Hoboken, New Jersey, recently enacted a living wage ordinance for building service workers that includes both a monetary wage component and paid leave requirements.78 The city also passed an ordinance requiring contractors or subcontractors with a service contract in the city to ensure that when there is a change in employer, the successor employer must retain building service workers for 90 days.79 In 2022, the Newark (New Jersey) City Council passed an ordinance (TAPinto Staff 2022) to protect subcontracted janitors, security officers, and door attendants from losing their jobs for 90 days when a contract changes hands through no fault of workers.

Responsible contractor requirements

Numerous local governments have passed laws requiring contractors bidding for public projects (above a certain value) to meet certain “responsible contractor” criteria (ILEPI n.d.b). A responsible bidder ordinance is a policy that sets minimal requirements for all contractors bidding on publicly funded projects in a given political jurisdiction.

Criteria may include, for example, previous compliance with worker protection laws (i.e., laws prohibiting wage theft, misclassification. etc.), appropriate insurance coverage (i.e., for workers’ compensation), participation in a registered apprenticeship training program, and appropriate professional licenses (ILEPI n.d.b). While such requirements are based in commonsense and noncontroversial approaches, they do diverge from the frequently taken approach of awarding contracts to the lowest bidder based solely on price alone (IIIFFC n.d.d).

The Indiana, Illinois, Iowa Foundation for Fair Contracting has developed a Responsible Bidder Toolkit (IIIFFC 2017) providing guidance to municipalities wishing to pass such measures; the organization also compiled a list of nearly 50 responsible contractor ordinances in municipalities within those three states (IIIFFC n.d.a, IIIFFC n.d.b; IIIFFC n.d.c). Other localities are considering such requirements. New Orleans, for example, passed (New Orleans MO 2021) a responsible contractor ordinance after the collapse of the Hard Rock Hotel, which was under construction; three workers died in the accident. New Orleans also specified that the primary contractor would be responsible for any subcontractor violations.

Seattle’s minimum wage ordinance contains a provision disallowing employers from bidding on city contracts if they are the subject of a final order and have not paid all money owed; if an employer has been the subject of a final order twice or more within five years, the contractor cannot bid on city contracts for two years.80 Most of the city’s other labor ordinances contain similar language.

San Diego’s municipal code requires city contractors, during the term of a contract, to “comply with all applicable local, state, and federal laws, including health and safety, labor and employment, and licensing laws, that affect the employees, the worksite or performance of the contract.”81

Minneapolis bars the city from contracting with entities included on a list of companies with outstanding violations of the city’s wage theft law (Minneapolis n.d.c). The city of Omaha, Nebraska, sets contractor rules for contracts greater than $500,000. These rules include a “bid incentive” for contractors to use apprenticeship training programs (allowing them to be competitive while submitting slightly higher bids), and also require proof of workers’ compensation insurance, proper classification of workers as employees, and disclosure of subcontractors; penalties for noncompliance include withholding by the city of any payments still owed to the contractor, as well as a year of being debarred from bidding on contracts if there are two violations (Omaha n.d.).

Toledo, Ohio, has a municipal code that requires payment of prevailing wages for contracts of $10,000 or more, and prohibits awards of such contracts to bidders who have been convicted or found liable under the city’s wage-related law in the previous two years. For construction projects of more than $100,000, city law sets criteria, including continuity and experience of the workforce, local hiring, whether there is an apprenticeship program, and whether the employer provides benefits (health insurance and retirement or pension plan), as well as the bidder’s record of compliance with tax, wage and hour, and unemployment laws (Toledo n.d.b).

Other cities that disqualify contractors with a history of wage theft and other labor standards violations from winning city contracts include Cincinnati (Hussein and Coolidge 2016); Columbus, Ohio (Columbus n.d.a, n.d.b); Coralville, Iowa (Zaluska 2021); El Paso, Texas; and Houston.

In 2021, New York City amended its law to include a requirement, currently being challenged in litigation, that human services contractors and subcontractors must agree to labor peace agreements as a condition to being able to win or renew a city service contract with city agencies. Among other things, they must file an attestation that the employer has entered into a labor peace agreement with a labor union, or that no union has sought to represent their workers, and if a union seeks to represent their employees during a contract, they must enter a labor peace agreement within a set period of time (NYC n.d.a).82

Local and targeted hiring policies

Local and targeting hiring programs require or incentivize businesses that receive public dollars to hire workers from the local community, or from targeted populations in the community. Local hiring creates hiring preferences for people who live in a specific geographic area, which can be as large as an entire city or county, or as small as specific zip codes or neighborhoods. Targeted hiring refers to hiring preferences based on a range of worker characteristics, such as veteran status, gender, race or ethnicity (where allowed), residency in a low-income neighborhood, having been formerly incarcerated, having a disability, or being long-term unemployed (Gross and PolicyLink 2019). Local and targeted hiring policies can be implemented by ordinance, as part of responsible contractor standards, or negotiated as part of project labor agreements or community benefits agreements (UCLA Labor Center 2014). Baltimore’s local hire law, for example, requires compliance by vendors, contractors, and subcontractors who do business with the city, and is applicable to city-awarded contracts of more than $300,000, and city-subsidized projects of more than $5 million. The law requires businesses and all of their subcontractors to post new jobs with the mayor’s Office of Economic Development exclusively for a period of seven days, that 51% of all new hires are Baltimore residents, and for businesses and subcontractors to submit monthly reports (Baltimore OED n.d.).

Project labor and community benefits agreements

Project labor agreements (PLAs) are used primarily in the construction industry to establish the terms of employment for all workers on a project. Generally, PLAs specify workers’ wages and benefits, and may include provisions requiring contractors to hire workers through union hiring halls, otherwise establish a unionized workforce, or develop procedures for resolving employment disputes. PLA terms often also prevent workers from striking, and employers from locking workers out, during the project (Mangundayao, McNicholas, and Poydock 2022). PLAs can help eliminate costly delays caused by labor conflicts or shortages of skilled workers. While many states have policies that promote PLA use in state-funded projects, some states restrict or disallow them (Brubeck 2018; FC and SLC 2018; Von Wilpert 2017). Local governments such as those in Boston, Los Angeles, and New York City have successfully used PLAs for years; more localities could use PLAs on major projects.

Community benefits agreements are made between developers of a commercial and/or residential project and representatives of community groups where the project is being developed (PWF n.d.a). Communities can stipulate certain requirements for the projects, such as hiring from the local community, or guaranteed financial or social benefit from the project; in return, the developer receives the community’s support for the project (Island Institute 2021). Major development often occurs on city land, receives public funding or tax breaks that can accrue value to the developer, and in almost all cases require land use approvals that require the support of local government officials (PWF and LP 2019). Consequently, local governments are sometimes parties to community benefits agreements directly, may have a separate agreement with developers that is also part of negotiations, or may otherwise leverage their land use or funding powers as a part of these community benefits agreement negotiations.

Some examples of community benefits and labor peace agreements are as follows:

• In 2012, a community coalition and the city of Oakland negotiated a community benefits agreement that included requirements for local and targeted hire, living wages, fair chance hiring, limitations on the use of temporary workers, and community oversight and enforcement (PWF n.d.c).
• In 2018, the city of Nashville supported a community coalition in winning a community benefits agreement that included requirements for local hire, a $15.50/hour minimum wage, mandatory worker safety training for construction workers and supervisors, and workforce development (Porterfield 2021).
• A 2008 community benefits agreement regarding the development of the Bayview-Hunters Point neighborhood of San Francisco included a labor peace agreement in key industries related to the project (PWF n.d.c).
• Pittsburgh also has an ordinance from 1999 that requires hotel contractors and employers to sign labor peace agreements when city financing has been involved in the development of the hotel (Pittsburgh 1999).

Some localities created compliance requirements to obtain, retain, or renew permits or licenses; however, limited enforcement lessens deterrence

The licensing and permitting process can be used to drive improved labor standards and conditions; accordingly, some localities have incorporated labor-related requirements into these processes (Madland and Rowell 2017). This can take the form of requiring disclosures or evidence of compliance as part of the application or renewal process, or imposing potential permitting or licensing consequences in the event of certain established violations.

One caveat regarding the numerous laws that have been passed in this area: lack of media reports suggests very limited exercise of these powers by localities that have passed them. As with any law, the effectiveness of these provisions depends in large part on enforcement. Economists have observed that “employers will not comply with the law if the expected penalties are small either because it is easy to escape detection or because assessed penalties are small” (Ashenfelter and Smith 1979). Licensing and permitting consequences change both parts of the equation—the ease of escaping detection, and the scale of the assessed penalties. In addition, as discussed in Section 9 below, media coverage of these consequences would likely significantly drive deterrence.

Localities face several challenges in operationalizing these requirements. First, there is the need for at least some dedicated staff time on the local level to make the program work. There is also the logistical challenge of ensuring that local licensing or permitting agencies learn about serious violations, which will require proactive outreach and research. In addition, unless they are given very clear direction or mandates from the ordinance and/or from their chain of command, licensing or permitting agencies may be reluctant or resistant to imposing consequences based on workplace violations (even those that are proven and unremedied), seeing these issues as outside of their substantive purview.

There also may be concerns about revocation of a license or permit possibly leaving workers out of jobs. However, licensing and permitting provisions generally provide ample opportunities to cure, as well as a range of consequences—not only the most severe—including a period of temporary suspension for a license or permit, or a probationary period. In addition, the existence of licensing or permitting consequences could permit an agency to reach a negotiated settlement with terms to ensure future compliance, such as requiring an employer to engage an independent monitor. Such negotiated settlements or less punitive measures could in many cases be preferential to revocation.

In addition, it is likely that even one or two well-selected, well-publicized uses of these powers would achieve much of the desired deterrence in a given industry or neighborhood. Further, the limited available examples suggest that these consequences work: as described below, the Santa Clara County Office of Labor Standards Enforcement has operationalized food permit consequences for restaurants with unpaid wage-related determinations from the state labor commissioner. In response, almost all employers involved have paid what they owed in order to avoid further consequences.

In short, this tool appears to be underutilized despite its apparent untapped potential in terms of deterring violations. Localities without these laws might consider passing them, along with required annual reports on activities. Localities with such laws might wish to systematically enforce them through leveraging the license application and renewal process, and through scheduled routine checks with local, state, and federal labor enforcers, and routine searches of court filings.

Sample legislative language

Even without language specifically addressing wage theft or other labor conditions, licensing or permitting laws may contain general language with catch-all provisions that may be used for the purposes of ensuring licensees or permit holders comply with workplace laws. The Minneapolis Code (Minneapolis n.d.d) section on business license holders provides several examples of this:

• It requires license holders to“maintain and operate the business in compliance with all applicable laws and ordinances, including the zoning, fire, environmental health, environmental management, license, food, liquor, housing and building codes” (emphasis added).83 The “all applicable laws and ordinances” provides a basis for taking adverse action against a licensee based on proven violations of wage or other workplace laws.
• It requires license holders to “pay all delinquent court judgments arising out of their business and business operations.”84 This provision could provide a basis for adverse action in a situation where a judgment related to wage, discrimination, or other workplace violations remains unsatisfied.
• Finally, the code states, “The provisions of this section are not exclusive. Adverse license action, inclusive of, but not limited to, revocation, may be based upon good cause at any time upon proper notice and hearing. This section shall not preclude the enforcement of any other provisions of this Code or state and federal laws and regulations.”85 This broad “good cause” language again provides an opening for action based on workplace practices, such as persistent ongoing violations or egregious infractions.

In addition to potential use of this type of general language, some city laws specifically reference working conditions and labor violations in relation to issuance or revocation of permits and licenses.

For example, Philadelphia’s city code allows the city to “deny, suspend, or revoke any license or permit issued or pending” for a period of up to one year if the applicant or licensee was found guilty, liable, or responsible for violating the city’s anti-wage theft ordinance. In addition, all applicants for a commercial or business license must certify that they have not been found guilty, liable, or responsible for violating wage theft laws within the past three years (Philadelphia n.d.b). Similarly, Jersey City, New Jersey’s wage theft prevention law prohibits issuance or renewal of a license or permit to an applicant or entity that has been found liable for wage theft and has not come into compliance within 90 days of any final judgment. It also requires disclosure of wage theft cases within the two years prior to license or permit application, and requires the city to make an annual request to the state labor department for any wage claims (and associated documents) filed against licensees in the past two years (Jersey City n.d.).

Permits

Some localities have used the permitting process to drive labor compliance. Prior to issuance of a permit for construction of a building above a threshold size, the city of Milpitas, California, requires applicants to sign a form (Milpitas n.d.) acknowledging responsibility for complying with certain state and local labor laws. They must also sign a form certifying compliance before a certificate of occupancy will be issued for the project (Milpitas n.d.). For issuance of a special construction permit under the Quincy, Massachusetts, city code, all levels of entities involved in the project (construction manager, lead contractor, contractor, subcontractor, etc.) must comply with wage payment-related laws; if not, the city’s measures to achieve compliance include issuance of a stop-work order until there is compliance.86

Michigan City, Indiana, creates requirements for issuance of building permits for construction projects of more than $250,000, including that in the past three years, the contractor must not have been barred from bidding on public work because of, or been found to have committed, legal violations pertaining to wages, taxes, workers’ compensation, or misclassification. It also requires contractors who receive permits to comply with these laws as well, and requires the property owner applying for a building permit to use their best efforts to require all contractors to comply with these obligations. The law contains serious potential consequences, including suspension of the permit (requiring stoppage of work), or even revocation (Indiana n.d.).

The Better Builder Program in Austin, Texas, uses a carrot instead of a stick. The program, in partnership with the Workers Defense Project (WDP n.d.), provides an innovative example of creating permit-related incentives for employers willing to commit to higher labor standards. In the program, construction companies willing to ensure certain protections for construction workers on commercial projects may receive expedited handling of their permits (Austin n.d., Hasan 2017; Anderson 2017).

Licenses

A number of localities incorporate wage theft and labor compliance into their business licensing laws and practices. For example, the city of Toledo prohibits issuance of a license to any applicant who has found liable or been convicted pursuant to the city’s anti-wage theft laws or any other wage-related provisions of local, state, or federal law within the previous two years.87 The Seattle municipal code empowers the Department of Finance and Administrative Services to deny, refuse to renew, or revoke an employer’s business license, if requested to do so by the Office of Labor Standards as a result of an unsatisfied settlement or order.88

In Boston, a 2017 executive order allows the city’s licensing board to take into consideration whether a licensee has been found to have violated state or federal wage laws in determining whether to reissue, modify, suspend, or revoke a license (Boston MO 2017). A number of localities in Massachusetts have similar provisions. In Northampton, the License Commission has authority over issuance and administration of licenses for a range of types of businesses: service and sale of alcoholic beverages; operation of restaurants, hotels, inns, and lodging houses; indoor and outdoor entertainment for licensed and nonlicensed premises; car dealers; and more. When issuing a new license or a renewal, the License Commission requires completion of a Fair Wage Compliance Certificate (NLC n.d.), attesting that the business is not subject to a judgment or final determination resulting from a violation of state or federal wage protection laws. If they do not certify as such, they may be required to provide a wage bond for the time period covered by the license (Northampton n.d.). The media reported on a case in which this wage bond requirement could potentially be triggered, based on citations issued by the Massachusetts attorney general’s office (Fieldman 2021).

The Santa Clara County (California) Office of Labor Standards Enforcement is an agency that has begun to meaningfully operationalize permitting consequences for violators of labor standards laws. Data from the California Division of Labor Standards Enforcement showed that Santa Clara County workers filed the highest number of wage theft claims in the state: over a nearly five-year period, retail food vendors were found to owe nearly $5 million in back wages, an estimated $2,900 per employee. In addition, worker advocates reported on (Gleeson, Taube, and Noss 2014) the high incidence of wage theft and highlighted potential responses by local government. Accordingly, the county established a food permit enforcement program (SC OLSE n.d.d) to encourage payment of existing judgments by conditioning the issuance, renewal, or retention of food facility permits on compliance with labor standards.

If a retail food vendor is determined to be in violation of a judgment for nonpayment, the county may elect to temporarily suspend or revoke the vendor’s food health permit. The program, which is being rolled out gradually to all zip codes in the county, contains graduated measures to encourage payment of outstanding wages: the county sends three notices (a notice of outstanding judgment, notice to comply, and notice of violation, with 15 days to respond to each), and ultimately, continued nonresponsiveness or noncompliance will lead to a food permit suspension of at least five days (with notice provided to the public regarding the reason for the suspension). The county created a flow chart to explain the process, contained in Figure A. One noteworthy aspect of this process that may increase its likelihood of success and effectiveness is its focus on only one industry (restaurants), and its gradual rollout plan, based on zip codes. This kind of approach—targeting a problem industry and gradual implementation—could readily be replicated elsewhere. The county also added ongoing wage theft violation information to its “SCCDineOut” app, which allows county diners to view restaurants’ food safety records on their smartphones (Ochavillo 2019).

Figure A

Retail food vendors may have food health permit suspended or revoked for noncompliance. In addition, in 2010, the San Francisco Department of Public Health, recognizing the socioeconomic determinants of health and the poor health outcomes resulting from labor violations, incorporated certain labor elements into its restaurant permit review process, including requiring proof of workers’ compensation insurance by all applicants, as well as successfully leveraging the permitting process in relation to unremedied serious labor violations by several employers (Bhatia et al. 2013).

Localities can support workers through exercise of public leadership: education and outreach, issuing reports, holding hearings, and general advocacy

Localities have leveraged their soft powers to support workers’ rights and organizing. Local agencies devoted to protecting workers’ rights have used a range of tools to educate workers about their rights, inform employers about their obligations, and share information with the broader community about issues affecting workers. They have issued reports, conducted extensive public education and outreach, made materials available on their websites, garnered media coverage, and more. Localities without dedicated labor agencies can also use these soft powers to promote public and worker education. Moreover, local elected officials—whether individually or collectively alongside other officials and community labor groups—can use their public platforms and convening authority to provide public education and support workers, including those who are actively forming and joining unions.

Strategic communications, including use of media, is particularly important in educating workers about their rights and deterring violations. Media coverage increases employers’ knowledge about their legal obligations; it also increases their perceptions about the likelihood and cost of detection of violations. A recent study showed that press releases about OSHA enforcement of workplace safety violations deterred other workplace safety violations, an effect likely applicable to other labor standards laws as well (Johnson 2020). In addition, many workers, especially low-wage workers, have limited knowledge about the laws that affect them (Rankin and Lew 2018; Miller and Tankersley 2020). There are numerous communications tools that localities can use to reach the public (Gerstein and Goldman 2020).

Many local labor agencies have issued reports on worker issues or on their activities supporting workers

Several local agencies have issued regular reports on their activities or on the state of workers’ rights within their jurisdiction. Annual reports generally provide a comprehensive overview of an office’s work. In some jurisdictions, such as Chicago, Duluth, and St. Paul, annual reports are required by statute, a beneficial requirement that ensures transparency and continued focus on the labor offices’ work (Chicago n.d.c; Duluth n.d.; St. Paul n.d.c). In other jurisdictions, such as New York and Seattle, there are not annual report requirements per se, but other mandates for regular report-backs; Seattle’s ordinance requires an annual report regarding required funding for the Office of Labor Standards (Seattle n.d.a) (which necessarily requires an accounting of the past year’s activities), and individual laws in New York City have their own specific reporting requirements (NYC n.d.b).

Here’s a look at some local reports:

• The Chicago Office of Labor Standards issued annual reports covering its activities in 2019 (Chicago OLS 2019), 2020 (Chicago OLS 2020), and 2021 (Chicago OLS n.d.).
• The Denver auditor issues an annual report (Denver OA 2021a), and the 2021 version has a section (Denver OA 2021b) on wage-related enforcement.
• The city of Los Angeles issued a milestone report (LA City OWS 2022) in January 2022, detailing its activities and accomplishments since 2016.
• The Minneapolis Labor Standards Enforcement Division has a running dashboard (Minneapolis n.d.a) on its website, with data about the division’s activities, and issues an annual report (Minneapolis 2020).
• St. Paul includes labor enforcement data in the annual report (St. Paul 2020) of the Department of Human Rights and Equal Opportunity.
• The New York City Department of Consumer and Worker Protection has issued annual reports (NYC n.d.d) on the state of workers’ rights since 2017. The department in 2018 issued a report (NYC 2018) specifically on paid care workers.
• The Philadelphia Department of Labor issued annual labor policy and compliance reports (Philadelphia OLS & OWP n.d.) in 2019, 2020, and 2021. In addition, the department issued a report (Cox 2020) in 2020 on the Philadelphia Worker Relief Fund, which provided foundation and city-funded cash assistance to workers excluded from unemployment insurance and pandemic-related stimulus, through distributions via 14 community-based organizations.
• The San Francisco Office of Labor Standards has issued three annual reports (SF OLSE n.d.a).
• The Santa Clara County Office of Labor Standards Enforcement has issued several reports, including an annual report (SC OLSE 2020) in 2020.
• The Seattle Office of Labor Standards has an extremely detailed interactive dashboard (Seattle OLS n.d.b).

Local labor agencies have launched campaigns to educate communities about workers’ rights

Many local labor offices are extremely active in reaching out to the public and educating workers about their rights as workers. The New York City Department of Consumer and Worker Protection has engaged in a number of targeted campaigns, including educating the public about the city’s paid sick leave law when it first took effect, introducing the agency’s new name (NYC 2019c) to include the word “worker,” and reaching out to nail salon workers (NYC 2019b). During the early months of the COVID-19 pandemic, the department set up a hot line (NYC 2020a) for workers with questions about the city’s reopening.

The Minneapolis Labor Standards Enforcement Division held a workshop to help employers plan for a minimum wage increase, (Minneapolis 2018), as well as a workshop on paid sick and safe time for immigrant-owned small businesses (Minneapolis 2017). The Philadelphia Department of Labor has extensive know-your-rights resources on its web page (Philadelphia DOL n.d.), including access to a video (Philadelphia 2021a) about city worker protections during the COVID-19 pandemic.

The Chicago Office of Labor Standards and Denver Labor are both relatively new offices that have taken considerable action to educate the public in their cities. In Chicago, the Department of Business Affairs and Consumer Protection, within which the Office of Labor Standards is located, has its own YouTube channel, and the Office of Labor Standards has posted numerous webinars there on a wide range of labor-related topics (Chicago Dept. BACP n.d.; Chicago n.d.b). The office also created a “Your Home is Someone’s Workplace” campaign focused on domestic workers, and has a web page specifically focused on this workforce, as shown in Figure B (Chicago n.d.a). 

Figure B

The Chicago Office of Labor Standards also engaged in an outreach campaign about a new law giving domestic workers the right to a written contract from their employer (Chicago n.d.a; Chicago Dept. BACP 2021b). Some outreach took place in conjunction with the nonprofit worker organization Arise Chicago, which provided trilingual (English, Spanish, and Polish) sample contracts for employers’ use (Arise Chicago n.d.).

Los Angeles County announced a similar “Your Home is Someone’s Workplace” campaign to educate employers about domestic workers’ rights, and the Philadelphia Labor Department conducted a fair workweek survey in English and Spanish (LA County CBA 2021a; Chewning 2021b, 2021a).

Denver Labor has an extensive outreach and public education function. The office holds “Wages Wednesday” live on Wednesdays on the Denver Labor Facebook page, including programs in English and Spanish (Denver 2022b, n.d.a). The office held nearly 50 live Facebook trainings in 2021, and had bilingual (English and Spanish) staff available to answer questions (Denver OA n.d.a). The office web page highlights restitution stories, and contains online resources for small businesses about compliance (Denver n.d.b, n.d.c). It also contains tools for workers and employers: a regional address finder to assess whether work performed was in the relevant local boundaries, and a minimum wage and tip calculator, among other things. Also, the office launched an “Earned It, Deserved It” campaign to raise awareness of the city’s minimum wage ordinance, with bilingual ads at regional bus stops, and on radio, television, and social media platforms (Denver OA 2021a, p. 16).

Local labor agencies have highlighted worker issues in their jurisdictions through advocacy, hearings, and convenings

Several city labor agencies have gotten involved in various worker advocacy efforts.

In 2021, officials from several local enforcement agencies, including Chicago, New York City, Philadelphia, Seattle, and the district attorneys of Suffolk County, Massachusetts, and Washtenaw County, Michigan, all signed a joint letter (NYC DCWP 2021), along with 11 state attorneys general, to the U.S. Department of Homeland Security (DHS) supporting the agency’s plan to change its approach to worksite enforcement to support labor rights, and recommending changes to DHS policies and practices to facilitate the ability of state and local labor officials to enforce workplace laws. The letter was in response to a recent DHS memorandum (USDHS 2021) to Immigration and Customs Enforcement (ICE), Customs and Border Protection (CBP), and U.S. Citizenship and Immigration Services (USCIS), directing them to adopt practices and policies to deliver more severe consequences to exploitative employers, and increase workers’ willingness to report violations of worker protection laws.

In March 2020, agency officials in four cities (Chicago, New York, Philadelphia, and Seattle) called on (NYC 2020b) FedEx, UPS, and XPO to improve their policies in response to the then-new pandemic, particularly in relation to paid sick leave. Also in 2020, four localities (Chicago, New York, Philadelphia, and Pittsburgh) joined (NY AG 2020) a coalition of 24 state attorneys general in submitting a comment letter (NY AG et al. 2020) to the U.S. Department of Labor opposing a proposed regulation that would make it easier for employers to classify workers as independent contractors instead of as employees.

Finally, the New York City Department of Consumer and Worker Protection has held a number of hearings and convenings. For example, in 2017, it held a public hearing (NYC 2017) on the state of workers’ rights in the city, along with the Mayor’s Office of Immigrant Affairs and the New York City Commission on Human Rights, and in 2019, the same three agencies, along with partner organizations, held a convening (NYC 2019a) focused on immigrant workers.

Making know-your-rights resources, labor law posters, and other materials widely available, including in multiple languages

Some local agencies have been particularly aware of the need to reach the broad range of workers within their jurisdictions, and have translated materials into multiple languages. Cities and counties operate on the ground serving diverse communities, and may sometimes be more attentive to language access concerns than agencies at other levels of government.

The New York City Department of Consumer and Worker Protection has produced workers’ bill of rights booklets in 15 languages and audio files in five indigenous languages (Garifuna, K’iche, Kichwa, Mixteco, and Nahuatl), as well as an animated video. The animated video and audio files also enhance access for people with varying literacy levels. The Philadelphia Department of Labor web page (Philadelphia DOL n.d.) contains workers’ rights resources in 12 languages. Los Angeles City has minimum wage and paid sick leave posters available in 13 languages (LA City OWS n.d.a). Santa Clara County’s Office of Labor Standards’ web page provides information (SC OLSE n.d.f) in five languages. Even smaller jurisdictions, like Emeryville, California, with a 2020 population (U.S. Census Bureau 2022e) of less than 13,000, offers minimum wage and paid sick leave notices and posters (Emeryville n.d.) in six languages.

Local labor agencies have generated media coverage about worker issues

In addition to issuing press releases and reports, some offices have been effective in helping to catalyze coverage of workers’ rights issues in the local press. The Philadelphia Department of Labor has been especially effective in this regard, helping place news stories about workers’ rights under the city’s fair workweek law when it was first enacted, about its issuance of an annual report that would shame employers with records of violations, and about the Philadelphia Worker Relief Fund for workers excluded from other public assistance during the pandemic (Dorfman 2021; Reyes 2021b, 2020; Marin 2020).

The Santa Clara County Office of Labor Standards received coverage (Reese 2021) on a county contracts enforcement pilot program, in which the office reviews judgments and orders from state and federal labor authorities to determine whether a contractor should be disqualified from working with the county. The office also received coverage (Telemundo n.d.) on Telemundo about its enforcement program related to county food permits.

Finally, workers themselves can catalyze coverage of enforcement actions by local labor enforcement agencies, as when a worker whose case was handled by the San Francisco Office of Labor Standards gave a TEDx Talk (Winner 2019) and was featured in a PBS NewsHour program (Nawaz and Carlson 2021) about the city’s fair chance ordinance, which requires employers to consider mitigating circumstances and rehabilitation evidence for job applicants with a criminal record.

Local elected officials have used their public platforms and convening authority to support workers

Local elected officials have used their public platforms to demonstrate their support for working people in many ways. Such officials have shown up at rallies, events, and actions (including strikes (Aponte 2021) and walking workers back to work after days of action). Local elected officials have also written opinion pieces (op-eds) in support of worker advocacy and to bring attention to harms and challenges experienced by workers (Rosenthal 2021), and have written and signed letters to employers expressing concerns about worker treatment. Moreover, local elected officials can hold hearings, which allow workers an opportunity to share about their experiences and for officials to ask employers relevant questions.

Local elected officials can also show support for ongoing worker organizing campaigns. For example, in 2022, New York City Comptroller Brad Lander, as a public pension fund trustee, led a shareholder effort to address high injury rates and turnover at Amazon warehouses (Newman 2022). Also in 2022, the Seattle and Philadelphia city councils both passed resolutions supporting Starbucks workers seeking to unionize (Taylor 2022b; Valentine 2022). A Local Progress website provides additional ideas and resources for local elected officials wishing to show support for the Starbucks worker organizing campaign (Local Progress, n.d.b.).  

