Key takeaways:

• Ballot initiatives have enabled voters to advance worker-centered policies—like higher minimum wages—in states with hostile legislatures, particularly in the South.
• A coordinated, right-wing legislative attack on ballot initiative processes is attempting to reverse ballot initiative wins, scare advocates out of using the ballot process, and make it harder to get future measures on the ballot that improve standards for workers.
• Despite these barriers, advocates and voters are fighting back to protect pro-worker ballot access and advance new progressive ballot measures.

In recent years, state ballot initiatives have served as powerful tools to advance economic opportunity for working families. Voters directly have raised the minimum wage, secured paid sick leave, protected abortion access, enacted bail reform, expanded Medicaid, and increased funding for public education—all popular progressive economic policies that some state legislatures have failed to enact. However, some conservative state legislatures have responded by overturning or limiting recent wins. And in the few Southern states where voters can access ballot measures—Arkansas, Florida, and Oklahoma—conservative legislators are waging war against the ballot initiative process itself, attempting to obstruct the will of voters and make it permanently more difficult for the public to directly decide on policy choices.

Why ballot initiatives are important for advancing economic opportunity

Ballot initiatives are a form of direct democracy in which voters have the power to decide on a proposed new law or constitutional amendment. Currently, 26 states and the District of Columbia offer voters access to ballot measures in some form, as do many more localities.

While more than half of the country has access to some form of direct democracy, ballot access is heavily concentrated in Western and Northern states. Only three states in the Deep South—Arkansas, Florida, and Oklahoma—effectively have ballot initiative processes. Attacks on the ballot process are intensifying in each of these states.

Ballot initiatives are more important than ever for advancing worker-centered policies that both Congress and state legislatures have failed to enact despite clear voter support. For example, Republican lawmakers have repeatedly blocked legislative proposals to increase the minimum wage (federally and in many states) despite the popularity of increasing the minimum wage and the positive impacts it has on workers and families. In the absence of federal action, 30 states, the District of Columbia, and almost 70 localities have adopted minimum wages above the federal minimum of $7.25 per hour. Of these states, 43% (13 states) used ballot measures to secure the increase. An additional three states used direct democracy to increase minimum wages that already exceeded the federal floor.

Ballot measures have been especially critical to achieving minimum wage increases in Southern states like Arkansas and Florida. Only four other states in the South—Delaware, Maryland, Virginia, and West Virginia—have increased their minimum wages via legislation likely due to higher minimum wages in neighboring states or Democratic legislative majorities.

Paid leave laws have remained similarly scarce across the South. Of the 18 states with some form of statewide paid sick leave, only one—Maryland—is in the South. Attempts to expand paid leave access in Southern states have so far been limited to narrow state legislation covering only some public employees, or local efforts threatened with state preemption, demonstrating the need for ballot initiatives.  

Right-wing attempts to weaken direct democracy in the South

In response to the success of progressive ballot measures, right-wing lawmakers have launched attacks on direct democracy, particularly in the South.  

Opponents of ballot access have especially targeted the signature process to delay or block measures from reaching the ballot. This strategy arose in Mississippi via a court challenge to a 2020 ballot initiative allowing the use of medical marijuana, which 74% of voters approved. As advocates including the Mississippi NAACP were building support for new ballot measures to expand Medicaid, the courts struck down the ballot process. Even though Mississippi’s Constitution guarantees voters access to ballot initiatives, the state Supreme Court ruled that no ballot initiative could be valid because of outdated constitutional language establishing the signature rules. (The old rules do not account for the lower number of congressional districts in Mississippi after redistricting, making it impossible to reach the signature threshold to put a measure on the ballot.)  

Following the Mississippi blueprint, direct democracy opponents in other Southern states have begun to challenge the signature process. After Arkansas voters passed minimum wage increases through ballot measures, the Arkansas legislature passed new state laws that could empower the state attorney general to invalidate a request for signatures because of the title of the measure. If and when the signature process begins, a host of laws make it much more difficult for canvassers to collect signatures. Canvassers must now confirm the voter reads the ballot title, inform voters that petition fraud is a crime, check voter identification, and file an affidavit stating they have complied with all laws. Scare tactics directed at both petition canvassers and signers make it harder to collect signatures out of fear that exercising their constitutional rights may lead to imprisonment.

Following minimum wage increases that passed via ballot measures, the Florida legislature followed a similar strategy of restricting the signature process for citizen-led constitutional amendments. Their legislation excludes people with felonies, people without citizenship, and non-Florida residents from being canvassers. It also requires canvassers to register with the state or face a third-degree felony charge which could be punishable by up to five years in prison. Once the signatures are collected, the law also requires the sponsor to deliver the petitions within 10 days after a voter signs, as opposed to once all signatures are collected. These restrictions deeply limit the number of people who can collect signatures and add burdensome labor to the petition sponsor by requiring frequent trips to deliver the petitions. In 2025, advocates met the signature threshold to put recreational cannabis on the ballot, but the new laws invalidated over 70,000 signatures and prevented the measure from reaching voters.  

Finally, conservative lawmakers in Oklahoma have launched attacks on the ballot process. Oklahoma organizers have already secured the signatures for a 2026 ballot measure to increase the minimum wage. In response, lawmakers attacked the signature process, restricting the share of eligible voters who can sign initiative petitions per county and consequently weakening the influence of voters in the most populous counties like Oklahoma and Tulsa counties. The Oklahoma Policy Institute explains that this new requirement would “exclude 2.2 million registered voters (or 94.4% of registered voters) from signing a petition for statutory amendments.” The restriction also has racial implications with Tulsa County home to 23% of Black Oklahomans and Oklahoma County home to 41% of Black Oklahomans. Compounding the new restrictions, the law also gives the secretary of state the authority to determine the legality of a proposal. The new law also requires that paid petitioners disclose their employer to the secretary of state and prohibits paying canvassers with out-of-state funding or based on the amount of signatures they collect, among other tactics to invoke fear.

Overall, these new petition processes can make signature collection more costly due to administrative barriers that only allow the most well-funded campaigns to have any chance of making the ballot. Consequently, the process now lends itself to causes backed by corporate interests or wealthy supporters which may not reflect the needs of average voters, contradicting the goals of ballot access policies intended to democratize decision-making.

Despite attacks, voters are still fighting to launch ballot initiative campaigns and protect direct democracy

Despite growing attacks on the ballot process, organizing across the country—and in the South—persists. In June 2026, Oklahoma State Question 832 will be on the ballot, proposing to gradually increase the minimum wage to $15 per hour by 2029. In Florida, ballot measures proposing various constitutional amendments are moving forward to expand Medicaid, legalize recreational use of marijuana, and codify the right to clean and healthy water.

Advocates are also organizing to protect the constitutional right to ballot access itself. Arkansas Public Policy Panel and the Protect AR Rights coalition continue to fight back and win against new restrictions on ballot measures, filing lawsuits and proposing a new ballot question that would make ballot access a “fundamental right.” Their new ballot question was approved in July 2025, clearing one of the last barriers for signature collection. In Oklahoma, advocates have filed two lawsuits opposing new restrictions on ballot measures—especially the state’s ability to disrupt the signature collection process—and are awaiting a decision from the state’s Supreme Court.

Voters are similarly fighting back in states where legislators have rolled back successful pro-worker ballot measures. In response to the Nebraska legislature weakening a new paid sick leave law won via ballot measure, the Respect Nebraska Voters coalition is organizing for a new ballot measure to make it more difficult for the legislature to reverse the will of voters. Missouri legislators repealed parts of a successful ballot measure that established paid sick leave and attached a cost-of-living increase to the minimum wage. Voter outrage over the legislative betrayal has “kicked the hornet’s nest,” according to the bipartisan Respect Missouri Voters coalition, which recently submitted over 20 versions of new petitions to protect ballot initiatives. If implemented, these petitions would require an 80% legislative majority to overturn a successful ballot initiative law or constitutional amendment, prohibit barriers to signature collection, allow corrections to misleading ballot language, and add other ballot protections.

The essence of ballot access is the will of the people becoming law. Despite legislative efforts to obstruct direct democracy, Southern advocates and voters continue to push for the voice of everyday people to be heard and for policies that improve the lives of workers and their family members.

Summary: From the abolition of slavery until now, Southern white elites have used a slew of tactics to suppress Black political power and secure their economic interests—including violence, voter suppression, gerrymandering, felony disenfranchisement, and local preemption laws.

Black voter disenfranchisement remains a key feature of the racist and anti-worker Southern economic development model today. However, periods of progress toward Black political empowerment, such as during Reconstruction and the Civil Rights Movement—though met with fierce suppression—show that targeted policy action has the power to dismantle racist barriers to political participation and disrupt the cycle of political suppression and economic exploitation. While significant advances have been made over the last century, a resurgent backlash underscores the need to strengthen civil rights protections and ensure all Southern workers and their families can enjoy political and economic equality.

There is a long strand of history connecting the legacy of slavery to the political and economic landscape of the Southern United States today. As EPI’s Rooted in Racism1 series has shown, the Southern economic development model is characterized by low wages, regressive taxes, few regulations on businesses, few labor protections, a weak safety net, and fierce opposition to unions. Just like the antebellum South’s economy was built on the exploitation of enslaved labor, today’s Southern economy also relies on a disempowered and precarious workforce (Childers 2024b). This spotlight examines how political and economic suppression—dynamics in the South which are rooted in racism—have played a central role in creating and maintaining the Southern economic development model.

Since the first enslaved Africans arrived in the Americas, authoritarian, white supremacist forces have used disenfranchisement, fraud, intimidation, and violence to extract wealth from Black and brown populations (Desmond 2019; Torres-Spelliscy 2019). While the abolition of slavery after the Civil War briefly disrupted this dynamic, repression quickly reemerged in new forms. In backlash against Black emancipation and enfranchisement, Southern leaders adopted Black Codes and later Jim Crow laws to entrench white supremacy and maintain an economy predicated on exploitation. The Civil Rights Movement of the 1960s was a lurch forward for racial equity and Black political power. However, these advances have been met with renewed backlash. The dismantling of key protections under the Voting Rights Act of 1965—particularly via the 2013 Shelby v. Holder decision—have fueled a resurgence of voter suppression tactics that harken back to the post-Reconstruction efforts to disenfranchise Black Americans. Today, as in the past, these efforts aim to undermine racial equality and perpetuate the Southern economic development model.

How emancipation and Reconstruction defined Black citizenship and civic engagement

The Declaration of Independence proclaimed that all men were created equal, with unalienable rights to life, liberty, and the pursuit of happiness. Yet these ideals coexisted alongside brutal chattel slavery. As Figure A shows, nearly one-fifth to one-eighth of the U.S. population—enslaved Africans and Black Americans—were systematically denied these rights (Gibson and Jung 2002). For nearly a century after the nation’s founding, the U.S.—and the Southern economy in particular—thrived on this exploitation, building immense wealth through the forced labor of enslaved people.

Figure A

Throughout U.S. history, Black Americans have had to fight to secure their right to self-determination and political representation. Prior to emancipation, only five Northern states—Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont—granted some degree of Black suffrage, but their Black voters still faced widespread discrimination (Litwack 1965). In 1857, the Supreme Court further undermined Black citizenship with its infamous Dred Scott v. Sandford ruling, which declared that Black people, whether enslaved or free, were neither citizens nor entitled to protections under the Constitution of the United States. This decision exacerbated tensions around the topic of slavery that ultimately precipitated the Civil War.

Although the defeat of the Confederacy in 1865 marked the formal end of slavery, it did not result in true liberty or self-determination for Black Americans. Within months of Robert E. Lee’s surrender to Union General Ulysses S. Grant on April 9, 1865, acrimonious white Southerners, who feared the loss of political and economic dominance, quickly mobilized to resist Black emancipation and enfranchisement.

Starting with Mississippi and South Carolina in 1865, Southern state governments became instruments for reestablishing the exploitative system of plantation labor after the Civil War. These states enacted laws known as Black Codes, which criminalized virtually all aspects of Black life. These laws required freed men, women, and children to sign exploitative labor contracts, often on the very plantations where they had been enslaved (EJI n.d.d). Black Codes also criminalized unemployment through vagrancy laws, which served to coerce freed persons into these labor contracts. Individuals who were unfortunate enough to be caught up in the web of criminalization were often funneled into prison labor systems, which leased convicted laborers out to private businesses for profit. By 1869, most former Confederate states—including Alabama, Arkansas, Georgia, Louisiana, South Carolina and Texas—had adopted such prison labor schemes (Kelley 2017; Cardon 2017; Dirkson 2024; EJI n.d.c).

Black Codes also curtailed the civic rights of Black Americans by prohibiting them from testifying against white individuals in court, serving on juries, joining militias, or exercising their right to vote. As renowned sociologist and founder of the NAACP W.E.B. Du Bois (1935) observed, these laws were “an indisputable attempt on the part of Southern states to make Negros slaves in everything but name.” Black Codes were a direct effort to maintain white supremacy through political and economic control of the post-emancipation South.

The conditions for Black men and women in the South under Black Codes were so dire, they were likened to a “slow-motion genocide” (Gordon-Reed 2011; PBS n.d.a; USCS 1865). Reports on the situation in the South galvanized Republicans in Congress to pass the Civil Rights Act of 1866, overriding President Andrew Johnson’s veto. This was the first federal law to define U.S. citizenship and affirm that all citizens, regardless of race, were entitled to equal protection under the law. This also laid the groundwork for the Reconstruction Acts of 1867, which placed Southern states under military rule to enforce these new rights and overcome the recalcitrance of the former Confederate states.

Ratified in 1868, the 14th Amendment further guaranteed equal protection for all citizens and redefined citizenship to include Black Americans. In 1870, the 15th Amendment was adopted, which prohibited denying the right to vote based on race, color, or previous condition of servitude. Through these reforms, millions of formerly enslaved Black men were enfranchised.

Figure B. A photograph of the 1868 legislature of South Carolina—the first state legislature with a Black majority (Library of Congress 1876).

Under Reconstruction, Black civil engagement flourished. Shown in Figure C, Black men registered to vote for the first time in staggering numbers and achieved outright majorities of registered voters in five of the former Confederate states. These new, multiracial electorates drew up new state constitutions, eliminating many of the barriers to voting established by the Black Codes. During this period, around 703,400 of the roughly four million freed men and women registered to vote (Franklin 1994; Census 1870). Additionally, 660,000 white Southerners who had pledged the Ironclad Oath— swearing loyalty to the Union—registered to vote. By 1870, Mississippi sent the first Black U.S. Senator, Hiram Revels, to Washington D.C. (MCRM 2024). During this period, around 1,500 to 2,000 Black individuals were elected at every level of public office across the South (Foner 1993).

Figure C

Jim Crow, the birth of modern voter suppression, and the Southern model

The rapid progress made during Reconstruction quickly met a violent backlash, with Jim Crow laws ushering in a new era of racialized political suppression and entrenchment of the Southern model. White supremacist groups, intent on reclaiming their power, used any means at their disposal—violence, intimidation, and legal manipulation—to reverse the gains made by Black Americans. One report by the Equal Justice Initiative conservatively estimates that 2,000 lynchings took place between 1865–1876, many with impunity (EJI 2020). The impact of lynching as an act of voter suppression historically shows up in the present: Data show that Black people who live in Southern counties that experienced more lynchings in the past are less likely to register to vote today (Williams 2020).

In 1876, a compromise between the Republican and Democratic parties to elect Rutherford B. Hayes in exchange for the removal of Union troops from the South marked what many consider the end of Reconstruction (Waxman 2022). With this concession, white supremacist violence accelerated and many Southern governments were recaptured by Confederate loyalists (EJI n.d.a). 

Figure D. A letter of warning from the Ku Klux Klan, addressed to Davie Jeems, a Black Republican elected sheriff in Lincoln County, Georgia in 1868 (Darling 2024, Gilder Lehrman Institute).

Amid a renewed campaign of white terrorism, newly empowered Southern legislators adopted a barrage of laws to institutionalize racial segregation and disenfranchise Black voters. This period, commonly referred to as the Jim Crow era, was the genesis of many of the modern tactics of voter suppression. Although the 15th amendment prohibited laws that denied the right to vote according to race, color, or previous condition of servitude, white supremacist legislators circumvented these protections by devising “race-neutral” laws—like poll taxes, literacy tests, tests of moral character, and disenfranchisement via criminal conviction. Since many of these barriers also impacted poor whites, legislators adopted grandfather clauses that exempted whites from these laws if their grandfathers had been eligible to vote before 1867.

In 1890, Mississippi legislators convened a constitutional convention with the explicit aim of disenfranchising Black voters. The convention’s President, Solomon Saladin Calhoon, said: “Let us tell the truth if it bursts the bottom of the Universe … We came here to exclude the negro. Nothing short of this will answer” (Shafer 2021). By the convention’s end, legislators had imposed a $2 poll tax, literacy tests, and disenfranchisement as a penalty for nine crimes that they believed Black people would be more likely to be convicted of than white people (MDAH 2024). By 1892, Black voter registration in Mississippi plummeted from 66.9% in 1867 to just 5.7% (MCRM 2024; Hannah et al. 1965).

Similar scenarios played out across the South:

• In 1898, Louisiana adopted a constitution with such extensive restrictions that an estimated 25% of the white male population would have been disqualified without the grandfather clause. Under this constitution, the number of registered Black voters plummeted from 130,000 to just 1,718 by 1904.
• By 1883, only 3,700 Black Alabamans were registered to vote, down from a peak of 140,000.
• By 1898, just 2,800 Black South Carolinians were registered to vote, down from 92,000 in 1876.
• Between 1920 and 1930, only about 10,000 Black Georgians registered to vote out of a total Black electorate of 370,000 (Lewis and Allen 1972; EJI 2024b).

By the turn of the 20th century, Black Southerners endured conditions that starkly resembled the brutality of slavery while lacking the political power to challenge or change their circumstances. Vagrancy laws and convict leasing programs functioned as slave trafficking networks, ensnaring thousands of Black men and women on fabricated charges, forcing them into grueling labor under conditions often as harsh as those of slavery (Blackmon 2009). In 1896, the Supreme Court dealt a further blow to racial equality by upholding the constitutionality of racial segregation under the “separate but equal doctrine” in Plessy v. Ferguson. Every place, from barbershops to hospitals, were racially segregated (EJI 2018). White supremacist forces, working across all levels of government, collaborated to reestablish and maintain racial hierarchy.

Southern elites respond to the Great Migration North

The oppressive conditions of the South, combined with a surge in labor demand in Northern cities during the World Wars, ignited the Great Migration. Initially, many Southern whites celebrated the exodus of Black residents. However, as it became clear that the northward emigration of Black laborers posed a threat to the economic development model in the region, Southern elites changed their disposition (Willis 2019). Southern states responded by banning newspapers from advertising jobs in the North, arresting Northern labor recruiters, and even detaining Black residents to prevent them from boarding northbound trains. Some white Southerners even interfered with the U.S. mail to disrupt the distribution of certain newspapers that advertised jobs in the North (Clark 2024a).

Despite these efforts to stymie the Great Migration, approximately six million Black Americans fled the South’s racism and violence between 1910 and 1970 in search of better opportunities and safety. Over this period, the share of the U.S. Black population residing in the South fell from 90% to 53% (Frey 2022).

Progressive policies of the New Deal era—such as the abolition of brutal convict leasing systems; the new Fair Labor Standards Act, which established a minimum wage and the 40-hour work week; and the National Industrial Recovery (NIRA) and the National Labor Relations Acts (NLRA), which enshrined the right to join a union and collectively bargain—ushered in economic gains for working class Americans.

Though many benefitted from the New Deal’s economic programs, prosperity was not universal. Racism and the failure to address systemic inequalities excluded many Black workers from New Deal era policies (Payne-Patterson and Maye 2023). Nevertheless, conditions for Black workers outside of the South were markedly better than those of their Southern counterparts. By 1940, Black Southerners who moved North were earning double the amount earned by their counterparts who remained in the South (Boustan 2016).

Some of the improved conditions for Black workers who migrated North can be attributed to the growth of the labor movement and its ability to raise standards across industries. Between 1933 and 1945, union membership grew 252%; union members accounted for 9.5% of the workforce in 1933 and 33.4% in 1945 (EPI 2021). Unfortunately, racist carve-outs in the NLRA denied many Black and brown agricultural and domestic workers the federally protected right to collectively bargain. Black workers were often excluded from more lucrative jobs in the defense manufacturing industry. Additionally, many Black workers faced prejudice within predominantly white unions or were even excluded from joining unions altogether (NUL 1930). However, as the union movement grew, labor unions recognized that raising Southern labor standards was key to raising labor standards nationwide. In 1946, the Congress of Industrial Organizations (CIO) launched Operation Dixie, a campaign to unionize Southern workers and challenge exploitative labor practices in the region.

White Southern elites recognized that a powerful Southern labor movement posed a dual threat: First, it would threaten the Southern economic development model by forcing employers to raise pay and improve working conditions; and second, it would create vehicles for cross-racial solidarity that could undermine the political dominance of white Southern elites. In response, Southern states enacted so-called right-to-work (RTW) laws that were explicitly designed to undermine collective bargaining and prevent cross-racial solidarity (Childers, Kamper, and Sherer 2024).

This fierce opposition to worker organizing continues today. In 2024, when workers at a Mercedez-Benz auto manufacturing plant petitioned to join the United Auto Workers union, Alabama Governor Kay Ivey denounced the unionization effort, claiming that the state’s “model for economic success is under attack” (Thornton 2024). Ivey, along with the governors of Georgia, Mississippi, South Carolina, Tennessee, and Texas, further issued a joint statement opposing the unionization campaign (OGSAL 2024). Notably, many of these same RTW states also have some of the most restrictive voting laws, low minimum wages, and other policies that aim to undercut worker power (Maye 2022).

The Civil Rights Movement, a Second Reconstruction

Throughout the 20th century, it became increasingly clear that securing equal rights for Black Americans was critical to dismantling the Southern model. The Civil Rights Movement of the 1960s, often referred to as a Second Reconstruction, directly challenged systemic barriers from the Jim Crow era.

Civil rights leader Dr. Martin Luther King Jr. recognized that ending segregation, expanding voting rights, and securing economic opportunities for all Americans were interconnected struggles, and that the Southern model sustained itself from the political disempowerment of Black people. In a speech at the AFL-CIO convention in 1961 (UMD 2016), he remarked:

“This unity of purpose is not an historical coincident. Negroes are almost entirely a working people. There are pitifully few Negro millionaires and few Negro employers. Our needs are identical with labor’s needs: decent wages, fair working conditions, livable housing, old-age security, health and welfare measures, conditions in which families can grow, have education for their children and respect in the community.

That is why Negroes support labor’s demands and fight laws which curb labor. That is why the labor-hater and labor-baiter is virtually always a twin-headed creature, spewing anti-Negro epithets from one mouth and anti-labor propaganda from the other mouth.” 

Just four years after Dr. King’s speech to the AFL-CIO, a watershed moment came when young Black civil rights activists, led by the Student Nonviolent Coordinating Committee organized a 54-mile march from Selma to Montgomery, Alabama. This march sought to spotlight the violence, beatings, firebombings, and murders targeting those organizing to register Black voters across the South—including the infamous 1965 Mississippi Burning murders, in which civil rights activists Andrew Goodman, James Earl Chaney, and Michael Henry Schwerner were brutally killed (PBS n.d.b). On March 7, 1965—a date known as Bloody Sunday—state troopers brutally attacked peaceful marchers as they crossed the Edmund Pettus Bridge. Shocking images of the attack galvanized President Lyndon B. Johnson and Congress to pass the Voting Rights Act (VRA) of 1965 (Coleman 2015).

The VRA, one of the most consequential voting reforms of the century, remapped power across the South by outlawing many of the post-Reconstruction and Jim Crow era laws that retaliated against increased Black political participation, including poll taxes and discriminatory literacy or moral character tests. Additionally, Section 5 of the VRA required states and jurisdictions with a history of discrimination to preclear any voting law changes with the federal government, which ended the incessant adoption of new “race-neutral” voting restrictions. The VRA also authorized the Department of Justice to appoint election examiners to enforce the guarantee of the 15th Amendment (USCCR 1968).

Just like the Reconstruction Acts of 1867, the impact of the 1965 Voting Rights Act on Black political participation was sudden and significant. Figure E illustrates the dramatic rise in Black voter registration across the South between March 1965 and September 1967. The states with the largest Black voter registration gaps before and after the Voting Rights Act—a proxy for where political suppression was most fierce—are Mississippi (+53.1 percentage points), Alabama (+32.3), Louisiana (+27.3), and Georgia (+25.2). These are the same states that today perform the worst economically; they have low wages, low GDPs, and higher rates of poverty (Childers 2023, 2024a).

Figure E

Political suppression and the Southern economic development model in the 21st century

The advancements secured by the Civil Rights Movement and the Voting Rights Act achieved a milestone in 2008, when U.S. voters elected the first Black President, Barack Obama. However, this historic election was followed by racist backlash, giving rise to conspiracy theories like the “birther movement,” which alleged the President was not a U.S. citizen (Samuel 2016; Beaumont 2016). It also coincided with new efforts to undermine voting rights. In 2010, Shelby County, Alabama, filed suit in federal court to declare Section 5 of the VRA unconstitutional. Figure F maps states and localities that were required, under Section 5, to preclear any changes to election laws with the federal government due to their history of discrimination.

Figure F

In June 2013, the Supreme Court ruled in Shelby v. Holder that Section 4(b) of the VRA—which outlined the formula used to determine which jurisdictions were subject to preclearance—was unconstitutional because it had been established based on electoral conditions of the 1960s and 1970s (Li 2024). While Section 5 remained intact, it became nullified in practice without a formula to determine which states are subject to preclearance. In 2022, Congress attempted to ratify a new preclearance formula, as part of a voting reform package called the John Lewis Voting Rights Advancement Act. This bill was ultimately thwarted by a filibuster by Senate Republicans (Hulse 2022).

Political suppression in the post-Shelby v. Holder era

The strategies employed by anti-democratic lawmakers to make voting more difficult for Black and brown citizens have continually evolved, particularly in the post-Shelby v. Holder era. Nullifying preclearance protections under the Voting Rights Act of 1965 led to the proliferation of restrictive voting laws across the South. Between 2013 and 2023, at least 29 states passed 94 restrictive voting laws in a widespread and coordinated effort to limit Black and brown voting access (Singh and Carter 2023).

Some of the most common tactics employed by states include eliminating same-day voter registration, reducing early voting periods, removing polling places, creating mechanisms for overruling local election officials, “purging” voters from registration lists, and creating harsh and expansive penalties for seemingly mundane administrative errors (Berzon and Corasantini 2024; Levine 2024; LCEF 2019; Clark 2024b; Vasilogambros 2024). Although done under the guise of preserving “election integrity” or responding to budget constraints, the effect (and intent) of these tactics is clearly to make it harder for Black and brown citizens to vote. A 2022 study showed that voters from Black neighborhoods waited 29% longer and were 74% more likely to spend more than 30 minutes at their polling place compared with voters from white neighborhoods (Chen et al. 2022).

