Imagine union membership tripling in the United States. It may sound radical—if you’ve forgotten history. In fact, more than 1 in 3 private-sector workers belonged to a union in the 1950s. The results? Wages grew in tandem with the economy. The middle class thrived. Black-white wage gaps shrank. Broadly shared economic growth was a reality, not an aspiration. That’s because when workers have bargaining power, they win better wages, benefits, and working conditions. This report shines a light on what we stand to win if we rebuild union power.

Over the last four decades, big corporations and the billionaires who run them have waged a relentless campaign against unions. And they have largely succeeded in reshaping the U.S. economy. By making it harder and harder for workers to organize and bargain collectively, the rich seized more and more income and wealth, destroying the U.S. middle class. Now the wealth of the richest Americans has exploded: The richest 0.1% own more than five times the combined wealth of the entire bottom half of the country.

And yet, workers haven’t given up. In 2025, unionization ticked upward. Public approval of unions has reached some of its highest levels in decades, and more than 50 million nonunion workers say they’d join a union tomorrow if they could. That’s because they know what unions deliver. In an economy that has been rigged against working people for decades, unions serve as a counterweight to corporate power—reducing inequality and building the kind of middle class that underpins a strong and inclusive economy.

It will take serious policy change to reverse nearly 50 years of deliberate attacks on working people and their institutions. It will require that politicians stand up to the superrich and corporate interests. It will require that workers continue to build power. But, as this report shows, we have much to gain from stronger unions. An organized and empowered workforce has powerful and far-reaching economic benefits.

Nearly four decades ago, I helped found the Economic Policy Institute because working people needed a voice in the economic debates that shape their lives. This report is exactly the work we envisioned: rigorous research that puts workers at the center of economic policy, and that arms all of us with the facts to fight for them. At a time when our economy is held in relatively few hands, we need this work—and we need unions—more than ever. 

Robert Reich
Professor, writer, and former Secretary of Labor

Executive summary

Union membership in the U.S. ticked up in 2025, breaking a decades-long trend of declining unionization. But today’s unionization rate doesn’t reflect the tens of millions of workers who want a union but can’t get one. This report examines what we stand to gain if we triple current union membership to 30%—restoring it to 1950s levels, when union strength delivered rising wages, narrowing racial wage gaps, and a thriving middle class.

Tripling union membership would:

• Deliver a 14.5% raise for the median worker—amounting to more than $7,700 annually, or nearly $270,000 over a 35-year career. These life-changing increases would benefit union and nonunion workers alike.
• Shift $1.2 trillion to workers annually. This would reverse a third of the increase in inequality experienced since 1979.
• Significantly narrow racial wage gaps. Because unions tend to boost wages more for Black and Hispanic workers than for white workers, tripling union membership would close racial wage gaps by more than one-third.
• Boost the number of people with health insurance. Since unions increase other forms of compensation, like health insurance benefits, the number of nonelderly people without health insurance would fall by about 25%. Unions further reduce uninsured rates by advocating for increased public benefits like Medicaid.
• Strengthen communities. States with high union density invest more in public education, have higher unemployment insurance recipiency rates, and have all adopted Medicaid expansion.
• Protect democracy. Unions boost voter turnout, equip workers with civic skills, and actively defend voting rights. States with high union density have passed far fewer voter restriction bills than low-density states.

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Roadmap for tripling union density

Reversing decades of political neglect that has stealthily undermined workers’ rights to unions and collective bargaining will require comprehensive reform that weaves together tested approaches with bold new ideas, at both federal and state levels.

Two bills with bipartisan support could help restore collective bargaining

• The Protecting the Right to Organize Act would restore private-sector workers’ right to organize and bargain collectively. It would streamline the union formation process, establish penalties for labor law violations, override so-called “right-to-work” laws, and ban “captive audience” meetings.
• The Public Service Freedom to Negotiate Act would be the first federal law that guarantees all public-sector workers at the federal, state, and local levels the right to organize and collectively bargain.

Two bold new proposals could expand the benefits of collective bargaining and help tackle the affordability crisis

• Guaranteed annual raises for newly unionized workers. Legislation providing that newly unionized workers can use arbitration to achieve a first contract (if an employer fails to negotiate in good faith) should set a minimum standard that such contracts include a cost-of-living adjustment (COLA). For the typical worker, a 3% COLA means roughly $2,000 extra a year.
• Default collective bargaining when CEO-to-worker pay ratios exceed 100:1. Declining unionization and the stratospheric rise in CEO pay are deeply connected. Strengthening the bargaining power of workers in severely imbalanced companies would enable them to capture a larger share of the wealth their work creates.

States can remove anti-union laws and protect collective bargaining

Removing so-called “right-to-work” laws and restrictions on public-sector bargaining alone would increase union density nationally from 9.9% to 14.4%. Beyond removing those unionization barriers, states can also:

• Extend collective bargaining rights to workers currently excluded from federal law (in-home child care, home health care, agricultural, and gig workers);
• Protect workers’ right to refuse mandatory, anti-union “captive audience” meetings; and
• Extend unemployment insurance eligibility to workers on strike.

Introduction

In 2025, 14.7 million workers—10% of all wage and salary workers—were union members, an increase from 9.9% in 2024.1 Though small, the increase marks a departure from prior years’ downward trend in union density and coincides with record high public favorability of unions.2

This report examines what the U.S. might look like if union membership were to triple to 30%, restoring it to roughly its 1950s peak. We analyze the economic, social, and democratic impacts of this increase; examine the potential impact on state union density rates if all states were to remove anti-union policies; and offer policy recommendations to expand union membership.

While tripling union membership is an ambitious goal, it is fully consistent with workers’ own demand for unions. Recent survey data show that 43% of nonunion workers would vote to unionize if given the opportunity—the equivalent of about 56 million wage and salary workers (Ahlquist, Grumbach, and Kochan 2024; McNicholas, Poydock, and Shierholz 2026). If all these workers unionized, union density would rise from 10% to 48.7%—well above the 30% goal we examine in this paper.

Union decline, wage suppression, and affordability

As union membership has declined, workers’ wages have been suppressed and inequality has skyrocketed. The gap between typical workers’ pay and economy-wide productivity is at a historic high.3 Since 1979, productivity has grown 2.7 times as much as pay for typical workers (Figure A). This divergence reflects both rising wage inequality—high earners experiencing much stronger wage growth than typical workers—and a shrinking share of the economy’s income going to workers overall. Between 1979 and 2023, real (inflation-adjusted) earnings for the top 0.1% grew 354% (from $618,000 to $2.8 million), while earnings for the bottom 90% of households grew just 44% (from $30,000 to $43,000) (EPI 2026a). And workers are now taking home a historically low share of corporate-sector income—meaning shareholders and other capital owners are capturing more than ever before (EPI 2026b).

Figure A

Inequality has grown since 1979 because of intentional policy choices that suppressed wages for typical workers to accelerate income growth at the top. If pay for typical workers had kept pace with productivity over the past nearly five decades, their paychecks today would be more than 40% larger (EPI 2026c). Though affordability pressures are often framed as a problem of high prices, the real problem is this wage shortfall—and reversing that shortfall must be central to any serious affordability agenda. Collective bargaining is the most effective mechanism workers have to raise their wages and secure their fair share of economic growth. Expanding union membership and collective bargaining is central to addressing the affordability squeeze.

Unions raise wages for all workers

One of the most well-studied benefits of unions is the ability of collective bargaining to raise pay—resulting in a “union wage premium.”4 Historically, that premium has fluctuated around 15–20% (EPI 2026d). Unions also reduce inequality by compressing the wage distribution within firms, with the largest benefits going to workers at the bottom and middle. This is one reason the union wage premium is typically larger for those with less education, and for Black and Hispanic workers relative to white workers (Bivens et al. 2023).

Less appreciated is that unions also boost wages for nonunion workers. Higher wages at unionized firms make those jobs more attractive to nonunion workers, indirectly pressuring nonunion firms to raise wages to keep their workers. Nonunion firms may also raise wages to avoid unionization, especially when union density is already high in the relevant sectors and occupations.

Finally, unions also advocate for progressive changes in the tax and benefit system—indirectly raising pre-tax pay for low- and middle-wage workers. This happens in two main ways: First, when taxes on top incomes are higher, corporate executives have less incentive to maximize their own income at the expense of workers’ wages.5 Second, more generous social benefits like SNAP and Medicaid increase the bargaining power of lower-paid workers by making them less economically vulnerable and better able to reject low-quality jobs (Bivens 2026).6

These “spillover” effects of unions on the nonunion sector are significant and increase when union density is high. Rosenfeld, Denice, and Laird (2016) and Farber et al. (2021) find strong evidence that unions raise the wages of nonunion workers. Consistent with this, Fortin, Lemieux, and Lloyd (2021) estimate that between 1979 and 2017, declining unionization was responsible for 37% of the increase in inequality between the 90th and 50th percentiles of male workers—and more than half of that impact occurred because, as unions weakened, nonunion employers faced less pressure to offer higher wages.

Tripling union density would shift $1.2 trillion a year to working people

Our analysis of the relationship between union density and state median wages finds that for every 10 percentage point difference in union density, real median wages are about 7.2% higher.7 If we tripled union density from 10% to 30%, the real median wage for all workers (including both union and nonunion workers) would rise from $25.67 in 2025 to $29.39 per hour—a 14.5% increase.8 A full-time, full-year worker earning that wage would see annual pay rise by more than $7,700.

To put this into perspective, consider the substantial growth in the gap between pay and productivity between 1979 and 2025. A full-time, full-year worker at the 2025 median wage was paid about $53,400 per year—but would have earned about $76,400 had their pay kept pace with productivity growth (EPI 2026e). Through direct wage increases for union members and unionization’s spillover effects on nonunion workers, tripling union density would close roughly one-third of the productivity-pay gap, increasing annual pay to $61,100.

To contextualize the gain in another way, consider that the median annual cost of a mortgage in the U.S. is $18,252. An additional $7,700 per year would cover more than 40% of that cost.9

Perhaps more strikingly, consider that an extra $7,700 a year adds up to nearly $270,000 (in today’s dollars) over the course of a 35-year career—a life-changing increase for a working family. Adjusting the USDA’s latest estimate of the cost of raising a child to 2025 dollars yields a current cost of roughly $317,000 to raise a child from birth through age 17, including food, housing, transportation, health care, clothing, child care, education, and other expenses (USDA 2017). The additional $270,000 in career earnings that a typical worker would receive if union density were tripled would cover 85% of that cost.

Or, according to the College Board, the average annual cost of attending a four-year in-state public college, including room and board, is about $31,000 (Ma, Pender, and Hu 2025). Over four years, that comes to $124,000 per student—so the additional $270,000 in career earnings would more than cover the cost of sending two children to college.

Yet another way to show how transformational these effects would be for the U.S. economy and the economic security of typical families: Assuming the 14.5% wage boost we estimate from a tripling of union density applies to the bottom 80% of the U.S. workforce, this would raise these workers’ combined pay each year by $1.2 trillion.10 

Several useful reference points help illustrate the scale of this $1.2 trillion increase in workers’ annual pay. First, the increase would be nearly three times as large as the $430 billion U.S. families received in “COVID checks”—and unlike those one-time checks, these gains would be permanent and recurring.11 Second, the $1.2 trillion that tripling union density would shift to workers slightly exceeds the Pentagon’s 2025 budget—a redistribution of income on a scale comparable to the entirety of the U.S. military-industrial complex.12 Third and most revealingly, this increase would claw back a full third of the increase in income inequality since 1979. Between 1979 and 2022, the share of market income going to the richest 20% of households rose by 12.0 percentage points (with nearly all of that increase—10.1 percentage points—accruing to the richest 1%). A $1.2 trillion increase in the incomes of the bottom 80% of households would reverse a third of that shift, 4.0 of the 12.0 percentage points.13

Our estimates likely underestimate future gains

It’s worth noting that while our estimates show large wage gains to workers from tripling union density, they are likely being significantly held down by the fact that union density in the U.S. is starting from such a low level (10%). Our estimates therefore likely understate the wage gains workers will experience once the labor market reaches a higher level of union density. Fortin, Lemieux, and Lloyd (2021) find that the wage payoff to union density is much larger where density is already high, and this shows up clearly in our analysis as well: Below 15% union density, a one percentage point increase in density is associated with just a 0.2% increase in the median wage; above 15%, the median wage increases by 0.9%—a wage response more than four times as large (see Figure B).14

The economic intuition behind this 15% threshold is that a minimum scale of unionization is needed for collectively bargained wages to exert a strong influence on pay scales—both union and nonunion—throughout the broader economy. While every additional percentage point of unionization gives another 1% of workers the union pay premium, it has a more limited effect on wage-setting throughout the broader labor market until overall union density reaches around 15%.

Today’s typical state has a union density of about 10%, which means the wage gains from each additional percentage point of unionization—while still significant—are muted relative to the gains that occur once union density exceeds 15%. In essence, the policy assault on unions in recent decades has pushed density so low that we need a 50% increase—from 10% to 15% union density—just to start realizing the “normal” gains unions can bring to a high-road economy. Raising density from 10% to 30% would carry the labor market across that 15% threshold and well into the higher-density regime, where each additional percentage point increase in unionization delivers substantially larger gains for the median worker. This is why a transformational policy effort is needed: We must rebuild union density from the depressed levels created by decades of political neglect to the point where the full wage benefits of widespread collective bargaining can be realized.

Unions reduce racial wage gaps

Because unions increase wages for Black and Hispanic workers more than for white workers, unions reduce racial wage gaps. And this dynamic is not new—research shows that the union premium was already higher for Black workers than for white workers by the mid-20th century, meaning that the spread of unionization in that era was one of the country’s greatest forces for racial justice (Farber et al. 2021; Bivens et al. 2023). But with the decline in unionization over the past 45 years, racial wage gaps have widened and are now substantially worse than they were in 1979—damage that restoring union power would more than reverse. In 2025, the median Black or Hispanic worker earned 76.5% of the median white worker wage—a wage gap of 23.5%. Tripling union density would close more than one-third of that gap, reducing it to 14.6%.15

Unions boost benefits, not just pay

Unions also increase other forms of compensation, like health insurance benefits. In 2025, 95% of union workers had employer-sponsored health insurance, relative to 71% of nonunion workers. In addition, as discussed later, unions further reduce uninsured rates by advocating for increased public benefits like Medicaid. Figure C shows that nonelderly uninsurance rates are substantially lower in states with higher union density. To do this analysis, we divided the 50 U.S. states plus the District of Columbia into three equally sized groups based on their current (2023–2025) level of union density.16 Most low-union-density states have double-digit uninsured rates, but these rates typically fall to the single digits in medium- and high-union-density states. If union density tripled and all states were high-density states, the national nonelderly uninsured rate would fall by about a quarter, from 9.8% to 7.3%.

Figure C

Unions benefit communities

Unions don’t just improve workers’ pay and benefits—they give workers a voice in shaping the social fabric of their communities, lifting standards for union and nonunion workers alike. The data reveal a strong correlation between higher levels of unionization and a range of economic and personal well-being measures. When more workers are in unions, states have more equitable economic and social structures (McNicholas et al. 2025). Meanwhile, states with anti-union policies have lower union density and consistently worse outcomes across these measures.

Economic well-being

We first examine economic well-being—broadly defined as working people having the means to support themselves—using two indicators: the gap between productivity and pay, and unemployment insurance recipiency rates.

As discussed earlier, there has been a growing gap since 1979 between productivity—the value of the output generated by a worker in the U.S. economy in an hour of work, on average—and typical workers’ hourly compensation. Far from accidental, this divergence stems from deliberate policy choices in the U.S. beginning around 1980 that allowed the gains from economic growth to be increasingly captured by the highest earners, shareholders, and other capital owners—rather than being broadly shared across low-, middle-, and high-income households (Shierholz 2024).

The degree to which productivity gains have translated into higher pay for typical workers varies widely across states. Figure D shows that in states with smaller declines in unionization since 1979, a larger share of productivity gains translated into higher pay for typical workers. In other words, in places where unions remained stronger, it wasn’t just those with high incomes and wealth who benefited from economic growth—working people, both unionized and nonunionized, saw a bigger share of the gains.

Figure D

Unemployment insurance (UI) recipiency rates also offer insight into economic well-being. When a worker is laid off and their household income falls, unemployment insurance supports them and their family until they find another job. UI is a joint federal-state program that relies on state UI systems to effectively deliver benefits to unemployed workers. States differ in their rules and approaches under the federal UI framework, leading to wide variation in the share of unemployed workers receiving UI benefits (the UI recipiency rate).

Studies show a strong correlation between higher UI recipiency rates and high union density (Clegg et al. 2022); Figure E illustrates this strong positive relationship. In recent years, the average UI recipiency rate in high-union-density states was 36%, double the 18% rate in low-union-density states.

Unions fight to increase UI eligibility, ease of access, benefit levels, and benefit duration—to the benefit of all workers, union and nonunion (Hertel-Fernandez and Gould-Werth 2020). The strong correlation between union density and state UI recipiency rates suggests that expanding unionization by removing anti-union policies would result in higher UI recipiency rates.

Figure E

Personal health and well-being

Next we examine personal health and well-being—which we define as an individual’s physical and mental health—using one indicator, Medicaid expansion.

As we noted earlier, almost all union workers (95%) have access to health insurance, and uninsured rates are lower in high-union-density states. To show how unions influence health care coverage beyond explicitly bargained workplace plans, we examine whether a state has expanded Medicaid under the Affordable Care Act to broaden eligibility. The Medicaid public insurance program provides critical health coverage to families and individuals with low incomes. Research has found that Medicaid expansion has expanded access to health care; improved health outcomes, including fewer premature deaths; lowered uncompensated costs; bolstered financial security; and boosted economic mobility (CBPP 2020). While the Medicaid program has broad federal guidelines, it is administered by states—and a 2012 Supreme Court decision gave them the power to decide on eligibility and expansion. Since 2014, 40 states plus the District of Columbia have adopted Medicaid expansion; 10 states have not (Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming).

Figure F shows a stark divide between high- and low-union-density states in terms of Medicaid expansion. All 17 high-union-density states have expanded Medicaid. Out of 17 medium-union-density states, 14 have adopted Medicaid expansion (Alabama, Kansas, and Wisconsin are the only medium-union-density states that have not adopted expansion). Just 10 out of 17 low-union-density states have adopted Medicaid expansion (Florida, Georgia, Mississippi, South Carolina, Tennessee, Texas, and Wyoming are the low-union-density states that have not adopted expansion).

There is a strong correlation between union density and Medicaid expansion. If states removed anti-union policies and became high-union-density states, they would be joining a group of states in which Medicaid expansion is currently universal, potentially helping to close the Medicaid coverage gap that currently leaves 1.5 million adults uninsured (Zhang 2026).

Figure F

Spending on public education

Union density also intersects with public education investment. Investment in public education helped make the U.S. the richest country in the world in the 20th century. The benefits of universal education are many—including a more productive workforce, and a more informed and engaged democratic society equipped to think critically. Unions play a key role in negotiating public spending on education. At the school district and state level, education unions advocate for increased funds for schools. 

We can measure the relationship between union density and public education investment by looking at states’ level of per-pupil spending. Adequate levels of per-pupil spending are crucial to maintaining quality education; low per-pupil spending limits the support students receive toward achieving their learning goals and makes it harder for districts to retain teachers and staff by offering competitive salaries or benefits. Increased per-pupil funding pays off for students. Research has consistently shown that increased funding for schools improves educational attainment, student achievement, and economic outcomes in adulthood (Jackson and Mackevicius 2023). In one study, researchers examined the impact of school finance reforms between 1972 and 2010 and found that a 10% increase in school spending for 12 years leads to increased high school graduation rates, 7% higher wages, and 10% higher family incomes in adulthood for children from districts that saw the spending increase (Jackson, Johnson, and Persico 2016).

Figure G shows that states with higher rates of unionization spend substantially more per pupil on education—demonstrating the impact of union advocacy on education investment and building a more educated society.

Figure G

Voting rights and democratic participation

Many states disproportionately disenfranchise people of color (Johnson and Feldman 2020), and the number of voter suppression laws enacted across the country is high and rising. These restrictions threaten democratic participation and the stability of our democracy.

Unions strengthen democracy by encouraging civic engagement and helping workers become informed voters. Unions communicate with their members about issues and candidates to make sure workers have the information they need when they go to the polls. And as democratic institutions where members elect leaders and ratify contracts, unions serve as “schools of democracy,” equipping workers with civic skills that carry over to public life (Andrias and Hertel-Fernandez 2026). More broadly, because many organizations that shape policy represent elite or corporate interests, unions are a countervailing force, bringing working people’s voices into legislative debates and building coalitions that can win against well-resourced opposition.

Research shows that these effects translate into greater political participation. Union members are more likely to vote than the general public, and voter turnout is higher in states with greater unionization (EPI 2021). Conversely, turnout is lower in states with “right-to-work” (RTW) laws, which weaken unions and in turn the civic engagement they foster. Feigenbaum, Hertel-Fernandez, and Williamson (2018) found that RTW laws reduced presidential election turnout by 2%, a substantial effect given the narrow margins that often decide presidential elections.

We build on this evidence by examining the relationship between union strength and laws that restrict voting. Figure H shows that there is a strong correlation between union density and voter suppression legislation. A large majority of low- and medium-union-density states passed at least one voter restriction bill between 2023 and 2025, while a large majority of high-union-density states passed none. Among high-union-density states, 14 out of 17 did not pass any voter restrictions during this period, while only eight of the medium-union-density states and three of the low-union-density states can claim this distinction.

These results are consistent with evidence that unions actively defend voting rights. Unions have long mobilized members to oppose voter suppression laws, educated communities about their rights, and turned out to vote despite increasing barriers (Bondy 2025). Unions have also expanded access to voting: Dean, McCallum, and Grumbach (2023) found that county-level union density was associated with greater access to ballot drop boxes—a highly secure way to increase access to voting—during the 2022 midterm elections. Together, these findings suggest that stronger unions not only increase voter participation but also help preserve and expand access to the ballot.