Conclusion: Localities throughout the country can adopt supporting workers’ rights as among the core functions they perform for their communities

There is a wealth of possibilities for localities that wish to get involved in expanding and enforcing workers’ rights. While some recent local action emerged in response to the Trump administration’s hostility to workers’ interests, much of cities’ work in this area pre-dated 2016. Accordingly, the local role in protecting working people continues to be relevant and critically important, even in the context of a worker-friendly federal administration.

Localities have been key innovators on labor matters, piloting new laws on such issues as paid sick leave and fair workweek; with proof of concept at the local level, such laws are later adopted at the state level (and perhaps eventually at the federal level as well). Creation of worker boards, strategic community enforcement partnerships, and using permits to drive compliance are also local innovations that help move the field forward. In addition, expansion and robust enforcement of workers’ rights at the local level serves as a hedge in our federal system, helping ensure at least some continued protection of workers in times when federal or state government is unfriendly to workers or insufficiently effective in protecting them. Moreover, public enforcement of workers’ rights is of even greater urgency when skyrocketing use of forced arbitration blocks workers from bringing their cases in court.

Localities in states without preemption of local laws may undertake any and all of the actions described above. However, even localities facing serious legal, political, or financial constraints in relation to their involvement in worker issues still can take action that will have a meaningful impact on workers’ lives.

Specifically, even in states with preemption:

• Localities can offer high-road standards to their own workforces, including enabling or facilitating collective bargaining where permitted, as well as sufficient minimum wage and paid sick/family leave for municipal employees.
• Localities can consider enacting laws that may not be preempted, such as those that do not set labor standards. These might include anti-wage theft ordinances that do not set a local minimum wage, but simply enforce existing rates; responsible bidder ordinances; ordinances concerning licensing or permitting consequences or incentives; or laws on salary transparency, for example. Local leaders can examine their state’s preemption law to assess the realistic possibilities.
• Localities can assess whether there is authority to require increased labor standards at the local airport.
• Localities can establish a worker advisory board to create a vehicle for open lines of communication and opportunities for worker leaders to raise newly emerging issues that the locality may be able to help address.
• Localities can establish a dedicated labor office or at the very least, a dedicated labor liaison at the local level. Even in a state with strong preemption, such an office could likely do some or all of the following:
  • Conduct outreach and public education on workers’ rights. Create a workers’ rights landing page on the locality website (in languages commonly used in the locality), with information about federal, state, and local workers’ rights applicable within the jurisdiction, (however expansive or limited they may be), as well as hyperlinks to relevant government agencies and other worker-oriented resources. Conduct outreach and include basic workers’ rights information in community outreach by existing local officials (such as by Fair Employment Practices Agencies, where they exist).
  • Review contracting, licensing, permitting standards, especially in industries with high rates of violation. Consider whether new laws are needed in order to impose compliance prerequisites or consequences for violations of labor laws. If so, try to enact them. In either case, routinely review labor compliance records of recipients of local government contracts, permits, or licenses, and consider whether action can be taken by contracting, licensing, or permitting agencies.
  • Review forms used for contracting, permitting, and licensing. Incorporate workplace law information about employer responsibilities on application forms and require signed certification by bidders or applicants that they will comply with these laws.
  • Research working conditions within the locality (possibly in conjunction with local or state academics), and issue and publicize reports on findings
  • Hold convenings or hearings to uncover and highlight problems facing workers, and to generate media coverage of these issues.
  • Create a comprehensive complaint form for workers and become a one-stop shop for reporting violations, serving as a gateway to help workers navigate other agencies and resources.
  • Publish enforcement data and stories to demonstrate effectiveness and deter violations.
  • Enlist and/or organize local resources, such as law school clinics or the local bar, to address worker issues. For example, the Massachusetts attorney general’s office holds a monthly wage theft clinic for cases it cannot handle, with nonprofit organizations, pro bono lawyers, legal services offices, lawyers who can take contingency cases, etc. (Massachusetts n.d.a). Along similar lines but addressing a problem unrelated to labor, the California Attorney General’s office in 2015 convened a roundtable of law firms and immigrants’ rights advocates about the legal needs of unaccompanied minors fleeing Central America; these efforts led to the legal representation of more children in immigration cases (CA DOJ 2015).

Localities in states without preemption, in locales more friendly to workers’ rights, can consider enacting any and all of the above measures. In addition, they have even more leeway to act, since they can:

• enact higher labor standards for all workers within their jurisdiction
  • minimum wage, overtime, paid sick and safe leave, fair workweek, expansive anti-discrimination laws, strong anti-retaliation protections
  • protections needed in particular industries: domestic workers, hotel, retail, fast-food, car wash workers, freelancers, etc.
  • cutting-edge worker protections such as just cause termination, gig worker pay or termination standards, salary transparency, and more
• meet with local worker organizations to learn what issues they identify as pressing
• create, fund, and empower a robust local office of labor standards with
  • enforcement power, including subpoena power
  • the ability to inform the administration and legislators on policy matters
  • a strategic enforcement approach
  • a funded community partnership model
• enact and enforce job quality standards (prevailing wage, living wage) and responsible bidder ordinances for local government contractors
• enact and fully operationalize workplace law compliance prerequisites and consequences for applicants and holders of locally issued permits and licenses.

In all localities—those in states hostile to workers, friendly to workers, and in between—there are opportunities to stand up for working people and take action.

Acknowledgments

The authors would like to thank Daniel Perez and Katherine DeCourcy, who provided excellent research assistance.

About the authors

Terri Gerstein is the director of the State and Local Enforcement Project at the Harvard Law School Labor and Worklife Program and a senior fellow at the Economic Policy Institute. She was recently an Open Society Foundations Leadership in Government Fellow. Previously, Terri was the labor bureau chief in the New York State Attorney General’s Office and a deputy commissioner in the New York State Department of Labor. Before her government service, Gerstein was a nonprofit lawyer in Miami, Florida, where she represented immigrant workers and co-hosted a Spanish language radio show on workers’ rights. She was a law clerk for Judge Mary Johnson Lowe of the U.S. District Court for the Southern District of New York. Her writing on workers’ rights issues has appeared in numerous outlets, including the New York Times, Washington Post, NBC News Think, The American Prospect, Politico, Slate, The Nation, and more; a complete listing is available at www.terrigerstein.com. She is a graduate of Harvard College and Harvard Law School.

LiJia Gong is the policy and legal director at Local Progress. She leads the development of Local Progress’ policy and research capacity to support members, and drives the development and growth of national program areas. Gong is an attorney with more than a decade of experience in policy, litigation, and political strategy. Prior to joining Local Progress, she served as counsel at Public Rights Project, an organization that empowers local and state governments to advance civil rights, worker and consumer rights, and environmental justice. At Public Rights Project, she launched a partnership with Local Solutions Support Center to fight abusive state preemption of local policymaking. Gong worked on the 2018 campaign to re-elect Sen. Elizabeth Warren of Massachusetts and served as a law clerk for Judge Kiyo Matsumoto of the U.S. District Court for the Eastern District of New York. Prior to becoming a lawyer, Gong worked as a research assistant at the Federal Reserve Board of Governors. LiJia earned her J.D. from Georgetown University Law Center and her B.S.F.S. from Georgetown University.

Endnotes

1. New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J, dissenting).

2. New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting).

3. This report uses the terms “localities” and “local governments” as an umbrella term for political subdivisions of a state that include, for example, counties, cities, townships, villages, and school districts. Local government decision-making structures and authorities vary significantly–in some localities the executive has far more authority than the legislative body (often referred to as “strong mayor” systems as applied to cities), while in some localities significant control rests with appointed offices like a city manager. Localities also vary tremendously in terms of size–some towns have only a few hundred or thousand residents, whereas Los Angeles County has more than 10 million residents. Accordingly, the capacity for policymaking and enforcement among localities also varies greatly. Due to this diversity across localities, this report uses “localities” and “local governments” generally to refer to powers that may belong to the local executive, legislature, administrative agencies, or some combination thereof in a given jurisdiction.

4. Diller argues that cities’ smaller scale, concentrated political preferences, and streamlined lawmaking processes facilitate public health innovation.

5. Many localities have longstanding agencies that enforce human rights, civil rights, or other anti-discrimination laws; this report touches on the work of such agencies, but they are not the focus. 

6. Because in its employment-related lawmaking and enforcement, Washington, D.C., operates more akin to a state than a city, it is not included in this report. For more information for enforcement actions taken by D.C.’s attorney general, please see Gerstein 2020.

7. The federal government sets the federal minimum wage; that rate serves as a national floor. Under the federal minimum wage law, the Fair Labor Standards Act, states and localities may pass minimum wages that are higher. Many, but not all states, also allow localities to require pay higher than the state minimum wage.

8. The advocacy group “A Better Balance” has an option on its website that enables filtered searches of enforcement agencies handling paid sick day enforcement (A Better Balance n.d.b). Several localities assign this function to their offices of community relations or of human rights (Boulder 2022; Montgomery n.d.; Pinellas OHR). In Duluth, Minnesota, the city clerk has authority to enforce the law (Duluth 2022b). In Miami-Dade County, a consumer mediation center handles wage disputes (Miami-Dade WTP). This list is illustrative but not exhaustive.

9. UC Berkeley 2022; Boston OWD n.d.; Chicago OLS 2022; Denver 2022a; Duluth 2022a; Emeryville 2022; Flagstaff 2022; LA City OWS n.d.a; LA City BCA n.d.; Minneapolis n.d.b; NYC OLPS n.d.b; Philadelphia n.d.a; SF OLSE n.d.c; Santa Clara n.d.a; SJ 2022; Seattle OLS n.d.d; St. Paul n.d.b; Tacoma n.d.

10. Brennan 2021; San Diego 2022.

11. Kelty 2022; Ludden 2021.

12. Miami-Dade WTP n.d.; Pinellas OHR n.d.; Broward OPSHR n.d.; Broward OIAPS 2022.

13. In re: Palm Beach County Wage Dispute Docket and Creation of “WD” Division, Administrative Order No. 3.907-3/15, March 9, 2015. Fifteenth Judicial Circuit Court in and for Palm Beach County, Florida. See Palm Beach 2015.

14. Bloomington n.d.

15. Bloomington 2022.

16. In March 2022, a Washington state bill was signed into law that will preempt Seattle’s local regulations of TNCs HB 2076, 2021–22 House of Rep., Reg. Sess. (Wash. 2022). See Washington 2022.

17. Res. 32038, 2021 City Council, Seattle (Seattle 2021). See Seattle CC 2021.

18. For an in-depth analysis of privatization generally, see Cohen and Mikaelian 2021.

19. Brief for the States of New York, Alaska, Connecticut, Delaware, Hawaii, Iowa, Kentucky, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia and Washington, and the District of Columbia as Amici Curiae in Support of Respondents, Janus v. American Federation of State, County and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018); see also Brief for the City of New York as Amicus Curiae in Support of Respondents, Janus v. American Federation of State, County and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018); Brief of Mayor Eric Garcetti, County Executive Dow Constantine, Mayor Jenny Durkan, Mayor Rahm Emmanuel, Mayor James Kenney, and Mayor Bill de Blasio as Amici Curiae in Support of Respondents, Janus v. American Federation of State, County and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018).

20. See, e.g., Louisiana (Louisiana Revised Statute 44:67.1(a), Davis v. Henry, 555 So.2d 457, 459 (La., 1990).

21. See, e.g., North Carolina (N.C. Gen. Stat. Ann. § 95–9).

22. Res. 2017–259 2017, Adams County Board of County Commissioners (Colo. 2017). See Adams Cty. BOC 2017.

23. Janus v. American Federation of State, County, and Municipal Employees, Council 31, et al., 138 S. Ct. 2448 (2018).

24. This authority typically derives from the “police power”—as in the power to promote the health, safety, welfare, and morals of the community—among the powers delegated to local governments. See, for example, Utah Const. art. XI, § 5 (delegating “the authority to adopt, and enforce within its limits, local police, sanitary, and similar regulations”).

25. Before 2012—the beginning of the Fight for 15 movement—only five local governments had minimum wage laws (UC Berkeley Labor Center 2022).

26. Birmingham, Alabama; Johnson, Lee, Linn, Polk, and Wapello counties, Iowa; Kansas City, Missouri; Louisville and Lexington, Kentucky; Miami Beach, Florida; and St. Louis, Missouri, passed local minimum wages that were higher than the state minimums, but they were subsequently preempted by state legislation, thereby rendering the local ordinances ineffective (UC Berkeley Labor Center 2022).

27. Dependency on tips often makes workers more vulnerable to sexual harassment.

28. Council Bill 18–008, 2018, Las Cruces City Cncl. (N.M. 2018). See Las Cruces 2018.

29. Oakland’s hotel minimum wage is higher than the citywide minimum wage for hotel workers who do not receive employer benefits.

30. Res. No. 20220127–053, 2022, Austin City Cncl. (Texas 2022). See Austin 2022.

31. There is a distinction between paid sick leave, and paid family and medical leave laws. Paid sick day laws require employers to pay workers for a modest number of days out of work for the short-term health needs of themselves and their families, while paid family and medical leave laws establish social insurance programs, typically funded by employer contributions and employee payroll deductions, to be used for longer-term medical issues, care for a new child, or care for a family member who is ill. This discussion addresses paid sick leave. Paid family and medical leave has been generally addressed in the United States at the state level, although some local governments do provide paid family and medical leave for their own employees. See Onuma 2015.

32. Austin, Dallas, and San Antonio passed paid sick leave laws that subsequently were found to be preempted in litigation. The laws were challenged by business groups arguing that the local ordinances were preempted by a Texas law that prohibits localities from enacting a minimum wage higher than the state’s. As a result, workers in these three cities lack the legal right to paid sick time. See A Better Balance 2021.

33. The state law in New Jersey mooted and preempted the numerous local paid sick leave laws.

34. Law 2018/150, 2018, New York City Cncl. (N.Y. 2018). See NY City Council 2018.

35. Law 2021/aa5, 2021, New York City Cncl. (N.Y. 2021). See NY City Council 2021.

36. Seattle’s local regulations of transportation network companies will be preempted pursuant to a state law passed in March 2022. See Washington 2022.

37. These localities include Albany County (New York), Atlanta, Chicago, Cincinnati, Columbia (South Carolina), Jackson (Mississippi), Kansas City (Missouri), Louisville, Montgomery County (Maryland), New Orleans, New York City, Philadelphia, Pittsburgh, Richland County (South Carolina), Salt Lake City, San Francisco, St. Louis, Suffolk County (New York), Toledo, and Westchester County (New York).

38. Colorado had passed a similar law in 2021. S.B. 19-085, 2019 Gen. Assemb., Reg. Sess.

39. Law 2022/031, 2022, New York City Cncl. (N.Y. 2022). See NY City Council 2022.

40. N.Y.C. Admin. Code § 20–1271 et seq.

41. Rest. Law Ctr. v. City of New York, 2022 U.S. Dist. LEXIS 24268, __ F. Supp. 3d __, 2022 WL 409190.

42. Rest. Law Ctr. v. City of New York, 2022 U.S. Dist. LEXIS 24268, __ F. Supp. 3d __, 2022 WL 409190.

43. N.Y.C. Admin. Code § 20–1301 et seq.

44. City of Los Angeles Municipal Code Chapter XVIII § 181.00 et seq.; San Francisco Police Code Article 33D.

45. A 2003 survey conducted by Airports Council International-North America concluded that city ownership accounts for 38%, followed by regional airports at 25%, single county at 17%, and multijurisdictional at 9%.

46. 8 Phila. Code § 18–201(8); Miami-Dade Cty. Res. No. R–148–07 (Feb. 6, 2007); Rules and Regulations, San Francisco Airport, Rule 12.1.

47. By using a state’s grant of local emergency authority, local governments might plausibly be able to adopt temporary emergency policies even when state law preempts such policies under normal circumstances (Haddow, Davidson, and Huizar 2020).

48. See discussion in Section 4.

49. These local governments include Chicago; Cook County, Ilinois; Duluth, Minnesota; Emeryville, California; Los Angeles; Minneapolis; Montgomery County, Maryland; New York City; Philadelphia; Pittsburgh; San Diego; San Francisco; Seattle; St. Paul, Minnesota; Tacoma, Washington; and Westchester County, New York. In general, this clarification of existing paid leave laws was permanent.

50. Many of these ordinances are no longer in effect, and the remainder that are still in effect are set to sunset on a specified date or after the conclusion of the relevant COVID-19 emergency order.

51. Bill No. 200303, 2020, Philadelphia City Cncl., (Pa., 2020). See Philadelphia CC 2020a.

52. CB 119793, 2020, Seattle City Cncl., (Wash., 2020).

53. Bill No. 200328, 2020, Philadelphia City Cncl. (Pa., 2020) See Philadelphia CC 2020b.

54. Coronavirus State and Local Fiscal Recovery Funds [rule], 87 Fed. Reg. 4338–4454 (January 27, 2022).

55. Minneapolis n.d.e.

56. The nonprofit organization Good Jobs First has lamented the lack of transparency in relation to state use of ARPA funds; it is likely that similar concerns exist in relation to local decision-making. See Furtado 2021.

57. Building & Construction Trades Council v. Associated Builders & Contractors of Massachusetts/Rhode Island, Inc., 507 U.S. 218 (1993).

58. Gade v. National Solid Wastes Management Association, 505 U.S. 88, 99–100 (1992).

59. Steel Inst. of New York v. City of New York, 716 F.3d 31, 34 (2d Cir. 2013).

60. In addition, five state plans cover only local and state government workers.

61. 29 USC § 218 (“No provision of this [Act] shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this [Act] or a maximum work week lower than the maximum workweek established under this chapter.”)

62. Wyeth v. Levine, 555 U.S. 555 (2009).

63. Also referred to as the “new preemption” or “abusive preemption” by some legal scholars.

64. HB 2076, 2021–22 House of Rep., Reg. Sess. (Wash. 2022). See Washington 2022.

65. For example, many state consumer protection and public nuisance laws empower city, county, and district attorneys to bring actions to enforce those laws. See, e.g., N.C. Gen. Stat. §§ 160A–193, 153A–140 (providing cities and counties with authority to abate public nuisances); Cal. Bus. & Prof. Code § 17204 (2019) (providing city and county attorneys in local jurisdictions with more than 750,000 residents the authority to bring unfair competition claims).

66. The Oakland city attorney’s office brought a case alleging wage and hour violations alongside a civil legal services organization to vindicate the rights of hotel cleaners (Oakland OCA 2018). In 2019, the San Diego city attorney’s office brought suit against Instacart alleging misclassification of its shoppers who obtain and deliver groceries and obtained an injunction, which was rendered inoperative by the passage of Proposition 22 in 2020 (Allsup and Mulvaney 2021).

67. In Alabama, California, Colorado, Florida, Kansas, Kentucky, Michigan, Minnesota, Missouri, and Montana, district attorneys have civil authority to enforce the state unfair deceptive acts and practices (UDAP) law. Ala. Code § 8–19–4, 8–19–8 (2019); Cal. Bus. & Prof. Code § 17204 (2019); Colo. Rev. Stat. § 6–1–103 (2018); Fla. Stat. § 501.203, 501.207 (2019); Kan. Stat. Ann. § 50–626(a)–632(a)(3) (2018); Ky. Rev. Stat. Ann. § 367.300 (West 2019); Wayne Cty. Prosecutor v. Wayne Cty. Bd. of Comm’rs, 93 Mich. App. 114, 127 (1979); Minn. Stat. § 325F.67, 325F.70 (2019); Mo. Rev. Stat. § 407.020 (2018); Mont. Code Ann. § 30—14–121 (2019).

68. Wage theft is the practice of employers failing to pay workers the full wages to which they are legally entitled. It includes situations in which employers refuse to pay promised wages, pay less than legally mandated minimums, fail to pay for all hours worked, keep worker tips or deductions intended for worker benefits, or do not pay overtime. In some states, the term “wage theft” is defined in the law, but more commonly it is used as a colloquial and descriptive term to refer to a set of practices. See Rosado Marzán 2020 for a detailed description of wage theft.

69. See also, In re Vega, 2020 N.Y. Slip Op. 02094 (N.Y. Court of Appeals March 26, 2020).

70. Minneapolis Code 40.110.

71. Localities also may provide conditions on grants to improve worker standards. For example, Boston funded a pilot program to support small restaurants and their workers during the COVID-19 pandemic. The grants were conditioned on the small businesses paying workers $12.75 an hour, as compared with the $5.55 tipped minimum wage under Massachusetts law (Edwards n.d.).

72. Somerville Code of Ordinances, Chapter 9, Article III, Division 2. See Somerville n.d.

73. City of Boston Municipal Code Chapter 24. See Boston n.d.a, n.d.b.

74. “Assistance shall mean any grant, loan, tax incentive, bond financing, subsidy, or other form of assistance of one hundred thousand ($100,000.00) dollars or more realized by or through the authority or approval of the City of Boston, including, but not limited to industrial development bonds, Community Development Block Grant (CDBG) loans and Federal Enhanced Enterprise Community designations awarded after the effective date of this Chapter. The forgiveness of a loan shall be regarded as financial assistance. A loan shall be regarded as financial assistance to the extent of any differential between the amount of the loan and the present value of the payments thereunder, discounted over the life of the loan by the applicable Federal rate as used in 26 U.S.C., Section 1274(d) 7872(f). A recipient of assistance shall not be deemed to include leases and subleases.” City of Boston Municipal Code Chapter 24 § 24-2(a).

75. City of Boston Municipal Code Chapter 24 § 24-2(e). See Boston n.d.a.

76. City of Boston Municipal Code Chapter 24 § 24-11(a). See Boston n.d.b.

77. Res. BOS-2016-196, 2016 Board of Supervisors, Santa Clara County (Santa Clara 2016). See Santa Clara n.d.c.

78. Hoboken Municipal Code Chapter 23. See Hoboken n.d.a.

79. Hoboken Municipal Code Chapter 199. See Hoboken n.d.b.

80. Seattle Municipal Code § 14.19.080 (I). See Seattle n.d.b.

81. San Diego Municipal Code Article 2 Division 30 § 22.3004(c). See San Diego n.d.

82. Social service agencies have filed a lawsuit challenging this law. See Blau 2022. 

83. Minneapolis City Code § 259.250 (2). See Minneapolis n.d.d.

84. Minneapolis City Code § 259.250 (5). See Minneapolis n.d.d.

85. Minneapolis City Code § 259.250 (5). See Minneapolis n.d.d.

86. City of Quincy, Massachusetts, Code § 9.4.9-9.4.10. See Quincy n.d.

87. City of Toledo, Ohio, Municipal Code § 701.04 (b). See Toledo n.d.a.

88. Seattle Municipal Code 14.19.100 (A) (4). See Seattle n.d.b.

References

Court Decisions and Orders

Building & Construction Trades Council v. Associated Builders & Contractors of Massachusetts/Rhode Island, Inc., 507 U.S. 218 (1993).

Florida, Palm Beach County, Fifteenth Judicial Circuit Court, Administrative Order No. 3.907-3/15.

Gade v. National Solid Wastes Management Association, 505 U.S. 88, 99–100 (1992).

New State Ice Co. v. Liebmann. 285 U.S. 262, 311 (1932).

Restaurant Law Center v. City of New York, U.S. District Court, S.D.N.Y., Case 1:21-cv-04801-DLC, Document 68, Filed 02/10/11, Opinion and Order.

Steel Inst. of New York v. City of New York, 716 F.3d 31, 34 (2d Cir. 2013).

Wyeth v. Levine, 555 U.S. 555 (2009).

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This paper investigates several important questions regarding young workers, defined as workers ages 16 to 24 years old. Our main findings of the experience of these workers in the labor market are summarized below.

• Young workers’ already-high unemployment rates have jumped much higher. The overall unemployment rate for young workers ages 16–24 jumped from 8.4% to 24.4% from spring 2019 to spring 2020, while unemployment for their counterparts ages 25 and older rose from 2.8% to 11.3%. Spring 2020 unemployment rates were even higher for young Black, Hispanic, and Asian American/Pacific Islander (AAPI) workers (29.6%, 27.5%, and 29.7%, respectively).
• Young workers are more likely to be in jobs impacted by COVID-19. Younger workers have had disproportionate job loss, in part, because of their concentration in the industries and occupations that were hardest hit. About a quarter of young workers are employed in leisure and hospitality, where employment declined by 41% between February and May 2020.

• The economic effects of the COVID-19 economy on young workers may persist for years. Absent a much more effective policy response than was undertaken following the Great Recession, today’s young workers may experience serious and long-term labor market repercussions.
• Young workers have been excluded from certain COVID-19 assistance. The CARES Act provided a vital safety net for many young workers, but others were left out. For example, those who were seeking but had not yet secured employment were not able to take advantage of the unemployment insurance expansions.
• A return to a strong economy would disproportionately help young workers. In particular, young workers would see faster wage growth than other workers.

Young workers have experienced worse outcomes than older workers leading up to and during the pandemic recession

Among workers across the age distribution, young workers have had the largest job losses since February 2020. As a group, they are the most likely to be unemployed or underemployed, least likely to be able to work from home, and more likely to work in industries and occupations with the largest job losses in the COVID-19 labor market. While young workers are historically disadvantaged in weak economies, they have been even more negatively affected by the current recession.

Young workers (ages 16–24) historically have higher unemployment and underemployment rates compared with their peers ages 25 and older—and these rates have spiked even higher during the pandemic

Since February 2020, the labor market has deteriorated, as evidenced by massive numbers of unemployment insurance claims and huge net job losses. Even after job gains in May, June, July, and August, the U.S. economy is still facing a jobs deficit of over 12 million jobs, given recent historical growth, and payroll employment is 7% below its February level (Gould 2020).

Although the economy was still floundering in September 2020, as millions more workers filed unemployment insurance claims and employment growth slowed, our analysis looks at trends between spring 2019 and spring 2020 to get a sense of the devastation experienced at the initial and deepest part of the recession thus far. In this section, we compare average unemployment and underemployment rates for April, May, and June combined to allow for sufficient sample sizes among demographic groups. It is also important to note that the data we use are not seasonally adjusted, which is why we compare this spring with the same months in 2019 to avoid inconsistencies based on seasonal fluctuations. Furthermore, evidence of nonresponse may bias our results for this spring toward better reported outcomes than actually occurred, as lower-income and Black workers were less likely to respond to the survey as the pandemic took hold (Rothbaum and Bee 2020). By any measure, the data show that younger workers ages 16–24 historically have worse labor market outcomes and have experienced disproportionately more job losses in this recession than workers ages 25 and older.

Unemployment rates are higher for young workers

Figure A shows the unemployment rates for these two age groups in spring 2019 and spring 2020 by gender and by race/ethnicity. The labor market improved significantly in the years leading up to 2019 as the economy continued to recover from the Great Recession. However, even in the tighter labor market of 2019, the unemployment rate for workers ages 16–24 was significantly higher than for workers ages 25 and up.

Figure A

In Figure A, the pre-COVID economy is identified in dark blue and dark orange, while light blue and light orange represents the current economy. The orange bars represent workers ages 16–24, while the blue bars represent workers ages 25 and up. In the pre-COVID economy—April, May, and June 2019—the unemployment rate for workers ages 16–24 (8.4%) was three times as high as for workers ages 25 and up (2.8%). Both young men and young women experienced significantly higher unemployment rates than their older counterparts. Similarly, young white, Black, Hispanic, and Asian American/Pacific Islander (AAPI) workers experienced much higher unemployment rates than their older peers. Young Black workers experienced the highest unemployment of any racial/ethnic group, 14.5%. It is obvious that even in a tighter labor market, young workers, particularly young Black workers, are much worse off than their older counterparts.

At the height of the coronavirus recession, we see a spike in unemployment for both younger and older workers. About one-fourth of young workers were unemployed, 24.4%, compared with just over one-tenth of older workers, 11.3%. We also see spikes for both young men and young women; roughly one-fourth of each group were unemployed this spring. Although the unemployment rate for young white workers also spiked, young Black, Hispanic, and AAPI workers experienced much higher unemployment rates than their white peers: In spring 2020, nearly 30% of young Black and Asian American/Pacific Islander workers were unemployed (29.6% and 29.7%, respectively).

Underemployment rates are higher for young workers

As with unemployment rates, underemployment rates for young workers are far higher than for older workers, both in the current year and historically, as shown in Figure B. Underemployment 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 work 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 (a “marginally attached” worker).

Figure B

As in Figure A, the pre-COVID economy is identified in Figure B by dark blue and dark orange, while light blue and light orange represent the current economy. The orange bars represent workers ages 16–24, while the blue bars represent workers ages 25 and up. In the pre-COVID economy, the underemployment rate for the younger group of workers was significantly higher than for older group. Younger workers were more than twice as likely to be underemployed as their older peers. We also see a similar pattern for young men and women workers compared with older men and women workers. Similarly, young white, Black, Hispanic, and AAPI workers experienced higher underemployment rates than their older peers. More specifically, young Black workers had the highest underemployment rate of all the groups prior to the current recession (24.2%).

