A new Economic Policy Institute report proposes tying the federal minimum wage to two-thirds of the national median wage, an evidence-backed benchmark that would deliver meaningful pay increases to the largest number of workers without the job losses critics typically predict. A complementary report also released today from the Roosevelt Institute—a think tank and professional network working to balance power in the economy—provides evidence for this higher wage rate and argues that greater worker protections, including universal just-cause protections and stronger enforcement against wage theft, are foundational to families’ economic security. 

The federal minimum wage—frozen at $7.25 since 2009—is at its lowest real value in 77 years, having lost 30% of its purchasing power over the 17-year freeze, according to EPI’s report. Setting the minimum wage at two-thirds of the median—equivalent to roughly $17.70 today and a projected $20 in 2030—would lift pay for nearly 40 million workers in 2030, about a quarter of the workforce. It would also durably narrow the gap between low-wage workers and the typical worker, with Black workers and women seeing the largest benefits. Indexing the federal minimum wage to median wage growth–which typically outpaces price growth–would lock in these gains, preventing the kind of decades-long slide that has eroded the current floor.

The two-thirds benchmark is also well-supported by economic research. Decades of studies show that minimum wage increases up to two-thirds of the median wage deliver meaningful pay increases and do not result in the kind of job loss critics of a higher minimum wage predict.

EPI’s proposal would eliminate poverty wages and move the federal minimum wage meaningfully toward a living wage in much of the country. Under EPI’s Family Budget Calculator thresholds, a single adult working full time at the proposed wage could cover the expenses of a modest but adequate standard of living in half of U.S. counties, a substantial step toward economic security for tens of millions of low-wage workers.

But in higher-cost states and localities, state and local policymakers can and should set even higher minimum wages to reduce even wider gaps between pay and the cost of an adequate standard of living. And even a strong federal floor cannot, on its own, guarantee economic security: Lifting working families requires a broader agenda of strengthening unions, expanding the safety net, and keeping unemployment low.

“The woefully inadequate federal minimum wage is a major driver of the affordability crisis facing low-wage workers. Meaningfully raising the federal minimum wage and indexing it to median wage growth is the single most direct step Congress can take to lift pay for U.S. workers and their families,” said Ben Zipperer, EPI senior economist and author of the report. 

“A stronger federal minimum wage is needed to put workers within reach of a living wage,” said Patrick Oakford, director of worker power and economic security at the Roosevelt Institute. “But a minimum wage alone won’t provide the foundation workers need to build meaningful economic security. We need common-sense employment policies to address persistent income inequality and limit corporate power, including universal just-cause protections for all employees.”

Key takeaways:

• The federal minimum wage is at its lowest real value in 77 years. Frozen at $7.25 since 2009, the federal minimum wage has lost 30% of its purchasing power during this 17-year freeze.
• Setting the federal minimum wage at two-thirds of the national median wage would raise pay for 39.6 million workers in 2030, about 1 in 4 of the wage-earning workforce.
• The policy would move the federal floor meaningfully toward one definition of a living wage, meeting EPI’s Family Budget Calculator thresholds in half of U.S. counties for a single adult working full time. But it falls short for many families, meaning that policies to strengthen unionization, provide a more robust safety net, and keep unemployment low remain essential.
• Decades of economic research support this two-thirds benchmark, finding little to no employment loss from ambitious minimum wage increases.
• Indexing the federal minimum wage to median wage growth would lock in these gains. Median wages typically outpace prices, so median wage indexing would prevent the kind of decades-long slide that has eroded the current floor.

Introduction

The federal minimum wage, frozen at $7.25 since 2009, is now at its lowest real value in 77 years and a major driver of the affordability crisis facing low-wage workers. For over a decade, the senior Democrats on the House and Senate’s labor committees have consistently introduced and championed the Raise the Wage Act, which would significantly raise the federal level (most recently, to $17 an hour in 2030) and index it to median wage growth going forward. But Congress as a whole has failed to take action on the legislation. In the absence of federal movement, states have moved on their own: Thanks in large part to the Fight for $15 campaign, 21 states and the District of Columbia, home to half of all U.S. wage earners, will have a minimum wage of at least $15 by 2028. But that patchwork still leaves 20 states—home to about 55 million workers—at $7.25, and updating the federal floor to a modern benchmark is the only way to reach these workers.

Raising the federal minimum wage to two-thirds of the national median wage would lift pay for nearly 40 million workers, about a quarter of the workforce. Two-thirds of the median—equivalent to roughly $17.70 today, a projected $20 in 2030, and a projected $25 in 2038—matches the benchmarks used in other high-income countries and tracks the direction of recent minimum wage research. Indexing to median wage growth thereafter would keep the floor from losing ground to inflation or falling behind the broader economy.

A federal minimum at two-thirds of the national median would eliminate poverty wages and move the floor meaningfully toward a living wage in much of the country: A single adult working full time could cover modest expenses in half of U.S. counties under EPI’s Family Budget Calculator thresholds. Maintaining the two-thirds minimum-to-median ratio would lock in those gains, improving affordability for U.S. workers and their families. It would also durably narrow the gap between low-wage workers and the typical worker, with Black workers and women seeing the largest benefits.

The two-thirds benchmark is also well-supported by economic research. Decades of studies of state and federal minimum wages find that higher floors raise pay for low-wage workers with little to no effect on employment, and a smaller but growing body of work on minimum wages approaching two-thirds of the median reaches the same conclusion. Setting the federal floor at two-thirds of the median, and updating it annually, would raise incomes at the bottom and prevent the kind of decades-long slide that has left the current minimum at its lowest real value in 77 years.

The outdated federal minimum wage and extent of low pay

The federal minimum wage is now at its lowest real value in 77 years. Stuck at $7.25 since 2009, it is in its longest stretch without an increase since the federal wage floor was established in 1938 (Figure A). Inflation has eroded 30% of its purchasing power over those 17 years, gradually cutting real pay for the lowest-wage workers in states still tied to the federal floor. Simply indexing the 2009 wage to inflation, a far weaker standard than this report proposes, would put the federal minimum at about $10.60 today.

The minimum wage was once meaningfully higher in real terms. Civil rights organizers in the late 1960s pressed Congress not only to raise the wage floor but also to extend its coverage to service industries that had previously been excluded because they disproportionately employed Black workers. By 1968, the federal minimum wage reached $1.60 per hour, equivalent to $12.62 in 2026 dollars and roughly 61% of the national median wage at the time, close to the two-thirds benchmark this report proposes. Even a federal minimum wage of $12.62 today would raise the wages of about 12 million workers.

Because Congress has not raised the federal floor in 17 years, states and localities have moved on their own. Thirty states, the District of Columbia, and dozens of cities and counties have raised their minimum wages, many in response to the Fight for $15 campaign (EPI 2026a). By the end of 2028, more than half of the U.S. workforce, about 74 million workers, will live in a state with a minimum wage of at least $15.

The state-by-state patchwork has delivered real successes but also left tens of millions of workers behind. Roughly 55 million people work in the 20 states still tied to the $7.25 federal floor, and they are nearly twice as likely as workers elsewhere to earn less than $15 per hour. Nationally, almost no one is paid exactly $7.25 anymore: The floor is so low it rarely binds. Yet 14 million workers, about 9% of the workforce, still earn less than $15. Closing that gap and preventing the federal floor from eroding further requires a national standard pegged to a modern benchmark.

A new standard: Two-thirds of the median wage

The federal minimum wage suffers from two related deficiencies: Its level is too low, and it does not adjust as the economy grows. Both can be solved by tying the federal minimum to two-thirds of the national median wage. Congress would first raise the floor to that level, and each subsequent year the minimum would adjust to maintain the same ratio.

First, the new benchmark replaces a poverty-level federal floor (Hickey and Cid-Martinez 2025) with one that pushes the minimum wage toward a living wage. As Oakford (2026) argues, two-thirds of the median is “a realistic stepping stone to living wages,” and standards below that ratio leave too large a gap between earnings and the cost of necessary expenses. A federal minimum at two-thirds of the median also better fulfills the original promise of the federal standard, which Congress described in 1937 as protecting “this Nation from the evils and dangers resulting from wages too low to buy the bare necessities of life” (U.S. Congress 1937).

Second, maintaining the two-thirds ratio guarantees automatic increases as the economy grows, ending the recurring erosion that comes from a frozen federal floor. Because median wages typically outpace prices, median wage indexing produces real gains, not just inflation protection. In 2025, two-thirds of the national median wage was $17.11 per hour (Figure B), and today, it is estimated to be $17.70. By 2030, applying Congressional Budget Office (2026) Employment Cost Index projections, it would reach $20.02. A federal minimum tied to two-thirds of the median would likely reach or exceed $25 by 2038, four years sooner than if a $17.11 wage in 2025 had been indexed only to the cost of living going forward.1

Nineteen states and the District of Columbia index their minimum wages to inflation, but Connecticut goes further by indexing to average wage growth and capturing the real gains that wage growth typically delivers above prices. Congress should follow Connecticut’s lead and link the federal minimum to the national median wage. Of course, indexing to price inflation would be an enormous improvement to current federal minimum wage policy and to state and local minimum wage policies that have also failed to implement automatic increases. Tying the minimum wage to median wages—i.e., indexing the minimum to typical workers’ wage growth—would yield even larger increases over time.

Tying the federal minimum to two-thirds of the median would also durably narrow inequality in the bottom half of the wage distribution. Whenever the minimum wage fails to keep pace with economy-wide wage growth, the gap between low and median earners widens. But a substantial increase in the minimum to a fixed ratio of the median shrinks and bounds that gap by construction. The gains disproportionately affect Black workers and women, who are overrepresented in low-wage jobs due to persistent racism and sexism (Banks 2019). Minimum wages are a major determinant of Black-white wage gaps (Derenoncourt and Montialoux 2020; Wursten and Reich 2023), and the long erosion of the federal minimum was a leading driver of widening pay inequality among women (Autor, Manning, and Smith 2016).

The state of minimum wage research and new policies

Minimum wages and job losses

A federal benchmark of two-thirds of the national median would significantly raise wages, and recent research strongly supports the conclusion that ambitious minimum wage targets work as intended, with little to no employment downsides. Across more than three decades of modern economic research, the median estimated employment effect is small; among studies that look at all low-wage workers rather than narrow subgroups, the effect is essentially zero (Zipperer 2024). The recurring scare stories about job losses are not borne out by the body of evidence.

Businesses adjust to higher minimum wages through what Dube (2026b) and Bernstein (2013) call the “Three P’s”: productivity, prices, and profits.2 Take productivity first. Higher wages reduce the rate at which workers quit, particularly in high-turnover sectors like restaurants and retail. That lowers hiring and training costs and means employment levels can hold steady even as new hiring slows. Better-paid workers, and workers with longer tenure, are also typically more productive, further offsetting the cost of the wage increase.

The minimum wage also redistributes income to low-wage workers when employers cover higher labor costs through reduced profits or modestly higher prices. Vergara (2026) and Coviello, Deserranno, and Persico (2022) both find that minimum wage increases shrink profits in low-wage industries. Price pass-through is small in aggregate terms because low-wage workers’ earnings are only a fraction of total labor costs, which are themselves a fraction of total business expenses. California’s $4 overnight increase in the fast-food minimum generated a one-time increase in fast-food prices of 2.1% to 3.6% (Sosinskiy and Reich 2026; Clemens et al. 2026). To put that in context: The price of a $6.00 hamburger would have risen to about $6.17.

How high is too high?

A common way to measure the level of a given minimum wage is to use the minimum-to-median wage ratio. Sometimes called the Kaitz index, the minimum-to-median wage ratio compares the minimum with the underlying distribution of wages by measuring the share of the typical wage that the floor reaches. This report proposes setting that ratio at about 67%. Most of the U.S. evidence base reflects periods when the ratio sat well below that level, because until recently, U.S. minimum wages were rarely considered high by today’s standards. But a growing body of recent research, together with recent state and local policies, has pushed the evidence into higher ratios—and the results are the same: There is substantial room for higher minimums without large employment losses.

Cengiz et al. (2019) found no negative employment effects at minimum-to-median ratios up to 59%. Dube and Lindner (2021), studying city-level minimum wages with ratios averaging 58% to 64%, found small and statistically insignificant effects. Godoy and Reich (2022) found no employment effect across localities with ratios ranging from 56% to 82%. And the 1968 federal minimum, which reached roughly 61% of the median,3 has been reexamined in two recent studies that likewise found small or no employment effects (Bailey, DiNardo, and Stuart 2021; Derenoncourt and Montialoux 2021).

The most direct evidence that the floor can go meaningfully higher comes from California’s $20 fast-food minimum wage. In April 2024, the state raised the wage for fast-food chain workers from $16 to $20, pushing the ratio of that minimum to the state’s median wage to about 74%, well above most U.S. precedents.4 One might worry that customers would substitute toward lower-priced independent restaurants exempt from the policy, generating job losses at the chains. The actual evidence shows otherwise. Despite the large wage increase, research finds little to no employment effect of the policy (Bivens and Zipperer 2026), and the median employment effect in Dube (2026a) is essentially zero. Evaluations of the UK minimum wage through 2019, when it reached nearly 60% of the median wage, also find small, statistically insignificant effects on the employment of low-wage workers (Giupponi et al. 2024).

A federal benchmark set at two-thirds of the national median will push some states above two-thirds of their own median wage. There is good reason to be optimistic about employment changes there as well. The studies above already span a wide range of Kaitz ratios, from the high 50s through the low 80s, and consistently find little or no employment effect. California’s $20 fast-food minimum extends this evidence to a 74% state-level ratio with essentially no employment losses, and only five states would have a minimum-to-median wage ratio above that threshold under the proposed federal benchmark. And while the minimum wage would be at a higher level relative to the state median in those states, it would still be less than a “living wage” for many families in those areas, as I discuss later.