Figure H

State policy and union density

Increasing union density across all states—including those where anti-union policies have historically suppressed unionization—is essential to strengthening both the economy and democracy, improving all workers’ wages, and expanding access to public goods like health care, retirement, and education.

As the previous section made clear, residents of high- and low-union-density states face starkly different economic and social realities. These wide variations in union density across states—and highly variable economic outcomes—are strongly correlated with variations in state labor policies. For example, the union rights of millions of public-sector, agricultural, and domestic workers (including home health care and in-home child care providers) vary by state because workers in these occupations are excluded from coverage under federal law. And even for private-sector workers whose union rights are covered under federal law, collective bargaining rights are limited by anti-union “right-to-work” laws in many states. Research shows that anti-union state policies result in lower union density. Union density averages 6.2% in states with anti-union RTW laws compared with 15.8% in non-RTW states, and states that limit or prohibit public-sector collective bargaining have lower overall union density than other states (Sherer and Gould 2024; Sherer and Morrissey 2026).

Here, we consider what union density would be if states with certain anti-union laws adopted the policies of states that better protect workers’ rights to unionize and collectively bargain. We consider two policy changes: 1) requiring state and local governments to bargain with public-sector workers who choose to unionize; and 2) repealing so-called “right-to-work” laws that limit collective bargaining rights of private-sector workers. These are two of many policies that states can adopt to remove barriers to unionization, but we focus on them because of their clearly documented, large-scale impact on large numbers of workers across much of the country. At present, roughly half of U.S. states have RTW laws in effect and do not require public employers to bargain with unionized public employees. Modeling changes to these two policies lets us estimate what would happen to union density if we removed large state-by-state labor policy disparities and created a stable “floor” for collective bargaining for workers across all states. This provides an important starting point for considering how additional, stronger state labor policies might affect union density, worker wages, and democracy.

Public-sector workers face wide disparities in bargaining rights across states

Variations in collective bargaining rights for public-sector workers are rooted in history, notably in Southern states where systemic racism drove the enactment of anti-union policies (Childers 2023; Dixon 2007; Kaufman 2018; Stelzner, Hoyt, and Ramchurn 2019). By the 1980s, most states had enacted public-sector collective bargaining policies, though these statutes varied in strength and coverage (Freeman and Ichniowski 1988). In more recent decades, many states have repealed or harshly limited formerly robust public-sector collective bargaining statutes, while a few states have expanded them. A key distinction is whether state and local government employers have a legal duty to bargain with unionized employees over pay and working conditions, rather than being merely permitted to bargain—or outright banned from doing so.

Sherer and Morrissey (2026) classify state public-sector bargaining rules across five categories of workers: teachers, police officers, firefighters, other local government employees, and other state government employees. States vary widely in which categories they cover and how strongly, and that variation maps closely onto union density. In states with strong, uniform duty-to-bargain rules across all five categories, public-sector union density can be close to 50% or higher, while in states that ban bargaining across most categories, state and local density can fall as low as the single digits. Pay consequences track these differences. Across the country, public-sector employees earn less than their private-sector counterparts with similar experience and education. This public-sector pay gap is smaller when bargaining rights are strong: Sherer and Morrissey (2026) estimate that in states with robust duty-to-bargain rights, public-sector workers earn 14.3% less than private-sector workers; the gap widens to 19.6% in states where bargaining is only permitted, and to 22.5% in states where it is banned.

“Right-to-work” laws weaken union density and suppress wages for all workers

“Right-to-work” laws prohibit unions and employers from negotiating over union security—the contract terms under which workers covered by a union contract either join the union or pay an agency fee covering their share of representation costs. State RTW laws first emerged as part of anti-union industry campaigns to suppress multiracial worker organizing and maintain Jim Crow labor relations in Southern states following the passage of the National Labor Relations Act (Pierce 2017). By making union finances more unpredictable and leaving unions more vulnerable to ongoing employer interference, these laws weaken unions’ stability, suppress union density, and limit workers’ bargaining power. As a result, RTW laws generate negative outcomes for all workers—with or without a union. States with RTW laws have lower unionization rates and higher income inequality, and workers in RTW states on average have lower wages and benefits (Fortin, Lemieux, and Lloyd 2022). Sherer and Gould (2024) document that workers in RTW states earn 3.2% less than otherwise comparable workers in non-RTW states—about $1,670 per year for a full-time worker.

There are currently 27 states with RTW laws in place—including Colorado, which is not a traditional RTW state, but whose law has, since 1943, effectively imposed RTW conditions. By barring unionized workers from negotiating over union security unless they first win a second, state-administered election by a 75% supermajority of those voting or 50% plus one of all eligible workers—whichever is higher—Colorado’s anti-union policy has produced RTW-like outcomes, so we group it with RTW states.

Removing state anti-union policies would raise national union density from 9.9% to 14.4%

We estimate that these two policy changes—1) requiring state and local governments to bargain with public-sector workers who choose to unionize, and 2) repealing RTW—would substantially increase unionization in states that currently have more anti-union policies in place, as shown in Table 1.17 In the 24 states without a duty to bargain with public-sector employees, establishing that duty would raise public-sector union density from 16.7% to 46.7%. In the 27 RTW states, repealing RTW would increase private-sector density from 3.4% to 8.8%. Overall, removing these anti-union policies would increase union density in 27 states from 5.4% to 14.3%. Nationally, union density would rise from 9.9% to 14.4%.18 This is a conservative national estimate reflecting changes in union density only for the 27 states undergoing hypothetical policy changes and not including likely impacts on the 23 states and D.C. where stronger union policies are already in place. These states would likely also see some level of increased union density under this scenario, given that removal of anti-union state policies across the country would strengthen worker bargaining power and union organizing resources in all states.

Table 1

Removing state-level anti-union policies would increase median wages by up to $4,900 a year

Were the 27 RTW states to increase unionization to estimated levels, overall annualized median wages would rise by $1,600 to $4,900 for full-time, full-year workers, depending on the state. Table 1 shows that if Virginia’s density rose from 4.9% to 15.5% because of the removal of state-level anti-union policies, annual pay for full-time, full-year workers at the state median wage would increase by about $4,500. Removing these anti-union policies in Texas could cause a similar increase in density, raising annual pay by $3,400.

Of course, were workers in all states able to achieve 30% union density, the effects on median pay would be even larger. These impacts are shown in Figure I. The 23 percentage point increase in density in Alabama, for example, would increase annualized median pay there for full-time, full-year workers by about $8,500.

Figure I

Recent state policy changes show that anti-union laws lower union density

Recent “natural experiments” in states that have changed one or both of these labor policies also show the impact on union density. For example, in states that adopted new RTW laws since 2010, union density fell 3.8 percentage points between 2010 and 2023. By comparison, union density declined only 2 percentage points during this same period in non-RTW states (Sherer and Gould 2024).

Wisconsin is an example of a state that both repealed a previous duty to bargain with public employees (in 2011) and enacted a new RTW law (in 2015). Since adopting these anti-union policies, between 2011 and 2024, Wisconsin’s union density has fallen by half, from 14% to 7%. Over this same period, national union density declined just 2 percentage points, from 13% to 11%. With both a RTW law in place and no public-sector duty to bargain, Wisconsin’s union density is plummeting in comparison with national and regional trends (Dresser, Rogers, and Vasquez 2025). Other studies show that Wisconsin’s adoption of anti-labor policies and declining union density have generated a wide array of harmful outcomes for the state’s economy and democracy, including sharp decreases in public education spending, declining worker wages, widening public-sector pay gaps (including stark increases in gender pay gaps for teachers), and declining voter participation (Nack et al. 2019; García and Han 2021; Biasi and Sarsons 2022; Feigenbaum, Hertel-Fernandez, and Williamson 2018).

States have other policy options to enable workers to increase union density

Beyond these two policy changes, states have numerous other opportunities to increase union density by removing obstacles to unionization and ensuring more workers have full rights to collectively bargain (Sherer 2026). A few examples that have not yet been adopted in most states include:

• Creating pathways to collective bargaining for all workers in occupations not currently covered by federal labor law, including in-home child care and home health care workers, agricultural workers, and rideshare or delivery drivers treated as “independent contractors” by digital platform companies;
• Protecting workers’ freedom to refuse mandatory “captive audience” meetings on political or religious topics not related to work duties, including mandatory anti-union meetings employers typically hold when attempting to block workers from unionizing;
• Ensuring workers whose paychecks stop due to a strike or lockout are eligible to apply for unemployment insurance; and
• Establishing or expanding state agency capacities and public labor education programs that ensure workers can easily learn about their union rights.

We do not model the specific impacts of all possible state policy changes in this report. But our conservative, baseline estimate of increases in union density likely to result from removing two of the largest state obstacles to workers’ union rights—RTW laws in 27 states and the lack of a duty to bargain for public employees in 24 states—suggests that combining these changes with additional policy changes would likely lead to additional increases in union density across the country.

Federal policy and union density

Given the clear benefits of tripling union membership, it is critical that policymakers prioritize reforms that enable workers to organize and collectively bargain. It is tempting to search for a policy “silver bullet” to restore the promise of the National Labor Relations Act (NLRA), our primary labor law. But the reality is that policymakers must adopt comprehensive labor law reforms to eradicate the effects of decades of political neglect that has steadily undermined the effectiveness of U.S. labor law. As discussed above, these reforms must at a minimum reverse state anti-union policies, via state or ideally federal labor law reforms that end Jim Crow-era occupational exclusions, ensure equal union rights and pathways to collective bargaining for all workers in all states, and eliminate RTW laws.

Labor law reform has passed the House three times with bipartisan support

A consistent narrative maintains that such policy change is impossible, but that narrative relies on the mistaken notions that real reforms require more political power than the labor movement has and that our legislative process prevents labor law reform. It is true that winning policy fights takes significant political capital. But labor law reform must not be seen as solely a labor movement priority. It is central to any attempt to address affordability pressures and economic inequality. And in this moment, such reform is imperative to our democracy. While the Senate filibuster rules do prevent much legislative progress, they are not inevitable dictates but rather agreed-upon rules that, as history shows, can change. It is deeply destructive to our political system to convince working people that the system simply cannot be expected to serve their interests, which is what this flawed narrative around labor law reform reinforces. To be clear, policies favored by elites benefiting from the unequal status quo are far more likely to become law than even broadly popular ones. But these reforms have the potential to help rebalance this inequality.

In fact, in the last two decades, legislation to significantly reform labor law has passed the U.S. House of Representatives three times—with bipartisan support each time. Even in the current Congress, legislation aimed at restoring collective bargaining rights has managed to bypass Republican House leadership opposition via parliamentary procedure (discharge petition) and pass with bipartisan support.19 Of the on average 12,000 bills introduced in a given Congress, labor law reform measures have had more success than roughly 95% of bills—passing a chamber with bipartisan support. Of course, Senate rules around the filibuster requiring 60 votes to proceed on consideration of various measures have been a significant impediment to the Senate passing these reforms. However, since 2013, the Senate has used the “constitutional option” to change its own rules for procedures and has eliminated the 60-vote requirement to proceed on specific debates three times. That could be done here, too.

Record high union approval strengthens the case for labor law reform

Labor unions today have significantly higher public approval ratings than when major labor law reform was last considered, polling more than 20 points higher.20 Since 2021, approval for unions has remained high, with over 68% of people in the U.S. viewing unions favorably (Brenan 2025). This positive view of unions is shared across generations, with majorities of Boomers (59%), Gen X (58%), Millennials (61%), and Gen Z (63%) viewing unions favorably. Young adults (ages 18–35) have the highest favorability rate at 72% (Glass 2025).

Unions are viewed positively across party lines, with both Democrats (90%) and independents (69%) having high favorability rates for unions, and over 40% of Republicans approving of labor unions (Brenan 2025). Some conservative organizations recognize that unions are popular among workers: Research by American Compass (2025) finds that at least 46% of Republicans view unions somewhat favorably, with favorability increasing among young Republicans (60%).

Data from the American National Election Studies show that people in the U.S. favor unions over big business now more than ever—with the average rating for labor unions hitting a new high (60%), while big business hit a low (44%) (Sojourner and Reich 2025). Further, most people in the U.S. say the decline in union density is bad for the country (60%) and bad for working people (62%). Most young adults (69%), including young Republicans (52%) and young Democrats (82%), view the decline in union density as negative for working people (Van Green 2025).

Three bipartisan bills would pave the way toward restoring collective bargaining rights

As with many popular policies, high public opinion of unions has not translated into the enactment of labor law reform. Even though several bills that would reform aspects of our current labor law are being introduced and even passing with bipartisan support in the U.S. House of Representatives, the Senate has failed to act on the legislation. There are three main bills with bipartisan support that would help reform our current labor law system and each should be passed.21

• The Protecting the Right to Organize (PRO) Act would restore private-sector workers’ right to organize and bargain collectively. It would streamline the process of forming a union, create a roadmap to reaching a first collective bargaining agreement, establish civil monetary penalties for employers who violate labor law, among other reforms—such as expanding coverage to more workers, overriding state “right-to-work” laws, and banning “captive audience” meetings (McNicholas, Poydock, and Rhinehart 2021). Since its first introduction in 2019, the PRO Act has passed the House of Representatives twice with bipartisan support.
• The Public Service Freedom to Negotiate Act (PSFNA) would establish public-sector workers’ right to organize and bargain collectively. This would fill an important gap—there is currently no federal law that guarantees all public-sector workers at the federal, state, and local levels the right to organize and collectively bargain. As a result, more than half of U.S. states today lack comprehensive collective bargaining laws for state and local public-sector workers (Sherer 2026).
• The Protecting America’s Workforce Act (PAWA) would reverse President Trump’s executive order that revokes collective bargaining rights for federal workers. The bill would reestablish collective bargaining rights for more than 1 million federal workers. In December 2025, PAWA passed the House of Representatives by a 231-195 vote.

Beyond passing these important bills, policymakers should also consider additional policies to help workers access collective bargaining and union membership. We propose two concrete policies that complement the labor reforms above. While these two proposals alone will not result in tripling union membership, they could help more workers receive the benefits of collective bargaining, which serves as a corrective to the affordability crunch and the economic inequality that characterizes our economy.

Guaranteed annual raises for workers in first contract arbitration

When workers win a union and begin to collectively bargain with their employer, both parties have an obligation to bargain in “good faith.” However, given that the NLRA lacks meaningful penalties for violations, employers often engage in bad faith bargaining tactics with few consequences. In fact, it is well documented that many union-busting consultants view bargaining as a new phase of union-busting and advise employers to drag out bargaining for as long as possible. The goal is to avoid reaching a contract for a year or more, hoping that workers will then give up their union through decertification, which is permitted one year after the election. It is no coincidence that workers who have successfully formed a new union spend an average of 465 days bargaining for a first contract before reaching an agreement.

The Faster Labor Contracts Act, which overwhelmingly passed the U.S. House of Representatives last month, would discourage delay and promote good faith bargaining by establishing a mediation and binding arbitration process when employers refuse to bargain in good faith. Beyond guaranteeing workers first contract arbitration, we suggest the adoption of a mandatory cost-of-living adjustment (COLA) for workers whose first contract bargaining ends up in arbitration. This would establish an important guardrail for workers in the arbitration process, given that an arbitrator will ultimately impose a final contract on both parties. This provision would ensure that workers receive at least a COLA each year of their first contract. In other words, by voting for a union, workers would be voting for a guaranteed raise.22

For the average production, nonsupervisory worker, a 3% COLA would result in almost a $2,000 increase in annual earnings for a full-time, full-year worker. 23 Table 2 shows that, while these increases would vary widely by industry because pay varies widely by industry, workers in some of the lowest-paid industries would still see annual pay increases above $1,000.

Table 2

Default collective bargaining when CEO-to-worker pay ratios exceed 100:1

The outsized and ballooning gap in recent decades between CEO pay and the pay of typical workers is among the clearest signs that the economy’s rules have been rigged to allow the most powerful to claim oversized shares of income growth. This CEO-to-worker pay ratio rose nearly tenfold from 1978 to 2024, as the pay of CEOs rose over 1,000% while the pay of typical workers rose just 26%. The explosion of CEO pay was driven not by CEO’s rising productivity or skills, but by policy changes that boosted both the incentives and the ability of CEOs to raise their own pay.

When a firm’s CEO makes more than 100 times what the typical worker in their industry makes, effective corporate governance has clearly broken down—which threatens the ability of those outside the C-suite to receive their fair share of the firm’s income. The two main parties competing with executives to claim a share of a firm’s income are the shareholders and the firm’s workers. The best mechanism for ensuring that workers are able to bargain against CEOs and shareholders for their fair share of the income generated by the firm is collective bargaining.

We propose instituting default collective bargaining in any firm that meets or exceeds this 100:1 ratio. Securities and Exchange Commission (SEC) reporting already requires the annual disclosure of CEO pay (SEC 2007). We propose that these disclosures be reported not only to the SEC but also to the National Labor Relations Board. Comparing those disclosures with Bureau of Labor Statistics data on the pay of a typical worker economy-wide in various industries, the NLRB would determine which corporations meet the default collective bargaining ratio of 100:1.24 The NLRB would then publish a public notice and notify specific corporations and their workers that the default collective bargaining ratio had been met, triggering default collective bargaining at the firm. The NLRB would then direct an election for a bargaining representative to be held within 45 days of the notification.25

Nonsupervisory workers at these firms would then have the opportunity to select a bargaining representative of their choosing—whether a labor organization or other representative. The NLRB would conduct the election for and certify a bargaining representative, after which bargaining would start. For purposes of default collective bargaining, the presumption for the bargaining unit would be a wall-to-wall unit—a model where all nonsupervisory employees join a single bargaining unit—ensuring comprehensive coverage under the collective bargaining process and resulting contract. This standard would apply absent an employer or employee representative demonstrating extraordinary circumstances.26 The NLRB would then determine the appropriate bargaining unit, the same way the agency already accepts or rejects bargaining unit proposals. We propose that all such questions be resolved within 10 days of the NLRB’s notice of election for bargaining representative. This proposal would not apply to existing bargaining units, but in firms where unions are present, it would apply to any nonunionized nonsupervisory employees, as described below.

A threshold of 100:1 for the CEO-to-typical-worker pay ratio is reasonable and fair. A ratio this high clearly signals a fatal breakdown in the ability of the firm’s workers and shareholders to protect their income claims against executives looking to maximize their own incomes. A ratio this high will not affect most publicly traded companies but will be relevant to a large share of the U.S. workforce.

Comprehensive data on CEO pay are available only for a subset of firms: The Compustat Execucomp database tracks CEO pay for half of publicly owned companies (and most U.S. firms are not publicly owned). For the firms in the Compustat database, under half (41.7%) had a CEO-to-typical-worker pay ratio exceeding 100:1 in 2024. This proposal would provide the 30 million workers employed in firms that have higher ratios—representing about a fifth of total private-sector employment in the United States—with collective bargaining.

It is not a coincidence that the stratospheric rise in CEO pay was accompanied by an acceleration in the downward trend of unionization in the United States. The broader correlation between declining unionization and the rise of inequality is well established, and the highest-quality research documents that this relationship is clearly causal, with the decline of unions leading to a higher share of income claimed by households at the top of the income distribution (Farber et al. 2021).

To be clear, using a threshold CEO-to-worker pay ratio as a trigger for default collective bargaining will not alone solve the problem of excess CEO pay. We focus on this threshold as a policy trigger because it is a readily available and measurable indicator of the outsized control of executives over the distribution of the firm’s income. In the total absence of collective bargaining or any other strong corporate governance institutions, firm executives will shift income in a zero-sum fashion away from both the workers and the shareholders of a firm. If shareholders manage to assert some influence over CEO pay—e.g., through public pressure campaigns or say-on-pay mandates—one likely outcome will be CEOs looking to suppress the firm’s wages even further to make room for both their own outsized salaries and a return to shareholders that placates them. Only collective bargaining can protect the interests and earnings of workers in firms where executives pocket an outsized share of firms’ incomes.

If collective bargaining became widespread enough throughout the corporate sector, it would likely not only boost workers’ wages but also rein in excess executive pay broadly—actually helping shareholders at the same time. The research on this question is encouraging: Unions and collective bargaining have been found to significantly restrain excess CEO pay (Huang et al. 2017; Nanda, Nishikawa, and Prevost 2025; DiNardo, Hallock, and Pischke 2000). But even if expanded collective bargaining does not tamp down the CEO-to-worker pay ratio beneath our 100:1 threshold, it will at a minimum protect workers’ interests from excess executive power—without foreclosing any policy route shareholders take to restrain excess CEO pay.

Currently, a number of firms with at least some degree of unionization among their workforces have CEO-to-worker pay ratios that exceed 100:1. But this is not an argument against using this threshold as an indicator of dysfunctional corporate governance requiring a strong policy solution. For many of these firms, union coverage among their rank-and-file workforce is far from complete, so this proposal would help fill in glaring gaps. Most of these firms clearly do pay wages that are among the highest in their industries, which signals that the policy of default collective bargaining to protect workers’ interests in the face of dysfunctional corporate governance would largely work. Finally, one key empirical driver of high CEO pay is the simple size of the firm: The CEO-to- worker pay ratio rises steeply with the size of the firm, all else equal.27 The firms with CEO-to-worker pay ratios above 100:1 and some degree of unionization among their workforces are large firms; it would take a very strong effect of collective bargaining on CEO pay specifically to have kept pay ratios at these large firms well below average.