In recent years, politicians have also taken aim at the credibility of the electoral system by making claims of widespread voter fraud. Following the expansion of vote-by-mail during the COVID-19 pandemic, some politicians, including former President Donald Trump, made claims that non-citizens, deceased, or out-of-state voters were casting ballots and alleged that individuals were voting multiple times (Trump 2020; Domonoske 2017). Despite the lack of evidence for these claims, states are increasingly adopting harsh penalties for perceived election interference, while restricting voting access and criminalizing acts like providing food or water to voters in line (Democracy Now 2022; Fowler 2021; Ura 2021). This coordinated effort to undermine confidence in the country’s elections has been effective: In 2020, just 59% Americans expressed confidence that their votes would be accurately cast and counted, down from 70% in 2018 (McCarthy 2020).

In aggregate, these restrictive voting laws appear to have been successful in hampering and/or discouraging voter turnout among Black voters, relative to their white peers. Figure G documents the reemergence of a Black-white voting gap in the South following the Shelby v. Holder ruling. In 1964, Southern Black voter turnout trailed that of white voters by 16 percentage points in presidential election years. When U.S. voters elected the first Black president in 2008, Southern Black voters nearly closed the gap, trailing white voters by just half a percentage point. And in 2012, for the first time on record, Black voters outperformed white voters by two percentage points. But the trend reversed following the Shelby v. Holder ruling and Black voters underperformed white voters by 4.4 points in 2016, and 8.6 points in 2020.

Figure G

Discriminatory redistricting and representation

Gerrymandering, the manipulation of congressional redistricting for political gain, is another tactic that has long undermined the democratic process—particularly in the South, where it has been used to entrench white political power. Redistricting, the process of creating geographic boundaries of electoral districts, typically occurs every decade following the release of the Census. Since the founding of the United States, political parties vying for power frequently gamed the redistricting process to secure an electoral advantage (Engstrom 2013). And following emancipation and Black suffrage, Southern legislators regularly used discriminatory redistricting to suppress Black and brown voting power.

One of the most glaring historical examples of discriminatory racial gerrymandering is South Carolina’s 1882 “boa constrictor” district map, which created discontinuous boundaries, and aimed to stifle Black voter power by concentrating the state’s Black population into one district (LOC 1882).

Figure H. South Carolina’s 1882 “boa constrictor” congressional district map, which packed Black voters into one noncontiguous district (District 7) and diluted their power in all other districts. (LOC 1882)2

The VRA of 1965 gave individuals the power to legally challenge racial gerrymanders. But to this day, Southern states continuously engage in discriminatory gerrymandering under the guise of partisan redistricting. Below are just a few examples of racial gerrymandering cases from recent years:

• In 2016, a federal court struck down North Carolina’s congressional map, ruling it an unconstitutional racial gerrymander aimed at diminishing the voting power of Black Americans.3
• In 2017, a federal court ruled that several Texas congressional and state legislative districts were drawn with the intent of discriminating against Black and Latino voters.4
• In 2020, South Carolina’s congressional map was deemed illegal by a federal court. An amicus brief alleged that South Carolina had purposefully drawn discriminatory districts that “bleached” Black voters out of select congressional districts in a manner that harkened back to the 1882 “boa constrictor” congressional district map.5 This ruling was later overturned by the Supreme Court in 2023.6
• In 2022, a federal court struck down Alabama’s congressional map for diluting Black voters’ political influence by spreading them across multiple districts. After defying an order to create a second Black majority district, litigation in this case is ongoing (Li 2023).

Partisan actors have also attempted to manipulate the apportionment process by proposing changes to the way the population is counted (Rudensky et al. 2021). These efforts included proposals to add a citizenship question to the Census and to not count non-voting populations in apportionment. Experts predict that this approach would disproportionally target Latino communities (as well as Asian American and Black communities, to a lesser extent), which would clearly be a violation of the Census Act (Rudensky et al. 2021).

Despite the safeguards of the VRA, particularly Section 2 which prohibits voting practices with discriminatory effects, gerrymandering continues to undermine Black and brown voting power across the South.

Mass incarceration is a key tool for disenfranchising Black and brown voters

Felony disenfranchisement is a vestige of the racist backlash against emancipation and Reconstruction and remains a pervasive tool for suppressing Black and brown political participation in the South today. As Black Code laws laid the groundwork for mass incarceration by criminalizing Black freed men and women, states also enacted laws to strip voting rights from people convicted of felonies. Between 1865 and 1880, 13 states (Alabama, Arkansas, Colorado, Florida, Georgia, Illinois, Mississippi, Missouri, Nebraska, North Carolina, South Carolina, Tennessee, and Texas) either introduced or expanded felony disenfranchisement laws. Even as the VRA of 1965 undid many of the barriers to voting established by Black Codes and Jim Crow laws, 25 states still have some form of felony disenfranchisement in place (Brennan Center n.d.).

In recent years, states have increasingly prosecuted individuals for voting without realizing they were disenfranchised due to a felony conviction. In 2018, Florida voters passed Amendment 4 to reinstate voting rights to individuals with previous felony convictions. Florida Governor Ron DeSantis and the Florida legislature responded by passing Senate Bill 7066, which prohibited individuals with previous convictions from voting until they paid court-imposed fees (Brennan Center 2023). In 2022, footage was released showing individuals being arrested at gunpoint and charged with election fraud after having unknowingly voted without paying these court-ordered fees (Mower 2022).

Today, about 4.4 million Americans, roughly the equivalent of the entire voting population of the state of Minnesota, have their right to vote revoked because of a criminal conviction (Porter et al. 2024; USFR 2024). Because incarceration rates are still highly racialized, Black Americans are much more likely to be disenfranchised this way. In Southern states like Alabama, Florida, Kentucky, Mississippi, Tennessee, and Virginia, more than one in seven Black Americans are disenfranchised because of felony convictions—twice the national average (Uggen et al. 2020). Without efforts to undo this vestige of slavery, felony disenfranchisement will continue to exclude millions of primarily Black and brown citizens across the South from civic participation.

Preempting local governance

Preemption is a practice where state legislatures bar local governments from adopting rules or standards distinct from those set by the state government. Over the last half century, preemption has been increasingly employed by majority-white legislatures in the South and Midwest to block local governments’ ability to enact ordinances related to labor standards, voting rights, climate, public health, law enforcement, and other issues.

Notably, in 10 of the 11 former Confederate states, localities are preempted from enacting local minimum wage ordinances. By prohibiting cities and counties from raising wages, majority-white state legislatures maintain a labor market dependent on a cheap and precarious workforce—an enduring feature of the Southern economic development model (EPI 2024; Blair et al. 2020; Childers 2024b).

In recent decades, the use of preemption has accelerated, targeting pro-worker measures like pro-union legislation, project labor agreements, prevailing wage ordinances, paid sick leave, and even the removal of Confederate monuments (Blair et al. 2020). This model, rooted in the legacy of slavery and exploitation, relies on suppressing labor rights and keeping wages low to preserve the economic dominance of a select few.

Conclusion

The preservation of the Southern economic development model has depended on the systematic disenfranchisement of Black and brown communities since emancipation. From the abolition of slavery through Reconstruction, the Jim Crow era, and even the Civil Rights Movement, the cycle of progress and backlash is testament to how fiercely and relentlessly Southern white elites will use racism, violence, and political suppression to secure their economic interests. Every step towards Black political empowerment has been met with new forms of suppression, aimed at maintaining a system that relies on an exploited and disempowered workforce.

Although this legacy continues through tactics like gerrymandering, felony disenfranchisement, and local preemption laws, periods like Reconstruction and the Civil Rights Movement, show that targeted policy action can dismantle racist barriers to voting and political participation. Breaking this entrenched cycle will require sustained efforts to dismantle the dynamic of political suppression and economic exploitation. Further, without confronting these deeply rooted structures of exploitation and disenfranchisement in the South, these dynamics will continue to spread and undermine progress across the nation.

“If you don’t organize the South, the South will come to you”

—Willy Woods, Unite Here Local 23 Chapter President

Notes

1. Economic Policy Institute, “Rooted in Racism and Economic Exploitation” (web page).

2. Alexander v. South Carolina State Conference of the NAACP 2024; Brief of Amici Curiae Historians in Support of Appellees and Affirmance, Alexander v. South Carolina State Conference of the NAACP 2023.

3. Rucho v. Common Cause 2019.

4. Abbott v. Perez 2018.

5. Alexander v. South Carolina State Conference of the NAACP 2024; Brief of Amici Curiae Historians in Support of Appellees and Affirmance, Alexander v. South Carolina State Conference of the NAACP 2023.

6. Alexander et al. v. NAACP 2023.

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That is the conclusion of our recent EPI report on labor unions and the use of ballot drop boxes during U.S. elections. Since ballot drop boxes are a highly secure way to increase access to voting during elections, the Republican Party has sought to limit their use as part of a broad assault on voting rights. During the 2022 midterm elections, for example, we found that unified Republican control of a state government was associated with a 95% decrease in ballot drop boxes per capita. Seventeen states completely banned ballot drop boxes—and all but one of them had either a Republican governor or a Republican-controlled legislature. By contrast, Democrats championed the John Lewis Voting Rights Advancement Act (VRAA) of 2021—national legislation that included protections against numerous state-level voting restrictions, including those related to ballot drop boxes. Senators Joe Manchin and Kyrsten Sinema, however, joined Republicans to block these reforms in early 2022.

In the face of these threats, labor unions have led a struggle at every level of government to defend and expand voting rights. At the national level, labor leaders endorsed the VRAA and lobbied for greater access to ballot drop boxes. As AFL-CIO President Liz Shuler demanded, “We need mail-in voting and ballot drop boxes…in every community…in every state.” At the state level, unions recently coordinated simultaneous protests in Atlanta, Washington D.C., Miami, Phoenix, and Houston against disenfranchisement laws sweeping Republican-led states. “The most brazen of these bills—some already passed into law—would suppress high-turnout voting methods by banning ballot drop boxes,” one protest organizer explained. Unions even fought for access to ballot drop boxes at the county level. For example, when a councilmember in Luzerne County, Pennsylvania, proposed banning drop boxes during the 2022 midterm elections, unions rallied outside the local courthouse to voice their dissent.

To examine the relationship between such union efforts and access to ballot drop boxes, we analyzed data on all 17,935 drop boxes available during the 2022 midterm elections. As Figure 1 displays, we found a positive association between county-level union density and ballot drop boxes per capita. Using multilevel negative binomial regression models and controlling for various county-level socioeconomic factors and the partisan control of state government, we found that a one-percentage-point increase in union density was associated with a 9.8% increase in the number of ballot drop boxes per capita. This means that a new organizing drive that brought just 1 out of every 10 workers into a labor union, for example, could more than offset the decrease in ballot drop boxes associated with Republican control of a state government.

Figure 1: Relationship between county-level union density and ballot drop boxes per capita during the 2022 midterm elections

With today’s BLS report in mind, however, we must remember that the reverse also holds: decreases in union density can lead to further restrictions on ballot drop boxes. Consider the state of Wisconsin, where union density decreased by 4.4 percentage points after then-Governor Scott Walker eliminated collective bargaining rights for public-sector workers. Our results suggest that a decline in union density of that magnitude is associated with the disappearance of more than 40% of ballot drop boxes in the average county.

With voting rights under attack, it is hard not to see the decline of labor unions as an enabling factor in the erosion of America’s democratic institutions. We need a resurgence of the labor movement not only to improve wages and working conditions for U.S. workers, but also to enable unions to continue their vital fight to defend American democracy.

This is a guest post. Adam Dean is associate professor of political science at George Washington University. Jamie McCallum is associate professor of sociology at Middlebury College. Jake Grumbach is an associate professor at the Goldman School of Public Policy at UC Berkeley. 

The politics of ballot drop boxes are contentious despite their success in recent elections. The Trump presidency ended with widespread concerns about the sustainability of American democracy. Conspiracy theories and disinformation spread by the far-right undermined faith in the integrity of U.S. elections, contributing to 6 out of every 10 Republicans still believing that President Biden did not win the 2020 election. The Republican Party has used these public doubts to justify new voting restrictions, with a particular focus on the ballot drop boxes that were widely introduced to facilitate voting during the COVID-19 pandemic. Labor unions, on the other hand, have played a leading role in recent struggles to protect and expand voting rights, with a particular focus on the defense of ballot drop boxes. As AFL-CIO President Liz Shuler recently explained, “we need mail-in voting and ballot drop boxes…in every community…in every state” (Shuler 2021).

To better understand union efforts to defend voting rights, we obtained proprietary data on every drop box available during the 2022 midterm elections. We matched this data with an original measure of county-level union density and performed the first ever national study of the use of ballot drop boxes in the United States. Using multilevel modeling, we found that labor union density was positively associated with access to ballot drop boxes, even after controlling for various county-level socioeconomic factors and the partisan control of state governments. While scholars have long known that labor unions improve workers’ wages and working conditions, our results suggest that unions may also play a vital role in defending voting rights and American democracy (Ahmed et al. 2022; Dean et al. 2022; Farber et al. 2021; Grumbach and Collier 2022).

Unions and voting rights

The American labor movement has historically had a complicated relationship to democracy and voting rights. Whereas organized labor played a central role in democratic revolutions in some European, Latin American, and Asian countries in the 19th and 20th centuries, the American Revolution lacked a labor connection. American labor unions in the 19th and early 20th centuries, such as the American Federation of Labor (AFL), were closed to workers of color and often opposed civil and voting rights for Black Americans and new immigrant groups. W.E.B. Du Bois famously lamented that white workers preferred to align with the wealthy rather than with freedmen during and after Reconstruction (Du Bois [1935] 2014). Although the Knights of Labor (KOL), a rival 19th century labor federation, was relatively more open to Black workers, it was vehemently xenophobic and played a leading role in the violent expulsion of Chinese workers from Seattle in 1886 (Kessler 1952; Karlin 1948).

But by the 1930s, both majority white unions and Black labor movements were making connections between the causes of economic justice and civil rights. The Congress of Industrial Organizations (CIO) pressured the Democratic Party in the 1930s and 1940s to become more aggressive on both labor and civil rights (Schickler 2016). The Alabama Sharecroppers’ Union, the Brotherhood of Sleeping Car Porters, and other Black labor organizations fought for what they saw as the linked struggles for economic and racial justice (Kelley 2015).

Labor unions were central in the push for the Civil Rights Act of 1964 and Voting Rights Act of 1965 (Frymer and Grumbach 2021; Griffith 1988; Lichtenstein 2013). The United Auto Workers (UAW) under Walter Reuther helped to finance bail for Martin Luther King Jr., and civil rights marchers in Birmingham, Alabama. King himself was assassinated in 1968 while working with striking sanitation workers organized under the American Federation of State, County, and Municipal Employees (AFSCME).

The partnership between labor unions and civil rights groups continued to grow, and today’s increasingly diverse labor movement regularly supports ethnic, racial, and gender diversity as well as immigrant rights and voting rights (Fine and Tichenor 2009). It is important to note that many unions, often in craft and public safety sectors, have been found in lawsuits to have discriminated against women, workers of color, and immigrant workers—even in recent years (Frymer 2008). Still, the trend is clear: The American labor movement has increasingly recognized that workers are more powerful when they are not divided by racial, ethnic, gender, religious, or national backgrounds. Today, Black workers in the U.S. are the most likely to be unionized, Hispanics and Asians are the fastest growing sets of union members, and research shows that union membership reduces wage inequality across race and gender.

Along with the growing importance of racial solidarity, unions believe voting is a fundamental right that allows workers to have a say in decisions affecting their lives and their workplaces. Following in the tradition of their support for the federal Voting Rights Act, virtually all major unions have endorsed recent voting rights proposals from the U.S. House, such as the For the People Act (HR1) and the John Lewis Voting Rights Advancement Act. While these pieces of legislation stalled in the U.S. Senate, state governments continued to pass new policies that affected the accessibility of voting—and labor unions have been involved. Labor unions endorsed state-level policies that make it easier for workers to vote, such as expanded access to early voting, mail-in voting, and same-day and automatic voter registration, and came out in opposition to voter suppression policies that increased wait times for in-person voting, shut down ballot drop box locations, or otherwise made voting more difficult.

Recent research by the Economic Policy Institute, for example, demonstrates that states with higher union density were less likely to pass voter suppression laws during the Obama and Trump administrations (Banerjee et al. 2021). Another new paper using a difference-in-differences design shows that the wave of state-level right-to-work laws since 2000 reduced the quality of democratic institutions in the states (Frymer, Grumbach, and Hill 2023). The analysis presented below furthers our understanding of the relationship between labor unions and democracy by exploring a local policy that varies across the country’s more than 3,000 counties, thus enabling us to control for obvious confounding variables such as partisanship, economic development, and racial demographics.

Beyond the fight for voting rights and ballot drop boxes, unions perform a series of other functions that increase workers’ political participation. Numerous studies find that unions increase their members’ political knowledge and shape their policy preferences (Iversen and Soskice 2015; Macdonald 2021; Ahlquist and Levi 2013; Kim and Margalit 2017). These union efforts lead their members to support expanded welfare-state policies that decrease economic inequality (Mosimann and Pontusson 2017). Similarly, union members vote at higher rates than their non-union counterparts (Leighly and Nagler 2007; Rosenfeld 2014), and are more likely to volunteer in political campaigns (Asher et al. 2001). 

In addition to mobilizing their own members to vote, unions also increase election turnout by encouraging political parties to appeal to lower-income voters (Lamare 2010; Radcliff and Davis 2000). Unions develop the individual capacities of their members to run for local office (Sojourner 2013) and to become the kinds of candidates who support policies favorable to working-class voters (Carnes 2013). In general, these studies all highlight the continued political importance of labor unions, despite the precipitous decline in union density over the last half century (Hacker and Pierson 2011; Milkman 2013; Rosenfeld 2014; Ahlquist and Levi 2013; Ahlquist, Clayton, and Levi 2014). 

Ballot drop boxes

In the months before the 2022 elections, the Department of Homeland Security concluded that ballot drop boxes were “a secure and convenient means for voters to return their mail ballot” and sent local governments advice on how to administer the upcoming election (CISA 2022). Recent research shows that access to ballot drop boxes increases voting, especially for low-income and minority Americans who have difficulty taking time off from work to vote in person on election day (Collingwood et al. 2018; Collingwood and O’Brien 2021; Greenberger and Roberts 2022; McGuire et al. 2020). In short, ballot drop boxes represent a crucial piece of the United States’ election infrastructure that helps to increase voting access and equity.

But the lead up to the 2022 midterm elections witnessed deep partisan divides over the use of ballot drop boxes. The Republican Party argued for the restriction of ballot drop boxes, and at times, implemented total prohibitions. These efforts gained momentum in 2020 when President Trump tweeted that “the Democrats are using Mail Drop Boxes, which are a voter security disaster…a big fraud!” State-level Republican officials quickly responded with new restrictions. Texas Governor Greg Abbott, for example, ordered all counties to have only one ballot drop box during the 2020 elections; by 2022, Abbott prohibited ballot drop boxes throughout the state. Of the 17 states that prohibited ballot drop boxes in 2022, 13 had Republican governors, and 3 more had Republican-controlled legislatures. These Republican efforts to ban ballot drop boxes were consistent with the party’s broader recent legacy of restricting voting access and reducing the democratic performance of states that they control (Grumbach 2022).

The Democratic Party, in contrast, supported the widespread use of ballot boxes and accused Republicans of seeking to reduce voting. As President Biden explained in January 2022, “Dropping your ballots off to secure drop boxes—it’s safe, it’s convenient, and you get more people to vote. So they’re [the GOP] limiting the number of drop boxes and the hours you can use them” (Biden 2022). According to Majority Leader Schumer (D-N.Y.), “have they [the GOP] shown that using drop-off ballot boxes creates more fraud than others? No, these are angled at suppressing certain types of people from voting. Not everybody” (Senate Democrats 2022). Of the 14 states with unified Democratic control, 13 made ballot drop boxes available during the 2022 midterm elections—all except for Delaware, whose Supreme Court ruled that “no-excuse” mail-in ballots were a violation of the state’s constitution.

Although state-level governors, legislatures, and courts have tremendous influence over state election policies, the final number and location of ballot drop boxes is often determined by municipal- and county-level elected officials. This means that local access to ballot drop boxes may also be influenced by the demands of local groups that seek to influence voting access (Percival, Johnson, and Neiman 2008). Perhaps the most important of these groups are labor unions, which have historically demanded government policies that make voting easier, especially for low-income and minority Americans (Frymer 2007; Hertel-Fernandez 2018; Nussbaum 2019; Greenhouse 2022; Moore 2021). Continuing this legacy, labor unions have played a leading role in recent national, state, and local struggles to defend voting rights, with a particular focus on the defense of ballot drop boxes.

Labor unions and ballot drop boxes

When Republicans began to propose bills that would ban ballot drop boxes and limit voting access, labor unions were quick to mobilize workers against these new voting restrictions. At the national level, union leaders supported the John Lewis Voting Rights Advancement Act (VRAA) of 2021, which would create federal protections against numerous state-level voting restrictions, including those related to ballot drop boxes. The AFL-CIO announced its commitment to “reverse state voter suppression laws passed in the wake of attempts to undermine the legitimacy of the 2020 presidential election, because every American should have access to the ballot box” (AFL-CIO 2022) 

U.S. labor unions have also helped to organize and lead protests against new state-level voting restrictions. On August 28, 2021, for example, the Service Employees International Union (SEIU) joined civil rights groups and other “Americans who believe in the power of democracy” in a “March On for Voting Rights” (March On 2021). The event simultaneously mobilized protesters in Atlanta; Washington, D.C.; Miami; Phoenix; and Houston to demand an end to voter disenfranchisement laws sweeping Republican-led states (March On 2021). According to the event planners, “the most brazen of these bills—some already passed into law—would suppress high-turnout voting methods by banning ballot drop boxes” (March On 2021). The SEIU explained that “from banning ballot drop boxes and mail-in voting to reducing early voting, these bills limit our rights by making it more difficult for marginalized communities to vote.” The union promised to “continue fighting back against any racist legislation that threatens our democracy” (SEIU Local 73 2021).

On occasion, labor unions have even mobilized local protests against county-level restrictions on ballot drop boxes. In Luzerne County, Pennsylvania, for instance, a member of the county council proposed a ban on the use of ballot drop boxes in the 2022 midterms. In response, the Service Employees International Union and other progressive organizations launched a rally outside the county courthouse in Wilkes-Barre. As one rally organizer explained, “We need to get people to the county council meeting…Maybe the people need to show up and tell them that they’re unhappy with their job performance” (Mocarsky 2022).

County clerks and local election policy

The U.S. has a highly decentralized election administration system, and elections are usually administered at the county level. Although authority over elections varies from state to state, most states delegate decisions over the number and location of ballot drop boxes to county-level elected clerks. States that permit ballot drop boxes often establish county-level minimums but then allow election officials to maintain additional drop boxes at their discretion. For example, Colorado law requires that county election officials must locate the drop boxes “in a manner that provides the greatest convenience to electors,” and must provide at least one drop box for every 30,000 registered voters (NCSL 2022).

Given labor unions’ national, state, and local support for ballot drop boxes, we expect county clerks and other local elected officials charged with administering elections to be responsive to local labor power. In other words, we expect clerks in counties with stronger labor unions to maintain additional ballot drop boxes. This expectation is consistent with cutting-edge research in political science that demonstrates how local demands are translated into local policy outcomes. As Warshaw explains, “local policies in the modern era tend to largely reflect the…composition of their electorates” (Warshaw 2019). In fact, the low turnout in most local elections may especially empower groups like labor unions, which can pressure elected officials and mobilize voters to the polls (Anzia 2013, 2021; Berry and Gersen 2010).

Labor union leaders, for their part, appear confident in their ability to influence local election policy. As Damon Silvers, Policy Director and Special Counsel for the AFL-CIO, explained “where the labor movement is powerful, elected officials are far less likely to be in the business of voter suppression…They just can’t get away with it.” 1 Especially since the 2000 elections, the AFL-CIO has pushed its central labor councils to work closely with affiliated unions, civil rights groups, and voting rights groups to monitor and assess local election regulations. These local coalitions, working at the county level, study the number and location of ballot boxes and voting machines and make sure that election infrastructure is sufficient to guarantee voting access and to avoid long lines. When voting access is deemed inadequate, Silvers said, unions “speak to their local political officials and get it fixed. They [are] embedded in the political process.” 2 And when talking with officials fails, the AFL-CIO often turns to litigation: “When push comes to shove, we have the lawyers and we have the apparatus for a real fight…if they’re bent on doing it wrong, sue them.” 3 

In short, labor unions have a long history of fighting for voting rights and have played an active role in demanding access to ballot drop boxes before the 2022 midterm elections.

Material and methods

We obtained proprietary data from Democracy Works, a non-profit organization focused on voting access, on the location of all ballot drop boxes available during the 2022 midterm elections. We then aggregated this data to create a count measure of ballot drop boxes per county.

For labor union density, we created a first-of-its kind county-level measure of the percentage of workers who are members of a labor union using the MRI-Simmons LOCAL consumer survey (MRI-Simmons 2023).4 MRI-Simmons released county-level estimates of union density for every year from 2013 to 2021, and we used the mean value over this time period in order to reduce measurement error.

We then used the state-level union density estimates reported by the Bureau of Labor Statistics (BLS) in order to scale our county-level measures within each state. For example, this meant scaling up our measure of union density for all counties in Illinois and scaling down our measure for all counties in Louisiana.5 Our new county-level measure of union density is available for 3,111 U.S. counties. The only alternative measure of county-level union density from the Bureau of Labor Statistics is available for just 279 of the country’s largest counties. The correlation between our new measure and the BLS measure is 0.82, suggesting that our use of the MRI-Simmons survey accurately captures union density throughout the United States.

To examine the association between ballot drop boxes and labor union density, we estimated cross-sectional, multilevel negative binomial regression models (using log population as an exposure term). Our main model controls for the county-level median income (logged), unemployment rate, percentage of Black residents, land area, and the percentage of voters who voted for Donald Trump in the 2016 presidential election. We also included state-level measures of whether each state government was divided, had Republican-unified control, or had Democratic-unified control. Finally, we included state fixed effects to adjust for state-specific characteristics and election policies.

Results

We identified 17,935 ballot drop boxes across 33 states. The following 17 states each had zero ballot drop boxes available in 2022: Alabama, Alaska, Arkansas, Delaware, Indiana, Louisiana, Michigan, Mississippi, Missouri, New Hampshire, North Carolina, Oklahoma, South Carolina, South Dakota, Tennessee, West Virginia, and Wisconsin. Of the states with drop boxes, the state with the most was New York (5,359), and the state with the fewest was Wyoming (5). In counties where labor union density was below the mean (8%), there were 9.1 ballot drop boxes per 100,000 residents. In counties where labor union density was above the mean, there were 11.8 ballot drop boxes per 100,000 residents. In states with unified Democratic control, the average county had 22.5 drop boxes per 100,000 residents. In states with unified Republican control, the average county had 3.8 drop boxes per 100,000 residents. Figure A and Figure B display geographical variation in ballot drop boxes and labor union density, respectively, across the continental United States.