In the depths of this recession, underemployment for younger workers rose more than for older workers. More than one-third of younger workers were underemployed compared with less than one-fifth of older workers. The underemployment rate does not vary significantly by gender: 34.0% of young men and 36.1% of young women were underemployed. Young white workers have an underemployment rate of 30.5%, which is significantly higher than the rate for older white workers, 15.9%. Young Black, Hispanic, and AAPI workers also saw big spikes in their underemployment rates. Roughly two in five young Black, Hispanic, and AAPI workers were underemployed this spring. This is bad news, particularly considering that these groups are already among the most vulnerable workers in the economy. Given historical discrimination, lower incomes, higher poverty, and lower wealth, Black and Hispanic workers are often the least able to weather job losses (Gould and Wilson 2020; Gould, Perez, and Wilson 2020).

Looking at the intersection between gender and race/ethnicity shows further differences among young workers

It is important to further break down our younger workers’ demographics into categories that intersect gender with race/ethnicity because examining the data by race/ethnicity and gender separately obscures important differences among young workers. In Figure C, we present unemployment and underemployment rates in spring 2020 by gender intersected with race/ethnicity. The groups with the highest unemployment rates were Asian American/Pacific Islander men, Black women, and Hispanic women; roughly one-third of their respective groups were unemployed this spring. Similarly, AAPI men had the highest underemployment rate, with nearly half (46.3%) underemployed, followed by Black men (44.4%) and Hispanic women (40.9%).

Figure C

Young workers saw greater job losses because of which jobs they held

Employers may be less likely to hire young workers because of their limited labor market experience. On top of this, the COVID-19 recession is even more acute for young workers because of the industries and occupations they tend to work in and the fact that they are less likely to be able to work from home.

Young workers are overrepresented in the hardest-hit industries

Young workers experienced greater job loss in the current recession because they worked in industries that were impacted the most by the COVID-19 shutdown. Figure D shows what shares of younger workers (ages 16–24) and older workers (ages 25+) worked in each industry in 2019 (pre-pandemic). Sectors are listed in order by extent of job losses between February and May 2020. (Percent job losses for each industry are shown in parentheses after the name of the industry.)

Figure D

Leisure and hospitality experienced the largest job losses, with 41.0% of those jobs shutting down in those months. Young workers were heavily represented in this industry; one-quarter of young workers ages 16–24 were employed in leisure and hospitality in the pre-pandemic 2019 economy. Young workers were also concentrated in retail trade. Retail trade had the third-largest job losses in the early months of the pandemic, and 18.9% of young workers were employed in retail trade in 2019. Industries with the largest shares of workers ages 25 and older—including professional and business services, health care and social assistance, and manufacturing—also experienced job losses but, on average, these sectors shed jobs at lower rates than the sectors dominated by younger workers. Therefore, younger workers’ higher job losses can be directly attributed to the fact that they were working in sectors that require high face-to-face contact and hence were most likely to see huge contractions of activity as the virus and social distancing measures progressed.

Young worker are overrepresented in the hardest-hit occupations

Similarly, younger workers tend to work in the occupations (not just the industries) that experienced the largest job losses in the spring of 2020. Figure E shows the occupation breakdown for workers ages 16–24 versus workers ages 25 and up. As in Figure D, occupations in Figure E are listed in order by extent of job losses in each occupation category (with percent job loss noted in parentheses). The bars represent the shares of younger and older workers in each occupation, respectively. Figure E tells us that service occupations experienced the largest job losses at the beginning of the pandemic, with 27.2% of service jobs lost between February and May 2020. Nearly one-third of younger workers (31.2%) worked in service occupations in 2019. Younger workers were also concentrated in sales and related occupations (15.6%), which saw the third-most job losses (17.5%) due to COVID-19 shutdowns.

Figure E

Older workers are most likely to be found in professional and related occupations (24.7%) and management, business, and financial occupations (18.5%), occupations that experienced a far smaller drop in employment of 6.5% and 4.6%, respectively.

Young workers are less likely to be able to work from home

Related to the types of jobs young people have, another factor that has disproportionately led to more job losses for young workers is their relative lack of options for working from home. Figure F shows that young workers prior to this recession were far less likely to be able to work from home compared with older cohorts. A mere 6.7% of young workers were able to telework in the pre-pandemic period.

Figure F

Their lower likelihood of having jobs they can do from home not only means that young workers are more likely to have lost their jobs during this economic downturn, it also means that most of those who have kept their jobs face the risk of exposure to COVID-19 at their workplace. Because of the industries and occupations they work in, younger workers have been disproportionately forced to choose between their health and their earnings. They have been putting themselves and their family members at risk to earn a paycheck. In multigenerational households, this may mean putting vulnerable populations—older adults and those with preexisting conditions—at increased risk.

The scarring effects of entering the labor market during a recession: Lessons from the Great Recession

In this section, we examine the potential short- and long-term effects of starting one’s career during the coronavirus recession. We use data from the height of the last recession as well as existing economics literature to assess the potential scarring of the current recession on young people’s future employment and wages.

Recessions have a disproportionate negative impact on young workers’ labor market opportunities

While exposure to a recession can have long-lasting negative effects on the employment and earnings of workers across the board, these effects are particularly damaging for younger workers who are just entering the labor market with little to no work experience. While the unemployment rate for all workers, regardless of age, race/ethnicity, gender, or educational attainment rises during recessions, the unemployment rate for younger workers often rises faster and higher compared with older workers due, in part, to employer hiring skewing away from less experienced workers (Forsythe 2019).

As discussed above, nearly one in four young workers ages 16–24 (24.4%) were unemployed in the spring of 2020. Furthermore, the unemployment rate for this group was twice as high in July 2020 as it was in July 2019, and the July 2020 rate was the highest July rate on record since July 2010 (BLS 2020).

Unless the economy returns to pre-pandemic conditions soon, which is unlikely given current health conditions and lack of additional federal relief and stimulus, the effects on young people of starting their careers during the current recession are likely to have long-term negative implications, such as repeated unemployment spells and lower wages and lifetime earnings. (These implications are discussed in more detail below.)

Young workers’ unemployment levels were steep following the Great Recession

In the immediate aftermath of the Great Recession, young workers ages 16–24 experienced high and sustained unemployment rates, far higher than those experienced by older workers ages 25 and up. Figure G shows the unemployment rate for each age group by gender and race/ethnicity, averaged over 2009, 2010, and 2011, to illustrate just how high and extended the period of unemployment was for some groups.

Figure G

During the labor market depths of the Great Recession (2009–2011), the unemployment rate for young workers (ages 16–24) was more than twice as high as for older workers (ages 25+). Both young men and young women experienced significantly higher unemployment rates than their older counterparts. Similarly, across all racial/ethnic groups shown here—white, Black, Hispanic, and Asian American/Pacific Islander—young workers experienced much higher unemployment rates than their older peers. The unemployment rate for young Black workers reached as high as 33.4% in a single month (July 2010),1 and their unemployment rate averaged 29.2% over the three-year period, higher than for any other racial/ethnic group and 16.2 percentage points higher than the rate for Black workers ages 25 and older.

Young workers’ underemployment levels were also steep in the wake of the Great Recession

In the immediate aftermath of the Great Recession, not only did young workers experience high levels of unemployment, but they also experienced high levels of underemployment, as shown in Figure H. During the worst three years, from 2009 to 2011, young workers, and particularly young Black and Hispanic workers, saw devastating levels of underemployment: The underemployment rate for young Black workers averaged 43.3% in the depths of the Great Recession, while young Hispanic workers faced 34.2% underemployment. Over these years, overall underemployment averaged 29.4% for young workers ages 16–24, twice as high as for workers ages 25 and older (14.2%). In both age groups, Black and Hispanic workers experienced far higher underemployment rates than any other demographic.

Figure H

The type of underemployment Figure H measures is hours-based underemployment (i.e., it includes part-time workers who want full-time work and those who are marginally attached to the labor force). It basically measures the underutilization of worker’s potential available time. Another measure of underemployment, introduced by Abel and Dietz (2014), is “skill/education-based” underemployment.

For instance, young workers with a college degree who are working in jobs that don’t usually require a college degree may be usefully labeled as “underemployed” in terms of their potential skills.

Even in good economic times, the share of college graduates who work in jobs that don’t require a college degree is high. For example, in 2000, when jobs were plentiful and the overall unemployment rate was 4.0%, 38.3% of employed college graduates ages 22–27 worked in jobs that didn’t require a college degree (Federal Reserve Bank of New York 2020). However, that share hit 47.2% in the labor market depths of the Great Recession (referring specifically to February 2012 here).

Unsurprisingly, given the data presented above on hours-based underemployment, Black college graduates are 10 percentage points more likely to work at jobs that don’t require a college degree compared with white college graduates (Williams and Wilson 2019). Thus, even as young workers generally face high rates of underutilization, Black college graduates are being underutilized even more significantly relative to their white peers.

Young workers who enter the labor market during a recession face long-term effects

Research on prior recessions finds substantial evidence that workers who enter the labor market during an economic downturn are scarred for many years. These unlucky workers are more likely to experience lower earnings, greater earnings instability, and more spells of unemployment in the long term compared with similar individuals who entered the labor market in better times.

The research literature on the short- and long-term effects of recessions on young workers is extensive, covering many years and countries, but historically has focused on college graduates.2 For example, Kahn (2010) examines the labor market outcomes of white male college graduates and finds that graduating from college in a recession has long-term negative impacts on their job opportunities and wages. Because of their initial bad start, they often get stuck in low-paying, low-quality jobs. Even when the economy gets stronger, it can be difficult for these workers to catch up to their pre-recession cohorts.

Rothstein (2020) finds that the negative impact of the Great Recession on the employment rates of college graduates who entered the labor market in 2010 persisted for many years rather than fading away. Compared with age- and time-adjusted employment rates of pre-recession cohorts, college graduates who entered the labor market in 2010 have employment rates that are 2 percentage points lower than otherwise predicted, as observed through 2019. Further, Rothstein posits that 2020 graduates may find that the current recession will be permanently scarring.

Schwandt and von Wachter (2018) examine outcomes across all labor market entrants (not just college graduates) by gender, race, and educational attainment. They find that “the effects [of entering the labor market in a recession] are particularly large for two groups: nonwhites and high school dropouts.”

During the Great Recession, workers in all age groups faced decreased likelihood of being employed when there was an increase in local unemployment in their area, but Rinz (2019) finds that young workers (millennials born between 1981 and 1996) experienced worse labor market outcomes than other generations. Millennials had about two times the employment rate reduction of older cohorts just after the recession. Millennials also experienced larger earnings losses than in 2010 and 2011. While millennials’ employment steadily recovered, exposure to the recession led to continued earnings losses as late as 2017. Over the entire period from 2007 to 2017, they experienced earnings losses of about 13% on average compared with 9.1% for Gen-Xers and 7.1% for baby boomers.3

The bottom line is that younger workers are disproportionately harmed by entering the labor market during an economic downturn. When compared with their older counterparts, young workers experience higher and more sustained unemployment and underemployment rates during recessions—and for years after. Exposure to a recession when they are starting out negatively affects their lifelong earnings and employment. These effects are magnified for young Black and Hispanic workers, who have higher unemployment and underemployment rates relative to their white peers.

The coronavirus-driven weak labor market is likely to continue for many more months—if not years. Unless policymakers take unprecedented action to help young workers, these workers will face negative consequences for an untold number of years to come.

Young workers disproportionately benefit from an economy that is at full employment

While the impact of a deep recession is devastating for young workers in the short and long term, the benefit of very tight labor markets for young workers is enormous. High-pressure labor markets are characterized by periods of very low unemployment, sometimes referred to as “full employment,” during which unemployment can’t get pushed any lower without leading to accelerating inflation (Bivens 2018). Full employment is essential for the benefits of a stronger economy to reach all corners of the labor market, particularly historically disadvantaged groups.

Research has shown that tight labor markets are particularly beneficial in terms of achieving lower unemployment, higher employment, and faster wage growth for lower-wage workers as well as for Black workers. For instance, Katz and Krueger (1999) document how critical the late 1990s tight labor market was for stronger labor market outcomes across the board. Wilson (2015) illustrates how African Americans experience stronger growth in both incomes and work hours when labor markets are tight. Bivens and Zipperer (2018) find that tighter labor markets can narrow racial employment gaps and that more equitable wage growth is linked to extended low unemployment, with low- and moderate-wage workers reaping more of the benefits as unemployment rates fall. While young workers are often understood to benefit in stronger economies, this section extends previous research by expanding our understanding of the importance of tight labor markets for young workers ages 16–24 as compared with the benefits to workers ages 25 and older.

In previous sections, we’ve seen, through two snapshots in time (2019–2020 and 2009–2011) that younger workers ages 16–24 are more sensitive to swings in the business cycle than workers ages 25 and up. In this section of the report, we examine the longer-term trends of this comparative labor market sensitivity to better illuminate why, if we are going to improve prospects for young workers, we must strive toward a full-employment economy.

Young workers’ unemployment rates are highly sensitive to labor market conditions

Over the last 30 years, the unemployment rate for young workers ages 16–24 averaged just over two-and-a-half times higher (2.6 times) than that for workers ages 25 and up.4 For every 1-percentage-point change (up or down) in the age-25+ unemployment rate, the unemployment rate for workers ages 16–24 changed by about 2.6 percentage points in the same direction. This means that when the unemployment rate rises, far greater shares of young workers are subject to job loss than older workers. We’ve shown how devastating this can be for younger workers in the near and long term. On the flip side, this labor market sensitivity also means that when the unemployment rate drops, young workers get a far larger boost in employment than older workers. So, as an economy approaches full employment, young workers benefit disproportionately.

Young workers’ wages are highly sensitive to changes in the unemployment rate

Further, young workers’ wages are also far more sensitive to changes in the unemployment rate than older workers’ wages. Using the methodology of Bivens and Zipperer (2018), we use state-level data from 1979 to 2019 to examine the relationship between labor market tightness and hourly wage changes for young workers ages 16–24 compared with older workers ages 25 and up. Figure I displays the changes in annual growth of hourly wages for each group given a percentage-point change in the unemployment rate.

Figure I

Hourly wage changes are measured at both the average and median levels of each respective wage distribution. Each value in the figure is obtained from a separate regression of the annual percent change in the average or median hourly wage on the level of the overall state-specific unemployment rate. The chart shows, for example, that a 1-percentage-point increase in the overall state-specific unemployment rate is associated with a 0.86-percentage-point decline in the annual rate of growth of the median real wage for young workers. Conversely, a 1-percentage-point drop in unemployment results in annual hourly wage growth for the typical young worker that is 0.86 percentage points faster. So, for example, if annual real wage growth was at 1.0%, then a 1-percentage-point fall in overall unemployment would result in annual real hourly wage growth rising to 1.86%.

The chart suggests that the hourly wages of young workers ages 16–24, measured either at the median or at the average, are more responsive to changes in the overall unemployment rate than the wages of older workers ages 25 and up. For a given fall in the overall unemployment rate, the wages for young workers rise more than the corresponding wage for older workers.

Young workers’ wages are highly sensitive to changes in the employment-to-population ratio

Figure J uses the same methodology to examine the relationship between wage changes and the employment-to-population ratio (EPOP). The results here indicate that a 1-percentage-point increase in the overall EPOP is associated with annual median hourly wage growth that is faster by 0.33 percentage points for young workers and faster by 0.17 percentage points for older workers.

Figure J

Taken together, Figures I and J suggest that young workers’ wages are far more responsive to labor market conditions than older workers’ wages, underlining the critical importance of achieving a full-employment economy in order to boost labor market outcomes and mitigate the disadvantages faced by young workers just starting out. When we achieve a full-employment economy, it will not only help young workers, but will boost outcomes for all historically disadvantaged groups.

Policy matters for young workers

Young workers are among the most vulnerable in this economy. They tend to have high unemployment and underemployment rates compared with older workers; they tend to work in the industries and occupations that have had the largest job losses due to the COVID-19 shutdown; and they are least likely to be able to work from home.

During recessions, young workers experience more sustained and worse labor market outcomes than their older counterparts. This coronavirus-led recession may continue for months, if not years. Given what we know about the long-lasting effects of recessions on young workers, young workers will likely suffer negative consequences for years to come.

While young workers have a tougher time in weak labor markets, they also have the potential to see enormous benefits when the overall unemployment rate is very low and remains that way for a sustained period of time. In a recent statement, Federal Reserve Chair Jerome Powell acknowledged the importance of sustained low unemployment and noted that the full-employment economy of the late 1990s, which led to more broad-based improvements in labor market outcomes, did not lead to spiraling inflation (Powell 2020). When we get back to low unemployment, he argues, it is vital that we allow the labor market to fully develop to benefit those too often left behind.

The Federal Reserve’s monetary policy tools are not the only way policymakers can improve the labor market outcomes for young workers today. Actions by lawmakers are also critical. While the provisions of the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, were vital for millions of workers and their families across the country, it unfortunately left many young workers wanting. Because many young college students are dependents of their parents for tax purposes, they were not eligible for the one-time $1,200 stimulus checks. Their parents also did not receive the $500 check for dependents because that age cutoff is 17. Furthermore, the CARES Act made several very important, though temporary, improvements to the unemployment insurance program, including the $600 enhanced benefit as well as expanded eligibility. Unfortunately, many young workers who had yet to secure any employment were ineligible for these benefits. Expanding the unemployment insurance program to include a job-seekers allowance would provide important support for young workers who have yet to launch their careers (Georgetown Center on Poverty and Inequality et al. 2020).

The CARES Act also established the Paycheck Protection Program (PPP), which offered loans to small businesses to use for payroll costs, mortgage interest, rent, and utilities—loans that are forgivable on the condition that the businesses retain or rehire employees at their pre-pandemic levels of pay (SBA 2020). Given the enormous pressures faced by sectors that disproportionately employ young workers (restaurants, other leisure and hospitality, and retail, in particular), a well-functioning payroll protection program that ensured workers were paid even as business revenues cratered would have been invaluable. Unfortunately, the PPP, as well-intentioned as it might have been, largely failed, for several reasons (Bivens 2020). The most important failure was the initial appropriation being capped at a too-low level, which made the PPP a zero-sum rush to apply for many businesses, with the advantage going to those with stronger preexisting relationships with banks. While a second round of funding was approved in late April 2020 to cover unmet demand, if the program had initially been uncapped and everyone who qualified had been guaranteed to get the loans, there may have been less harm in terms of businesses having to wait longer to get an application processed.

Congress has also failed to make sufficient investments in state and local governments in their coronavirus response so far, while declining state and local revenues, compounded by increased demand on resources, are inhibiting recovery. Most relevant, perhaps, to young workers is that without substantial federal aid to state and local governments, it is a near certainty that public university tuition will rise significantly in coming years, just as it did when there was state fiscal austerity following the Great Recession. The majority of young workers who do not have (and may never obtain) a college degree face an even tougher labor market than their college-degreed counterparts, while those pursuing additional education can find rising tuition and mounting debt insurmountable.

Strengthening and enforcing labor standards would also have an outsized advantage for young workers in the economy, particularly in weaker labor markets when their leverage is acutely diminished.

Policymakers have allowed the federal minimum wage to erode in value over the last 50 years. While increasing the minimum wage would aid workers across the age spectrum, young workers, who are the most likely to be earning very low wages, would see meaningful wage growth (Zipperer and Schmitt 2020). Policymakers can also it easier for young workers to form unions and can make it more difficult for employers to impede workers’ attempt to organize. Expansive collective bargaining rights benefits workers of all ages, including setting standards in nonunion workplaces (Shierholz 2019). By enforcing and enhancing these labor standards, policymakers can improve the labor market for young workers while providing a boost to the economy as well. This is all the more important in today’s faltering economy.

Notes

1. Authors’ analysis of Economic Policy Institute Current Population Survey Extracts, Version 1.0.9 (2020), https://microdata.epi.org.

2. Examples include Altonji, Kahn, and Speer 2016; Kahn 2010; Oreopoulos, von Wachter, and Heisz 2012; Schwandt and von Wachter 2018; Rinz 2019; and Rothstein 2020. Some of these studies are discussed in further detail below.

3. Gen-Xers are those born between 1965 and 1980. Baby boomers are those born between 1946 and 1964.

4. Authors’ analysis of Economic Policy Institute Current Population Survey Extracts, Version 1.0.9 (2020), https://microdata.epi.org.

References

Abel, Jaison R., and Richard Deitz. 2014. “Are the Job Prospects of Recent College Graduates Improving?” Liberty Street Economics (Federal Reserve Bank of New York blog), September 4, 2014.

Altonji, Joseph G., Lisa B. Kahn, and Jamin D. Speer. 2016. “Cashier or Consultant? Entry Labor Market Conditions, Field of Study, and Career Success.” Journal of Labor Economics 34, no. S1, part 2: S361–S401. https://doi.org/10.1086/682938.

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

Bivens, Josh. 2018. “Recommendations for Creating Jobs and Economic Security in the U.S.: Making Sense of Debates About Full Employment, Public Investment, and Public Job Creation.” Working Economics Blog (Economic Policy Institute), March 27, 2018.

Bivens, Josh. 2020. “How Can the U.S. Get More Transformative With its Coronavirus-Shock Response? With Payroll Guarantees and an Economic ‘Deep Freeze’ Plan.” Working Economics Blog (Economic Policy Institute), April 8, 2020.

Bureau of Labor Statistics (BLS). 2020. “Employment and Unemployment Among Youth—Summer 2020” (news release). August 18, 2020.

Economic Policy Institute. 2020. Current Population Survey Extracts, Version 1.0.9, https://microdata.epi.org.

Federal Reserve Bank of New York. 2020. “The Labor Market for Recent College Graduates” (interactive). Last updated July 17, 2020.

Forsythe, Elizabeth Carla. 2019. “Why Don’t Firms Hire Young Workers During Recessions?” Working paper, University of Illinois, March 2019.

Georgetown Center on Poverty and Inequality, Employ America, Economic Policy Institute, National Women’s Law Center, National Employment Law Project, and The Century Foundation. 2020. A Jobseeker’s Allowance Would Respond to COVID-19 & Beyond (fact sheet). May 2020.

Gould, Elise. 2020. “Slowdown in Jobs Added Means We Could Be Years Away from a Full Recovery.” Economic Policy Institute Economic Indicators, October 2, 2020.

Gould, Elise, Daniel Perez, and Valerie Wilson. 2020. Latinx Workers—Particularly Women—Face Devastating Job Losses in the COVID-19 Recession. Economic Policy Institute, August 2020.

Gould, Elise, and Valerie Wilson. 2020. Black Workers Face Two of the Most Lethal Preexisting Conditions for Coronavirus—Racism and Economic Inequality. Economic Policy Institute, June 2020.

Kahn, Lisa B. 2010. “The Long-Term Labor Market Consequences of Graduating from College in a Bad Economy.” Labour Economics 17, no. 2: 303–316. https://doi.org/10.1016/j.labeco.2009.09.002.

Katz, Lawrence F., and Alan B. Krueger. 1999. “The High-Pressure U.S. Labor Market of the 1990s.” Brookings Papers on Economic Activity 30, no. 1: 1–87.

Oreopoulos, Philip, Till von Wachter, and Andrew Heisz. 2012. “The Short- and Long-Term Career Effects of Graduating in a Recession.” American Economic Journal: Applied Economics 4, no. 1: 1–29. https://doi.org/10.1257/app.4.1.1.

Powell, Jerome. 2020. “New Economic Challenges and the Fed’s Monetary Policy Review.” Speech to the Board of Governors of the Federal Reserve System, August 27, 2020.

Rothbaum, Jonathan, and Adam Bee. 2020. “Coronavirus Infects Surveys, Too: Nonresponse Bias During the Pandemic in the CPS ASEC.” Social, Economic, and Housing Statistics Division Working Paper no. 2020-10, September 2020.

Rothstein, Jesse. 2020. “The Lost Generation? Labor Market Outcomes for Post Great Recession Entrants.” National Bureau of Economic Research Working Paper no. 27516, July 2020. https://doi.org/10.3386/w27516.

Rinz, Kevin. 2019. “Did Timing Matter? Life Cycle Differences in Effects of Exposure to the Great Recession.” Center for Economic Studies Working Paper, U.S. Census Bureau, September 2019.

Schwandt, Hannes, and Till von Wachter. 2018. “Unlucky Cohorts: Estimating the Long-Term Effects of Entering the Labor Market in a Recession in Large Cross-Sectional Data Sets.” National Bureau of Economic Research Working Paper no. 25141, October 2018. https://doi.org/10.3386/w25141.

Shierholz, Heidi. 2019. Working People Have Been Thwarted in Their Efforts to Bargain for Better Wages by Attacks on Unions. Economic Policy Institute, August 2019.

Small Business Administration (SBA). 2020. “Paycheck Protection Program” (web page). Accessed May 2020.

Topel, Robert H., and Michael P. Ward. 1992. “Job Mobility and the Careers of Young Men.” Quarterly Journal of Economics 107, no. 2: 439–479. https://doi.org/10.2307/2118478.

Williams, Jhacova, and Valerie Wilson. 2019. Black Workers Endure Persistent Racial Disparities in Employment Outcomes. Economic Policy Institute, August 2019.

Wilson, Valerie. 2015. The Impact of Full Employment on African American Employment and Wages. Economic Policy Institute, March 2015.

Zipperer, Ben, and John Schmitt. 2020. “Raising the Minimum Wage to $15 by 2025 Will Restore Bargaining Power to Workers During the Recovery from the Pandemic.” Working Economics Blog (Economic Policy Institute), September 14, 2020.

We are releasing this chartbook in the midst of the coronavirus pandemic—a crisis that has highlighted the importance of keeping our homes clean, the skills and patience required to provide child care, and the urgency of caring for elderly, sick, and disabled Americans.

Here are just a few key findings:

• The vast majority (91.5%) of domestic workers are women and just over half (52.4%) are black, Hispanic, or Asian American/Pacific Islander women.
• Though most (64.9% of) domestic workers are U.S.-born, they are more likely than other workers to have been born outside the U.S. and they tend to be older than other workers.
• The typical (median) domestic worker is paid $12.01 per hour, much less than other workers (who are paid $19.97 per hour). Even when compared with demographically similar workers, domestic workers on average are paid just 74 cents for every dollar that their peers make.
• Domestic workers are three times as likely to be living in poverty as other workers, and almost three times as likely to either be in poverty or be above the poverty line but still without sufficient income to make ends meet.
• Fewer than one in 10 domestic workers are covered by an employer-provided retirement plan and just one in five receives health insurance coverage through their job.

Jump to the charts

Jump to the data tables

The coronavirus crisis has laid bare the ways in which this work is undervalued and this workforce is underprotected. As their employers take steps to practice social distancing, many domestic workers have been left without work—and without any indication that they would get their jobs back. 1 At the same time, many domestic workers who are still on the front lines of the pandemic, caring for the sick and keeping homes clean, may lack the protective equipment they need. Although the pandemic serves as the backdrop for this chartbook, only data from before the pandemic was available at the time of our analysis. That means that the charts and data tables here provide a snapshot of domestic workers in the pre-coronavirus period.

In addition to caring for children and helping households stay clean, domestic workers support older people and people with disabilities or illnesses by providing hands-on health care, running errands, making meals, and cleaning homes, allowing their clients to live as independently as possible in their own homes. These services are incredibly valuable to those who receive them and to the other workers who would otherwise be spending their time on this important work. Given continued gender disparities in home responsibilities for unpaid care work, working women in particular are affected by the existence of the domestic workforce.

Although domestic work is vital to everyday life, this chartbook shows that domestic workers face low pay, rarely receive benefits, and have less access to full-time work than other workers. Because they work in private homes, they are outside of public view and isolated from other workers, leaving them particularly vulnerable to exploitation.2 And many groups of domestic workers are explicitly left out of many federal labor and employment protections—a policy decision dating back to the New Deal, when majority-black domestic and farmworkers were excluded from landmark federal labor laws as a concession to racist Southern lawmakers.3

Specifically, domestic workers are excluded from the National Labor Relations Act, enacted in 1935 to guarantee employees the right to form labor unions—or engage in other forms of collective action—to organize for better working conditions. And “live-in” workers are excluded from the overtime protections in the Fair Labor Standards Act, enacted in 1938.

The exclusions for domestic workers carried through to subsequent worker protection statutes. The Occupational Safety and Health Act does not apply to “individuals who, in their own residences, privately employ persons for the purpose of performing…what are commonly regarded as ordinary domestic household tasks, such as house cleaning, cooking, and caring for children.”4 Federal anti-discrimination laws, such as the Civil Rights Act, the Americans with Disabilities Act, and the Age Discrimination in Employment Act, all generally cover only employers with multiple employees, meaning many domestic workers are excluded from these protections. This exclusion is also part of the Family and Medical Leave Act.

A critical first step to providing domestic workers with the same protections as other workers is passing a National Domestic Workers Bill of Rights. In addition to extending basic wage and hour protections to domestic workers, such a measure would include key provisions establishing fair scheduling (i.e, no unexpected shift cancelations or changes without warning or compensation), transparent employment contracts, and access to health care and retirement benefits for domestic workers. Nine states (California, Connecticut, Hawaii, Illinois, Massachusetts, Nevada, New Mexico, New York, and Oregon) and the city of Seattle have already passed Domestic Workers Bills of Rights, and other states and localities should follow suit.