In our world with only 10% union density (and less than this in the private sector), it should hardly be a shock that collective bargaining by itself has not been able to stem what has been an irresistible tide toward high CEO pay. Even large increases in executive pay are not enormous when compared with overall returns to shareholders. Given the strong policy and economic barriers to shareholder activism in restraining CEO pay, it takes truly outrageous pay scales to mobilize enough organized opposition from shareholders. In those firms where it is relatively strong, collective bargaining has protected workers’ interests, and that is the primary goal we are looking to achieve with this policy. The fact that in these firms the CEOs have felt free to shift income to themselves at the expense of other stakeholders (like the shareholders of the firm) is not a sign that default collective bargaining is a bad solution for protecting workers’ interests—it is only a sign that the problem of excess CEO pay needs to be addressed from other angles as well.

Tripling union density is what workers want—and it is entirely achievable

Restoring union density to 1950s levels is not a nostalgic pipe dream. Federal and state policymakers have a clear roadmap for tripling union density. While no single reform discussed in this report is a silver bullet for the problems facing the country, taken together they would address one of the worst: the erosion of workers’ right to bargain for their fair share of the wealth they produce. These reforms are meaningful steps toward tripling union density, and toward an economy where productivity gains are shared broadly, not captured by corporate elites and the superrich.

The evidence in this report shows what is at stake. Tripling union density would deliver nearly $270,000 in extra earnings over the median worker’s career and shift $1.2 trillion annually to working people—reversing a third of the rise in inequality since 1979. Rebuilding union power would narrow racial wage gaps by more than a third, and removing state anti-union policies would help dismantle the legacy of Jim Crow-era campaigns aiming to suppress multiracial organizing. States with higher union density deliver better economic and personal well-being outcomes to their residents, and they have healthier democracies with fewer voting restrictions. At a time when the voting rights of all citizens are under attack, rebuilding union power is a democratic imperative.

Acknowledgments

The authors thank Hilary Wething for her contribution to this report’s section on public education spending. We also thank Matthew Wich, Summer Labor Fellow from the Institute for Social Concerns at the University of Notre Dame, for his support of the project.

Appendix

Methodology

How we measure union density

The Bureau of Labor Statistics provides data on both union membership—workers who are full-fledged union members—and union representation, which includes both union members and workers who are not members but are covered by a collective bargaining agreement. As a result, the share of workers represented by a union is higher than the share of union members. For example, in 2025, 11.2% of workers were represented by a union, but 10% were union members.

In this report, we measure union density as the share of workers who are members of a union. Throughout this report, the terms “union density” and “unionization” refer to those who are members of a union. When measuring union density by state, data are averaged over three years (2023 to 2025) to give a more accurate estimate of state unionization rates and avoid temporary single-year changes due to small sample sizes in some states.

Estimating wage effects of tripling union density

To assess how much higher wages would be after tripling union density, we use state-level annual data on wages and unionization from 1979 to 2019 and compare median wages with unionization rates across states and over time. Specifically, we regress the state median wage on the state union membership rate, controlling for permanent differences in state characteristics, national annual shocks (like recessions), and annual state characteristics like state unemployment rate, minimum wage level, and education, race, age, gender, broad industry, and managerial shares.

Using state-level data from the Current Population Survey Outgoing Rotation Group for 1979–2019, we regress the log median wage on union density with state and year fixed effects and additional covariates: the log minimum wage, unemployment rate, and shares of those with less than a high school degree and just a high school degree, age group shares, and shares of those who are white, Black, Hispanic, married, and shares of those in the public sector, manufacturing, construction, services, and a managerial occupation. Regressions are weighted by state employment levels averaged over 1979–2019. The coefficient on union membership is 0.724 with a standard error, accounting for clustering at the state level, of 0.191.

To calculate effects of increasing union density on racial wage gaps, we use the same wage regression as before, except where the dependent variable is the state annual racial wage gap.

The calculation yielding the $1.2 trillion estimate of the annual increase in workers’ pay from tripling union density is as follows. First, the share of total labor income claimed by the bottom 80% is calculated from data provided by the Congressional Budget Office’s (CBO 2026) Distribution of Household Income data (we focus on the bottom 80% because research has generally identified the positive effect of unions on boosting pay as applying mostly to union and nonunion workers in the bottom 80% of the U.S. workforce). In 1979 this share was 60.5%, but by 2019 it had fallen to 50.1%. We use 50% for our calculations. Then we multiply the 14.5% boost to pay stemming from a tripling of union density by this 50% of labor income to get an estimate (7.25%) of how much total labor compensation would rise in the event of a tripling of union density. In the first quarter of 2026, the National Income and Product Accounts (NIPA) Table 2.1 from the Bureau of Economic Analysis (2026a) reports that total labor compensation was $16.1 trillion. Multiplying this by the 7.25% pay boost from tripling union density yields $1.16 trillion in higher pay for the bottom 80%. We believe this is the appropriate estimate for approximating how much higher wages would be for most workers if union density tripled. While potential caveats merit consideration, none, in our view, hold much force. For example, the regressions used earlier in the paper use median wages, not median total labor compensation, as the dependent variable. However, a long research literature has highlighted that benefit premiums stemming from unionization are likely even larger than wage premiums (Knepper 2020). To the degree that tripling union density works by giving all workers more leverage and bargaining power in labor markets, it seems clear that some of this leverage will be used to obtain broader and more generous coverage of benefits, not just higher wages. Another objection could be that union effects (both direct and indirect effects) are higher in the middle of the wage distribution than in either the lower or upper parts of the distribution, and hence the full 14.5% wage boost would only apply to (say) the second and middle fifths of workers while workers in the lowest and fourth fifth would see smaller wage boosts. However, in work that has estimated both the overall average effect of unionization on nonunion wages and the effect by wage percentile, the overall average effect is roughly one-half the effect at the median, a result that would be consistent with applying the 14.5% premium to half of all labor income, as we do (Fortin, Lemieux, and Lloyd 2021). Other research has similarly found that union effects at the median are very close to overall average effects (Baker et al. 2026).

For our analysis of how wage effects differ across union density levels, we use the same regression of log median wages on union density described above, modified to let the slope differ below and above 15% density using a piecewise-linear specification interacting union density with an indicator for density of at least 15%, while retaining the same controls and state and year fixed effects, weighted by state employment. The difference in slopes is statistically significant at the 1% level.

The scatterplot in Figure B uses 50 state-year bins to show this nonlinearity directly. The binned scatterplot groups the state-year observations into 50 employment-weighted bins by union density and plots each bin’s average real log median wage against its average union density, after partialing out the same controls and state and year fixed effects used in the regression.

State union density groupings

We divided the 50 U.S. states plus the District of Columbia into three equally sized groups based on their current (2023–2025) level of union density.

These groupings are shown in Appendix Table 1. We refer to the 17 states with the highest union density as “high-union-density states” (with 11.9%–25.1% union membership rates); the next 17 states (including D.C.) are “medium-union-density states” (6.8%–11.6%); and the remaining 17 are “low-union-density states” (2.5%–6.1%).

Appendix Table 1

Estimating union density effects of establishing a public-sector duty to bargain and repealing “right-to-work” laws

To estimate the effect of these two policy changes—1) requiring state and local governments to bargain with public-sector workers who choose to unionize, and 2) repealing RTW—we use the CPS Outgoing Rotation Groups for 2023–2025 to compute union density rates in states with stronger union policies (i.e., states with public sector collective bargaining and/or without RTW). We do this separately by industry and major occupation group for the private sector and by level of government (federal, state, and local) for the public sector. We then apply those rates to the workforce of each state that lacks the corresponding policy, holding each state’s industry, occupation, and government-employment mix fixed. Nevada is an exception on the private-sector side: Although Nevada is a RTW state, its private-sector union density is already comparatively high, so we hold its private-sector density at its current level.

Notes

1. “Union membership” refers to workers who are full-fledged union members, while “union representation” includes both union members and workers covered by a collective bargaining agreement but not members. The share of workers represented by a union is thus higher than the share of union members. In 2025, for example, 11.2% were represented by a union and 10% were union members.

2. In 2025, for the fifth consecutive year in a row, approval of unions reached record high levels last seen in the late 1950s, when union membership was roughly triple what it is now.

3. The productivity-pay gap is a measure of how much income is generated in an average hour of work.

4. “Union wage premium” refers to the additional wages paid to union members compared with nonunion workers with similar characteristics.

5. For example, when the top marginal tax rate was 91%, as it was in the 1950s and early 1960s, executives kept far less of each additional dollar of pay than they do under today’s 37% top rate, which reduced the payoff to pursuing ever-larger compensation packages.

6. Relatedly, expanded unemployment benefits during the pandemic boosted workers’ bargaining power and compelled employers to make higher wage offers (Bivens and Banerjee 2023).

7. See appendix for details about our methodology.

8. The real median wage is the wage of the person in the middle of the overall wage distribution, including both union and nonunion workers.

9. The median monthly cost of a mortgage in the U.S. is $1,521 according to Census (2025). Over the course of a year, that is $18,252.

10. See appendix for details about the calculation of this figure.

11. In 2020 and 2021, Congress authorized Economic Impact Payments—better known as the “COVID checks.” Those three rounds of payments added roughly $430 billion to U.S. families’ personal income in those years and were widely viewed as an historically ambitious economic intervention. Data on how much these checks added to personal income can be found at Bureau of Economic Analysis (2026c).

12. Data on federal defense spending in 2025 is from Bureau of Economic Analysis (2026b).

13. Data on the income shares by percentile come from CBO (2026), which contains data through 2022. The calculation of how much the $1.2 trillion gain to wages would reverse the rise in income shares of the top quintile uses data from BEA (2026a).

14. See appendix for details on how we estimated these wage effects.

15. See appendix for details on how we calculated the effects of increasing union density on racial wage gaps.

16. See Appendix Table 1, which shows how we grouped states into low-, medium-, and high-union-density categories.

17. For details on the data and methodology used to produce these estimates, see appendix.

18. For this state-level analysis, we use 2023–2025 averages of union density across states, which is 9.9%, rather than the 10% for 2025 cited earlier in this report.

19. See passage of Protecting America’s Workforce Act and Faster Labor Contracts Act.

20. The last time a major labor law reform was considered was in 2009 with the Employee Free Choice Act.

21. The Protecting the Right to Organize Act has two Republican co-sponsors, the Public Service Freedom to Negotiate Act has six Republican co-sponsors, and the Protecting America’s Workforce Act has nine Republican co-sponsors.

22. One way to determine the exact COLA amount is to use nonseasonally adjusted values of the national Consumer Price Index for All Urban Consumers (CPI-U) published by the Bureau of Labor Statistics. These price index values are easily available, less subject to revision, and widely covered in the media. The simplest COLA adjustment would be to use the annual rate of inflation measured as the percent change between the two most recent annual averages of nonseasonally adjusted CPI-U values. See BLS (2023) for other considerations.

23. CBO estimated CPI in 2026 at 2.8%, 2027 at 2.4%, and then 2.3% after—however those estimates were done before the U.S. war in Iran that increased energy prices, so we estimate COLA at 3% for purposes of the proposal. To calculate full-time, full-year worker wages, we used 2025 average production, nonsupervisory wage rates (EPI 2026f).

24. We specifically would recommend calculating the CEO-to-typical-worker pay ratio using the methodology detailed in EPI (2025). 

25. In order to appear on the ballot, an individual or organization would have to demonstrate a record of collective bargaining over the preceding three years or obtain 100 signatures or 10% of the workforce, whichever is less.

26. The showing of extraordinary circumstances is referenced in the acute care hospital rule: 29 CFR § 103.30 (1989).

27. This correlation between simple firm size and CEO pay is yet another piece of evidence that CEO pay is not about the skills or acumen of individual CEOs, but is driven by noncompetitive market structures and labor markets for executives.

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Childers, Chandra. 2023. Rooted in Racism and Economic Exploitation. Economic Policy Institute, October 2023.

Clegg, Daniel, Elke Heins, and Philip Rathgeb. 2022. “Unemployment Benefit Governance, Trade Unions And Outsider Protection In Conservative Welfare States.” Transfer: European Review of Labour and Research 28, no. 2: 195–210. 
https://doi.org/10.1177/10242589221094240. 

Congressional Budget Office (CBO). 2026. Distribution of Household Income 2022.

Dean, Adam, Jamie McCallum, and Jake Grumbach. 2023. Labor Unions and the Defense of American Democracy. Economic Policy Institute, December 2023. 

DiNardo, John, Kevin F. Hallock, and Jörn-Steffen Pischke. 2000. “Unions and the Labor Market for Managers.” IZA Discussion Paper, August 2000.

Dixon, Marc. 2007. “Limiting Labor: Business Political Mobilization and Union Setback in the States.” Journal of Policy History 19, no 3: 313–344. https://doi.org/10.1353/jph.2007.0015.

Dresser, Laura, Joel Rogers, and Leslie Vasquez. 2025. The State of Working Wisconsin 2025. High Road Strategy Center, August 2025.

Economic Policy Institute (EPI). 2021. “Unions Help Reduce Disparities and Strengthen Our Democracy” (fact sheet). April 23, 2021.

Economic Policy Institute (EPI). 2025. “CEO Pay Has Skyrocketed Since 1978: Discussion of our Methods” (web page). Last updated September 25, 2025.

Economic Policy Institute (EPI). 2026a. “Average Real Annual Wage (2023$),” State of Working America Data Library. Accessed June 30, 2026.

Economic Policy Institute (EPI). 2026b. “Nominal Wage Tracker” (web page). Accessed June 30, 2026.

Economic Policy Institute (EPI). 2026c. “The Productivity–Pay Gap” (web page). Last updated March 23, 2026.

Economic Policy Institute (EPI). 2026d. “Union Wage Premium – Union Wage Premium, Average (Regression-Based),” State of Working America Data Library. Accessed May 4, 2026.

Economic Policy Institute (EPI). 2026e. “Wage Calculator” (web page). Accessed May 4, 2026.

Economic Policy Institute (EPI). 2026f. “Hourly Earnings by Industry – Production and Nonsupervisory Employees, Average Nominal Wage,” State of Working America Data Library. Accessed June 30, 2026.

Farber, Henry S., Daniel Herbst, Ilyana Kuziemko, and Suresh Naidu. 2021. “Unions and Inequality over the Twentieth Century: New Evidence from Survey Data.” The Quarterly Journal of Economics 136, 3 (August): 1325–1385.

Feigenbaum, James, Alexander Hertel-Fernandez, and Vanessa Williamson. 2018. “From the Bargaining Table to the Ballot Box: Political Effects of Right to Work Laws.” National Bureau of Economic Research Working Paper no. 24259, January 2018.
https://doi.org/10.3386/w24259.

Fortin, Nicole, Thomas Lemieux, and Neil Lloyd. 2021. Labor Market Institutions and the Distribution of Wages: The Role of Spillover Effects. Journal of Labor Economics 39, no. S2.

Fortin, Nicole, Thomas Lemieux, and Neil Lloyd. 2022. “Right-to-Work Laws, Unionization, and Wage Setting.” National Bureau of Economic Research Working Paper no. 30098, June 2022. https://doi.org/10.3386/w30098.

Freeman, Richard B., and Casey Ichniowski. 1988. When Public Sector Workers Unionize. Chicago, Il.: Univ. of Chicago Press.

García, Emma, and Eunice Han. 2021. The Impact of Changes in Public-Sector Bargaining Laws on Districts’ Spending on Teacher Compensation. Economic Policy Institute, April 2021.

Glass, Aurelia. 2025. “Everybody Likes Unions.” Center for American Progress, November 4, 2025. 

Hertel-Fernandez, Alexander, and Alix Gould-Werth. 2020. Labor Organizations and Unemployment Insurance: A Virtuous Circle Supporting U.S. Workers’ Voices and Reducing Disparities in Benefits. Washington Center for Equitable Growth, October 2020.

Huang, Qianqian, Feng Jiang, Erik Lie, and Tingting Que. 2017. “The Effect of Labor Unions on CEO Compensation.” Journal of Financial and Quantitative Analysis 52, no. 2: 553–582. https://doi.org/10.1017/S0022109017000072.

Jackson, C. Kirabo, Rucker C. Johnson, and Claudia Persico. 2016. “The Effects of School Spending on Educational and Economic Outcomes: Evidence from School Finance Reforms.” The Quarterly Journal of Economics 131, no. 1: 157–218. https://doi.org/10.1093/qje/qjv036. 

Jackson, C. Kirabo, and Claire L. Mackevicius. 2023. “What Impacts Can We Expect from School Spending Policy? Evidence from Evaluations in the United States.” American Economic Journal: Applied Economics 16, no. 1: 412–446. https://doi.org/10.1257/app.20220279.

Johnson, Theodore R., and Max Feldman. 2020. The New Voter Suppression. Brennan Center for Justice, January 2020. 

Kaufman, Dan. 2018. “A Labor Day Reflection on Unions, Race, and Division.” The New Yorker, September 3, 2018.

KFF. 2026. Health Insurance Coverage of Population Ages 0-64: 2024. Accessed May 4, 2026. 

Knepper, Matthew. 2020. “From the Fringe to the Fore: Labor Unions and Employee Compensation.” The Review of Economics and Statistics 102, no. 1: 98–112.

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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.

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https://doi.org/10.1111/fima.12472.

Pierce, Michael. 2017. The Origins of Right-to-Work: Vance Muse, Anti-Semitism, and the Maintenance of Jim Crow Labor Relations. The Labor and Working-Class History Association, January 12, 2017.

Rosenfeld, Jake, Patrick Denice, and Jennifer Laird. 2016. Union Decline Lowers Wages of Nonunion Workers. Economic Policy Institute, August 2016. 

Securities and Exchange Commission. 2007. “Executive Compensation” (web page). Last modified January 4, 2007.

Sherer, Jennifer. 2026. Holding the Line: Rights to Unionize and Collectively Bargain. Economic Policy Institute, February 2026.

Sherer, Jennifer, and Elise Gould. 2024. “Data Show Anti-Union ‘Right-to-Work’ Laws Damage State Economies.” Working Economics Blog (Economic Policy Institute), February 13, 2024.

Sherer, Jennifer, and Monique Morrissey. 2026. Stronger Collective Bargaining Laws Will Benefit All Virginians. Economic Policy Institute, January 2026.

Shierholz, Heidi. 2024. “Middle-Out Economics Is Good for Workers, Their Families, and the Broader Economy.” Working Economics Blog (Economic Policy Institute), March 19, 2024.

Sojourner, Aaron, and Adam Reich. 2025. “Americans Favor Labor Unions Over Big Business Now More Than Ever.” Working Economics Blog (Economic Policy Institute), May 20, 2025. 

Stelzner, Mark, Eric Hoyt, and Toushita Ramchurn. 2019. Structured Conflict: Changes in Federal and State Labor Laws and Strike Activity, 1950 to 2017. Political Economy Research Institute (PERI), University of Massachusetts Amherst, May 2019.

United States Department of Agriculture (USDA). 2017. “2015 Expenditures on Children By Families” (web page). Accessed June 30, 2026.

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. 

Zhang, Elizabeth. 2026. Nearly 3 Million Uninsured Adults Would Gain a Path to Medicaid Coverage if Their States Adopted ACA Medicaid Expansion. Center on Budget and Policy Priorities, March 19, 2026.

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.

This interactive chartbook provides a statistical snapshot of race and ethnicity in the United States, depicting racial/ethnic disparities observed through

• Population demographics
• Civic engagement
• Labor market outcomes
• Income, poverty, and wealth
• Health

The chartbook also highlights some notable intersections of gender with race and ethnicity, including educational attainment, labor force participation, life expectancy, and maternal mortality. The findings are bracing, as they show how much more work we need to do to address longstanding and persistent racial inequities.

Most charts include data for five racial/ethnic groups in each of the charts—white, Black, Hispanic, Asian American and Pacific Islander (AAPI), and American Indian and Alaska Native (AIAN). In the charts and text, “Americans” refers to all U.S. residents, regardless of citizenship status.

Researchers seeking disaggregated data and statistics for AAPI and AIAN groups are encouraged to look at sources cited in the companion essays in the Anti-Racist Economic Research and Policy Guide: AAPI Data and the Center for Indian Country Development at the Federal Reserve Bank of Minneapolis.

As our efforts illustrate, collecting and maintaining data sources that are representative of the entire U.S. population is an essential first step toward overcoming the invisibility, neglect, and lack of understanding experienced by many communities of color. Future work on this project will involve identifying comparable data from alternative sources that fill in as much of the missing information in the chartbook as possible.

In this interactive chartbook, additional notes and source information can be accessed by clicking on the ellipses ( … ) in the notes and sources lines under the charts.

Population demographics

The U.S. has become more racially and ethnically diverse over the last two decades: Share of U.S. population by race and ethnicity, 2000, 2010, and 2020

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Each decennial Census since 2000 has revealed a more racially and ethnically diverse U.S. population. While the share of people who identify as Black (about 12%) or American Indian and Alaskan Native (0.7%) has remained constant, the non-Hispanic white share of the population has declined from 69.1% in 2000 to 57.8% in 2020. On the other hand, a growing share of U.S. residents identify as Hispanic (increasing from 12.5% in 2000 to 18.7% in 2020) or Asian American and Pacific Islander (increasing from 3.7% in 2000 to 6.1% in 2020). These changing population demographics reflect different trends in birth, mortality, and immigration rates across groups. Since 2000, there have also been significant changes in how people identify racially. Notably, a growing share of people identify as being of two or more races (this would include people who, for example, identify as Black and AAPI, but would not include people who identify as Black and Hispanic, as they are identifying Black alone as their race and Hispanic as their ethnicity). Also, a growing but still small share of people identify as being of a race other than those explicitly defined by the Office of Management and Budget (OMB).

As Trevon Logan notes in his essay, it is the OMB that issues regulations regarding the classifications of race and ethnicity by federal agencies, including the U.S. Census Bureau, which conducts the major household and business surveys used by researchers. There are six permitted race categories and two ethnicity classifications, Hispanic and non-Hispanic. As such, everyone is a member of both a race and ethnicity. For more on the current classifications, see Logan’s essay.