Even if some employment loss does occur, that is not the right test of policy success. Low-wage labor markets are dominated by job-to-job churn, so reduced employment in response to a higher minimum typically shows up as longer gaps between jobs rather than workers permanently shut out of the labor market (Cooper, Mishel, and Zipperer 2018). On net, low-wage workers come out ahead in annual earnings when significantly higher hourly pay more than offsets a modest increase in unemployment.

Policymakers and organizers campaigning for minimum wage increases have considerable room to maneuver above the current federal floor before needing to worry about job losses. To assuage concerns about employment impacts, a federal proposal could be structured to limit annual increases of the federal minimum wage so that they never exceed two-thirds of the national median wage. States and localities, of course, can and should continue to push for higher minimum wages, as many will have higher median wages and costs of living than the national average.

Existing proposals and policies reaching two-thirds of the median

Some recent federal proposals already target or are consistent with the two-thirds benchmark. The recent Give America a Raise Act would raise the federal minimum to $20 by 2029, close to this report’s projection of two-thirds of the 2029 median wage ($19.44). The Living Wage for All Act names the two-thirds benchmark explicitly and locks in indexation in statute: “once the minimum wage equals two-thirds of the national median hourly wage, it shall thereafter be automatically adjusted each year to maintain that ratio.” The Bold Economic Program for America (Reich 2026) likewise proposes $20 by 2030, and Oakford (2026) embeds the two-thirds target in a broader portfolio that includes just cause protections and stronger wage theft enforcement.

The benchmark also aligns U.S. policy with international practice. The UK Low Pay Commission has targeted two-thirds of the median for the National Living Wage since 2024, and in the EU, 17 of 22 countries benchmark their statutory minimum wages to a ratio of the median or average wage. The 2022 European Union Minimum Wage Directive obligates member states to use “indicative reference values”—such as 60% of the gross median wage—to assess adequacy of their wage standards (Luebker and Schulten 2026).

Some of these international benchmarks may look numerically lower than two-thirds, but they are usually defined against a different denominator. Germany, for instance, benchmarks against the median wage of full-time workers. In the United States, the full-time median is about 10% higher than the overall median, so 60% of the full-time median is roughly equivalent to two-thirds of the overall median that this report proposes.

Implementing a minimum wage equal to two-thirds of the median wage

Any federal legislation will need a phase-in period, but it must specify two things: a clear path to the target and an explicit guarantee that automatic median wage indexing kicks in once the floor reaches two-thirds of the median.

Implementing the benchmark also requires choosing a wage source. Legislation should designate the Department of Labor (DOL)—which already publishes median wage estimates through the Bureau of Labor Statistics (BLS) Occupational Employment and Wage Statistics (OEWS)—to publish the official median wage each year. DOL has two ready sources: OEWS, an establishment survey, and the Current Population Survey (CPS), the household survey already used to produce the unemployment rate, which collects detailed wage and hours data.

Each source has tradeoffs. The CPS is timelier, with wage data available at a one- to two-month lag, but smaller samples, the difficulty of computing hourly earnings for salaried workers, and respondents’ tendency to round wages all introduce noise. OEWS uses an established BLS hourly wage methodology and median wage calculation that may be less volatile, but it is published with a one-year lag and pools data from earlier, lower-wage years. DOL could pick one source or use a weighted average; recent data show only about a $1 difference between the two surveys.5 Either way, expanding resources at BLS and the Census Bureau would strengthen the underlying data and support further refinements to the methodology.

Once DOL has a baseline median, indexing requires projecting that median forward to the year the new minimum takes effect. The UK Low Pay Commission, which recommends a two-thirds median target to the UK government, offers a useful template: It estimates a midyear median wage by combining lagged historical data with timely indicators and short-run forecasts (Low Pay Commission 2024). A concrete schedule illustrates the approach. To set the minimum for January 1, 2030, DOL would announce the new wage on July 1, 2029, six months in advance, based on its best projection of the July 2030 median, the midyear point representative of the median wage workers will face on average throughout 2030. The projection would proceed in three steps: compute the 2028 median from CPS or OEWS data; roll it forward to early-to-mid-2029 using a combination of available data—like the Current Employment Statistics, the Consumer Price Index, and the Employment Cost Index (ECI); and then roll it forward one more year using short-run wage projections like those in the CBO Budget and Economic Outlook (2026).

National and state effects of a federal minimum wage at two-thirds of the median

To estimate the economic benefits of a federal minimum wage set at two-thirds of the median wage, I model how many low-wage workers would see higher pay under this policy. I assume the policy is phased in over five years, so that if it went into effect today, the federal minimum would reach two-thirds of the median in 2030 and then automatically adjust each year to maintain that ratio.

Concretely, I assume the federal minimum rises to $12 immediately in 2026 and then increases incrementally to $20 in 2030, which is about two-thirds of the projected national median wage.6 Legislation should build in a path adjustment if 2030 median wages come in higher or lower than projected.

I focus on the effects in 2030. I assume the same phase-in path and automatic indexing applies to the federal tipped minimum wage, which has been frozen at $2.13 per hour since 1991.7 Wages elsewhere are assumed to grow in line with CBO ECI projections from 2026 to 2030, and the model incorporates the effects of scheduled state-level minimum wage increases (see the appendix for details).

In 2030, a federal minimum wage equal to two-thirds of the national median would raise pay for 39.6 million workers, about 1 in 4 of the wage-earning workforce (Table 1).8 Annual earnings would rise substantially, and the gains would be largest for Black workers: A full-time, full-year Black worker affected by the increase would earn about $5,000 more per year, compared with $4,400 for all affected workers. In line with other minimum wage increases, women would gain more than men, with 31% of women seeing higher pay compared with 23% of men.

Adults ages 20 and over would make up 9 in 10 affected workers (teens would have the largest share of affected workers of any age group, but they make up a small share of total employment). The problem of low pay is far from limited to the youngest workers.

Although several states with scheduled minimum wage increases will see the gap between their minimum wage and the new federal floor shrink, workers in every state would still be affected (Figure C). With the exception of D.C., no state’s scheduled 2030 minimum wage reaches $20. The largest gains go to workers in the 20 states still tied to $7.25: 1 in 3 (33%) would see a raise, and annual pay for those affected would rise by about $6,200 on a full-time, full-year basis.

Figure C

Beyond who gets a raise and how much, a related question is whether the raise is enough to cover a family’s basic costs. Setting a target of two-thirds of the median would push the federal floor much closer to a living wage for many families. What counts as a living wage varies across the country, depending on local costs and on family size and composition. EPI’s Family Budget Calculator thresholds make this concrete: They calculate the income a given family type needs in a given place to afford a “modest but adequate” standard of living. For example, in 2025 a two-adult, one-child family in Los Angeles County, California, needed about $118,000 in annual pretax earnings to pay for housing, food, child care, transportation, health care, taxes, and other necessities. In more rural Early County, Georgia, a similar family needed about $74,000. These budgets are minimal by design, with no allowance for savings, emergencies, retirement, college, or entertainment.

Of course, other business income and government provided social benefits can lower the amount of labor market earnings a family needs to maintain the same standard of living. Gould, Mokhiber, and deCourcy (2024) report that, according to Congressional Budget Office data, about 81% of a middle-income family’s budget is met by labor market income.

Applying that 81% adjustment to EPI’s Family Budget Calculator thresholds gives a more useful benchmark for what wages need to deliver. Under this adjusted measure, the Los Angeles County family would have needed about $96,000 in earnings to meet their 2025 budget, equivalent to both adults working full time, year round at about $23 per hour. The Early County family would have needed about $60,000, equivalent to both adults working full time, year round at $15 per hour.

The implications for everyday affordability are significant. After inflating these adjusted thresholds to 2030 dollars using CBO Consumer Price Index projections, a federal minimum at two-thirds of the median substantially closes the gap between full-time annual earnings and necessary expenses for low-wage workers and their families. A single adult working full time at the 2030 minimum of $20 would cover modest but adequate expenses in half of U.S. counties. Two full-time working parents with two children would meet their family budget in roughly a quarter of U.S. counties. Using similar thresholds, Oakford (2026) finds that a federal minimum at two-thirds of the national median in 2025 would be “90% to 99% of the median living wage of a single adult without children in 16 states.”

A federal minimum tied to two-thirds of the national median would therefore make enormous progress in increasing affordability and helping families make ends meet. Closing the remaining gaps will require a broader set of policies, including strengthening other labor standards like overtime protections and their enforcement, a more robust safety net, expanded public goods like universal health insurance, fewer barriers to unionization, and a renewed commitment to full employment.

Conclusion

The federal minimum wage is at its lowest real value in 77 years, and tens of millions of low-wage workers are paying for that erosion every paycheck. Pegging the federal floor to two-thirds of the national median wage, and maintaining that ratio, would correct the two flaws that have left the floor unfit for purpose: a level too low to function as a meaningful wage standard and a structure that does not adjust as the economy grows.

A federal minimum at two-thirds of the median would raise pay for nearly 40 million workers in 2030, deliver the largest gains to Black workers and to women, and bring the floor close to a living wage in much of the country. Decades of research, recent state and local experience, and California’s $20 fast-food minimum all point to the same conclusion: The labor market can absorb minimum wages of this size with little to no employment cost. The benchmark also brings U.S. policy into line with the UK and most of the EU, where two-thirds-style targets are now standard practice.

A higher floor cannot, on its own, guarantee economic security for working people. That will require a broader agenda: a stronger safety net, expanded public goods, fewer barriers to unionization, and a renewed commitment to full employment. But updating the federal minimum to a modern, indexed benchmark is the single most direct step Congress can take to raise wages at the bottom, and the only step that reaches the 55 million workers in the 20 states still stuck at $7.25.

Appendix

State benefits

Methodology

Underlying wages are based on the 2025 Current Population Survey and between 2025 and 2030. I assume wages increase at the rate of CBO (2026a) ECI projections and because of future state-level minimum wages. Due to the Trump administration’s immigration policies and the possibility of continued labor market weakening, how the baseline level of employment grows over the next five years is very uncertain. For simplicity, I hold the estimated employment level constant between 2025 and 2030 instead of making additional assumptions about either employment rates or population growth. In terms of total population growth, this assumption may not be too far off the mark of current projections; CBO (2026b), for example, estimates that between 2025 and 2030, the civilian population ages 16 to 64 will only grow by 0.06%, or 130,000 people.

Affected workers include those “directly” affected, whose wages would otherwise be less than the new federal minimum wage, as well as “indirectly” affected workers who earn up to 115% of the new minimum (Cooper, Mokhiber, and Zipperer 2019). These particular estimates may overstate the number of workers affected because while they incorporate already scheduled state-level increases, they exclude city-level minimum wage increases, and some cities will have higher than $20 minimum wage standards in 2030. On the other hand, if the labor market continues to weaken, low-wage workers will, in the absence of minimum wages, face slower than usual wage growth because their wage growth slows disproportionately when unemployment is higher (Bivens and Zipperer 2018).

Notes

1. These projections follow CBO ECI and CPI projections from 2025–2036, and for subsequent years assume 2026–2035 annual growth rates of 2.26% for CPI and 2.94% for ECI. 

2. For additional discussion, see Dube and Lindner (2025), Schmitt (2013), and Zipperer (2023).

3. OECD (2026) estimated the U.S. minimum-to-median wage for full-time workers was 55.05% in 1968. Assuming a 10% premium for the full-time median wage relative to the overall median wage results in a minimum-to-median wage ratio of 60.56%.

4. In April 2024, the state raised the wage for fast-food chain workers from $16 to $20, pushing the ratio of that minimum to the state’s median wage to about 74%, well above most U.S. precedents.

5. The 2024 OEWS national median wage (which is the latest available data) was $23.80 (BLS 2025). The EPI State of Working America Data Library (EPI 2026b), which uses CPS wage data and which we use for wage levels throughout this paper, reports a 2024 median wage of $24.87.

6. The exact schedule simulated below is $12 in 2026, $13.50 in 2027, $15.50 in 2028, $17.50 in 2029, and $20 in 2030.

7. Ideally other subminimum wages would be phased out, including those for some workers with disabilities and youth workers. I do not model the effects of those changes due to data constraints.

8. I concentrate on the effects in 2030. Were low-wage workers’ wages to grow slower (or faster) than median wages, these estimates would understate (or overstate) the effects in later years.

References

Banks, Nina. 2019. “Black Women’s Labor Market History Reveals Deep-Seated Race and Gender Discrimination.” Working Economics Blog (Economic Policy Institute), February 19, 2019.

Bernstein, Jared. 2013. “If Increasing the Minimum Wage Doesn’t Cost Jobs, How Does It Get Absorbed?” Huffington Post, August 14, 2013.

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

Bureau of Labor Statistics (BLS). 2025. “Occupational Employment and Wage Statistics (OEWS) Tables, May 2024” [Excel file], Occupational Employment and Wage Statistics. Accessed May 13, 2026. 

Clemens, Jeffrey, Olivia Eduwards, Jonathan Meer, and Joshua D. Nguyen. 2026. “The Effects of Calfornia’s $20 Fast Food Minimum Wage on Prices.” National Bureau of Economic Research Working Paper no. 34990, March 2026.

Congressional Budget Office (CBO). 2026a. The Budget and Economic Outlook: 2026 to 2036. February 11, 2026.