Home care aides make up the majority of the nation's 2.2 million domestic workers: Employment in domestic worker occupations, 2019

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here are 2.2 million domestic workers in the United States and more than half are agency-based home care aides. Domestic workers do the vital work of cleaning homes, tending to children, and providing daily living and health assistance to people who are elderly, are convalescing from illness, or have disabilities. The data from this chart are also available in Table 1, at the end of the chartbook.

It is highly likely that this 2.2 million estimate is an undercount of domestic workers. First, a significant proportion of domestic workers are paid “under the table,” which makes individuals who participate in surveys less likely to report these jobs. Second, the share of domestic workers who were born outside of the United States is higher than the share of workers overall who are not U.S.-born, and it is believed that immigrants are underrepresented in national surveys.5

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Women make up the vast majority of domestic workers: Share of workers who are women or men, for domestic workers, for all other workers, and by domestic worker occupation, 2019

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More than nine in 10 domestic workers (91.5%) are women—a gender imbalance that is even more pronounced for house cleaners (95.5% women) and child care providers (roughly 97% women). By comparison, women make up just under half (46.3%) of the rest of the workforce. While men are somewhat more likely to be home care aides than house cleaners or child care providers, they still account for less than 15% of home care aides.

See Table 2 at the end of the chartbook for a demographic breakdown of domestic workers by gender, race/ethnicity, nativity, education, and age. We have also provided supplemental tables with demographic breakdowns of domestic workers in each state and in selected metropolitan areas.

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Black and Hispanic workers make up a disproportionate share of domestic workers: Share of workers who are of a given race or ethnicity, for domestic workers, for all other workers, and by domestic worker occupation, 2019

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Well over half (57.1%) of domestic workers are black, Hispanic, or Asian American/Pacific Islander (AAPI). In contrast, black, Hispanic, and AAPI workers make up 36.0% of the rest of the workforce. House cleaners constitute the domestic worker occupation with the highest share of Hispanic workers (61.5%), while agency-based home care aides constitute the domestic worker occupation with the highest share of black, non-Hispanic workers (30.3%).

See Table 2 for a demographic breakdown of domestic workers by gender, race/ethnicity, nativity, education, and age. We have also provided supplemental tables with demographic breakdowns of domestic workers in each state and in selected metropolitan areas.

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Black and Hispanic women make up a disproportionate share of domestic workers: The share of domestic workers who are black, Hispanic, or AAPI women, 2019

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While women of all races and ethnicities are overrepresented in the domestic employee workforce, this overrepresentation is particularly pronounced for Hispanic and black women. A majority (52.4%) of domestic workers are black, Hispanic, or AAPI women—over a quarter (27.2%) are Hispanic women and nearly one in five (19.7%) are black women. Most house cleaners are Hispanic women (58.9%) and more than a quarter (27.2%) of agency-based home care aides are black women.

See Table 3 for a detailed demographic breakdown showing the race/ethnicity and nativity of domestic workers by gender.

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Domestic workers are more likely than other workers to have been born outside the U.S.: Share of workers with given nativity status, for domestic workers, for all other workers, and by domestic worker occupation, 2019

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More than a third (35.1%) of domestic workers were born outside of the U.S., compared with just 17.1% of the rest of the workforce. One in five is a foreign-born noncitizen (20.3%), while about one in seven is a U.S. citizen who was born in a different country (14.8%). While noncitizens are overrepresented in all domestic worker occupations, they are particularly overrepresented in the house cleaner workforce, making up half (50.8%) of house cleaners.

See Table 2 for a demographic breakdown of domestic workers by gender, race/ethnicity, nativity, education, and age. Table 3 provides even more detail, showing the race/ethnicity and nativity of domestic workers by gender. We have also provided supplemental tables with demographic breakdowns of domestic workers in each state and in selected metropolitan areas.

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Domestic workers tend to be older than other workers: Share of workers by age group, for domestic workers, for all other workers, and by domestic worker occupation, 2019

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Two in five domestic workers are age 50 or older, while just one-third of all other workers are at least 50 years old. Home care aides who aren’t agency-based are the domestic worker occupation with the highest median age (51). The exception to the tendency of domestic workers to skew older is the occupation of nannies, whose median age is 26. Over one-third of nannies are younger than 23 years old, compared with 8.3% of nondomestic workers who are under 23.

These data suggest that domestic work is often an important source of income for older workers. The reliance of some older workers on income from domestic occupations is particularly relevant during the coronavirus pandemic—older workers have a greater risk of severe illness from the virus—and underscores the need to provide domestic workers with access to paid sick leave and adequate protective equipment.

See Table 2 for more detailed age categories and the median ages of domestic workers. We have also provided supplemental tables with demographic breakdowns of domestic workers in each state and in selected metropolitan areas.

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How many domestic workers are employed in your state?: Number of domestic workers working in each state, by occupation and compared with all workers, 2019

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This map is color-coded to show which states have the most domestic workers. You can click on a state to display how many domestic workers total are employed there, and how many are employed in each domestic worker occupation, and compare these with the number of workers in all other occupations. You can access the map data from Table 4, which also shows employment counts by region. Employment counts for selected metropolitan areas are available in Table 5.

We have also provided supplemental tables with demographic breakdowns and median hourly wages of domestic workers in each region and state and in selected metropolitan areas.

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There is a wide and persistent gap between domestic workers’ wages and wages of all other workers: Median real hourly wages of domestic workers, by occupation, versus other workers, 2005–2019

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There is a large “domestic worker wage gap”—a wide gulf between the median hourly wage of domestic workers and the median hourly wage of all other workers. The wage gap for domestic workers is not only large, but it is also persistent. Like other typical workers, domestic workers have seen stagnant wages for decades (since well before 2005, which is the starting point in this chart because it is the first year for which data are available for the domestic worker occupations defined in our analyses). For an in-depth look at the sluggish wage growth of the last 40 years, see EPI’s report State of Working America Wages 2019.6

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The pay gap for domestic workers is widest for nannies: Median real hourly wages, domestic workers (all and by occupation) versus other workers, 2019

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The typical domestic worker is paid $12.01 per hour, including overtime, tips, and commissions—39.8% less than the typical nondomestic worker, who is paid $19.97. This wide gap between domestic workers’ wages and the wages of all other workers is consistent across domestic worker occupations.

Table 6 shows the median hourly wages of domestic workers, all other workers, and domestic workers by occupation broken out by gender, race/ethnicity, nativity, education, and age. We have also provided supplemental tables with median hourly wages of domestic workers by demographic group for each region and state and for selected metropolitan areas.

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Domestic workers who are male, U.S.-born, AAPI, college-educated, or ages 50 and older have the biggest wage gaps relative to their peers in other professions: Median real hourly wages, domestic workers versus other workers, 2019

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W
ithin every demographic category that we analyze, domestic workers are typically paid less than their peers. Male domestic workers face a larger wage gap relative to other men ($8.77, or 40.6%) than do female domestic workers ($6.27, or 34.4%; not shown). Asian American/Pacific Islander domestic workers, older domestic workers, and domestic workers with at least a bachelor’s degree also face particularly large within-group wage gaps.

Table 6 shows the median hourly wages of all domestic workers versus all other workers, and by domestic worker occupation, broken out by gender, race/ethnicity, nativity, education, and age.

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Even when controlling for demographics and education, domestic workers are paid less than similar workers: Average domestic worker hourly wages as a share of wages paid to demographically similar workers in other professions, 2019

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ven when we control for demographics and educational background using regressions, domestic workers face a big pay gap: The average domestic worker is paid 74 cents for every dollar that a similar worker would make in another occupation—or 26% less. Home care aides who are not agency-based face the largest wage gap: Their wages are two-thirds the wages of demographically similar workers—a third less. Although the regression-adjusted wage gap is smaller for nannies and house cleaners, they are still paid only about 80 cents for every dollar that a similar worker would make in another occupation.

Table 7 shows regression-adjusted hourly wage gaps for all domestic workers and for each domestic worker occupation, broken out by gender, race/ethnicity, nativity, education, and age.

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Domestic workers are more likely to work part time and more than twice as likely to work part time because they can't get full-time hours: Share of workers who work full and part time, for domestic workers, for all other workers, and by domestic worker occupation, 2019

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n addition to having lower hourly wages, domestic workers tend to work fewer hours than other workers. Nearly half of domestic workers work part time, compared with less than a quarter of all other workers. Much of this difference is at least somewhat “voluntary,” with domestic workers being more likely than other workers to have a part-time job because they want a part-time schedule (or need a part-time schedule to handle child care or other responsibilities). But domestic workers are also more than twice as likely as other workers to want a full-time job but to have to settle for a part-time job because they can’t get full-time hours. The greater likelihood of wanting but being unable to get full-time work is particularly acute for house cleaners, 15% of whom work part time but would like a full-time job. The greater incidence of part-time work among domestic workers is reflected in their average weekly hours on the job (not shown). While workers in other occupations put in just under 40 hours a week on average, domestic workers spend an average of 33.4 hours on the job each week.

Table 8 displays the data from this chart, as well as the average weekly hours of domestic workers.

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Domestic workers are paid less in a year than other workers: Median annual earnings, domestic workers versus other workers, 2018

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he combination of lower average hours and much lower median wages (shown in Table 8 and Figure 9) results in substantially lower annual earnings for domestic workers relative to other workers. The typical domestic worker’s annual earnings are just two-fifths of a typical worker’s in another occupation. While typical agency-based home care aides have higher annual earnings than domestic workers in other occupations, they still are paid just half of what workers outside the domestic workforce are paid in a year.

Table 9 shows the median annual earnings of all domestic workers, domestic worker occupations, and all other workers, broken out by gender, race/ethnicity, nativity, education, and age.

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Even when controlling for demographics and education, domestic workers are paid less in a year than similar workers: Average domestic worker annual earnings as a share of earnings paid to demographically similar workers in other professions, 2018

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ven when we control for demographics and educational background using a regression, domestic workers face a big pay gap as a result of lower hourly wages and fewer hours: The average domestic worker is paid less than half of what a similar worker would make in another profession on an annual basis. Nannies face the largest gap: Their annual earnings are less than one-third the earnings of a demographically similar worker. Although the regression-adjusted earnings gap is smaller for agency-based home care aides, they are still paid 42.8% less annually than a similar worker would be paid in another occupation.

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Domestic workers are three times as likely to be in poverty and almost three times as likely to lack enough income to make ends meet: Poverty rates and twice-poverty rates of domestic workers versus other workers, 2018

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omestic workers are much more likely than other workers to be living in poverty, regardless of occupation. They are also much more likely to have incomes that fall below the twice-poverty threshold, which is considered by many researchers a better cutoff for whether a family has enough income to make ends meet. The majority of house cleaners are struggling to make ends meet (their “twice-poverty” rate is 54.8%) and more than a quarter (25.4%) have incomes that put them below the official poverty threshold. Workers who provide child care in their own homes have somewhat lower poverty rates than other domestic workers, although a third of them (32.4%) still do not have enough income to make ends meet—about twice the share of the nondomestic workforce living below the twice-poverty line. Domestic workers who are not U.S. citizens and those without a high school diploma face particularly high poverty rates, as do black and Hispanic domestic workers. (These data are shown at the end of the chartbook in Table 10 and Table 11, which provide poverty and twice-poverty rates for domestic workers and all other workers broken out by gender, race/ethnicity, nativity, education, and age.)

Poverty researchers generally do not consider the poverty rate to be a good measure of the share of families who cannot make ends meet in part because the poverty thresholds were set in the 1960s and have not evolved to reflect changing shares of spending on various necessities by low-income families. That is why “twice poverty” is often used as a cutoff for whether a family is able to make ends meet.

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Even when controlling for demographics and education, domestic workers are more likely to live below the poverty line than similar workers: Percentage-point difference between the poverty rate of domestic workers and that of demographically similar workers in other occupations, 2018

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ven when we compare domestic workers exclusively with workers in other professions who are demographically similar, domestic workers are still much more likely to be living in poverty. House cleaners on average have a poverty rate that is 14.0 percentage points higher than the poverty rate of similar workers. Along with agency-based home care aides, house cleaners also have twice-poverty rates that are nearly 20 percentage points higher than you would expect these rates to be if these workers were employed in nondomestic occupations. (The twice-poverty rate is the share of workers whose family income falls below the twice-poverty threshold, considered by many researchers a better cutoff for whether a family has enough income to make ends meet.)

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Domestic workers are less likely to have health or retirement benefits: Employer-provided health insurance and retirement coverage rates, domestic workers versus other workers, 2018

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ust under one in five domestic workers has employer-provided health insurance, a shockingly low coverage rate compared with the near-majority of other workers who receive health insurance through their job. Coverage rates are less than 10% for house cleaners and workers who provide child care in their own home. Even agency-based home care aides, the domestic worker occupation with the highest employer-provided health insurance coverage rate, are barely half as likely to be covered as nondomestic workers.

The coverage rates for employer-provided retirement plans are even more dismal—fewer than one in 10 domestic workers are covered. By comparison, about a third of other workers benefit from their employer contributing to their retirement savings.

See Table 12 and Table 13 for variations in employer-provided health insurance and retirement coverage rates for domestic and all other workers by gender, race/ethnicity, nativity, education, and age.

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Even when controlling for demographics and education, domestic workers are less likely to have benefits than similar workers: Percentage-point gap between the coverage rates of domestic workers and those of demographically similar workers in other occupations, 2018

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The glaring gaps in health insurance and retirement coverage rates are evident even when we compare domestic workers with demographically similar workers. The share of domestic workers with employer-provided health insurance is 21.4 percentage points lower than the share of all other workers with such coverage. And the share of domestic workers with employer-provided retirement plans is 17.1 percentage points lower than the share of all other workers with such coverage. Agency-based home care aides are more likely than other domestic workers to have employer-provided benefits, but the gap between these workers and nondomestic workers remains enormous even after controlling for demographic characteristics.

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Employment in domestic worker occupations is growing faster than the rest of the workforce: Projected employment change, domestic workers versus other workers, 2018–2028

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Employment in domestic worker occupations is projected to grow more than three times as fast as employment in other occupations over a decade—22.9% compared with 6.9%. This trend is driven by the expected large increase (45.4%) in agency-based home care aides, who make up about half of the domestic employee workforce.

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Table 1

Table 2

Table 3

Table 4

Table 5

Table 6

Table 7

Table 8

Table 9

Table 10

Table 11

Table 12

Table 13

Technical notes about data and definitions

The figures and tables in this chartbook use data from the Current Population Survey (CPS), a monthly survey of households in the United States sponsored jointly by the U.S. Census Bureau and the U.S. Bureau of Labor Statistics (BLS). Our CPS basic and Outgoing Rotation Group microdata are pulled from the Economic Policy Institute Current Population Survey Extracts, Version 1.0.2 (2020), https://microdata.epi.org.

In our analyses of hourly wages, we use data from the CPS’s Outgoing Rotation Group (ORG), a CPS subgroup of employed adults asked to answer a detailed set of questions about their earnings from work. Our analyses of annual earnings, benefits, and poverty rates come from the CPS’s Annual Social and Economic Supplement (ASEC). To ensure adequate sample sizes for these detailed analyses, we pool several years of CPS, CPS-ORG, or CPS-ASEC microdata. Most data sets are drawn from pooled 2016–2018 or 2017–2019 microdata, whichever microdata set is the most recent available. Data sets that are broken down by geography are drawn from pooled 2010–2019 microdata. Even after pooling years together, we still do not have adequate sample sizes to report statistics for some demographic groups, as indicated in the tables by “NA.”

The CPS asks respondents about both race and ethnicity, so respondents may be categorized as having Hispanic ethnicity and being of any race. To avoid including observations in multiple categories, we create five mutually exclusive categories for race/ethnicity: white (non-Hispanic), black (non-Hispanic), Hispanic (any race), Asian American/Pacific Islander (non-Hispanic; sometimes referred to as “AAPI” in this report), and “other.” Likewise, gender is restricted to the two predominant binary categories: women and men. Note that for clarity, when discussing our findings, we adhere to the category name of “Hispanic,” which is used in official government sources, rather than Latino, Latina, or Latinx.

In our charts, “Foreign-born” refers to anyone who is not a U.S. citizen at birth. “Foreign-born noncitizen” includes foreign-born persons who are either lawful permanent residents, in a nonimmigrant status (migrants with temporary visas), or lacking an immigration status, including both unauthorized immigrants and those with lawful presence (such as Deferred Action for Childhood Arrivals recipients and asylum applicants whose cases are in process).

The data include all public- and private-sector workers ages 16 and older. Due to rounding, in a few cases sums that can be calculated by using the data in tables or figures vary slightly from sums cited in the text.

Acknowledgments

The authors would like to thank EPI Editor Krista Faries for improving the chartbook through her careful editing and preparing of our figures and tables for publication. And we are indebted to EPI’s Online and Creative Director, Eric Shansby, who created the awesome system that makes it possible to design and publish these interactive chartbooks.

Endnotes

1. Julia Wolfe, “Domestic Workers Are at Risk During the Coronavirus Crisis,” Working Economics Blog (Economic Policy Institute), April 8, 2020.

2. Laura Dresser, Valuing Care by Valuing Care Workers: The Big Cost of a Worthy Standard and Some Steps Toward It, Roosevelt Institute, October 2015.

3. Linda Burnham and Nik Theodore, Home Economics: The Invisible and Unregulated World of Domestic Work, National Domestic Workers Alliance, 2012.

4. Occupational Safety and Health Administration, “Policy as to Domestic Household Employment Activities in Private Residences,” Standard Number 1975.6.

5. United States General Accounting Office, Immigration Statistics: Information Gaps, Quality Issues Limit Utility of Federal Data to Policymakers, July 1998.

6.  Elise Gould, State of Working America Wages 2019: A Story of Slow, Uneven, and Unequal Wage Growth over the Last 40 Years, Economic Policy Institute, February 2020.

There is a penalty for working part time in America that goes beyond the lower annual earnings and fewer employee benefits that part-time workers get. Part-time workers are also face an hourly wage penalty: they are paid 29.3% less in wages per hour than workers with similar demographic characteristics and education levels who work full time. And when controls for industry and occupation are added, part-time workers are paid 19.8% less than their full-time counterparts. This part-time wage penalty is on par with the gender and racial wage penalties in the United States.

This report provides new analysis of data on the part-time wage penalty overall, by race/ethnicity and gender, and by the reasons workers give for working part time. White men and black men suffer the largest wage penalty for working part time. However, because women constitute a disproportionate 60% share of the part-time work force, they bear the brunt of the wage penalty for working part-time jobs. Moreover, the part-time wage penalty is worse for people who work part time but want full-time hours, relative to part-time workers who cannot or do not want to work full time. In addition, there is a broader compensation penalty in employee benefits, faced by part-time workers, in particular part-time workers employed in service occupations. (Note: penalties are calculated using 2003–2018 microdata from the Current Population Survey.)

Following are the key findings from the report:

• Part-time workers earn 29.3% less per hour worked than other workers with similar demographic characteristics and education levels.
• The part-time wage penalty is smaller but still substantial, 19.8%, when the worker’s industry and occupation (as well as demographics and education) are controlled (these controls yield the “fully adjusted wage penalty.”) This reduction with the industry and occupation controls added suggests that a share of the wage penalty is attributable to being relegated to certain lower-paying sectors or job types dominated by part-time work.
• By race and ethnicity, the fully adjusted wage penalty is across the board—it is 20.7% for white workers, 20.2% for African American workers and 14.2% for Hispanic workers, suggesting majority workers are just as prone to the part-time wage penalty.
• By gender, the adjusted wage penalty is 15.9% for women and 25.8% for men, suggesting that men pay a noticeably higher price for working part time. However, women constitute nearly two-thirds (63.3% in 2019) of those employed part time, and are much more likely to work part time: 22.8% of all female workers work part time, compared with 11.8% of all male workers in 2019). Thus, a greater proportion of women than men bear the brunt of the wage penalty, albeit smaller in size relative to the part-time men.
• By gender and race, white men face the highest wage penalty, at 28.1%, followed by black men at 24.6%, while the penalty for black women is 17.2%, for white women it is 16.4%, and for Hispanic men it is 16.9% while it is 12.3% for Hispanic women. The racial gap in part-time wage penalties likely reflects a combination of whites’ advantage in wage rates at their full-time jobs along with a shared disadvantage when they are in part-time jobs.
• The part-time wage penalty is greater for those working part time but wanting a full-time job (i.e., those whose reasons for working part time are categorized by the BLS as “for economic reasons,” which includes “slack work or business conditions” and “could only find part-time work”). Part-time workers who say they work reduced hours because of “slack work or business conditions” experienced a 22.3% wage penalty, while those who say they work part time because they “could only find part-time work” experienced a 29.5% wage penalty. Those working part time for “noneconomic reasons” (such as child care problems and family or personal obligations) still experienced a wage penalty, 18.3%, though a smaller-sized penalty than those who were part time for “economic reasons.” (Though respondents who work part time for “noneconomic reasons” may prefer to work full time if, say, they could afford child care, they are not included in the standard count of part-timers who want full-time work.)
• The penalty for part-time workers who want full-time work can be characterized as a double penalty: they are constrained to working fewer hours than they want and thus have lower total earnings, while they also make less for each hour they do work.
• There has been a notable increase in the part-time pay penalty over time. A 2005 study by Barry T. Hirsch, using data from 1995–2002, found a part-time pay penalty of about 10% for women and 22% for men. Our present analysis using a comparable method but with 2003–2018 data show a pay penalty of about 16% for women and 26% for men. Since the hourly pay penalty estimates control for year, this 6 percentage-point increase for women and 4 percentage-point rise for men likely reflects some kind of change in the labor market affecting both genders in the more recent period, beyond that attributable to just the Great Recession.
• Part-time workers face even more of a disadvantage in benefits than in wage rates. Benefits make up about 20.1% of full-time workers’ compensation, but only about 16.4% of part-time workers’ compensation. The inequity in benefits means that the compensation penalty (including wages and benefits) is a full 5.5 percentage points larger than the wage penalty. Thus, a part-time worker on average faces a full compensation penalty of 25.3%–a 5.5% benefit penalty on top of the 19.8% wage penalty.
• Policy priorities should include an array of reforms directed toward all part-time jobs, not just its incumbents, to address the large and apparently growing inequity in both wages and in benefits. Reforms could specifically promote more pay parity and income-earning opportunities for workers with relatively shorter weekly hours, specifically for those who work part time but prefer to work longer or full-time hours.

Introduction and overview: Part-time working—why should we care?

Part-time work is an essential component of the labor market for both employers and employees. Working part time can be both a blessing and a curse for workers. It is more of a blessing if a part-time job provides the incumbent worker with the number of work hours and schedule that meets their needs or preferences for working, without unduly sacrificing other aspects. Indeed, part-time positions originated to integrate those who might otherwise prefer to be entirely out of the labor force. It is more of a curse when the job provides chronically fewer than preferred hours, schedules that fluctuate so much that they create rather than resolve time conflicts with other commitments and, our focus in this paper, reduced wages and benefits for those whose hours are shorter, even if seemingly preferred. Employers benefit from the partial commitment as well, to cover or extend their office, shop, or opening hours; receive human capital that complements their full-time work force; and have buffer stocks of employees to cushion their labor demand for unforeseen cyclical fluctuations. Employers also benefit from their short-term cost savings.

Part-time employment constituted just under 17% (16.9%) of the work force in 2019, a bit higher than the 16% rates witnessed in the pre-recession 2000s, although lower than the spike of up to 20% after the recession (BLS 2020a; BLS 2020b). About one in six (17.1%) of part-time workers explicitly prefers a full-time workweek (i.e., the reasons they give for working part time are categorized by the BLS as “economic reasons,” which includes “slack work or business conditions” and “could only find part-time work”). The number of people working in part-time jobs in the U.S. economy who explicitly prefer to work full-time hours in 2019 was about 4.3 million. This number has declined since the start of the recovery in 2009 from more than 9 million workers but remains above the 4 million observed before the Great Recession;  in percentage terms, part-timers who explicitly prefer full-time work declined from over 6% of the overall workforce to nearly 3% (BLS 2020a; BLS 2020b; Valletta, Bengali, and van der List 2020). Moreover, part-time working for what the BLS considers “noneconomic” reasons (which others sometimes label “voluntary” part-time work) has been increasing in number, and remains consistently greater than 20 million (Dunn 2018; BLS 2020a; BLS 2020b). While not traditionally counted among those explicitly preferring full-time work, many of these “voluntary” part-time workers also are constrained by the inadequate systems of child care and support for the disabled and elderly, effectively forcing the “choice” of part-time working to fulfill family responsibilities.

Part-time working, and its associated wage and benefit penalties and frequent underemployment, is about 17 times as common as the attention-getting “gig”/on-demand platform-based jobs (Appelbaum and Rho 2018).1 Given that part-time working remains so prevalent, not only with a cyclical element but with an apparent structural change, part-time work conditions matter more greatly than ever (Kroll 2011; Golden 2016; Glauber 2017; Valletta 2018; Borowczyk-Martins and Lalé 2019; Bell and Blanchflower 2019).2

Furthermore, “involuntary” part-time work is more widespread than conventional measures show. A forthcoming report from the Center for Law and Social Policy (Golden and Kim 2020) creates a more complete picture than BLS measures of “involuntary” part-time working, for three reasons. One is because the former captures part-timers who want to work more hours, but not necessarily full time. A second is because part-time workers who hold multiple jobs to piece together full-time (35 or more) hours are actually not counted as part-time workers by BLS. Third and finally, because working parents who take part-time jobs because of “child care problems,” which might include a lack of affordability or availability, are actually not counted as involuntary part-time workers. The data published in the upcoming CLASP report provides a more accurate analysis of what it calls “underemployment”—workers who desire more hours—finding that the share of total employed that were part-time and underemployed is double the rate suggested by BLS using the CPS data.

Because part-time work is here to stay, it is crucial to provide a fresh look at the relative wage and benefit rates of part-time work vis-à-vis full-time work, the extent of the existing “wage penalty” for working part time, and the causes of such a penalty. How much of this wage disadvantage reflects characteristics of how part-time workers are treated versus their personal attributes? Which workers face bigger (or no) penalties? Have wage gaps between part-time and full-time jobs decreased or increased over time? Are penalties different for people who say they work part time for noneconomic reasons such as child care issues and family or personal obligations (which we consider “reasons of choice under constraint”) than for those who explicitly say they would prefer full-time working (i.e., they say they work part time for economic reasons such as slack work or the inability to find full-time work)? Do penalties differ between those whose hours are closer to the full-time workweek vs. those with only very short weekly hours? In addition to wage rate gaps, what are the differences in various benefits coverage for part-time jobs versus full-time jobs, so that we can assess a “full compensation” penalty?

The part-time penalty consists of three main elements—hourly wage rates, nonwage benefit and social insurance coverages, and inadequacy and volatility of work hours (i.e., “schedule variability”). Though this report focuses on the compensation penalties, Lambert, Fugiel, and Henly (2015); Schneider and Harknett (2019) and McCrate, Lambert, and Henly (2019) show workweek and schedule variability as a third aspect of part-time workers’ work condition disadvantage.3 This paper explores the current wage and benefits penalties associated with part-time work, and differences by type of worker, as well as by their reason for working only a number of hours associated with part-time jobs.4 The size and distribution of these wage penalties should inform public policy measures to address existing or growing wage and benefit gaps of part-time jobs and their incumbents.5

As we seek to answer these questions, we build on the existing body of research that confirms that part-time wage and benefit penalties matter. We take a special look at the roughly one in six part-time workers who works fewer than 35 hours per workweek either because of business conditions or slack work, or because they cannot find a full-time job (2019 data from BLS 2020a). Our analyses confirm what past research has indicated: that these part-time workers for economic reasons suffer not only from shortened hours (akin to the adverse effects experienced by the unemployed), but also from a large pay rate per-hour penalty just for being part time (Glauber 2013; Zukin and Van Horn 2015; Horemans, Marx, and Nolan 2016; Mousteri, Daly, and Delaney 2020).6 Studies have also shown that such underemployment tends to disproportionately burden certain labor force subgroups—males, youth, Hispanics, immigrants and also blue-collar job holders (Kler, Potia, and Shankar 2017; Young and Mattingly 2016; Wilkins and Wooden 2011). The median income for families in which women work part time for economic reasons is far lower than for women ostensibly working more “voluntarily” part time (i.e., for noneconomic reasons (Glauber 2013)). (Contrary to common practice, we avoid labeling people who work part time for noneconomic reasons as those working “voluntarily” part time because someone who works part time to deal with child care issues or family or personal obligations is likely facing constraints that restrict their choices.) The proportion of part-time workers who are the “primary earners” in their households has risen over time.7 These part-time primary earners appear to face a relatively higher risk of poverty and be more likely to not have health insurance.8

The structure of the paper is as follows. It begins with a condensed review of the existing literature and descriptive evidence on the meaning and measurement of part-time compensation differentials. It then explains how we replicated and updated a systematic analysis of the part-time wage penalty that was definitive but used data from 1995 to 2002. In brief, as we explain, we pool the cross-sectional data from the U.S. Current Population Survey (CPS) Outgoing Rotation Group (ORG) files from 2003 through 2018 to form a large data set with more than 1.7 million observations. Three estimates of the part-time wage gap are constructed—a raw estimate, one adjusted partially (just for workers’ demographic characteristics and education), and a third adding adjustment fully, including for workers’ industry sector and occupation of employment. Following the methodology discussion is a section presenting key findings. As we discuss in more detail, the results show that the size of the wage penalty not only is substantial, but it has increased in size since the period ending in the early 2000s. The size of the wage penalties by race/ethnicity, gender, reason for working part time, and number of weekly hours are reported. In addition, the potential gulf in employee benefits coverage between part-time and full-time jobs then is estimated in order to complete the picture of the potential full compensation—wage and benefit—disadvantage for those working part time.