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While U.S. residents are overwhelmingly citizens, Asian American/Pacific Islander and Hispanic citizens are more likely to be first-generation immigrants: Share of U.S. population by race/ethnicity and nativity, 2024

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Across all racial and ethnic groups, an overwhelming majority of people in the United States are U.S. citizens, according to data from the Current Population Survey. However, nativity shares vary across racial groups. White persons (95.9%), American Indian and Alaskan Native (AIAN) persons (81.3%), and Black persons (88.6%) are most likely to have been born citizens (born in the United States or to United States citizens abroad), compared with over half of the Hispanic population (66.7%) and more than one-third (37.8%) of the Asian American and Pacific Islander (AAPI) population.

Immigration status also varies widely. AAPI residents are most likely to be immigrants: more than one-third (38.3%) were not born U.S. citizens but became U.S. citizens (i.e., are naturalized U.S. citizens), while another 23.9% are not citizens. Hispanic residents are next most likely to be immigrants: 12.6% are naturalized citizens and 20.7% are not citizens. These statistics highlight only a fraction of the diversity represented within and across different racial and ethnic groups. As several essays in the Advancing Anti-Racist Economic Research and Policy guide explain, analyses that use categories or group descriptions that are too broadly defined can lead to inaccurate conclusions.

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The uneven geographic distribution of racial and ethnic populations highlights the influence of state and local policy on racial inequality: Share of state population by race and ethnicity, 2020

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The U.S. Census Bureau projects that Black, Hispanic, AAPI, and other people who do not identify as white will collectively account for over half of the population of the United States by 2044. In California, Hawaii, Maryland, Nevada, New Mexico, Texas, and the District of Columbia, the white population is already in the minority, and in Arizona, Florida, Georgia, New Jersey, and New York, white persons make up just over half of the population. This interactive map shows areas of population density for each race or ethnic group (click on a race or ethnic group) along with the racial and ethnic distribution of each state’s population (click on a state). It shows that Southern states and the District of Columbia have the largest shares of residents who are Black, with the highest shares in the District of Columbia (40.9%), Mississippi (36.4%), and Louisiana (31.2%). Southwestern and Western states are home to a large percentage of Latinos, with the highest shares in New Mexico (47.7%), Texas (39.3%), and California (39.4%). AAPI residents, including Native Hawaiians, predictably account for nearly half (46.8%) of the population of Hawaii but are also a significant share of the population in California (15.5%) as well as New Jersey and Washington state (10.2% each). Also, as the group’s name would indicate, American Indian and Alaska Native residents account for the highest share of the population in Alaska (14.8%), followed by New Mexico (8.9%), South Dakota (8.4%), and Oklahoma (7.9%). White Americans account for the largest majority of the population in several Northeastern states (90.2% in Maine, 89.1% in Vermont, and 87.2% in New Hampshire) and West Virginia (89.1%).

The patterns illustrated in the map trace each group’s unique history of settlement, immigration, and migration in this country. But they also help to make a point about the important role that state and local policies play in either improving or worsening racial disparities in the United States. As just one example, EPI research shows that Southern states, which have a high density of Black residents, are more likely than states in other regions to use preemption laws to stop local governments from setting strong labor standards, such as raising the minimum wage and guaranteeing paid sick leave.

For more on preemption laws in the South, see Hunter Blair et al., Preempting Progress: State Interference in Local Policymaking Prevents People of Color, Women, and Low-Income Workers from Making Ends Meet in the South, Economic Policy Institute, September 2020.

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Current population demographics by race/ethnicity and age support projections that people of color will become the collective majority by 2050: Share of U.S. population within given age ranges, by race and ethnicity, 2024

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The changing racial and ethnic makeup of the U.S. population is foretold in the age distribution of different racial and ethnic groups. In 2024, over a quarter (28.9%) of people who identified as Hispanic were under the age of 18, as were about a quarter of those who identified as Black (24.5%), American Indian and Alaska Native (AIAN) (27.9%) and a fifth within those who identified as Asian American and Pacific Islander (19.9%). A smaller share of the white population (17.8%) belonged to this younger age cohort while over a third (36.9%) of white residents were near or at retirement age (age 55 or older)—a much larger share than for other racial and ethnic groups. As the current population ages, the older population will remain predominantly non-Hispanic white while Black, Hispanic, AAPI, and AIAN persons will be a growing share of the younger population. This racial and ethnic generation gap will require balancing the interests of a younger, less wealthy, more racially and ethnically diverse population with those of an older, wealthier, predominantly white population. However, these generations are linked in important ways. Older workers and retirees have a stake in worker, economic, and racial justice for those younger workers who in the years ahead will be a growing share of workers driving the national economy and providing many of the services the aging population relies on. Census population projections from 2022 (the latest available) indicate that in 2050, non-Hispanic white persons will account for less than half (48.4%) of the U.S. population (see U.S. Census Bureau, 2023 National Population Projections Tables, Table 4).

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Men’s educational attainment is highly stratified by race and ethnicity, with American Indian and Alaska Native, Hispanic, and Black men most likely to be “working class”: Share of men aged 25 and older within given level of educational attainment, by race and ethnicity, 2024

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The term working class has been used to describe working-age adults who have less than a bachelor’s degree. Based on their high shares without a bachelor’s degree or more education, American Indian and Alaska Native (AIAN) (85.3%), Hispanic (80.9%), and Black (76.5%) men are more likely to be considered working class (under this definition) than are white (60.3%) or Asian American and Pacific Islander (AAPI) (40.7%) men. Even among the groups of men most likely to be considered working class, there is still a wide range of educational attainment that includes everything from less than a high school diploma to some college. The some college category includes attendance at a four-year or two-year institution, but no degree; it also includes completion of a two-year associate or technical degree. The groups with the highest shares of people with less than a high school education are Hispanic men (27.6%) and AIAN men (23.5%) and 57.7% of Hispanic men and over half of AIAN men (58.2%) have no education beyond high school. While about half (47.0%) of Black men also have no education beyond high school, Black men are more likely than either Hispanic or AIAN men to have a bachelor’s or advanced degree, but still much less likely to have that level of education than either white or AAPI men. AAPI men lead all other racial groups in the share (59.2%) who have a bachelor’s or advanced degree. These patterns of educational attainment are shaped by multiple factors, including differences in immigration policies applied to Asian versus Latin American countries, as well as the legacy of racial discrimination and oppression that severely limited educational opportunities for generations of Black and Native Americans.

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Most women have more than a high school education, but Latinas and AIAN women lag behind other groups in attaining higher education: Share of women aged 25 and older within given level of educational attainment, by race and ethnicity, 2024

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In 2024, across most racial and ethnic groups, at least half of women aged 25 or older had some education beyond a high school diploma. Latinas were the exception—only 49.1% had some level of education beyond high school and 24.2% had less than a high school education, a much higher percentage than any other group of women (1.2 to nearly 5 times as much). Those women least likely to have a bachelor’s or advanced degree were American Indian and Alaskan Native (AIAN) women (19.7%) and Latinas (23.9%). Asian American and Pacific Islander (AAPI) and white women had the highest levels of educational attainment with 56.9% of AAPI women and 41.8% of white women having at least a bachelor’s degree, followed by 29.9% of Black women. As with men, these patterns of educational attainment are shaped by multiple factors, including differences in immigration policies applied to Asian versus Latin American countries, as well as the legacy of racial discrimination and oppression that severely limited educational opportunities for generations of Black and Native Americans. But compared with male educational attainment by race and ethnicity women tend to have higher levels of educational attainment (see Chart 5).

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While the Black and AIAN imprisonment rate has decreased, Black and AIAN people are still five times as likely as white people to be imprisoned: Imprisonment rates per 100,000 U.S. residents by race and ethnicity, 2012–2022

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In response to the demand for criminal justice reform and a shift away from the “tough on crime” politics of the 1980s and 1990s, imprisonment rates for Black, American Indian and Alaska Native (AIAN), Hispanic people have fallen over the last decade. But Black, AIAN, and Hispanic people are still much more likely to be incarcerated than white people, whose imprisonment rate has stagnated over the past decade. Over 1,000 out of every 100,000 U.S. residents who are Black or American Indian and Alaska Native (AIAN) were imprisoned in 2023, followed by 603 out of 100,000 Latino U.S. residents, 229 out of 100,000 white U.S. residents, and 88 out of 100,000 Asian American and Pacific Islander U.S. residents. Thus, the approximately 1.8 million people held in U.S. prisons at the end of 2022 —an often-forgotten segment of the U.S. population—are disproportionately Black, AIAN, Hispanic, and other people of color. 

Data on the size of the overall incarcerated population come from the “Correctional Populations in the United States, 2022—Statistical Tables” published by the U.S. Department of Justice in May 2024. 

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Black and AIAN men have an exceptionally high imprisonment rate: Imprisonment rates per 100,000 U.S residents, by race/ethnicity and gender, 2022

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This chart makes two facts very clear: That imprisonment in the United States is not only a gendered issue—with men being much more likely to be imprisoned—but also an issue of racialized gender, with Black and American Indian and Alaska Native (AIAN) men being far and away the most highly imprisoned group. Among women, AIAN residents had the highest imprisonment rate (173 per 100,000), followed by Black residents who had an imprisonment rate (64 per 100,000) in 2022. AIAN women were almost three times as likely to be imprisoned as Black women, around four times as likely to be imprisoned as White and Hispanic women, and 34 times as likely to be imprisoned as AAPI women. Among men, Black residents had the highest imprisonment rate (1,826 per 100,000), followed by AIAN men (1,443 per 100,000). Black men were more than twice as likely to be imprisoned as Hispanic men, more than five times as likely to be imprisoned as white men, and almost 13 times as likely to be imprisoned as AAPI men. AIAN men were almost twice as likely to be imprisoned as Hispanic men, more than four times as likely to be imprisoned as white men, and more than ten times as likely to be imprisoned as AAPI men.

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Civic engagement

Consistently higher turnout among white voters was challenged by historic Black voter turnout in 2012 and, to a lesser extent by historic Hispanic and Asian voter turnout in 2020: Voter turnout in presidential election years by race and ethnicity, select years 1992 to 2024

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The right to vote is the most powerful right of U.S. citizenship—and widespread voter participation is essential to a functional democracy. Yet many U.S. citizens ages 18 and older do not vote. Data on voter participation during presidential election years since 1992 reveal that turnout varies significantly by race and ethnicity and changes over time. Since 1992, voter turnout has typically been highest among white voters—ranging from 60.7% to 70.9%—although Black voter turnout saw a huge increase in 2008 and 2012 during the election and reelection of the nation’s first Black president, Barack Obama. In fact, 2012 was the only election in which Black voter turnout (66.2%) exceeded white voter turnout (64.1%). Hispanic and Asian voter turnout was less than 50% in all presidential election years between 1996 and 2016, until both groups had the largest turnout in decades in 2020 (53.7% and 59.7% respectively). In the 2024 presidential election, voter participation declined among Black, Hispanic and AAPI adults. While one’s personal decision to participate in an election can be influenced by any number of factors—including enthusiasm about a particular candidate or confidence in the democratic process—rampant forms of voter suppression in some states undoubtedly contribute to these disparities as well.

For more on the impact of state laws that limit access to voter registration, revoke the right to vote for returning (formerly incarcerated) citizens, or otherwise make it more difficult for certain populations to cast a ballot, see “State Voting Laws,” Brennan Center for Justice, accessed May 5, 2022;  “State Voting Rights Tracker,” Voting Rights Lab, accessed May 5, 2022.

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Amid dramatic decline in union membership since the 1970s, Black workers have held onto the highest rate of union membership for decades: Union membership rates, by race and ethnicity, 1973–2024

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Like the constitutional right to vote in civil society, union membership gives workers a voice—in this case, a voice at work. But as the chart shows, since 1973, union membership has declined for all racial and ethnic groups. Union membership is an important metric of the state of the American worker given the role that labor unions play in giving workers a stronger, collective voice to advocate for higher pay, better benefits, and training and promotional opportunities, as well as protections against discrimination and harassment. In a unionized workforce, for example, collective bargaining results in labor contracts that help to create greater transparency through clearly defined policies and pay structures. These contracts help reduce the potential for pay discrimination by limiting an employer’s discretion in paying different wages to comparably qualified individuals doing the same job and by providing workers with critical protections and direct recourse against other forms of exploitation or mistreatment. The benefits of union membership are a likely contributor to the higher union membership rate of Black workers, given their long history of unequal treatment relative to other groups of workers. Between 1973 and 1980, Hispanic workers also had higher rates of union membership than white workers. While the subsequent across the board decrease in union membership has brought union membership rates by race and ethnicity closer together, in 2024, Black workers were still more likely to be union members (11.7%) compared with white workers (10.0%), Asian American and Pacific Islander workers (8.9%), and Hispanic workers (8.5%).

Still, the labor movement, like any other U.S. institution, is not immune to racism. Unions must continue to become more diverse, inclusive, and dynamic as they serve the vital role of leveling the playing field for all workers.

For more on the benefits and protections conferred by union membership, see Celine McNicholas et al., Why Unions Are Good for Workers—Especially in a Crisis Like COVID-19, Economic Policy Institute, August 2020 and Valerie Wilson, “The Costs of Racial and Ethnic Labor Market Discrimination and Solutions That Can Contribute to Closing Employment and Wage Gaps,” testimony before the U.S. House of Representatives Select Committee on Economic Disparity and Fairness in Growth, January 20, 2022.

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Labor market

Black women have maintained the highest labor force participation rate amid post-1970 rise in women’s labor force participation overall: Labor force participation rate for women by race and ethnicity, 1973–2024

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The labor force participation rate is an important indicator of economic well-being. It shows the number of people in the labor force—people who are employed or unemployed but looking for work—as a share of the number of civilian, noninstitutionalized people ages 16 and older. Across racial and ethnic groups, women’s labor force participation rose significantly from the 1970s through the 1990s for a number a reasons: increased access to higher education, and the introduction and widespread availability of the birth control pill, to name a few. After leveling off during most of the first decade of the 2000s, labor force participation by women declined during or after the Great Recession of 2007–2009. And it declined again during the 2020 COVID-19 pandemic and recession as the burden of job losses and care responsibilities disproportionately impacted women. In 2024, Black women had the highest labor force participation rate at 60.5%, followed by Hispanic (58.9%), Asian (58.6%), white (56.7%), and American Indian and Alaska Native women (55.1%). While Latinas have historically had the lowest rates of labor force participation among women, their labor force participation rate had been climbing steadily in the four years leading up to the COVID-19 pandemic. Historically, Black women have had stronger labor force attachments than other groups of women. This is part of the legacy of being forced to work as enslaved people, but the necessity of work has continued for Black women who are often co-breadwinners if not sole earners for their households.

For more on the rise of women’s labor force participation from the 1970s see Elisabeth Jacobs and Kate Bahn “Women’s History Month: U.S. women’s labor force participation”, Washington Center for Equitable Growth, March 22, 2019.  

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Hispanic men have maintained the highest labor force participation rate even as labor force participation of all men has declined since the 1970s: Men’s labor force participation rate by race and ethnicity, 1973–2024

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Across all racial and ethnic groups, men’s labor force participation rates have declined significantly since the 1970s, with the sharpest decline occurring during and since the Great Recession of 2007–2009. While this trend in part reflects an aging population with a growing share of retirees, researchers have suggested that labor force participation has fallen among prime-age men (ages 25–54) due to a rise in serious health conditions that are a barrier to work, the emerging opioid crisis, or technological changes that encourage younger men  (under age 30) to allocate less time to work and more time to leisure activities like playing video games. Unlike with Black women, who have the highest labor force participation rate among women, Black men in 2024 had the lower labor force participation rates than white and Asian men (65.9%). And unlike with Hispanic women, who have historically had the lowest labor force participation rates among women, Hispanic men have had the highest labor force participation rate, which reached 75.5% in 2024. The ranking of men’s labor force participation rates by race and ethnicity has remained constant over the last three decades.

For more on the likely reasons for declining male labor force participation see Alan Krueger, Where Have All the Workers Gone? An Inquiry into the Decline of the U.S. Labor Force Participation Rate, Brookings Papers on Economic Activity, September 2017; and Mark Aguiar et al., “Leisure Luxuries and the Labor Supply of Young Men,” National Bureau of Economic Research Working Paper 23552, June 2017.

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Black and AIAN unemployment is consistently higher than unemployment of all other racial and ethnic groups: Annual unemployment rate by race and ethnicity, 1979–2024

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Relative rates of unemployment by race and ethnicity have been remarkably consistent over time. Typically, the annual unemployment rates of American Indian and Alaska Native (AIAN), Black, and Hispanic workers are significantly higher than those of white workers. The difference between Asian and white unemployment rates is smaller, and the size of the gap fluctuates, as does which group has the lower unemployment rate. In 2024, this pattern held, with an unemployment rate of 6.5% for AIAN workers, 6.0% for Black workers, followed by 5.1% for Hispanic workers, 3.6% for white workers, and 3.5% for Asian workers. While 2023 saw historical low rates for Black unemployment, one of the most enduring features of the U.S. labor market is the roughly 2-to-1 ratio of the Black and white unemployment rates.

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Higher education typically lowers a worker’s chances of being unemployed but does not eliminate racial and ethnic disparities in unemployment rates: Unemployment rate by race/ethnicity and educational attainment, 2024

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A breakdown of unemployment rates by race, ethnicity, and education level shows the limits of educational attainment as a factor in addressing inequitable economic outcomes. As the chart shows, racial and ethnic disparities in unemployment rates exist at every level of educational attainment. And Black workers have the highest rates of unemployment among all groups without a college degree. In fact, even at historically low rates of unemployment in 2024, only the most highly educated Black workers approached anything near unemployment rate parity with their white counterparts. The figure also shows that while education can contribute to better outcomes—unemployment rates are lower for all groups at higher levels of education—education alone does not necessarily create equal outcomes. Reading this chart alongside Chart 13 suggests that differences in the average unemployment rates of racial and ethnic groups can only be partially explained by relative differences in education, skill, experience or local labor market conditions—discrimination remains an undeniable factor.

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Black, Hispanic, and AIAN workers earn lower wages and have smaller gender wage disparities than their white and AAPI counterparts: Median wages by race/ethnicity and gender, 2024

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There are sharp differences in the wages earned by typical workers of different racial groups in the United States. Asian American and Pacific Islander (AAPI) and white workers are paid the highest wages at the median, while Black, Hispanic, and American Indian and Alaska Native (AIAN) workers are paid significantly less. The gender differences are also greater among AAPI and white workers than among Black, Hispanic and AIAN workers. While AAPI and white men far out-earn AAPI and white women, Black and Hispanic men and women have much more similar median wages.

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Even after controlling for education and other factors known to affect earnings, women—particularly Black and Hispanic women—are paid far less than white men: Regression-adjusted hourly wage gaps for women relative to non-Hispanic white men, by race and ethnicity, 2024

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Women of all racial and ethnic groups in the U.S. have a significant pay penalty by virtue of their gender, even when we account for several factors that could reasonably influence a worker’s productivity or wage rate, including education, marital status, age (a measure of potential experience) and geographic area (a measure of local labor market conditions). Black and Hispanic women face an additional pay penalty by virtue of their race or ethnicity. The chart depicts these wage gaps, presented as how much less women make than non-Hispanic white men. The fact that Black and Hispanic women earn about a quarter less than white men on average when calculating regression-adjusted wage gaps mean, then, that the pay penalty is not a result of differences in formal education between those groups of women and white men. One partial explanation for these wage disparities is occupational segregation, by which women of color are more highly concentrated in occupations with low pay, even relative to their education level. However, women of all races and ethnicities also often earn less than men in the same occupation (not shown in the chart), an indication of potential pay discrimination.

For more on occupational segregation and on gender pay gaps by occupation, see Jessica Schieder and Elise Gould, Women’s Work” and the Gender Pay Gap: How Discrimination, Societal Norms, and Other Forces Affect Women’s Occupational Choices—and Their Pay, Economic Policy Institute, July 2016; Emily Carew and Valerie Wilson, “Latina Equal Pay Day: Latina Workers Remain Greatly Underpaid, Including in Front-Line Occupations,” Working Economics Blog, Economic Policy Institute, October 20, 2021; Valerie Wilson, “Black Women Face a Persistent Pay Gap, Including in Essential Occupations During the Pandemic,” Working Economics Blog, Economic Policy Institute, August 2, 2021.

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Income, poverty, and wealth

Racial and ethnic disparities in median household income have been largely persistent across time: Inflation-adjusted median household income (2024 dollars), by race and ethnicity, 1972–2024

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In the United States, households of different racial and ethnic backgrounds bring in significantly different amounts of income and have done so for decades. At the median, Black, Hispanic, and American Indian and Alaska Native (AIAN) households earn the least on an annual basis, while Asian and white households earn the most. It is notable, though, that in 2023, Black households had the highest household income on record and experienced the largest increase in income between 2020 and 2023. Significant gaps in employment opportunities (shown in Chart 13) and lower wage levels (shown in Chart 15) translate into lower incomes among Black, Latino, and AIAN households. Household income is also a function of the number of earners in a household. Though not shown here, past EPI research found that in the pre-pandemic economy, about a third of Black nonelderly households (where the head of household is age 18–64) had two or more earners, compared with nearly half of white and Hispanic nonelderly households. This racial disparity in the number of household earners is not just a function of how many working-age adults live in the household, or family structure, but is another measurable consequence of the persistent 2-to-1 ratio between the Black and white unemployment rates (shown in Chart 13). As income inequality in the United States has increased in general over the past 50 years, disparities between the least and most well-off groups have continued to persist and, in some cases, have grown.  

For more on earners per household by race, see Elise Gould and Valerie Wilson, Black Workers Face Two of the Most Lethal Preexisting Conditions for Coronavirus—Racism and Economic Inequality, Economic Policy Institute, June 2020. For more on increasing income inequality, see Elise Gould, “Decades of Rising Economic Inequality in the U.S.,” testimony before the House of Representatives Ways and Means Committee, Washington, D.C., March 27, 2019.