Figure A

Figure B

Our adjusted multilevel negative binomial regression analyses found a positive association between unions and ballot drop boxes during the 2022 midterm elections. A one percentage point increase in union density was associated with a 9.8% increase in the number of ballot drop boxes per capita. We also found that partisan control of state government was associated with large differences in ballot drop boxes. Compared with divided government, Republican control was associated with a 93% decrease in drop boxes, while Democratic control was associated with an 8-fold increase in drop boxes. Beyond labor union density and partisan control of state government, we found that ballot drop boxes were negatively associated with county-level median income and land area and positively associated with Trump’s 2016 vote share.

Sensitivity analyses

Our results were robust to a series of sensitivity analyses. First, we estimated a similar model using negative binomial regression rather than multilevel modeling. We included the same county-level covariates as our main model as well as state fixed effects, which precluded us from including state-level measures of partisan government control. In this analysis we drop data from the 17 states that prohibited the use of ballot drop boxes during the 2022 midterm elections. Our results are similar, suggesting that a one percentage point increase in union density was associated with an 8.3% increase in ballot drop boxes per capita.

Second, we estimated our main multilevel negative binomial model using an alternative measure of county-level union density that does not re-scale our data using BLS state-level estimates of union density. Our results are similar, suggesting that a one percentage point increase in union density was associated with a 17.8% increase in ballot drop boxes per capita. We also find that Republican control of state government was associated with a 94.6% decrease in ballot drop boxes, while Democratic control was associated with an 11-fold increase in ballot drop boxes.

Third, we estimated our main multilevel negative binomial model with alternative measures of partisan state control. As reported above, our main model explores differences between Republican unified control, divided government, and Democratic unified control. In these robustness checks we included 1) only the partisanship of the governor, 2) only the partisanship of the state legislatures (Republican control, divided, Democratic control), and 3) both the partisanship of the governor and the state legislatures. In these three tests we find that 1) moving from a Democratic governor to a Republican governor was associated with a 93% decrease in ballot boxes per capita, 2) moving from divided state legislatures to Republican control was associated with a 98% decrease in ballot drop boxes per capita, and 3) when we included measures for the partisanship of the governor and legislatures in the same model, only Republican control of the legislature was statistically significant.

Fourth, we estimate a negative binomial model using only the 14 states that had Republican-controlled state legislatures and permitted the use of ballot drop boxes. We included the same county-level covariates as our main model as well as state fixed effects and found that one percentage point increase in union density was associated with an 11.6% increase in ballot drop boxes per capita. Importantly, these results suggest that the link between labor unions and ballot drop boxes is not driven by Democrat-controlled states placing ballot drop boxes in counties with large labor union constituencies that lean Democratic.

Discussion

Labor unions have long fought to increase voting access for all Americans. In the lead up to the 2020 presidential election, unions mobilized at the national, state, and local levels to defend voting rights, including access to ballot drop boxes. Our negative binomial regression analysis found that county-level union density and access to ballot drop boxes are positively associated, with a one percentage-point increase in union density associated with a 9.8% increase in ballot boxes per capita. Although the causal mechanisms are difficult to disentangle, this finding underscores the connections between union strength and the health of American democracy.

Our results are not just statistically significant; they also suggest that the relationship between unions and ballot drop boxes is substantively and politically important. First, recall that the Republican party has sought to restrict access to ballot drop boxes during U.S. elections. As discussed above, unified GOP control of state-level governments is associated with a 95% decrease in ballot drop boxes per capita. 

What would it take for unions to counteract this dynamic associated with unified Republican power? According to our results, it would require a 9.7 percentage point increase in union density, or roughly the difference in union density between North Carolina (2.6) and Pennsylvania (12.9) in 2021. In other words, large increases in union strength could help defend ballot drop boxes even in the face of unified Republican control of state governments.

Unfortunately, the reverse also holds: Decreases in union density could lead to further restrictions on ballot drop boxes. And union density has been in decline for decades despite recent organizing breakthroughs at Starbucks and Amazon, and an increase in public support for labor unions. From 2013 to 2021, for example, union density in the state of Wisconsin decreased 4.4 percentage points. Our main results suggest that a drop in union density of this magnitude would be associated with a decrease of 10 ballot drop boxes for every 100,000 residents. This is a substantively large reduction in ballot drop boxes that would likely decrease actual voting; among the 1,397 U.S. counties that used ballot drop boxes during the 2020 elections, the mean number of ballot drop boxes per 100,000 people was roughly 24. This means that a decline in union density similar to what has occurred in Wisconsin would be associated with the disappearance of more than 40% of ballot drop boxes in the average county. 

Conclusion

Recent assaults on voting rights are part of a broader threat to democracy in the United States. For example, the GOP has recently succeeded in limiting the use of ballot drop boxes—a simple and secure way to increase voter turnout—during American elections. In 2022, for example, all but one of the 17 states that completely banned ballot drop boxes had either a Republican governor or a Republican-controlled legislature. Overall, our analysis found that unified Republican control of a state government was associated with a 95% decrease in ballot drop boxes per capita.

In the face of these Republican efforts, labor unions, often in concert with elements of the Democratic Party, are leading a struggle to defend and even expand access to voting for Americans. When it comes to access to ballot drop boxes, the difference between states with unified Democratic control and states with unified Republican control is especially stark: Democratic-controlled states maintain approximately 6 times as many ballot drop boxes per capita as do Republican-controlled states.

Beyond these important partisan differences, our analysis of the 2022 midterm elections found that local labor union power is associated with greater access to ballot drop boxes. Using multilevel negative binomial regression, we found that a one percentage point increase in union density was associated with a 9.8% increase in the number of ballot drop boxes per capita. These results suggest that a resurgence of labor union power may help to increase access to ballot drop boxes as part of a larger effort to defend voting rights and democracy in America. A new organizing drive that brought just 1 out of every 10 workers into a labor union, for example, could more than offset the decrease in ballot drop boxes that is associated with Republican control of a state government.

American labor unions have played an active role in extending and defending democracy since at least the fight for the Civil Rights Act and Voting Rights Act of the mid-1960s. With voting rights increasingly under attack from the Republican Party, it is hard not to see the decline of labor unions since the 1980s as an enabling factor in the erosion of America’s democratic institutions. 

Thankfully, there are growing reasons for optimism. The COVID-19 pandemic forcefully illustrated that unions can make a life-and-death difference for workers and their broader communities (Maffie 2022). In U.S. nursing homes, for example, unionized facilities had lower COVID-19 infection rates for workers as well as lower COVID-19 mortality rates for residents (Dean, Venkataramani, and Kimmel 2020). With these broad social benefits on clear display throughout the pandemic, a new AFL-CIO study found that 88% of Americans under the age of 30 currently approve of unions. In short, the horrors of the pandemic workplace may have triggered a resurgence in the American labor movement just in time to help defend our democracy (Grumbach 2022; McCallum 2022).

About the authors

Adam Dean is associate professor of political science at George Washington University. Dean’s research focuses on labor politics, international trade, and public health. He is the author of two books, From Conflict to Coalition (2016) and Opening Up by Cracking Down (2022), both of which examine labor unions and the political economy of globalization.

Jamie McCallum is associate professor of sociology at Middlebury College. He is the author of Essential: How the Pandemic Transformed the Long Struggle for Worker Justice (2022), Worked Over: How Round-The-Clock-Work Is Killing the American Dream (2020), and Global Unions, Local Power (2013).

Jake Grumbach is an associate professor at the Goldman School of Public Policy at UC Berkeley. Grumbach studies the political economy of the United States, with interests in democratic institutions, labor, federalism, racial and economic inequality, and statistical methods. His book, Laboratories Against Democracy (2022), investigates the causes and consequences of the nationalization of state politics.

Notes

1. Jamie McCallum, interview with Damon Silvers, 2023.

2. See note 1 above.

3. See note 1 above.

4. Our substantive findings are similar when using a non-scaled version of our union density measure. 

5. The MRI-Simmons data were used in a Cornell ILR blog post by Russell Weaver: https://blogs.cornell.edu/highroadpolicy/2021/09/06/a-union-member-geography/. MRI-Simmons uses a proprietary modeling technique to produce union membership estimates for various geographies in the United States.

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The culmination of literacy tests, economic retaliation, and racial terrorism prevented many Black people from registering to vote and fully participating in our democracy, particularly in Southern states. The inexplicable link between brutality and voter suppression is deeply entrenched in American history and has shaped many of the historical events within the civil rights era.

The racial violence and tension that many Black people had experienced daily reached a boiling point during the first attempt at marching from Selma to Montgomery where demonstrators, led by John Lewis and others, were beaten and tear-gassed by state troopers and Ku Klux Klan members, leaving them unable to progress forward.

Infamously known as “Bloody Sunday,” the events of this gruesome demonstration shocked the nation. The fierce outrage led to a federal court order permitting the voting right marchers to finish their journey while under the protection of the National Guard. The events in Selma and the growing public support for the protestors later motivated Congress to pass the Voting Rights Act of 1965 prohibiting racial discrimination in voting and barring voter registration loopholes like poll taxes and literacy tests. Following the passage of the Voting Rights Act, voter registration increased significantly as seen in Figure A.

Figure A

The legacy of the March on Selma is both inspiring and somber for several reasons. Without the sacrifice of so many brave civil protestors, activists, and demonstrators, we wouldn’t have many of the voting protections we have today. However, despite their valiant efforts, our country is still fighting to protect our basic right to vote over 50 years later. Currently, faith leaders and activists around the country are protesting through hunger strike to urge Congress to pass meaningful voting rights legislation to combat the threats against our democracy in the form of rampant voter suppression.

Across the country, state legislatures are cutting back on early voting, gerrymandering, narrowing voter identification requirements, and passing felony disenfranchisement laws. In the wake of the 2020 election, at least 19 states had passed 34 laws restricting access to voting, and more than 440 bills with provisions that restrict voting access have been introduced in 49 states in the 2021 legislative sessions. Figure B illustrates the states that have either enacted expansive voter protection bills, voter restrictive bills, or a mixture of both.

Figure B

Most of the states that passed these restrictive voting laws have also implemented policies that contribute to growing economic inequality and undermine worker power. For example, of the 19 states that had passed restrictive voting laws, 16 of them have so-called “right-to-work” laws in place and 13 of the states use the meager federal minimum wage of $7.25.

Both of these policies contribute to lower wages and benefits while weakening workplace protections and the economic security of these workers and their families. These policies also disproportionately hurt workers of color and exacerbate the economic harm and disparities communities of color face. Without broader voting access and increased protections against voter suppression tactics, these policies will continue to maintain the long-standing history of racial segregation and economic oppression in this country.

Congress has the unique opportunity to address many of these obstacles by passing the Freedom to Vote Act, which would significantly bolster voter participation and access, promote racial justice and equity, and counter the ongoing assault on voting rights within state policy. Specifically, the Freedom to Vote Act would:

• Set new federal standards protecting people’s voting rights.
• Expand voting by mail and early voting.
• Standardize automatic voter registration.
• Make Election Day a legal public holiday.
• Reinstate voting rights to all those with felony convictions who’ve completed their sentences.
• Strengthen protections of election administration officials, combat gerrymandering practices, and bolster campaign finance laws.

The right to vote is a critical economic provision that enables people to have a voice in local, state, and federal decision making as well as how resources are allocated for their families and communities. Without protecting this right, the needs of voters and their families will be unmet and their economic well-being could be at risk.

Limited voting options—as seen during the ongoing COVID-19 pandemic and the 2020 elections—present even more challenges for voters who are exercising their right, and other forms of voter suppression make voting inaccessible to many of the least privileged members of society. For groups who have been historically disadvantaged, these implications are far more acute and sustain present inequities. Congress must pass this bill to invest in our democracy and safeguard our rights.

The Freedom to Vote Act embodies many of the sacrifices, hopes, and dreams that demonstrators fought for in the March on Selma. Fifty years later, our country is on the path of reconstructing those dreams into restorative policy. This comprehensive bill reform exemplifies the true goals of our democracy and strives to strengthen the voices of those who have been systematically excluded.

When the coronavirus pandemic arrived, the United States was already deeply unequal. Before the pandemic, 140 million Americans were poor or near poor,* living just one emergency above the poverty line. The 140 million included approximately 60 percent of Black, non-Hispanic Americans (24 million), 64 percent of Hispanic Americans (38 million), 60 percent of Indigenous Americans (2 million), 40 percent of Asian Americans and Pacific Islanders (8 million), and 33 percent of white Americans (66 million).2

Indeed, the pandemic spread rapidly in the fissures that previously existed because of racism, poverty, and profound inequality—and our refusal to acknowledge the full extent of these injustices in our public discourse or public policies. Alongside enduring inequities in the social determinants of health (including access to safe and affordable housing, clean air and water, healthful foods, quality education, and public transportation), the economic effects of the pandemic hastened even greater insecurity, especially for poor people of color. It is estimated that the 140 million grew to nearly 150 million during the pandemic,3 but most of these people remain uncounted among the poor and therefore excluded from many of our policies. At the same time, our policy responses to this widespread insecurity are constrained in part because we do not have an accurate account of it.

This inequality in the United States did not happen suddenly and cannot be explained as the consequence of individual failures; rather, decades of public policies brought us to this point, making the rich richer at the expense of everybody else. When we fail to meet basic needs for food, housing, and health care for everyone, when we fail to invest in education, safe communities, and fair elections, the health and well-being of our entire nation is compromised. We waste our most precious resources, yes. But more than that, we allow the potential of individuals, families, and communities—and the full potential of our nation and its ideals—to go unrealized.

This article is a collaboration between the Poor People’s Campaign: A National Call for Moral Revival—a moral movement rooted in the legacy of Rev. Dr. Martin Luther King Jr. that is organizing around the needs and demands of the 140 million in 45 states—and the Economic Policy Institute (EPI)—an independent, nonprofit, nonpartisan organization that uses economic research and analysis to understand and improve the economic conditions of workers and their families. In this article, we evaluate the public policies that shaped the preexisting conditions of the pandemic, policies that were by no means accidental or morally neutral, and lay out the policies that we need to counter and reverse the status quo, including the heightened suffering from the pandemic.

The roots of the pandemic recession

The economic damage done by COVID-19 in the United States was amplified by the decades of policy choices leading up to it. The early months of the pandemic precipitated a historically large and damaging economic shock, far beyond the 2008–09 Great Recession and even the 1929–39 Great Depression. Because COVID-19 spread so efficiently in face-to face situations, economic sectors that relied on in-person interactions—including food service, retail, hospitality, education, and many health sectors, among others—were essentially closed when social distancing measures came into force. These widespread closures resulted in a stunning collapse of economic activity and employment. In March and April of 2020 alone, 22 million workers lost their jobs.4 Along with lost income, an estimated 12 million people also lost employer-sponsored health insurance.5

The recovery from this shock has been uneven. Although recessions always hit low- and middle-wage workers the hardest, by the end of 2020 the lowest-wage sectors were still down by nearly 8 million jobs while the highest-wage sectors actually gained about 1 million jobs (Figure A).6 Within low-wage sectors, Black, Hispanic, and women workers have been disproportionately impacted.7 Recovery could be a long time coming for many of these workers.8

Figure A

This overwhelming impact on low-wage work reflects an economy that has become dramatically more unequal over the past 40 years. As summarized in Figure B, huge swaths of the U.S. workforce have been disempowered since the 1970s.9 Productivity—defined as the amount of income generated in an average hour of work in the entire U.S. economy—has grown consistently over this time. But instead of going to typical workers, the benefits of our increasingly productive economy have gone mainly to corporate and business executives and wealth owners (e.g., stock market investors). Therefore, what Figure B really shows is the stark disparity between what workers are paid and what they could be paid.

Figure B

If typical workers’ pay had kept up with productivity growth over this time, there would have been no increase in inequality. In a very real sense, that “wedge” between productivity and pay is the extent of inequality in the U.S. economy.

This inequality becomes more stark as we move down the wage distribution. Wage growth has been most stunted for the lowest-wage workers (Figure C). Workers at the 10th percentile saw only 3.3 percent cumulative growth in hourly wages between 1979 and 2019;† however, workers at the 50th percentile saw 15.1 percent growth over that period, and workers at the 90th percentile saw 44.3 percent growth.10 As stark as these disparities are, at the very top of the earnings distribution, the gaps become enormous. Analyzing annual earnings,‡ EPI finds that while wages for the bottom 90 percent of workers grew 26 percent, workers at the 99th percentile saw 160 percent wage growth and those at the 99.99th percentile saw 345 percent wage growth.12

Figure C

The moral and economic costs of poverty and inequality

Rising inequality is associated with slower overall economic growth and more persistent poverty. As shown in Figure D, EPI has estimated that if we had not experienced rising inequality since the late 1970s—if the fruits of our productivity had continued to be shared more broadly, as they were in previous decades—the poverty rate would have dropped to zero by the year 2000.13

Figure D

This is not the trajectory we have followed. Instead, poverty and economic insecurity have been allowed to grow alongside the concentration of wealth in fewer and fewer hands, with real consequences:

• Families are hungry. In 2019, more than one in 10 U.S. households faced food insecurity at some point during the year, and households with children were even more likely to not know where their next meal was coming from. Food insecurity affects Americans of all races and ethnicities; however, white households faced food insecurity at lower rates (7.9 percent) than Black (19.1 percent) or Hispanic (15.6 percent) households.14
• People’s health is sacrificed. A 2018 survey15 found that 87 million Americans had inadequate health coverage—they were either uninsured (roughly 24 million) or underinsured, putting them at risk for medical debt, onerous health cost burdens, and poor health outcomes, including deaths that could have been prevented.16 Most of these people are either unable to work or are in low-wage jobs that do not offer insurance and do not pay enough for workers to purchase insurance. They also disproportionately live in states that have refused to expand Medicaid. In 2019, 94 percent of those in the top 10 percent of wage earners—but only 24 percent of those in the bottom 10 percent of wage earners—had access to health insurance through their employer.17
• Education is compromised. There are large gaps in educational achievement between children from the families with the fewest resources and those with the most. The strong relationship between income inequality and educational inequality perpetuates lack of opportunity, decreases social mobility, and “represents a societal failure that betrays the ideal of the ‘American dream.’ ”18
• Safe, affordable housing is elusive for many families. More than 60 percent of workers do not earn enough to afford a two-bedroom rental home (with “affordability” defined as costing no more than 30 percent of income); the median wage is just barely sufficient for a one-bedroom rental.19 And there is no place in the country where a full-time worker earning the federal minimum wage comes even close to being able to afford a two-bedroom apartment.20

The sum total of these impacts is devastating: every year, approximately 250,000 people die from poverty and income inequality.21

This human tragedy goes largely ignored, which allows inequality to grow unchecked and does not make good economic sense. In today’s severely unequal economy, economic growth is slower, downturns are more severe and painful, and our economy fails to reach its full potential. When low-wage workers get a raise, they generally put that money right back into the economy, spending it on things their families need—which in turn supports jobs and economic growth. In contrast, high-wage workers are much more likely to save any extra dollars they receive.22

Maintaining this vastly unequal economy has costs. For example, the aggregate costs of child poverty, considering everything from child homelessness to crime and health costs to lost economic productivity, is estimated at $1 trillion per year.23 Similarly, barriers to full labor market participation and compensation for women and people of color were estimated at $2.6 trillion of our gross domestic product in 2019.24 But the full extent of such losses is impossible to quantify. Children lifted out of poverty and protected from its destabilizing effects are potential teachers, firefighters, health care workers, researchers, innovators, caring family members, good neighbors, loving parents, and engaged citizens. People performing valuable—but chronically underpaid—services, such as cleaning buildings, stocking grocery store shelves, and caring for elderly Americans, deserve to be paid fairly, to receive necessary benefits like sick leave, and to be protected at work; they should not live in poverty or near poverty, wondering how they will pay their rent and buy food or what will happen if they get sick. And everyone living in our society must have some adequate foundation of economic security if they are unemployed or to fall back on in times of crisis.

How we got here

The wedge between pay and productivity is no accident. It is the result of intentional policy and fiscal choices designed to redistribute economic leverage and bargaining power away from typical workers. There was no single piece of legislation that did this; instead, it was the accumulation of dozens, if not hundreds, of choices made in the form of legislation, regulatory changes, and administrative and judicial decisions that consistently allowed the wealthy to reap the vast majority of the benefits of economic growth.25

As corporations and employers have been prioritized over communities and employees, anti-poverty programs have been consistently underfunded, while spending on war, prisons, and immigration enforcement has been steadily increased. These choices were only possible because our democracy has been weakened by voter suppression, keeping those who are most impacted by these skewed priorities out of our political system.

Here we describe six policy choices and three fiscal choices that have promoted the steady growth of inequality over the last 40 years.

Policy choices

Chronic excessive unemployment has been enabled by austerity-driven macroeconomic policies. The Federal Reserve Board (Fed) has the dual mandate to pursue the maximum level of employment consistent with stability in inflation. However, post-1979, Fed policymakers have too often guarded excessively against inflation, with grave consequences: they cut recoveries short before the benefits had reached low- and moderate-wage workers.§

Further, during recessions, Congress has too often failed to pass needed recovery measures. We saw this most starkly in the aftermath of the Great Recession, when economic recovery was actively held back by a Republican-led U.S. Congress and Republican state governments that imposed steep austerity measures. Public spending grew more slowly in the recovery following the Great Recession than during any other recovery since World War II.26 Federal aid to state and local governments was stopped too soon, and Republican governors embraced austerity as an economic strategy to further reduce government outlays. This throttling of state and local government spending delayed a full recovery (i.e., a return to 2007’s pre-recession unemployment levels) by four full years.27

Corporate-driven globalization has shifted economic leverage away from low- and middle-wage workers. Globalization was expected to depress wage growth for the majority of American workers, but policy failures have significantly amplified these damaging effects, turning it from a manageable challenge into a deep economic wound. Globalization has been used—at the behest of corporations—as a tool to shift economic leverage and power away from low- and middle-wage workers. Non-college-educated workers have seen their wages cut and their jobs become less secure, while multinational corporations and highly credentialed professionals have seen their incomes and market power carefully protected. Contrary to stereotypes, these effects are not just a problem for white manufacturing workers in the Rust Belt (an area of industrial decline stretching from the Northeast to the Midwest); they impact the majority of workers and likely fall disproportionately on the wages of nonwhite workers.28

Collective bargaining rights have been eroded. The National Labor Relations Act, which is supposed to protect the right of private-sector employees to form a union and bargain collectively, has increasingly failed to safeguard workers’ rights and has been inconsistently enforced, with too many loopholes that employers have been able to exploit. Unions address inequality on multiple levels. Unions help to narrow wage gaps, relative to white men, for women and for Black and Hispanic workers.29 When we had higher levels of unionization, the top 10 percent of wage earners commanded a lower share of total income in the United States, as seen in Figure E.30 But, as also seen in Figure E, union membership has declined over the last several decades, accompanied by rising inequality. This erosion of collective bargaining has lowered the median hourly wage by $1.56, which adds up to $3,250 per year for a full-time worker.31

Figure E

The bulk of this decline has taken place in the private sector, as unions have faced intense opposition from private employers; however, public-sector unions have been increasingly under attack in recent years. For example, in Wisconsin, public-sector union membership rates dropped from 50.3 percent in 2011 to 24.4 percent in 2018, following the 2011 passage of Act 10, which undercut collective bargaining rights for public-sector workers in the state.32 The 2018 Supreme Court decision in Janus (which allows nonmembers to benefit from collective bargaining without paying any union fees) poses a major threat to public-sector unions. Although unions like the AFT remain strong, the full extent of Janus’s impact remains to be seen.33

Labor standards have been weakened. Key changes include a steady decline in the value of the minimum wage, insufficient protections against unpaid overtime and wage theft, and inadequate resources dedicated to enforcement to help workers whose employers have underpaid them or failed to pay them altogether.

The federal minimum wage was meant to guarantee a living wage and protect workers from being exploited, but it has been raised in only an ad hoc manner since its inception in 1938 and infrequently since the late 1970s. In recent decades, its real value has declined by a third (Figure F). In 2021 dollars, the real (inflation-adjusted) value of the hourly minimum wage has dropped from its high of $10.59 in 1968 to $7.34 in 2020.

Figure F

Making matters worse, employers are able to get away with misclassifying employees as “independent contractors”; those workers lose out on rights and benefits associated with being an employee, such as the protection of minimum wage and overtime laws, workers’ compensation, and health insurance benefits—amounting to a significant savings for employers. Employers who misclassify workers also don’t contribute to those workers’ Social Security and Medicare (the workers must pay the entire tax). Misclassification is harmful to workers and profitable for employers—and there are few disincentives to stop employers from doing it.34

Immigrant workers, especially those who are undocumented, are particularly vulnerable. U.S. immigration policy has effectively created “labor standards free zones,” allowing for wage suppression and other forms of exploitation—particularly against migrant workers. This, in turn, suppresses wages for U.S. workers across the board.35

Employer actions to limit employees’ rights have been allowed to grow unchecked. Many employers require their employees to sign away certain rights on the first day of work as a condition of employment (for example, through noncompete and forced arbitration agreements).36 The use of such strategies to undercut workers’ rights has been allowed to grow without intervention from policymakers, hurting the economic position of workers.

New corporate structures that consolidate market power have been tolerated by policymakers. New and emerging corporate structures have put further pressure on workers’ rights, depressed wages, and made it difficult for workers to hold their employers responsible for labor law violations or to collectively bargain over wages and working conditions. These include workplace “fissuring” (e.g., subcontracting even core services and treating workers as independent contractors),37 industry deregulation, privatization, buyer dominance affecting entire supply chains, and increases in the concentration of employers.38

Fiscal choices

Inadequate poverty measures have led to inadequate poverty programs and misguided national priorities. The federal government’s official poverty measure was developed in the 1960s based on food and expense data from the 1950s. Other than being adjusted for inflation, it has remained essentially the same for over 50 years, even though the costs of many basic necessities have outpaced inflation and other costs, like health care and child care, were not even imagined at the time. Today, the poverty thresholds are approximately $12,880 per year for a single person and $26,500 for a family of four. When compared against the contemporary costs of basic necessities, these amounts are absurdly low. Even the government’s Supplemental Poverty Measure, which is an improvement, is still too low given the costs of living today.**

Because anti-poverty programs are based on these measures, they have never met the need at hand—and they have even been scaled back. The largest reduction in cash assistance to low-income families came with the passage of the Personal Responsibility and Work Opportunity Reconciliation Act in 1996, which eliminated Aid to Families with Dependent Children (AFDC; a program created under the Social Security Act of 1935) and replaced it with Temporary Assistance for Needy Families (TANF).39

TANF not only ended the entitlement of a right to welfare but also drastically reduced resources available to families in poverty and imposed unrealistic work requirements on recipients. Former TANF beneficiaries forced into the labor market faced low wages, irregular schedules that made work-life balance nearly impossible, and precarious work that often provided no employee benefits.40 These changes curtailed the reach and impact of our welfare programs. In 1996, AFDC reached 68 percent of poor families,41 far more than the 23 percent of poor families that TANF reached in 2019. In all but three states, TANF benefits have declined since 1996 in real value, with monthly benefits at or below two-thirds of the federal poverty line.