Literature review: Conventional versus alternative explanations of the part-time wage differential

Why might wage rates per hour be lower for part-time workers relative to full-time workers? The part-time hourly wage penalty reflects a combination of possible factors (Messenger and Ray 2015). Labor economic theory suggests that there may be lower human capital among part-time job incumbents, such as skills and experience, as compared with full-timers (Montgomery 1988). This would reduce part-time workers’ relative wages. In addition, part-time workers’ fixed costs, on a per-hour basis, may be relatively higher than per-hour costs of full-time workers. Thus, a wage differential found for part-time workers might reflect a traditional, equilibrium-compensating wage differential in hourly wages for part-time work (Blau and Kahn 2017; Goldin 2014; Friesen 1997)—although this would discount the gap as a pure penalty. Workers can be heterogeneous not only in skills, but also in preferences and job search. If workers prefer shorter hours, then “part-time wage differentials can result from differences in labor supply” factors (Hirsch 2005). In addition, a part-time wage differential can arise if workers are willing to take lower-paid part-time jobs as a way of queuing for higher-paying, full-time jobs (Hirsch 2005).9 Finally, to the extent that a part-time job provides a job amenity, e.g., schedule flexibility, the wage payment could be reduced and still attract and retain labor. Workers might choose part-time employment at least in part to comply with the role(s) or identity to which they adhere, perhaps at stages in their life cycle, working part time to better integrate the competing claims on their time made by their different roles (Russo 2012), thus they would be “willing to accept low wages” (Hirsch 2005).10 Moreover, in cases when the fixed costs per hour worked are higher for part-time workers, their wage rates might be adjusted downward, as an equalization of all labor costs. A wage differential for part-time workers can arise when workers are not fungible (homogeneous) and the employers have preferences regarding how they schedule hours among workers.11

On the other hand, part-time working might be more productive per hour if there are fatigue effects in the quantity of output (if not quality) over the course of a workday or workweek.12 The higher the skill level of employees, the higher might be both the administrative costs and their relative productivity rate per hour. Higher productivity per hour, and thus higher marginal revenue product for an hour of part-time work, would reduce the wage penalty and might even create a wage premium.13 Thus, differences in preferred hours are not a sufficient condition to produce a wage penalty for all part-time jobs, if part-time workers have identical skills and create no fixed labor costs to employers—wages would equalize as employers create a mix of jobs only to reflect the preferences of employees. For example, part-time work might command a premium if these two part-time positions generate greater productivity than one full-time job sufficient to more than overcome the fixed costs. In addition, there may be a compensating wage differential necessarily developed to recruit into and retain workers in part-time positions, given the other adverse working conditions, in particular, the fewer or outright lack of employee benefits, as well as undesirable schedule times or variability.

Thus, hourly wage rates for part-timers compared with otherwise comparable full-timers might reflect either a negative wage penalty or a positive pay premium. However, this also depends on whether employers share the financial benefits—the income from greater relative productivity or lower compensation costs per hour derived from hiring part-time workers—with the workers themselves in the form of a wage boost. Certain part-time workers indeed generate such gains (i.e., “rents”) for their employers, either from their relatively higher productivity per hour or relatively lower wage rates paid (Garnero, Kampelmann, and Rycx 2014). Thus, depending on the bargaining power of employers or employees, there may be a wage premium for some and a wage penalty for others (Jepsen et al. 2005; O’Dorchai, Plasman, and Rycx 2007).

While the more conventional explanations of the penalty dominate much of the economic theory and testing of the wage differential between full-time and part-time workers, valid alternative explanations of the size of the penalty involves labor market power, job downgrading, and outright discrimination. When labor market conditions are not very tight or employers have some monopsony power, they may be more able to exploit the vulnerabilities of workers with more limited options—those who need jobs that provide some income but allow time for family or personal reasons.14 Moreover, polarization (i.e., dualism) in labor markets suggests that certain jobs, including many part time, are structured simply to contain short-run labor costs and disconnect from full-time, regular positions (Tilly 1996; Howell and Kalleberg 2019; Fernández-Kranz and Rodríguez-Planas 2011; Benton, Kim, and Wilmers 2018). Thus, the larger the gap between part-time workers and otherwise comparable full-time workers, the more it reflects how employers may treat incumbents as second-class citizens, unworthy of the full value of their productivity.

The “gross” or “raw” wage gap—a simple comparison of part-time and full-time hourly wages —typically is considered as the average wage differential between part-time and full-time workers in a given sample. The size of the penalty or premium is an empirical issue. There is mixed evidence, with quite a wide range of estimates. Much of the research starts by estimating the “unadjusted” or “raw” wage difference between part-time and full-time jobs or work per hour. This is an important first estimate because it relates most directly to workers’ choices in the labor market regarding hours of work and to consequences of those choices for their income. Estimations typically then adjust this raw differential for demographic and human capital factors such as age, experience in the labor market, education, etc., to get an “adjusted” penalty (or premium). This typically lessens the size of the penalty, by controlling for the additional experience and education that full-time workers have compared with part-time workers, on average (Baffoe-Bonnie 2004). In addition, full-time workers are more likely to have better benefits, like pensions, and be represented by unions (Bishow 2015; BLS 2019).

Previous research notes at least some pay penalties, but considerable variation in the size of same. Virtually all research indicates the adjustments to control for these differences in worker and job characteristics considerably reduce the national wage differential between full-time and part-time workers, given the substantial variation across regions and industries in full-time versus part-time composition. Studies within specific industries and occupations suggest there are part-time penalties, but these are much reduced or quite small when controlling for schooling, experience, occupation, and establishment size.15 In the United States, the raw wage penalty for part-time working men was as high as a 67% (meaning men working part time made as much as 67% less than men working full time), while among women, this was on the order of about 22% (Bardasi and Gornick 2008; O’Dorchai, Plasman, and Rycx 2007). The size of the penalty in the United States generally gets reduced by about 10% when fully adjusted with controls (Fallick 1999). A sizable average part-time wage penalty of 21%–26% for men and 19% for women—was found using earlier cross-sectional data (Blank 1990, 1998).16 With data from 1995–2002, Hirsch (2005) intended to update and reestimate this. Without any controls for demographic and work characteristics in the full sample for the raw wage penalty, there was a pay gap of 49% among men and 26% for women. Adding these controls, there was a 37% penalty for men and about 20% for women.17 With the full battery of typical control variables (personal and location variables, industry, and occupation), the part-time wage penalty was 10% for women and 22% for men (or 9 and 19 log points difference, respectively) (Hirsch 2005). This estimate is fairly consistent with other North American data, which found a 12% pay penalty with controls for personal and job characteristics included (Bardasi and Gornick 2008).18

There may be some nuanced, important differences by hours of work, even among part-time workers, in proximity to a country’s full-time workweek.19 Indeed, in the United States, the penalties found for working shorter hours per week or per year may just mirror the flipside—the pay rate premium earned for those who work longer than standard full-time hours (Blau and Kahn 2017; Goldin 2014; Cha and Weeden 2014; Bertrand, Goldin, and Katz 2010).20 Thus, the wage penalty may be smaller for those part-timers who work nearer the full-time workweek threshold.21 Indeed, recent changes in the representation of gender and parents who are working part time is associated with a decline in the gender wage gap among parents and in the motherhood wage penalty, but also with an increase in the fatherhood wage premium (Preston and Yu 2015; Weeden, Cha, and Bucca 2016; Yu and Kuo 2017). The size of a wage penalty might be smaller for those groups that have a relatively higher preference for working part time—mothers of young children, students, retirees, etc.

No known previous study has focused on the degree of voluntariness of taking or holding a part-time job, which may be associated with different compensating differentials or some of the other reasons for a penalty. The degree of voluntariness may play a role, explaining why the penalty may be larger for those who are less likely to prefer part-time working, e.g., men. In addition, a part-time pay premium could reflect a combination of several possible sources—the lack of employee benefits (so cash in lieu), the variability of hours and thus weekly earnings among hourly self-employed people, the lower job security provided by part-time positions.22A penalty also may be smaller, if not become an outright premium, for those compensated as salaried as opposed to hourly paid. Moreover, the size of a penalty or premium might vary by industry sector. Finally, the institutions within a country help shape the existence and size of the penalty or premium (Blau and Kahn 2013; McGinnity and McManus 2007).23

New estimates of the wage and compensation penalties: Methodology

The Bureau of Labor Statistics’ Current Population Survey (CPS) is a monthly survey of households in the United States. One-fourth of the employed adults (age 16 and older) in the survey’s “Basic” monthly sample—a subgroup often referred to as the “Outgoing Rotation Group” (ORG)—are asked to answer a detailed set of questions about their earnings from work. Our empirical strategy is to replicate what Hirsch (2005) had generated, using updated CPS–ORG data, from 2003 through 2018.24

The part-time wage penalty may be measured in several ways. We compare the hourly earnings of those who usually work what is considered part-time hours with hourly earnings of those whose hours are defined as full time. Part-time workers in the CPS are defined as those who worked one to 34 hours as their “usual” work hours (or during the reference, last week). These workers are subdivided into two groups as classified by the BLS: those working “part time for economic reasons” and those working “part time for noneconomic reasons.” The part-time-for-economic-reasons group includes survey respondents who said they work part time due to “slack work or unfavorable business conditions”or “an inability to find full-time work.”25 Those who usually work less than 35 hours for what the BLS calls “noneconomic reasons” are those who say they work part time because of “child care problems,” “other family/personal obligations,” “health/medical limitations,” “school/training,” “retired/Social Security limit on earnings,” “full-time workweek is less than 35 hours,” and “other for non-economic reasons.” Those who work part time for noneconomic reasons often are considered to be “voluntary” part-time workers (even though these workers’ choices are constrained by existing policies and institutions, such as the lack of resources for child care or care for family members who are older or who have a disability). Workers typically are considered to be working part time “involuntarily” when they indicate they are willing, able, and available to work full-time hours, but either had to settle for working part-time hours, or had their hours reduced by their employer (from greater than to less than 35 hours).26 Herein, we will rely on the BLS’s “economic” versus “noneconomic” reasons for working part-time hours, rather than the commonly inferred “involuntary” versus “voluntary” terminology.

The total sample size applied here, pooled within the period 2003–2018, is 1,756,419 individual observations. The sample consists of hourly and non-hourly wage earners, ages 16 and older, in the 2003–2018 EPI extracts of the CPS-ORG. Observations with allocated hourly wages or weekly earnings are excluded, as are all observations with hourly wages less than $2.00 or more than $150.00 per hour (as in Hirsch (2005)). All standard errors are clustered by state.

Demographic controls include race, gender, and education dummies, and a quintic polynomial in age. Industry and occupation controls are dummies for Census recodes of major industry and occupation categories. The key independent variable is the part-time work status of the individual. We use the Basic CPS hourly earnings question, even though employed persons in the ORG are asked about hours per week. We define “part time” by using the “usual hours at your main job,” as Hirsch (2005) does.27 For workers with varying hours, last week’s hours are used for the 35-hour cutoff (in one’s primary job). The dependent variable is the log of the wage rate (average hourly earnings) for a worker. Hourly wages are defined first as the straight time wage for nontipped workers (observations with allocated values are dropped); when that value does not exist, hourly wages are weekly earnings divided by usual hours (observations with allocated values for either weekly earnings or usual hours are dropped); for workers whose “hours vary,” weekly earnings divided by last week’s hours (observations with allocated values for either weekly earnings or last week’s hours are dropped).

All multivariate regressions use logarithm of the hourly wage as the dependent variable and are weighted using the ORG sample weights. The regressions are on the same dependent variable with the same controls and same hierarchical approach. First the models are run with the entire sample of all workers, with no controls, except for the 15 years and 51 state fixed effects. Then, sequentially adding controls, first the set of demographic and work characteristics, and then adding industry and occupation controls. We break down the part-time penalty by types of workers by race and gender, and the type of part-time work (e.g., noneconomic and economic reasons).

Part-time wage penalty empirical tests: Findings with the latest data, 2003–2018

We test for the following questions to determine the extent to which the estimated size of the part-time wage penalty is different:

• In size as it was in the earlier period, ending in 2002, as a raw or adjusted wage gap.
• By the noneconomic versus economic motivations for working part-time hours.
• By race and gender and its combinations, although part-time work is disproportionately female.
• In size to a potential add-on penalty of reduced access (coverage) regarding nonwage benefits for part-time workers.

Our empirical procedure is to conduct a three-step process estimating the size of the wage penalty for part-time workers:

• The “raw” wage gap in wage levels, with no controls for individual, state, or year fixed effects excluded and then included. The “raw” wage penalty is expected to be largest.
• The “partially adjusted” penalty, the above model and controlling for all personal and demographic characteristics, education, and location. The penalty is contrasted between shorter versus longer part-time hours per week, and economic versus noneconomic reasons for working part-time weekly hours.
• The “fully adjusted” wage penalty is estimated first without, then with, controls for both industry and occupation of the worker. Effects of the industry of employment are expected to be higher in certain industries, perhaps where part-time jobs are more prevalent.

The unadjusted wage penalty for part-time work

Part-time jobs during the period 2003 to 2018 averaged 52.4% less wages per hour compared with earnings from full-time jobs. When factoring in just the effects of location (states) and state of the economy in subperiods (year), the “raw” wage penalty is 53.1% (see Table 1). This represents a substantial size reduction in absolute earnings per hour, suggesting that part-time workers earn less than 50 cents per hour on the dollar earned by their full-time worker counterparts. To put this in perspective, the order of magnitude is more than twice the size of the raw gender gap in the United States (Blau and Kahn 2017; Yu and Kuo 2017; Weeden, Cha, and Bucca 2016; Goldin 2014; Matteazzi, Pailhé, and Solaz 2014; Leslie et al. 2012; Harkness and Waldfogel 2003). Furthermore, this represents a substantial increase in the size of the unadjusted wage penalty from 1995–2002, which was on the order of 33% (between the 46% found for men and 22% for women (Hirsch 2005)).

Adjusted pay penalties—partial, by demographic and education characteristics of workers

While the raw wage penalty for working part time is a massive one, how much of this represents different qualities of part-time and full-time workers, such as their age (a proxy for work experience) or education levels (a proxy for skills brought to a job)? Because of the many different possible characteristics of workers observable in the CPS, we next measure the adjusted wage penalty for working part time versus full time. Controlling for workers’ demographic and “human capital” (i.e., 16 educational levels) characteristics is arguably a more meaningful measure of the penalty experienced by a given worker for part-time work, and is the most common, accepted way of measuring it with large, representative surveys in the United States and other countries.28 The “partially adjusted wage penalty” estimates control for the “observable” differences among workers in their personal/demographic and education features, but also their location.29

As discussed above, the “raw” wage penalty is 52.4% and remains comparable when adding state and year controls. The partially adjusted wage penalty, controlling for workers’ demographic characteristics and education level, is 29.3% (see Table 1). So, the inclusion of demographic and education controls “knocks down” the size of the wage penalty for usually working part-time hours, as expected, but this partially adjusted wage penalty remains substantial. This means that otherwise comparable workers who usually work part-time hours earn almost 30% less than their full-time working counterparts. This is markedly higher than the 24% (18% for women, 33% for men) wage differential found for the 1995–2002 era.

The fully adjusted wage penalty, which controls also for the worker’s industry and occupation in which they are employed, is 19.8%. This suggests that part-time workers get paid about 20% less than otherwise comparable full-timers simply because they are in part-time jobs, independent of whatever occupation and industry they work in. Thus, we infer that about one-third of the only partially adjusted wage gap is attributable to part-time workers being employed in certain lower-paying sectors or job types. Nevertheless, two-thirds of the wage gap is not explained by their industry or occupation of employment. In the earlier period, “measurable” characteristics accounted for 60% of the raw wage penalty (Hirsch 2005). The fully adjusted wage penalty for part-time workers is markedly higher recently—about 20% compared with 16% in the earlier, 1995–2002 period. The increase is surprising since the skills required of part-time workers actually rose between 2007 and 2017 (Dangermond, Monaco, and Smyth 2019).

It is interesting to note that the part-time wage penalty is on par with the gender and racial wage penalties in the U.S. labor market. Female workers are paid 22.6% less than male workers with similar demographic characteristics and education levels and black workers are paid 14.9% less than white workers with similar demographic characteristics and education levels (Gould 2020).

Table 1

Part-time wage penalties, by reason for part-time work

There are differences in the part-time wage penalties based on the reason a worker works part time. The CPS asks employed persons who report “usually” working fewer than 35 hours a week, “What is your main reason for working part time?” As noted in the methodology section, the BLS divides the many reasons that workers give into “economic” and “noneconomic” reasons. (Note that the survey does not ask whether those who give noneconomic reasons would prefer full-time work were it not for these noneconomic reasons.) The main two reasons within the “part-time for economic reasons” category are those working part time because of “slack work or business conditions” and because the respondent “could only find part-time work.” Another economic reason, though cited much less often, is “seasonal work or between jobs.” Other reasons are characterized by the BLS as “part-time for noneconomic reasons.”30 Those working part time for noneconomic reasons include workers, disproportionately women, who seek part-time work more by choice, but under the constraint that they might have little access to any supports for child care, sick leaves, and other social or family obligations that, if supported more, would help enable them to work full-time hours. Thus, if one works part-time hours on a regular basis because of “child care problems” or “other family/personal obligations,” then BLS considers that one works part time “for noneconomic reasons.”

The results in Table 1 show that those working part time for economic reasons suffer a greater wage penalty. When working fewer than 35 hours for economic reasons, such as “slack work or business conditions,” the fully adjusted wage penalty is 22.3%. However, those working part time because they only have been able to find part-time work, there is a considerably higher penalty, at 29.5%. In contrast, those working part time for noneconomic reasons face a wage penalty of 18.3%, smaller in size than that faced by economic part-time workers. Thus, there is a gradation apparent: The greater the employer role in determining the part-time status of the work, the larger the wage penalty. This means workers who work part time but want full-time work not only are “hours-constrained” underemployed, but also suffer from even lower relative hourly earnings than part-time workers overall. This finding is not consistent with a compensating wage differential theory, which would imply that those working shorter hours as a personal choice should be more willing to sacrifice pay. Those who are part time for economic reasons, in post-recession years, increasingly make up a larger share of those who settle for part-time jobs in lieu of full-time jobs, rising to constitute one-third of the total among all (10) reasons provided for working fewer than 35 hours, i.e., part time (Golden 2016).

Part-time wage penalties by race and by gender

Within the 19.8%, fully adjusted wage gap for all part-time workers, there are notable differences by workers’ race or ethnicity, as shown in Table 2. For white workers, the penalty is 20.7%, a tick higher than the overall average, on par with the 20.2% penalty for black workers. The wage gap is 14.2% for Hispanic workers, or about three-fourths of the average overall. The similar size of the part-time wage group across groups suggests that the penalty for part-time working appears to be due to the part-time job itself, experienced by all incumbents across racial/ethnic groups, with only slight differences in size.

Table 2 breaks down the overall and race results by gender. Women experience a substantial wage penalty for working part-time hours of just under 16%. For men, it is substantially larger; the wage penalty is greater than 25%. Again, these differentials are somewhat greater than those found in the earlier period, which were 11% for women and 22% for men (Hirsch 2005).

Table 2

While smaller in size, the scope and the impact of working part time is greater for women than men, even though the actual size of the part-time wage penalty is larger for men than women. This is because—though not shown in the table—women are twice as likely to work part time as men—22.8% of all female workers worked part time in 2019, compared with 11.8% of all male workers. Even starker, there are 73% more women part-time workers than men part-time workers (16.1 million part-time women versus 9.3 million part-time men (BLS 2020a)).

Indeed, findings (unreported here) regarding the size of the wage penalty by the length of workweeks (also Hirsch 2005), reveal that the part-time penalty is, in large part, more of a penalty for fewer work hours. When broken out by subranges of weekly hours, there appears to be an hours gradient to the part-time wage penalty. Working 20 or fewer hours has the largest penalty, although not that much larger than working 20–29 hours, but noticeably larger than in the 30–34 hours range. However, even when working more than 35 but less than 39 hours, there also is some penalty vis-à-vis those usually working 40. Thus, there appears to be an hours-related wage penalty within part-time jobs.31 Moreover, if the Bureau of Labor Statistics definition of what constitutes “full time” (working 35 hours or more) was changed to the more legal and normative “standard” workweek of 40 hours, the impact of the wage penalty would be more widespread, given how many millions of workers work 35–39 hours.

Table 3

Table 3 shows the gender and race distribution of part-time workers, by reason. By gender, it shows that women make up a greater share of those who work part-time hours generally, both for noneconomic and economic reasons. Women make up 63.3% of part-time workers, even though women make up just 47.0% of those “at work.” Women clearly are disproportionately working part time and so a much larger share of women are affected by the part-time pay penalty.

Hispanic women and black women both make up a disproportionate share of those working part time (both for noneconomic and economic reasons). By race/ethnicity alone, black and Hispanic workers make up a disproportionate share of those working part time for economic reasons: Hispanics constitute 26.5% of all those working part time for economic reasons, in contrast to being only 17.6% of all those at work. Black workers constitute 16.7% of all those working part time for economic reasons while they are only 12.5% of all those at work. Broken by gender and race, black men and women and Hispanic men women all disproportionately work part time for economic reasons.32 But in summary, women of color appear to bear a disproportionate brunt of the part-time earnings penalty because they make up a disproportionate share of those working part time for any reason.

Differentials in employee benefits

The results so far focus on the hourly wage penalty faced by part-time workers. However, part-time workers also receive less in such benefits as retirement and health care because they frequently are excluded from such plans. Analysis of National Compensation Survey 2013 data showed that part-time workers had far less access to benefit plans than full-timers did (Bishow 2015; BLS 2015). For instance, only 37% of part-time workers had access to the employer’s retirement plan, far less than the 74% of full-time workers who did. Similarly, part-time workers had access to health care plans only 24% of the time, while full-time workers had access to health care plans 85% of the time. Part-time workers also were excluded from holiday, sick leave, and vacation plans. Access to benefits depends on the scheduled number of weekly work hours, not only whether the responding establishment reports the job as full time or part time (Bishow 2015).33

The challenge is how to incorporate analysis of these benefit gaps along with wage penalties, because the monthly survey data source (CPS) used to estimate wage penalties does not have benefit data. The only data available are from BLS’s Employer Costs for Employee Compensation series, in the National Compensation Survey, which provides breakdowns of wages and benefits separately for full-time and part-time workers (for major occupation categories). Unfortunately, these data do not allow us to control directly for differences in education, experience, or industry; however, some of these factors will be reflected in the occupation differences (i.e., workers in a similar occupation will have similar education levels).

Table 4 provides an analysis of the full compensation—both wages and benefits—for all private-sector workers and for two general occupational categories (blue-collar and service occupations). “Blue collar” includes “production, transportation, and material moving” occupations, and “service occupations” includes a variety of mostly low-wage occupations such as health care support occupations, food preparation and serving-related occupations, building and grounds cleaning and maintenance occupations, and personal care and service occupations, along with protective service occupations (firefighters, police, corrections officers).

Table 4

The analysis is focused on estimating the degree to which the full compensation penalty (incorporating both wages and benefits) is larger than that for wages only. To do so, the analysis adopts W-2 wages, a measure of wages that mirrors that used in the analysis of CPS data above. “W-2 wages” includes the BLS category of direct wages, but adds costs for paid leave and supplemental pay (because these categories are embedded in the CPS definition of wages). Nonwage benefits include insurance, retirement, and payroll taxes paid by the employer.

In the private sector, nonwage benefits make up 20.1% of full-time workers’ compensation, but account for only 16.4% of part-time workers’ compensation. As Table 4 shows, this implies that for every dollar of wages, there is 25.2 cents for benefits for full-time workers, but only 19.7 cents per dollar for part-time workers. This implies, in turn, that even if part-time and full-time workers had equivalent wages, there would be a compensation penalty of 5.5 percentage points. Thus, we can add another 5.5 percentage points to the estimated wage penalty to obtain the full compensation penalty for part-time jobs. Moreover, there is an even bigger benefits penalty, 8.3 percentage points, for those in low-wage service occupations. However, there is no apparent add-on benefits penalty among workers in the group of blue-collar jobs.34

Implications of the findings for policies to address the penalties associated with working part time

Working part-time hours clearly involves a willing sacrifice of income, sometimes an acceptable trade-off for those workers who prefer less-than-full-time work, and the flexibility that part-time jobs potentially provide compared with a full-time commitment to work or the workforce.

However, having significantly reduced per-hour compensation for the same work characteristics, hurts part-time workers, whether they are working part-time hours for either the economic or noneconomic reasons. The hourly wage penalty for working part time, in the recent U.S. labor market, is a 20% reduction in earnings per hour, even after one’s education, experience, occupation, and industry are taken into account. The part-time workers’ relative wage gap is thus on par with observed gender and racial wage gaps in the United States, and is similarly persistent and inequitable. Indeed, the wage penalty is measurably higher now than it was a decade and a half ago when Hirsch (2005) did his analysis with the same CPS data. In addition, the over 4 million U.S. workers in part-time jobs who prefer to work full-time hours (at least 35 weekly) (BLS 2020a) pay an even stiffer penalty. Even those working part time for various noneconomic reasons—which includes those who likely would prefer full-time work if they did not have such constraints as a lack of support for parenting, health issues, and the need to obtain more education—pay a penalty of over 18%.

Furthermore, part-time workers have less access to various employee benefits, suffering an additional 5.5 percentage-point benefits penalty, in the private sector, in addition to their wage penalty. These substantial compensation consequences likely reflect underlying structural and institutional factors in the U.S. economy that could and should be addressed, with a range of policy innovations. Listed below are several policies that we would need to adopt to address the part-time wage and benefits penalties and some of the key legislative efforts under way to bring them to fruition.

• Compensation parity for part-time jobs and workers. A codified measure to ensure rights for part-time workers would need to include provisions for wage fairness and pro-rated benefit coverage. Pay parity for part-time work is a basic, accepted precept of the International Labour Organization (ILO)’s Part-Time Work Convention, 1994 (No. 175)—the globally accepted standard for providing proportional parity for part-time workers. It recognizes “the economic importance of part-time work, the need for employment policies to take into account the role of part-time work in facilitating additional employment opportunities, and the need to ensure protection for part-time workers in the areas of access to employment, working conditions and social security” (Preamble), relative to “comparable full-time workers” (who have the same type of employment relationship; are engaged in the same or a similar type of work or occupation; and are employed in the same establishment) (Article 1). This standard articulates that “national law and practice shall be taken to ensure that part-time workers do not, solely because they work part time, receive a basic wage which, calculated proportionately on an hourly, performance-related, or piece-rate basis, is lower than the basic wage of comparable full-time workers.” (Article 5). “These conditions may be determined in proportion to hours of work, contributions or earnings.” (Article 6). It extends this proportional parity in pay norm to statutory social security schemes that are based on occupational activity, “so that part-time workers enjoy conditions equivalent to those of comparable full-time workers” (Article 6). Finally, it promotes that measures be taken to ensure that part-time workers receive conditions equivalent to those of comparable full-time workers for maternity leave, paid annual leave, paid public holidays, and sick leave—provided in proportion to hours of work or earnings (Article 7). The Netherlands (where 75% of women employed work fewer than 35 hours per week) has been at the forefront of creating pro-rata equivalence for part-time workers, particularly regarding salary levels and, where reasonable, also for employee benefits (Visser et al. 2004). In the United States, San Francisco’s Formula Retail Employee Rights Ordinances have such parity for part-time workers (San Francisco Office of Labor Standards Enforcement 2020, see Section 3300G.5 ).

• Access to hours for part-time workers. Work schedules that often do not provide as many hours as they want or need are a significant challenge faced by many part-time workers. The Part-Time Workers Bill of Rights Act to be introduced by Sen. Elizabeth Warren (D-Mass.) and Rep. Jan Schakowsky (D-Ill.) would address that challenge by requiring that large employers offer available hours first to current, available, qualified part-time employees before hiring new employees or temporary or subcontract workers. Some local jurisdictions are already offering such protections. Seattle’s Secure Scheduling Ordinance, adopted in 2017, provides “Access to hours” which ensures that, before new employees are hired, an employer must post notice for current employees of available hours for three days and offer the job or work to qualified current employee(s). In San Jose, California, the Opportunity to Work Ordinance requires, without specifying the number of hours for the period, that employers first offer available additional hours of work to its existing part-time workforce (who in the employer’s good faith and reasonable judgment have the skills and experience to perform the work) before hiring (sub)contractors, temps, or new part-time workers. The employer also must use a transparent and nondiscriminatory process to distribute the hours of work among those existing employees. Employers are not obliged to allocate those hours to existing employees in the event the additional hours would result in premium-owed overtime hours (The Center for Popular Democracy and Working Partnerships USA 2016). In addition to Seattle and San Jose, several cities such as Chicago; Emeryville, California;  New York City; Philadelphia; and San Francisco have introduced or passed fair workweek laws that include “access to hours” provisions.