Congressional Budget Office (CBO). 2026b. The Demographic Outlook: 2026 to 2056. January 7, 2026.

Cooper, David, Zane Mokhiber, and Ben Zipperer. 2019. Minimum Wage Simulation Model Technical Methodology. Economic Policy Institute, February 2019. 

Coviello, Decio, Erika Deserranno, and Nicola Persico. 2022. “Minimum Wage and Individual Worker Productivity: Evidence from a Large US Retailer.” Journal of Political Economy 130, no. 9: 2315–2360.

Derenoncourt, Ellora, and Claire Montialoux. 2021. “Minimum Wages and Racial Inequality.” Quarterly Journal of Economics 136, no. 1 (February): 169–228.

Dube, Arindrajit. 2026a. “Labor Market Effects of California’s $20 Fast-Food Minimum Wage.” National Bureau of Economic Research Working Paper no. 35171, May 2026.

Dube, Arindrajit. 2026b. The Wage Standard: What’s Wrong in the Labor Market and How to Fix It. New York: Penguin Random House.

Dube, Arindrajit, and Attila S. Lindner. 2024. “Minimum Wages in the 21st Century.” In Handbook of Labor Economics, Volume 5, edited by Christian Dustmann and Thomas Lemieux. 

Economic Policy Institute (EPI). 2026a. Minimum Wage Tracker. Accessed May 5, 2026.

Economic Policy Institute (EPI). 2026b. State of Working America Data Library. Accessed May 5, 2026. 

Giupponi, Giulia, Robert Joyce, Attila Lindner, Tom Waters, Thomas Wernham, and Xiaowei Xu. 2024. “The Employment and Distributional Impacts of Nationwide Minimum Wage Changes.” Journal of Labor Economics 42, no. S1: S293–S333.

Hickey, Sebastian, and Ismael Cid-Martinez. 2025. “The Federal Minimum Wage is Officially a Poverty Wage in 2025.” Working Economics Blog (Economic Policy Institute), April 28, 2025.

Low Pay Commission. 2024. “What Will the Minimum Wage Be Next Year?” (blog post). April 19, 2024.

Oakford, Patrick. 2026. Federal Employment Standards as the Foundation of Economic Security: Revisiting Minimum Wage, Just Cause, and Tools to Combat Wage Theft. Roosevelt Institute, May 2026.

Organisation for Economic Co-operation and Development (OECD). 2026. OECD Data Explorer. Accessed May 5, 2026.

Reich, Michael. 2026. The Unexpected Effects of a $20 Federal Minimum Wage. Center on Wage and Employment Dynamics, February 2026.

Reich, Michael, and Denis Sosinskiy. 2026. “Effects of a $20 Minimum Wage: Evidence from Granular Data on Wages, Employment, and Prices.” Institute for Research on Labor and Employment Working Paper, April 1, 2026.

U.S. Congress. Senate. Committee on Education and Labor. 1937. Fair Labor Standards Act of 1937. S. Rep. No. 884, 75th Cong., 1st Sess. Washington, DC: Government Printing Office.

Wursten, Jesse, and Michael Reich. 2023. “Racial Inequality in Frictional Labor Markets: Evidence from Minimum Wages.” Labour Economics 82, 102344.

Introduction

In 2025, unionization in the United States grew to its highest levels since 2009 (McNicholas, Poydock, and Shierholz 2026). This growth is a testament to the fact that Americans increasingly view unions favorably and recognize them as critical instruments for building a just economy. Yet more than 50 million nonunion workers would join a union but are unable to do so because our nation’s labor laws allow employers to derail workers’ unionization efforts (McNicholas et al. 2019).

It is well documented that employers often hire union avoidance consultants to dissuade and weaken workers’ unionization efforts. These consultants work to prevent a union election from taking place—and if that fails, to ensure that workers vote against the union and then stall negotiations over a first collective bargaining agreement. Over the past several decades, large law firms have developed substantial business specializing in union avoidance services. These firms now play a significant role in denying workers their rights to a union and collective bargaining (Kaufman and Stephan 1995).

The role of these law firms in defeating workers’ organizing campaigns and frustrating workers’ attempts to reach a first contract has largely gone unexamined. While employers are required to disclose money spent on lawyers engaged in persuading employees on their union and collective bargaining rights, there is an exemption around reporting money spent on “advice” services, which is ill-defined under the law. Union avoidance law firms have taken full advantage of this reporting loophole and have constructed an industry providing counsel on union busting. Further, many union avoidance law firms provide employers services beyond these persuader activities, including representation at the NLRB and the stalling of first contract negotiations. 

In this report, we examine the union avoidance industry and the law firms that play integral roles in this business. We calculate the revenue law firms generate from employers who try to avoid unions and undermine collective bargaining with their workers. Further, we discuss the impacts of the union avoidance industry on workers’ ability to organize and what it means for workers, our economy, and our democracy.

Employers spend millions on union avoidance consultants

When workers seek to form a union, employers often hire union avoidance consultants to dissuade and weaken workers’ unionization efforts. These consultants include both non-attorney consultants and attorney consultants. Under the Labor–Management Reporting and Disclosure Act (LMRDA), employers and the consultants they hire must file disclosure reports on agreements in which the consultant is engaging in union-busting activities. Table 1 lists just a few of the employers who filed mandatory reports with the Department of Labor during 2025.

Table 1

These reports represent only a fraction of the total money spent on anti-union campaign services, not to mention legal counsel, representation, and litigation aimed at union avoidance. That’s for two main reasons: 1) consultants are not required to report activity that counts as “advice,” which is ill-defined but currently interpreted to exempt nearly all activities that don’t involve direct contact with workers, even though this accounts for the vast majority of work that consultants engage in; and 2) even activities that clearly must be reported very often are not. Research from LaborLab found that 57% of employers who were known to owe a financial disclosure for having hired a union avoidance consultant in 2024 had failed to file their required disclosure by June 30, 2025, three months after the filing deadline (LaborLab 2025). In 2024, a total of 153 employers filed a financial disclosure, according to the LaborLab report. This showcases a significant amount of underreporting from employers when one considers that over 3,200 union election petitions were filed in 2024, and that 71%–87% of employers hire a union avoidance consultant when faced with a union-organizing drive (NLRB 2026; DOL n.d.). If most “advice” provided by consultants were included, EPI estimates employers spend $442 million per year on both attorney and non-attorney consultants for anti-union campaign services.1

However, that still represents only a fraction of what employers spend on union avoidance. The EPI estimate excludes spending on legal counsel, representation and litigation aimed at defeating organizing drives and stalling contract negotiations, as well as strike preparation and strike-breaking services (McNicholas et al. 2019). It further excludes spending on consultants to implement or enhance employee engagement and “positive employee relations” programs that center around “union-substitution” policies (Levine et al. 2025). These programs feature techniques that are deliberately crafted to preempt, detect, and rapidly quash union organizing, including supervisor training, manipulative communication policies, surveillance techniques, “voice” mechanisms (like suggestion boxes), and employee-involvement programs (such as employee committees and teams).

As mentioned, EPI estimates that employers spend at least an estimated $442 million on anti-union campaign services provided by consultants that are designed to persuade or intimidate workers into voting “no” in union elections. Many of these consultants are also practicing attorneys who simultaneously will provide legal counsel and representation services related to NLRB proceedings. These attorneys also will help employers bend the law to their advantage during contract negotiations, prepare for and break strikes, file unfair labor practice charges to weaken unions and defend employers against such charges, sometimes appealing them not just to the NLRB but also into federal courts. Inclusive of all of these services, the traditional labor relation practices of these law firms generate an estimated $1.48 billion on average.2 When we account for overlap (much labor practice revenue comes from providing anti-union campaign services, not just representation and counsel), these two figures suggest that total spending on attorneys (whether for representation, consulting, or both) and non-attorney consultants is roughly $1.7 billion a year.3 Table 2 shows top law firms’ share of cases at NLRB and the estimated revenue the labor relations practices of these firms generated in 2024.

Table 2

Union avoidance law firms

Prominent law firms—such as Littler Mendelson, Morgan Lewis, and Jackson Lewis—have generated substantial business in union avoidance work on behalf of U.S. employers seeking to frustrate worker organizing and collective bargaining. As shown in Table 2, these law firms do a great deal of business before the National Labor Relations Board, the independent agency charged with enforcing the National Labor Relations Act (NLRA). The NLRA is the nation’s fundamental labor law that guarantees most private-sector workers the right to organize and the right to collective bargaining. However, decades of federal policy and court decisions have weakened the NLRA (Shierholz et al. 2024). Union avoidance consultants and law firms have long exploited the law’s significant loopholes, making it harder and harder for workers to win unions. For nearly 80 years, policymakers have failed to address the NLRA’s weaknesses and restore meaningful union and collective bargaining rights to workers.

These law firms have represented employers in fighting against some of the largest organizing efforts over the last decade, including worker organizing drives at Amazon, Starbucks, and Trader Joe’s (Logan 2025). These law firms have essentially created a specialized practice of union busting and together have generated billions of dollars in revenue, as shown in Table 2. The firms range from exclusively labor and employment firms to full-service corporate firms offering representation in a range of matters. The following are profiles of three law firms that have been at the center of the largest union avoidance campaigns in recent years.

Littler Mendelson

One of the largest union avoidance law firms is Littler Mendelson, a global management-side law firm with more than 1,800 attorneys who can make upwards of $1,700 an hour (Littler Mendelson 2026).4 In Littler Mendelson’s 80-year history, it has represented the likes of Amazon, Delta Airlines, and McDonald’s and has played a predominant role in Starbucks’s anti-union campaign (Logan 2022; Logan 2025). Beyond offering their union-busting services to employers, Littler Mendelson has expanded their services to include promoting anti-worker legislation. For example, Littler Mendelson’s Workplace Policy Institute (WPI) played a predominant role in opposing California’s Assembly Bill (AB) 5, legislation aimed at protecting workers by combatting misclassification (Poydock 2020). WPI also supported the passage of Proposition 22, which exempted gig workers from AB5 (McNicholas and Poydock 2019). WPI is part of the Coalition for Workplace Innovation, which has lobbied for proposals that weaken workers’ rights, including the exclusion of gig/app-based workers from employee status (Pinto 2022).

Morgan Lewis

Morgan Lewis also has a large practice aimed at union avoidance (Morgan Lewis 2026). The firm is a global law firm with nearly 2,000 attorneys, representing the likes of Amazon, REI, and McDonald’s. In addition to being one of the largest union avoidance law firms, Morgan Lewis is also known as one of the most expensive firms, with partners making $1,100 to $1,900 an hour.5 Morgan Lewis is the lead law firm engaged in the legal challenge to have the NLRB declared unconstitutional, despite employing multiple former NLRB officials (Rhinehart and McNicholas 2024).

Jackson Lewis

Another law firm with a significant union avoidance practice is Jackson Lewis, a national labor and employment law firm with a nearly 70-year history in union avoidance (Jackson Lewis 2026). The firm has over 1,000 attorneys who can make upwards of $730 per hour.6 Jackson Lewis has an especially robust presence in the higher education and health care industries but also serves major companies in a wide range of other industries, such as ExxonMobil, Amazon, and Google. As with other union avoidance law firms, Jackson Lewis’s services go beyond legal representation—often providing employers a “full-service” campaign in which they train supervisors and design materials, including speeches, to dissuade workers from organizing a union (Correia 2019).

How union avoidance law firms frustrate worker organizing

The NLRB election process is designed to be straightforward. Workers seeking to form a union file an election petition with the NLRB with signatures of at least 30% of the proposed bargaining unit. If parties cannot agree on a bargaining unit and election logistics, the NLRB will hold a hearing on issues of disagreement and then issue a decision and direct that an election be held. Either party can file post-election objections over the conduct of the election and other issues. Once these issues are resolved, if a majority of workers casting valid ballots in the election vote for union representation, the NLRB will certify the union and direct the parties to begin bargaining. 

While the NLRB election process is supposed to be relatively simple, the strategy of union avoidance law firms follows a standard playbook—they use their overwhelming resources to exploit the NLRB’s administrative processes and sometimes create nearly endless delays. This includes challenging bargaining units and election results and filing endless appeals of adverse decisions (See Appendix Table 1 for examples). The result is to create an unnecessarily complicated and protracted legal process for workers. The NLRB’s own performance objectives aim to ensure that the median age of representation and unfair labor practice cases before the Board is 180 days or less (NLRB 2025). While the NLRB has achieved this goal for many years, the median age for cases is over 100 days and for some workers, it can take years. For example, the NLRB only recently ordered Amazon—an employer known for hiring Littler Mendelson, Morgan Lewis, and Ogletree Deakins—to bargain with workers who voted to unionize over four years ago (Bensinger 2026).

Impact of union avoidance

The roughly $1.7 billion U.S. employers spend each year on anti-union law firms and consultants has an undeniable impact on workers’ ability to organize and bargain collectively. It also contributes to the creation of an economy marked by inequality: It has been well documented that the decline in unionization has contributed to increased income inequality over the last several decades (Bivens et al. 2023). It is no coincidence that the overall decline in unionization follows decades of federal policy neglect that have weakened U.S. labor law. The loopholes in U.S. labor law, which union avoidance consultants and law firms exploit, routinely frustrate workers’ organizing and collective bargaining, enabling wealthy corporations to prosper at workers’ expense.