These cuts mirrored cuts to other federal programs and assistance. The affordable housing stock, for example, has declined by 60 percent since 2010,42 and 10,000 public housing units are lost every year.43 Consequently, only about one in four people eligible to receive federal housing assistance actually receives it.44 Likewise, federal support for basic needs, such as water or sanitation, has declined precipitously. From its peak in 1977, federal assistance to local water systems has fallen 77 percent,45 even as pipes are aging and water, sanitation, and wastewater infrastructure investment needs are rising. This has led to higher water rates, mass water shutoffs, and toxins like lead leaching into water sources, compounding other health crises in poor and low-income communities.

Alongside failures to meet these fundamental needs of tens of millions of people are choices to allocate our public resources to war and war preparedness, mass incarceration, cruel immigration enforcement, brutal policing, and polluting sectors of the economy (e.g., oil and gas production). These policy decisions compromise our quality of life and life itself, both in America and around the world.46 Indeed, the U.S. Department of Defense is the largest institutional emitter of greenhouse gases in the world, and its overseas operations have the worst environmental impacts.47 And our expanded fossil fuel infrastructure poses serious threats to the climate, water quality, and public health through leakage as well as catastrophic spills, which are mainly concentrated in poor and low-income communities.48

Tax policy has favored the wealthy and powerful. Our tax code has been riddled with loopholes and giveaways to rich, large corporations and Wall Street for years, but the 2017 tax cuts grew their wealth enormously. The new law cut the top marginal tax rate for individuals from 39.6 to 37 percent and privileged income from investments over income from work by making the top base rate on income from capital gains just 20 percent. This was a huge giveaway to the richest 1 percent, who hold more than half of national wealth invested in stocks and mutual funds.49

The corporate tax rate was also cut back from 35 to 21 percent, a move that will cost $1.3 trillion over 10 years.50 Although corporate profits were already near record highs, the tax break was justified to boost investment and job creation. However, in the first few months after passage of the new tax law, U.S. corporations announced nearly $1 trillion in stock buybacks,51 while real investment in plant and equipment began quickly cratering.52 As a 2021 study concluded, these so-called trickle-down tax policies really only benefit the wealthy and therefore increase inequality.53

Voter suppression has marginalized the concerns of poor and low-income Americans. The concerns of poor and low-income people—who make up more than 40 percent of the population—are not marginal issues, but their concerns have been marginalized within the national political discussion. A 2020 report published by the Poor People’s Campaign finds that among adults eligible to vote, people with low incomes are significantly less likely to vote than people with higher incomes, which means their interests are not well represented by policymakers.54 A long and ongoing history of voter suppression is certainly a major factor—if not the factor—at the root of this low voter turnout. That suppression is often racially motivated and is used to enact policies that increase inequality and negatively impact the 140 million Americans living in or on the edge of poverty.

There has been a dramatic rise in voter suppression since 2013, when the Supreme Court gutted key protections of the Voting Rights Act of 1965 in Shelby v. Holder. One of these protections was the preclearance requirement, which mandated that the U.S. Department of Justice (DOJ) investigate and approve any changes to voting laws in jurisdictions with a noted history of racist voter suppression. Up until Shelby, preclearance had been effectively used for decades. In North Carolina alone, the DOJ had objected over 60 times to more than 150 changes to voting laws on the grounds that they were racially retrogressive.

Since 2013, there have been hundreds of voter suppression laws introduced in nearly every state in the country, and two presidential elections have taken place without the full protections of the Voting Rights Act.55 In fact, in just the first six months following the 2020 election, 47 states introduced over 380 laws to suppress the right to vote.56 Although Black, Hispanic, Indigenous, and poor people are often the direct targets of these laws, the impact of these laws is felt among the broader population of poor and low-income people.

To fight back, a multiracial democracy must rise up to demand better economic and social policies.

Transformative policies

Because policy and fiscal choices have been used to perpetuate and deepen inequality, they can also be used to usher in an era of greater equality and equity. Here we offer 10 discrete, ambitious policy changes that would be transformative, especially for the 140 million poor and low-income people who were facing significant challenges even before COVID-19.

1. Prioritize ‘high-pressure’ labor markets

Policymakers must commit to ending recessions and restoring “high-pressure” labor markets (in which unemployment is very low) as quickly as possible. This would represent a fundamental break with decades of past practice, when policymakers’ prime concern was very low inflationary pressures, which led them to engineer (or at least tolerate) excessively high unemployment.57 High-pressure labor markets fundamentally change the bargaining dynamic between workers and employers, forcing employers to go begging for workers and increasing workers’ leverage over wage negotiations.

2. Raise the federal minimum wage

In 1963, the March for Jobs and Freedom (a.k.a. the March on Washington) demanded a federal minimum wage of $2 per hour. Adjusted for inflation, this would be roughly $15 today. Adopting the march’s demand and boosting the federal minimum wage to $15 by 2025 would give a raise to 32 million workers, with Black workers and women seeing the greatest gains. If the federal minimum wage had kept up with productivity since its inception, it would be over $23 per hour today. A labor market is only as strong as its floor, and the federal minimum wage needs to be significantly strengthened to bolster this floor.58

3. Uphold the right to form and join unions

We should act to close loopholes in current labor law to protect workers from employers’ anti-union tactics. Passage of the Protecting the Right to Organize (PRO) Act would strengthen workers’ rights to form unions and negotiate with their employers for better wages and working conditions. Specifically, it would reform our nation’s labor law so that private-sector employers are no longer able to intimidate workers seeking to unionize or perpetually stall union elections and contract negotiations.59 Further, passage of the Public Service Freedom to Negotiate Act would give public-sector workers the ability to form unions and engage in collective bargaining on the federal level.60 Currently, more than half of the states in the United States lack comprehensive collective bargaining laws for public-sector workers like teachers.61

4. Reform unemployment insurance

We should follow the lead of other rich countries and greatly expand the share of the unemployed who receive unemployment insurance (UI) benefits in normal times while also making normal UI benefits significantly more generous. A transformed UI system can be a revolutionary change for U.S. workers, significantly blunting the anxiety and deprivation inflicted by even short spells of joblessness.

5. Provide universal health care

The COVID-19 shock has been only the latest crisis highlighting the perversity of tying access to health insurance coverage to specific jobs. Nearly every other rich industrialized nation has delinked health insurance and the labor market and has instead made access to insurance coverage a universal right. The United States should join this community and provide coverage to all—and, more importantly, this coverage should not become degraded or ruinously expensive whenever one loses a job. The steps forward made by the Affordable Care Act have exposed an important truth: we need substantial increases in publicly provided insurance, beginning with the expansion of Medicaid. Universal health care not only would have profound effects on the economic security of households in the United States but also could boost wages and jobs, leading to labor markets that match jobs and workers more efficiently.62

6. Provide universal access to vital goods and services

High-quality child and elder care, and early childhood and higher education, are examples of vital goods and services that are out of reach for too many families. These should also be universally accessible through public programs. The upfront costs of providing these are considerable, but the payoff over time to society is huge.63 Some studies find that investments in top-notch early childhood education, for example, are more than 100 percent self-financing; when the participants reach adulthood, they are more productive, have higher wages, pay higher taxes, and, with a strong early foundation of systemic supports, are less likely to end up in the criminal justice system. High-quality elder care can allow a large expansion in the labor force of adult women. And access to free, or at least more affordable, higher education would produce a better-prepared workforce while reducing student debt.

7. Create a new poverty measure and expand social welfare programs

In order to respond to the changing, post-pandemic economy, we need to have accurate measures of poverty and economic insecurity to inform social welfare programs that truly meet all basic needs. Instead of the current official and supplemental (yet still inadequate) poverty measures, the federal government should establish a new poverty measure that reflects what it takes to have a decent standard of living in the country today. This new measure should provide the basis to expand public benefits, including cash assistance and other programs to guarantee adequate incomes, housing, food, water, and other human needs.

8. Invest in safe communities

Recent years have seen a growing recognition that the brute force model that combines aggressive policing and mass incarceration has failed as a mechanism for guaranteeing public safety. We need a new model that rests on investments in health, education, and opportunity for people in chronically under-resourced neighborhoods. These investments can include pilot programs that give primary responsibility for ensuring public order and safety—and the investment to back it up—to community-based organizations. Many community-based organizations already do much of this work, building safe public spaces and intervention programs to prevent violence or crime. These organizations are forced to do this work on the cheap, but their work is often effective and, if financed publicly, could build trust rather than antagonism between communities and those tasked with providing public safety.

9. Tax the rich and corporations

In the 30 years following World War II, the fruits of economic growth were far more evenly distributed and tax rates for the rich and corporations were substantially higher.64 These higher tax rates provided revenue for needed public spending and reduced the incentive for privileged economic actors to rig the rules of the market to tilt more gains their way. We should raise taxes progressively to help finance needed public investments and safety net spending and to reduce the payoff to exercising market power. This market power should also be confronted directly with legislation and regulation, but as a backstop we should tax its payoff.

10. Protect and expand voting rights

For any of the policies above to be advanced, we must protect and expand voting rights, especially for poor people and poor people of color. A motivating belief of the Poor People’s Campaign is that the votes of poor and low-income Americans can make a difference in our elections. And, in fact, the increase in turnout among these voters in the 2020 presidential election—six million more than in 2016—may have tipped the scales.65 But voter suppression laws continue to proliferate across the states. Pushing back begins with restoring the full power of the Voting Rights Act by updating the preclearance formula to cover all jurisdictions—those with deep-rooted histories of voter suppression as well as those that have more recently passed voter suppression laws or used these tactics. Other key changes include making Election Day a national holiday, establishing a fair redistricting process that eliminates racist and political gerrymandering, increasing polling locations, modernizing voter registration (with online, same-day, and automatic registration), implementing early voting and mail-in voting in every state, and ending felony disenfranchisement.

______

If America does not address the problem of inequality by making visionary social and economic choices, the health and well-being of the nation will continue to decline. We need long-term policies, enshrined in law, that establish justice, promote the general welfare, reject decades of austerity, and build strong social programs that lift society from below.

Such policies will help us not only live up to the constitutional and moral commitments this country was founded on but also revive our economy. By organizing against the policies that have pushed millions of people out of the political narrative and increasingly out of any economic power, we can begin a path to recovery that will reduce inequality, increase workers’ power, and morally and economically benefit us all.

* “Americans” refers to all U.S. residents, regardless of citizenship status. “Poor or near poor” is defined as having household income below 200 percent of the poverty threshold, per the Supplemental Poverty Measure. It is widely recognized, though, that both the Supplemental Poverty Measure and the even more miserly Official Poverty Measure set far too low a standard for economic security.1

† We do not include 2020 data in this analysis because the 2020 numbers are distorted by high job loss among low-wage workers during the coronavirus pandemic.

‡ As income inequality grows, it is increasingly difficult to measure wages of high earners using hourly wage data from the Bureau of Labor Statistics.11 EPI therefore uses annual wage data from the Social Security Administration when analyzing disparities between the highest earners and the bottom 90 percent.

§ The “maximum level of employment,” which we also refer to as a “tight labor market” and a “high-pressure market,” occurs when the demand for workers is strong enough to push the unemployment rate to very low levels. When the labor market is tight, workers across the board are empowered to demand and receive pay increases, and greater pressure is put on employers to reduce discriminatory barriers to hiring and pay practices.

** The Supplemental Poverty Measure (SPM) takes into account out-of-pocket expenses for food, clothing, housing, and utilities; government transfers like Supplemental Nutrition Assistance Program benefits (i.e., food stamps); and the earned income tax credit. It is also adjusted for geography and housing tenure. In 2019, the SPM threshold for a family of four was anywhere from just over $21,000 for a home-owning household in nonmetro Iowa to nearly $37,000 for a renting family in Los Angeles. These values are still too low. Fair market rent for a two-bedroom apartment in Los Angeles is about $2,000 per month (according to the U.S. Department of Housing and Urban Development’s FY 2021 Final Fair Market Rents Documentation System), which would take up two-thirds of the SPM threshold for a family of four.

Endnotes

1. For a good overview of the flaws of these measures, see S. Fremstad, The Defining Down of Economic Deprivation: Why We Need to Reset the Poverty Line (New York and Washington, DC: Century Foundation, September 2020).

2. See S. Barnes, “Explaining the 140 Million: Breaking Down the Numbers Behind the Moral Budget,” Kairos Center for Religions, Rights, and Social Justice, June 26, 2019.

3. L. Giannarelli, L. Wheaton, and K. Shantz, 2021 Poverty Projections (Washington, DC: Urban Institute, Income and Benefits Policy Center, February 2021).

4. E. Gould, “What to Watch on Jobs Day: The Giant Job Deficit Left by the Pandemic,” Working Economics Blog, Economic Policy Institute, February 4, 2021.

5. J. Bivens and B. Zipperer, Health Insurance and the COVID-19 Shock: What We Know So Far About Health Insurance Losses and What It Means for Policy (Washington, DC: Economic Policy Institute, August 2020).

6. E. Gould and J. Kandra, Wages Grew in 2020 Because the Bottom Fell Out of the Low-Wage Labor Market (Washington, DC: Economic Policy Institute, February 2021).

7. “Written Testimony of Heidi Shierholz, Senior Economist and Director of Policy, Economic Policy Institute,” U.S. Equal Employment Opportunity Commission, Meeting of April 28, 2021—Workplace Civil Rights Implications of the COVID-19 Pandemic, April 28, 2021.

8. A. Tappe, “We’re Never Going Back to the Old Economy,” CNN Business, November 17, 2020.

9. EPI analysis of unpublished Total Economy Productivity data from the Bureau of Labor Statistics (BLS) Labor Productivity and Costs program, and wage data from the BLS Current Employment Statistics, BLS Employment Cost Trends, BLS Consumer Price Index, and Bureau of Economic Analysis National Income and Product Accounts. Data are for compensation (wages and benefits) of production/nonsupervisory workers in the private sector and net productivity of the total economy. “Net productivity” is the growth of output of goods and services less depreciation per hour worked. For more details, see Economic Policy Institute, “The Productivity-Pay Gap,” May 2021.

10. See 2019 data in Gould and Kandra, Wages Grew in 2020 Because the Bottom Fell Out.

11. See C. Ingraham, “Income Inequality Is Rising So Fast Our Data Can’t Keep Up,” Washington Post, February 21, 2019.

12. L. Mishel and J. Kandra, “Wages for the Top 1% Skyrocketed 160% since 1979 While the Share of Wages for the Bottom 90% Shrunk,” Working Economics Blog, Economic Policy Institute, December 1, 2020.

13. Simulated supplemental poverty rate is based on a model of the statistical relationship between growth in per capita GDP and poverty that prevailed between 1967 and 1979. In the model, the Supplemental Poverty Measure is anchored to 2012 poverty thresholds, allowing for changes in poverty trends to be explained by changes in income and net transfer payments. See Fox et al. 2014 for technical detail. Analysis by Elise Gould and Daniel Perez of the Economic Policy Institute of L. Fox et al., “Waging War on Poverty: Historical Trends in Poverty Using the Supplemental Poverty Measure,” working paper no. 19789, National Bureau of Economic Research, January 2014, doi.org/10.3386/w19789; Bureau of Economic Analysis, “National Income Product Accounts (NIPA) Table 7.1: Selected Per Capita Product and Income Series in Current and Chained Dollars,” U.S. Department of Commerce, apps.bea.gov/iTable/iTable.cfm?reqid=19&step=2; and Columbia Population Research Center, “Historical Supplemental Poverty Measure Data Using the Current Population Survey,” February 14, 2019, bit.ly/3xxoMLU. Analysis using methodology from S. Danziger and P. Gottschalk, America Unequal (Cambridge, MA: Harvard University Press, 1995).

14. U.S. Department of Agriculture, Economic Research Service, “Food Security in the U.S.: Interactive Charts and Highlights,” ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-us/interactive-charts-and-highlights.

15. G. Galvin, “87M Adults Were Uninsured or Underinsured in 2018, Survey Says,” US News, February 7, 2019, citing S. Collins, H. Bhupal, and M. Doty, Health Insurance Coverage Eight Years After the ACA (New York: Commonwealth Fund, February 2019).

16. J. Tanne, “More Than 26,000 Americans Die Each Year Because of Lack of Health Insurance,” BMJ 336, no. 7649 (April 2008): 855.

17. U.S. Department of Labor, Bureau of Labor Statistics, “Lower-Wage Workers Less Likely Than Other Workers to Have Medical Care Benefits in 2019,” TED: The Economics Daily, March 3, 2020.

18. E. García and E. Weiss, Education Inequalities at the School Starting Gate: Gaps, Trends, and Strategies to Address Them (Washington, DC: Economic Policy Institute, September 2017).

19. See Figure 3 in A. Aurand et al., Out of Reach 2020: The High Cost of Housing (Washington, DC: National Low Income Housing Coalition, 2020).

20. National Low Income Housing Coalition, “How Much Do You Need to Earn to Afford a Modest Apartment in Your State?,” Out of Reach 2020.

21. S. Galea et al., “Estimated Deaths Attributable to Social Factors in the United States,” American Journal of Public Health 101, no. 8 (August 2011): 1456–65.

22. J. Bivens, Inequality Is Slowing U.S. Economic Growth: Faster Wage Growth for Low- and Middle-Wage Workers Is the Solution (Washington, DC: Economic Policy Institute, December 2017).

23. M. Rank and M. McLaughlin, “Estimating the Economic Cost of Childhood Poverty in the United States,” Social Work Research 42, no. 2 (June 2019): 73–83, describing the impact of lost economic productivity, increased health and crime costs, and increased costs from child homelessness and maltreatment.

24. Federal Reserve Bank of San Francisco, “SF Fed Asks, ‘How Much Is Inequity Costing Us?,’” SF Fed Blog, February 4, 2021.

25. L. Mishel and J. Bivens, “Identifying the Policy Levers Generating Wage Suppression and Wage Inequality,” Economic Policy Institute, May 13, 2021.

26. J. Bivens, Why Is Recovery Taking So Long—and Who’s to Blame? (Washington, DC: Economic Policy Institute, August 2016).

27. J. Bivens, “A Prolonged Depression Is Guaranteed Without Significant Federal Aid to State and Local Governments,” Working Economics Blog, Economic Policy Institute, May 19, 2020.

28. For further discussion, see J. Bivens, Adding Insult to Injury: How Bad Policy Decisions Have Amplified Globalization’s Costs for American Workers (Washington, DC: Economic Policy Institute, July 2017).

29. Economic Policy Institute, “Unions Help Reduce Disparities and Strengthen Our Democracy,” April 23, 2021.

30. Data on union density follows the composite series found in Historical Statistics of the United States, updated to 2019 from unionstats.com. Income inequality (share of income to top 10 percent) data is from the World Inequality database. See Figure B in H. Shierholz, Working People Have Been Thwarted in Their Efforts to Bargain for Better Wages by Attacks on Unions (Washington, DC: Economic Policy Institute, August 2019).

31. L. Mishel, The Enormous Impact of Eroded Collective Bargaining on Wages (Washington, DC: Economic Policy Institute, April 2021).

32. C. Gordon, “State of the Unions,” Dissent (blog), February 13, 2019.

33. C. McNicholas and H. Shierholz, Supreme Court Decision in Janus Threatens the Quality of Public-Sector Jobs and Public Services (Washington, DC: Economic Policy Institute, June 2018).

34. F. Carré, “(In)dependent Contractor Misclassification,” briefing paper no. 403, Economic Policy Institute, June 2015.

35. Mishel and Bivens, “Identifying the Policy Levers.”

36. In EPI’s Policy Agenda (epi.org/policy) under the section “Good Jobs,” see items 8 and 9: “Workers Should Be Able to Access the Courts to Enforce Their Rights” and “Workers Should Not Have Their Job Opportunities Restricted by Noncompete Agreements.”

37. D. Weil and T. Goldman, “Labor Standards, the Fissured Workplace, and the On-Demand Economy,” Perspectives on Work (2016): 26–29, 77.

38. J. Bivens, L. Mishel, and J. Schmitt, It’s Not Just Monopoly and Monopsony: How Market Power Has Affected American Wages (Washington, DC: Economic Policy Institute, April 2018).

39. U.S. Department of Health and Human Services, Office of the Assistant Secretary for Planning and Evaluation, “Aid to Families with Dependent Children (AFDC) and Temporary Assistance for Needy Families (TANF)—Overview,” November 30, 2009.

40. K. Newman, No Shame in My Game: The Working Poor in the Inner City (New York: Vintage Books, 2000).

41. Center on Budget and Policy Priorities, “Chart Book: Temporary Assistance for Needy Families,” February 2, 2021.

42. Freddie Mac Multifamily, “Rental Affordability Is Worsening,” Multifamily in Focus, 2016, mf.freddiemac.com/docs/rental_affordability_worsening.pdf.

43. Joint Center for Housing Studies, “The State of the Nation’s Housing 2013: Fact Sheet,” Harvard University, 2013.

44. Center on Budget and Policy Priorities, “Three Out of Four Low-Income At-Risk Renters Do Not Receive Federal Rental Assistance,” apps.cbpp.org/shareables_housing_unmet/chart.html.

45. In the Public Interest, Restoring and Reimagining Investment in Public Water (Oakland, CA: February 2021).

46. S. Barnes, L. Koshgarian, and A. Siddique, eds., Poor People’s Moral Budget: Everybody Has the Right to Live (New York, Washington, DC, and Goldsboro, NC: Poor People’s Campaign, Institute for Policy Studies, Kairos Center, and Repairers of the Breach, June 2019).

47. N. Crawford, Pentagon Fuel Use, Climate Change, and the Costs of War (Costs of War Project and Watson Institute for International and Public Affairs, Brown University, November 13, 2019).

48. B. Gottlied with L. Dyrszka, Too Dirty, Too Dangerous: Why Health Professionals Reject Natural Gas (Washington, DC: Physicians for Social Responsibility, February 2017); Liberty Hill Foundation, Drilling Down: The Community Consequences of Expanded Oil Development in Los Angeles (Los Angeles: 2015); B. Bienkowski, “Poor Communities Bear Greatest Burden from Fracking,” Scientific American, May 6, 2015; and Substance Abuse and Mental Health Services Administration, “Greater Impact: How Disasters Affect People of Low Socioeconomic Status,” Disaster Technical Assistance Center Supplemental Research Bulletin, July 2017.

49. E. Wolff, “Household Wealth Trends in the United States, 1962 to 2016: Has Middle Class Wealth Recovered?,” working paper no. 24085, National Bureau of Economic Research, November 2017.

50. Center on Budget and Policy Priorities, “Corporate Tax Cut Benefits Wealthiest, Loses Needed Revenue, and Encourages Tax Avoidance,” June 13, 2018.

51. Americans for Tax Fairness, “Stock Buybacks,” americansfortaxfairness.org/stock-buybacks.

52. M. Corser, J. Bivens, and H. Blair, Still Terrible at Two: The Trump Tax Act Delivered Big Benefits to the Rich and Corporations but Nearly None for Working Families (Washington, DC: Center for Popular Democracy and Economic Policy Institute, December 2019).

53. D. Hope and J. Limberg, “The Economic Consequences of Major Tax Cuts for the Rich,” working paper 55, London School of Economics International Inequalities Institute, December 2020.

54. R. Hartley, Unleashing the Power of Poor and Low-Income Americans: Changing the Political Landscape (New York and Goldsboro, NC: Kairos Center, Poor People’s Campaign, and Repairers of the Breach, August 2020).

55. Brennan Center for Justice, “New Voting Restrictions in America,” October 1, 2019.

56. Brennan Center for Justice, “State Voting Bills Tracker 2021,” February 24, 2021.

57. J. Bivens and B. Zipperer, The Importance of Locking in Full Employment for the Long Haul (Washington, DC: Economic Policy Institute, August 2018).

58. D. Cooper, Z. Mokhiber, and B. Zipperer, Raising the Federal Minimum Wage to $15 by 2025 Would Lift the Pay of 32 Million Workers (Washington, DC: Economic Policy Institute, March 2021).

59. C. McNicholas, M. Poydock, and L. Rhinehart, “How the PRO Act Restores Workers’ Right to Unionize,” Economic Policy Institute, February 4, 2021.

60. C. McNicholas and M. Poydock, “The Public Service Freedom to Negotiate Act Provides Public-Sector Workers the Right to Join in Union and Collectively Bargain,” Working Economics Blog, Economic Policy Institute, June 26, 2019.

61. “Status of Collective Bargaining Rights for State and Local Public Workers, by State,” in C. McNicholas et al., Why Unions Are Good for Workers—Especially in a Crisis Like COVID-19: 12 Policies That Would Boost Worker Rights, Safety, and Wages (Washington, DC: Economic Policy Institute, August 2020).

62. J. Bivens, Fundamental Health Reform Like “Medicare for All” Would Help the Labor Market (Washington, DC: Economic Policy Institute, March 2020).

63. J. Bivens, “Ambitious Investments in Child and Elder Care Could Boost Labor Supply Enough to Support 3 Million New Jobs,” Working Economics Blog, Economic Policy Institute, July 21, 2020; and J. Bivens et al., It’s Time for an Ambitious National Investment in America’s Children, Economic Policy Institute, April 2016.

64. E. Saez and G. Zucman, “How to Tax Our Way Back to Justice,” New York Times, October 11, 2019.

65. S. Anderson and M. Rathke, “After Boosting Low-Income Voter Turnout, Poor People’s Campaign Mobilizes for Covid Relief,” Blogging Our Great Divide (blog), Inequality.org, November 9, 2020.

In fact, what is actually under attack is the reinvigorated movement across the United States to engage in dialogue about our country’s continuing legacy of racial hierarchy and oppression—and the policy choices that could finally begin to redress that legacy. And while the campaign against critical race theory is recent, it is merely the latest tool many states have wielded in order to disempower and further disenfranchise Black people as well as cut off any broad-based support for structural reform.

Before the latest right-wing scapegoating tactic, critical race theory was seldom discussed among the general public. It is an academic discourse, mostly taught in law schools, that calls for an examination of our legal system from a racial lens, arguing that the law is not neutral and has been a tool to maintain racial hierarchy.

Conservative attackers fomenting controversy rarely engage with the substance of critical race theory. Instead, they attack any public discussion, organizing movement, policy effort, or—most concerningly—public education that acknowledges that the founding of our nation is rooted in the enslavement of people of African descent for their labor, and the genocide and plunder of Indigenous peoples for their land. They also attack any call for changes in our economic, legal, and cultural domains to address some of these harms that have compounded for centuries.