• Control over work schedules and protections from volatile scheduling practices. Lower pay for part-time work is compounded when people do not know or control their own hours or have enough advance notice when their schedules are set or changed. Legislation to help ensure that lower-wage employees are provided with more certainty about their work schedules, hours, and income has been proposed in the U.S. Congress and proposed or passed in many statehouses and city councils across the United States. The national Schedules That Work Act of 2019 (STWA) and the local and state measures contain provisions that would diminish the income and pay disadvantages experienced by incumbents of part-time jobs. The bills generally permit employees to request changes to or stability in their work schedules without fear of retaliation, and ensure that employers consider these requests. The measures also require employers to provide a minimum advance notice of schedules, typically between seven to 14 days, that will make hours more predictable and stable for all the hourly employees in the industries covered. The provisions in fair workweek laws for New York City, the state of Oregon, San Francisco, Seattle, and elsewhere include some requirement for “predictability pay”—if a worker’s posted schedule is altered or their shift length or hours are cut, the employee is owed at least some pay for that. In certain cases, the employee is owed just an hour or two hours’ pay; in other cases, hours cuts made within 24 hours of the shift start time, employees are owed pay for no less than half the hours of the originally scheduled shift. Similarly, reporting pay requirements, which predate the proposed scheduling ordinances (CLASP, Retail Action Project, and Women Employed 2014; Ben-Ishai 2016), require a minimum payment for those showing up to work and having one’s hours eliminated or cut. All of these measures would clearly mitigate the pay suppression experienced by workers in part-time positions, not only for those who work part time for economic reasons—where the pay gap is more egregious—but for those working part time for noneconomic reasons as well, who also deserve such protections. Because part-time workers are far more likely to be given unfavor­able work schedules or face greater schedule volatility (Zukin and Van Horn 2015; Ruan and Reichman 2014; Alexander and Haley-Lock 2015; Schneider and Harknett 2019), other provisions of the STWA and local ordinances—such as prohibition of on-call work and “clopening” (being scheduled to close the business one night and be back to open the business the next morning)—would improve dimensions of part-time workers’ well-being less directly associated with pay. Similarly part-time workers would benefit from the “right to request” modifications in hours (and schedules) in the STWA and in such laws in cities and two states (New Hampshire and Vermont): Under these provisions part-time employees could expressly request additional work hours. Moreover, a minimum hours standard for part-time workers could guarantee a certain number of hours per week (such as 24 in France) to workers when hired, unless they prefer otherwise (Peck and Traub 2011). Indeed, all EU member states by 2022 will have to comply with the European Commission’s Directive for Transparency and Predictability in Work, which will incorporate elements similar to these ordinances, including “good faith estimates” of hours and schedules upon hiring of employees (European Commission 2019).

• A lower overtime pay threshold of hours for hourly paid part-time workers: Under federal law, almost all hourly workers are automatically eligible for overtime pay—1.5 times the regular rate of pay for any hours over 40 hours in a week. A lower threshold for part-time workers to be owed overtime pay—such as beyond 35 hours— would surely help address the part-time pay gap. Indeed, the proportion of part-time workers whose actual weekly hours exceeded 40 were a nontrivial 4%, and likewise, a far-greater proportion likely have weekly hours of 35 or more, given that part-time workers are more than twice as likely to report working irregular shift times.35

• Provisions allowing part-time workers to continue receiving unemployment insurance benefits while working part-time hours, for both “economic” and “noneconomic” reasons: Eligibility for partial unemployment insurance (UI) should be extended to not only those taking part-time work in lieu of finding full-time jobs, but also to anyone who seeks to reduce his or her own work schedule for compelling reasons, including personal health and child care responsibilities. UI eligibility for individuals who voluntary quit for “good cause” should be extended to workers who are forced to quit due to their erratic schedules (Ben-Ishai and McHugh 2016). The federal government should enact a minimum eligibility standard for UI benefits, as long as the work being sought is for at least 20 hours per week.36 Currently, in 28 states and the District of Columbia employees can qualify for receiving  partial unemployment insurance as “short-time compensation” (STC) payments. They are eligible if their employer (not the employees themselves) initiated cuts in their workdays or shift lengths to part-time workweeks (i.e., “work sharing”) in lieu of instituting layoffs among a group of five or more employees.

• Paid time off: Paid sick, vacation, and personal time off are available to a far lower share of workers at the bottom of the income scale, especially those in part-time jobs. National minimum paid sick time, vacation, and personal time laws are another tool that would help mitigate the income penalties part-time workers face. Having greater access to prorated paid time off may induce many workers to remain in their part-time jobs so as to best combine work with caregiving and/or schooling activities, rather than quitting for a different job or leaving the labor force. The national FAMILY Act would, if enacted, create a national family and medical leave insurance program that would apply coverage to part-time workers (National Partnership for Women & Families 2019).

Acknowledgments

The author thanks Larry Mishel and Ben Zipperer of EPI for their assistance with data and reviews of this report.

About the author

Lonnie Golden is a professor of economics and labor-employment relations at Pennsylvania State University, Abington College. He is an affiliate with the Project for Middle Class Renewal at the University of Illinois at Urbana-Champaign and the Employment Instability, Family Well-being and Social Policy Network (EINet) at the University of Chicago. He holds a Ph.D. in economics from the University of Illinois at Urbana-Champaign. His research has centered on the labor market and hours of work—specifically, the economic and noneconomic determinants of hours, including legal, organizational, and individual preferences, and their effects on employment and well-being, including work-life and worker happiness. He is coeditor of the books Working Time: International Trends, Theory and Policy Perspectives (Routledge Press) and Nonstandard Work: The Nature and Challenges of Changing Employment Arrangements (Cornell University Press), and author of many research articles that have appeared in such journals as Industrial Relations, Monthly Labor Review, Cambridge Journal of Economics, and Journal of Marriage and Family.

Endnotes

1. According to Appelbaum and Rho, “despite all the hype, gig work is an extremely small share of employment. Just 1.6 million workers—1.0 percent of total employment—were engaged in electronically mediated work in 2017.” In 2017, the total number of part-time workers was nearly 28 million (BLS 2020b).

2. The level of part-time jobs, in a state, is not significantly associated with the cost of health benefits, so the structural change involved is not mainly health care costs (Valletta, Bengali, and Van der List 2020).

3. Human capital investment such as training could be a fourth and job insecurity a fifth inherent disadvantage, leading to long-run effects on earnings trajectories (e.g., Ferber and Waldfogel 1998; Green and Ferber 2005; Wolf 2014; Paul 2016; Messenger and Ray 2015; Pedulla 2016; Kyyrä, Arranz, and García-Serrano 2017) and their job satisfaction (e.g., Wheatley 2016). Voluntary part-time working has a positive effect on longer-term earnings for women.

4. See Mishel 2013.

5. As of the end of 2019, no national legislation concerning part-time work had been introduced in the United States since H.R. 3682, the Part-Time and Temporary Workers Protection Act of 1996, 104th Congress (1995–1996), sponsored by Rep. Patricia Schroeder (D-Colo.).

6. Past CPS data confirm that those classified as involuntary part-time workers indeed work part time “involuntarily” (Stratton 1996), because involuntary part-time work tracks other indicators of underemployment (Li and McCully 2016).

7. Part-time workers who are primary earners increased from 1970, making up almost four in 10 of all part-time workers (Shaefer 2009).

8. A preference for working part time is high, particularly among mothers with children, including those who work full time and those not employed who prefer to work. Mothers in the bottom half of the income scale are more likely to prefer full-time work (Wang, Parker, and Taylor 2013).

9. This implies an “occupational crowding model” at work, where there not only is an efficiency wage leading to higher pay for full-time work, but an enlarged supply of workers with preferences for fewer than full-time hours (e.g., mothers and students). The labor demand side provides a foundation regarding why employers may favor creation of more jobs with part-time hours, or fewer in favor of more full-time positions. Employer preferences regarding the ratio of full-time and part-time jobs will depend on the ratio of fixed labor costs to the hourly wage rate, a variable cost (Zeytinoglu 1992; Montgomery and Cosgrove 1995; Lettau 1997; Barrett and Doiron 2001; Hamermesh and Stancanelli 2015; Golden 2015a; Elsayed, de Grip, and Fouarge. 2016). This would lead employers to curb the ratio of part-time to full-time jobs. A lower variable cost of wage rates, alternatively, might lead employers to hire more part-time workers, if their total compensation per hour worked is sufficiently less than that of full-time workers (Carré and Tilly 2012). On the other hand, the total administrative cost of having two part-time workers rather than one full-time worker to oversee may be higher on a per-unit basis for part-time jobs, incentivizing employers to hire fewer part-time workers.

10. To wit, across virtually all countries part-time working corresponds closely to the female share of the labor force. For more direct indicators of “schedule flexibility,” see Golden 2009 and Berg et al. 2014.

11. Hirsch (2005) uses college towns to illustrate where students are diverse in skills but care very much about which hours of the day are scheduled.

12. At least in medium-skilled service-sector work (Collewet and Sauermann 2017).

13. Indeed, Dutch firms with a large part-time employment share are relatively more productive—a 10% increase in the part-time share is associated with almost 5% higher productivity (Jepsen et al. 2005).

14. Ransom and Oaxaca (2010) find that workers who have lower labor supply elasticities get paid lower when firms have some monopsony power.

15. With panel data and the ability to control for potential individual heterogeneity among part-time and full-time workers, using individual-fixed effects models, the wage penalty estimates, not surprisingly, are lower; see Hirsch 2005 and Booth and Wood 2008.

16. Alternative methods to control for “unmeasured skill differences” to account for the potential self-selection (endogeneity) into part-time status typically find a reduced penalty size, particularly for women. One study found a 25% wage penalty for men who cut their workweek from 40 to 20 hours at retirement ages, but no such effect was noted among women (Aaronson and French 2004).

17. Studies from outside the United States show a pay penalty—in the United Kingdom, as high as 22% to 26%. About half of the pay gap, 13% among women, is “explained” by worker characteristics, but the remaining 3% to 10% (by gender) is unexplained (Manning and Petrongolo 2008). In several European countries, part-time jobs are flexible but insecure—analysis of labor market transitions in Denmark, France, Italy, the Netherlands, and Spain finds that being employed part time (mostly women) leaves one at higher risk of unemployment (Blázquez and Carcedo 2014; Anxo et al. 2007). However, wage differences between part-time and full-time workers are small in Norway (Hardoy and Schøne 2006), suggesting there is little systematic difference between part-time and full-time workers regarding the selection process or in earnings capacity, which they attribute to the Norwegian labor market providing more equal rights for part-time workers, strict rules against the discrimination of part-time workers, and a generous family policy enabling women to combine work and family life. The case of Norway suggests the importance of an institutional setting characterized by relatively strong employment protection that includes part-time workers. Partly as a consequence of this, a large proportion of Norwegian women are working part time. Similarly, with panel data on German workers, estimating a wage equation (using a random effects model), capturing the employment history and dynamic choice of employment status, controlling for the institutional context, finds that working part time with a relatively small number of weekly hours has a large causal effect on current wages. In contrast, more part-time work does not reduce current wages, although it leads to negative longer-term wage effects (Paul 2016). A study of women’s part-time work and wage penalties, using fixed-effects estimation, finds the smallest penalties for part-time employment where female labor force participation rates are lowest (McGinnity and McManus 2007).

18. Within occupations, one study finds almost a 9% wage penalty among workers in child care establishments, only a 7% gap among teacher aides and no more than 0% among teachers or among nurses, once instrumental variables or random effects estimations are conducted (Montgomery and Cosgrove 1995; MacPherson and Hirsch 1995). In caregiving jobs, being able to arrange part-time work is negatively associated with wages; i.e., care workers, on balance, trade off wages for this type of job flexibility (Smith and Folbre 2016). There may be changes over time. For example, in pharmaceutical occupations, the pay penalty has been shrinking, attributable to the reorganizing in that industry (Goldin and Katz 2016). There may be similar penalties for related forms of nonstandard jobs. The wage penalty associated with job outsourcing ranged from 4% to 7% for janitors and from 8% to 24% for security guards (with similar findings on health benefits), and were not a reflection of their lower hours (nor skill differences nor compensating differentials for higher benefits).

19. In particular, the share of female part-time workers is associated with wage penalties (whereas male part-time workers received a pay premium when working more than 25 hours). This is interpreted to reflect women’s different prime motive for reducing working hours and the types of part-time jobs available to them, or more to accommodate domestic constraints by downgrading to more flexible jobs. In Belgium, longer-hours part-time workers were more productive per hour than those at a much shorter weekly hours level (Garnero, Kampelmann, and Rycx 2014). In Germany (Wolf 2014), accounting for all available observed as well as time-constant unobserved individual characteristics yields a wage reduction for part-time workers of about 10%, with part-time men subject to higher wage penalties than women.

20. To the degree part-time work actually offers incumbents greater flexibility, there is an exponential return to greater current hours of work in high-paying occupations (Goldin 2014).

21. See Booth and Wood 2008 and Baffoe-Bonnie and Gyapong 2018 for the sensitivity of wage differential estimates to the definition of the number of weekly hours that is considered working full time.

22. Among Australia’s “casual” labor contracts, part-time workers explicitly lack long-term job security and social insurance security protections (Campbell, Whitehouse, and Baxter 2009). This lack of benefits explains the entire pay premium found for workers working part time there and in South Africa (Rodgers 2004; Posel and Muller 2008; Booth and Wood 2008). However, when controlling for unobserved individual heterogeneity (fixed effects) using panel data, part-time working men and women in Australia (Booth and Wood 2008) and in Germany (Wolf 2014) typically earn an hourly pay premium relative to those in full-time jobs.

23. See Booth and Wood 2008, Baffoe-Bonnie and Gyapong 2018 for the sensitivity of wage differential estimates to the definition of full time.

24. The matching is accomplished using IPUMS identifiers, which results in slightly different sample sizes than what Hirsch used.

25. We do not focus on the small number of respondents who say they work part time because of “seasonal declines” in demand or because their “job ended or started” during the reference week.

26. This group working part time for noneconomic reasons excludes the over 7.7 million who usually work full time but worked one to 34 hours in the last week because of vacations, holidays, weather, family obligations, or “other reasons” (according to 2019 data from BLS 2020a). An alternative way to count the number of workers part time for economic reasons who worked from one to 34 hours in the last week (whether they “usually work full time” or “usually work part time”) because of “economic reasons” is the universe of individuals who were “at work” in the reference week. Respondents who said they were not “at work” or were “absent,” but have a job, are counted as “employed.” Thus, part time for economic reasons is likely undercounted (Golden 2016).

27. Hirsch used the Basic CPS rather than ORG “usual” hours question. We substitute the answer regarding “usual hours” in the ORG with the same question in the Basic CPS to observe consistency. We also substitute the actual hours worked in the previous week being fewer than 35 and contrast. Finally, we used the “usually work part time” question as a dummy variable to contrast to “usual hours” being fewer or more than 35.

28. Controls for age show there is a significant positive effect of age on wages, but little influence of the exponentials. That is to say, earnings rise with age but neither more nor less than proportionally. In unreported results, the size of the penalty for working “usual part time” is contrasted briefly with measuring part time with workers’ “actual” hours last week being shorter than 35. The latter display somewhat lower pay penalties, which can be attributed to “actual” hours, including many full-time workers who worked fewer than 35 hours the previous week because of an absence.

29. Part-time employment appears in all major industry classifications. However, it is proportionately higher in some: private household services, leisure/hospitality, retail/wholesale trade, services-other, and education/health. Are pay penalties consistent across sectors or higher in some sectors, particularly where part-time work is more common? Unreported results show that among 50 different “intermediate” industry types, 49 have pay penalties. The variation in the partially adjusted pay penalty ranges up to 50% (with a small pay premium in only one outlier), although most fall in the 15% to 40% range. The pay penalty is above average in retail trade at 32%. Within the retail sector, working in clothing stores brings a sizably higher pay penalty, but somewhat lower in restaurants, where earnings include tips. In several industries, the pay penalty is above that of retail—more than 49% in rental and leasing services, at 46% in motion picture and sound recording and in other information services, 45% in internet publishing and broadcasting (though sample size is not large), 44% in petroleum and coal, 38% in beverage/tobacco products, 36% in publishing, and 35% in miscellaneous/nonspecified manufacturing. The sole exception to a penalty in part-time workers’ pay is in hospitals, where there is a slight pay premium of 3% (and only a small 3% pay penalty for those employed in private households). However, in health care industries other than hospitals, there is somewhat of a penalty of 6%. It suggests there is something unique about working part time in hospitals versus other health services. Even in hospitals, among those working one to 19 hours, the premium is zero. The lower penalties in certain sectors might reflect greater wage compression generally in those industries, in contrast to a wider pay disparity in other industries, particularly outside of health care.

30. Workers are provided three separate chances in the CPS to demonstrate that their part-time hours truly are “involuntary” (see Golden 2016).

31. This also suggests full-time work likely is better conceived of 40 or more hours, when it comes to pay, since working 35 to 39 hours appears to be more of a hybrid between full-time and part-time working, not entirely resembling full-time work at 40 hours or greater.

32. The totals by race and ethnicity in the table do not add up to 100% because the categories are not mutually exclusive, i.e., white includes Hispanic white workers and black includes Hispanic black workers.

33. Several other national surveys reinforce the large disparities between full-time and part-time workers in a wide range of employee benefits, or access to them. This includes parental leaves, paid sick time, paid vacation and personal time, and other perks (Kosar, van der Klaauw, and Zafar 2017; FRB 2016; AEI-Brookings-Urban Institute 2018; NWLC 2017; Glynn et al. 2016; Fronstin 2013; and Milli, Xia, and Min 2016).

34. See Bivens et al. 2017, which shows the union advantage in benefits, and supports (unreported) findings that unionized part-time workers have a 15.6% wage premium, higher than the overall average wage premium of 13.2%.

35. This policy is supported by both voluntary and involuntary part-time workers (Zukin and Van Horn 2015); see Golden 2009, 2015b.

36. See Stettner, Cassidy, and Wentworth 2016; Golden 2016; Ben-Ishai 2016; Glauber 2013; McKay 2017; Messenger and Ghosheh 2013; and NCSL 2019.

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“Low unemployment is essential for a healthy labor market, but this is far from a strong economy for working people—there is major room for improvement,” said Thea Lee, President of EPI. “Wage growth remains stagnant, gender and racial wage gaps have increased in recent years, and erosion of government protections combined with corporate attacks on unions have weakened workers’ bargaining power.”

To address these problems, EPI’s researchers provide comprehensive analysis and policy solutions that would allow working people to finally benefit from the economic recovery. The series includes:

• Josh Bivens argues that wage growth happens if, and only if, policymakers make it a top priority.
• Heidi Shierholz discusses the importance of restoring labor unions in order to strengthen workers’ bargaining power.
• David Cooper, Elise Gould, and Ben Zipperer highlight another crucial labor market institution for bolstering workers’ wages—minimum wages.
• Jhacova Williams and Valerie Wilson highlight continued racial gaps in unemployment, and construct a new measure of underemployment—one based on the underutilization of workers’ credentials.
• Elise Gould and Valerie Wilson highlight the failure of today’s tighter labor market to deliver strong wage growth and close race- and gender-based wage gaps.
• Daniel Costa explains how employers have weaponized the nation’s immigration system to keep both immigrant and U.S.-born workers powerless and insecure.

These essays underscore the importance of understanding dynamics of gender, race, and immigration when crafting policy if we want to give all workers a fair shot at achieving faster wage growth and increased bargaining power.

Part of the series Labor Day 2019: How Well Is the American Economy Working for Working People?

The current economic expansion is the longest in U.S. history, marking over 100 consecutive months of job growth as of June 2019, with more than 21 million jobs added in that time. While the pace of the recovery has been slow and uneven at times, the length of the recovery has resulted in a national unemployment rate of 4% or lower since March 2018. The length of the recovery has also been instrumental in bringing the black unemployment rate down to the lowest it has been since the Bureau of Labor Statistics began reporting it in 1972. The average black unemployment rate for the 12 months ending in June 2019 was 6.4%.

Outcomes vary significantly by race and education

In light of the severity of the Great Recession, there is no question that these numbers indicate a solid recovery. Yet even at exceptionally low rates of unemployment, outcomes vary significantly by race and level of education. For example, even with the tightest labor market in almost 20 years and a historically low black unemployment rate (6.4%), black workers remain twice as likely to be unemployed as white workers (3.1%)—a pattern that has persisted for more than 40 years. In fact, this 2-to-1 ratio holds in practically every state in the nation where black workers make up a significant share of the workforce.1

These overall numbers—as troubling as they are—mask still bigger differences in rates of unemployment for black and white workers within and across levels of education. As shown in Figure A, the black unemployment rate is roughly double the white unemployment rate at every level of education, except among those with a bachelor’s or an advanced degree. The graph also shows that only black workers with college and advanced degrees have unemployment rates below 4%, that is, only the most highly educated black workers are reaching levels of unemployment at least as low as the national average. In contrast, with the exception of those with less than a high school diploma, white unemployment is below 4% at all levels of education.

Figure A

Black workers’ skills are more likely to be underutilized in the workplace

In addition, even among those most likely to be employed, black workers don’t necessarily have the same opportunities as their white counterparts to utilize and develop their skills. The Bureau of Labor Statistics (BLS) points out that “when workers are unemployed, they, their families, and the country as a whole lose”2—but what about when workers are underemployed?

The term “underemployment” is commonly used to encompass a broader definition of labor underutilization that includes not only the unemployed but also involuntary part-time workers (those part-time workers who would prefer to be working full time) and those who are marginally attached to the labor force (those who have given up looking for work—and so are not counted in official unemployment numbers—but who are willing and able to work if the opportunity presented itself).3 Essentially, this traditional definition of underemployment measures the underutilization of workers’ potential available time. Under this definition, black workers have significantly higher rates of underemployment than white workers, as we have documented elsewhere.4

However, Abel and Dietz have introduced an alternative definition of underemployment—which we would like to adopt here—that focuses on underutilization of workers’ skills: They look at the share of recent college graduates working in jobs that typically do not require a college degree.5 Following Abel and Dietz’s definition, we estimate the extent to which black workers’ skills are being underutilized relative to white workers’ skills.

To do this, we calculate the percentage of black and white workers (among all workers, ages 16+) who have at least a bachelor’s degree and whose occupation is classified as a “college occupation”—that is, an occupation that typically requires a college degree or for which the majority in that occupation hold a college degree. Examples of college occupations include (but are, of course, not limited to) elementary and middle school teachers, social workers, accountants, education administrators, chief executives, financial managers, and software developers. (For more information about how these classifications are determined, see the methodology.)

The results, presented in Figure B, show that working black graduates are nearly 10 percentage points more likely to be in a noncollege occupation compared with working white graduates when those in both groups have at least a bachelor’s degree.

Figure B

Conclusion

The persistence of racial disparities in employment outcomes across levels of education is troubling. While a tighter labor market has helped to reduce the black unemployment rate, even that has not been enough to eliminate multiple layers of racial inequality in the labor market, as we have shown here and as we summarize in Figure C. In particular, the fact that the country’s most highly educated black workers are still less likely to be employed than their white counterparts, and when they are employed, are less likely to be employed in a job that is consistent with their level of education, strongly suggests that racial discrimination remains a major failure of an otherwise tight labor market.

Figure C

Methodology

In Figure B, we calculate the percentage of black and white workers who have at least a bachelor’s degree and whose occupation is classified as a “college occupation.” In order to identify what a college occupation is, we use data from the O*Net 23.3 Data Dictionary (O*Net). O*Net provides a listing of almost 1,000 occupations along with the percentage of individuals in a given occupation who report having each education level. We define an occupation to be a “college occupation” if at least 50% of the individuals in the occupational category report having at least a bachelor’s degree. O*Net occupations are matched to Current Population Survey (CPS) occupational codes using a crosswalk obtained from the BLS that maps O*Net occupational codes to Standard Occupational Classification (SOC) occupational codes and then using a crosswalk that maps SOC codes to CPS codes. CPS codes that are matched to multiple O*Net codes are assigned college occupation status based on the average college occupational status among multiple O*Net codes. For example, if all O*Net codes matched to one CPS code are (or are not) classified as college occupations, then the equivalent CPS code is (or is not) classified as a college occupation. If at least half of O*Net codes matched to one CPS code are classified as college occupations, then the equivalent CPS code is classified as a college occupation. Otherwise, the CPS code is not classified as a college occupation.

According to this definition, 30% of occupations listed in CPS are classified as college occupations, accounting for 35% of total employment. Examples of college occupations include elementary and middle school teachers, social workers, accountants, education administrators, chief executives, financial managers, and software developers. Examples of noncollege occupations—those occupations for which less than half of those employed have at least a bachelor’s degree—include general and operations managers, police officers, cashiers, customer service representatives, administrative assistants, and teacher assistants.

We examine individuals in the CPS basic monthly files for the 12-month period from July 2018 to June 2019 in order to determine whether the likelihood of being employed in a college occupation is different for black and white college graduates.

Endnotes

1. Valerie Wilson, Black Unemployment Is at Least Twice as High as White Unemployment at the National Level and in 14 States and the District of Columbia, Economic Policy Institute, April 2019.

2. Bureau of Labor Statistics, “How the Government Measures Unemployment” (web page), last modified October 8, 2015.

3. See description of measure U-6 at Bureau of Labor Statistics, “Table A-15. Alternative Measures of Labor Utilization,” last modified August 2, 2019.

4. Economic Policy Institute, State of Working America Data Library, “Underemployment by Race” (data table), last updated February 28, 2019.

5. Jaison R. Abel and Richard Deitz, “Underemployment in the Early Careers of College Graduates Following the Great Recession,” National Bureau of Economic Research Working Paper no. 22654, September 2016.

The members of the high school Class of 2019 who enter the labor market right after graduating have better job prospects than young people who graduated from high school into the aftermath of the recession, a result of the steady (if slow) progression of the economic recovery. However, compared with those who graduated into the strong 2000 labor market, the Class of 2019 still faces real economic challenges, as demonstrated by elevated levels of underemployment as well as low wages and worsened wage gaps for black workers.

Those high school graduates who wish to pursue further education also face significant challenges. Because of the sluggish growth in family incomes and the rising cost of a college degree, many young high school graduates are only able to access the benefits (economic and otherwise) of a college degree by taking on significant debt. And many take on such debt without actually experiencing significantly improved employment outcomes after college; this is particularly likely to be true for those who complete some college, but do not graduate, and for those who attend for-profit colleges.

The economy needs to continue on track toward full employment for economic growth to reach all corners of the labor market—including those workers without a college degree who make up the vast majority of the workforce—while ensuring equal access to the economic (and intrinsic) benefits of a college education.

Overview and key findings

In this study, we analyze data on recent young high school graduates (ages 18–21) to learn about the Class of 2019’s economic prospects as they start their careers. We begin the report by providing a snapshot of the educational attainment of all young adults in this age group (not just graduates) side by side with the educational attainment of all adults over age 21, to provide context and get a sense of these graduates’ likely future educational prospects. In the second section, we look specifically at those in this age group who have graduated from high school to learn what shares of these young adults are now enrolled in further schooling, employed, both, or neither. Third, we narrow our focus to only those graduates who are not enrolled in further schooling to find out how they are faring in the labor market—specifically, looking at their unemployment and underemployment rates. In the fourth section, we analyze the wages of those who are employed (and not enrolled in further schooling), making comparisons with wages in earlier periods as well as looking at important differences by gender and race/ethnicity. In the fifth and final section, we discuss the challenges facing those students who wish to pursue a college degree: stagnating family incomes, the rising price of college and resulting student loan debt, uncertain future wage prospects, and the complicating role of for-profit colleges.

This report focuses exclusively on those graduating from high school. Outcomes for recent college graduates are the subject of a separate report, Class of 2019: College Edition (Gould, Mokhiber, and Wolfe 2019).

Key findings

While 45.7 percent of all 18- to 21-year-olds have at least some college education, the vast majority (65.8 percent) of the population over age 21 do not have a four-year college degree.

• About one in three young adults (ages 18–21) has a high school diploma only. One in five has less than a high school diploma.
• Young women are more likely than young men to have completed high school already and to have enrolled in college right after graduating from high school.
• Young black and Hispanic adults are less likely to have already completed high school than their white and Asian American/Pacific Islander peers.
• Asian Americans/Pacific Islanders are significantly more likely to have begun on the college path at this age than any other racial/ethnic group.

While there’s been some growth in the last few years, a smaller share of young high school graduates are employed only (and not enrolled in further schooling) now than in 1989. The share that are enrolled only (and not employed) increased over most of the last three decades, although it has flattened in recent years.

• After rising dramatically during the Great Recession, the share of high school graduates who are idled—neither employed nor enrolled in further schooling—has declined, but a larger share are idled now than they were when the economy was at full employment in 2000.
• Young women graduates are more likely to be enrolled than their male peers.
• Young black and Hispanic high school graduates are more likely to be idled than their white and Asian American/Pacific Islander peers. Asian Americans/Pacific Islanders are the group most likely to be enrolled, and they are far more likely to be enrolled without being employed.

Nearly one in 10 young high school graduates not enrolled in further schooling is unemployed. This share is on par with where it was when the economy was at full employment in 2000.