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Black and AIAN households are more likely to have the lowest annual incomes—under $25,000 per year in 2024: Share of households within given income range by race and ethnicity, 2024

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This chart extends beyond the data on median or midpoint of household income shown in Chart 17 to provide a more detailed look at where different groups fall across the entire household income distribution. In 2024, 22.9% of Black households, 23.3% of American Indian and Alaska Native households, 15.1% of Hispanic households had annual incomes under $25,000, compared with just 11.4% of white households and 9.3% of Asian households. This $25,000 figure is well below the 2024 official poverty threshold for a family of two adults and two children ($31,812). Conversely, 29.3% of Asian households and 17.8% of white households had annual incomes at or above $200,000—the highest income category—compared with only about 6%-10% of Black, AIAN, and Hispanic households.  

Poverty threshold data can be found in the U.S. Census Bureau’s Poverty in the United States: 2024 data tables, published September 09, 2025 

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Persistently elevated AIAN, Black, and Hispanic child poverty rates have thwarted progress reducing overall child poverty in the U.S.: Child poverty rates, by race and ethnicity, 1974–2024

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A cruel and unfortunate reality of structural racism in the U.S. economy is that even in the “best” of economic times, Black, American Indian, and Alaska Native (AIAN), and Hispanic children experience much higher rates of poverty than white children. In 2024, 30.5% of AIAN children, 25.4% of Black children and 20.2% of Hispanic children lived below the official poverty threshold, compared with just 8.2% of non-Hispanic white children 6.4% of Asian children. While child poverty has fallen significantly for Black, Hispanic, and Asian American children over the past 40 years, Black and Hispanic child poverty rates remained over 20% in 2024. Additionally, in 2024, AIAN children had the highest rates of child poverty at over 30 percent (30.5%). This large and persistent disparity in child poverty combined with the fact that Black and Hispanic children have become an increasing share of the underage 18 population over time (see Chart 1 and Chart 4) has resulted in very little change in the overall child poverty rate since 1974. Given the long-term effects of exposure to poverty in childhood, addressing these persistent disparities must play a role in our approach toward building equity and moving the needle on child poverty.

For more on the long-term effects of exposure to poverty in childhood, see Kerris Cooper and Kitty Stewart, “Does Money Affect Children’s Outcomes? An Update,” CASEpapers (203), The London School of Economics and Political Science, July 2017; Randall Akee et al., “Parents’ Incomes and Children’s Outcomes: A Quasi-Experiment,” American Economic Journal: Applied Economics, January 2010.

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Poverty rates are higher among AIAN, Black and Hispanic working-age adults: Poverty rates for age 18–64, by race and ethnicity, 1974–2024

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While poverty across the working-age population (ages 18 to 64) is lower than that for children (see Chart 19), disparities by race and ethnicity follow a similar trend, with American Indian and Alaska Native (AIAN), Black, and Hispanic adults more likely to be impoverished than white and Asian adults. Poverty is a measure of economic deprivation, and among working-age adults in particular, reflects disparities in unemployment, wages, and income. Life circumstances, such as severe disability and major illness—which can also limit earned income or quickly deplete any available savings—also contribute to poverty for this age group. The racially coded misrepresentation of poverty as some kind of moral or cultural pathology has hindered the political will needed to sustain and strengthen vital income supports that have proven effective in fighting poverty.  

For more on the misrepresentation of poverty as a cultural pathology see William “Sandy” Darity Jr., “Revisiting the Debate on Race and Culture: The New (Incorrect) Harvard/Washington Consensus.” Du Bois Review: Social Science Research on Race 8, no. 2, 467–476. For more on the vital income supports that would lessen poverty see Asha Banerjee and Ben Zipperer, “Social Insurance Programs Cushioned the Blow of the COVID-19 Pandemic in 2020,” Working Economics Blog, Economic Policy Institute, September 14, 2021.

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There are large racial disparities in poverty at older ages (65 and older)—likely reflecting differences in retirement preparedness and/or lifetime income disparities: Poverty rates for people ages 65 and older, by race and ethnicity, 1974–2024

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The poverty seen among older Americans in the chart is most likely the result of a lifetime of low earnings and a lack of retirement preparedness. While research shows that Social Security plays a critical role in keeping poverty rates among older Americans lower than they otherwise would have been (not depicted in the chart), older Black, Hispanic, and American Indian and Alaska Native (AIAN) adults still have relatively high poverty rates. Older Asian Americans are also more likely to live in poverty than older white Americans. Additionally, older Asian Americans have higher poverty rates than younger Asian Americans (see Chart 19 and Chart 20). This is likely due to a larger share of older Asian Americans having worked comparatively few years in the United States, or in jobs where they were unable to accumulate the necessary years for Social Security eligibility, leaving them less able to take advantage of work-based social safety net programs like Social Security.

For more on the causes of poverty among older Americans and the capacity of Social Security to lift older Americans—particularly women and people of color—out of poverty, see Kathleen Romig, Social Security Lifts More People Above the Poverty Line Than Any Other Program, Center on Budget and Policy priorities, April 2022. For more on the economic condition of the older Asian American population, see Victoria Tran, “Asian American Seniors Are Often Left Out of the National Conversation on Poverty,” Urban Wire (Urban Institute blog), May 31, 2017.

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Racial wealth disparities are stark and persistent, reflecting a history of exploitation and exclusion: Median family net worth by race and ethnicity, selected years from 1989 to 2022

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The chart shows sharp racial and ethnic disparities in net worth observed across time in the United States. Though not shown in the chart, these disparities reflect the differences in lived economic experiences between white, Black, Hispanic, and Asian families. Wealth can be accumulated both within and across generations, such that a high net worth can result from the benefit of prime earning years with 1) relatively few employment disruptions, 2) access to wealth-building savings and investment vehicles, 3) relatively few serious negative health shocks, and 4) well-timed wealth transfers from parents and grandparents.  The typical white household has many times the wealth of the typical Black or Hispanic household due to 1) their privileged position in the American labor market, which grants them access to more consistent and higher-quality employment opportunities, 2) their more limited exposure to the health risks brought on by poorer living conditions and discrimination, and 3) their history of access to wealth-building opportunities from which other groups have been excluded. 

In 2022, the Survey of Consumer Finances reported household wealth data for the Asian American population for the first time. Asian household wealth far outstrips that of other households in 2022, though this statistic should be couched with appropriate context: Asian Americans are an incredibly diverse group with varying economic circumstances related to, among other things, immigration history and country of origin; moreover, the SCF oversamples households that are likely to be wealthy. Further disaggregation of wealth data by immigration history could be useful in illuminating wealth disparities within the Asian American population.  

For more on the systemic barriers to Black wealth building see Natasha Hicks, Fenaba Addo, Anne Price, and William Darity Jr., Still Running Up the Down Escalator: How Narratives Shape Our Understanding of Racial Wealth Inequality, The Samuel Dubois Cook Center on Social Equity, 2021. For more on the barriers to Hispanic wealth building see Dedrick Asante-Muhammad, Alexandra Perez, and Jamie Buell, “Racial Wealth Snapshot: Latino Americans.” National Community Reinvestment Coalition, September 17, 2021.

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Health

Racial disparities in life expectancy reflect the cumulative disadvantage of living as a minority in the United States: Women’s and men’s life expectancy at birth, by race and ethnicity, 2022

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Racial disparities in life expectancy have been documented as far back as statistics on life expectancy have been recorded in the U.S, with clear and persistent distinctions between privileged groups and disadvantaged groups. That is, rather than groups shifting in their ranking of life expectancy randomly across time, there are distinct patterns in which groups live longer lives than others. In general, Black and AIAN women and men live much shorter lives than white and Asian women and men. 

In 2022, Asian American women and men had the longest life expectancies, at 86.3 years and 82.3 years respectively. AIAN women and men had the lowest life expectancies, at 64.5 years and 71.3 years respectively. This massive gap in life expectancy approaching two decades can be attributed to several factors, many of which are structural and rooted in economic disparity. In recent years, life expectancy gains have disproportionately gone to those in the highest income categories, who are disproportionately white and Asian (see Chart 18). Alongside the history of white supremacy and anti-Black racism in the United States, these economic roots of also help to explain persistent the persistent Black-white gap in life expectancy. That Black-white gap has fluctuated somewhat over the past decade, shrinking due to the impact of opioid-related “deaths of despair” on lowering white life expectancy, and reopening as COVID-19 related mortality disproportionately impacted Black and brown communities. 

Hispanic women and men tend to live longer than white women and men, though that life expectancy advantage has been shown to diminish with subsequent generations of U.S.-born Latinos. This suggests that there may be something uniquely deleterious about living as a minority in the United States.

For more on gaps in life expectancy, effects of the opioid crisis, and Hispanic life expectancy see Congressional Research Service, The Growing Gap in Life Expectancy by Income: Recent Evidence and Implications for the Social Security Retirement Age, CRS Report R44846, July 6, 2021; Helena Hansen and Julie Netherland, “Is the Prescription Opioid Epidemic a White Problem?” American Journal of Public Health 106, no. 12 (December 2016), 2127–2129 (doi: 10.2105/AJPH.2016.303483); Osea Giuntella, “The Hispanic Health Paradox: New Evidence from Longitudinal Data on Second and Third-Generation Birth Outcomes,” SSM – Population Health, vol. 2 (December 2016), 84–89 (doi.org/10.1016/j.ssmph.2016.02.013).

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The Affordable Care Act significantly reduced uninsured rates across racial and ethnic groups, but disparities remain: Uninsured rates by race and ethnicity, 2008–2024

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The Affordable Care Act (the ACA or “Obamacare”) expanded health insurance coverage to middle- and low-income Americans, which disproportionately benefited those groups with the least access—Hispanic Americans and American Indians and Alaska Natives (AIAN), and to a lesser extent Black Americans. Despite the marked improvement in health insurance coverage rates since the implementation of ACA, disparities between groups remain stark, with Hispanic and AIAN uninsured rates double Black rates, and approaching four times as high as the uninsured rates of white and Asian American and Pacific Islanders (AAPI). Early diagnosis and treatment are essential to minimizing the severity of chronic illnesses, and regular health care is important for promoting better overall health. The lack of health insurance often results in a choice to delay receiving health care until one’s condition is critical, contributing to racial disparities in health outcomes and life expectancy.

For more on how the ACA expanded health coverage, particularly to certain groups, see Samantha Artiga, Latoya Hill, Kendal Orgera, and Anthony Damico. “Health Coverage by Race and Ethnicity, 2010–2019,” Kaiser Family Foundation, July 16, 2021; Jesse Cross-Call, Medicaid Expansion Has Helped Narrow Racial Disparities in Health Coverage and Access to Care, Center on Budget and Policy Priorities, October 2020.

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Black mothers are far more likely to die from pregnancy-related causes than are white and Hispanic mothers: Pregnancy-related deaths per 100,000 live births by race and ethnicity, 2023

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Maternal mortality rates are a stark indicator of racial disparities in public health in the United States. Black women are over twice as likely to die from a pregnancy-related cause as white women, almost three times as likely as Hispanic women, and almost four times as likely as Asian women. Although not shown in the chart, these racial disparities persist regardless of a woman’s social or economic status. Health status and differential access to quality prenatal care play a major role in maintaining these disparities, as does structural racism more generally. To adequately address these disparities in maternal health outcomes, we must confront racism and bias in the U.S. health care system and the implications for how health care providers and personnel communicate with and treat patients.

For more on the causes and solutions to Black maternal mortality, see “Working Together to Reduce Black Maternal Mortality,” Centers for Disease Control and Prevention, April 6, 2022.

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AIAN population 1-year estimates and 3-year rolling averages, select charts

Appendix

Appendix

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Key takeaways

• The last decade marks a shift in the prime-age labor force participation rate (LFPR). It moved away from a long-term decline toward rebounded participation in the wake of strong labor markets. Current prime-age LFPR is now back to its 2001 level, erasing much of those losses. Key conclusions from this: Full-employment labor markets are needed to keep LFPRs strong, and long-term structural determinants of LFPR growth cannot be accurately diagnosed during times of cyclical labor market weakness.
• Since 1979, key drivers of the decline in men’s labor force participation included the following:
  • extended periods of excess unemployment rates
  • the labor market scarring effect of mass incarceration
  • the decline of historical sources of employment for noncollege men like the manufacturing and military sectors
  • increased opioid usage
• During the strong labor market in the late 2010s and following the tremendous recovery from the pandemic recession, noncollege men and Black men have seen substantial increases in    labor force participation.
• Women, by contrast, experienced historical gains in labor force participation throughout the 1980s and 1990s but then their participation stalled out in the early 2000s —and began falling behind relative to peers in OECD countries. In the U.S., insufficient support for balancing paid work and family responsibilities has been a limiting factor in further increases in women’s labor force participation. However, increases in workplace flexibility, with the rise of hybrid or remote work following the pandemic, may have boosted labor force participation, particularly for women with caregiving responsibilities.

Policy recommendations for maintaining and improving gains in labor force participation:

• In addition to policies that prioritize tight labor markets, policies should target the following for adults:
  • reductions in opioid use
  • reductions in incarceration rates
  • improvements in policies that support parents and caregivers
  •  substantial improvements in the pay and working conditions of jobs of the future (like caregiving jobs) to attract and retain workers
• Investments in today’s children are crucial for boosting the labor force participation of future generations, such as safety net policies that promote long-term health and educational investments. The future labor market benefits of investing in children are so strong in the long run that they may even be fiscally self-financing.

Executive summary

Labor force participation is both a key input and a consequence of strong economic growth. While there are many reasons some do not participate in the formal labor market—school, family caregiving responsibilities, retirement, work-limiting disabilities—a strong labor market with high employer demand for workers is a necessity to give as many willing workers as possible a chance for employment.

In an aging population in which college attendance is far more common than it used to be, demographic trends have a strong influence on the overall labor force participation rate. Few people think that it’s a problem that many older Americans choose to enjoy retirement or that many younger adults are enrolled in school rather than searching for work. What is, however, a potential problem is many prime-age workers—those between 25 and 54—are dropping out of the job search and work. To assess the extent of this problem, this report focuses primarily on prime-age labor force participation, the share of the population between 25 and 54 that is working or looking for work. This measure rose sharply from the mid-1970s to the mid-1990s. After that, it was flat for a period, then fell during the mid-2010s, most notably following the Great Recession. Over the last 10 years, participation has rebounded strongly and is now back to its 2001 level, erasing much of those post-2000 losses.

The rise in participation before 2000 was primarily driven by women as they increased their education, delayed family formation, and chose to participate in the paid labor market, driven in part by greater opportunities to access higher-paying previously male-dominated professions. The rise in participation over the last decade improved outcomes for both men and women, as strong employer demand led to workers entering or returning to the labor market. By 2024, women’s participation hit an all-time high, and men’s participation rate is back to its 2010 level.

Changes in labor force participation over the last nearly five decades varied by gender, but also across various demographic groups. While changes within demographic groups were the most important drivers of overall trends, there were notable differences between groups. For instance, those without a college degree—particularly men—experienced steeper declines in participation. And education upgrading (increasing the share of the population with a college degree) over the long term did little to offset that weakness. Loss of jobs in areas that traditionally were large-scale employers of noncollege men, such as manufacturing and the military, is undoubtedly related to reduced opportunity and participation in the labor force for those without a four-year college degree.

Black men, in particular, experienced notable declines in participation before the strong labor market over the last 10 years returned their participation to its 2000 level. The quadrupling of incarceration rates through the 1980s and 1990s disproportionately impacted Black men, making it harder for them to secure employment because of both the labor market scarring effects of incarceration as well as labor market discrimination.

Across peer countries in the OECD, prime-age labor force participation didn’t fall off to the same extent for men as it did in the U.S. and continued to rise for women over time. Insufficient support for balancing paid work and family responsibilities in the U.S. has been a limiting factor, particularly for women’s labor force participation. A body of international evidence indicates that larger investments in those areas—such as child care and paid leave—have the potential to help boost participation. Recent increases in work flexibility following the pandemic, such as hybrid or remote work, may have aided the entry or reentry of workers with caregiving responsibilities.

Policy choices–both of commission and omission—can affect the future growth of labor force participation, but outside of immigration, the effects will be comparatively modest relative to historical swings in labor force participation. Strengthened public care can increase labor supply, particularly for women. Poor health, pain, and opioid use have been linked to lower participation, so improving population health and the provision of health care could increase labor force participation. Further, investments in today’s children, through programs that provide health care, early education, and food security, can also pay dividends in terms of future labor force participation.

A strong economy and high-quality jobs are strongly related to labor force participation. When the labor market is tight, workers come back in search of better opportunities. Even with the pandemic job losses, the tight labor market over the last decade has all but erased the declines in the 2000s when excess unemployment and slow job growth kept would-be workers on the sidelines.

Introduction

The rate at which people participate in the U.S. labor force—which includes people who are working, as well as those who are unemployed but actively looking for work—has enormous implications for the economy and can serve as a barometer for its overall health.

There is no ideal labor force participation rate, and a society in which 100% of the population is in the labor force is not only unrealistic, but also undesirable. For example, high labor force participation could reflect a strong economy, or it could reflect a lack of access to social safety nets that force the very old and people with work-limiting disabilities into the workforce in order to survive. Falling labor force participation rates could be the result of a recession or other negative event like a global pandemic or could be caused by an aging population with many retired people or increased educational opportunities that delay entry into the labor force among younger cohorts.

Because there is no obvious ideal labor force participation rate, policymakers should think less about particular targets to hit for this rate and should instead aim at removing barriers that stand in the way of willing workers and their ability to search for and secure a decent job. While there are good reasons to not participate, such as gaining education or skills, harmful barriers could include macroeconomic slack in labor markets or more structural barriers like discrimination or insufficient societal investment in workers’ health and skills or insufficient support for balancing paid work and family responsibilities.

Labor force participation that is high due to few barriers between willing workers and the ability to find decent jobs is a key ingredient to a healthy, stable economy. This relationship moves in both directions: A healthy economy is one that sees few barriers to willing workers finding jobs, and growing labor force participation is also a key component of economic growth. When the number of people in the labor force increases, it boosts production and leads to higher consumption.

The overall labor force participation rate in the United States is lower now than at its peak in 2000, largely because the population is aging and members of the baby-boom generation have retired. Participation among younger people has declined over time, raising concerns among some economists and policymakers. But the direction of these trends has not been consistently negative, and there is evidence from the last decade that earlier patterns were less durable than predicted.

This report provides an overview of prime-age labor force participation over the last 45 years, summarizes prior research on possible drivers behind the changes over time, and highlights when and how patterns have shifted over the last decade, concluding with policy recommendations that the data suggest could be most helpful to support a continued upward trajectory.

Overall trends in labor force participation

The prime-age labor force participation rate is the share of the civilian noninstitutional population between ages 25 and 54 that is working or looking for work. We focus on this measure to remove those who may be more likely to be in school or retired. As educational attainment has increased over time, a larger share of the population may be out of the labor force for longer (primarily affecting the population younger than 25). At the same time, the population has aged, and a growing share of the population has moved into retirement. Removing those under 25 and over 54 from our analysis removes those mostly demographic changes in labor force participation. Unless otherwise stated, all analysis in this report will include only the U.S. population 25 to 54 years old and will, therefore, be referred to as the labor force or the labor force participation rate (LFPR).

In this report, our primary data set is the basic monthly Current Population Survey. For most analysis, we have a consistent series from 1976 to 2024 and use that entire period, when possible, to display trends. For consistency when decomposing changes over periods of time, we start with 1979 because it is the first business cycle peak in our data, and we don’t want to capture any cyclical trends that may have impacted the data from 1976. Using endpoints for analyses that are at different points of the business cycles can cloud conclusions on structural changes in the labor market. This is what happened with much of the research on labor force participation rates from the mid-2010s when the economy was still suffering employment losses in the aftermath of the Great Recession.

Prime-age labor force participation increased year over year throughout most of the post-World War II era for which we have data. Between 1976 and 2024, the prime-age labor force participation rate rose 8.8 percentage points from 74.8% to 83.6%. As Figure A demonstrates, there was a sharp rise in labor force participation from 1976 to the mid-1990s when it stabilized somewhat, then fell until the mid-2010s. With the notable exception of the pandemic recession, labor force participation has been on the rise for the last 10 years.

Figure A

Labor force participation rates by gender

The overall trends in prime-age labor force participation are valuable in understanding the overall story of the labor market, but they mask some stark differences between participation rates for men and women. Figure B shows that men’s labor force participation is consistently higher than women’s throughout the entire period. What’s most striking is the rise in participation overall through the 1990s was entirely driven by women. There are a number of cultural and socioeconomic factors behind that rise in women’s participation as women increased their college attendance and graduation rates while narrowing the gender gap in college majors, delayed marriage and childbirth, and acquired more market-relevant skills. Combined, these shifts led to greater opportunities for women to enter previously highly male-dominated occupations and earn higher wages (Goldin 2006). Both men and women experienced declines in participation from around 2000 to the mid-2010s, and then both groups experienced a rise since then, though stronger for women.

Figure B

Labor force participation rates move with overall labor market strength

Labor force participation rates tend to decline under weak economic conditions, like recessionary periods. But when the 2008 recession began, prime-age participation had still not fully recovered losses from the early 2000s, and LFP continued to fall for both men and women after the recession ended and the economy started expanding again. The majority of the decline in prime-age labor force participation occurred in the years after the 2008 recession, when prime-age LFP fell by 2.2 percentage points over the course of six years.

A significant body of research was released in the mid-2010s that highlighted the long-term fall in labor force participation, particularly among men, but the last 10 years have shown us a notable reversal in trend as participation for both men and women have been on the rise. While prime-age women are now experiencing their highest labor force participation rates on record, men’s have stopped their downward movement and risen 1.1 percentage points since their low point in 2014 (except in the pandemic recession).