Historical context

These attacks are the latest examples of white backlash to perceived progress, upward mobility, and equality for Black people. Throughout U.S. history, reactionary politics have always followed periods of potential redemptive transformation. The short—yet significant—period of Reconstruction after the U.S. Civil War serves as a pivotal example of this. In what the historian Eric Foner calls “this first experiment in genuine interracial democracy in the South,” the Reconstruction era saw transformative voting rights legislation passed as well as the 14th Amendment to the Constitution, which guaranteed equal citizenship to anyone born in the United States.

However, by the end of the 19th century, white backlash ended Reconstruction. The Jim Crow era of racial segregation—legitimized by the 1896 Supreme Court Plessy v. Ferguson decision—reigned supreme. Poll taxes and literacy tests replaced the Reconstruction universal male suffrage laws, and the Ku Klux Klan spread in influence and membership. White backlash and violence were prevalent both in periods of economic growth, especially Black economic growth as seen by the Tulsa Massacre of 1921 and others, and in periods of economic downturn, such as the Chinese Exclusion Act of 1882.

This historical context matters because, as the current anti-CRT vitriol shows, these trends continue today. The historical backlash, violence, and racist legislation not only destroyed lives, livelihoods, and wealth at the time, but crucially, cut off wealth-building and intergenerational wealth. White backlash and violence have persistent economic effects and impact current inequality and material wellbeing. Recent scholarship, for example, has shown that areas with high rates of lynchings have lower Black voter registration today.

Legislative fights in the states to censor public education

The attacks against “critical race theory” are not a random occurrence by a few fringe agitators—they are pervasive and insidious state-sponsored attempts to disempower and disenfranchise marginalized and racialized communities. These right-wing attacks have escalated from a mere dog whistle into serious and concerning legislative action and censorship. Several states have passed legislation banning or hindering teachings on the country’s history of racial and gender-based hierarchy and its contemporary ramifications, mostly in K–12 schools. These states include Arizona, Arkansas, Idaho, Iowa, New Hampshire, North Dakota, Oklahoma, Tennessee, and Texas. In Florida, Georgia, and Utah, school boards have restricted teachings on race-related topics.

Policymakers in dozens of other states have introduced legislation or campaigns to restrict education on racial injustices and related biases in what are thinly veiled attempts to censor and promote a revisionist whitewashed history. Some, such as Alabama’s pre-filed bill, ban the teaching of any concepts about critical race theory and make broad statements such as “The Alabama State Board of Education believes that the United States of America is not an inherently racist country, and the state of Alabama is not an inherently racist state.” Arizona’s signed bill prohibits the teaching of unconscious bias or responsibility for historic acts of racism. Tennessee’s signed bill withholds funding from schools if teachers connect events to institutional racism.

The fight for civil rights has always been intertwined with worker power and economic justice. Thus, it is not surprising, and in fact deliberate, that the same states enacting bills under the banner of stopping critical race theory are the same states that have historically disempowered workers and today exhibit the worst racial economic inequities. As shown in the map below and in Table 1, the states where lawmakers have advanced these harmful bills also have low rates of unionization, more voter suppression bills, and are more likely to be so-called “right-to-work” states. These states have long disempowered workers and underinvested in community and worker wellbeing.

Map

These right-wing efforts are a distraction from pivotal opportunities for change

Beyond the direct harm to the country’s children and schools, this coordinated campaign to fuel racism is also intended to divert attention away from the critical policy reforms that this moment demands. Media attention has shifted away from the promises and demands for civil rights and economic transformation that buoyed the Biden administration into power. Instead, it has fixated on superficial commentaries on this culture war.

The American Rescue Plan (ARP) Act should serve as the beginning of long-needed policy reform to transform our economy and livelihoods. What state legislators and advocates need to prioritize right now is equitable spending of ARP funds that centers racial, gender, worker, and immigrant justice to ensure a recovery for all that goes beyond merely restoring our pre-pandemic economy. The complement to this spending is establishing progressive revenue streams that simultaneously fix the regressive nature of most state tax codes while securing long-term funding for critical public services, and equity-promoting, people-centered budgets and programs. This includes ending the reliance in many localities on fees and fines as a major source of government funding.

State usage of ARP funds to address issues like the Black maternal health crisis, for example, would get us closer to achieving the goals of the civil rights movement. In a period plagued by a global pandemic that has shed light on so many of our societal woes and compounding inequalities, significant and deliberate investments to address the racialized and gendered social determinants of health and related outcomes should be our focus. Rather than returning to a pre-pandemic normal, we should be making long-term investments in education as well as other wealth-building mechanisms, such as improving access to credit and banking, distributing baby bonds, or cancelling student debt. We must recognize the latest right-wing frenzy for what it is—an attempt to distract from the reforms needed to make us a more inclusive and equitable society.

A race-conscious view of our policies and the ways they maintain but can also dismantle systems of oppression is what we need right now. Legislation like the Protecting the Right to Organize (PRO) Act, for example, would address some of the unequal bargaining power between employees and employers by making it easier for workers to unionize. Among other reforms, the PRO Act would outlaw so-called “right-to-work” laws that weaken unions and bar workers from the better pay and working conditions won through collective bargaining. Unions can be particularly powerful in boosting pay for workers of color. Unionization is also correlated with lower levels of inequality and greater educational investment as a whole. As we show above, the states most effectively and successfully passing anti-critical race theory bills are the same states with very low or no minimum wages and low rates of unionization. They are also more likely to have already passed voter restriction bills in 2021 alone.

Conclusion

The brutal and publicized murders of Black and Latinx people at the hands of the police and armed civilians have motivated widespread organizing and energy around the need for systemic reforms. These efforts have been directed toward the centuries’ long fight against the pervasive anti-Blackness in our legal, economic, and cultural systems and narratives. Many of the economic disparities we see and fight against today have roots in the segregation and economic oppression following Reconstruction.

We must not let another white backlash continue to entrench poverty, immobility, and economic disparities. Fortunately, the threat to democracy and authoritarian streak of this backlash is finally getting greater media coverage. Still, it is up to all of us to see through the transformations necessary to meet the demands of the recent racial justice and health crises and their collision with centuries’ old inequality and injustice in our nation. Our political (re)imaginations must center life-altering material gains, where civil and economic transformations toward equity intersect. The fight for a 21st century New Deal centered on racial, gender, and worker justice must remain lawmakers’ focus.

Table 1

Introduction

The Postal Service is many things—among them, a public service; part of the nation’s critical infrastructure; a regulated monopoly; a good employer, especially for Black workers and military veterans; and a government enterprise competing with and supplying services to private companies.

To take advantage of network economies, the United States and other countries shield their postal services from competition in exchange for delivering mail to far-flung and poorer regions. Like transportation and communications networks that are often publicly owned or function as regulated utilities, a national service with standardized pricing promotes commerce and guards against the concentration of economic power.

Social value of the Postal Service

The social value of the Postal Service extends beyond the economic benefits provided by its delivery operations. It connects family and friends, fosters democracy, and is a key part of our emergency and national security infrastructure. It has operated without interruption during the COVID-19 pandemic and other national catastrophes.

Career jobs in the Postal Service are good jobs for workers without bachelor’s degrees. Postal workers are better compensated than many other workers with similar education, years of experience, and hours worked. This is typical for unionized workers, workers employed by large employers, and public-sector workers without bachelor’s degrees. However, this advantage is shrinking as the Postal Service increasingly relies on noncareer employees who receive meager benefits, and there is pressure to cut benefits for career employees as well.

Challenges faced by the Postal Service

The Postal Service’s financial woes, exacerbated by the pandemic, are due to a confluence of factors: a mail monopoly that is declining in value with the rise of electronic communication; a public service mandate to deliver to every address in the country six days a week; caps on postal rates, borrowing limits, and other restrictions that limit its ability to raise revenue and make necessary investments; and an onerous requirement to rapidly prefund retiree benefits, among other factors.

President Trump’s push to privatize the Postal Service and his party’s antipathy toward government partly explain Republicans’ reluctance to provide the same pandemic relief to the Postal Service as it has to airlines and other private companies facing a similar collapse in demand. Privatization is a long-standing goal of conservative think tanks and corporations that stand to gain from weakening or dismantling the Postal Service. The administration has also been motivated by the president’s animus toward Amazon, a major Postal Service customer, and a desire to impede voting by mail.

While politics and ideology play a role in privatization efforts, the driving force is special interests—large corporations such as United Parcel Service, FedEx, and Pitney Bowes that seek to take advantage of the same network and scale economies as the Postal Service to capture an even larger share of the shipping and mail-processing markets without shouldering the Postal Service’s public service responsibilities. These corporations not only lobby Congress and the Postal Regulatory Commission but also exert an unusual amount of influence through industry advisory groups that operate behind closed doors.

The Postal Service is restricted in its ability to enter new markets, a restriction that benefits competitors but not consumers. In particular, the financial services industry has an interest in preventing the Postal Service from reviving postal banking, which would greatly benefit unbanked and underbanked communities that currently rely on high-cost payday lenders and other alternative financial services.

Meanwhile, the Postal Service is being hollowed out by outsourcing and constrained in its ability to compete in parcel delivery, with negative effects on consumers and workers. Laws designed to prevent government agencies from lowering labor standards by outsourcing to low-wage companies do not apply to bulk mailers and other companies that perform processing and transportation tasks that would otherwise be done by the Postal Service—and receive deep discounts in exchange. The Postal Service itself does not benefit from these “workshare” arrangements because the cost savings are fully passed on to the companies, many of which are competitive only because they pay low wages. The new postmaster general, Louis DeJoy, previously headed a logistics company that performed outsourced postal work and engaged in illegal anti-union activities.

Policy recommendations

Allowing the Postal Service to fail, or speeding up the privatization process already underway, would harm the national economy while devastating many vulnerable households and communities, notably homebound seniors, people in rural areas, and residents of low-income urban neighborhoods. The corporations that stand to gain will do so not because they are more efficient than the Postal Service, but because they can shed public service obligations and pay their workers less.

Public policy needs to address market concentration and low-road labor practices in the e-commerce, shipping, and related industries. Amazon should be regulated, not arbitrarily forced to pay four times what it is currently paying the Postal Service for deliveries, as President Trump has demanded. Increasing what Amazon pays for deliveries would primarily benefit the United Parcel Service and other competitors, not consumers, workers, small businesses, or the Postal Service itself.

The Postal Service and corporations that interact with it have significant market power, though the Postal Service is limited in its ability to exercise this power by the Postal Regulatory Commission. Rather than treating the sector as if it were a competitive market and blocking the Postal Service from entering new markets, policymakers should focus on ensuring that the Postal Service fulfills its public service mission in the face of changing needs and market conditions.

The Postal Service is good for communities

The benefits of a postal monopoly

Governments around the world have for centuries understood the benefits of postal monopolies (USPS 2020d). In addition to the competitive advantage the Postal Service has as an established network, it has a legal monopoly on mail delivery, shielding more lucrative delivery routes from competition to help it extend service to less populated and poorer areas, fulfilling its universal service obligation (USPS 2008b, 2020d). Since 1934, the Postal Service has also had a monopoly on accessing mailboxes, a monopoly that rival United Parcel Service (UPS) has lobbied to end (Sullivan 2019). Like road, rail, electricity, communications, and other networks that are often publicly owned or function as regulated utilities, a national service with standardized pricing promotes commerce and guards against the concentration of economic power.

The universal service obligation is a great equalizer. Though it costs more to transport letters and packages to and from far-flung and less populated areas, this difference is not reflected in the postage. You can mail a letter from Kotzebue, Alaska, to Homestead, Florida, with the same stamp you would use to mail it across the street in New York City. Regulated pricing and uniform service also help small businesses compete with large ones, fostering entrepreneurship and helping counter the concentration of economic power. Though companies can negotiate bulk discounts with the Postal Service, these are overseen by the Postal Regulatory Commission to guard against favoritism. Many services, such as Parcel Select Lightweight for parcels weighing under a pound, have a uniform price regardless of sender.

The postal network is a part of the connective tissue that binds our nation and economy. Though viewed as a service rather than physical infrastructure like a road network, this distinction is not clear-cut. Roads require maintenance and other services, and postal networks require post offices, distribution centers, and other brick-and-mortar facilities. These networks reinforce each other. Road construction and other investments in physical infrastructure enabled the expansion of the postal network, which in turn spurred greater investment in post roads, distribution centers, and other infrastructure. Another commonality between our nation’s physical infrastructure and the Postal Service is higher per capita costs in sparsely populated areas (Kirk 2018).

The contours of the postal monopoly have changed over time. Restrictions on what the Postal Service and its private-sector competitors can and cannot do have always been points of contention (Ryan 1999). The Postal Service lost its monopoly on express mail delivery in 1979 and has long competed with private companies in package delivery. These activities are circumscribed, with the Postal Service subjected to fluctuating weight and size limits on packages over the years, for example. FedEx, a pioneer in express air delivery, and UPS, which since its inception has focused on larger parcels, jealously guard against what they view as encroachment by the Postal Service.

Protecting private-sector companies against competition from the Postal Service is often treated as an end in itself, whether or not it serves a public purpose. In 1952, for example, Congress reduced the Postal Service’s package weight limit to 40 pounds in a futile effort to prop up a competing railroad-based delivery service (USPS 2020d). Generally, relaxing these limits has benefited consumers and companies relying on home delivery. When a four-pound weight limit was lifted in 1913 with the introduction of Parcel Post, Sears, Roebuck catalog orders increased fivefold within a year (USPS 2008b).

While competitors try to crack the postal monopoly, they resist Postal Service efforts to expand its competitive business. Former Postal Service Inspector General and Board Vice Chair David C. Williams, among others, has pointed out that the Postal Service could offer more services to offset the fixed cost of maintaining post offices and daily delivery (USPS OIG 2015b; HSGAC 2016; Brookings 2015b). Post offices, for example, could offer many printing and other services provided by FedEx Office and The UPS Store, and expand the use of parcel delivery lockers (USPS OIG 2013). Likewise, mail carriers could pick up and make deliveries from local stores, including groceries (Chandler 2014).

Expanding the services offered by the Postal Service could not only bring in revenue to offset fixed costs associated with its public service mandate, but it could also address unmet needs. The Postal Service could provide banking services to low-income communities underserved by financial institutions or high-speed internet access to rural areas. Such service expansions would require congressional action because the Postal Accountability and Enhancement Act of 2006 (PAEA) restricts the nonpostal services the Postal Service can provide to a limited number of grandfathered services, such as processing passport applications, photocopying, and selling collectible stamps (Kosar 2009; Christensen, Francis, and Hatch 2016).

The post office provides an important public service

To our country’s founders, the Postal Service’s social and civic purpose—connecting people to each other and fostering a well-informed citizenry—were as or more important than its economic benefits. Though George Washington could not garner enough support for his proposal that newspapers be delivered free of charge, the Postal Service Act of 1792 established a uniformly low rate for newspapers, including those critical of his fledgling government (John 2020). Though people now get much of their news through television and the internet, no network reaches everyone and none is as reliable as the Postal Service, which remains critical for the delivery of official documents, ranging from jury summons to Census surveys and mail ballots.

The public service mandate was reaffirmed in the Postal Reorganization Act of 1970.1 The Act transformed the Postal Service from a cabinet department into the more independent U.S. Postal Service (USPS) and described its basic function as providing “Postal Services that bind the Nation together through the personal, educational, literary, and business correspondence of the people.” It called for “prompt, reliable, and efficient services to patrons in all areas,” regardless of the higher cost of services to smaller communities, and specified that “no small post office shall be closed solely for operating at a deficit, it being the specific intent of the Congress that effective Postal Services be insured to residents of both urban and rural communities.”

The social value of the Postal Service extends beyond its delivery operations. A 2010 report by the Urban Institute enumerates some of these, including letter carriers being trained to alert emergency services when something is amiss, post offices serving as community hubs in rural areas, and traffic reduction as streamlined postal delivery replaces multiple shopping trips (Pindus et al. 2010; USPS OIG 2019a). The inscription above the old Washington Post Office, now the Smithsonian’s National Postal Museum, reminds us that a letter carrier is not only the “consoler of the lonely”—especially apt in these times of social distancing—but also the “enlarger of the common life” (Widmer 2020).

The Postal Service is a lifeline in the wake of terrorist attacks, natural disasters, and other emergencies. It is a key part of our emergency and national security infrastructure (Block 2020). The Postal Service tightened safety precautions, including installing biohazard detection systems and educating the public about bomb and bioterrorism threats in the wake of 9/11 and anthrax attacks that followed a month later (Davis et al. 2008). The Postal Service was critical to reconnecting displaced persons, distributing relief funds, and delivering medicine and other supplies in the wake of Hurricane Katrina and other natural disasters (Katz 2015; Joy Leong Consulting 2011). Postal deliveries have continued uninterrupted during the COVID-19 pandemic, despite the risk to workers.

Voting by mail

An increasing number of Americans vote by mail. In recent decades, many states have eased rules that previously restricted mail voting to absentee voters, and five states have switched entirely to mail voting (MEDSL n.d.). In addition to the essential public service they provide by delivering mail ballots, post offices could also, if permitted, promote civic engagement through convenient voter registration (Christensen, Francis, and Hatch 2016).

In August, President Trump openly admitted that Republicans were holding up funding to the Postal Service in order to limit voting by mail in the 2020 election (Blake 2020). Though he and his party sometimes couch their opposition to mail-in voting as a concern over fraud (Cochrane and Fuchs 2020), there is no evidence that this is a widespread problem (Coll 2020). Republicans were highly selective in their opposition, with Republican leaders in Florida and other swing states actively encouraging Republican voters to use absentee ballots despite the president’s claim that voting by mail was not secure (R. Berman 2020). These attacks on mail voting led former President Obama, among others, to accuse Trump of undermining the Postal Service to disenfranchise voters (Lee and Bogage 2020).

Done right, voting by mail is the safest way to vote in a pandemic. Even after the pandemic is over, voting by mail can increase access to the ballot box for low-income working parents and others with inflexible schedules, transportation barriers, health issues, and other obstacles to voting in person. In practice, however, state laws often restrict access to mail ballots to seniors and voters who are out of state on Election Day, and hard-to-follow rules can lead to large numbers of discarded ballots. These challenges are more likely to affect core Democratic constituencies (A. Berman 2020).

Leading up to the 2020 elections, there were also serious concerns about whether the Postal Service could handle the anticipated spike in mail volume in a timely fashion, especially since the president’s hand-picked postmaster general, Louis DeJoy, appeared to be sabotaging mail voting through cost-cutting measures that slowed delivery of requested and completed ballots (Edmondson et al. 2020; Broadwater 2020). In the end, the worst fears about mail voting did not materialize, in part because a federal judge closely monitored DeJoy’s actions, and in part because negative publicity prompted voters to request and mail ballots early and use other methods, including voting early in person and hand-delivering ballots to drop boxes, to ensure their votes would be received in time (Epstein 2020; Vasilogambros and Van Ness 2020; Redden 2020; Cheney 2020; Broadwater and Fuchs 2020; Vasilogambros, Van Ness, and Levine 2020).

Postal banking

While some seek to dismantle the Postal Service, others seek to expand its activities for the public good. The idea that has received the most attention is a return to postal banking, a service that existed in the United States from 1911 until 1967 and that currently serves people in numerous countries including Brazil, France, Germany, India, Italy, Japan, New Zealand, South Korea, and the United Kingdom (Campaign for Postal Banking 2015; Christensen, Francis, and Hatch 2016).

Postal banking takes advantage of underused capacity to address unmet needs. Law professor Mehrsa Baradaran and other advocates note that post offices, though far fewer in number than in the past, are still found in poor and rural communities that banks have largely abandoned (Baradaran 2014; USPS 2020b). They already sell money orders and offer check cashing, though many potential customers are unaware of these options (Christensen, Francis, and Hatch 2016). Post offices could expand these financial activities—offering savings accounts, making small loans, and facilitating other financial transactions, on their own or in partnership with other financial institutions, as they have in the past.

This would especially benefit low-income Americans who lack bank accounts or easy access to affordable financial services. The Federal Reserve estimates that 6% of U.S. adults are “unbanked”—meaning they do not have a checking, savings, or money market account (Federal Reserve 2020). Another 16% are “underbanked,” people with bank accounts who nevertheless resort to using alternative financial services such as check cashing services, payday lenders, or pawn shops that typically charge high fees.

Difficulties in accessing pandemic relief laid bare the challenges facing the unbanked and underbanked. Nearly 70 million people without access to direct deposit waited a month or longer to receive financial aid checks from the CARES Act (Reilly 2020). Delays in receiving pandemic relief not only increased the hardship faced by many families hard hit by the economic crisis, but they also slowed the injection of funds into the weak economy.

People should not be subject to fees simply to access their own money, whether paychecks or government transfers. One option supported by President-elect Joe Biden and Sen. Bernie Sanders (I-Vt.) would provide bank accounts and rapid payments through the Federal Reserve and make these easily accessible at post offices and other locations (Biden-Sanders Unity Task Force 2020). A version of this plan, referred to as a “digital wallet,” was introduced by Sen. Sherrod Brown (D-Ohio) in March (Haggerty 2020).

Support for postal banking has grown. The idea gained steam when USPS Inspector General David C. Williams issued two supportive white papers in 2014 and 2015, noting that the average household underserved by mainstream financial institutions spent an exorbitant $2,400 per year on interest and fees to payday lenders and other alternative financial services (USPS OIG 2014, 2015d). In addition to President-elect Biden and Sens. Sanders and Brown, policymakers who have championed postal banking include Sens. Kristen Gillibrand (D-N.Y.) and Elizabeth Warren (D-Mass.) and Reps. Alexandria Ocasio-Cortez (D-N.Y.) and Bill Pascrell (D-N.J.) (Pascrell 2019). A broad coalition of unions, financial industry watchdog groups, and economic justice organizations formed the Campaign for Postal Banking to promote the idea (Campaign for Postal Banking 2020).

The financial services industry opposes postal banking, even though some institutions would likely benefit. Payday lenders, not surprisingly, are against it (Davidson 2015). But there is also short-sighted opposition from credit unions and community bankers, who would be natural partners (Wack and Angell 2018; Dobbs-Allsopp 2015). Meanwhile, the Trump administration, far from taming the predatory lending practices that postal banking would help address, worked with the industry to weaken and delay a rule aimed at lenders who intentionally target borrowers who will not be able to repay loans and are trapped into paying interest indefinitely (Confessore 2019).

The financial sector’s opposition to postal banking has parallels with its attempts to limit government involvement in setting up retirement accounts for workers without access to 401(k)s. The Obama administration’s MyRA accounts and state and local governments’ Secure Choice and similar accounts were shaped by the need to assuage financial industry concerns that government could be cutting into their business, even though the accounts were targeted at low-income workers whom the industry did not find it worth their while to pursue (Oakley 2017; Denmark 2015).

Skeptics have questioned whether the Postal Service could charge enough to cover not only transaction costs, but also default and other financial risks if its activities extend to making small loans. To put it another way, if it is so easy for nonprofits to service the unbanked, why are predatory payday lenders still in business?

One reason is that payday lenders are not really in the same business as credit unions and other mainstream financial institutions that extend credit at competitive rates to customers who face unexpected expenses or take out loans to buy homes or cars. Rather, payday lenders take advantage of borrowers’ poverty and financial unsophistication to trap them in debt, forcing borrowers to repay loans several times over in the form of high interest and fees (Howarth, Davis, and Wolff 2017). Payday lenders do not charge competitive rates commensurate with the risks and transaction costs involved in lending to their customers. Rather, they often charge different rates to similar borrowers depending on limits set by states (Pew Charitable Trusts 2014). Since interest rates and fees charged by payday and other predatory lenders are not kept in check by competition, President-elect Biden, Senator Sanders, and other postal banking supporters have called for protecting consumers from usurious rates, in addition to supporting postal banking as a viable alternative for consumers (Biden-Sanders Unity Task Force 2020).

The advantage the Postal Service has over credit unions and other nonprofits is that it is a trusted national brand and a presence in all but the smallest towns. Since maintaining a post office is, like daily delivery, to a large extent a fixed cost, the Postal Service does not, in offering new services, incur the same overhead expenses that a credit union would if it opened a new branch in a small town. And offering such services—even at a low cost and for the benefit of the community—can serve to defray some of the post office’s fixed overhead costs. Other fixed costs, such as the cost of developing new products and services, can be spread over a large nationwide pool of potential customers.

As a trusted institution with a preexisting customer base, the Postal Service might also benefit from lower marketing costs. It does face one disadvantage—its transaction costs could be higher than competitors’ as it expands into new areas—but this disadvantage could be minimized by partnering with credit unions or other financial institutions with experience offering these services.

Postal banking is not an either-or proposition. It can be introduced incrementally and in partnership with other nonprofit financial institutions. Whatever the pros and cons of different approaches, shielding for-profit providers from competition should not factor into the discussion. The fact that the Postal Service may have a cost advantage over other providers should not matter as long as consumers, especially low-income consumers, benefit.

The Postal Service provides good jobs

The Postal Service is an important rung to the middle class, especially for African Americans and military veterans. As is typical of jobs in the public sector, which are positions of trust that often require significant training, the pay of rank-and-file postal workers is better than the pay of many private-sector jobs that do not require a four-year college (bachelor’s) degree. However, this pay advantage has been eroding.2

Postal workers are clustered in the middle of the educational distribution. Most have either a high school diploma (or equivalent) or some college education. They may have an associate degree, but typically lack a bachelor’s degree. Few postal workers are on either end of the educational spectrum—lacking a high school diploma or having an advanced degree. The fact that most postal workers have a high school diploma or some college has been true since at least the late 1970s. In 1976–1979, 22.7% of private-sector workers lacked high school diplomas, while only 11.4% of postal workers did. However, the private-sector workforce has become better educated, with fewer workers lacking a high school diploma and more having a bachelor’s or advanced degree (Table 1).

Table 1

Postal workers look like America, but with a higher proportion of Black workers and veterans. Postal workers are older by five years on average and therefore have more work experience than the average private-sector worker (all statistics refer to full-time workers). Almost one in four postal workers is Black, double Black workers’ share of the private-sector workforce (Table 2), the result of a hard-fought battle by Black activists and unions for employment and pay parity dating back to the early days of the Postal Service (Rubio 2010). Postal workers are somewhat more likely to be male than private-sector workers. They are almost three times as likely to be military veterans as private-sector workers, since veterans benefit from preferential hiring in federal jobs and have skills sought by the Postal Service (DOL n.d.; OPM 2020b).

Table 2

Career jobs in the Postal Service are good jobs for workers without bachelor’s degrees. Workers without bachelor’s degrees are generally paid better in government jobs than in private industry, though the reverse is true for workers with bachelor’s or advanced degrees (see Appendix Note and Appendix Figure A). This holds true for postal workers, who are less likely to have bachelor’s degrees than most government workers. There are several reasons why workers without bachelor’s degrees are generally better paid in the public sector, including less discrimination, a higher wage floor, greater responsibilities, and union membership.