• Young black high school graduates are roughly twice as likely to be unemployed as their white and AAPI peers.

The underemployment rate for high school graduates in this age group currently sits at 19.1 percent, a slight improvement over 2007, but still well above where it was in 2000.

• Underemployment counts include those who are unemployed plus those part-time workers who want to work full time (involuntary part-time workers) plus those workers who want a job and have looked for work in the last year, but have given up actively seeking work in the last four weeks (and are therefore not officially counted as “unemployed”).
• Over a quarter of young black high school graduates are underemployed, a much higher rate than among young white, Hispanic, and Asian American/Pacific Islander graduates.

From 1989 to 2019, average wages for young high school graduates grew only 11.2 percent in total. And if it hadn’t been for the expansionary economy of the late 1990s and 2000, wages would actually be 3.1 percent lower today than in 1989.

• Average wages for young high school graduates recently surpassed their 2007 level, but remain just below their 2000 level, representing two lost decades of wage growth.
• The gender wage gap for young high school graduates barely budged over the past 19 years, and the improvement that did occur was due to a small increase in women’s wages and a slight decline in men’s wages. The current gap is $1.29 per hour, or about $2,680 per year for a full-time worker.
• Young Hispanic high school graduates saw faster wage growth than their white, black, and AAPI peers did between 2000 and 2019.
• Between 2000 and 2019, white high school graduates’ wages grew by less than a percent over the entire period while black graduates experienced a 2.7 percent drop in pay, increasing the black–white pay gap to 11.1 percent. Black graduates have the lowest hourly pay at $10.92 per hour.

As incomes stagnate and the price of college increases, students must increasingly rely on loans to finance their education, further complicating the decision to enroll in college.

• Black students take on a disproportionate amount of debt, in part because their families generally accumulate less wealth than white families.
• Those who take on student debt but do not complete their degree are more likely to have trouble repaying their loans.
• Students at for-profit colleges generally take on more debt than students at nonprofit private and public schools do, but they are less likely to finish their degrees and often do not get the same wage boost after attendance.

What are the likely future educational prospects for young high school graduates?

Figure A displays the shares of all 18- to 21-year-olds and all over-21–year-olds by highest level of educational attainment. Looking at these data allows us to compare the educational attainment of those just starting out with that of adults over age 21, and to draw conclusions about the likely eventual educational attainment of those just graduating from high school.

Figure A

One in five 18- to 21-year-olds has not graduated from high school; this share shrinks to 10.2 percent for the population over 21, suggesting that many of those young people who have not yet finished high school will eventually receive a high school diploma (or equivalent). Just over one-third of 18- to 21-year-olds have a high school diploma and no further education, while 44.0 percent have “some college.”1 Very few young adults between the ages of 18 and 21 have graduated from college.2

While many of the 18- to 21-year-olds with a high school diploma or some college will go on to obtain at least a bachelor’s degree, adults without a four-year college degree still make up the majority of the population over 21 years old (65.8 percent). When considering how to strengthen the economy, policymakers should remember that most workers will likely never attain a four-year college degree and that these workers need viable options in the labor market to reach a reasonable standard of living with decent wages, work supports, and benefits.

Figure B displays the shares of 18- to 21-year-olds at each level of educational attainment, overall and by gender and race/ethnicity. The overall shares clearly mask important differences among demographic groups. Young men in this age group are less likely to have completed high school than young women, and young women are more likely to go on to college right away than young men. (As discussed in The Class of 2019: College Edition, among 21- to 24-year-olds, women are also more likely than men to have completed a bachelor’s degree [Gould, Mokhiber, and Wolfe 2019].) Asian Americans/Pacific Islanders are significantly more likely to have begun on the college path by ages 18–21 than members of any other racial/ethnic group, while Hispanic and black young adults are less likely to have completed high school than their white and AAPI peers.

Figure B

What are recent high school graduates doing?

In this section, we look at the employment and enrollment outcomes of young adults with a high school diploma but without a college degree, whom we refer to as “young high school graduates.” We group these graduates into four mutually exclusive categories based on their outcomes: employed and not enrolled (“employed only”), employed and also enrolled in further schooling (“enrolled and employed”), enrolled in further schooling and not employed (“enrolled only”), and neither employed nor enrolled in further schooling (“idled”). Figure C, which shows the share of all young high school graduates that are experiencing each outcome, uses 12-month moving pools of data to ensure an adequate sample. Figure D shows outcomes by gender and race/ethnicity; these outcomes are based on a 36-month pool of data to ensure an adequate sample to allow us to make these comparisons.

Figure C

Figure C shows that the share of young high school graduates who are employed (the sum of those who are “employed only” and those who are “employed and enrolled”) has declined significantly since 1989, driven by the declining share of young graduates who are employed and not enrolled in further education (“employed only”). In 1989, 44.5 percent of young high school graduates were employed only. That share declined over the next 20 years, particularly during the Great Recession, bottoming out in 2010 when roughly a quarter of young graduates were employed only. Since 2010, the employed-only share has increased somewhat, although it remains below its pre-recession level.

A larger share of young high school graduates enroll in additional education now than did in 1989. Now, over half (54.9 percent) of young high school graduates are enrolled in additional schooling, up from two in five (42.0 percent) in 1989. This trend has been driven by the increasing share who are enrolled in further education without being employed (“enrolled only”). In 1989, equal shares (21.0 percent) of young high school graduates were enrolled only and enrolled while employed. The share that are enrolled while employed has held relatively steady since then, while the share who are enrolled only has increased to nearly one in three.

While some of the decline in the employment shares during the Great Recession is reflected in the increasing enrolled-only share, there was also a pickup in the share that were idled (neither employed nor enrolled). In 2007, on the eve of the recession, 13.3 percent of young high school graduates found themselves idled. During the recession, that share peaked at 17.7 percent, and it has since declined to just above its pre-recession level, now at 13.7 percent. Still, a larger share of high school graduates are idled now than were when the economy was at full employment in 2000, when the idled rate dropped to a low of 11.8 percent.

Figure D illustrates, by gender and race/ethnicity, what young high school graduates are doing now, using the same four mutually exclusive categories: employed only (dark orange), employed and enrolled (light orange), enrolled only (yellow), and idled (gray). The first set of bars shows the differences in outcome shares by gender and the next set shows differences by race and ethnicity.

Figure D

To highlight total employment, we examine the dark orange (“employed only”) and light orange (“enrolled and employed”) bars combined. The overall employment rate for men and women is quite similar. However, men are more likely to be employed only, while women are more likely to be enrolled and employed simultaneously. Similar shares of men and women are enrolled only, but, because of their higher enrolled-and-employed rate, women have a higher overall enrollment rate.

Three-quarters of young Asian American/Pacific Islander (AAPI) graduates are enrolled in further education, a much larger share than any other racial group. This difference is driven by the fact that these graduates are far more likely to be enrolled only. In fact, 52.3 percent of young AAPI graduates are enrolled only, a slightly higher share than the overall enrollment shares for both Hispanic and black graduates (the sum of enrolled-only shares and enrolled-and-employed shares for those groups). Only 16.0 percent of AAPI graduates are employed only, making them about half as likely as the other groups to be employed but not enrolled.

Asian Americans and Pacific Islanders are the group least likely to be idled (10.2 percent), followed by young white graduates (11.9 percent). Young black high school graduates have the highest likelihood of being sidelined, with nearly one in five (18.9 percent) being neither enrolled in further education nor employed. Hispanic graduates are also more likely to be idled (15.7 percent) than their white or AAPI peers.

What are the employment prospects for recent high school graduates not enrolled in further schooling?

In this section, we examine unemployment and underemployment rates for young high school graduates. To do this, we narrow the sample of young high school graduates to those who are not currently enrolled in further schooling. This allows us to better assess the employment prospects of otherwise similar groups. Figure E presents unemployment and underemployment rates for young high school graduates, showing that both of these rates shot up during the Great Recession and its immediate aftermath.

Figure E

The unemployment rate reflects the share of people in the labor market who are jobless and have reported that they are actively seeking work. Nearly one in 10 (9.3 percent) young high school graduates is unemployed—an improvement over 2007 and in line with 2000, when the overall labor market was near or at full employment. And the current unemployment rate likely understates the slack in the labor market given that, in recent months, seven out of 10 newly employed workers were not actively searching for work in the prior month3—these workers would not have been counted in the official unemployment rate, even though they were clearly interested in working. Still, it is encouraging that the recovery is now reaching some of the more vulnerable populations, including young people with only a high school degree.

Looking at the underemployment rate broadens our understanding of the labor market for young high school graduates. This rate includes the officially unemployed (see above), but also includes “involuntary” part-timers (those who are working part time but want full-time work) and “marginally attached” workers (those who want a job and have looked for work in the last year but who have given up actively seeking work in the last four weeks and therefore are not captured in the official unemployment rate). Nearly one in five (19.1 percent) young high school graduates is underemployed, a slightly smaller share than in 2007 (20.1 percent) but a larger share than in 2000 (16.5 percent). This suggests that more young high school graduates are having difficulty finding full-time jobs or have been discouraged from searching, compared with young high school graduates in 2000.

Figure F compares unemployment rates by gender and race/ethnicity in 2019 with rates in 2000, the last time the economy was at or close to full employment. For most groups of young high school graduates, their unemployment rate is at or below its 2000 level.

Figure F

Young white graduates are the only race/ethnicity group with an unemployment rate that is higher than in 2000. Young black graduates saw a slight dip in their unemployment rate, although it is still far higher than the rate for any other group and is about twice as high as the white unemployment rate (15.9 percent versus 8.2 percent).

One would think there would be little disparity in the unemployment rates of young high school graduates, who have the same basic level of education and are in the same labor market position (i.e., high school diploma only, ages 18–21, not enrolled in school, and either employed or actively seeking work). It is notable that having an equivalent amount of education and little variation in work experience (given their young age) still does not result in parity in unemployment rates across races and ethnicities. This suggests other factors may be at play, such as discrimination or unequal access to the informal networks that often lead to job opportunities.

Figure G shows underemployment rates for young high school graduates. While unemployment rates (the share of young graduates who are actively seeking work) for most groups have recovered to their 2000 levels, underemployment rates generally remain elevated above their 2000 levels. This means that a larger share of young graduates from most groups are now either discouraged from the job search or are working part time when they would rather work full time.

Figure G

The underemployment rates for both young women and men with a high school diploma are still significantly higher today than in 2000. Just under one in five young white and Hispanic high school graduates is underemployed—a significantly larger share than in 2000. Black underemployment is 27.8 percent, just above its 2000 level (27.1 percent) and much higher than the 2019 levels for their white, Hispanic, and AAPI peers.

What are the wages of young high school graduates not enrolled in further schooling?

Over much of the last three decades, wage growth for young high school graduates has been essentially flat. Figure H presents average hourly wages for young high school graduates (ages 18–21, not enrolled in further schooling) from 1989 to 2019 (in 2018 dollars). Over that entire period, average wages cumulatively grew only 11.2 percent. If it hadn’t been for the wage growth spurred by the extended period of very low unemployment in the late 1990s and 2000, wages would be 3.1 percent lower today than in 1989. Wages at the last business cycle peak in 2007 were below where they were in 2000. And then the Great Recession hit, and young high school graduates experienced the loss in wages felt throughout the economy. Wages for young high school graduates have been slowly recovering lost ground since 2013 and recently reached the level they were at in 2007, immediately before the Great Recession hit; however, they are just below where they were in 2000.

Figure H

Fortunately, low-wage workers in general, of which high school graduates make up a disproportionate share, have been showing larger wage gains over the last five years thanks to an economy approaching full employment as well as a series of state-level minimum wage increases (Gould 2019b). In today’s tightening labor market, we should expect to see continued and stronger wage growth, which should help make up for losses experienced by young high school graduates in the aftermath of the Great Recession. However, a high-pressure labor market will have to be sustained for quite some time to offset the longer-run wage stagnation young high school graduates have experienced.

Although it may be tempting to point to young graduates’ age or lack of previous work experience as the reason their wages have failed to grow since 2000, we observe similar wage trends for the population as a whole (Gould 2019a). Like graduates ages 18–21, high school graduates in the labor force at large (all workers ages 16 and older) saw a brief period of strong wage growth in the 1990s, but have had stagnant wages since—with their wages rising only 3.4 percent from 2000 to 2019 (Gould 2019a). This is indicative of an economywide slowdown in wage growth, driven both by a lack of demand for workers and by the erosion of workers’ power to bargain with their employers for higher wages (Bivens et al. 2014).

In 2019, young workers with a high school diploma have an average hourly wage of $12.26, which translates to annual earnings of around $25,500 for a full-time, full-year worker. This overall average masks important differences in wages by gender and race. Figure I looks at average wages for young men and women with a high school diploma as well as for young white, black, Hispanic, and Asian American/Pacific Islander (AAPI) high school graduates, in 2000 and 2019, using a three-year pool of data for more reliable comparisons among groups and across time. Figure J compares wage gaps between women and men as well as between white workers and black, Hispanic, and AAPI workers, in turn.

Figure I

Figure J

Young women with a high school diploma have average hourly wages of $11.32 in 2019, just above their 2000 wage of $11.00, an increase of 3.0 percent. Over this same time, men’s wages fell slightly from $12.74 to $12.61, a dip of 1.0 percent. These different trends have meant that the gender wage gap for young high school graduates has fallen over the last 19 years from 13.7 percent to 10.2 percent (as shown in Figure J). The current gap of $1.29 per hour translates into about $2,680 per year for a full-time worker, still a substantial difference in pay.

The second set of bars in Figure I shows average wages for young white, black, Hispanic, and AAPI high school graduates in 2000 and 2019. Hispanic graduates experienced the fastest wage growth (7.3 percent), and their wages are now in line with the wages of their white peers. Young black and AAPI graduates actually saw slight declines over this period. Young black graduates have the lowest hourly pay at $10.92 per hour.

The second set of bars in Figure J compares black, Hispanic, and AAPI wages with white wages in both 2000 and 2019. Gains in Hispanic pay alongside mild losses in white pay have essentially closed the Hispanic–white wage gap. White graduates saw a slight wage increase over this period, while black graduates saw a decline in pay, increasing the black–white pay gap to 11.1 percent by 2019.

Financial challenges facing those who want to pursue higher education

As they prepare to graduate from high school, young people are faced with one of their first major life decisions: whether to enter the workforce or enroll in some form of higher education. There is immense societal pressure on high school graduates to go to college; for many, the idea that a college degree is needed to achieve a middle-class lifestyle is a foregone conclusion. Statements like “from almost any individual’s perspective, college is a no-brainer. It’s the most reliable ticket to the middle class and beyond,” from The New York Times, reinforce this idea (Leonhardt 2014).

To be clear, the average economic benefits an individual gains from attending college are large. But the decision of whether to attend college is more complicated than just examining average differences in wages or employment between those with and without a college degree. This is particularly true for those who are starting out with limited financial resources. Even if it is true that they will likely earn more money after graduation, increasing costs of college mean additional obstacles to enrolling—and staying—in college. And a corresponding rise in the financing of education through student loans means that students who choose to go to college often take on financial risks and burdens that could have long-term consequences for their financial security and well-being.

Amid the immense pressure to go to college combined with the financial barriers to entry, many for-profit institutions have sprung up in recent decades, using aggressive marketing strategies while facilitating financial aid processing in order to enroll large numbers of students (Cottom 2017). These for-profits schools are often more costly than traditional public or private nonprofit schools and yet confer lower economic returns to their graduates (Looney and Yannelis 2015). Students who borrow money to attend for-profit colleges take on more student loan debt, on average, than traditional students (NCES 2017a); they are more likely to leave college without finishing their degree; and they are more likely to default or be delinquent on student loans (Looney and Yannelis 2015).

Family incomes have stagnated while college costs have risen dramatically

Though the Great Recession officially ended in June 2009, the recovery following it has been slow, and median family incomes by 2017 were just slightly above their 2007 levels.4 It is likely that many of the families of the students in the Class of 2018 faced real financial challenges—e.g., because of job loss or depressed wages after the Great Recession—and have only recently seen their incomes begin to recover.

The cost of higher education has risen faster than typical family incomes, making it harder for families to pay for college. Many students face financial challenges in addition to paying tuition, such as food and housing insecurity or the need to contribute to their family’s household income (Goldrick-Rab 2016). From the 1978–1979 enrollment year to the 2017–2018 enrollment year, the inflation-adjusted cost of a four-year education—including tuition, fees, and room and board—increased 173.6 percent for private school and 159.4 percent for public school. Median family income increased only 24.5 percent over this 39-year period, leaving families and students increasingly unable to pay for most colleges and universities in full (College Board 2018; U.S. Census Bureau 2018).

During the downturn, colleges had to rely more on tuition to make up for endowment losses (mostly at private universities) and funding cuts (at public universities), further shifting the costs of college onto students and their families. Between the 2007–2008 school year and the 2015–2016 school year, state appropriations for higher education per full-time enrolled student fell by 18 percent; in response, public colleges and universities steeply increased tuition (Mitchell, Leachman, and Masterson 2016). Other sources show a similar trend. Figure K shows that from 1992 to 2018, full-time enrollment increased while educational appropriations per full-time-equivalent student decreased in real terms (SHEEO 2019). Figure K also shows that over time students have taken on an increasing share of the cost burden for public education, with tuition’s share of total educational revenue rising from less than one-third (28.8 percent) in 1992 to nearly one-half (46.4 percent) in 2018. In 27 states, the tuition share was greater than 50 percent in 2018 (SHEEO 2019).

In the 2017–2018 school year, the total cost of attendance for an on-campus student—including in-state tuition, books, room and board, transportation, and other expenses—at a four-year in-state public school averaged $25,290. For a four-year private nonprofit school, it was $50,900 (College Board 2017). When total grant aid and tax benefits are taken into account, public four-year in-state costs still averaged about $19,460, while costs for a four-year private nonprofit school averaged about $30,690.5

Figure K

Students are forced to take on increasing levels of debt if they want to attend college

As tuition costs have risen at rates vastly exceeding household income growth, it is not surprising that many students have to take on debt to pay for college. Using the Survey of Consumer Finances, Richard Fry (2014) shows that in 2010, 37 percent of the nation’s households headed by an adult younger than age 40 owed money on student debt, a share that has more than doubled since 1989. For households with student loan debt, the average amount in 2010 was $26,682 while the median was $13,410 (reported in 2011 dollars). The average amount is higher than the median because of very high amounts of debt owed by some: 10 percent of households owe $61,894 or more (Fry 2012).

The real average student debt amount has nearly tripled since 1989, and household incomes have failed to keep up. In 1989, student loan debt was equivalent to 1.2 percent of all household income on average; this ratio had steadily increased to 6.1 percent by 2010 (Fry 2012).The growth in student loan debt in younger households—in which the head of household is younger than 35—was even more dramatic, rising from 3.6 percent in 1989 to 21.9 percent in 2010. Using the Federal Reserve Board of New York’s Consumer Credit Panel, Brown et al. (2015) find that between 2004 and 2014, the number of student loan borrowers increased by 92 percent, and average debt per borrower increased by 39 percent, in real terms.

Debt can be damaging to graduates’ future incomes and lifelong earnings. After graduation, those with higher student debt are more likely to accept jobs that offer higher initial wages but have slower wage growth over time (Minicozzi 2005; Rothstein and Rouse 2011). High debt can also steer graduates into worse-fitting careers than their debtless peers; for example, some workers might prefer to be in the public or nonprofit sector but feel compelled to take corporate jobs because they need the high salary to pay off their debts. Moreover, many students who take on debt do not actually complete their degree, putting them at an economic disadvantage in the workforce; while the prospect of paying off student loans is daunting for college graduates entering the workforce, those who took on debt but never completed a degree face a greater likelihood of defaulting or becoming delinquent on loans (Nguyen 2012).

Those who have borrowed to finance their education are increasingly struggling to repay their debts. In the first quarter of 2019, 10.9 percent of student loan debt was seriously delinquent (Federal Reserve Bank of New York 2019)6—this is a higher rate than for any other type of consumer debt. In the first quarter of 2003, the first period for which this data is available, that rate was 6.1 percent. Unlike for other forms of consumer debt, serious delinquency rates for student loan debt spiked during the recovery from the Great Recession and have remained high ever since.7

Black students, in particular, rely disproportionately on loans to finance their education, largely because black families tend to hold much less wealth than white families, even at the same income levels (Goldrick-Rab, Kelchen, and Houle 2014). Furthermore, low-income students of color are disproportionately more likely to leave college before completing a degree (Huelsman 2015); as discussed above, students who attend college but don’t graduate face even steeper challenges to paying off their debt (Nguyen 2012).

For-profit college students had even higher levels of debt than students at nonprofit private or public schools. In the 2011–2012 school year, the cumulative amount borrowed by full-time undergraduate students at for-profit institutions was $24,950, compared with $22,810 for private nonprofit institutions and $17,320 for public institutions, in 2015–2016 dollars (NCES 2017a). Outcomes for for-profit students tend to be worse as well. A Brookings Institution study compared those who took on student loan debt to attend a for-profit college (“for-profit borrowers”) with traditional four-year college borrowers from 2002 to 2011. For-profit borrowers had worse labor market outcomes than traditional four-year college borrowers. They tended to have higher unemployment rates, and median earnings of for-profit borrowers in 2011 were $20,900 (in 2014 dollars), compared with $29,100 for borrowers from nonselective four-year institutions and $42,300 for those graduating from selective four-year institutions. For-profit borrowers also tended to come from lower-income families and were much less likely to finish their degree. As a result of all of these factors, they were much more likely to default or be delinquent on their loans (Looney and Yannelis 2015).

Furthermore, students attending for-profit institutions were 1.5 percentage points less likely to be employed after attending the institution compared with their peers at public institutions, and those who were employed had 11 percent lower earnings (Cellini and Turner 2019). In addition, these students were found to have no meaningful difference in annual earnings after their attendance at a for-profit school when compared with their peers who did not attend college at all. These findings, considered together with the amount of debt the typical student at a for-profit institution takes on, make it clear that for-profit colleges are a questionable investment.

Slow wage growth for recent college graduates makes it harder to pay back debt

The rising cost of college and stagnating public investment in higher education, combined with sluggish wage growth for college graduates, signals that entering college is becoming a potentially more risky investment.

The college premium, or the relative edge workers receive in earnings from obtaining a college degree, experienced rapid growth in the 1980s and 1990s, but the growth has been relatively slow since 2000 and is mostly attributable to sluggish wage growth for high school graduates rather than to strong wage growth for college graduates (Gould 2019a). As shown in The Class of 2019: College Edition, young college graduates (ages 21–24) have an average hourly wage of $20.74, which translates to an annual salary of roughly $43,100 (in 2018 dollars) for a full-time, full-year worker (Gould, Mokhiber, and Wolfe 2019). This is only slightly higher than what a typical young college graduate would have made in 2000 ($41,300). In contrast, from the 1999–2000 enrollment year to the 2018–2019 enrollment year, the average cost of college (including room and board) rose 75.0 percent for a public university and 49.4 percent for a private school (College Board 2018).

To be clear, the college premium—despite recent slow growth—is still significant: The regression-adjusted log-wage difference between the wages of college-educated and high school–educated workers is estimated at 48.4 percent in 2018 (Gould 2019a). But although wages of college graduates continue to be much stronger than those of high school graduates, wages of college graduates are clearly failing to keep pace with the rising cost of college and rising student loan debt, meaning that college is becoming an increasingly risky investment.

Further, not everyone who takes on college debt has the same level of access to the college premium. For one thing, the college wage premium of 48.4 percent is an average. A large share of workers with a college degree do not experience such a large wage boost—particularly those on the margin. In fact, the bottom 60 percent of those with a college degree still have lower wages than they did in 2000 (Gould 2019c)—meaning that wages for a majority of college grads have not only not kept pace with the rising cost of education, they’ve gone in the opposite direction.

On top of this, the only way to access the full college wage premium is by completing a four-year college degree. Of the 69.3 percent of young adults who have at least some college education, over half (54.4 percent) haven’t completed a bachelor’s degree by age 31 (BLS 2018); often, these young adults are leaving college with substantial debt but without the relative benefits in employment and wages that the college premium offers.

Finally, wage levels vary significantly by gender and race/ethnicity. Among young college graduates (ages 21–24), women are paid 12.9 percent less than men. Young black college graduates are paid, on average, 12.2 percent less than their white counterparts, while young Hispanic graduates are paid 5.8 percent less (Gould, Mokhiber, and Wolfe 2019). For those who think that having a larger share of the population attain college degrees carries large, positive spillovers for society at large (and we certainly think this), these additional wage disadvantages for some groups (particularly young women and black graduates), together with the rising cost of education, should be very worrisome indeed.

Financial challenges are often exacerbated by for-profit schools’ tactics

Even though students who attend for-profit colleges tend to have worse outcomes than those who attend traditional four-year institutions, over the past two decades for-profit students have grown to represent a significant share of all those enrolled. From 2000 to 2016, the number of students enrolled at for-profit institutions grew by 127 percent, compared with 25 and 27 percent enrollment growth at public and private nonprofit institutions, respectively. In total, about 915,000 of the 13.1 million students enrolled in college in 2016 attended a for-profit institution (NCES 2018). For many for-profit institutions, the amount spent per student on actual instruction is much lower than the amount spent at a traditional four-year institution, while the amount spent on marketing, recruitment, and lobbying is disproportionately higher. In the 2015–2016 school year, for-profit institutions spent $3,948 on instruction per student, compared with $10,221 at public nonprofits and $17,567 at private nonprofits (NCES 2017b).

Targeted advertisements and aggressive sales strategies are used to recruit students. Admissions officers often enroll—and facilitate financial aid processing for—low-income workers, people working multiple jobs, or other people in precarious positions who don’t have the time or necessary information to gain a full understanding of the type of education they are signing up for or the debt they are taking on. Even after students are enrolled, 65 percent never know that they are enrolled at a for-profit organization (Cottom 2017). In an environment where people recognize that they need to get some sort of qualification in order to achieve financial stability, but are unsure how to get it, the for-profit colleges’ aggressive strategies are quite effective in getting people to sign up for their programs. Unfortunately, these programs are too often not worth the cost.

Conclusion

While recent high school graduates may have many reasons for choosing to enter the labor force after high school rather than attending college, college should at least be a viable option; a person’s economic resources should not be the determining factor in whether they get to go to (and complete) college. But, as things stand, the prospect of staggering debt may discourage students from less wealthy families from enrolling in further education or prevent them from completing a degree.

In addition to the intrinsic value of education, both to individuals and society, college graduates tend to have better employment outcomes and higher wages than workers without a degree. These benefits, economic and otherwise, should be made available to all those who wish to pursue them though increased state and federal funding for higher education, stemming of tuition hikes, debt relief for past students, debt-free options for future students, additional support for the students who are most in need both financially and academically, and appropriate monitoring of loan terms as well as regulations to protect consumers from the predatory practices of for-profit colleges.

The policies that will give young people a fighting chance as they enter the labor market in the aftermath of the Great Recession are the same policies that will help workers overall. The most direct way to quickly bring down the unemployment rate and spur wage growth of young workers—and all workers—is to institute measures that would boost aggregate demand and encourage full employment, bolster labor standards, and strengthen workers’ collective bargaining rights. Most immediately, this means ensuring high aggregate demand, particularly through strategic public investments targeting the communities that need them most in areas such as infrastructure, energy efficiency, and early child care and education. Policies that generate demand for U.S. goods and services in turn generate demand for the workers who provide them—bringing down unemployment, giving workers more leverage, and raising workers’ wages. Policies that reduce work hours, including paid family and medical leave and overtime protections, will also ensure that job growth spurred by high aggregate demand is more widely shared (Bivens 2018).

Additional policies that will improve young high school graduates’—and all workers’—job quality include raising the minimum wage; protecting workers from wage theft; providing undocumented workers with a path to citizenship (which will give these workers, as well as authorized workers in similar fields, more leverage to command higher pay); and ending discriminatory practices that contribute to race and gender inequities (Bivens et al. 2014). Further, we should pursue stronger safety nets, such as more generous unemployment insurance and more affordable health care, which would allow for basic economic security that is not directly dependent on employment (Bivens 2018)—ensuring that new graduates don’t fall through the cracks as they navigate the challenges of the labor market.

Endnotes

1. The category “some college” includes anyone who has taken a college course but does not hold a four-year degree. People in this category may have begun a college program but left college without completing a four-year degree; they may be currently enrolled; or they may have an associate degree.

2. For a discussion of labor market outcomes for young college graduates, see The Class of 2019: College Edition (Gould, Mokhiber, and Wolfe 2019).

3. EPI analysis of monthly jobs and unemployment data from the Bureau of Labor Statistics, December 2018–May 2019. See, e.g., Gould 2018.

4. EPI analysis of U.S. Census Bureau 2018, which accounts for the redesign in the CPS ASEC income questions in 2013.

5. Total costs of attendance are from College Board 2017, Figure 1. Grant aid and tax benefits are from College Board 2017, Figures 9 and 10; net costs are Figure 1 costs minus these offsets.

6. An account is considered seriously delinquent if it is delinquent by 90 days or more.

7. The delinquency rates for student debt are likely understated, since they are calculated as a share of all borrowers, including students who are currently enrolled or have recently graduated and therefore are exempt from making payments (and therefore cannot be delinquent) (Brown et al. 2012).