Why would these corporations want to frustrate workers’ organizing? Consider the benefits unions provide for workers and their communities. When workers join together in a union and engage in collective bargaining, they see higher wages and better benefits (McNicholas, Poydock, and Shierholz 2026). Further, in communities with higher union density rates, working families have higher incomes, greater access to health care, and few voter restrictions (McNicholas et al. 2025). It is clear that when unions are strong, workers have more power and their communities thrive.

Despite the erosion of U.S. labor law and the standard playbook of union avoidance, workers do win unions and union contracts. In 2025, 16.5 million workers in the United States were represented by a union—an increase of 463,000 from 2024 and the highest number of unionized workers in the U.S. in 16 years. The 2025 rise in union density coincides with a high public favorability toward unions, with nearly 70% of people in the U.S. viewing unions favorably (Brenan 2025). Further, research from the Pew Research Center finds that most people in the U.S. see the decline in union density as bad for the country (60%) and bad for working people (62%) (Van Green 2025).

To sustain the modest gains seen in union density in 2025, policymakers must act to restore workers’ rights to a union and collective bargaining. This is critical to the health of our economy and to ensuring that workers receive a fair share of the profits they help produce. Policymakers must pass the Richard L. Trumka Protecting the Right to Organize (PRO) Act, which would help restore private-sector workers’ ability to form unions and bargain collectively.7 The PRO Act addresses many of the major shortcomings with U.S. labor law by establishing civil penalties for employers who violate workers’ rights, creating an election process that limits employer interference, and establishing a bargaining process for reaching a first contract in a timely manner. The PRO Act also would shed light on the union avoidance industry by requiring prompt disclosure of union-busting activities and closing the “advice” loophole through which employers and consultants have evaded reporting (McNicholas, Poydock, and Rhinehart 2021).

Acknowledgments

The authors would like to thank Joe Fast and Hannah Faris for their research assistance for this report.

Appendix

Methodology for labor practice revenue estimate

Estimated revenue of company-level labor practices and of U.S. labor practices as a whole was calculated in the following manner. 

First, we divided the number of attorneys listed in a company’s labor practice in 2026 by the number of attorneys that Law.com reported that the firm had in 2024, the most recent year for which Law.com data are available. We treated that figure as an initial indicator of the fraction of the firm’s total revenue that came from its labor practice. We then multiplied that fraction by the company’s total 2024 revenue, as reported by Law.com. Next, we discounted the result by 50%, on the conservative assumption that half of the revenue generated by attorneys in a company’s labor practice was earned for work performed in other areas of law than labor law. (Many labor relations attorneys belong to multiple practices, often practicing both labor law and employment law at the same company.) This calculation yielded our estimate of the revenue generated by a firm’s labor practice in 2024, inclusive of both representation and consulting services. 

We performed this calculation for the six law firms with 1.5% market share or more in 2024, where market share is defined here as a firm’s share of all NLRB cases in 2024. We then estimated the total revenue generated by all U.S. labor practices by dividing the sum of the six firms’ estimated labor practice revenue by the sum of the six firms’ market share.

Market share data were obtained through a custom query of NLRB data compiled by Labor Data (https://labordata.bunkum.us/). The number of attorneys in a company’s labor practice was obtained by tallying the number of attorneys listed on each company’s labor relations practice page in March 2026 and weeding out any attorneys practicing outside the U.S. 

Note: The share of revenue generated by attorneys in a labor practice that comes exclusively from labor relations services (rather than other areas of practice, such as employment law) may vary significantly by each law firm. For example, our labor practice revenue estimate for Littler Mendelson is lower than our estimate for Ogletree, Deakins, Nash, Smoak & Stewart, even though the former has greater market share than the latter does. This may be because our 50% assumption is too low in Littler Mendelson’s case. Perhaps attorneys in Littler Mendelson’s labor practice specialize in labor relations more often and more intensively than attorneys in Ogletree’s labor practice, thereby leading to higher labor practice revenue for Littler than our estimate suggests.

Appendix Table 1

Notes

1. See Celine McNicholas, Margaret Poydock, Julia Wolfe, Ben Zipperer, Gordon Lafer, and Lola Loustaunau, Unlawful: U.S. Employers Are Charged with Violating Federal Law in 41.5% of All Union Election Campaigns, Economic Policy Institute, December 2019. To arrive at the $442 million figure, we take the $338 million dollar estimate from McNicholas et al. 2019, which covered the four-year period 2014–2017, and adjust it for inflation to 2025 dollars, according to Consumer Price Index (CPI-U) estimates using the annual average of the BLS CPI-U for 2014–2017 and BLS C-CPI-U for 2025. The estimated rates for consultants are from McNicholas et al. 2019.

2. Full methodology for this calculation can be found in the methodology section in the appendix.

3. We assume about half ($221 million) of the $442 million goes to attorney consultants for anti-union campaign services, which we also capture in the law firms’ labor practice revenue of $1.48 billion. To get to the $1.7 billion, we add the remaining of the $442 million ($221 million) on non-attorney consultants with the law firm revenue estimates ($1.48 billion).

4. Author’s analysis of public court documents and engagement letters sourced from LexisNexis and municipality websites.

5. Author’s analysis of public court documents and engagement letters sourced from LexisNexis and municipality websites.

6. Author’s analysis of public court documents and engagement letters sourced from LexisNexis and municipality websites.

7. Richard L. Trumka Protecting the Right to Organize Act of 2025, [H.R. 20], 119th Cong. (2025).

References

Bensinger, Greg. 2026. “Amazon Must Negotiate with Staten Island Warehouse Workers, NLRB Says.” Reuters, April 2, 2026.

Bivens, Josh, Celine McNicholas, Margaret Poydock, Jennifer Sherer, and Monica Leon. 2023. What to Know About This Summer’s Strike Activity. Economic Policy Institute, August 2023.

Brenan, Megan. 2025. “Labor Union Approval Relatively Steady at 68% in U.S.” Gallup, August 28, 2025.

Correia, David. 2019. “Union Busting on Campus: Jackson Lewis and Higher Education Anti-Unionism.” Verso Books, March 11, 2019.

Department of Labor (DOL). n.d. Persuader Agreements: Ensuring Transparency in Reporting for Employer and Labor Relations (fact sheet). n.d.

Department of Labor, Office of Labor–Management Standards (OLMS). 2026. “OPDR–LM-10 Employer” (web page). Accessed May 15, 2026.

Gregg, Forest. 2026. “Labor Data.” Accessed May 15, 2026.

Jackson Lewis. 2026. “About Us” (web page). Accessed May 8, 2026.

Kaufman, Bruce E., and Paula E. Stephan. 1995. “The Role of Management Attorneys in Union Organizing Campaigns.” Journal of Labor Research 16 (December 1995): 439–454. https://doi.org/10.1007/BF02685719.

LaborLab. 2025. One-Sided Transparency: The Growing Gap Between Required Annual Union Versus Employer and Persuader Filings and OLMS Compliance Efforts Continues to Widen. July 2025.

Law.com. 2026. “Fisher Phillips” (web page). Accessed May 15, 2026.

Law.com. 2026. “Jackson Lewis” (web page). Accessed May 15, 2026.

Law.com. 2026. “Littler” (web page). Accessed May 15, 2026.

Law.com. 2026. “Morgan Lewis” (web page). Accessed May 15, 2026.

Law.com. 2026. “Ogletree Deakins (web page). Accessed May 15, 2026.

Law.com. 2026. “Seyfarth” (web page). Accessed May 15, 2026.

Levine, Jonathan O., Tanja L. Thompson, Brooke E. Niedecken, and Brendan Fitzgerald. 2025. Littler’s 2025 Labor Survey Report. Littler Mendelson, September 30, 2025.

Littler Mendelson. 2026. “Our Firm History” (web page). Accessed May 8, 2026.

Logan, John. 2022. “Not Your Father’s Anti-Union Movement: Ten Key Facts About Starbucks’ Union Avoidance Law Firm, Littler Mendelson.” The Labor and Working-Class History Association (LAWCHA), March 7, 2022.

Logan, John. 2025. Corporate Union Busting in Plain Sight: How Amazon, Starbucks, and Trader Joe’s Crushed Dynamic Grassroots Worker Organizing Campaigns. Economic Policy Institute, January 2025.

McNicholas, Celine, and Margaret Poydock. 2019. How California’s AB5 Protects Workers from Misclassification (fact sheet). Economic Policy Institute, November 14, 2019.

McNicholas, Celine, Margaret Poydock, and Lynn Rhinehart. 2021. Why Workers Need the Protecting the Right to Organize Act (fact sheet). Economic Policy Institute, February 9, 2021.

McNicholas, Celine, Margaret Poydock, and Heidi Shierholz. 2026. Workers’ Resolve Drives Increase in Unionization in 2025. Economic Policy Institute, February 2026.

McNicholas, Celine, Margaret Poydock, Heidi Shierholz, and Hilary Wething. 2025. Unions Aren’t Just Good for Workers—They Also Benefit Communities and Democracy. Economic Policy Institute, August 2025. 

McNicholas, Celine, Margaret Poydock, Julia Wolfe, Ben Zipperer, Gordon Lafer, and Lola Loustaunau. 2019. Unlawful: U.S. Employers Are Charged with Violating Federal Law in 41.5% of All Union Election Campaigns. Economic Policy Institute, December 2019.

Morgan Lewis. 2026. “Our Firm” (web page). Accessed May 8, 2026.

National Labor Relations Board (NLRB). 2025. The National Labor Relations Board 2025 Performance and Accountability Report. Fiscal Year 2025. 

National Labor Relations Board (NLRB). 2026. “Case Search” (web page). Accessed May 8, 2026.

Pinto, Maya. 2022. How the ‘Coalition for Workforce Innovation’ Is Putting Workers’ Rights at Risk. Gig Workers Rising, National Employment Law Project, PowerSwitch Action, Service Employees International Union, and Temp Worker Justice, July 2022.

Poydock, Margaret. 2020. “The Passage of California’s Proposition 22 Would Give Digital Platform Companies a Free Pass to Misclassify Their Workers.” Working Economics Blog (Economic Policy Institute), October 22, 2020.

Rhinehart, Lynn, and Celine McNicholas. 2024. “What’s Behind the Corporate Effort to Kneecap the National Labor Relations Board?: SpaceX, Amazon, Trader Joe’s, and Starbucks Are Trying to Have the NLRB Declared Unconstitutional—After Collectively Being Charged with Hundreds of Violations of Workers’ Organizing Rights.” Working Economics Blog (Economic Policy Institute), March 7, 2024.

Shierholz, Heidi, Celine McNicholas, Margaret Poydock, and Jennifer Sherer. 2024. Workers Want Unions, but the Latest Data Point to Obstacles in Their Path: Private-Sector Unionization Rose by More Than a Quarter Million in 2023, While Unionization in State and Local Governments Fell. Economic Policy Institute, January 2024.

Van Green, Ted. 2025. “Majorities of Adults See Decline of Union Membership as Bad for the U.S. and Working People.” Pew Research Center, August 27, 2025. 

Key takeaways:

• Affordability is not just about prices; it’s the outcome of a race between income growth and price inflation. When income growth is slower than price inflation, affordability worsens. When income growth is faster, affordability improves.
• Focusing just on prices is bad for understanding how the economy works and how it has performed in the recent past, and it leads to an overly restrictive policy menu for improving families’ affordability.
• Policy can more reliably address income growth for typical families. This growth has been stunted for decades by the rise of inequality. Closing this gap by ensuring more equitable distribution of future growth is the strongest tool we have for improving affordability.

Affordability has been the policy buzzword of recent years. Much of the affordability discourse—both among policymakers and the public—has focused near-exclusively on prices as the big affordability problem. But affordability is not a problem of high prices, instead it’s the outcome of a race between incomes and prices. And the reason typical families have faced an affordability crunch in recent decades is not because prices have grown exceptionally fast, it’s because incomes for the vast majority have grown too slowly. This income growth has been suppressed mostly by rising inequality that has put a growing wedge between overall economic growth and the income growth of typical families.

Getting the drivers of affordability right is important—it’s not just quibbling. If you only examine price growth and try to infer what has happened to affordability over periods of economic history, you’ll usually get the story wrong. And if policymakers only look at how to change the trajectory of prices while ignoring what they can do to change the trajectory of incomes, they will be far less effective in providing useful relief to U.S. families. There are far more ways to use policy to raise incomes in a targeted and effective way than there are to suppress price growth.

Below, we provide some more background on why analyses of affordability need to include incomes, why policymakers have much more scope to raise incomes in a useful way as opposed to pushing down prices, and why focusing just on prices can obscure whether affordability has improved or worsened.

Why do prices dominate today’s affordability debates?

In modern capitalist economies, prices rise essentially every year (though at quite different rates), but so do incomes. Determining what has happened to families’ ability to afford a decent and secure life requires looking at measures that take into account both sides of the affordability equation, such as real (inflation-adjusted) income growth. Nobody really disputes this. After all, Americans could buy a new car for $600 in the 1930s, but nobody thinks society was generally richer back then.

The narrow focus on prices in assessing one’s own economic struggles likely stems from several factors.

First, inflation was very fast in the early 2020s. Americans hadn’t experienced inflation rates that high in decades, and they didn’t like them, so prices remain front of mind for many.

Second, it is true that price changes can dominate what happens to real incomes over very short time periods (say a year or less). This recognition is why we can be so sure that the oil price shock inflicted by the U.S. bombing of Iran is going to be so damaging to U.S. families. The rise in oil prices so far this year has likely baked in at least a 1.5% increase in inflation over the next 6–12 months. In 2025, real wage growth for the large majority of workers was slower than 1.5% (which was the outcome of roughly 4% nominal wage growth minus 2.5% inflation). Given this, a sharp and unexpected 1.5% jump in prices will likely erase any prospective real wage gains for workers in 2026.