Postal Service jobs were not always good jobs. In the years prior to the landmark 1970 postal workers strike, postal workers’ pay lagged that of private-sector workers, and many postal workers were forced to work second jobs or live in poverty (Rubio 2020). However, reforms signed into law by President Nixon after the strike, including granting unions the right to bargain over compensation and binding arbitration if negotiations reach an impasse, led to better pay for postal workers. Meanwhile, wages for many private-sector workers, especially nonunion workers without college degrees, stagnated despite increased productivity.

Postal Service and other government jobs often require more training and responsibility than many private-sector jobs. Rank-and-file Postal Service jobs require anywhere from several months to a year of training and a range of technology skills. Many are also strenuous and expose workers to extreme temperatures and other hazards.3 To avoid significant costs associated with recruitment, vetting, and training, the Postal Service and other government employers try to hire workers interested in public service careers rather than relying on a transient workforce.

The Postal Service is highly trusted and postal workers take pride in fulfilling their duties (Cep 2020). It has its own police force, and the police officers and other career postal workers have more to lose than the gig economy workers employed by FedEx and Amazon (Soper and Black 2018). This trustworthiness allows jewelry and other high-cost items to be shipped from businesses to homes, insured at modest cost through the Postal Service. A RAND study found that nine in 10 Americans felt the Postal Service was more reliable than private delivery companies, and more than half preferred having only the Postal Service access their mailboxes (Davis et al. 2008). Over three-fourths of respondents thought that increasing the sorting, processing, and transportation of mail by private companies would increase the respondents’ concerns about security breaches and crime. The public trust in the post office is an asset that could allow it to successfully expand services offered, for example, to include in-home grocery delivery, as has been tested in Sweden (Bogage 2020d).

The Postal Service and other government employers have a higher wage floor than the private sector. Many private-sector employers, including Postal Service competitors and service providers, pay workers poverty-level wages and benefits and misclassify workers as “contractors” to avoid providing health and other benefits and evade minimum wage, overtime, and other labor standards. Few full-time postal workers without a bachelor’s degree earn below $15 per hour (8.9%) or live in poverty (1.3%) based on the U.S. Census Bureau’s Supplemental Poverty Measure (SPM) (Fox 2020), which, unlike the official poverty measure, takes into account taxes, transfers, and other factors that affect a family’s standard of living (Table 3). In contrast, 38.7% of full-time private-sector workers without a bachelor’s degree earn below $15 per hour and 6.5% live in poverty based on the SPM.

Table 3

Poverty-level wages are common in some sectors that compete with or do work outsourced from the Postal Service. In the warehousing and storage industry, for example, nearly half (49.3%) of full-time workers without a bachelor’s degree earn less than $15 an hour and 8.9% live in poverty. Since poor pay and benefits force workers to rely on government safety net programs to meet health care and other basic needs, a low-road employment strategy makes little sense for government employers.

There is less discrimination in the Postal Service and other government agencies than in the private sector. In the Postal Service, Black (non-Hispanic) and Hispanic workers are paid 6.5% and 1.9% less than white (non-Hispanic) workers with similar education, hours worked, and years of experience, and the difference is not statistically significant for Hispanic workers (Appendix Figure B). Though any pay gap is cause for concern, the gaps are much larger in the private sector, where Black (non-Hispanic) and Hispanic workers are paid 17.3% and 13.3% less than their white (non-Hispanic) counterparts. Similarly, though full-time women workers face a pay gap in the Postal Service (10.4%), it is less than half the size of the private-sector gap (22.0%).

Finally, the Postal Service is a large employer and most of its workers belong to unions. Large and unionized employers tend to offer better pay and benefits than smaller and nonunion employers (BLS 2020). The Trump administration task force report on the Postal Service that criticized the pay of Postal Service workers nonetheless found that Postal Service compensation, including benefits, was only 13% higher than compensation at unionized UPS in 2017, based on financial statements (Task Force 2018). The report acknowledged that such a comparison does not account for differences in “experience, duties, and location,” among other factors.

Even if pay is higher in the Postal Service than in the private sector, this does not mean postal workers are overpaid. As mentioned earlier, many private-sector employers pay poverty wages and discriminate against workers of color and women. A regression analysis controlling for age, education, year, and hours worked finds that white male postal workers are paid 4.8% more than their private-sector counterparts, or 0.3% more (not statistically significant) if also controlling for union membership. This analysis does not account for other differences between the two groups, including employer size and workers’ occupations, since the Current Population Survey does not ask about employers, and most postal workers are in occupations exclusive to the Postal Service, based on U.S. Census occupation codes. Though an imperfect comparison, this regression analysis suggests that postal workers’ pay advantage, if it exists, is primarily due to smaller pay gaps for women and workers of color.

Moreover, the Postal Service pay premium (if it exists) appears to have shrunk since the 1970s. This is not due to increased earnings for private-sector workers with similar education, which have stagnated. Rather, there has been a decline in postal workers’ average earnings from $66,437 in 1976–1979 to $59,048 in 2015–2019 (adjusted for inflation), as the Postal Service has come under increasing pressure to cut costs. This erosion occurred despite educational gains and an increased emphasis on technical skills. Though postal workers receive more generous health and retirement benefits than most private-sector workers, these benefits have not become more generous to compensate for declining pay. However, health cost inflation has eaten into workers’ pay across sectors and accounts for some of the decline (Bivens 2018).

The Postal Service increasingly relies on noncareer employees with less job security and meager benefits. The number of career postal workers has shrunk by 38% in the new millennium and is at its lowest level in over half a century despite economic and population growth (USPS 2020a). Most of the decline happened in the decade following passage of the PAEA in 2006, which spurred the Postal Service to cut current labor costs by over $1 billion a year (more than 21% overall) in a futile effort to meet a requirement for rapidly prefunding retiree health benefits (USPS OIG 2016c). Much of the cost savings stemmed from reduced work hours, but some was achieved by replacing career employees with noncareer employees at a rate of around 3% per year. There is pressure to cut benefits for career employees as well.

Though corporate America is broadly supportive of efforts to weaken unions and lower labor standards, not all corporations benefit from attempts to force the Postal Service to cut wages and benefits. While reducing labor costs helps large shippers such as Amazon, it puts more pressure on unionized competitor UPS. Though unionized UPS drivers are more productive than nonunion FedEx drivers, FedEx is able to stay in business by paying its drivers much less (Linnane 2019).

Challenges and constraints faced by the Postal Service

The COVID-19 pandemic

Few sectors of the economy have been left unscathed by the COVID-19 pandemic. Though relief measures to help businesses, nonprofits, and workers weather the sharp economic downturn had bipartisan support in the first months of the pandemic, the Senate Republican majority and the Trump administration have so far resisted providing USPS and other essential public services with the funds they need to make up the decline in revenue caused by the pandemic (Bogage 2020e).

The Postal Service has said it would run out of funds within 18 months, but the Trump administration and Republican-controlled Senate have held up needed funding, including a loan that had been approved by Congress. The Postal Service initially estimated that it would be insolvent by the end of the fiscal year in September, but later reported an increase in package deliveries that pushed the projected insolvency date back (Fandos and Tankersley 2020).

The Postal Service still projects a liquidity crisis, albeit with more uncertainty about when this will happen (Bogage 2020d). The Postal Service estimated it would need $54 billion to make up for losses related to the pandemic (Brennan 2020). The CARES Act, which the president signed into law in March, increased the amount the agency could legally borrow by $10 billion (Stuessy and Gnanarajah 2020). But the administration, in an unprecedented power grab, held the loan hostage as it unsuccessfully pressed the Postal Service to raise prices on Amazon and other large shippers. Though the Postal Service did not bow to pressure to raise rates, it did agree to provide the administration with proprietary information about contract agreements with its top competitive customers (Bogage 2020b).

The HEROES Act, which passed the House in May, included $25 billion to cover the Postal Service’s short-term losses and required the administration to release the $10 billion loan in the earlier bill (Bogage and Dawsey 2020). However, the bill has not been taken up by the Senate. A stand-alone bill with the same funding for the Postal Service passed the House in August with 26 Republicans voting with the Democratic majority, but it too stalled in the Senate (Fandos and Cochrane 2020).

The Postal Accountability and Enhancement Act

The Postal Service’s financial challenges predated the pandemic, which made a bad situation worse. The Postal Service, whose operations are self-funded, had already nearly reached the legal limit on what it can borrow before the pandemic (Christensen, Francis, and Hatch 2016; Stuessy and Gnanarajah 2020). Therefore, in addition to immediate pandemic relief, the USPS Board of Governors requested $25 billion to replace an aging vehicle fleet prone to catching fire and make other overdue investments, plus a $25 billion line of credit to cover future shortfalls (House Committee on Oversight and Reform 2020; Lee 2020).

The Postal Service’s financial difficulties stem from incompatible demands put upon it. USPS is mandated to be self-financing, but has limited ability to raise prices, cut services that do not generate sufficient revenue to cover costs, or expand into more profitable areas. It is required by law to deliver mail to every household at least six days a week regardless of mail volume. As a result of this universal service obligation, a drop in volume is not matched by a similar reduction in costs (USPS OIG 2016a). This long-standing problem was exacerbated by the pandemic, which caused a sharp decline in marketing mail (Bui and Sanger-Katz 2020; Marcos 2020). Though package volume has ballooned as more people shop online, especially during the pandemic, package delivery normally accounts for only about a third of Postal Service revenues (PRC 2020b).

Many problems can be traced back to the Postal Accountability and Enhancement Act of 2006, which capped postage rate increases for first-class and bulk mail at the rate of inflation, required rapid prefunding of retiree health benefits, limited the Postal Service’s ability to expand into new business areas, and subjected the Postal Service to strict borrowing limits (Kosar 2009). Hamstrung by these constraints, the Postal Service’s capital spending has not kept pace with depreciation and amortization, and the Postal Service has been forced to erode its capital stock and cut services rather than invest for the future (USPS OIG 2016c).

Many PAEA provisions were suggested years earlier by industry bodies advising the Postal Service. As described by Postal Service scholar Sarah F. Ryan, recommendations from various industry task forces, committees, and conferences advising the Postal Service in the decade before the PAEA’s passage were included in precursor bills that did not make it into law, as well as the 2006 act itself (Ryan 1999). These recommendations included indexing postage to a price index, allowing customized service and pricing for large mailers, and a narrow definition of the Postal Service’s mandate. Industry groups also pushed the Postal Service to offer bigger discounts for processed mail before the PAEA’s passage, sometimes resulting in revenue losses that were greater than the cost savings achieved. The chief congressional sponsor of the legislation that paved the way for the PAEA, John McHugh, now chairs the Package Coalition representing retailers and mail service providers.

Some of the damage done to the Postal Service from the PAEA may have been unintentional. The PAEA passed with bipartisan support at a time when mail volume was peaking, right before the onset of the Great Recession. Though the bill was backed by Postal Service allies in Congress and some postal unions, USPS leadership withheld support, concerned about the high cost of prefunding retiree health benefits (Olsen 2006).

Though they were right to worry, the prefunding provisions may not have been a deliberate attempt to sabotage the Postal Service or make it an appealing target for privatization. Some supporters may have had covert motives, but the more apparent reason for rapid prefunding was to preserve large Postal Service payments to the U.S. Treasury after the Postal Service was found to be overpaying the Civil Service Retirement System for pension benefits (Blom and Isaacs 2015; Hutkins 2013; Morris 2012). Since the Postal Service is an off-budget entity, these intragovernmental payments were counted as federal revenue at a time when deficit concerns—or deficit posturing—loomed large in policy discussions. To postal union allies in Congress, earmarking funds for retiree health care must have seemed an improvement over the Postal Civil Service Retirement System Funding Reform Act of 2003, which steered funds previously contributed to the pension plan toward federal debt reduction and an escrow account (Kosar 2009).

Retiree health benefits

Rapid prefunding of retiree health benefits has been the main cause of the Postal Service’s financial woes since passage of the PAEA. In combination with aggressive cost-cutting, expanded package delivery would almost have kept the Postal Service in the black were it not for a provision in the PAEA that required the Postal Service to begin prefunding retiree health benefits and pay down these costs within 10 years (Brennan 2019; USPS OIG 2016c). As a result, the Postal Service has had to borrow or default on retiree benefit contributions every year since the passage of the PAEA in 2006.

Whatever the motivations behind the retiree health benefit provisions in the PAEA, they were arbitrarily stringent and extraordinarily harmful. The PAEA required the Postal Service to estimate retiree health benefits payable over the next 75 years and start paying into a Retiree Health Benefit Fund created for this purpose. Contrary to some accounts, the benefits of future employees were not included in the estimated liability, only those of current or former employees, some of whom will still be alive in 75 years. However, the measure does include benefits employees are not yet eligible for and may never receive.

Retiree health benefits fall into an accounting gray area. Unlike most pension benefits, retiree health benefits are generally not protected except to the extent that they are covered by collective bargaining agreements. That is, employers can cancel retiree health benefits workers are already eligible for, whereas they can only stop workers from accruing additional pension benefits (they cannot cancel vested benefits). In a legal sense, therefore, retiree health benefits, unlike pension benefits, are not liabilities that extend beyond the life of collective bargaining agreements even for union members.

Not only can retiree health benefits be reduced or eliminated, they generally require that workers remain in their jobs until retirement—a choice that is not always up to workers. In the case of postal workers and other federal employees, workers who are not employed by the Postal Service in the five years before retiring are generally ineligible for retiree health benefits even if they are eligible to receive pension benefits (OPM 2020a). Though the Postal Service is a special case because it would take an act of Congress to revoke these benefits, this offers only limited protection.

Because they are not guaranteed, retiree health benefits were previously treated as an expense for current retirees, not a future liability. This contrasts with traditional pension benefits, which are generally protected by law and, in the private sector, insured by a federal agency. In 1993, private-sector employers began including projected retiree health benefits in liabilities, and state and local governments followed suit in 2006 (McArdle et al. 2006). However, USPS remains the only federal agency—in fact, the only employer—required to treat these benefits as liabilities and prefund them for active workers (HSGAC 2016).4

The Postal Service was required not only to prefund the benefits but also to do so in only 10 years. Moreover, the size of the projected liability is highly sensitive to assumptions about interest rates, health cost inflation, and other factors (USPS OIG 2015a). It loomed large because health costs were assumed to grow rapidly—by 7% a year—while the fund was required to invest in low-yielding Treasury bonds (Blom and Isaacs 2015). The required payments ranged from $5.4–5.8 billion per year—roughly 15% of operating expenses (author’s estimate based on Blom and Isaacs 2015 and USPS Annual Reports for 2007–2016). The rapid paydown of these legacy costs accounted for three-quarters of the Postal Service’s shortfall in the 13 years after the PAEA’s passage, with much of the remainder tied to the Great Recession and slow recovery (USPS 2020c).

Faced with unpayable expenses, the Postal Service simply stopped paying them. In the end, USPS contributed $20.9 billion to the retiree health fund between 2007 and 2010, including a reduced payment authorized by Congress in 2009, before defaulting on the remaining $33.9 billion (USPS 2019). Though the Postal Service paid no penalty, the defaults left the impression that the Postal Service faced serious problems even though the accounting losses were caused by Congress trying to minimize the amount of deficit spending they authorized in on-budget programs.

Though the rapid prepayment requirement has expired, the Postal Service is still obliged under the PAEA to prepay retiree health benefits rather than fund them on a pay-as-you-go basis. Because Congress pays less attention to costs outside a 10-year budget window, the PAEA gave the Postal Service 40 years to pay down retiree health benefits accrued by workers after the law’s passage. After emerging from the 10-year rapid prepayment period, amortization payments to pay down legacy costs, spread over 40 years, fell to under $1 billion per year, though this is in addition to payments covering the cost of newly accrued benefits.

Since the Postal Service has been tapping the fund it built up, it is not currently being squeezed by these payments. However, its actions remain in violation of the PAEA and the defaulted amounts remain on the books as accounts receivable. Meanwhile, the Postal Service’s reputation has unfairly suffered, and deficits that were entirely due to the retiree health provisions are still held up as evidence that the post office is on an unsustainable course. The New York Times, for example, recently reported that the Postal Service “has struggled economically for years” without providing necessary context (Tompkins 2020). Rapid prefunding of retiree health benefits has also contributed to the perception that Postal Service labor costs are high (USPS 2016c).

Postage rate caps

Another challenge facing the Postal Service is its limited ability to raise postage rates in response to declining volume of paper mail. The PAEA capped rate increases for most types of letter mail to changes in the consumer price index (CPI), allowing the Postal Regulatory Commission to approve increases above inflation only in “extraordinary or exceptional circumstances” (Kosar 2009; Christensen, Francis, and Hatch 2016). Unfortunately, the PAEA coincided with a peak in mail volume (USPS 2020b). Mail subject to the CPI cap has declined by over 50% since its passage (PRC 2018, 2020b). The price cap has generally been binding, though postage rates were temporarily raised above inflation in the wake of the Great Recession. After a 10-year review of inflation-indexing, the Commission asked for more flexibility to increase rates, but the proposed changes have yet to be approved (PRC 2017).

There is no reason to expect the price of postage to increase in lockstep with inflation. The CPI is a weighted average of price increases for a range of goods and services, with weights based on how much the average consumer spends on each category. Most prices rise either more slowly or more quickly than the index at any given time, with flat or declining costs in apparel and computing (for example) partly offsetting the rapidly rising costs of medical care and college tuition.

A service with high fixed costs and declining volume will generally have faster-than-average price increases. This problem with the PAEA price cap was identified early on but never addressed by Congress (Kosar 2009). First-class and marketing mail volume have declined as people have switched to other forms of communication and methods of bill-paying, even while the number of mailing addresses has continued to climb. Because of this and other factors that a postal service cannot control, most countries do not cap postage rate increases without some wiggle room (USPS OIG 2017a). Due in part to the U.S. Postal Service’s strict price cap, the cost of a first-class stamp is now considerably lower in the U.S. than in most other industrialized countries (USPS 2020c).

Constraints on competitive services

The Postal Service has partly made up for the decline in letter mail with an increase in parcel delivery. The PAEA distinguished between “market-dominant” services (mostly first-class and bulk mail)—where the Postal Service either maintains a monopoly to help it comply with its uniform service obligation or has a dominant market position—and “competitive” services (mostly parcel shipping), where it competes with private-sector companies. Shipping volume has more than tripled while market-dominant mail volume has declined by a third since the PAEA’s passage (Table 4).

Though some of the shift from the market-dominant to the competitive category reflects reclassification—commercial lightweight parcels, for example, were switched from market-dominant to competitive (Hutkins 2015)—it is largely due to electronic communication replacing some forms of paper mail as well as e-commerce replacing brick-and-mortar stores.

It is worth noting, however, that while some types of paper mail are on the decline (due to electronic bill paying, for example; see USPS OIG 2015f), marketing mail has expanded—as has the clout of the bulk mail industry. Since mail volume is declining but still accounts for most of the Postal Service’s business, the rapid increase in shipping has not offset the slower decline in mail.

Table 4

Revenue per letter or parcel handled has also fallen as the Postal Service has engaged in more outsourcing and specialization. Whereas in the past the Postal Service and other delivery services might have participated in every stage of the process, they now share tasks with other companies—a process Brandeis professor David Weil has dubbed “fissuring” (Weil 2017).

The Postal Service offers discounts for mail that is processed or transported closer to its destination. It also offers “last-mile” delivery services to e-commerce and shipping companies, where the Postal Service is involved only in the last stage of the process. As a result, mail volume is not a consistent measure of the amount of work being performed in-house by the Postal Service. The size and weight of parcels, delivery time, and distance traveled are also not captured by simple volume measures. In combination with declining mail volume, fissuring and other factors have caused Postal Service revenue to drop by a quarter since 2007 despite the rapid increase in parcel volume.

Parcel delivery and other competitive services are regulated under the PAEA, though the Postal Service has more flexibility in setting rates for these services than for first-class and bulk mail. The PAEA requires that the price of competitive services include an amount to cover some of the Postal Service’s overhead. Though not as strict as the price cap on market-dominant services, this requirement (a price floor, not a ceiling) still limits the Postal Service’s pricing flexibility. Left to its own devices, the Postal Service might opt for lower prices to increase revenue from some competitive services if demand for these services is price sensitive. On average, however, package delivery and other competitive services contribute significantly more toward overhead costs than the minimum required.

Special interests and the push for privatization

Not surprisingly, corporations lobby to tighten or loosen constraints on the Postal Service in ways favorable to their business models. This often puts Postal Service competitors and customers at odds with each other, as competitors try to raise Postal Service costs and prices and customers try to lower them. The two groups are also at odds in lobbying for or against changes to delivery standards, such as ending Saturday delivery. Complicating matters, alliances shift as customers such as Amazon are also increasingly competitors, and competitors such as UPS are also increasingly customers.

Special interest angles are not always self-evident. For example, the bulk mail industry aligns with package delivery companies, but not retailers, in favor of higher Postal Service shipping rates so that competitive services bear more of the Postal Service’s overhead costs. UPS and other delivery companies have long accused the Postal Service of using its mail monopoly to cross-subsidize its package delivery business, a charge that has repeatedly been found to lack merit by the Postal Regulatory Commission. As will be discussed below, there is no single “right price” for delivery services when there are fixed network costs—and prices should be set to benefit consumers, not protect rivals.

Though UPS wants the Postal Service to charge retailers higher shipping rates, UPS itself takes advantage of the Postal Service’s last-mile delivery services. Meanwhile, the Package Coalition, which represents Amazon and other retailers, favors lower shipping costs and disputes UPS’s claim that the Postal Service has an unfair advantage over private competitors. The Package Coalition and another lobbying group, the Coalition for a 21st Century Postal Service, share some members—including Amazon, eBay, and Pitney Bowes—but the latter includes mail-processing, paper, and printing companies that push for larger “worksharing” discounts for bulk mail that has been processed or transported closer to its destination—discounts that do not benefit parcel shippers. Shifting interests and alliances further complicate the picture.

Postage and shipping rates are not the only prices under contention. The Postal Regulatory Commission also regulates prices and discounts for mail-processing and related industries, such as commissions paid to postage vendors and workshare discounts. Pitney Bowes, which pioneered the first commercial postage meter in 1920, remains a major player among these “workshare partners” of the Postal Service (USPS OIG 2019b). While less visible than e-commerce and delivery companies’ interactions with the Postal Service, direct mail printers, mail service providers, and logistics companies also stand to gain or lose immensely, depending on the extent to which the Postal Service’s activities are privatized or open to competition as well as on the size of discounts provided for mail that has been presorted or “drop-shipped.”

Some Postal Service leaders have actively supported these efforts. In 1988, Postmaster General Anthony Frank established a joint worksharing task force with industry members representing mass mailers and mail service providers (National Postal Museum n.d.). The task force led to changes that incentivized companies to do more of the work previously done by the post office—a form of back-door privatization.

Hollowing out the Postal Service through outsourcing

It is a mistake to think of privatization as an all-or-nothing proposition. Privatization of government functions can occur through divestment, contracting out of tasks, or attrition. It can occur gradually or suddenly. And it can happen through lawmakers’ concerted efforts or by haphazard deregulation and private-sector encroachment. The German government, for example, sold its postal service to the private sector in stages, an example that served as a model for a Trump administration task force (Task Force 2018). In the United States, President George W. Bush sought to divert a portion of Social Security contributions into privately managed investment accounts. While overt attempts to privatize popular programs such as the U.S. Postal Service and Social Security have met with fierce resistance, back-door privatization achieved by hobbling government services and encouraging outsourcing to the private sector has occurred with less public awareness and often with bipartisan support.

Outsourcing sometimes takes the form of direct contracting out of Postal Service tasks, despite strong resistance from postal unions. Unions have won important battles in this ongoing war, blocking attempts to expand the use of contracted delivery service carriers on specified routes and an effort by office supply store Staples to open postal counters (Kosar 2012; Vail 2017).

Often, however, outsourcing takes the less visible form of discounts that incentivize companies to perform tasks that would otherwise be performed by the Postal Service. Companies receiving these workshare discounts may perform the work themselves or hire third-party contractors to do it. From a purely economic standpoint, it matters little whether the Postal Service is directly paying contractors to transport mail, say, or offering discounts for mail that has been transported closer to its destination. However, there are legal and other implications of outsourcing that takes the form of customer discounts.

Outsourcing has grown rapidly since worksharing discounts were first introduced in the late 1970s. By 2008, 80% of mail was covered by these arrangements, according to a report by the USPS Office of the Inspector General (USPS OIG 2010). The report found that workshare discounts for companies that presorted or drop-shipped mail were a wash for the Postal Service, which provided $15.0 billion worth of discounts to workshare partners for $14.8 billion in cost savings to the Postal Service in 2008. This was by design, since the Postal Service aims to rebate all cost savings to the companies doing outsourced work based on the principle of “efficient component pricing,” according to which workshare discounts are supposed to be set equal to avoided costs.

Outsourcing “upstream” work therefore does not benefit the Postal Service nor does it support its public service mandate. As Evergreen State College professor Sarah F. Ryan pointed out in her 1999 master’s thesis, what drives outsourcing is not the Postal Service’s desire to save money, as might be expected, but rather behind-the-scenes lobbying by corporations (Ryan 1999). Many of these corporations are military contractors and others adept at using past employment experience and contacts at government agencies to profit from government outsourcing.

Safeguards against conflicts of interest have proven ineffective. The Postal Service Board has long been dominated by corporate executives. However, its members are not supposed to have a direct financial interest in the mailing industry (a rule the current postmaster general appeared to be violating before belatedly selling his interest in his former employer; see Cohen 2020 and Durkee 2020). Instead, corporations’ primary influence channel, aside from lobbying Congress and the Postal Regulatory Commission, is through industry task forces and advisory committees set up by the Postal Service (Post & Parcel 2001; HSGAC 2007). Postal Service unions have tried to make industry-dominated advisory bodies more inclusive and transparent, with little success.

Even if it does not benefit the Postal Service, is outsourcing efficient from a societal point of view? Some division of labor in the mailing industry, such as the Postal Service offering last-mile delivery to other shippers, takes advantage of underused capacity and economies of scale. This is efficient and clearly benefits consumers, though regulatory oversight is required to ensure that large companies such as Amazon do not unduly benefit. Similarly, presorting and bar-coding addresses before mail is printed and dropped off is more efficient than doing it after the fact.

Much outsourcing, however, is driven by differences in hourly labor costs rather than productivity. Low-wage companies engaged in mail processing, transportation, and related tasks generally have lower labor productivity than the Postal Service and other unionized employers because they rely on a less skilled and more transient workforce and have less incentive to invest in training or technology.