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In this study, we analyze data on recent young college graduates (ages 21–24) to learn about the Class of 2019’s economic prospects as they start their careers. This report focuses exclusively on those graduating from college. Outcomes for recent high school graduates will be the subject of a forthcoming report, Class of 2019: High School Edition.

We begin this report by providing a demographic snapshot of this population of young college graduates. In the second section, we discuss what shares of these young graduates are now enrolled in further schooling, employed, both, or neither. Third, we narrow our focus to only those graduates who are not enrolled in further schooling to find out how they are faring in the labor market—specifically, looking at their unemployment and underemployment rates. We also draw on literature that highlights the likelihood that many young college graduates will end up working at jobs that do not require a college degree. In the fourth section, we analyze the wages of those who are employed (and not enrolled in further schooling), making comparisons with earlier periods as well as looking at important differences by gender and race/ethnicity.

While by many measures the labor market for young graduates is now almost—or perhaps even fully—back to where it was before the recession, the economy of 2007 represents a low bar for economic opportunity. We should instead be striving for the high-pressure economy of the late 1990s and 2000, in which an extended period of labor market strength translated into better opportunities for workers across the board. The economy needs to continue on track toward full employment for economic growth to reach all corners of the labor market.

Because of the progression of the economic recovery and substantial declines in the unemployment rate, members of the college Class of 2019 currently have better job prospects than the classes who graduated into the immediate aftermath of the recession. However, compared with those who graduated into the 2000 labor market, the Class of 2019 still faces real economic challenges, as demonstrated by elevated levels of underemployment as well as worsened wage gaps for women and black workers.

Key findings

Fewer than one-fifth of adults ages 21–24 are college graduates.

• Women in this age group are more likely than men to have a college degree. Women make up half of 21- to 24-year-olds but well over half (57.4 percent) of young college degree holders.
• White and Asian American/Pacific Islander (AAPI) young adults are more likely than black and Hispanic young adults to hold a college degree. White young adults represent just over half (54.3 percent) of the young adult population but two-thirds of those with a college degree; AAPI young adults are also disproportionately represented among those young adults with a college degree. Young black and Hispanic adults between the ages of 21 and 24 are far less likely to be college graduates relative to their representation in the population.

The overall employment rate for young college graduates has declined, and the share who are idled—neither employed nor enrolled in further schooling—has increased between 1989 and 2019.

• This trend was driven primarily by a decline in the share who are employed and not enrolled in additional schooling.
• Of those graduates who are enrolled, about half are working while in school.

Employment and enrollment outcomes vary by gender and by race/ethnicity.

• The most likely outcome for every group is being employed only. The least likely outcome for every group, with the exception of AAPI young adults, is being idled, meaning they are neither enrolled in further schooling nor employed.
• Young men and women graduates have similar idled rates and similar overall employment rates.
• Young AAPI graduates are more likely than other graduates to be enrolled only, while young white graduates are the most likely group to be employed only and the least likely to be idled.
• Young black graduates enroll in additional schooling at higher rates than their white and Hispanic peers.

The unemployment rate among young college graduates is at pre-recession levels, but it is still higher than the full-employment economy of 2000.

• One out of every 20 young college graduates is unemployed, a higher rate than in 2000, when only one in 25 was.
• While the unemployment rate for white graduates has essentially recovered to within 0.2 percentage points of its 2000 level, unemployment rates for other racial/ethnic groups remain well above their 2000 levels, and the gaps between the white unemployment rate and the black, Hispanic, and AAPI unemployment rates for young graduates are significantly larger than they were in 2000.

The overall underemployment rate of young college graduates has improved markedly since its peak in 2011 but remains higher than it was in 2007 and is much higher than it was in 2000.

• Underemployment counts include those who are unemployed plus those part-time workers who want to work full time (involuntary part-time workers) plus those workers who want a job and have looked for work in the last year but have given up actively seeking work in the last four weeks (and are therefore not officially counted as “unemployed”).
• One in 10 young college graduates are underemployed, more than in 2007 (9.0 percent) and 2000 (6.5 percent).

• Underemployment rates for all gender and race/ethnicity groups are significantly higher than they were in 2000.

• In 2019, nearly one in seven black, Hispanic, and AAPI graduates are underemployed while one in 11 white graduates are.
• Other research on underutilization suggests that more college graduates are taking jobs that do not require a college degree than they have in stronger labor markets.

Over much of the last four decades, young college graduates have experienced lackluster wage growth.

• From 1989 to 2019, average wages of young college graduates grew only 13.9 percent in total. Without the few years of strong growth in the tight labor market of the late 1990s and 2000, wages would be no higher today than they were in 1989.
• After falling in the aftermath of the Great Recession, wages for young college graduates have been growing steadily since 2014 and have (just barely) surpassed the 2000 benchmark; however, nearly two decades of wage growth for young college graduates have been lost.

Young women and black college graduates face large and growing pay penalties in the labor market relative to young men and white graduates, respectively.

• While men’s and women’s wages have both grown slowly between 2000 and 2019, men’s wages grew slightly faster, resulting in a widening of the gender wage gap for young college graduates from 10.7 percent to 12.9 percent.
• In 2000, as well as for much of the late 1990s, the hourly pay of black college graduates closely tracked that of their white counterparts, but black wages have seen large declines in the Great Recession and its aftermath, translating into lower wages and significantly larger pay penalties right out of college. Today, young black college graduates are paid, on average, 12.2 percent less than their white counterparts.

What are the demographics of young college graduates?

In this report we examine the employment, enrollment, and wages of recent college graduates in order to glean the Class of 2019’s economic prospects as they start their careers after college. To do this, we look at recent college graduates (ages 21–24) who are in the labor market or enrolled in further education. Because the sample sizes are small, particularly when we examine specific demographic groups, we combine 36 months of data to strengthen the estimates (see the text box above for extensive information about our sample and sample restrictions). Figure A displays the shares of 21- to 24-year-olds at each level of educational attainment, overall and by gender and race/ethnicity (combining data from April 2016 through March 2019 for all categories, including “overall”).

Among adults ages 21 to 24, fewer than one-fifth (18.6 percent) have completed a bachelor’s degree but have not attained an advanced degree. An additional 1.7 percent have already completed an advanced degree. By comparison, just under two-fifths of the overall workforce (ages 16 and up) have at least a college degree (EPI 2019b). While many Americans go on to increase their educational attainment throughout their 20s and 30s, the vast majority do not wind up completing a four-year college degree.

In this paper, we restrict our sample to just recent young college graduates (ages 21–24) in order to best predict the economic prospects of those who attend and complete college following closely on the heels of receiving their high school diploma or GED. By limiting our sample to college graduates in their early 20s, we can restrict any variation in outcomes attributable to both later degree-acquiring and higher amounts of labor market experience. This allows us to compare employment outcomes and wages across gender and race/ethnicity while assuming that the individuals have similar levels of education and work experience. Among 21- to 24-year-olds, more than two in five (43.3 percent) have had some college education (but have not completed a four-year degree), while nearly three in 10 (29.4 percent) have a high school diploma only, with no further schooling.

The overall shares displayed by the first bar in Figure A clearly mask important differences among demographic groups. Among young adults, women are more likely to have a bachelor’s degree than men. Asian American/Pacific Islander young adults are significantly more likely to have a four-year college degree than young adults from any other racial/ethnic group, while Hispanic young adults are least likely to have a college degree.

Figure A

The population of young adults with a college degree has a different composition than the overall 21-to-24-year-old population. Figure B illustrates these variations in composition, confirming what we saw in Figure A about the disproportionate likelihood that members of certain groups have completed a four-year college degree. While men and women represent equal shares of those ages 21 to 24, women in this age group are disproportionately more likely to hold a college degree. Well over half (57.4 percent) of young college degree holders are women, while men make up only 42.6 percent of that group. Figure A indicates that women in this age group are also more likely than men to hold an advanced degree.

Figure B

Just over half (54.3 percent) of the 21-to-24-year-old population is white, yet two-thirds (66.0 percent) of young college grads are white. Asian Americans/Pacific Islanders also make up a disproportionate share of the young college graduate population (12.5 percent), relative to their representation in the overall 21-to-24-year-old population (7.3 percent). Young college graduates are less likely to be black or Hispanic: 15.1 percent and 21.8 percent of all 21- to 24-year-olds are black and Hispanic, respectively, while they account for only 10.0 percent and 10.9 percent of young college graduates.

What are young college graduates doing?

In this section, we look at the employment and enrollment outcomes of young adults with a college degree. We group these graduates into four mutually exclusive categories based on their outcomes: employed and not enrolled in further schooling (“employed only”), employed and also enrolled in further schooling (“enrolled and employed”), enrolled in further schooling and not employed (“enrolled only”), and neither employed nor enrolled in further schooling (“idled”). Figure C, which shows the share of all young college graduates with each outcome, uses 12-month moving pools of data to ensure an adequate sample. Figure D shows outcomes by gender and race/ethnicity; these outcomes are based on a 36-month pool of data to ensure an adequate sample to allow us to make these comparisons.

Figure C

Figure C shows that being idled—being neither employed nor enrolled—has consistently been the least likely outcome for young college graduates, although the idled share has increased since 1989. Prior to the most recent recession, just over 8 percent of young graduates were idled (8.4 percent in 2007), about the same share that were idled when the economy was at full employment in 2000 (8.6 percent). During the recession, the share of idled young graduates increased, peaking at 11.9 percent in 2011. The idled share has not quite recovered to its pre-recession level and has even increased somewhat over the past year, with 9.7 percent of young graduates still idled in 2019. The increase in the share of disconnected young adults represents an enormous loss of opportunities for this cohort, as the loss of work experience or further education will have a lasting negative impact on their lifetime earnings.

Nearly four in five young graduates (77.0 percent) are employed. (The overall employment rate is the sum of “employed only” and “enrolled and employed” and is represented in Figure C by the darker and lighter orange areas combined.) The overall employment rate has declined over the period shown in Figure C (down 7.3 percentage points from 84.4 percent in 1989). This was driven by a steady decline in the share who are employed only, from 74.2 percent in 1989 down to 64.9 percent in 2019. During that 30-year period, the share who were simultaneously employed and enrolled increased slightly, although not enough to offset the decline in the share who were employed only.

Particularly during the Great Recession, the growing idled share reflected not only a decline in employment rates, but a decline in enrollment as well (which could reflect the stemming of longer-term structural increases in enrollment). While enrolling in school is often thought of as an alternative to employment in a weak economy, this option is not available to all students. Students and workers are not distinct groups; many students must work to pay for school or cover living expenses. A weak economy can therefore prevent would-be students from pursuing additional education by disrupting their own financial stability. Many students also depend on the support of parents—but if a student’s parents saw the value of their home drop when the housing bubble burst, or one or both lost their jobs in the aftermath of the Great Recession, then financial support from parents for continued schooling may not have been available (see, for example, Lovenheim and Reynolds 2013). For these reasons, young graduates are at increased risk of being idled during a recession, with neither a job nor the resources to go back to school. Graduating into a weak labor market not only limits immediate economic opportunities, but it can also have a significant effect on lifetime earnings and even health (Schwandt and von Wachter 2018).

Of those young graduates who decide to pursue further education (the sum of “enrolled only” and “enrolled and employed,” the light orange and yellow areas combined), an increasing share are not working while enrolled. The share of recent graduates who are enrolled only has increased since 1989. In 1989, just 7.8 percent of young graduates were enrolled in further schooling but not working while enrolled. By 2007, that share had increased to 11.9 percent. Today, about half of the young graduates who are enrolled in further schooling are also working (13.3 percent) and half are not (12.2 percent).

Figure D illustrates, by gender and race/ethnicity, what these young college grads are doing now using four distinct categories: employed only (dark orange), employed and enrolled (light orange), enrolled only (yellow), and idled (gray). The first set of bars shows the differences in outcome shares by gender, and the next set shows differences by race and ethnicity.

Figure D

To see total employment, we look at the dark orange (“employed only”) and light orange (“enrolled and employed”) bars combined. We see that similar shares of young women and men with college degrees are employed. Although a somewhat smaller share of women are employed without being enrolled, that is balanced by the fact that young women are more likely to be enrolled and employed at the same time than men. Young graduates of both genders have about the same likelihood of being enrolled in further education without being employed, but young women with college degrees are more likely to be enrolled in further schooling overall (with 26.3 percent total enrollment) than their male peers (24.1 percent enrollment). While both working men and women (ages 16 and up) have been increasing their education, women’s attainment of college and advanced degrees has grown faster than men’s. By the early 2000s, a larger share of women than men in the workforce had at least a college degree. In 2018, two in five (40.3 percent) working women had at least a college degree while just under a third (35.0 percent) of men did (EPI 2019b).

Similar shares of male and female graduates are idled (neither enrolled nor employed). As we will show later, young women with bachelor’s degrees have a lower unemployment rate than their male peers. But because these women are both employed and idled at similar rates to men, we can infer that their lower unemployment rate reflects lower labor force participation, not higher levels of employment.

In the second set of bars, similar comparisons are made with respect to the four mutually exclusive racial and ethnic groups we are looking at: white, black, Hispanic, and Asian American/Pacific Islander.

Young Asian American/Pacific Islander graduates are much more likely to be enrolled in further schooling and much less likely to be employed than their peers. Just under half (48.5 percent) of AAPI young college graduates are employed only. They are disproportionately likely to be enrolled in further schooling, driven by an outsize share of AAPI graduates who are enrolled without being employed. In fact, they are the only racial/ethnic group in which more graduates are enrolled only than are both employed and enrolled. Young AAPI graduates are also the racial/ethnic group with the largest idled share.

After young AAPI graduates, young black graduates have the second highest rate of enrollment, summing those enrolled only and those enrolled while working. In total, over a quarter of young black graduates (27.2 percent) are enrolled in further schooling. Young black graduates are simultaneously employed and enrolled at a higher rate than any other racial/ethnic group. At the same time, young black graduates are less likely than their white and Hispanic peers to be employed. Since young black graduates actually have the highest rates of being both employed and enrolled, their lower employment rate is driven by their low likelihood of being employed only.

Young Hispanic graduates are more likely to be employed only than their black and AAPI peers, but less likely than their white peers to be employed only. This trend holds true for the overall employment rate as well. More than four in five young white college graduates (81.0 percent) are employed, a larger share than any other group. This is driven by the fact that over two-thirds (68.9 percent) of young white college graduates are employed and not enrolled in further education. Young white college graduates are less likely than their peers to be enrolled, with under a quarter (22.9 percent) total enrolled in further schooling.

What are the employment prospects for recent graduates not enrolled in further schooling?

In this section, we examine unemployment and underemployment rates for young college graduates. To do this, we narrow the sample of young college graduates to those who are not currently enrolled in further schooling. This allows us to better assess the employment prospects of otherwise similar groups.

By attending and finishing college, young college graduates have made a significant down payment on their career in terms of both time and money, and they typically have very high labor force participation rates. And because a college degree affords more opportunities in the labor market—not least of which is the fact that college graduates are often more competitive relative to non–college graduates when it comes to landing even those jobs not necessarily requiring a college degree—unemployment among young workers with a college degree is substantially lower than among other young workers (EPI 2019b). However, young college graduates’ job prospects are significantly worse than they would be if the economy were at genuine full employment.

Figure E presents unemployment and underemployment rates for young college graduates, both of which shot up during the Great Recession and its aftermath.

Figure E

The unemployment rate reflects the share in the labor market who are jobless and have reported that they are actively seeking work. The unemployment rate for young college graduates is currently 5.1 percent, just below where it was at the labor market peak of 2007 before the start of the Great Recession (5.2 percent). However, it remains significantly higher than it was in 2000 (4.0 percent). And the current unemployment rate likely understates the slack in the labor market, given that, in recent months, 7 out of 10 newly employed workers were not actively searching for work in the prior month1—these workers would not have been counted in the official unemployment rate, even though they were clearly interested in working. Further evidence that the low unemployment rate is overstating the strength of the labor market is the fact that the share of the prime-age population with a job remains lower than in prior business cycles (Gould 2019b).

Looking at the underemployment rate also broadens our understanding of the labor market for young college graduates (ages 21–24). The underemployment rate for college graduates in this age group, currently at 9.9 percent, remains nearly a percentage point higher than it was in 2007 (9.0 percent). This rate includes the officially unemployed (see above) and also includes “involuntary” part-timers (those who work part time but want full-time work) and “marginally attached” workers (those who want a job and have looked for work in the last year but who have given up actively seeking work in the last four weeks and therefore are not captured in the official unemployment rate).

Figure F compares the unemployment rates by gender and race/ethnicity in 2019 to the rates in 2000, the last time wage growth was strong for all workers in the U.S. economy. While the overall unemployment rate (shown in Figure E) has dropped to its pre-recession level and is creeping down toward its 2000 level, some groups are faring better than others.

Figure F

Men continue to have a higher unemployment rate than women (6.4 percent vs. 4.1 percent), and the gap between those two rates has grown since 2000, when men’s unemployment rate was 4.7 percent to women’s 3.9 percent. However, this does not necessarily indicate that women are having an easier time finding jobs than men are. Rather, it in large part reflects the fact that women participate in the labor force at lower rates than men. To be considered unemployed by the CPS survey, an individual must be actively looking for work. We show in Figure D that men and women are idled at similar rates, and we note that the “idled” category includes all individuals who are neither employed nor enrolled, not just those who are actively looking for work. In this case, the similar idled rates for men and women indicate that women’s lower unemployment rate does not actually translate into a higher employment rate—it simply means women who are not working are less likely to be counted in the official unemployment rate. Later in this section we show that the gap between the male and female underemployment rates is smaller than the gap in unemployment rates; the gap in underemployment rates fills out the picture, allowing us to account for some portion of those women who are idled but are not counted as “unemployed.”

The white unemployment rate in 2019 is slightly above its 2000 low, up from 4.0 percent to 4.2 percent. The unemployment rates for all other races are even higher and have recovered less since the Great Recession, further widening the racial gaps. One would think there would be little disparity in the unemployment rates of young college graduates, who have the same basic degree and are in the same labor market position (i.e., college graduates, ages 21–24, not enrolled in school, and either employed or actively seeking work). It is notable that having an equivalent amount of higher education and a virtual blank slate of prior professional work experience still does not result in parity in unemployment rates across races and ethnicities: The unemployment rates of young black, Hispanic, and Asian American/Pacific Islander college graduates are much more elevated than those of their white peers. This suggests other factors may be at play, such as discrimination or unequal access to the informal professional networks that often lead to job opportunities.

Figure G shows underemployment rates for young college graduates, which, like their unemployment rates, remain elevated significantly above their 2000 levels, but to a greater degree. The increases in underemployment rates have been substantially larger than the increases in unemployment. Although there are still key differences in the underemployment rates of different demographic groups, the gaps are smaller than they are for unemployment.

Figure G

In 2000, young men with college degrees had a slightly higher underemployment rate (7.3 percent) than young women graduates did (6.6 percent). Over the next 19 years, underemployment increased significantly for both groups, but somewhat more for men (by 4.1 percentage points, to 11.4 percent) than for women (3.0 percentage points, to 9.7 percent), widening the gap.

In 2000, the underemployment rate of young black graduates was 8.2 percent, higher than the rate for young white graduates (6.7 percent). By 2019, the black underemployment rate had increased to 14.1 percent, while the white rate rose to just 8.9 percent. The underemployment rates of young Hispanic and Asian American/Pacific Islander graduates were also higher than the white underemployment rate in 2000 and grew more than white underemployment by 2019, increasing the already existing disparities.

Although the measure of underemployment used in Figures E and G includes hours-based underemployment (i.e., part-time workers who want full-time work), it does not include “skills/education–based” underemployment (e.g., the young college graduate working as a barista). Research from the Federal Reserve Bank of New York (Abel and Deitz 2014) offers insight into skills/education–based underemployment of recent college graduates. The authors categorize occupations according to whether the U.S. Department of Labor’s Occupational Information Network (O*NET) characterizes them as requiring a four-year college degree; the authors then calculate what share of recent college graduates with jobs are working in jobs that actually require a college degree. First, it is important to note that even in good economic times, a surprisingly high share of young college graduates work in jobs that do not necessarily require a college degree. For example, in 2000—when jobs were plentiful and the unemployment rate was 4.0 percent—38.3 percent of employed college graduates ages 22–27 worked in jobs that did not require a college degree (Federal Reserve Bank of New York 2019). No matter how strong the labor market is, recent college graduates often require some time to transition into their desired career track.

However, the share of young college graduates working in jobs not requiring a college degree increased over the weak 2000–2007 business cycle, increased further during the Great Recession and its aftermath, and has been slow to fall since. In 2007, 41.8 percent of employed college graduates under age 27 were working in a job that did not require a college degree. This share increased to 46.3 percent in the aftermath of the Great Recession and has been falling steadily since, reaching 41.4 percent by December 2018 (Federal Reserve Bank of New York 2019).

Furthermore, more of these workers are ending up in lower-quality “noncollege” jobs now than previously. In 2000, about half of recent college graduates who were in a job that did not require a college degree were nevertheless in a “good” job that tended to be career-oriented and fairly well compensated—such as electrician, dental hygienist, or mechanic (Federal Reserve Bank of New York 2019). That share has dropped substantially, to about one-third, while at the same time there has been an increase in the share of recent college grads who are now employed in occupations with low average wages, such as bartender, food server, or cashier. The bottom line is that for recent college graduates, finding a good job has become much more difficult. These findings are consistent with other research showing that, since 2000, among the workforce as a whole, there has been a decline in the demand for “cognitive skills” (Beaudry, Green, and Sand 2013).

Taken together, these findings underscore that in recent years the elevated unemployment rate among young workers did not arise because these workers lacked sufficient education or skills. Rather, there remains somewhat weak demand for goods and services, which makes it unnecessary for employers to significantly ramp up hiring for workers—regardless of the workers’ level of education. In fact, when we look at the overall labor market for workers ages 16 and up, we see only slight increases in the college premium—the expected boost to workers’ pay from a four-year college degree—over the last 18 years (Gould 2019a). If there had been a disproportionate demand for these credentialed workers overall, then we should be seeing even lower rates of unemployment and underemployment and a lower share of young college graduates who are otherwise underutilized in the labor market.

What are the wages of young college graduates?

Over much of the last four decades, young college graduates have experienced lackluster wage growth. Figure H presents average hourly wages for young college graduates (ages 21–24, not enrolled in further schooling) between 1989 and 2019 (in 2018 dollars). Over that entire period, average wages grew only 13.9 percent in total, less than half a percent per year on average. If it hadn’t been for the expansionary economy of the late 1990s and 2000, wages would be no higher today than in 1989. Wages at the last business cycle peak in 2007 were just below where they were in 2000. And then the Great Recession hit, and young college graduates experienced the loss in wages felt throughout the economy. Wages for young college graduates have been growing steadily since 2012 and have surpassed the 2000 benchmark. In today’s tightening labor market, we should expect to see continued wage growth, which will help make up for losses experienced by young college graduates in the aftermath of the Great Recession. But a high-pressure labor market will have to be sustained for quite some time to offset the longer-run wage stagnation facing this group.

Figure H

Although it may be tempting to point to young graduates’ age or lack of previous work experience as the reason their wages have grown slowly since 2000, we observe similar wage trends for the population as a whole (Gould 2019a). While young graduates have lower wages than the overall (ages 18–64) workforce of college graduates (which is to be expected given their relative lack of work experience), their wages display the same trends: Both groups saw a brief period of strong wage growth in the 1990s but have had stagnant wages for much of the 2000s and only saw stronger growth in the recent recovery in two of the last five years (Gould 2019a). This is indicative of an economywide slowdown in wage growth, driven both by a lack of demand for workers and by the erosion of workers’ power to bargain with their employers for higher wages (Bivens et al. 2014).

In 2019, young college-degreed workers have an average hourly wage of $20.74, which translates to annual earnings of around $43,100 for a full-time, full-year worker. This overall average masks important differences in wages by gender and race. Figure I looks at average wages for young college-degreed men and women as well as for young white, black, Hispanic, and Asian American/Pacific Islander (AAPI) college graduates, in 2000 and 2019, using a three-year pool of data for more reliable comparisons among groups and across time. Figure J compares wage gaps between women and men as well as between white workers and black, Hispanic, and AAPI workers, in turn.

Figure I

Figure J

Young women with a college degree have average hourly wages of $19.20 in 2019, just above their 2000 wage of $18.68. Over this same time, men’s wages rose significantly, from $20.91 to $22.04, an increase of just over 5 percent. These different trends have meant that the gender wage gap for young college graduates has grown over the last 19 years from 10.7 percent to 12.9 percent (as shown in Figure J). The current gap of $2.84 per hour is not only statistically significant, but also of practical significance—it translates into about $5,900 per year for a full-time worker, a large and economically meaningful difference.

While, as discussed earlier, young women are earning bachelor’s degrees at higher rates than men (21.3 percent vs. 15.8 percent, setting aside those who also get advanced degrees), this advantage is doing little to insulate them from wage gaps within educational categories. And different amounts of experience cannot account for these wage gaps: Given the tight age restriction in our estimates, both groups should have relatively similar work experience on average. The particularly disquieting fact is that these gaps exist from the very beginning of women’s careers.

The second set of bars in Figure I shows average wages for young white, black, Hispanic, and AAPI college graduates in 2000 and 2019. Asian American/Pacific Islander graduates had the highest wages in both 2000 and 2019. White, Hispanic, and AAPI college graduates all experienced wage growth, at 5.8, 7.4, and 4.5 percent, respectively. Young black college graduates experienced a large drop in pay—$2.27 per hour—for a total decline of 11.2 percent.

The second set of bars in Figure J compares black, Hispanic, and AAPI wages with white wages in both 2000 and 2019. Asian American/Pacific Islander graduates have seen a slight decrease in their pay premium vis-à-vis white college graduates, while Hispanic college graduates have seen a small reduction in their pay penalty with respect to white college graduates.

The most striking finding from this analysis of wages is what has happened to young black college graduates. In 2000, as well as for most of the late 1990s, the hourly pay of black college graduates closely tracked that of their white counterparts. The 4.6 percent pay premium shown in Figure J is not statistically distinguishable from zero, meaning that white and black wages were basically the same in that period. What is stunning is the sharp decline in black wages over the last several years, during the Great Recession and its aftermath. Young black college graduates are the only group that saw outright declines, and these declines are quite large and economically meaningful.

These trends in black–white pay differentials for young college graduates mirror what we are seeing in the larger economy. Wilson and Rodgers (2016) find that the growth in the divergence between black and white wages is largely unexplained by observable factors and that discrimination is likely the most significant of the unobservable factors at play. It is clear from the trends in the late 1990s and into 2000 that tight labor markets can reduce discrimination and may have some lasting power even as the economy cools, as it did in the early 2000s. But the Great Recession and its aftermath clawed back those gains and then some.

The average hourly wage of black college graduates bottomed out in 2014 at $15.84 per hour and has only recently edged up to $18.07 in 2019 (trends not shown).2 As of the latest year of data, young black college graduates now face a 12.2 percent pay penalty relative to their white counterparts. This $2.51 hourly pay gap translates to about $5,200 on an annual basis for a full-time worker.

Conclusion

Although the Class of 2019 is entering into a markedly stronger economy than those who graduated during the immediate aftermath of the most recent recession, the Class of 2019’s labor market prospects are still not as strong as the Class of 2000’s. Unemployment and underemployment rates for young college graduates remain above their 2000 levels, substantially so in the case of the underemployment rate. At the same time, young graduates have experienced lackluster wage growth, with the strong wage growth of the late 1990s and 2000 accounting for most of the improvements over the past three decades.

It is also important to note that these steady improvements have not been felt by all young college graduates. Both unemployment and underemployment rates for young black, Hispanic, and AAPI graduates remain well above their 2000 levels. While wages have improved for young white, Hispanic, and AAPI graduates, young black college graduates have actually experienced a substantial decline in their average wage.

The recent wage growth for college graduates, on average, does not make up for the long period of wage stagnation, and it certainly does not make up for the rising cost of college and resulting debt (Gould, Mokhiber, and Wolfe 2018). From the 1978–1979 enrollment year to the 2017–2018 enrollment year, the inflation-adjusted cost of a four-year education, including tuition, fees, and room and board, increased 173.6 percent for private school and 159.4 percent for public school while median family income increased just 24.5 percent (College Board 2018; U.S. Census Bureau 2018). As a result, an increasing share of students must take on substantial debt to access the benefits of a college education. Between 2004 and 2014, the number of student loan borrowers increased by 92 percent, and average debt per borrower increased by 39 percent in real terms (Brown et al. 2015).

While the Class of 2019’s prospects in the labor market show some signs of improvement over recent cohorts, those improvements are nowhere near significant enough to offset the heightened financial challenges many of these graduates face in the form of rising college costs and debt loads. As a result, the overall financial health of these graduates is likely to falter relative to those who graduated into a stronger economy and with lower levels of debt.

Endnotes

1. EPI analysis of monthly jobs and unemployment data from the Bureau of Labor Statistics, December 2018–May 2019. See, e.g., Gould 2018.

2. EPI analysis of Current Population Survey Outgoing Rotation Group microdata.

References

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