The strength of the labor market over the last 10 years has meant more and better opportunities for potential labor market entrants. There have been two distinct periods over the last 45 years in which a growing economy has led to more broadly shared prosperity: the late 1990s and the last 10 years. Table 1 maps changes in labor force participation in those particular time periods against unemployment rates. Then, we summarize those two periods of time into two categories. The stronger labor market is defined by 1995–2000 and 2014–2024, while the weaker labor market is defined by the remaining 30 years since 1979.

In the good times, the unemployment rate averaged 4.7%, and labor force participation increased 0.3 and 0.1 percentage points per year, on average for women and men, respectively. In the bad times, women’s labor force participation continued to rise, but was largely driven by the structural increases in opportunities in education and reduced barriers to entry for higher-paying professions that characterized the 1979–1995 period. Men’s participation fell 0.2 percentage points in these times of weaker opportunities and lower wage growth when the overall unemployment rate averaged 6.7% (Gould 2020). Since 2000, periods of high unemployment have been associated with declines in both male and female labor force participation.

Table 1

Periods of higher unemployment for much of the last 45 years appear to be related to lower participation rates, particularly among men. But, as the women’s labor force participation rate stabilized in 2000, the trends have been similar for both men and women. The weaker labor market between 2000 and 2014 meant losses in participation, as workers saw fewer opportunities for themselves in the labor market. Though delayed, the labor market expansion in the lead-up to the business cycle peak in 2019, and in the strong bounceback of the last four years, has coincided with greater labor market participation for new or returning workers.

Mechanically, when workers see fewer opportunities and leave the labor force, the unemployment rate will fall as people who may have been classified as unemployed are now out of the labor force and, therefore, not counted. To the extent this is happening, even the higher unemployment rates in the bad times may be overstating labor market strength or undercounting weakness.

Since men’s and women’s labor force participation rates differ greatly in terms of their absolute levels across the entire period in question, we will conduct separate analyses for women and men. We caution readers to note the change in scale between figures for women and men when comparing trends. Women’s low participation in the 1970s requires a wider range; when men’s are narrowed to the range of interest, it can appear to amplify changes. While there were large losses over the entire period for men, they may appear larger than they are when compared with women’s wider labor force experiences.

Labor force participation rose for all racial/ethnic groups among women, while white and Black men experienced the largest declines

Figure C illustrates prime-age labor force participation rates for women (on the left) and men (on the right) for four groups: Hispanic of any race, white non-Hispanic (white), Black non-Hispanic (Black), and other (non-Hispanic). Other (non-Hispanic) is mostly Asian and Pacific Islander women and men; however, a series for this group doesn’t date as far back as 1976. Among women, Hispanic women have the lowest participation rates, while white and Black women have the highest. White women experienced the sharpest rise in participation through the 1970s, 1980s, and 1990s, and all groups experienced a lack of progress or a softening in participation in the early 2000s. Except for the dip in the pandemic recession, all groups experienced a resurgence in participation over much of the last decade.

Figure C

Over the entire period, Black men had the lowest labor force participation rates, and their declines were the sharpest for much of the last 45 years, never recovering fully in each recovery until the most recent period. With the exception of losses in the pandemic recession, Black men experienced a significant increase in participation over the last decade. Now, their labor force participation rate is the highest it has been in nearly 25 years. White men also experienced declines until the mid-2010s, but their participation rate stabilized and remains just shy of their pre-pandemic levels. Hispanic men experienced milder declines over the entire period and an uptick since the pandemic recession.

Though we do not show a figure for labor force participation rates by nativity (and the data only go back to 1994), it’s worth noting that among women, the participation rate of noncitizens is much lower than that of native or naturalized women (See Appendix Table 1). Among men, the largest fall in participation occurred among the native-born though 2014 but then rose over much of the last 10 years, except during the deep pandemic recession. Non-native men, either naturalized or noncitizens, did not experience large declines in participation, but their presence in the U.S. is often tied to the availability of work so their denominator—the population of each of these groups—also ebbs and flows with the strength of the labor market.

Over the last nearly five decades, the prime-age population has shifted from over 80% to about 55% white non-Hispanic, a drop of about 28 percentage points (EPI 2025a). While the Black share of the prime-age population rose about 4 percentage points, the largest gains were among the Hispanic share, increasing about 16 percentage points between 1979 and 2024 (EPI 2025a).

Given differences in labor force levels by race and ethnicity and the changing composition of the population by race and ethnicity over time, it is useful to decompose the overall change in the labor force into its component parts: the change in population share (or the between effect) and the change in labor force participation within groups (the within effect). Figure D shows these two effects, on the left for women and on the right for men.

Figure D

Compared with the changes due to the changing composition of the workforce, the changes within groups loom much larger. For women, the changing composition pulls down participation in part because Hispanic women were a growing share of the population with lower participation rates, compared with the falling share and higher participation rates of white non-Hispanic women. The rise is due to within-group increases in participation over the entire period.

Among men, the changing composition of the workforce played a small role, though likely driven by a falling population share of white men with higher participation rates in general. The drop in participation rates within each race/ethnic group played a much larger role over the 45-year period.

Labor force participation rate fell sharply for men with less than a four-year college degree, while participation for women with a college degree is at its highest ever

Labor force participation rates for different groups by educational attainment vary but follow the same general pattern for men and women, respectively. Both men and women with lower levels of educational attainment, shown in Figure E as noncollege—less than a four-year bachelor’s degree—exhibit lower levels of labor force participation throughout the last 45 years. For women, the noncollege participation tracked college participation, though their rates notably continued rising into 2000, while college participation peaked in 1997 (before the current period). Then, noncollege women’s participation dropped off in the 2000s and rose only mildly over the last 10 years. After softening for several years, labor force participation for women with a college degree is now at an all-time high.

Figure E

The labor force participation rate for men with and without college degrees has declined over time, but unevenly. Men without a four-year college degree experienced large declines between 1979 and 2014, a fall of 8.2 percentage points. They experienced some gains in the expansion of the late 2010s but were harmed more in the pandemic recession. While their participation rate is now back to their 2019 level, the increase hasn’t put a huge dent in the losses they suffered in the 35 years following 1979.

The reduction in labor force participation for noncollege men over time has been considerably greater than for men with a four-year degree. Technology has reduced employment for some types of workers, especially in manufacturing and jobs made up of routine tasks, while boosting employment for other kinds of work, and there is evidence that middle-skilled or middle-wage occupations have declined and have been replaced with a combination of low- and high-skilled jobs (CEA 2016).1

The decline in jobs that are available to workers with lower levels of formal education—or perhaps more accurately, the decline in the types of jobs these men have traditionally had access to, such as those in manufacturing—may make men more likely to leave the labor force. The decline in routine manual-labor jobs—skilled and semi-skilled jobs in production, maintenance, and material moving occupations, which are concentrated in manufacturing but are common in many other industries as well—has been significant and was accelerated by the 2008 recession.

From 2000 to 2017, routine manual-labor jobs as a share of all nonfarm employment fell by nearly 5 percentage points (Valletta and Barlow 2018). There is a correlation between routine manual-labor jobs and prime-age labor force participation, and in states where the drop was larger, there tended to be corresponding larger declines in participation. Controlling for other state-level economic conditions does not alter the relationship, indicating that the share of routine manual-labor jobs is not a proxy for other broad changes such as changes to the unemployment rate. The reduction in the routine manual employment share from 2000 to 2017 is estimated to have reduced the prime-age participation rate by approximately 1.3 percentage points, slightly more than half of the actual 2.3 percentage point decline in prime-age LFP (Valletta and Barlow 2018).

More specifically, the share of men’s employment in the manufacturing sector has fallen to less than half of what it was in 1979. As shown in Appendix Table 3, men’s share of employment in combined durable and nondurable goods manufacturing was 28.5% in 1979, but by 2024, these shares were reduced to 12.8%. To be clear, women’s participation in manufacturing jobs also declined substantially over the period, dropping from 17.9% to 6.3% of women’s employment; however, given that these jobs made up a smaller share of women’s overall employment composition, the loss was felt less by women than by men.

Additionally, the debate over falling male labor force participation often does not mention an important and heavily male economic sector that has shrunk enormously in terms of the opportunities it provided for those who might otherwise have lower-than-average participation rates: the military.

Figure F shows the overall decline in men’s labor force participation alongside the decline in total military employment scaled to the male noninstitutional prime-age population. To be clear, these are not true shares because our measure of the prime-age population is limited to the noninstitutional population, which excludes those in military service. However, the decline in military employment has meant that millions of noncollege men who might have lower-than-average opportunities in the civilian economy can no longer find work in the military. Throughout the mid-1960s through the 1990s, the share of prime-age men in the military dramatically decreased, from a high of 14% in 1967 leveling out at just under 4% of the prime-age male population in the 2000s.

Figure F

Educational upgrading played a small role compared with within-group changes in labor force participation

As with the composition of the population by race and ethnicity, there were large shifts in the educational attainment of men and particularly women between 1979 and 2024. As shown in Appendix Table 2, the share of women with a college degree rose 30.3 percentage points, while the share of men with a college degree rose 14.3 percentage points. Even though women started out with a smaller share of college graduates, today they are more likely to have a four-year degree relative to men. Given that overall labor force participation is far higher for college degree holders, all else equal, we would expect participation rates to have climbed over the 45-year period. While not the same as the labor force participation rate, prime-age women’s increased educational attainment is estimated to have contributed 2.7 percentage points to their employment rate between 2000 and 2023 (Arnon et al. 2023).

There is evidence that pursuing postsecondary education may be delaying labor force entry, at least for some populations. While most college students are younger than prime age, about one-third of students enrolled at Title IV institutions in the fall of 2023 were age 25 or older, and one-quarter were ages 25 to 39 (NCES 2024). Research comparing prime-age men between millennial and baby-boomer generational cohorts found that school attendance explains a roughly a third of millennial men under 30s’ lower labor force participation, but that this effect has virtually no impact by age 40 (Bengali, Duzhak, and Zhao 2023). And when millennial men are separated by education, labor force participation for those with a high school diploma or less is relatively flat from age 25 to 40, while it increases with age for those with a college degree or more, suggesting that additional educational attainment may play a role in delaying eventual entry into the labor market.

In Figure G, we examine the role that changing education composition played in the changes in labor force participation. As the shift in educational attainment was twice as large among women, it’s not surprising that it played a large role in lifting women’s participation rates overall. But the increases in participation within education groups were even more important since 1979. For men, the declines in participation within each group played an outsized role in explaining declines in labor force participation. As we saw in Figure E, these losses were more acute among noncollege men.

Figure G

Labor force participation among married women rose quickly, as unmarried women saw little change

Participation rates for men and women by marital status display a strikingly different pattern, as shown in Figure H. Married men are more likely to work than unmarried men, while unmarried women are more likely to work than married women. Unmarried women always exhibit relatively high levels of labor force participation, and that has changed little over much of the last few decades, except for mild rising and falling in business cycles. Married women, however, experienced a sharp rise in participation from just over a half (52.3%) to three-quarters (75.8%), currently at their highest level of participation on record.

On average, married men are about 9 percentage points more likely to participate in the labor force than unmarried men. That gap has been relatively consistent over the last 45 years, though unmarried men are more subject to swings in the labor market.

Figure H

Over the last nearly five decades, marriage rates have declined for both men and women, falling by about a quarter overall (see Appendix Table 2). All else equal, the decrease in marriage rates for women would pull up overall labor force participation for women. Figure I illustrates this decomposition. The shift toward unmarried status pulled up women’s participation but depressed men’s, as unmarried women are more likely to work than unmarried men, but unmarried men are less likely to work than married men. Rising participation, especially among married women, was a major factor in the rise of participation among women. Men’s falling labor force participation over the 1979–2024 period is explained by both falling participation among married and unmarried men and falling married rates.

Figure I

Labor force participation among women with young children rose, while men’s labor force remained tied to aggregate labor market conditions

While a small percentage of prime-age workers overall report they are not in the labor force due to family and care responsibilities, family structure and caregiving have strikingly disparate impacts on men’s and women’s participation. Care for children is a significant driver of this difference, as mothers are more likely than fathers to be primary caregivers. Mothers have lower participation rates than similarly aged women without children, even after controlling for demographics and education (Kahn, García-Manglano, and Bianchi 2014).

Participation rates for women with young children tend to lag participation rates for women overall and have not grown at the same rate (see Appendix Table 1). Women with children under age 3 have lower participation rates than women with children under 5, although the gap between these two groups has closed slightly since the early 2000s. Women experience a significant and sharp decline in labor force participation after having their first child. Compared with one year prior to having their first child, mothers are 18 percentage points less likely to be in the labor force in the quarter they give birth, and it takes an estimated two years after the birth of their last child for LFP to recover to roughly the same rate as pre-motherhood (Sandler and Szembrot 2019).

Some of this is likely due to personal preferences and cultural norms around caregiving, but there is also evidence that suggests high prices for child care contribute significantly to lower maternal labor force participation. Previous studies have found a positive relationship between access to child care and the mother’s LFP, although the size of the effect varies across studies (Morrissey 2017). More recent data suggest a close to a 1-to-1 relationship between the price of care and employment; as child care prices increase by 1 percentage point, a mother’s probability of employment declines by 0.9 percentage points, and the relationship is even stronger in states with traditional gender norms (Collins et al. 2021).

Factors thought to have influenced prime-age labor force participation between 2000 and the mid-2010s

The majority of the decline in prime-age labor force participation occurred in the years immediately after the 2008 recession, when the participation rate fell by 2.2 percentage points over the course of six years. This prompted a wave of research and subsequent news coverage aimed at understanding the drivers behind this shift. Labor force participation rates tend to decline under weak economic conditions like recessionary periods. But when the recession began, the prime-age LFP had still not fully recovered losses from the early 2000s, and it continued to fall for several years for both men and women after the recession ended and the economy started expanding again.

The longer-term trends indicated that there were factors exerting downward pressure on prime-age participation beyond the business cycle. Estimates on how much of the change in LFP was caused by cyclical factors vary, ranging from one-sixth to about two-thirds (Shierholz 2012; CEA 2016). But while point estimates varied, there was widespread agreement that structural factors contributed significantly to falling labor force participation after 2007.

Many of the factors identified, such as declining opportunities for men without four-year college degrees and stalled parental and child care policies, have already been discussed. A wide range of other potential causes has also been hypothesized to be behind the reduction in prime-age participation, with an overall focus on the experience of men, given their steeper declines.

Poor health, pain, and the opioid epidemic

The number of prime-age adults who report they are not in the labor force due to poor health or disability has increased over time and is the primary reason for nonparticipation reported by men (Tüzeman and Tran 2019). Prime-age women overall report their health as better and their well-being as higher compared with men, and women’s self-reported health does not vary significantly by labor force status. In contrast, prime-age men who are not in the labor force report worse health indicators compared with working men (Graham and Pinto 2021).

Racial and ethnic disparities in health are well documented (NASEM 2017), but in contrast to decades of findings that people of color experience disproportionate health challenges, white men, among prime-age men not in the labor force from 2010 to 2016, reported worse health, lower well-being, and more pain than men of other racial groups. Among these white men, overall low scores were driven by those with lower educational attainment and those at the older end of the prime-age range, especially those ages 45 to 54. Because their health was so much worse than similar men who are working, this suggests that poor health may be the cause of their nonparticipation rather than its effect (Graham and Pinto 2021).

The opioid epidemic has also been linked to declining labor force participation, although it is difficult to assign causation or separate cause from effect due to a lack of reliable data. Opioid prescriptions increased significantly beginning in the late 1990s and peaked in 2012 (Chai et al. 2018) with 17.8 billion opioid analgesic pills dispensed that year alone (Woods et al. 2021). While the overall decline in prime-age labor force participation predates the opioid epidemic, there is evidence opioid use may have contributed to the trend.

A number of studies show that increases in the use of opioids are associated with negative labor market outcomes, including lower labor force participation, although effect sizes vary (Maclean et al. 2020). One widely cited report found that labor force participation fell more in counties with higher opioid prescription rates. After controlling for race, marital status, age, education, manufacturing jobs, and census region, increased opioid prescriptions are estimated to account for as much as 0.6 percentage points of the decline in prime-age male LFP and 0.8 percentage points of the decline for women—or roughly 20% of the total decline from 1999 to 2015 (Krueger 2017). Subsequent research found an opposite pattern by gender, estimating that a 10% increase in the local opioid prescription rate is associated with a 0.53 percentage point decline in prime-age participation for men and a 0.10 percentage point decline for prime-age women (Aliprantis, Fee, and Schweitzer 2023).

Social Security Disability Insurance

Along with increased self-reported poor health, pain, and opioid use, growing incidence of disability benefits has also been proposed as a cause of falling prime-age labor force participation in the 2000s and 2010s. Social Security Disability Insurance (SSDI) has been an important component of the social safety net since benefits began in 1957. Reforms were made to the disability screening process in the 1980s, and researchers have posited that, coupled with an increase in the real value of benefits, this led to the subsequent large increase in enrollment, with the number of workers receiving SSDI benefits tripling from 1980 to 2013. Some went so far as to suggest that many of the applicants may be making fraudulent claims (Autor and Duggan 2006). Although SSDI benefits replace only a fraction of a disabled worker’s prior earnings and disabled beneficiaries are more than twice as likely to live below the poverty line (CBPP 2025), some researchers hypothesized that SSDI benefits would reduce the incentive for people with some remaining work capacity to stay in the labor force.

Estimates on how much increased SSDI receipt has contributed to declining labor force participation for prime-age men vary but generally account for very little of the total change (CEA 2016). SSDI is suggested to have a particularly chilling effect on LFP for men with lower levels of education since benefit receipt has grown more for prime-age adults without a college degree, a group that has also seen larger declines in participation (Burk and Montes 2018). But research comparing data on SSDI and participation rates between 1975–1984 and 2008–2017 found that increases in disability benefits explain almost none of the decline in LFP for men with less than a high school education and only very small shares of the drop in LFP for prime-age men with only a high school diploma—0.01 percentage points of the decline for men ages 25–34 and 35–44, and 0.3 percentage points for those ages 45–54 (Binder and Bound 2019).

Incarceration rates

The number of people incarcerated in the U.S. quadrupled from 1978 to 1998 (BJS n.d.), and young Black men are disproportionately likely to be impacted. The rise in incarceration has cross-cutting effects on measured labor force participation. Because the surveys that estimate participation do not include the incarcerated population, if those currently incarcerated would be likely to have lower-than-average labor force participation rates in the noninstitutional labor market, a rise in incarceration can actually boost measured participation by removing this population from the denominator.

However, if a spell of incarceration causally reduces the probability of labor force participation because it makes an individual’s connections to the labor force more tenuous (being in an institution categorically means one is not in the labor force) or because skills and work experience can depreciate over time, then a growing stock of people in the market with a spell of incarceration in their history could lower overall participation through these scarring effects. Further, people with a history of incarceration are more likely to experience labor market discrimination (Burk and Montes 2018).

Spells of incarceration are estimated to have accounted for at least a quarter of the decline in LFP among all Black men between 1979 and 2000, and over one-half of the decline in participation rates among Black men ages 25–34 without a high school diploma (Holzer, Offner, and Sorenson 2005). More recently published research found that having received a criminal charge in their youth significantly increased the number of weeks prime-age men spent out of the labor force up to 26 years later. However, the data used in this research may be overestimating effects since it cannot account for reasons why someone is not in the labor force, including school attendance or because of later incarceration (Ellsworth 2017).

While not specifically measuring effects on prime-age labor force participation, additional research quantifies the way prior convictions—which may or may not result in incarceration—impact future employment. Having been convicted of a felony is estimated to have reduced the employment rate for all men in 2008 by 1.5 to 1.7 percentage points, and by 6.1 to 6.9 percentage points for men without a high school diploma (Schmitt and Warner 2011). Later research using state-level modeling estimated that every 1 percentage point increase in the share of the adult population with a felony conviction is associated with a 0.3 percentage point increase in the rate of nonemployment—including unemployment and being out of the labor force—for adults aged 18 to 54 (Larson et al. 2022).

Leisure activities

As previously discussed, prime age women are much more likely to leave the labor force to undertake family responsibilities, and men rarely report this as the reason for their nonparticipation. But regardless of the reason for their nonparticipation, there is also no evidence that men ultimately use the time they may have otherwise used for labor market activities on household work. Time-use data show that prime-age men not in the labor force spend twice as much time on leisure activities compared with other men, but only slightly more time on housework and caring for children (Krause and Sawhill 2017).

From 2000 to 2015, total market hours worked fell more for younger men ages 21 to 30 than for men ages 31 to 55, and younger men’s detachment from the labor market increased. Computer and video game technology advanced over this same period, which increased the appeal of this leisure time, and younger men significantly increased their time spent gaming. While recognizing other factors such as declining demand for younger men’s labor, researchers have hypothesized that video and computer games are a potential factor that contributed to the reduction in the labor supply of younger men, estimating that increased gaming technology was responsible for up 38% to 79% of the differential in work hours reduction between younger and middle-aged men (Aguiar et al. 2017).

Subsequent research confirms that time spent playing video games increased among men in the 2000s (Krueger 2017; Gray 2019). The increase in time spent gaming was concentrated among men under 30, and nonworking young adult men spent more time playing computer and video games than their working peers did. However, total electronics leisure time was flat over this period because time spent on gaming was generally offset by decreased time watching television or movies, not by reduced job search or labor market activity. And while young men who had recently exited the labor force spent more time gaming than employed men did, they spent less time compared with men who had been out of the labor force longer, undercutting the hypothesis that gaming was the reason for their exit (rather than a consequence of it). Overall, the data suggest that shifting cultural norms have made it more socially acceptable for slightly older and non-employed men to spend time playing video games, not that young men were leaving the labor force in order to devote more time to gaming (Gray 2019).