Finally, it has been noted that many Americans see wage gains as something they accomplished themselves through hard work, while prices are out of their immediate control. Inflation is hence seen as damage done to them and something they need relief from. But this is mostly wrong—policy choices impact wage growth at least as much as inflation, and the most effective policy relief for living standards will come through measures that raise wages, not restrain prices.

Policy can target incomes more effectively and precisely than prices

One person’s income is another person’s cost, which means prices are a bundle of different stakeholders’ incomes. The bill you pay at the grocery store must cover payments the store makes to its shareholders, the salary of the CEO and managers, the wages of cashiers, and the cost of buying food from producers. We don’t want all these incomes to be forced down. Given extreme levels of inequality in the U.S., we would likely be fine with lower CEO pay and payments to shareholders, but we would want wages of cashiers and many in the food production supply chain to rise. Efforts to simply clamp down on this price will have uncertain effects on incomes.

In the jargon of economists, focusing on prices is sector-based policy but to genuinely improve affordability we need factor-based policies, where factors of production like capital, rank-and-file workers, and corporate management can be specifically targeted by policies that aim to raise or restrain their incomes.

Fortunately, there are many good policy options for targeted affordability policy specifically toward low- and middle-income families. Incomes for these families—and for anybody without dynastic wealth—are dominated by wages and public benefits. We talk about each of these in turn below.

Boosting public benefits is affordability policy

Public benefits are entirely under policymakers’ control. If policymakers really cared about the affordability of groceries or health care or energy, they could boost benefits for food stamps, Medicaid, and the low-income heating energy assistance program. These programs currently deliver needed assistance to tens of millions of families to make life more affordable—and they do this with vanishingly small administrative costs, meaning they are highly efficient. Yet all of these programs are slated for steep cuts in the coming decade due to the Republican tax and spending megabill passed in 2025. This bill will inflict large damage to the most vulnerable families’ ability to afford decent and secure lives.

Further, Congress and the Trump administration chose to not extend the Biden administration’s more-generous subsidies for people to buy health insurance through the marketplace exchanges of the Affordable Care Act. The failure to extend these subsidies—even after a full federal government shutdown engineered by congressional Democrats aimed at prioritizing this issue—means that average out-of-pocket costs will double for those buying insurance in the exchanges.

Besides just reversing these cuts, making the U.S. welfare state more robust could also greatly boost the affordability of a decent life. Things like making health coverage more universal with lower out-of-pocket costs, reforming unemployment insurance to make it more protective, and providing all families with children a generous universal child allowance could dramatically improve affordability.

Policy can boost affordability through higher wages as well

The link between policy changes and wage growth is slightly less direct than for public benefits, but it remains very strong. Capitalist labor markets are inherently tilted toward employers and against workers. The only periods of history that have seen strong and equal rates of wage growth across the workforce have been periods where policy supported institutions that boosted workers’ leverage with employers.

The 30 years after World War II saw the creation of policies and institutions that successfully spread the gains from rising productivity equitably among workers up and down the wage distribution, with low- and middle-wage workers seeing growth rates as fast as high-wage workers. This equitable distribution of wage growth was a crucial way that income growth more broadly was kept equitable in this period.

Since 1979, however, these institutions have been steadily attacked and weakened with no new institutions being stood up to take their place in ensuring an equitable distribution of economic growth. The result has been that wages and incomes of typical families have lagged far behind average income and wage growth (or productivity). The wedge between income growth experienced by the vast majority of families and average growth is simply income being generated in the economy that is not helping typical families’ affordability struggles. Instead, it is income being funneled reliably away to the top.

There’s no reason that the institutions that equalized wage growth cannot be built back up and modernized.

The federal minimum wage is the most obvious policy institution for raising wages at the low end of the labor market. Raising the federal minimum wage from its current shamefully low $7.25 would directly boost affordability for tens of millions of workers. In the middle of the wage distribution, unions have proven to be the institution that has historically counteracted employer power and given typical workers increased leverage. However, unions are in a far weaker position today relative to their high points because of intentional policy choices—specifically because policymakers failed to act to curb employers’ growing hostility (and often their illegal activities) toward union organizing. If stronger policy boosted union density, unions would raise wages for both members and non-members alike.

Low- and middle-wage workers also benefit enormously from a determined effort to keep unemployment low for extended periods of time. In recent decades, policymakers have tolerated excess unemployment to keep inflation in check, but this is far too costly a strategy to keep potential inflation in check. Besides locking out millions of willing workers from job opportunities, long periods of excess unemployment were periods when real (inflation-adjusted) wage growth became literally stagnant.

Policymakers often seem skeptical of the effectiveness of these wage-boosting policies, arguing that the effects are too indirect and will take too long to provide benefits to workers. It’s true that efforts to boost unionization and sustain full employment will take some time to push up wages. But they will do this reliably. Further, many policies advanced in the name of reducing prices would also take a long time to come to fruition. For example, calls to tighten antitrust restrictions against corporate mergers and to break up established monopolies often have lots of merit. However, they are not policies that happen instantly and have purely predictable effects.

Focusing too hard on prices can obscure when affordability is actually improving

Finally, one key reason to broaden the affordability debate beyond prices is simply to make sure the public and policymakers can correctly identify periods of improvement or degradation of affordability. As an example of how focusing only on prices can lead to an incorrect diagnosis of affordability trends, take the example of two five-year stretches in recent economic history, both measured from a business cycle peak and going five years forward from there: In the years between 2007 and 2012, annual inflation averaged 1.8% and peaked at 5.5%, while between 2019 and 2024, inflation averaged 4.2% and peaked at 9%. Based on price growth alone, one would expect affordability to have eroded more rapidly in that second period, and indeed the popular narrative is that the early 2020s inflation was particularly destructive for affordability.

But between 2007 and 2012, the nation’s unemployment rate averaged 8.3%, while it averaged less than 5% between 2019 and 2024. After 2007, it took 93 months to re-attain the pre-recession unemployment rate, while it took just 29 months after the 2019 business cycle peak. In short, the labor market was far stronger in the second period.

And when it comes to real (inflation-adjusted) wage growth, the second period—largely because of its lower unemployment—saw far better outcomes than the first. In the 2019–2024 period, inflation-adjusted wages for low-wage workers (those at the 10th percentile) and the median worker rose by a cumulative 15.3% and 5.8%, respectively. In short, contrary to most conventional wisdom, affordability improved in this time. Between 2007 and 2012, real wages outright fell for both low-wage and median workers. Even with very slow inflation, affordability was demonstrably worse in that earlier period.

Figure A

More recently, inflation averaged slightly lower in 2025 (2.5%) than 2024 (2.9%). Yet for many workers—and particularly low-wage workers—2025 saw weaker (or even negative) real wage growth. This is largely due to some slight cooling in the labor market as unemployment rose from 4.0% to 4.4% over the course of 2025. Hence, even as inflation decelerated, the cooling labor market led to an even faster deceleration in nominal wages, which meant that affordability worsened for many workers.

Figure B

Reducing inequality is the key to improving affordability

Because many policymakers believe that affordability concerns are a new problem caused by inflation of recent years, they are now on a frenzied search for new and creative solutions to this price problem. But because the real affordability problem for U.S. families did not emerge in the past few years (remember, affordability was improving in the five years before 2025) and because the genuine long-run problem of affordability was about the inequality of income and wage growth, not excess inflation, most of these new and creative solutions just won’t hit the mark.

It’s understandable why many policymakers seem frustrated with being reminded of the long-diagnosed problem of inequality and the proven remedies—such as sustained full employment, higher wage standards like minimum wages, protecting workers’ fundamental rights to organize unions and bargain collectively, and a more robust welfare state.

Some, of course, just don’t believe in some of these solutions, while many who do would argue that these proven remedies are politically unrealistic in the current moment. But because the real affordability problem is an inequality problem that requires those at the top of the income and wealth scales having to accept less growth going forward (less than the stratospheric gains they’ve gotten used to, it should be said), any genuine solution is going to seem impossible in today’s political system that is dominated by the wealthiest families and corporations. Any policy—whether old and well-tested or new and creative—that actually aims to redistribute income, wealth, and power away from where it sits today will face a wall of opposition that must be politically overcome one way or the other. There’s no “one weird trick” where you can develop a policy creative and neat enough that it will somehow fool the rich and powerful about what its end result will be. And if the end result of the new and creative policy does not threaten the prerogatives of the rich, it’s not a real solution.

Today’s affordability concerns are indeed rooted in objective facts about the material circumstances of middle- and working-class families in the United States. Precisely because of this, they deserve more serious analysis and policy responses than they have been getting. This means focusing more on incomes than prices, and it means being clear-eyed that it has been the upward redistribution of income to the top—abetted by policy decisions—that is the drag on typical families’ affordability. Until solutions address that, they’re mostly just noise.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Table 1

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

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

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

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

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

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

Strengthening collective bargaining rights is one of the most powerful policy levers states have available to confront primary economic challenges facing all workers today: an affordability crisis driven by the long-term suppression of workers’ pay, growing income inequality, and persistent racial and gender labor market disparities. It’s widely recognized that in today’s wildly unequal economy, millions of workers wish they had a union contract but face daunting obstacles to exercising their legal rights to get one. Moreover, many workers have never been protected by federal labor law at all due to Jim Crow-era exclusions.  

For the second year in a row, Colorado and Virginia state legislators have passed landmark legislation to remove barriers to unionization:  

• In Colorado, legislators have passed the Worker Protection Act to repeal an 83-year-old state policy that has limited Colorado workers’ freedom to form unions by requiring they undergo a state-mandated “second election” before they can secure full collective bargaining rights.  

• In Virginia, lawmakers have passed collective bargaining legislation to ensure full union rights for more than 500,000 state and local government employees and home care workers—all of whom have historically been denied coverage under federal labor law. The legislation would replace Virginia’s longstanding ban on public employee collective bargaining that has resulted in one of the largest public-sector pay gaps in the nation. 

Both pieces of legislation would correct historical wrongs—restoring rights that Colorado and Virginia workers have been denied since the 1940s, when past state lawmakers adopted anti-union policies amid a wave of white supremacist, big business backlash to multiracial union organizing. Yet both pieces of legislation were vetoed by their states’ respective governors in 2025 and are now once again awaiting governors’ signatures in 2026. 

In Colorado, Governor Polis has already indicated intent to once again veto the Worker Protection Act, but it’s not too late for Polis to seize his second chance to sign the bill.  

In Virginia, Governor Glenn Youngkin vetoed the collective bargaining legislation in 2025 and was ineligible to run for reelection because of term limits. This year, when the legislation was first sent to newly elected Virginia Governor Spanberger, she proposed extensive, damaging amendments to weaken the bill instead of signing it. The General Assembly has since rejected those amendments, and now Spanberger has her own “second chance” to sign this transformative legislation into law. 

Meanwhile, scores of anti-worker actions from the Trump administration are continuing to accelerate a decades-long trend of weakening workers’ rights, suppressing wages, and eroding bargaining power. This year, state lawmakers have handed both Governor Polis and Governor Spanberger historic opportunities to rebalance unequal power in their states’ economies and remove major obstacles Coloradans and Virginians face to exercising their rights to unionize and collectively bargain. And the choices Polis and Spanberger make in the next few weeks will shape economic outcomes in their states for years to come.

On Thursday, May 7, 2026, Economic Policy Institute’s Chief Economist Josh Bivens and Senior Economist Ben Zipperer joined Director of Government & Advocacy Samantha Sanders in a conversation on how policymakers should respond to the rise of AI.

Webinar links, notes and discussion

Timestamped themes, discussion, and resources mentioned in the webinar

Find out about upcoming webinars first! Subscribe to EPI newsletters.

Since the second Trump administration swept into office in January 2025, it has undertaken a range of damaging and destabilizing actions that have weakened the economy, undermined workers, hurt businesses and consumers, and threatened core elements of our democracy. While Trump has targeted numerous Democratic-led states and cities, the Washington, D.C., region has faced acute and prolonged harms since day one. From the first set of executive actions signed on Inauguration Day, the Trump administration has attacked people and businesses in the capital region repeatedly and intensely. These initial actions announced the president’s dubious claims of authority to fire large segments of the federal workforce, eliminate long-standing federal agencies and programs, and begin a campaign of illegal and inhumane mass deportations.  

The Trump administration’s damaging actions have been enabled and abetted by Republican members of Congress. Their passage of H.R. 1, the bill that the White House has referred to as the “One Big Beautiful Bill Act” (OBBBA), amplifies the administration’s mass deportation agenda and shreds critical health care and food supports for lower-income families to finance tax cuts for the wealthy. This funding bill will only cause more pain in the years ahead for Washington, D.C.-area households and throughout the country.

Congress also passed a federal spending bill that constrained the District of Columbia’s ability to spend its own tax revenue (Koma 2025) and a resolution that may force the district to adopt local tax code changes that match the OBBBA, whether the city wants to or not—changes that will jeopardize hundreds of millions of dollars for city programs (D.C. Fiscal Policy Institute 2026).

In this report, we assess the early indicators of the damage of Trump’s actions and their effects on the Washington, D.C., regional economy, with particular attention to effects on workers and the labor market. We focus on this region due to its prominence as an early target of the Trump administration, in part due to its large federal workforce. Additionally, the district’s unique status as a non-state means that its leaders have far less legal authority to resist Trump’s interference than other target areas do.