Outsourcing creates administrative and other headaches for the Postal Service. The inspector general and others have noted that even if cost savings are rebated on average to companies, discounts are difficult to price correctly and are often more or less than savings achieved, distorting incentives. Quality control is also an issue. Outsourcing incentivizes what economists call rent-seeking behavior by corporations—effort expended on gaming the system rather than engaging in productive activities. As the inspector general’s report notes, “Worksharing represents a financial incentive for mailers and MSPs [mail service providers] to influence the postal policy debate. Not surprisingly, there have been controversies over the size of workshare discounts, how they are calculated, and how broadly they are applied” (USPS OIG 2010, 8).

If the Postal Service does not directly benefit from outsourcing tasks, who does? Outsourcing to low-wage companies means corporate shareholders benefit at the expense of workers. And whether bulk mailers perform the work themselves or use mail service providers, they benefit from lower costs. The extent to which these cost savings are passed on to consumers, however, depends on the competitiveness of the industry and the sensitivity of consumer demand to price changes. Since the mailing industry is increasingly concentrated, much of the benefit accrues to corporate shareholders, not consumers, especially if these companies negotiate preferential rates at the expense of other mail customers (Ryan 1999). In any case, the benefit to consumers of marketing mail is indirect, since much of it is designed to capture market share without necessarily leading to price or quality improvements.

Competitive pressure that normally leads to lower consumer prices is also blunted by the structure of outsourcing discounts. As the inspector general’s report notes, outsourcing may be lucrative even for inefficient companies because the Postal Service is required to give the same discount to all mail service providers rather than going through a competitive bidding process or setting the discount to maximize the cost savings to the Postal Service (USPS OIG 2010). As a result, work may be profitably performed by any company with lower costs than the Postal Service, not necessarily the most efficient company.

Limiting the Postal Service’s ability to compete in parcel delivery

The apportionment of fixed costs is another contested area, with UPS and others arguing that the Postal Service is engaging in unfair competition by subsidizing parcel delivery and other competitive services. While the hollowing out of the Postal Service through workshare discounts has happened under the radar, there has been a heated public debate around the pricing of competitive services.

Following the passage of the PAEA, which distinguished between market-dominant and competitive services, the Postal Regulatory Commission required that the price of competitive services include at least 5.5% toward “institutional costs.” When the Commission increased the institutional cost contribution requirement to 8.8% in 2019, Amazon (which is mostly a customer) predictably argued that this was too high, and UPS (which is mostly a competitor) predictably argued that this was still too low (PRC 2020a; Steiner 2019).

In practice, the institutional cost contribution requirement sets a price floor for competitive products, but prices are often significantly above this floor. The Postal Service sets rates above the floor when this helps its bottom line—that is, when the negative effect of reduced demand is more than offset by the positive effect of a higher price. In 2019, revenue from competitive products was $24.2 billion, of which $8.2 billion (34.1%) went toward institutional costs (PRC 2020b). The issue worth debating is not whether low Postal Service shipping rates hurt industry profits, but whether high shipping rates serve the public interest.

President Trump sided with the Postal Service’s competitors in calling for higher prices for competitive services—at least when Amazon is the customer. President Trump made no secret of his dislike of Amazon CEO Jeff Bezos, who owns the Washington Post, which has been critical of the Trump administration. In 2017 and again in 2018, Trump accused Amazon publicly of having a sweetheart deal with the Postal Service (DePillis 2017; Trump 2017, 2018). He also reportedly lobbied the postmaster general privately (Paletta and Dawsey 2018).

Though one of the Postal Service’s largest customers, Amazon is rapidly expanding its in-house delivery network. By one estimate, the Postal Service delivered 31% of Amazon packages in July 2019, down from 60% just two and a half years earlier (Premack 2019). According to USPS financial disclosures, Amazon and two other unnamed customers (one of them presumed to be eBay) accounted for 8.5% of Postal Service revenues in 2019 (USPS 2019; Dawson 2019). Though Amazon is likely the Postal Service’s largest customer among retailers, UPS and FedEx—which use the Postal Service for last-mile delivery—may be as or more important to the Postal Service’s bottom line. As Amazon expands its own delivery network, its arrangements with the Postal Service may matter less to UPS and FedEx than the fact that the company that already dominates e-commerce is trying to do the same for delivery (Cheng 2019).

Not satisfied by the recent increase in the institutional cost contribution requirement, Trump demanded that the Postal Service quadruple what it charges Amazon for last-mile delivery as a condition of receiving pandemic relief. The president’s claim that Amazon has an unfair advantage appears to be based on an estimate of the “true economic cost” of shipping in a Citigroup brief (Ward 2020). This estimate, however, relies on the false assumption that the Postal Service’s competitive services contribute only the minimum required by law toward overhead, as Josh Barro of Business Insider notes (Wetherbee et al. 2017; Barro 2018). According to Barro, the Citigroup brief also relies on UPS-funded research that includes legacy costs associated with past employment in measures that should only include current costs (Neels 2015). Moreover, the UPS analysis ignores how demand for services would be affected by rate hikes, as the Postal Regulatory Commission’s lawyers successfully argued in federal court in United Parcel Service v. Postal Regulatory Commission. UPS appealed the court’s decision as far as the Supreme Court, which declined to take the case (Stohr 2019).

There is no single “right price” for last-mile delivery. The Postal Service makes money on this mutually beneficial service since it delivers to all homes and businesses regardless and the cost of delivering an extra package is less than the Postal Service charges for these deliveries. Meanwhile, it would cost UPS, FedEx, and Amazon more to do last-mile delivery of a package if they had to make a special trip to do so. (This symbiotic relationship goes both ways: The Postal Service also contracts with UPS and FedEx for air transportation. See USPS OIG 2015b.)

The challenge in determining a fair price for Amazon and other large e-commerce, shipping, and processing companies is that there is not a textbook competitive market on either side of the transaction. There are network fixed costs in delivery services that give established actors an advantage against would-be competitors, which is why Amazon, UPS, and FedEx should be regulated as quasi-monopolies and why we should take with a grain of salt suggestions that the Postal Service, a monopoly that is heavily regulated, is not nimble enough to be competitive (Slentz and McCann 2009).

Both sides in the Postal Service’s last-mile arrangements with shippers are better off engaging in the transaction across a range of prices, so that the distribution of spoils is determined through negotiation. Economists model situations like this using game theory, as opposed to pinpointing a single competitive price at the intersection of supply and demand curves (USPS OIG 2017b). The “game” in this case is complicated by the actions of other competitors and suppliers, dynamic considerations, and sunk costs. For example, shippers like Amazon can build out their own delivery networks. In such circumstances, raising rates could benefit the Postal Service in the short run but hurt it in the long run by incentivizing Amazon to expand its delivery network, especially in high-density areas (Premack 2020).

Ideology and special interests: The role of pro-privatization think tanks

Companies that stand to gain by hobbling or shrinking the Postal Service support pro-privatization think tanks. Think tank veterans active in these efforts have served in, or acted as outside advisors to, Republican administrations. Though some Democrats have supported privatization, these efforts are more aligned with the GOP’s limited-government stance and its alliance with big business, two interests that often overlap.

The Cato Institute, the Heritage Foundation, and the Reason Foundation are among the libertarian and conservative think tanks that have pushed to privatize the post office and other government entities. FedEx CEO Frederick W. Smith served on the board of the Cato Institute, which has spent decades pushing for Postal Service privatization (Smith 1999; Hudgins 2000; Edwards 2016). Advocates of Postal Service privatization at the Cato Institute and the Heritage Foundation, including Peter J. Ferrara and Stuart M. Butler, were also architects of a high-profile effort to privatize Social Security (Ferrara 1980, 1999; Butler 1985; Butler and Germanis 1983). Another proponent, Robert Poole of the libertarian Reason Foundation, encouraged President Reagan to pursue privatization of the post office and other federal agencies, which led to the appointment of a privatization commission (Poole 2004). Decades later, President Trump nominated the commission’s research director, Stephen Moore—who had also served stints at Cato and Heritage—for a position on the Federal Reserve Board (Cato n.d.; Moore 1988).

Centrist think tanks have also weighed in. Robert J. Shapiro, a Clinton administration veteran and author of a UPS-funded 2015 report claiming that the Postal Service had an unfair advantage over competitors (Shapiro 2015), participated in a panel discussion at the Brookings Institution (Brookings 2015c), which received funding from UPS (Brookings 2015a). His findings were the basis of a misleading essay by co-panelist Elaine Kamarck of Brookings, who used Shapiro’s report to argue in favor of privatizing Postal Service parcel delivery operations (Kamarck 2015; Anderson 2015). Kamarck, who led the Clinton administration’s “reinventing government” initiative, had previously written that the Postal Service should either become more entrepreneurial and expand into new lines of business (which it is prohibited from doing under current law) or should be fully dismantled and privatized (Kamarck 2009).

Pitney Bowes was an early supporter of privatization efforts. Along with FedEx CEO Frederick Smith, former Pitney Bowes CEO Michael Critelli participated in a 1999 Cato conference on Social Security privatization, though Critelli was more circumspect in his remarks than Smith (Cato 1999). In 2013, Pitney Bowes funded a National Academy of Public Administration panel looking into privatizing many of the Postal Service’s upstream operations (Keane 2013). The panel was led by former Comptroller General and Postal Service critic David M. Walker, a long-standing supporter of privatization (GAO 2001; Walker 2013). Despite the company’s obvious financial interest in the issue and Walker’s background, the panel was billed as an “independent review” of an earlier “thought-leader” proposal by, among others, Edward L. Hudgins, the author and editor of two Cato books on Postal Service privatization (NAPA 2013; Hudgins 1996, 2000). Pitney Bowes now belongs to the Coalition for a 21st Century Postal Service, which officially opposes privatization efforts but supports “postal reform” (C21 2018).

Trump-era assaults on the Postal Service

Office of Management and Budget report

Like some earlier Republican administrations, the Trump administration flirted with overt privatization. A 2018 Trump Office of Management and Budget (OMB) report proposes returning USPS to profitability in order to sell it off (OMB 2018). The report claims that a “privatized Postal Service would have a substantially lower cost structure, be able to adapt to changing customer needs and make business decisions free from political interference, and have access to private capital markets to fund operational improvements without burdening taxpayers.” The report assures readers that “the United States could privatize its postal operator while maintaining strong regulatory oversight to ensure fair competition and reasonable prices for customers.”

The OMB report blames politics for the Postal Service’s woes, without explaining how a privatized service would be free of such interference. Rather than magically transforming “political interference” into “strong regulatory oversight,” as the report promises, Postal Service privatization would more likely simply add another special interest to the lobbying mix. Currently, unlike its rivals, the Postal Service is not allowed to engage in lobbying or make political donations—but a privatized postal service could (Fisch 2005; Jacobson 2001). (A similar strategy of exacerbating a problem under the guise of paving the way for a solution was seen in the administration’s starving the Postal Service of funds while promising that privatization would provide access to needed investment capital.)

The OMB report proposed significant cuts to customer service and workers’ compensation. It called for delivering mail fewer days per week to more central locations, rather than six-day-a-week door delivery to all addresses, and emulating “private sector practices in compensation and labor relations”—among other things, by ending workers’ participation in federal benefit programs. It also suggested offloading accrued pension liabilities onto taxpayers to make the Postal Service a more appealing target for would-be buyers. In short, the report did little to hide the fact that privatization would lead to a massive transfer of wealth from rural residents, small customers, taxpayers, and workers to corporate shareholders.

Treasury-led task force

A later Trump administration task force appointed to study the Postal Service’s business model deemphasized privatization while filling in the details of the OMB’s proposed service and compensation cuts. That task force, headed by Treasury Secretary Steven Mnuchin, called for stripping postal employees of their right to collectively bargain over pay and benefits while preserving a role for a downsized public postal service (Task Force 2018). Whether the task force was more politically realistic or more cagey about privatization than the authors of the OMB report is an open question. The administration may have become aware that overt privatization faced serious opposition, even from segments of the Republican Party base. Or it may simply have come to the realization that advertising a strategy of cutting services and workers’ pay to pave the way for privatization was not politically smart.

The Treasury-led task force called for adopting a more targeted business model based on providing “essential mail and package services for which there is no cost effective, nationwide, private sector substitute.” It proposed elevating the private sector to a central role while limiting the Postal Service to “correcting the failures and inefficiencies” of private markets in order to meet the needs of “customers who are not reasonably served by commercially available products.” While recognizing a limited need for government involvement to provide “a safety net of necessary postal services,” the task force declared that “the Postal Service’s role in promoting national cohesion has diminished,” paving the way for the private sector to take over more of its upstream operations.

The task force’s rationale for elevating the private sector’s role borrowed terms used by economists but was not based on rigorous economic theory. Echoing libertarian arguments long used to promote the privatization of government functions, the task force framed the historical argument for a government postal service as stemming from its resemblance to a public good—a term economists and political scientists use to describe goods or services whose benefits cannot be limited to those willing to pay for them. Even doctrinaire libertarians accept that lighthouses and armies should be funded by taxpayers for this reason, but they allow few if any other rationales for government provision of goods and services.

The task force argued that the Postal Service once resembled a public good, but that the rise of internet communications had relegated it to a safety net role. Aside from the highly debatable claim that a delivery network operated as a public service is less important in the age of e-commerce, framing the question around whether the Postal Service is or is not a public good makes little sense since the Postal Service is not funded by taxpayers.

The Postal Service does, however, have features of a natural monopoly with positive externalities, similar to other public or regulated utilities. A natural monopoly means that an established postal network can fend off competitors due to the fixed cost of building the network and network effects that make a service more valuable and cheaper to operate the more people who use it. A private service, unlike a government agency with a public service mandate, will underprovide services relative to what is socially optimal because monopolies maximize profits by restricting supply to raise prices, and because some benefits are not captured by paying users (the aforementioned “positive externalities”).

In the postal context, a private service left to its own devices will reduce or stop offering services in higher-cost areas, especially rural and poor regions of the country. While the task force claimed its proposed business model would not disadvantage rural residents, it defined this narrowly as maintaining uniform postage rates, while suggesting service reductions for rural customers, including closing post offices and reducing access points by clustering mailboxes.

In short, while you can make an argument for replacing a government postal service with a regulated private monopoly, the advantage of either option depends on the relative effectiveness of a government provider or regulator. The task force’s rationale for shrinking the Postal Service conveniently ignores the best arguments for maintaining it as a public service, notably the fact that it resembles a natural monopoly with positive externalities.

Appointment of Postmaster General Louis DeJoy

In June 2020, Treasury Secretary Mnuchin engineered the appointment of Louis DeJoy, the former CEO of a logistics company, to head the Postal Service. XPO Logistics, which bought DeJoy’s company New Breed Logistics in 2014 and kept him on as a director, has contracts with the Postal Service and many of its major customers. Amazon was reportedly XPO’s largest customer until 2018, when Amazon decided to expand its own warehouse and delivery operations (Baertlein 2019).

The new postmaster general was a controversial pick. His candidacy was promoted by Robert M. (“Mike”) Duncan, a former Republican National Committee chairman and ally of Senate Majority Leader Mitch McConnell. Trump appointed Duncan’s son to be U.S. District Attorney for the Eastern District of Kentucky in 2017 before appointing Duncan Sr. to the Postal Service Board in 2018. DeJoy himself is a major Trump donor (who, among other things, gave large sums to the RNC during Duncan’s tenure and to political action committees with ties to McConnell) and was the chief fundraiser for the party’s 2020 convention (Bogage 2020c; Mak, Dreisbach, and Temple-Raston 2020; Schouten 2018; Arkin 2020). Two members of the board, including Deputy Postmaster General Ronald Stroman, resigned, reportedly in protest of Mnuchin’s interference in the Postal Service’s internal affairs and DeJoy’s selection (Herb and Dean 2020; Dayen 2020a). The other board member who resigned, Vice Chair David C. Williams, compared Mnuchin’s interference to an earlier attempt by the George H.W. Bush administration to wrest control of the independent agency by withholding funds (USPS OIG 2016b).

DeJoy is no friend to workers. A Cornell University analysis of the mailing industry commissioned by the American Postal Workers Union in 2004 (Hickey 2005) painted a scathing portrait of New Breed Logistics not simply as a company that actively opposed unionization efforts—hardly uncommon in the United States—but as one whose central business model was encouraging unionized companies and government agencies to outsource their supply chain management to nonunion New Breed. USPS was New Breed’s largest customer in 2002 and the Postal Service accounted for a fifth of New Breed’s revenues in 2004. Depending on the year, the Postal Service and other government contracts were responsible for anywhere from 25% to 95% of the company’s revenues.

Describing unions in promotional materials as “cultural obstacles,” New Breed engaged in illegal anti-union activities to ensure that not a single employee would be represented by a union. The Cornell study recounts the lengths DeJoy went to in order to achieve this. When New Breed took over a contract for a container facility on an Army base in California, it refused to hire the 12 unionized employees, instead conducting a secret hiring process offsite. Since this is illegal, the company falsely claimed that the former employees had not applied for the jobs. The National Labor Relations Board ruled that New Breed had acted with anti-union animus and pursued a rare motion for injunctive relief, which New Breed tried to challenge all the way to the Supreme Court. More recently, a series of New York Times articles reported on unsafe working conditions and charges of unfair labor practices in warehouses managed by XPO, the company that bought New Breed in 2014 (Silver-Greenberg and Kitroeff 2018; Kitroeff 2019). New Breed was also cited for retaliating against workers who had filed sexual harassment complaints.

As the Postal Service is under pressure to save costs by degrading middle-class jobs, union-busting and health hazards in this sector are serious causes for concern. DeJoy has wasted no time making changes that sacrifice service with directives banning late trips and extra trips to deliver late items (Bogage 2020a). These are presented as cost-saving measures but smack of sabotage, since on-time delivery is a major selling point for the Postal Service and its competitors. As American Postal Workers Union President Mark Dimondstein has noted, “Undermining and degrading the Postal Service helps frustrate the customer, which sets the stage to privatizing it” (Bogage 2020a).

A party at odds with its constituents

The Postal Service is very popular, especially with rural Americans. Surveys consistently find the Postal Service among the most popular government agencies, with 91% of Americans expressing approval in a March 2020 Pew poll (Pew Research Center 2020). A RAND poll conducted in May found the Postal Service was second only to the Centers for Disease Control and Prevention (CDC) in public trust, with rural Americans, who tend to vote Republican, giving it especially high marks (Pollard and Davis 2020; Parker et al. 2018).

However, anti-government sentiment among Republican lawmakers often outweighs their constituents’ economic interests. Republican-controlled states have been slow to expand Medicaid under the Affordable Care Act, forgoing billions in federal dollars in addition to harming the physical and financial well-being of families in these states. With increased polarization and sorting of districts and states into Republican and Democratic strongholds, Republican incumbents often face more danger from primary challengers than from opponents in general elections, making them reluctant to provoke the ire of more ideological voters and big-money donors. Nevertheless, the fact that 26 House Republicans recently broke ranks to support pandemic aid to the Postal Service reflects its broad popularity (Fandos and Cochrane 2020).

If a party’s political brand is limited government—and Republicans in the Trump era have been increasingly willing to attack even government functions the party previously supported—underfunding public services may seem to make strategic sense. “Starving the beast” leads to deteriorating public services, which in turn can lead to reduced support for these services. This also explains Republicans’ reluctance to include significant funding to state and local governments in pandemic relief legislation passed to date. But this presents political risks, both in terms of being blamed for deteriorating public services and because state and local government cutbacks further damage an economy already suffering from insufficient demand for goods and services (Tahmincioglu 2020).

Underfunding government in order to shrink it undoubtedly appeals to the party’s wealthy supporters. Big-money donors also tend to be antagonistic to public-sector unions, including the four that represent rank-and-file postal workers (Pilkington 2018). In addition to resisting pay cuts, unions are often the most effective champions of public services, and this has certainly been true of postal unions. But while some conservatives do not like government in the abstract, most voters like programs they have direct experience with, including those the ideologues are most eager to eliminate or radically transform, such as Social Security, public schools, and the Postal Service. Even the much-maligned Affordable Care Act is increasingly liked by voters, which helps explain why President Trump and other Republicans have tried to claim credit for its benefits while quietly trying to kill it in the courts (Sullivan 2020; Rizzo 2020).

Though full privatization efforts have not borne fruit, they have succeeded in putting the Postal Service and unions on the defensive and expanding the private sector’s role. This may have been the primary goal all along. Though some think tank libertarians may be true believers in privatization efforts, most “reform” efforts are fueled by competitors who want to encroach on or curtail the Postal Service’s activities and by major customers who support privatization as a way to force the Postal Service to reduce labor costs or outsource to low-cost providers.

There are parallels with Social Security. While President George W. Bush’s high-profile attempt to replace Social Security benefits with 401(k)-style accounts was soundly defeated, these benefits have gradually been reduced while tax subsidies for 401(k) plans have expanded since 1983 (Reno, Bethell, and Walker 2011; EBRI 2018). In the case of the Postal Service, overt privatization attempts have never gone beyond an exploratory phase. Nevertheless, the hollowing out of the Postal Service has proceeded apace, mostly a result of workshare discounts offered to bulk mailers and third-party service providers.

The PAEA sped up back-door privatization. Its onerous requirements spurred the Postal Service to cut post office hours, close distribution centers, and outsource more of its functions (Christensen, Francis, and Hatch 2016). The Postal Service also came under increased pressure to move to five-day-a-week delivery even as e-commerce boomed and customers became accustomed to faster service (Christensen 2012). Six-day delivery gives the Postal Service a valued niche delivering goods ranging from ice cream packed in dry ice to life-saving drugs (USPS OIG 2015e). However, the Postal Service’s reputation for reliably speedy delivery has suffered since Trump’s hand-picked postmaster general began implementing service cuts (Cochrane et al. 2020).

Looking to the future

Congress has left the Postal Service to wither on the vine. Political polarization has rendered Washington so dysfunctional that the USPS Board of Governors was entirely vacant in 2016 (Christensen and Stuessy 2018). The following year, then–Postmaster General Megan Brennan told Congress that no amount of cost-cutting and defaulting on contributions to employee benefit plans would balance the books given the fundamental imbalance between costs fixed by law and statutory constraints on revenue-generating activities imposed by Congress (Brennan 2017).

The incoming Biden administration will have its hands full repairing the damage inflicted by its predecessor. This will require new leadership. The USPS Board consists of up to nine presidential appointees, who serve seven-year terms, plus the postmaster general and the deputy postmaster general, who are selected by the board and serve indefinite terms. The current board is composed of six Trump appointees, four of them Republican, plus Postmaster General DeJoy. There are three openings, not counting the vacant deputy position and a seat held by a board member whose term expired and who is serving in a holdover capacity. President Trump has nominated a fifth Republican, who has not been confirmed. All of President-elect Biden’s initial appointees could be Democrats, since a maximum of five appointees on the board can be from the same political party. This would give Democrats control of the board if Trump’s nominee is not confirmed. However, DeJoy and the Trump appointees on the board may be able to maintain control long enough to inflict more damage on the Postal Service, especially if they are able to hand-pick a deputy postmaster general who would also have a seat on the board.

A change in leadership will not be enough. The Postal Service cannot thrive under the PAEA. Whether the PAEA’s disastrous prefunding provision was a booby trap or simply a mistake, Congress’s unwillingness to amend the law to adapt to changing circumstances in the ensuing years reflected not only growing polarization and gridlock in Congress, but outright hostility to the Postal Service from Republicans on the House Oversight and Government Reform Committee, among others, quashing attempts by the PAEA’s co-sponsors and others to repair the damage (Nichols 2013; WSJ 2011).

There are glimmers of hope. In February, the House passed a bipartisan bill, with the support of 87 Republicans and 222 Democrats, that would eliminate retiree health prepayments and forgive the remaining balance (Katz 2020; U.S. House Clerk 2020). However, the Republican-controlled Senate has yet to schedule a vote on a companion bill.

Congress urgently needs to provide the Postal Service with the same pandemic relief as airlines and other private-sector employers facing a collapse in demand (Steinberg 2020). Allowing the Postal Service to fail would have negative economic and social consequences throughout the country, especially in rural areas and low-income urban neighborhoods.

Postage rate caps should be relaxed after the economy recovers. A postage increase is not the answer during the coronavirus crisis. Raising rates now would amount to a tax on businesses and households at a time of high unemployment.

The bigger issues that need to be addressed are outsourcing and limits on Postal Service activities that benefit big corporations at the expense of American families. Concerns over the postal monopoly and “unfair competition” are misplaced. We should worry less about regulated public monopolies and more about underregulated large corporations. While the e-commerce and package delivery sectors tend to be highly concentrated due to network economies, there is also increasing consolidation in mail-processing and related industries due to technological, regulatory, and other barriers to entry. Industries undergoing consolidation include direct mail printing, mail-processing software, and third-party logistics (Patel and Qian 2019; Stoller 2020; Burnson 2019).

The goal of government should be to raise, not lower, labor standards. Though both “high-road” and “low-road” employers can be competitive, it is worse for society when the main competitive advantage a company or public service has is paying low wages. The low road leads to increased poverty, widening inequality, and taxpayers bearing more of the burden of meeting families’ basic needs through means-tested government programs.

A range of federal, state, and local laws are designed to ensure that government actions do not exacerbate poverty and inequality. The Davis-Bacon Act requires contractors in federally funded construction projects to pay the prevailing (usually union) wage, and the McNamara-O’Hara Service Contract Act does the same for contractors providing services to the federal government (Parrott 2014). Living wage ordinances in many municipalities around the country require businesses that have government contracts or receive government assistance to pay above-minimum wages to ensure that workers and their families do not live in poverty. Though Postal Service contractors are generally covered by these laws, the laws do not apply to companies taking advantage of worksharing discounts as opposed to directly contracting with the Postal Service.

Steep workshare discounts allow outsourced work to be profitably performed by any company with lower labor costs than the Postal Service, not necessarily the most efficient company. For this reason, a report from the inspector general’s office recommends that the Postal Regulatory Commission allow the Postal Service to reduce worksharing discounts (USPS OIG 2010). This would have the dual benefit of allowing the Postal Service to capture some cost savings and potentially reduce race-to-the-bottom outsourcing to low-wage companies. Though this change would not require legislative action, the Commission has not implemented this recommendation. A more far-reaching solution should address the loophole allowing low-road employers who would be prevented by the Service Contract Act to perform contracted work for the Postal Service to take advantage of workshare discounts to perform outsourced work.

The Postal Service should not be prohibited from entering markets that fit with its public service mandate. If there were less resistance to expanding the scope of government to meet unmet needs and take advantage of natural monopolies, the Postal Service could not only offer postal banking services but could also compete with Amazon as a one-stop shopping and delivery conduit to independent retailers. There is much discussion of how the growth of electronic payments has reduced mail volume and contributed to the Postal Service’s financial challenges. Another way to look at this trend is to see that a private monopoly—Amazon—is replacing a public one, without, however, a public service mandate. While President Trump may have been wrong to suggest that Amazon is taking advantage of the Postal Service with a sweetheart deal for last-mile delivery, the long-run health of our economy depends on limiting Amazon’s ability to take advantage of network economies in payments and delivery systems to squeeze small businesses, workers, and ultimately consumers.