Real and relative wages

Real hourly wages (adjusted for inflation) for prime-age men without a college degree were meaningfully lower in 2015 compared with the early 1970s, while real wages for men with degrees increased over the same time—although the decline is not consistent throughout the entire period, and real wages for all educational groups did increase in the late 1990s (Binder and Bound 2019).

While an individual’s personal level of pay is important to labor market decisions, there is also evidence that men’s relationship to other men’s wages may have a meaningful impact on their beliefs about the financial returns on the time and effort invested in work and subsequent labor supply. Data from 1980 to 2019 show that noncollege prime-age men are more likely to leave the labor force when their earnings decline relative to other prime-age men. Increases in real earnings may not be enough to offset the effect of inequality; it’s the comparison to what other similar-ages men are paid that seems to matter most. The relationship with women’s wages is weaker, and white non-Hispanic men are driving the relationship, indicating that the LFP of historically privileged groups may be more sensitive to changes in relative economic standing. This decline in relative earnings for noncollege prime-age men is estimated to have contributed to 44% of the decline in labor force participation over this period (Wu 2022).

Additional recent research comparing wages in men’s birth states found a positive relationship between the wages paid to other men starting in an individual’s boyhood and their eventual labor force participation when they reach prime age, even after controlling for labor market conditions and demographic variation. The study found that a $0.33 increase in the average experienced aggregate lifetime hourly wage of men raised the probability of prime-age labor force participation by 10 percentage points. The effects persisted even when men moved states, and were stronger within racial categories with an effect twice as strong for Black men compared with white men. Racial decompositions found that white men were most influenced by the wages of other white men, while Black men were influenced by both Black and white wage trajectories (Levin and Vidart 2025). The data suggest that lifetime wage experiences, and what men see other similar men being paid throughout the life course, may shape beliefs about the returns on work, which in turn, influence labor force participation. This may help explain why men’s LFP continued to decline in the 1990s when real wages rose.

More recent changes to the economy 

The research outlined above was largely conducted using data from the years immediately after the 2008 recession, often with endpoints before prime-age labor force participation started recovering in the late 2010s. Labor force participation declined dramatically in 2020 but rebounded faster than predicted, continuing the upward trend in place before the pandemic. Between 2020 and 2024, the prime-age labor force grew about two-and-a-half times faster than the prime-age population (EPI 2025b). And as of 2024, prime-age men’s participation had regained its 2010 level, while women’s hit a historic high.

Research on the drivers of the rapid recovery and longer-term prime-age LFP increases is ongoing, but there are indicators that the single most important factor might simply be the state of macroeconomic slack. The 2010s saw prolonged and large output gaps that persisted for almost a decade after the business cycle peak in 2007. The more recent post-pandemic recovery was far faster, with output gaps essentially erased 18 months after the previous peak.

Since 2015, when prime-age participation started to recover, researchers have found a consistent procyclical relationship between changes in state unemployment rates and prime-age LFP, a relationship that is not present for business cycles between 1990 and 2014. The wage gains experienced by low-wage workers have been larger during the recent economic expansions compared with earlier periods, and since this groups tends to be more responsive to changes in labor market conditions, it is possible that higher wages for workers at the lower end of the wage spectrum drove labor force participation rates up (Prabhakar and Valletta 2024). However, as wage growth has slowed, this procyclical rise has likely cooled for now.

Prime-age women’s labor force participation fell more than men’s in the early months of the pandemic, declining by 3.4 percentage points compared with men’s decline of 2.8 percentage points, although women’s LFP recovered earlier and more consistently than men’s in 2023 (EPI n.d.). Maternal employment and labor force participation were also deeply impacted by the closure of in-person schooling and child care, more so than for fathers and women without children (Landivar et al. 2023). As a result, in contrast to studies done in the 2010s, much of the post-pandemic research has focused on the labor market experiences of women and mothers.

Labor force participation for mothers whose youngest child was under age 5 hit a record high of 71% in September 2023 (Aron-Dine, Bauer, and Powell 2025). There are a number of factors that could have influenced this outcome, including increased access to telework, as mothers with preschool-aged children are the most likely group of prime-age workers to telework, or this could be the result of the procyclical factors previously discussed.

Earlier analysis found that prime-age women contributed the most to the rebound of the overall labor force participation rate post-pandemic, and among all prime-age women, it was mothers with children under 5 who increased their participation the most from 2019 to 2023. However, this seems to be largely because their participation rate, which was already lower than the rate for all prime-age women and mothers of older children, declined the least among mothers in the labor market collapse period (April–May 2019 to April–May 2020). During the recovery period (April–May 2020 to April–May 2023) prime-age women without minor children had a larger impact on the net change in the labor force participation rate, holding population constant. (Bauer and Wang 2023).

Analysis by the Council of Economic Advisers on the impact of the Biden-Harris administration’s $24 billion in child care stabilization funds, which were issued as subsidies to child care providers, estimates a 2–3 percentage point increase in the labor force participation rate for mothers of children under 6 as a result of the funds (CEA 2023). Labor force participation rates stabilized around the time the funds expired, and after that point, growth in LFP for mothers of young children followed the same patterns as those of other women, lending support to the hypothesis that increased child care funding was driving earlier increases. However, these estimates only control for the expanded child tax credit and state unemployment rates, with no control for increases in telework. Telework increases have also been hypothesized to affect all groups of women similarly, but that finding differs by data source. Analysis using Current Population Survey data shows prime-age parents are more likely to telework than workers without children (Aron-Dine, Bauer, and Powell 2025), while others using Census Pulse Survey data found non-mothers were more likely to telework in the first half of 2023 (Bauer and Wang 2023).

Prospects for labor force participation going forward and how policy can affect them

There are many reasons for comparative optimism about prime-age labor force participation going forward, driven by a partial reversal of a number of pressing social challenges. For one, the low points of the 2010s seem to have been significantly driven simply by excess macroeconomic slack. To the degree such prolonged periods of slack can be avoided going forward, labor force participation rates should avoid similar large slumps. For another, the incarcerated population in the United States has fallen significantly in the past 2 decades. To the degree that the future will see fewer workers scarred by a spell of incarceration, this should boost labor force participation. Further, the high point of the opioid epidemic seems to have passed, and rates of addiction are falling, removing another key headwind to labor force participation.

All of these potential tailwinds to labor force participation are obviously contingent on policy decisions—both economic and social. Further, a number of other margins that will affect labor force participation also will be largely driven by policy. Below, we highlight a number of determinants of labor force participation in coming years and assess how policy can increase or reduce their effect.

Efforts to reduce opioid use further may increase labor force participation

Although the exact effects are challenging to measure due to a lack of comprehensive data, there is some evidence suggesting that the increased use of opioids contributed to declining labor force participation in the late 2000s through mid-2010s (Aliprantis, Fee, and Scheitzer 2023). Since that time, a number of laws at the state and national levels have been enacted in response to the opioid crisis. Federally, the Comprehensive Addiction and Recovery Act of 2016, the 21st Century Cures Act, and the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act are intended to lessen the demand and supply of opioids while reducing the harms of opioid use disorder (CBO 2022). These efforts are multifaceted but include strategies such as providing funding to states to invest in prescription drug monitoring programs, increasing budgets for public health services to prevent and treat substance use disorders, and developing treatment alternatives to incarceration.

Tracing the impact of these laws is difficult, in part due to the effects of the pandemic, which contributed to increased opioid use, misuse, and deaths in 2020 (CBO 2022). However, post-2020 some measures have markedly improved. The overall rate of opioid dispensing has declined by roughly 20% since 2019, and opioid deaths involving prescription drugs have declined since their peak in 2017 (CDC 2024; NIDA 2024b). Emergency room visits for suspected nonfatal overdoses related to all opioids also declined over this time period (CDC 2024). At the same time, overdose deaths from any drug and those involving any opioid (not just prescription drugs) continued to increase through 2022 before declining in 2023, although they remain elevated by historical standards (NIDA 2024a).

It is too early to know if these measures will continue to trend downward, but there does not seem to be a simple, straightforward, ongoing connection between opioid misuse and labor force participation. Overdose rates are not a perfect proxy for misuse, but deaths from synthetic opioids increased dramatically after 2014 and remain very high, largely caused by illicitly manufactured fentanyl (NIDA 2024c). This occurred at the same time that prime-age labor force participation has also been increasing. It is possible that there are more complex relationships developing between opioid misuse and LFP, particularly as the opioid crisis changes over time.

Reducing the labor market scarring of incarceration

For Black men in particular, incarceration presents a uniquely challenging obstacle to gaining employment and rejoining the labor force (Pager 2003; Williams, Wilson, and Bergeson 2019; Holzer, Offner, and Sorenson 2005; Ellsworth 2017). At least 1 in 5 Black men will experience incarceration at some point in their lives (Robey, Massoglia, and Light 2023). These results suggest that any successful policy effort to reduce incarceration and recidivism rates would be highly supportive of labor force participation. While recent ban-the-box policies (such as those that do not require job applicants to disclose their criminal history for most jobs) have had mixed results in their ability to promote overall employment (Rose 2021), Bailey et al. (2024) found that children in households that received food stamps had a reduced likelihood of being incarcerated as adults later in life by 0.5 percentage points, suggesting that meeting families’ basic needs can do more than just improve health.

More promising than the ban-the-box policies is California’s 2011 policy to redistribute the costs of sending an adult to prison to the governing locality that makes the decision to incarcerate. This policy is associated with a reduction in the prison population of 50,000 between 2009 and 2019, suggesting that public financing policy can play a surprisingly effective role in supporting labor force participation (Pfaff 2024). The law, AB 109 or colloquially referred to as realignment,” mandated that nonviolent, nonsexual, and nonserious offenders were required to serve sentences under county supervision. Prior to the law, prosecutors, who are paid by the county, were incentivized to prosecute offenses to their highest conviction to get offenders sent to prison, which was paid for exclusively by the state. This redistribution of costs significantly curtailed prosecutors’ incentives to seek higher sentences for less serious offenses and as a result, reduced incarceration rates in California substantially.

Job quality matters to attract workers into the labor market, particularly into some of the fastest-growing occupations

A key headwind for men’s labor force participation in the past few decades has been a slowdown in job growth in sectors like manufacturing and mining that traditionally provided relatively high wages for workers without a college degree. Much of the change in the composition of employment is largely outside the purview of policymakers—but policy can have some effect on the margins of this employment composition. More importantly, how changing employment composition translates into changes in wages or perceived opportunities for different population groups is highly contingent on policy.

Occupational segregation is the tendency for one gender to more likely work in certain occupations than another. For instance, men are more likely to work in manufacturing and construction, while women are more likely to work in education and health care (industrial sectors are provided in Appendix Table 3, but the same phenomenon exists in occupations). Gender stereotypes, such as the idea that women are better suited to caregiving or that men are naturally better at physically demanding tasks, can constrain people’s options and make them more or less likely to pursue traditionally gendered jobs (Palffy, Lehnert, and Backes-Gellner 2023).

Occupational segregation is driven by social and cultural forces that compel women into caring professions (Schieder and Gould 2016). While many people do have choices about which jobs to apply for, accept, or reject, these decisions are made within the context of larger social and cultural influences. Occupational choices are shaped by a lifetime of experiences, including the expectations children are raised with, educational experiences, hiring practices, and norms and beliefs about family roles and the division of household labor held by employers, co-workers, and society. These norms and expectations impact women’s as well as men’s occupational “choice.” As we’ve shown above, the loss of both manufacturing and military jobs in the U.S. came at a cost to men in particular. On the flip side, the growth in jobs in health care will disproportionately benefit those more likely to work in health care, in this case, women.

Figure J illustrates the occupations expected to gain the most jobs, in percent terms, between 2024 and 2034 (BLS 2025a), as well as the share of women in those four occupations in 2024. The industries shown are expected to grow at least twice as fast as the average rate of 4%.

Three of the four fastest-growing occupation groups are dominated by women. The fastest-growing occupation group over the next 10 years—health care support occupations—is expected to grow by 12.4% and is comprised of jobs that pay lower-than-average wages. The median wage in health care support occupations is about three-fourths the median wage overall ($37,000 versus $49,000). Currently women make up about 84% of workers in health care support occupations. Low pay is both a cause and effect of occupational segregation. Jobs in which women are overrepresented tend to provide lower pay and fewer benefits than male-dominated occupations do, and wages tend to fall in occupations as the share of women increases (Levanon, England, and Allison 2009).

Figure J

For workers of any gender to enter those faster-growing occupations, those jobs need to be better. That means better pay, better working conditions, and better benefits. Stronger labor standards, such as a higher minimum wage and overtime protections, can improve those jobs and make them more appealing to a broader range of workers. Increased unionization can also improve pay in those jobs. On average, workers in unionized jobs are paid about 12.8% more than workers in nonunion jobs (EPI 2025c) A key reason jobs in manufacturing could support a middle-class lifestyle was the high unionization rates. There’s no reason currently low-paid health care support occupations couldn’t enjoy such conditions. The number and share of unionized workers in health care support jobs has recently increased, and their wages are higher than those of their nonunion counterparts (BLS 2025b; BLS 2025c).

Labor force participation is more resilient in peer countries

Figure K compares the United States with the OECD average prime-age labor force participation, 1976–2024, women on the left and men on the right. While they display similar overall trends at the endpoints—upward for women and downward for men—there are some notable differences. In the OECD countries, men’s participation also fell between 1976 to the early 2000s, but the losses tapered off quickly, and today, participation remains around its 2000 level. In the United States, men’s participation continued to drop, most notably during the Great Recession and prolonged recovery before starting its upward climb as the economy expanded.

While it is the case that many of our peer countries in the OECD also experienced downturns, particularly in the Great Recession, their labor force participation rates did not fall as far, largely due to different policy responses. Policies such as work sharing and time banking that provide support for workers to stay on the payroll helped blunt the impact of the Great Recession in places like Germany, which saw its unemployment rate tick down at the same time the rate in the U.S. more than doubled (Baker 2018).

Figure K

Women’s labor force participation never stopped its upward rise in the OECD average, even while it softened in the United States following 2000. The steep gains in participation in the U.S. tapered off significantly, while it continued to rise in the OECD until today. The policy environment around work for women is quite different, particularly in Western European countries, which have stronger family leave and child care supports.

There is meaningful evidence that the lack of work-family policies and relatively sparse care infrastructure in the U.S. depresses women’s labor force participation. In 1990, out of 22 OECD countries, the U.S. ranked 6th for women’s prime-age labor force participation, but by 2010 had fallen to 17th place. The lack of family-supportive policies in the U.S., such as paid parental leave and publicly provided child care, can explain 29% of the decline in the U.S.’s ranking of female LFP relative to other OECD countries (Blau and Kahn 2013).

In the subsequent 15 years, the gaps between policies in other OECD countries and the U.S. have typically widened. Compared with other high-income OECD countries, the U.S. is now even more of an outlier on nearly every workplace policy that could help boost labor force participation among workers with family responsibilities.

Since 2010 the total amount of paid parental leave available to two parents in OECD countries has increased from an average of 58.1 weeks to 64.6 weeks (OECD 2024). Yet the United States remains an extreme outlier and is one of the only countries in the world that does not guarantee workers the right to any form of paid parental leave. Across the other 37 OECD countries, mothers are eligible for an average of more than one year (53.5 weeks), and fathers are eligible for more than three months (13 weeks) of paid leave.

Families in the United States also pay more on average for child care than families in other OECD countries. In the U.S., a single parent paid the average wage would need to spend 40% of their wages to pay for center-based care for two toddlers—about 5 times the cost burden (8%) for the OECD, on average (OECD n.d.). And while net costs increased for U.S. families, they declined in most other OECD countries, with the overall OECD average dropping from 15% to 8% between 2004 and 2023.

The cost burden is much greater in the U.S. compared with other countries where child care fees are similarly high or higher because the U.S. does not provide meaningful benefits like child care allowances or fee rebates to help families reduce their financial costs. While there are tax credits that allow some working parents to write off child care expenses, not all families qualify, and the overall impact on net costs is minimal.

The share of GDP the United States spends on early childhood education and care has declined since 2010, while the OECD average has increased (OECD Social Expenditure Database n.d.). In 2021, the last year with complete data on all 38 OECD countries, U.S. spending (0.3% of GDP) was less than half the OECD average (0.7%).

Policies related to remote work and workplace flexibility—such as the ability of workers to alter their start and stop times—were not part of the original analysis conducted by Blau and Kahn (2013). However, flexibility and remote or telework options have been identified as important policies to support labor force participation, particularly among mothers post-2020. As of April 2024, 25 of the 38 OECD countries had laws in place allowing workers to request flexible schedules, remote work, or both (World Bank 2024).

The 2019 Work-Life Balance Directive2 created a right for workers in the European Union to request flexible work arrangements, including remote work, to better coordinate work with family caregiving responsibilities. The law does not guarantee that employers will grant approval to every request, but they are required to seriously consider requests for flexibility and must provide reasons for refusing requests. In the United Kingdom, workers’ rights to request flexible work arrangements were expanded through the Employment Relations (Flexible Working) Act 20233. Workers in the U.K. now have a legal right to request flexibility starting from their first day of employment rather than having to wait 26 weeks before making the request as they did previously.

In the United States, workers do not have an explicit legal right to request remote work or workplace flexibility, and employers are not required to consider such requests when they are made. Although the data are not conclusive, there are indications that increased access to telework during and after the pandemic enabled greater labor force participation, including among mothers of young children. Broadening access to flexibility and remote work would likely further increase entry or reentry into the labor force among workers with caregiving responsibilities, as well as supporting continued participation for current workers.

Investing in children is a long-run strategy to increase labor force participation in the future

Previous sections noted the sharp increase in college attainment among the U.S. population in recent decades and also noted that college graduates saw much slower rates of declines in labor force participation than noncollege workers did. The public sector has supplied the majority of financing for higher education in the United States for the entire post-World War II period. In short, the boost to labor force participation (and economic growth generally) supplied by higher education was a policy choice.

Policy choices about how prepared future generations will be to participate in the labor force are not just confined to education spending (though that is obviously important as well). Investing in children by supporting their basic needs such as food, medical care and child care has been shown to have demonstrable long-term effects on health and economic sufficiency. These, in turn, support attachment to the labor market. Early childhood is a sensitive period, and investments in children tend to have large benefits as they age (Cunha and Heckman 2007; Heckman 2008). Additionally, a stronger welfare state raises the income and resources of a child’s family (Ruhm and Waldfogel 2012). Importantly, these benefits tend to outweigh the costs of the program or any potential impacts on the parents (Aizer, Hoynes, and Lleras-Muney 2022).

Long-term studies have tracked children in households with access to food stamps (SNAP), early childhood education, and Medicaid to assess the impact of these programs on these children as adults. With respect to food stamps, Hoynes, Schanzenbach, and Almond (2016) found that access to food stamps for households with children led to statistically significant improvements in measures of metabolic health when they were adults. Moreover, researchers found positive impacts of receiving food stamps on economic sufficiency (high school completion, use of food stamps, and earnings), with statistically significant increases among adult women who receive food stamps. Bailey et al. (2024) linked the 2000 Census and 2001–2013 American Community Survey to information from Social Security to examine how SNAP program rollouts from 1961–1975 impacted children as adults. They found that children with access to food stamps before age 5 have better outcomes as adults in the form of increased economic self-sufficiency (3% standard deviation increase), human capital (6% SD increase), quality of neighborhood residence (8% SD increase), and a 1.2-year increase in life expectancy. 

Several studies have also documented the long-run impact of Medicaid with implications for labor market participation. Miller and Wherry (2019) studied infants who gained access to Medicaid in utero via their mother’s prenatal coverage. They find that infants with prenatal coverage had lower rates of chronic health conditions as adults, fewer hospitalizations, and increased high school graduation rates. Thompson (2017) examined the long-term impact of Medicaid access and found that each additional year of Medicaid eligibility during childhood improved overall adult health (self-score evaluations) and reduced chronic conditions and asthma prevalence as adults. Given that disability and chronic health conditions are some of the main reasons that individuals stay out of the labor force, these studies show that access to Medicaid as a child can promote the conditions that would lead to labor force attachment.

Finally, Brown, Kowalski, and Lurie (2020) use tax data to estimate the long-term impact of Medicaid eligibility in childhood on a variety of outcomes measured at ages in early adult life. They find that eligibility for Medicaid during childhood increased college enrollment rates, delayed fertility, reduced mortality, and reduced dependence on EITC benefits, and led to higher tax payments among adults, suggesting that access to Medicaid has the long-term benefit of improved economic self-sufficiency and employment.

While the U.S. doesn’t have a national pre-K early-childhood program, studies of individual programs show promising results. Chicago’s Child-Parent Center Education Program preschool was linked to higher educational attainment and socioeconomic status, a higher likelihood of health insurance coverage, and lower rates of justice-system involvement and substance abuse (Reynolds et al. 2011). Michigan’s HighScope Perry Preschool program was linked to fewer arrests, higher earnings, and higher educational achievement and attainment (Schweinhart 2005), and careful cost- benefit analysis estimated that every dollar invested at age 4 yields a return of $60–$300 by age 65 (Heckman et al. 2010). Additionally, studies of state-introduced universal kindergarten programs in the 1960s and 1970s found that this additional early childhood education increased both educational attainment for some groups of students (Cascio 2009, 2010; Dhuey 2011); and labor market outcomes in the form of weeks worked and wages (Dhuey, 2011), suggesting that early childhood education interventions can support labor market attachment.

Studies in Europe have documented the impact of pre-K and early childhood care on long-term outcomes. In Denmark, researchers found that early increased preschool density was positively associated with completed schooling, particularly for daughters of less educated mothers, and later adult earnings (Bingley and Westergaard-Nielsen, forthcoming). In France, researchers found that the large-scale universal preschool program increased test scores, high school graduation rates, and adult wages, with larger effects for children from disadvantaged backgrounds (Dumas and LeFranc 2010). In Norway, an expansion of subsidized child care led to increased educational attainment (more years of schooling, higher rates of college attendance) and labor market participation (Havnes and Mogstad 2011).