Throughout this report, unless otherwise indicated, the data describe economic conditions for the Washington, D.C., metropolitan statistical area (MSA), which includes the District of Columbia, four nearby counties in Maryland, six cities and 11 counties in northern Virginia, and one county in West Virginia. We also refer to this region as the DMV (Washington, D.C.; Maryland; and Virginia). While we do not yet have the requisite data to fully and precisely document all the effects of the administration’s actions, we can see clear signals that the regional economy is already struggling, with more severe impacts likely to register in the data soon.

We then explore some of the factors that make other regions particularly vulnerable to significant economic harm from the Trump administration’s agenda. These include counties with large concentrations of federal workers, areas where federal transfer income (such as Medicaid and Social Security) makes up a significant portion of the region’s economic base, and places with significant immigrant populations. Though Trump has largely targeted prominent, Democratic-led areas, many of the regions most susceptible to the harmful economic consequences of the administration’s actions are rural counties, frequently represented in Congress by Republicans.

Trump’s actions in Washington, D.C., have led to reduced employment and rising unemployment

The clearest sign of the harm that the Trump administration’s actions have done to the Washington, D.C., regional economy is the substantial drop in the region’s employment rate. Based on EPI analysis of Current Population Survey data from the Bureau of Labor Statistics, from December 2024 to December 2025, the share of the regional working-age population with a job fell by 3.2 percentage points.1 As shown in Table 1, this compares with a decline of just 0.4 percentage points for the country over the same period. Among prime-age workers (those ages 25–54), the share employed in the DMV fell by 2.7 percentage points, compared with a decline of just 0.1 percentage points for the country overall.

This dramatic drop in regional employment is a direct result of the Trump administration’s relentless attacks on federal government workers, cuts to federal programs and agencies, and their cascading effects on connected regional industries. Prior to Trump’s taking office, federal employees made up 11.2% of the metro area’s total workforce (BLS-CES-SAE 2025).2 Between the end of 2024 and 2025, federal employment in the DMV region fell by more than 53,800 jobs (-14.2%) (BLS-CES-SAE 2026).3 These losses reverberated through the regional economy as affected households pulled back on spending, and many may have even opted to move, as data show the DMV region had the largest increase in home sale listings of any major metro last year (Brookings Institution 2026).

These significant cuts to federal employment, though highly damaging on their own, are only the first layer of the administration’s harm on the regional labor market. The DMV has a non-federal workforce of over three million people (BLS-CES-SAE 2026), many of whom work at firms that consult with, contract with, are funded by, or are otherwise connected to the government.4 The Trump administration has terminated thousands of grants to scientific research institutions (Kozlov, Tollefson, and Garisto 2026) and frozen or delayed funding for tens of thousands of nonprofit organizations, causing those targeted to limit operations or lay off staff (Tomasko et al. 2025). These cuts have also shrunk the funding pool for nonprofit groups, causing budget challenges even for those not previously receiving federal funding, as they must compete with groups previously funded through federal programs that are now scrambling to fill gaps with private support (Barrett 2025). The administration has also moved to cancel contracts with any company that maintains a commitment to DEI standards (Singh 2026). Although these cuts affect organizations everywhere, the DMV is disproportionately vulnerable to the economic harms of attacks on this sector as it has one of the highest concentrations of nonprofits in the country (Friesenhahn 2025). This is evident in the region’s slight dip (-0.3%) in private-sector employment from December 2024 to December 2025, a change from the consistent, albeit slowing, growth that had marked the years following the COVID-19 pandemic. At the national level, private-sector employment experienced slow but still positive change (0.5%) over the same period (BLS-CES-SAE 2026).5

The widespread impact of the administration’s actions can be seen in the breadth of employment declines across racial, ethnic, gender, and age groups in the region. As shown in Table 1, the employment rate fell by at least 2 percentage points for every demographic category of workers in the DMV. Notably, young workers under age 25 (-4.3 percentage points), workers age 55 and older (-3.3 percentage points), men (-3.5 percentage points), and Black workers (-5.9 percentage points) all experienced drops in their employment rates larger than the regional average. For older workers, the above-average decline likely reflects, at least in part, the firings and retirements of many federal employees, including many who had been near retirement age and opted into the so-called “Fork in the Road” deferred resignation program. For young workers, the administration’s funding and programmatic cuts directly reduced many traditional Beltway early-career opportunities (internships, fellowships), while weakness in the broader regional economy simultaneously forced area employers to pull back on entry-level positions.

Still, not all groups have been equally affected by Trump’s actions. As Table 1 shows, Black workers in the DMV region have suffered the largest employment declines, with the share employed falling by 5.9 percentage points in 2025. This is nearly triple the employment drop experienced by white workers (2.0 percentage points) in the region and, notably, more than seven times the employment drop of Black workers throughout the country overall (0.8 percentage points). Again, this is a direct consequence of the administration’s attacks on the federal workforce. Black workers have long tended to make up a larger share of the public sector than they do in the private sector—both in the DMV and across the country. This is because the public sector has historically been a pathway to the middle class for workers of color who face labor market discrimination in the private sector (Maye and Marvin 2025).

Trump’s massive cuts to federal employment have also rapidly undone what had been considerable progress in shrinking the regional Black-white employment gap. Figure A shows the employment rate of DMV workers, overall and by race/ethnicity, since the end of 2018. The rapid drop in the Black employment rate since the start of President Trump’s second term is striking, bringing the regional Black employment rate back down to its pandemic-era low. It is also notable that before that drop began, Black workers in the region were employed at essentially the same rate as their white counterparts—the only time in the last two decades when that occurred. These losses in employment will exacerbate existing racial and gender inequity across wages, poverty, and unemployment (Markoff and Zielinski 2026; Zielinski 2025; Busette and Elizondo 2022).

Recent increases in the DMV’s overall unemployment rate underscore the damage Trump is doing to the region. The non-seasonally adjusted unemployment rate jumped more than a full percentage point, from 3.1% in January 2025 to 4.4% in January 2026—more than four times the increase in the national figure. (Importantly, this increase understates the weakening of the area labor market, as the BLS estimates the DMV labor force shrank by 3% over the same period—meaning that many workers who would have been counted as unemployed simply left the area labor force.) For comparison, the national non-seasonally adjusted unemployment rate increased by less than half a percentage point, moving from 4.4% in January 2025 to 4.7% in January 2026 (BLS-LAUS 2026).

These numbers do not capture the full extent of the economic downturn in the DMV area, nor can they give us precise insight into where the pain has been most acutely felt. The administration’s violent deportation agenda, for example, will lead to a drop in immigrant and U.S.-born Hispanic workers’ employment, but resulting changes in Hispanic employment rates may be muted by the corresponding shrinking of the overall Hispanic population (Zipperer 2025). In other words, while the overall Hispanic population in the U.S. may fall dramatically in coming years, the ratio of remaining employed workers to remaining total population may stay somewhat consistent. This will mask the true scale of the economic and social harm being done to immigrant communities in the DMV and across the country.

It is also difficult to fully quantify how the deployment and continued presence of National Guard troops, violent immigration actions, and other authoritarian, fear-inducing tactics have impacted D.C.-area businesses, workers, and families, particularly in neighborhoods with predominately Black and Latino populations. Early data show regional declines in tourism, consumer spending, and foot traffic; harder to capture are the emotional and long-term economic consequences (Montgomery 2025; Hadden Loh and Haskins 2025; Sachs and Cocco 2025). Other recent analyses estimate similar economic harms in cities where targeted federal immigration enforcement actions have been aggressively deployed (Rosenthal and Sojourner 2026). A full accounting of the Trump administration’s harms on the Washington, D.C., region will take years to document.

Other localities should brace for similar consequences

Some of the Trump administration’s actions and their acute consequences are unique to the DMV, a function of the region’s high concentration of federal employees and government contractors, as well as the District of Columbia’s lack of statehood and full constitutional rights. However, the anti-government attacks the administration has unleashed on DMV-area households, workers, and businesses will have cascading consequences for communities throughout the country. The effects of the administration’s authoritarian attacks on the civil service, democratic institutions, and immigrants (Human Rights Watch 2026) that first registered across the DMV should be viewed as a preview of the consequences that will be felt in other regions. While no locality will be spared, regions particularly at risk include those with large shares of government workers (especially federal workers, but state and local government workers too), localities in which federal funding and social safety net programs make up a large portion of total area income, and those with large immigrant populations.

Trump’s attacks on the federal workforce will harm communities that rely on their employment

The day Trump returned to power in January 2025, he began attacking the federal workforce, first by moving to reclassify tens of thousands of federal employees to make it easier to fire and replace them with political loyalists (EPI 2026c), and then by stripping more than one million federal workers of their collective bargaining rights (EPI 2025a). The Trump White House subsequently worked feverishly to slash federal employment, attempting large and chaotic reductions in force, shuttering entire agencies, and coercing tens of thousands of staff to resign, among many other attacks (Poydock 2025). As of March 2026, the administration’s actions have reduced nationwide federal government employment by over 350,000 (11.7%) since January 2025 (Gould 2026).

Though federal workers make up a sizeable share of the DMV’s workforce, over 80% of federal workers live outside the region (Partnership for Public Service 2024). For instance, in Alaska, Hawaii, and New Mexico—states that are home to large swaths of federal and Native land, military bases, and federal research institutions—federal workers make up at least 4.5% of total employment (EPI 2025c). Within states, federal workers tend to be concentrated in specific localities. For instance, in Apache County, Arizona, which is largely made up of the Navajo Nation and the White Mountain Apache Reservations, lands that extend beyond county lines, the federal government employs 12% of the county’s workers, more than double the next most significant county for federal worker employment in the state (EPI 2025c). There are 22 U.S. counties, spread across the South, Midwest, and West Census regions, where federal workers comprise at least 10% of the county’s workforce (see Table 2).

In these counties and elsewhere, federal workers are the backbone of the regional economy, both through the essential services they provide and through their contributions to the local economy. Trump’s attacks simultaneously threaten federal workers’ livelihoods and the economic health of communities in which these workers’ spending on goods and services makes up a large share of economic activity in the region. In Apache County, Arizona, civilian government workers’ earnings comprise 11.7% of total economic activity in the county (see Table 3)—roughly the same as their share of overall county employment. However, in some counties, federal employees’ earnings are a disproportionate share of the regional economic base. For instance, in Leavenworth County, Kansas, where federal employees make up 10.0% of employment (Leavenworth has a large federal prison), federal civilian earnings comprise 22.1% of total income in the county.

The effects from lost federal jobs and income in these regions could be devastating. Some of these communities are places that have already faced historic disinvestment and in which there are few local employment opportunities that can match the quality of federal government jobs. These jobs are historically stable, good quality, union jobs that offer a pathway to the middle class, particularly for workers without a college education.6

Regions highly dependent on federal revenue will also suffer from a reduction in services and a loss of income

Beyond the harm to localities from reductions in the federal workforce, localities that are particularly reliant on federal government revenue and services will bear the consequences of Trump’s actions most acutely, though no locality will be spared from harm. For example, the Trump administration has announced or considered $23 billion in cuts to federal clean energy projects in nearly every state (CATF 2025) and $8 billion in cuts to colleges and universities that will impact every state’s economy (Bedekovics and Ragland 2025). Trump’s 2025 budget bill also made massive cuts to federal safety net programs that millions of low-income households rely on in order to finance tax cuts for the wealthiest households and corporations.

Funds from federal programs such as SNAP, Medicaid, and other social programs not only help struggling families make ends meet, they also comprise a significant share of a locality’s “economic base,” the amount of money circulating in that region, as shown by sociologist Robert Manduca in a recent working paper (2025). Indeed, an often-overlooked benefit of Medicaid coverage is its role as a source of income for low-income households (money they would have had to spend on medical care in the absence of Medicaid). For the bottom 20% of households in the U.S., Medicaid comprised 70% of their total money income, based on recent data from the Congressional Budget Office (Bivens, Wething, and Morrissey 2025). In fact, government transfers such as Social Security, Medicare, and Medicaid collectively made up 40% of the economic base of U.S. regions in 2022 (Manduca 2025). Substantial cuts to government social programs that support low-income households could reduce the economic base of these localities, at a scale equivalent, in many cases, to the loss of entire private industries in those areas.

Without deliberate intervention by state lawmakers to offset lost federal revenues, localities in every state face dire economic losses, but states particularly reliant on government transfers will suffer most. For instance, take Clay County, West Virginia, which is represented in Congress by Rep. Carol Miller (R-WV01), who voted in support of Trump’s budget bill (Miller 2025). Clay County’s poverty rate is more than double the national rate, and its per capita income is half the national amount (U.S. Census 2024a). Of the 10 U.S. counties that rely most on each of the largest federal social insurance programs (Medicare, Medicaid, SNAP, and Social Security) as a share of their economic base, Clay is the only county in the country to show up three times (see Table 4). Federal government transfers in the form of Medicare, SNAP, and Social Security payments comprise 57% of Clay County’s economic base, 20 times the share comprised by the earnings of every private industry in the county combined. Alaska, Arizona, Florida, Georgia, Kentucky, Tennessee, and West Virginia all have at least three counties that are ranked in the top 10 in the country for their reliance on a given social safety net program as a share of the county’s economic base (see Table 4).