Conclusion

The GOP’s “big tent” is getting smaller. The Republican Party has historically balanced individual and community values; the interests of global corporations and patriotism; free enterprise and public service. In its support for privatizing a beloved public service, however, libertarian and narrow business interests have trumped tradition and broader community interests, including those of rural residents and small business owners.

Rather than openly attacking popular government programs, anti-government activists try to paint these programs as obsolete and inefficient. For would-be reformers, recessions and other crises present opportunities for radical change. But privatizers can cite no hard evidence of poor service or a reluctance to innovate (Keating 2013). If anything, the fact that Postal Service jobs—unlike many in the private sector—provide a decent middle-class income has forced the Postal Service to innovate and invest in labor-saving technology because it is less able to rely on low-wage labor than competitors such as FedEx. The incoming president, who has signaled that creating good jobs will be central to his economic agenda, should include bringing back Postal Service jobs lost to outsourcing among his priorities.

The Trump administration and other would-be privatizers simply assume the answers to the key questions of whether a privatized service would be more efficient and whether allowing the market to set prices would make people better off. Adam Smith famously argued in The Wealth of Nations that the self-interest of “the butcher, the brewer or the baker” can lead to the socially beneficial provision of goods and services. However, much economic discourse since Smith’s time has revolved around when markets do and do not achieve desirable results.

Even with textbook competitive markets and in the absence of externalities, Kenneth Arrow and other economists have demonstrated that you can never assume that free markets maximize well-being because people have different tastes and inherited advantages, among other reasons. A competitive market can only be said to be Pareto optimal, meaning that no one can be made better off without making someone else worse off. As Arrow noted in his Nobel Prize speech, “An allocation of resources could be efficient in a Pareto sense and yet yield enormous riches to some and dire poverty to others” (Arrow 1972).

The real issue is whether the Postal Service should reflect egalitarian democratic values or profit-maximizing free market ideals. A functioning democracy serves as a counterweight to unequal resources even in a capitalist society, and voters may prefer a Postal Service with more equal pricing and services than would occur in an unfettered marketplace. In addition to the fact that a postal network does not operate in an environment where it is easy to assume that private-sector competition will lower prices and improve quality, there are many areas of society where most people prefer government or nonprofit providers over for-profit ones, including education and health care (Quilantan 2020; KFF 2020). Often these are areas where it is important that those providing the services be motivated by a sense of responsibility more than personal gain. Like public schools and hospitals, the Postal Service is a concrete reminder that while for-profit companies may make the best smartphones, civic-minded institutions are better suited for many other purposes, especially when public trust is paramount.

Another common refrain is that government services should be targeted, not universal. This allows small-government advocates to stake the moral high ground by offering to take better care of those who really need it while reassuring vulnerable but influential groups. Thus, the Trump administration task force and other would-be reformers do not dismiss the concerns of rural residents, but rather assure them their interests will be protected in a “safety net” system. However, it is highly unlikely that a Postal Service pared down to what would-be reformers consider “essential services” will be able to maintain current services to rural residents at affordable prices.

Comedian P.J. O’Rourke once quipped, “The Republicans are the party that says government doesn’t work and then they get elected and prove it” (O’Rourke 2003). This has certainly been the case with the Trump administration’s undermining of the CDC and Postal Service during the COVID-19 pandemic. Despite these attempts at sabotage, most Americans, including Republicans, value government services. Rather than trying to shrink government on the false assumption that the private sector is always more efficient, we should consider expanding government entities—like the Post Office—that have proven their worth.

Acknowledgments

The author would like to thank Sarah Ryan, Jim Sauber, and David Williams for taking the time to share their expertise; Krista Faries for skillfully editing an unwieldy report; and Melat Kassa for excellent research assistance. The author is alone responsible for the views expressed and any errors remaining in the report.

Appendix: Methodology note

In both regression results reported here, the dependent variable is the natural logarithm of inflation-adjusted annual earnings. In Appendix Figure A, the baseline is the earnings of full-time private-sector workers (all workers in the analysis work 35+ hours a week and 50+ weeks a year). In Appendix Figure B, the baseline is the earnings of male, white, non-Hispanic (NH) workers without a high school diploma.

A log-linear model is used to estimate percentage differences from baseline earnings, controlling for education, hours worked, age, year, and, in some cases, gender, race, and ethnicity. While the coefficients shown in the appendix figures serve as approximations, more accurate estimates cited in the text are calculated using the e^(b) − 1 formula, where e is the base of the natural logarithm and b is the coefficient estimate. For example, in Appendix Figure A, applying this formula to the coefficient estimate for government workers with a bachelor’s degree (-0.170, rounded to two decimal points in the figure) shows that postal workers earn 15.6% less than private-sector workers (not 17.0% less) since e^(-0.170) − 1 ≈ -0.156.

In the figures, 95% confidence intervals are indicated by lines extending from point estimates, which are not always visible. Confidence intervals are wider for postal workers than for other government or private-sector workers because sample sizes are smaller, especially for subgroups such as postal workers with advanced degrees. Confidence intervals that cross the zero line indicate that differences in earnings from the baseline are not statistically significant.

Appendix Figure A

Appendix Figure B

Notes

1. Postal Reorganization Act, Pub. L. 91-375 (1970).

2. Unless otherwise noted, all worker statistics refer to full-time wage and salary workers and are based on the author’s analysis of microdata from the Annual Social and Economic Supplement (ASEC) of the U.S. Census Bureau’s Current Population Survey (Flood et al. 2020). Years refer to survey years (the ASEC is conducted in March) and pay refers to the previous 12 months’ pay. Thus, 2019 earnings are earnings from March 2018 through February 2019. Amounts are inflation-adjusted based on a 2018 (not 2019) consumer price index (CPI-U) because reported pay is backward-looking.

3. Source: O*NET OnLIne occupation summary reports for Postal Service Mail Carriers (43-5052.00); Postal Service Clerks (43-5051.00); and Postal Service Mail Sorters, Processors, and Processing Machine Operators (43-5053.00), accessed September 18, 2020.

4. Changes in the accounting treatment of retiree health benefits did spur many private-sector employers to cut these benefits or begin prefunding them to minimize the liability on their books (Munnell, Aubry, and Crawford 2016). Likewise, state and local governments must estimate how much they would need to contribute to prefund benefits within 30 years, but they are not required to actually make the actuarially determined contribution (GASB 2004).

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There were 120 statewide measures considered by voters across the country. In this post, we briefly highlight some of the notable measures that would have a meaningful impact on the welfare of workers, families, and communities; the power of workers and communities to have a voice in economic policy decisions; and the ability of all people to achieve economic security, regardless of race, ethnicity, or gender. We also call attention to the advocacy and research of Economic Analysis and Research Network (EARN) members in these states, whose work in many cases was critical in explaining the implications of the measures for workers, families, and communities.

State legislative control

Republicans controlled 59 legislative chambers entering the election on November 3, with total control of the state house and governor’s seat in 21 states—22 if you include Nebraska, which officially has a “nonpartisan” unicameral legislature and a Republican governor. Thus far they have not lost control of those previously controlled bodies (results in Arizona are still pending). Additionally, they have picked up both the House and the Senate in New Hampshire, giving Republicans total control in 23 states. Democrats control the state house and governor’s seat in 15 states, while 12 states have divided governance.

In addition to determining who has the ability to set the policy agenda in each state, these results are significant because they also determine which party has control in next year’s redistricting process. Only a handful of states have independent redistricting commissions to draft and implement electoral district maps without partisan design, meaning that we can expect some state legislatures to gerrymander their districts. Sadly, this type of gerrymandering has been used aggressively in the past by Republican lawmakers to suppress the voices of particular groups, especially communities of color.

Minimum wage

Florida: With over 60% of the vote, Florida voters passed Amendment 2, which will raise the state minimum wage to $15.00 per hour by 2026. The amendment will raise the minimum wage to $10.00 per hour effective September 2021, with a continuing annual increase until the minimum wage reaches $15.00 per hour. EARN’s Florida partner, the Florida Policy Institute, estimates the measure will lift pay for 2.5 million Floridians.

Workers’ rights

California: Proposition 22 passed, allowing app-based transportation and delivery companies, such as Uber and Lyft, to classify drivers as independent contractors rather than employees. By doing so, these companies will avoid paying Social Security, Medicare, and Medicaid taxes for these workers, and the workers will lose protections that come with traditional employment status—notably access to unemployment insurance, overtime protection, and the ability to form a union.

Paid family and medical leave

Colorado: Proposition 118 passed, establishing a paid family and medical leave program that will provide workers in the state with 12 weeks of paid family leave (and 16 weeks for the birth of a child) funded through a payroll tax levied on employers and employees in a 50/50 split. The U.S. is the only industrialized country in the world without a national paid leave program. With the passage of Proposition 118, Colorado joins 12 other states and dozens of cities that have established their own leave programs. EARN partners—the Bell Policy Center, the Colorado Fiscal Institute, and the Colorado Center on Law and Policy—supported the measure.

Tax fairness

Illinois: The Fair Tax Amendment, which would have put in a place a progressive graduated state income tax, did not pass; the state will maintain its flat income tax. Virtually every state is facing a severe budget crisis as a result of the coronavirus pandemic. Without the added revenue from the measure, the state may be forced to cut public-sector jobs and services, further hampering the economic recovery and likely disproportionately harming women and workers of color. An EARN partner, the Center for Tax and Budget Accountability, supported the measure and said it would help the Illinois fiscal system respond better to the modern economy while promoting tax fairness.

California: Proposition 15 in California failed. The measure would have eliminated the state’s cap on commercial property tax increases, which limits annual property tax increases at 2%, no matter the increase in the property’s value. The tax cap has allowed major corporations to pay only modest annual property tax increases, even as the value of their commercial properties in San Francisco, Los Angeles, San Diego, and elsewhere have—in some cases—doubled or even tripled. EARN partner The California Budget and Policy Center has explained how Proposition 15 would have helped schools and local communities because they currently lose revenue under California’s inequitable taxing of commercial properties.

Proposition 19 passed, changing tax rules for property tax transfers so that persons over age 55 and those severely disabled may transfer their tax base to a new property, up to three times. The measure also closed a loophole that allowed property to be transferred between parents and children without being reassessed. Now this exclusion will apply only to primary residences. The California Budget and Policy Center concludes the measure may generate slightly more revenue on net, but it will complicate the state’s tax policy and reinforce racial inequities without helping the state’s housing crisis.

Arizona: Proposition 208 passed, establishing a 3.5% additional income tax on personal incomes above $250,000 for single filers or $500,000 for joint filers. The revenue from the measure will be dedicated to increasing funding for teachers and schools. The Arizona Center for Economic Progress and the Grand Canyon Institute, EARN’s partners in Arizona, both published analyses showing the impact and importance of the measure.

Louisiana: Amendment 5 failed. If it had passed, the state constitution would have been amended to authorize local governments to enter into special property tax break agreements with manufacturing corporations, allowing them to make special payments to the taxing authority in lieu of regular property taxes. The Louisiana Budget Project, EARN’s Louisiana partner, explains that this dangerous measure would have threatened critical funding for local communities and shifted the tax burden more onto residents.

Predatory lending

Nebraska: Initiative 428 passed, capping payday lenders’ rates at 36% annually.

Voting rights and democracy reform

Colorado: Proposition 113 passed, making Colorado the 15th state to join the National Popular Vote Interstate Compact. The Compact would give the state’s nine electoral votes to the presidential candidate who wins the national popular vote if states representing at least 270 Electoral College votes adopt the compact.

Massachusetts: Question 2 did not pass. It proposed creating ranked choice voting for all state and federal elections in Massachusetts.

Mississippi: Ballot Measure 2 passed, which removes the requirement that a candidate for governor or state office receive the highest number of votes in a majority of the state’s 122 House districts in addition to a majority of the popular vote. Previously, if no candidates met both thresholds, the state House of Representatives would choose a winner. Measure 2 replaces this with a runoff election process. Passage of the measure eliminates a discriminatory, Jim Crow–era political structure that was designed to limit the influence of Black voters in the state’s governance.

Missouri: Amendment 3 passed, eliminating the state’s nonpartisan redistricting process and shifting the drawing of legislative districts from a nonpartisan demographer to a bipartisan commission appointed by the governor. Because the commission’s members will be appointed with equal numbers from the state’s two political parties, plus four members appointed by the governor, it will effectively allow the governor’s party to draw the state’s legislative districts. Republicans control both chambers of the Missouri legislature and the governor’s seat, meaning they may cement control over the state legislature for the next decade by gerrymandering the district maps.

Virginia: Virginia Question 1 (Redistricting Commission Amendment) passed, establishing a bipartisan redistricting commission to draw political boundaries in the commonwealth. This amendment will transfer the power to draw the state’s congressional and legislative districts from the state legislature to a redistricting commission made up of a bipartisan group of state legislators and citizens. While taking the process out of the legislature may be helpful, it would have been better if the measure had included stronger provisions for diverse and equitable representation, protections for voters of color, and a ban on gerrymandering.

California: Proposition 17 passed, amending the constitution to allow people with felonies on parole to vote. The ballot measure keeps imprisonment as a disqualification for voting but removes parole status. In doing so, the measure will restore the right to vote to an estimated 50,000 citizens in California. EARN partner Center on Policy Initiatives, supported this measure because it would reverse a form of voter suppression and expand voting rights to people on parole from state prison.

Clean energy and infrastructure

Nevada: Question 6 passed, requiring that all utility providers acquire 50% of their electricity from renewable sources by 2030. This ballot initiative was initially passed in 2018, but Nevada law requires a second vote before a measure can amend the state constitution. The change brings more clean energy to Nevada and is an important step toward 100% renewable portfolio standards and addressing climate change.

Cities across the country: Several cities passed measures creating new dedicated revenue for public transit investment. These cities include Austin, Texas; San Antonio, Texas; Denver, Colorado; Fairfax, Virginia; San Francisco, California; and Seattle, Washington.

Criminal justice

Oklahoma: State question 805 did not pass. If it had, it would have prohibited a person’s conviction history, in the case of prior “non-violent” felonies, from being used to extend future prison sentences and would have provided for greater sentence modifications for eligible persons. The Oklahoma Policy Institute, EARN’s Oklahoma partner, explains that the measure would have been a major step forward toward a more balanced approach to criminal justice.

Housing

California: Proposition 21 failed. The measure would have allowed local governments to enact or expand rent control measures and increased renter protections to prevent discrimination on buildings more than 15 years old. Though not a comprehensive solution to the state’s long-standing housing crisis, an expansion of rent control would have helped many renters continue to afford to live in their homes and prevent further evictions and displacement, especially among people of color, LGBTQ+ people, and people with disabilities in low-income communities. The Center on Policy Initiatives supported the measure because of the excessive rents and low wages that have left many communities throughout California vulnerable to houselessness.

There is no mystery about what has brought us to this point. The immediate cause of the economic crisis we face is the fallout of the pandemic and the Trump administration’s failed response. As social distancing measures were enacted to slow the spread of the coronavirus, economic activity collapsed. A burst of new activity has accompanied some reopenings, but now, because the government has failed to curb the pandemic and failed to enact a just response, the economy is plunging deeper into crisis.

This all is taking place in a society that was already deeply unequal. Before the pandemic, 140 million people were poor or one emergency away from being poor, including approximately 60% of Black, non-Hispanic people (26 million); 64% of Hispanic people (38 million); 60% of indigenous people (2.15 million); 40% of Asian people (8 million); and 33% of white people (66 million).

The pandemic spread and deepened along the fissures of that inequality and the inadequate public policies that existed prior to the pandemic. It is no surprise that 8 million people were pushed below the poverty line in the past five months as COVID-19 economic disruptions continued.

So, what needs to be done?

This blog post from the Economic Policy Institute (EPI) and the Poor People’s Campaign: A National Call for Moral Revival shows that if America does not address what’s happening with visionary social and economic policy, the health and well-being of the nation is at stake. If poor and low-income people don’t vote and determine who is in office, and if policymakers don’t change course from one-shot policy activism, we will face even greater economic peril. What we need is long-term economic policy that establishes justice, promotes the general welfare, rejects decades of austerity, and builds strong social programs that lift society from below.

In this post, we provide several illustrative policy recommendations, which are by no means exhaustive, but aim to give a sense of how bold change must be. It’s important to understand where we are today and how we got here.

The pandemic recession (and a depression for the poor)

Because COVID-19 spreads so efficiently in face-to-face situations, economic sectors that relied on face-to-face interactions—including food service, retail, hospitality, education, and health sectors, among others—were essentially closed when social distancing measures came into force. These widespread closures resulted in a stunning collapse of economic activity and employment. In March and April of 2020, 21.5 million workers lost their jobs, and 12.7 million lost their health insurance when they became unemployed. While some jobs have been returning as sectors reliant on face-to-face interactions slowly open back up, the economic shock of COVID-19 remains historically large and damaging, far beyond the 2008–2009 Great Recession and even the Great Depression.

Many of these workers were facing extreme economic distress and insecurity before the COVID-19 shock that made them more vulnerable to the pandemic’s economic fallout:

• they were not paid enough to build up savings to tide them over in an emergency, let alone a long pandemic;
• they lacked paid sick, medical leave, and health insurance benefits;
• many lacked access to unemployment insurance or affordable options for high-quality child care;
• they often lived in expensive but crowded accommodations;
• and they lacked, and continue to lack, power and a voice at work to demand safe working conditions.

The disempowerment of huge swaths of the U.S. workforce is perhaps best summarized by the figure below. The wedge between what workers are being paid and the ability we have to pay workers higher wages (or the amount of income generated in an average hour of work, also known as productivity) has grown enormously since the 1970s. Instead of going to workers, the benefits of our increasingly productive economy have gone to corporate and business executives and holders of wealth.

Productivity-Pay Gap

This wedge is not a sad accident of apolitical market forces. It is the predictable outcome of intentional policy choices that aimed to redistribute economic leverage and bargaining power upward and away from typical workers. There was no one single piece of legislation that did this; instead it was the accumulation of dozens, if not hundreds, of policy choices made in the form of legislation, regulatory changes, and administrative decisions that consistently put a thumb on the scale of the conflict over who would see benefits from economic growth.

The need for policymakers to radically change course

The recovery from this point forward will be a long and slow slog, unless policymakers radically change their course. Most of what is needed in the COVID-19-driven recession is the same thing that is needed in every recession: safety net programs and additional federal resources that flow robustly and generously to state and local governments in a time of increased need.

This includes policies that can address the precarious economic status of low-wage, “essential” workers who have been on the front lines of the hardest-hit sectors of the pandemic recession. While all recessions are hard on lower-wage workers, most recessions do not start in low-wage sectors. Traditionally they have begun in manufacturing or construction and then radiated outward, harming low-wage workers in their wake. However, the economic sectors requiring face-to-face interactions in the U.S. economy are disproportionately staffed by low-wage workers, and these sectors have been the epicenter of the COVID-19 shock.

This is in part why the CARES Act was not enough—not for the crises at hand nor the longer, festering policy choices and overall direction this country has shifted to over the past decades. It will take more than one-shot policy activism to bring us out of these depths, but this is essentially what the CARES Act offered.

The best parts of the CARES Act included substantial federal aid for control and treatment of the virus, and a reimagining of how protective and expansive the nation’s unemployment insurance (UI) system could be. But because we have disinvested for decades in the state systems that administer UI, these huge changes led to much disruption—including often-delayed benefits for those in need. And while those who received benefits through the CARES Act were thrown a lifeline that kept them above water, the extra $600 in UI benefits ran out at the end of July and the PUA program that made normal benefits available even to nontraditional workers runs out at the end of this year.

Also, millions of people were excluded from these benefits, including the 11 million undocumented workers who are working on the front lines of this pandemic. Neither they nor their citizen children received the one-time stimulus check (Economic Impact Payment or EIP). Meanwhile, unbanked people, who include a large number of the nation’s indigenous people, received the EIP weeks late.

This withdrawal and delay of critical economic aid even as the economy remains profoundly damaged isn’t just cruel to families struggling to get by. It is also bad economics.

This aid—largely going to families with workers who were in sectors shut down by the pandemic—essentially kept the COVID-19 shock contained in those sectors and kept it from spilling over into the rest of the economy. As of September, the direct economic shock from COVID-19 has been getting smaller, at least for the moment, but the negative effects are starting to spill over again, as the measures to contain the economic hardship of the pandemic—the EIP and enhanced UI—have been stripped away.

Another glaring weakness of the CARES Act was its insufficient aid to state and local governments. In the federalized U.S. system, state and local governments provide many of the most important on-the-ground tasks people expect of the public sector generally. Health and education spending dominate state and local budgets. The COVID-19 shock caused incomes and spending to plummet and, in turn, will lead tax collections of state and local governments to plummet. Because these governments have balanced-budget rules, this puts intense pressure on these governments to reduce spending in the face of much lower tax collections.

We must do more

We have seen this before. In the aftermath of the Great Recession, recovery was throttled by a Republican-led Congress. Public spending grew more slowly in the recovery following the Great Recession than during any other recovery since World War II. Federal aid to state and local governments was stopped too soon and Republican governors embraced austerity as an economic strategy. By our estimate, these measures delayed a full recovery back to pre-recession (2007) unemployment levels by four full years. This drag on growth stemming from state and local budget distress always comes with a lag: Employment losses in state and local governments, for example, persisted for four full years after the official end of the Great Recession of 2008–2009.

This was, in short, a policy disaster.

We do not need to repeat these mistakes. Indeed, there are discrete, ambitious policy changes that could happen quickly and would be transformative, especially for the 140 million poor and low-income people who were facing multiple pandemics even before COVID-19.

Sustained full employment

Policymakers must commit to ending recessions and restoring full employment as quickly as possible. They need to refrain from cutting recoveries short in the name of safeguarding against potential inflation. Instead, they should aggressively push unemployment down as far as possible, only stopping expansionary measures when actual inflation begins. Tight labor markets with low unemployment fundamentally change the bargaining dynamic between workers and employers, forcing employers to go begging for workers rather than workers begging for jobs.

Living wages

In 1963, the March for Jobs and Freedom demanded a federal minimum wage of $2 per hour. Adjusted for inflation, this would be roughly $15 today. Adopting the March’s demand and boosting the federal minimum wage to $15 by 2025 would give a raise to 33 million workers, with Black workers and women seeing disproportionate gains. A labor market is only as strong as its floor, and the federal minimum wage needs to be significantly strengthened to bolster this floor.

Fundamental reform of unemployment insurance

We should follow the lead of other rich countries and greatly expand the share of the unemployed who receive UI benefits in normal times, and normal UI benefits should be made significantly more generous. A transformed UI system can be a revolutionary change for U.S. workers, significantly blunting the anxiety and deprivation inflicted by even short spells of joblessness.

Universal health care

The COVID-19 shock has just been the latest crisis highlighting the perversity of tying access to health insurance coverage to specific jobs. Nearly every other rich industrialized nation has delinked health insurance and the labor market and has instead made access to insurance coverage a universal right. The U.S. should join this community and provide coverage to all and, more importantly, this coverage should not become degraded or ruinously expensive whenever one loses a job. The steps forward in health security made by the Affordable Care Act (ACA) have laid bare an important truth about these efforts: Their bedrock needs to be substantial increases in publicly provided insurance, beginning with the expansion of Medicaid.

Taxing the economic ‘bad’ of inequality

In the 30 years following World War II, the fruits of economic growth were far more evenly distributed than since and tax rates faced by the rich and corporations were substantially higher. These higher tax rates provided revenue for needed public spending and reduced the incentive for privileged economic actors to rig the rules of the market to tilt more gains their way. We should raise taxes progressively to help finance needed public investments and safety net spending and because progressive taxes reduce the payoff to exercising market power. Yes, this market power should also be confronted directly with legislation and regulation, but we can also tax away the payoff to exercises of market power as a backstop.

Investing publicly to provide necessary goods and services

Health care, high-quality child and elder care, and education are all examples of vital goods and services that are out of reach for too many families. These should be provided by public investments that provide them universally. While the upfront costs of providing these are considerable, the payoff over time to society is huge. Some studies find that investments in early childhood education, for example, are more than 100% self-financing even in narrow public budgeting terms (i.e., the higher taxes paid by more productive and hence higher-income adults resulting from early childhood investments will fully pay for these). High-quality elder care can allow a large expansion in the labor force of adult women, greatly bolstering growth. And health care in countries that rely more on public provision is more affordable and sees slower cost growth than others.

Investing in safe communities

Recent years have seen a growing recognition that the brute force model of policing and incarceration has failed as a mechanism for guaranteeing public safety. A new model needs to be developed, one that rests on investments in health, education, and opportunity for poor neighborhoods. These investments should include pilot programs that invest in community-based organizations that are given primary responsibility for ensuring public order and safety. In many communities around the U.S., community-based organizations already do much of this work, building safe public spaces and trying to intervene to stop violence or crime before it happens. These organizations are forced to do this work on the cheap, but their work is effective and, if financed publicly, can build trust rather than antagonism between communities and those tasked with providing public safety.

Protecting and expanding voting rights

For any of the policies above to be advanced, policies must also be passed that protect and expand voting rights, especially for poor people and poor people of color. Since 2010, there has been a wave of new voter suppression laws in at least 25 states in the country, targeting poor people of color. Pushing back against this voter suppression begins with reinstating the pre-clearance requirements of the Voting Rights Act that were lifted by the 2013 Supreme Court case Shelby County v. Holder; including judicial oversight of those jurisdictions that have passed voter suppression laws since 2010; ensuring automatic registration at the age of 18, same day registration, and early voting in every state; ending felony disenfranchisement; and making Election Day a national holiday.

Moral policy is sound economic policy

There are real costs to maintaining a vastly unequal economy: Every year, we lose $1 trillion to child poverty costs and $2.6 trillion in lost earnings from gender and racial wage gaps; we have lost $1.3 trillion in government revenue by lowering the corporate tax rate in 2017 and $6.4 trillion in endless wars; inaction on climate change may cost close to $3.3 trillion annually; and 250,000 people die from poverty and inequality every year. The cumulative financial costs of the pandemic are estimated to be $16 trillion.

Absent a radical policy change, there is a very good chance that these unnecessary losses will continue, inequality and inequity will worsen, and the U.S. economy will find itself in a recession again before the end of this year. There is no reason this needs to happen, especially if we ensure that those people who are most impacted by this economic crisis (and by those who brought us to this point) are engaged in the political process of electing our policymakers.

According to research by the Poor People’s Campaign with economist Robert Paul Hartley, there are 34 million poor and low-income people who did not vote in 2016. In key battleground states, a small percentage of those voters can meet and even exceed the margins of victory from 2016.

By organizing against the policies that have pushed millions of people out of the political narrative and increasingly out of any economic power, we can begin a path to recovery that will benefit us all. When we lift from the bottom, everybody rises.