Localities that have significant shares of federal workers and rely heavily on federal government transfers may face particularly significant consequences as a result of Trump’s attacks on the federal workforce and the Republican budget bill’s cuts to essential social safety net programs. For example, in Rio Arriba County, New Mexico, and Apache County, Arizona, federal government workers make up 16.1% and 12.0% of all workers in the county, respectively (EPI 2025b). At the same time, both counties are ranked in the top-10 counties most reliant on federal government transfers—Apache is #2 for Medicaid, and Rio Arriba is #10 for SNAP. In Apache County, federal government transfers account for three-quarters (76.9%) of the county’s economic base, and the earnings of federal government civilian workers account for 11.7%—the Navajo Nation Tribal Government is the county’s largest employer (NACOG 2023). Meanwhile, private earnings account for a mere 2.8% of the county’s economy. In Apache, Trump’s cuts to both the federal workforce and federal government programs mean that the federal government may be unable to fulfill its legal obligations to tribal communities (Brown 2025) that have faced decades of disinvestment and depressed economic outcomes resulting from historic land theft and forced assimilation. Apache County’s poverty rate of 31.2% (AZ Economics 2026) is nearly triple the national rate of 11.1% in 2023 (Shrider 2024).

Trump’s anti-immigrant crackdown and deportation agenda hurt localities with large immigrant populations

Trump has launched a campaign of terror against immigrant communities, communities of color, and those who stand with them. Last summer, Trump federalized local police and deployed thousands of federal troops to diverse cities with large immigrant populations (Kim 2025). Though Washington, D.C., may have experienced the most visible federal troop presence, a function of the district’s lack of statehood and the president’s unchecked authority to mobilize the National Guard there (Dallas 2025), Los Angeles was the first city Trump targeted after public opposition to aggressive immigration raids (Kim 2025). It was soon followed by Washington, D.C.; Memphis, Tennessee; Portland, Oregon; New Orleans, Louisiana; Minneapolis, Minnesota; and Portland, Maine.

These attacks are characteristic of an authoritarian playbook that includes forcing the leaders of diverse, opposition-led communities to bend to the strongman government’s will (McManus, Benson, and Herman 2024). Minneapolis, home to a large immigrant population, was subjected to an unprecedented immigration crackdown that drew widespread protests (Boone 2026). During “Operation Metro Surge,” as it was called, federal immigration enforcement officials made 4,000 arrests and killed two U.S. citizens. Though the true toll of this violent operation may never be fully quantified, initial economic data show clear cause for concern. A recent analysis estimated that Trump’s immigration crackdown has led to a 2.9% decline in consumer spending in Minnesota over a single month—the equivalent of the state’s economy losing $626 million (Rosenthal and Sojourner 2026). Relative to overall consumer spending, the food and accommodation sector (which employs a large share of immigrant workers) saw the most significant decline in January 2026—3.8% or a $46 million reduction in economic activity. Researchers also estimated that nearly 3% of workers in the Minneapolis-Saint Paul region were unable to work during the occupation, resulting in a loss of over $100 million in wages (Sojourner and Rosenthal 2026).

Trump’s deportation agenda will continue to destabilize local communities and result in job losses for immigrant and U.S.-born residents alike (Zipperer 2025). Though immigrants live in counties across the U.S., coastal urban areas tend to have the largest shares of foreign-born residents. Counties with the largest foreign-born populations include Miami-Dade, Florida; Queens, New York; Aleutians, Alaska; and Hudson, New Jersey (see Table 5). Counties with relatively large shares of immigrants may see particularly acute harms from aggressive immigration enforcement.

Communities face overlapping economic threats from attacks on federal workers, the social safety net, and immigrants, but state and local lawmakers can resist them.

The Trump administration’s attacks on the federal workforce, the social safety net, and immigrant communities are designed to exacerbate economic precarity in many communities that are already struggling (Bivens 2026). The implementation of Trump’s authoritarian agenda in the DMV region may be the first, clearest, and in some cases most direct manifestation of its harms, but other localities across the country—particularly those with large federal workforces, those that are heavily dependent on federal revenue and those with sizeable immigrant populations—are far from immune, and many will suffer as much, if not more, from this agenda.

While state and local leaders cannot stop federal attacks, they do have the power to resist Trump’s agenda by improving state labor standards (EPI 2026b), advancing protections for immigrant workers (Díaz and Whitaker 2026), investing in the public-sector workforce (Bivens and Shierholz 2026), and using progressive tax policies (Austin and Davis 2025) to stabilize funding for critical social programs and other investments that workers, families, and communities need.

Notes

1. Throughout this report, unless explicitly noted, the source for all employment rate data is the authors’ analysis of Current Population Survey data (EPI 2026a). We compare an average of calendar year 2025 with calendar year 2024 in order to have adequate sample sizes for the noted demographic groups.

2. Employment level by industry and sector data come from the authors’ analysis of the Bureau of Labor Statistics’ Current Employment Statistics (CES) State and Metro Area (SAE) data.

3. These numbers are calculated using monthly totals rather than annual averages. A quarterly comparison of 2025Q4 to 2024Q4 finds roughly the same results—employment fell by 52,600 jobs (13.9%). The quarterly analysis omits October in both years to maintain an apples-to-apples comparison, accounting for missing data due to the government shutdown that began in October 2025 and the subsequent lapse in Bureau of Labor Statistics funding.

4. The non-federal workforce includes private sector workers as well as state and local government employees.

5. These numbers are calculated using monthly totals rather than annual averages. Quarterly comparisons of 2025 Q4 to 2024 Q4 produce similar results—private sector employment fell by 0.1% in the DMV and grew by 0.7% nationally. The quarterly analysis follows the methodology outlined in note 2.

6. On average, federal workers with advanced degrees typically earn less in wages and total compensation than their private-sector counterparts. Federal workers without an advanced degree typically earn more than their private-sector counterparts and have access to retirement benefits that have become less common in the private sector (CBO 2024).

References

Austin, Sarah, and Carl Davis. 2025. The Wealth Proceeds Tax: A Simple Way for States to Tax the Wealthy. Institute on Taxation and Economic Policy, October 2025.

AZ Economics. 2026 “Apache County, Arizona.” U.S. Economic Research. Accessed April 2026.

Barrett, William P. 2025. “America’s Top 100 Charities: A Year of Pain After Trump Cuts.” Forbes, December 12, 2025.

Bedekovics, Gréta, and Will Ragland. 2025. Mapping Federal Funding Cuts to U.S. Colleges and Universities. Center for American Progress, July 2025.

Bivens, Josh. 2026. The Trump Administration’s Macroeconomic Agenda Harms Affordability and Raises Inequality. Economic Policy Institute, February 2026.

Bivens, Josh, and Heidi Shierholz. 2026. “You Can’t Starve the Public Sector to Excellence.” Working Economics Blog (Economic Policy Institute), February 27, 2026.

Bivens, Josh, Hilary Wething, and Monique Morrissey. 2025. Cutting Medicaid to Pay for Low Taxes on the Rich Is a Terrible Trade for American Families. Economic Policy Institute, February 2025.

Boone, Rebecca. 2026. “A Timeline of Trump’s Immigration Crackdown in Minnesota.” PBS Newshour, February 13, 2026.

Brookings Institution. 2026. “Active Residential For-Sale Listings,” DMV Monitor. Last updated February 18, 2026.

Brown, Alex. 2025. “For Indian Country, Federal Cuts Decimate Core Tribal Programs.” Stateline, March 4, 2025.

Bureau of Labor Statistics, Current Employment Statistics State and Metro Area (BLS-CES-SAE). Various years. Public data series accessed through the CES State and Metro Area Databases and through series reports. Accessed April 2026.

Bureau of Labor Statistics, Local Area Unemployment Statistics (BLS-LAUS). Various years. Data from the LAUS are available through the LAUS database and through series reports. Accessed April 2026.

Busette, Camille, and Samantha Elizondo. 2022. “Economic Disparities in the Washington, D.C. Metro Region Provide Opportunities for Policy Action.” Commentary, Brookings Institution, April 27, 2022.

Clean Air Task Force (CATF). 2025. “The High Cost of Retreat: Impacts of Department of Energy Project Cuts.” Clean Air Task Force, November 21, 2025.

Congressional Budget Office (CBO). 2024. Comparing the Compensation of Federal and Private-Sector Employees in 2022. Congressional Budget Office, April 2024.

Dallas, Kelsey. 2025. “The President’s Power to Deploy Troops Domestically: An Explainer.” SCOTUSblog, October 28, 2025.

D.C. Fiscal Policy Institute. 2026. “Congressional Interference Will Cost D.C. Nearly $700 Million in Local Revenue and Jeopardize Efforts to Reduce Child Poverty.” D.C. Fiscal Policy Institute, February 4, 2026.

Díaz, Marisa, and Mimi Whitaker. 2026. How States and Localities Can Strengthen Workplace Protections for Immigrant Workers. National Employment Law Project, January 2026.

Economic Policy Institute (EPI). 2025a. “Executive Order on ‘Exclusions from Federal Labor-Management Relations Programs.’” Federal Policy Watch (Economic Policy Institute), December 17, 2025.

Economic Policy Institute (EPI). 2025b. How Many Federal Employees Live in Your State? Economic Policy Institute.

Economic Policy Institute (EPI). 2025c. “New Resource Calculates How Many Federal Workers Live in Every State, County, and Congressional District” Economic Policy Institute (press release). March 3, 2025.

Economic Policy Institute (EPI). 2026a. Current Population Survey Extracts, Version 2026.3.11, https://microdata.epi.org.

Economic Policy Institute (EPI). 2026b. Holding the Line: State Solutions to the U.S. Worker Rights Crisis. Economic Policy Institute.

Economic Policy Institute (EPI). 2026c. “OPM Finalizes Regulation Enabling Firing Federal Employees for Political Reasons.” Federal Policy Watch (Economic Policy Institute), March 4, 2026.

Friesenhahn, Erik. 2025. “Nonprofit Organizations: State and Regional Employment Trends.” Monthly Labor Review (U.S. Bureau of Labor Statistics), March 2025. https://doi.org/10.21916/mlr.2025.6.

Gould, Elise. 2026. “Attacks on the federal workforce continue (down 18k jobs in March).” Bluesky, @elisegould.bluesky.social, April 3, 2026, 9:01 a.m.

Hadden Loh, Tracy, and Glencora Haskins. 2025. Consumer Spending and Visitor Demand in the Washington, D.C. Region Are Dropping. Brookings Institution, December 2025.

Human Rights Watch. 2026. “Sliding Towards Authoritarianism?” January 2026.

Kim, Juliana. 2025. “Trump Says National Guard Will Soon Go to New Orleans. Here’s the Latest.” NPR, December 3, 2025.

Koma, Alex. 2025. “Here’s How D.C. Solved the Billion-Dollar Budget Problem Congress Created.” WAMU, October 22, 2025.

Kozlov, Max, Jeff Tollefson, and Dan Garisto. 2026. “U.S. Science After a Year of Trump.” Nature 649 (January): 812–815.

Lynch, Teresa M., and Robert Manduca. 2024. “Beyond Local and Traded: Evidence for a Third Industry Market Area Type and Implications for Regional Economic Development.” Economic Development Quarterly 38, no. 3: 183–194, July 2024. 

Manduca, Robert. 2025. Financial and Transfer Income as Components of the Regional Economic Base. Washington Center for Equitable Growth, June 2025.

Markoff, Shira, and Connor Zielinski. 2026. Chronic Racial Inequality Holds Back Workers and Equitable Economic Growth. D.C. Fiscal Policy Institute, March 2026.

Maye, Adewale A., and Stevie Marvin. 2025. “Trump Attacks on Federal Agencies Have Steep Implications for Black Workers.” Working Economics Blog (Economic Policy Institute), April 10, 2025.

McManus, Allison, Robert Benson, and Dan Herman. 2024 “The Dangers of Project 2025: Global Lessons in Authoritarianism.” Center for American Progress, October 2024.

Miller, Carol. 2025. “Miller Votes to Send the One, Big, Beautiful Bill to President Trump’s Desk” (press release). Office of Congresswoman Carol Miller, West Virginia’s First District, July 3, 2025.

Montgomery, Mimi. 2025. “Trump Crackdown Is Affecting D.C.’s Image and Tourism Numbers.” Axios, August 29, 2025.

Northern Arizona Council of Governments (NACOG). 2023. “Business, Jobs, and Industry Highlights for Apache County.” Northern Arizona Council of Governments, November 20, 2023.

Partnership for Public Service. 2024. Beyond the Capital: The Federal Workforce Outside the D.C. Area. March 2024.

Poydock, Margaret. 2025. “How Trump Has Dismantled the Federal Workforce in His First 100 Days.” Working Economics Blog (Economic Policy Institute), May 23, 2025.

Rosenthal, Aaron, and Aaron Sojourner. 2026. The Economic Impact of Operation Metro Surge in January 2026: A Synthetic Difference-in-Differences Analysis. North Star Policy Action, February 2026.

Sachs, Andrea, and Federica Cocco. 2025. “D.C. Tourism Was Already Struggling. Then the National Guard Arrived.” Washington Post, August 29, 2025.

Shrider, Emily A. 2024. Poverty in the United States: 2023. United States Census Bureau, Report Number P60-283, September 2024.

Singh, Kanishka. 2026. “Trump Signs Executive Order Asking Federal Contractors to Eliminate DEI.” Reuters, March 26, 2026.

Sojourner, Aaron, and Aaron Rosenthal. 2026. Impact of DHS Agent Surge on Minneapolis-Saint Paul Metro Area Labor Outcomes. North Star Policy Action, February 2026.

Tomasko, Laura, Hannah Martin, Katie Fallon, Mirae Kim, Lewis Faulk, and Elizabeth T. Boris. 2025. How Government Funding Disruptions Affected Nonprofits in Early 2025: Nationally Representative Findings from the Nonprofit Trends and Impacts Study. Urban Institute, October 2025.

U.S. Census Bureau. 2024a. “American Community Survey 5-Year Estimates: Retrieved from Census Reporter Profile Page for Clay County, WV.” Accessed April 14, 2026.

U.S. Census Bureau. 2024b. “U.S. Foreign-Born Population: 2018–2022 American Community Survey, 5 Year-Estimates (Table B05006).” Accessed April 14, 2026.

Zielinski, Connor. 2025. “Inequality Remained Extreme in 2024 as D.C. Backslid on Poverty.” DCFPI Blog (D.C. Fiscal Policy Institute), September 15, 2025.

Zipperer, Ben. 2025. Trump’s Deportation Agenda Will Destroy Millions of Jobs: Both Immigrants and U.S.-Born Workers Would Suffer Lob losses, Particularly in Construction and Child Care. Economic Policy Institute, July 2025.

Key takeaways:

• Income inequality has skyrocketed since 1979 because of intentional policy choices that suppressed wages for typical families to accelerate income growth at the top.
• Middle-class household incomes would be roughly $30,000 higher today if their incomes had simply kept pace with average income growth since 1979.
• Recognizing that today’s affordability problems are overwhelmingly inequality problems is the key to constructing the right policy solutions.
  • As a start, protecting workers’ right to organize unions, fostering long periods of very low unemployment, and keeping minimum wages high will help typical families claim their fair share of income growth.

When most people—including policymakers—complain about a lack of affordability, they think of prices being too high. But affordability is the outcome of a race between prices and incomes. After all, goods and services were a lot cheaper 90 years ago during the Great Depression, but we all know that nearly everybody is richer today than their peers back then. Bringing incomes into the affordability picture makes for better understanding and better policy.

New Congressional Budget Office (CBO) data show that rising income inequality is the main reason that affordability feels out of reach for too many U.S. families. For more than four decades, most of the income growth in the U.S. economy has been funneled to those at the very top, leaving typical families with far less than their proportionate share of the economy’s gains. If middle-class household incomes had simply kept pace with average income growth since 1979, their pay would be roughly $30,000 higher today. If we account for taxes and government transfers, incomes would still be $19,000 higher today for these middle-class households. Think of this gap as an “inequality tax”: the amount that rising inequality has cost the typical U.S. family. Life would be much more affordable for these families today if they hadn’t been hit by this inequality tax.

This inequality is not the result of competitive markets fairly rewarding people’s skills and hard work. Instead, it resulted from an intentional policy campaign of wage suppression. Labor markets in capitalist economies are inherently tilted toward employers. Fair pay and broadly shared prosperity only materialize when policy affirmatively aims to correct this power imbalance. This can happen—policy choices that bolstered workers’ leverage and bargaining power in labor markets kept growth fast and equal for decades following World War II, for example. But lawmakers rolled back these policies at the behest of capital owners and corporate managers.  

The latest CBO inequality data make the scale of this policy shift visible. Figure A shows the distribution of market income growth for non-elderly households by income group since 1979. We use market income to look at pre-tax, pre-transfer outcomes to assess the equality of outcomes generated by markets. We isolate non-elderly incomes because older households tend to have very low market incomes and these older households have grown as a share over time—so we don’t want any poor performance of market incomes documented here to simply be the outcome of natural population aging. Among this non-elderly group, the top 1% have captured a hugely disproportionate share of market income growth. Between 1979 and 2022, market income for the top 1% grew 277% (from $784,573 to $2.958 million) compared with just 26% growth for the middle fifth of households (from $76,359 to $96,335). This lopsided growth is the root of America’s affordability problem. Even as the economy grew and average incomes rose, typical families fell further behind those at the top who captured most of income growth.

Figure B shows the inequality tax over time, plotting actual market income for the middle fifth of households against what their income would have been if it had grown at the same rate as overall average income. By 2022, the inequality tax reached $30,676 per household, meaning middle-class families are forgoing that much income each year because of rising inequality. The gap has widened steadily since 1979, a sign that the affordability problem facing typical families is not a recent development but rather the cumulative result of decades of policies that have shifted income upward.

Because market income for middle-class families is driven predominantly by labor income, the inequality tax in Figure B reflects the consequences of decades of wage suppression. Of course, the United States has a system of taxes and means-tested transfers (safety net programs like Medicaid and food stamps, for example) that leads to post-tax and transfer income being more equal than market income in any given year. But the tax and transfer system did not ramp up in importance as market income inequality grew after 1979, and even after accounting for its effects, inequality increased significantly. Figure C shows that even when using post-tax and transfer income, the inequality tax remained substantial at $19,320 per middle fifth household in 2022.

Figure D shows who loses and who gains from rising inequality. While the inequality tax cost middle-income families $19,320 in 2022, families at the very top benefited enormously. The 96th to 99th percentiles gained about $88,000 from rising inequality, while the top 1% gained $1.1 million in 2022.

Perhaps surprisingly, the lowest quintile also slightly gained. For this group, lower taxes and higher levels of means-tested benefits counterbalanced a significant loss of market income due to inequality (their market income inequality tax would be around $4,000). The greater fiscal transfers to the bottom fifth are an under-recognized policy achievement of recent decades. It is also an achievement under constant threat, with the latest one being the large cuts to Medicaid and food stamps coming because of the Republican tax and spending bill that passed in 2025.

Figure D

U.S. families’ feeling that life is less affordable than it should be is grounded in objective realities about how the economy has failed them. And it’s understandable why so many of these families think about prices, which they see as the final barrier between them and being able to obtain what they need for a good life, whether the price is for a gallon of gas or a loaf of bread or a monthly health insurance premium.

But the forces causing this affordability crunch are far larger than any given set of prices. Instead, they are mostly the forces that led to rising income inequality by intentionally suppressing the power of workers in labor markets. This wage suppression meant that middle-class income growth was never going to outpace inflation consistently enough to ensure steadily improving economic security.

In short, today’s affordability problems are overwhelmingly inequality problems. Recognizing this fact is the key to constructing the right policy solutions. As a start, protecting workers’ right to organize unions, fostering long periods of very low unemployment, and keeping minimum wages high will help typical families claim their fair share of income growth.

Once the Assembly’s bill reached her desk, Virginia Governor Abigail Spanberger had the opportunity to strengthen it or sign it into law. Instead, Governor Spanberger put forward her own heavily amended version of the bill last week, weakening the proposed collective bargaining framework so extensively that her version would lock Virginia into an unstable, ineffective system in which collective bargaining would remain merely “optional” and where employers and workers would remain perpetually uncertain about what rules might apply to them from year to year depending on what appointees of future governors might decide. The governor’s amended bill will now be considered by the Assembly in its one-day veto session this week. Below, we analyze some of the many substantive differences between the Assembly bill and the governor’s bill, as well as the likely economic impacts.

Virginia’s ability to reap economic benefits of collective bargaining will depend on strength of any new law 

EPI has previously analyzed the economic importance of strengthening collective bargaining rights in Virginia, where the state’s long-standing ban on public-sector collective bargaining has suppressed workers’ wages and union membership. Our most recent analysis showed that state and local government employees in Virginia earn, on average, 26.7% less than private-sector peers with similar education and experience. Virginia’s public-sector pay gap is the second highest in the nation while its public-sector unionization rate (at 14.1%) is the fourth lowest, outcomes that our 50-state data show are closely correlated with the strength or weakness of a state’s collective bargaining laws. Recent EPI research further shows that beyond helping states narrow public-sector pay gaps and improve conditions for directly affected workers and the public they serve, stronger collective bargaining laws are highly correlated with widely shared benefits including higher wages, more equitable state economies, and healthier democracies.

State public-sector collective bargaining laws are complex and highly variable. In our prior research, we grouped state laws into three categories based on assessment of whether collective bargaining is:

1) illegal: state law prohibits public employers and unionized workers from entering into collective bargaining agreements.

2) permitted: collective bargaining is “optional” insofar as it is allowed in certain jurisdictions but occurs only if both parties agree to engage in it; whether parties are required to negotiate over wages or other terms and conditions of work is not defined in state law.

3) required: once a group of workers has gone through the process of forming a legally certified union, employers have a “duty to bargain” over pay (at a minimum), and there is a specified process for both parties to follow in negotiating to reach agreements that result in a legally binding collective bargaining agreement.

Currently, Virginia’s collective bargaining law straddles the first two categories: collective bargaining is illegal for units of state government in Virginia, but the state has recently (since 2021) permitted local governments to enact their own collective bargaining systems.

As shown in Table 1, data show that average public-sector pay gaps vary across states depending on the strength of their collective bargaining laws. Virginia’s large public-sector pay gap is an extreme outlier, currently exceeding even the average among all states with the weakest laws (where collective bargaining is illegal).

Table 1

Governor’s bill deletes essential elements of a strong collective bargaining system

Virginia lawmakers now face a choice between two dramatically different visions for collective bargaining: an Assembly bill that would move Virginia into the stronger “required” category, and the governor’s substitute bill that would lock Virginia into the weaker “permitted” category.

The Assembly’s collective bargaining bill includes clear language recognizing the rights of public employees to choose whether to unionize; setting forth consistent rules, timelines, and processes for workers and employers to follow for union elections and contract negotiations; and establishing a new, independent state labor board to support and administer the new framework across all covered state and local jurisdictions. The Assembly bill also has limitations—for example, it falls short of equalizing rights of all public employees by excluding most higher education workers—but it does provide a clear, strong roadmap for implementing a robust, effective collective bargaining system modeled on proven best practices from other states to serve as a solid foundation for Virginia to build on.

The governor’s amended version of the bill weakens all these key elements of the statutory framework proposed by the Assembly and the proposed labor board’s role in enforcing a clear statutory framework. In many important sections of the bill, the governor’s amendments include changing the word “shall” to the word “may”—a critical change that converts entire sections of statutory rules and requirements into mere suggestions, rather than legally enforceable expectations applying equally to all workers and employers. Another repeated pattern throughout the governor’s bill is the deletion and replacement of a host of detailed statutory guidelines with directives that such guidelines should instead be “determined by the board” or that the board “shall adopt regulations” to answer critical questions about workers’ rights and employer obligations in the unionization and collective bargaining process.

Table 2 summarizes just a few of the key differences between the Assembly bill and the governor’s bill. The Assembly bill proposes a framework similar to those successfully implemented in many other states, including statutory language defining the topics parties are required to negotiate over, clear rules for union elections and negotiations procedures, and binding arbitration to ensure that negotiations will eventually conclude with a contract settlement. These standard elements are essential to a strong, effective collective bargaining system that enables workers to have an equal voice at the bargaining table—but the governor’s bill removes all of these elements.

Table 2

The stark contrast between the scope of bargaining as defined in the Assembly bill versus the governor’s bill is especially salient. The strength of any collective bargaining system depends on clear, consistent rules for which topics unions and employers must be willing to discuss in negotiations and which subjects must (or may) legally be incorporated into a collective bargaining agreement. When subjects of bargaining are “permitted” but not required, parties may try to pick and choose what to discuss, one party may refuse to negotiate over matters that are important to the other, and non-mandatory topics are generally not considered as part of arbitration procedures and often therefore never get included in final contracts. Alarmingly, the governor’s bill leaves the scope of bargaining completely undetermined, giving the labor board discretion to determine when and whether it is “appropriate” to require parties to negotiate even over topics as basic as wages.

This change alone would lead us to categorize the governor’s bill as a model for “permitting” (but not requiring) collective bargaining, making it unlikely to significantly narrow Virginia’s public-sector pay gap or achieve other important economic outcomes associated with stronger collective bargaining laws. As shown above in Table 1, workers in states where collective bargaining is “permitted” but not required continue to experience pay gaps far above average (and far greater than in most states with strong collective bargaining laws).

At a minimum, any collective bargaining legislation in Virginia should be measured against the status quo and whether it represents progress toward achieving full and equal collective bargaining for all workers. Here, the governor’s bill falls woefully short and could even represent a step backwards for some workers. At best, the governor’s bill would lock Virginia into a system where collective bargaining becomes “permitted” for more workers than are currently covered by local collective bargaining ordinances. At worst—depending on rules yet to be determined by a future labor board—the governor’s bill could erode existing rights of some local government workers who might find themselves in the future governed by weaker state collective bargaining procedures than those they’ve been able to win at the local level since 2021.

The governor’s bill includes additional significant changes too numerous to cover in detail here. Among other notable amendments that weaken the proposed framework for collective bargaining or its implementation, the governor’s bill:

• delays application of the new law to January 1, 2030, for local governments
• excludes Virginia Port Authority workers from coverage
• maintains exclusion of most higher education workers from coverage (including faculty, professional staff, researchers, graduate assistants, etc.) and specifies that this exclusion extends to health care workers at university hospitals and health care facilities

In the short term, the numerous exclusions, delays, and weaknesses introduced or expanded by the governor’s bill would leave Virginia workers with a limited patchwork of different rights covering different localities and occupations. In the long term, this would create permanent uncertainty about whether and when various rules covering particular groups of workers might be changed by the labor board.

It’s clear that the fight to ensure every employee in Virginia has a voice on the job has only just begun. Collective bargaining is a fundamental right, not intended to be left up to the whims of individual local elected officials or to-be-determined future members of a new state labor board. Collective bargaining is both a labor issue and a civil rights issue, as NAACP Virginia State Conference leaders recently pointed out. Nowhere is this clearer than in Virginia, where the denial of collective bargaining rights to generations of workers is directly rooted in a history of white supremacist backlash against Black worker organizing. Virginia lawmakers still have a chance to enact meaningful collective bargaining legislation in 2026, but doing so will first require rejecting the damaging amendments put forward by Governor Spanberger.