The role labor force participation rates play in the economic future of the U.S.

Labor force growth is a key element of economic growth more generally. At the most basic level, growth in overall gross domestic product (GDP) over brief periods of time can be proxied as the sum of the growth rates of the labor force and of labor productivity—with productivity defined as the amount of output generated in an average hour of work in the economy. Given this, every percentage point rise or fall in the growth rate of the labor force translates one for one into a corresponding change in overall GDP growth.

In coming decades, the question that matters more than any other for projecting labor force growth for the U.S. economy is the pace of net immigration. For example, the Congressional Budget Office projects that the U.S. labor force will grow by just under 7% from 2025 to 2035 (CBO 2025a). But if the influence of immigration flows is removed, this growth will fall to just 0.5% over the entire next 10 years.4

There is no realistic scope at all for changes within U.S.-born labor force participation rates to fundamentally change this and lead to significant increases in the labor force over the next decade. Most importantly, the U.S.-born population is aging fast. Over the next 10 years the share of the U.S. adult population over the age of 65 will rise by another 4 percentage points (to over 27%). Given the gap in labor force participation rates for workers aged 65–74 and those under the age of 65, this translates into a reduction in the overall labor force participation by roughly a full percentage point over the decade—a powerful headwind to growth.5

In theory, the CBO has taken some account of the fact that major headwinds to growth in prime-age participation rates over the past decade or so should likely reverse (or at least, dial down) in the next 10 years. These headwinds include excess labor market slack, the stock of prime-age adults with some spell of incarceration in their past, the prevalence of opioid addiction, and the steady shrinkage of military employment scaled against the civilian workforce. If none of these past headwinds to labor force participation were taken into account in CBO projections, their reversal could conceivably add 1–2 percentage points to prime-age labor force participation rates over the next 10 years. But, again, this doesn’t come close to rivalling the potential effects of changes in net immigration, and CBO has likely accounted for a number of these influences in their projections, at least in part.6

If one of the more ambitious long-run strategies for boosting future labor force participation highlighted in the previous section was undertaken (large investments in child health, nutrition, and education for example), these effects could conceivably add another percentage point to labor force participation rates, but only at a quite long time horizon (well over 10 years).7

One upshot of the dominance of immigration flows in conditioning future labor force growth and the continued downward pressure on labor force growth imposed by the aging of the U.S.-born population is that anybody promising large increases in GDP growth in coming years without calling for higher rates of immigration will have a very hard time fulfilling this. Again, every percentage point decline in the growth rate of the labor force subtracts a percentage point from GDP growth, and changes in labor force growth in the coming decade will be driven near entirely by immigration inflows.

Of course, GDP growth is (roughly) the sum of growth in the labor force plus the growth of productivity. In theory, a slower growth rate of the labor force could be overcome by a surge in productivity growth, and overall GDP growth could still rise. However, productivity growth over the past century in the U.S. economy has fluctuated with a relatively narrow band—essentially between 1% and 2% annually. Since the 1960s, spells of productivity growth over 2% have been rare—just the late 1990s and early 2000s. It is theoretically possible that we are in a stage currently where technological change will accelerate and productivity growth will surge to the higher bands of its historical experience, but this is very hard to bank on. Promises of future growth surges from other technological changes (like robotization in the 2010s) yielded real, but quite modest, productivity growth.

But while productivity growth is unlikely to generate historically fast GDP growth in coming decades, it is the most relevant part of the growth equation to focus on. A higher GDP driven by a larger labor force does not necessarily raise living standards. It is productivity growth alone that makes a country richer over time in the most relevant sense—providing the potential for higher living standards per person.

By far the most substantive way that differing rates of labor force growth can affect Americans’ economic future is through the tax and transfer system. The federal government in the U.S. has historically taken on the role of ensuring adequate income in retirement for all citizens by running social insurance programs—Social Security and Medicare—through the nation’s fiscal system. Very roughly speaking, current workers are taxed to provide benefits to current retirees. As the share of the population that is retired rises relative to the stock of current workers, this means a higher share of workers’ output needs to be devoted to providing income for retirees.

This need not imply any pronounced economic pressure. Productivity growth means that even if a rising share of workers’ incomes is devoted to social insurance for current retirees that workers’ net-of-tax income levels can still rise steadily over time. But this demographic angle of the large social insurance programs run by the federal government does pose potential political challenges. These political challenges could well be lessened by policy decisions that keep the ratio of current workers to current retirees higher than it otherwise would have been—and here is where issues of labor force participation could matter.

Conclusion

Labor force participation is both an input and a consequence of a healthy economy. While there is no ideal labor force participation rate that policymakers should target, they should target any barriers that are keeping willing workers from being able to actively search for work. These barriers include too-slack labor markets stemming from macroeconomic policy failures; labor market discrimination; insufficient investment in workers’ health, skills, and credentials; and a failure to make investments needed to enable parents with young children to also participate meaningfully in the labor market.

Outside of immigration, however, the changes to labor force participation that can be leveraged by even quite ambitious policy changes will be relatively small and will not meaningfully change the trajectory of the U.S. macroeconomy over a decade or so. This does not mean they are not worth doing, instead it means that policymakers should be realistic when claiming that future economic growth can be boosted by increasing growth in the U.S. labor force.

Appendix

Appendix Table 1

Appendix Table 2

Appendix Table 3

Acknowledgments

The authors thank Katie deCourcy and Stevie Marvin for research assistance and Grace Park for editing. This project was made possible by financial support from the Peter G. Peterson Foundation.

Notes

1. We should note that this change in employment shares by skill- or credential-grouping does not predict at all accurately any related change in wages. In short, one can believe that changing employment shares by occupation—even those driven by technological changes—fail to move relative wages or inequality in any significant way, and that non-relationship between employment and wage changes by occupation is validated in the data (see Mishel, Schmitt, and Shierholz 2013).

2. Council Directive 2019/1158, 2019 O.J. (L 188), 79–93.

3. The Employment Relations (Flexible Working) Act 2023, c. 24 (UK), https://www.legislation.gov.uk/uksi/2024/438/made.

4. Authors’ analysis is based on information in CBO 2025a, b. The size of the over-19 labor force over the next decade is provided directly in CBO 2025b. This data also provide the share of growth in the over-19 population that is accounted for by immigration. To obtain the counterfactual growth, we just removed the portion of growth associated with immigration each year and recalculated the level of the labor force for each year in the next decade.

5. Numbers in this paragraph are based on authors’ analysis of data in CBO 2025a, b. CBO 2025b reports that the share of the over-64 population will rise as a share of the total adult population by almost exactly 3 percentage points between 2025 and 2035. Currently, the LFPR for workers between the ages of 65 to 69 is almost exactly 30 percentage points lower than for workers between the ages of 55 to 64. Multiplying these together (which gives 0.9%) should give a very rough sense of the downward pressure on labor supply stemming from aging.

6. Schmitt and Warner (2011) estimated that the scarring effect of incarceration could reduce the employment-to-population ratio of men by between 0.6 to 2.6 percentage points by 2008. Given that the stock of incarcerated men has fallen by roughly 20% since its highest point (and a bit more than this as a share of the population), this penalty going forward could have been reduced by 0.15 to 0.6 percentage points. In regard to opioids, given estimates that rising opioid use throughout the 2000s could have reduced labor force participation rates by as much as 1 percentage point, any leveling off of this could remove a powerful headwind to labor force growth, and any affirmative reduction in the incidence of opioid addiction should, in theory, potentially boost labor force growth.

7. Most estimates of the effect of early childhood investments—whether it be early education, health, or nutritional investments—report the effect on earnings of exposed children when they become adults. Assuming a package of investments in today’s children were able to boost their earnings by 5% when they became adults (which seems plausible given that early childhood educational investments alone have been estimated to increase annual earnings of exposed children by over 20%, and the share of today’s children not currently receiving high-quality early childhood education is estimated to be over half of all children (see Lynch and Vaughul 2015)). If increased labor force participation accounted for a fifth of this total earnings effect (as opposed to lower unemployment rates, higher hours worked during a year, and higher hourly wages), then a range of estimates would indicate that these investments could boost the adult labor force participation rates of today’s children by roughly a percentage point. It seems plausible that increased labor force participation could, by itself, explain a fifth of projected future earnings. For example, annual earnings of workers with a college degree are roughly 60% higher than with only a high school degree. This 60% difference can be very roughly expressed as the sum of differences in labor force participation, unemployment rates, hours worked per year, and average hourly earnings. Labor force participation rates for workers with a bachelor’s degree or greater are roughly 12% higher than for workers with only a high school diploma , which is roughly a fifth of the total difference in annual earnings. 

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

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

The labor market mostly held strong in 2024 

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

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

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

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

Figure A

Persistent economic disparities leave families of color disproportionately vulnerable

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

Figure B

Policy changes are weakening the economy in 2025

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

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

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

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

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

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

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

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

Figure C

Timely and accurate data are essential but under threat

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

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

Note

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

Summary

Tariffs do not automatically raise wages or create good jobs. While strong tariff policies can help preserve jobs in industries facing unfair competition, strong unions are a prerequisite for tariffs to translate into widespread job and wage gains. Without unions, corporate executives have no incentive to pass on the profits they’re gaining to their workers. Only unionized workers can secure a fair share of tariff-driven profits, while most nonunion workers will be left behind.

At the same time, the Trump administration is pursuing unprecedented union busting that will drive unionization rates even lower than they are today. Today only 16% of autoworkers and 18% of steelworkers are in unions compared with 62% of autoworkers and 50% of steelworkers in 1983. Without strong unions, tariffs simply funnel higher profits to corporate executives and shareholders. The potential benefits of tariffs will only be shared with workers if they are combined with improved labor rights and stronger labor unions.

How to fix it

Union leaders need to communicate this message to members and nonunion workers: Trump’s tariffs will benefit businesses, not workers. Tariffs must be combined with pro-labor reforms and support for unionization so that workers can have a voice in the workplace and in policymaking. 

Introduction

In 2024, Donald Trump campaigned on the benefits of tariffs for U.S. workers. He claimed that tariffs would boost wages and create good manufacturing jobs by protecting domestic industries from unfair foreign competition. On the face of it, it might seem like tariffs would automatically protect entire industries, increasing profits for employers and wages for workers. But whether employers share the benefits of tariff protection with workers depends on their bargaining power—something very few workers have without a union.

Without unions, tariffs will mostly just lead to higher corporate profits in protected industries. And with the Trump administration waging the worst union busting in recent American history (McNicholas et al. 2025), high tariffs will mean corporate executives and Wall Street shareholders will see the big payday, not workers. Tariffs alone do not increase wages or create good jobs, unless the industries being protected by tariffs have strong unions.

Since returning to office, President Donald Trump has aggressively increased U.S. tariffs on friend and foe alike. While some of these tariffs have been paused1 and others ruled unlawful by U.S. courts (Lynch and Zakrzewski 2025), Commerce Secretary Howard Lutnick has promised that the Trump administration’s overall approach to broad tariffs is “not going away” (Bacon 2025).

The case against tariffs

By now, there have been many critiques leveled against Trump’s tariffs. They will increase inflation and consumer prices (Peller 2025). They will decrease economic growth and trigger a recession (Burga 2025; Bianco 2025). They open the door to official corruption (Hersh and Bivens 2025). The chaos of tariff increases and reversals roiled the stock market and made it impossible for businesses to plan for the future (Rosen 2025). Tariffs alienate allies needed to strengthen U.S. supply chains (Mui 2025).

These academic arguments may all be correct, but they are unlikely to sway most working-class voters. Trump’s 2018 tariffs were attacked for all the same reasons, yet counties protected by those tariffs still swung toward Trump and GOP candidates in the next election (Autor et al. 2024). It is difficult to counter Trump’s populist promises that tariffs will increase wages and create new manufacturing jobs with elite concerns about the stock market and aggregate economic growth (White House 2025).

What’s tragic about this situation is that Trump’s new tariffs will likely not deliver for most workers, not even those in tariff-protected industries. One could understand working-class voters supporting a tariff policy that prioritized long-term investment and higher pay for workers at the expense of short-term returns for shareholders. But Trump’s tariffs threaten to do just the opposite—increasing profits for bosses while leaving workers far behind.

While it is true that higher tariffs may reduce new layoffs in U.S. manufacturing—a significant goal after decades of free trade caused de-industrialization and millions of job losses—maintaining the status quo is a far cry from Trump’s promise that tariffs will spur re-industrialization with higher wages and new jobs (Kimball and Scott 2014; Hersh and Scott 2021). Though tariffs can offer some job security to workers in trade-affected industries, tariffs will translate into job and wage gains only when companies work collaboratively with their employees.

To be clear, this report assumes that tariffs will boost profits in protected industries, but even that may be overly optimistic. The fact that automakers have posted billion-dollar losses is a reminder that tariffs alone are not a coherent industrial policy (Ewing 2025; Tucker 2025). Domestic industries need strong demand signals for their products. Instead, the Trump administration’s unpredictability has created deep uncertainty for businesses, discouraging investment and undermining long-term planning. Trump’s policy incoherence will likely yield a lose-lose scenario of lower profits and lower wages, while threatening job growth across the manufacturing sector. In other words, even the best-case scenario for Trump’s tariffs will fail to deliver higher wages or good jobs for the vast majority of U.S. workers who lack strong unions.

Tariffs don’t automatically benefit workers

To understand why, we need to revisit the conventional argument about tariffs and workers’ wages in protected industries. Tariffs shield U.S. producers from unfair trade practices and cheaper imports, enabling them to increase market share—and sometimes prices. But how do those higher prices lead to more jobs and higher wages? Here’s how the logic works in the theoretical (and unrealistic) models of an economic textbook.

Higher tariffs for a specific U.S. industry—for example, automobiles—increase the price of imported cars, which allows domestic car producers to raise prices without fear of losing market share. For industries facing chronic competition from unfair trade practices, tariffs help level the playing field by limiting unfairly valued competition. Absent that context, tariffs are a blunt instrument benefitting domestic producers without any accountability for worker pay. The tariff does not make it more expensive to produce cars in the United States but means that car makers can charge a higher price and earn higher profits for each car they produce. In turn, higher profits may induce increased investment and employment in making cars. Since these models assume full employment throughout the economy, no one is out looking for a job, and firms need to raise their wages to attract new workers.

But in the real world, there is little reason to expect that employers will pass on the higher profits they receive in the form of higher wages for their workers. There are two problems that get in the way of workers sharing in the benefits of high tariffs: unemployment and market power. 

Precarious employment breaks the connection between tariffs and wages

First, unemployment can break the connection between tariffs and wages. Although higher prices may lead firms to increase production, they often find a surplus of unemployed workers willing to work at the going wage. This is especially true when government policies like those in the Republican-led budget bill that Trump recently signed into law are sharply cutting social safety nets, pushing unemployed workers to accept jobs at even lower wages. This means that firms facing a slack labor market can turn higher tariffs into higher prices and profits without the need to increase workers’ wages. 

Part of the problem is that many U.S. counties with manufacturing-based economies still have higher unemployment rates from years of neoliberal globalization and cheap imports, even as the national unemployment rate remains relatively low (Autor, Dorn, and Hanson 2021). Given such unemployment in labor markets near manufacturing plants, we should not expect Trump’s new tariffs to increase workers’ wages. Unsurprisingly, this is exactly what recent studies find regarding Trump’s 2018 tariffs: They increased prices and profits, but nominal wages in the tradable sector of the U.S. economy increased by only 0.1%, or about $1.20 a week (Fajgelbaum et al. 2019).

Market power breaks the connection between tariffs and employment

Second, market power can break the connection between tariffs and employment. In competitive markets, higher prices lead firms to expand production and hire more workers. But when an industry is dominated by a small number of firms—as is the case in much of today’s U.S. economy—producers often behave like monopolists. Instead of increasing output to meet higher demand, they restrict production to keep prices—and profits—high, as we saw during the COVID-19 pandemic. Tariffs that raise prices in such markets can simply boost profits without leading to more jobs. Since the 1980s, the rise of corporate consolidation has given firms greater pricing power across the economy, including in key manufacturing sectors like autos and steel (De Loecker, Eeckhout, and Unger 2020).

Consider Stellantis, which chose to spend $3.3 billion on stock buybacks in 2024 after new car prices—but not manufacturing costs—spiked during the COVID-19 pandemic, rather than making investments that would increase production and employment (Stellantis 2024; BLS 2025). And in response to more recent tariff developments in April 2025, Stellantis went ahead with a $2.26 billion dividend payout to shareholders, rather than hiring workers or investing in expanded capacity (Lawrence 2025). For these firms, expanding production in response to higher tariffs would lower prices and erode profitability. Considering the uncertainty caused by Trump’s volatile tariff policy, it’s no surprise that most companies are delaying investments rather than hiring new workers (CBT News 2025). The outcome mirrors what happened in 2018: Tariffs raised prices and profits but failed to increase employment in newly protected industries (Autor et al. 2024)—though they likely helped preserve jobs in industries that might otherwise have lost further ground to unfair foreign competition.

In other words, when companies are given protection from competition that lets them charge more for each unit of output they produce, they do not automatically pass the benefits of this protection onto their workers in the form of higher compensation or expanded employment. So, how can workers make sure that higher tariffs lead to higher wages and more good jobs? One way is by joining a labor union, which increases workers’ bargaining power and helps them capture a share of their companies’ booming profits. Sadly, intentional policy decisions have made this option far too rare for most U.S. workers (McNicholas et al. 2019).

Unions boost profit sharing for workers

The UAW’s ‘Stand Up’ strikes support profit sharing for workers

Now consider the United Auto Workers (UAW), whose 2023 “Stand Up” strike won contracts that once again include profit sharing for workers (UAW 2023). The UAW’s current contracts with the Big-Three auto companies provide workers with profit-sharing bonuses of roughly $250 for every $250 million in company revenue (Martinez 2025). If Trump’s tariffs increase car prices and revenue for the Big Three, unionized autoworkers are guaranteed to see higher incomes. Even before the new auto tariffs, the UAW’s contract with GM led to a $14,500 profit-sharing bonus for union members in 2024. If the Big Three expand production, that would mean more jobs with union wages and benefits. The UAW’s new contracts also protect workers’ right to strike over future plant closures, giving the union some countervailing power against monopolistic companies placing profits over jobs (Bustamante 2023). And those gains for unionized workers also pressured some nonunion employers to raise wages too. But there is no inherent guarantee of good jobs if tariffs result in nonunion automakers increasing U.S. production at the expense of unionized facilities.

Or consider GM’s recent announcement that it would invest $4 billion to create new jobs in the U.S. auto industry. Although the Wall Street Journal (Otts 2025) reported this as a business decision based on Trump’s new tariffs, the reality is that the majority of these investments were negotiated with the UAW back in 2023 to end the “Stand Up” strike. The UAW plays a crucial role in making sure that profits for a company like GM translate into new investment and new jobs for workers. The UAW continues to push the Big Three to respond to tariff increases by reshoring production jobs to the U.S.—where these companies have unused capacity—rather than issuing stock buybacks and special dividends (UAW 2025).

This all means that auto tariffs are good news for UAW members, and it shouldn’t be a surprise that the UAW has offered tentative support for targeted tariff protection for the auto industry. But only 16% of the 1.4 million autoworkers in the U.S. are unionized, so the vast majority of autoworkers should not be surprised when Hyundai, Tesla, and other nonunion auto companies and auto parts suppliers refuse to share tariff-generated profits with their workers (Unionstats.com 2025). As Shawn Fain, president of the United Auto Workers, recently explained, “tariffs increase profits—but only unions increase wages” (Fain 2025).

The United Steelworkers win improvements in profit sharing for U.S. Steel and ArcelorMittal workers

Another example is the steel industry in which the United Steelworkers had to fight U.S. Steel and ArcelorMittal for a share of the profits generated by Trump’s 2018 tariffs. Back then, tariffs increased U.S. steel prices by 30%, and companies like U.S. Steel announced $2 billion in profits (Keller 2018). But when it came time to negotiate a contract with its workers, U.S. Steel offered a small wage increase that would be wiped out by deep cuts to workers’ health care benefits (Lindstrom 2018). It was only after USW members overwhelmingly voted to authorize a strike that the companies agreed to new contracts that increased wages, maintained health care benefits, and improved the companies’ profit-sharing arrangement (USW 2018).

The profit-sharing provision in the current USW contract with U.S. Steel requires the company to share roughly 6% of earnings with steelworkers every quarter (Dolph-Smith 2024). That means that Trump’s new 50% steel tariffs are good news for USW members, but the union only represents 18% of the 295,000 workers in the U.S. steel industry (Unionstats.com 2025). When union density is high, these gains help raise wages for nonunion workers as well. But when unions are against the ropes, as is the case for a vast majority of workers, Trump’s tariffs will likely mean higher prices and corporate profits, but not higher pay.

Workers’ wages haven’t kept pace with increases in their productivity

The inability of most workers to share in their company’s profits is not unique to trade policy. It is just another example of workers’ wages lagging behind increases in worker productivity when they lack strong unions. From 1948 through 1979, when labor unions represented between 20% and 30% of all U.S. workers, wages grew along with increased productivity (Romero and Whittaker 2023). But since 1980, precipitous declines in union density—now at 6% in the private sector—have left wages lagging far behind productivity gains (Durbin 2024). From 1979 to 2019, worker productivity grew by roughly 60%, while workers’ total compensation grew by less than 16% (Mishel 2021).

Nor is the inability of many workers to share in their company’s profits specific to the United States. I examined the relationship between wage growth and productivity growth in 28 manufacturing industries, across 117 countries, from 1986 to 2002. The analysis relies on labor rights data that measure the degree to which a country respects their workers’ rights to act collectively (Dean 2015a). The results demonstrate that when labor rights are weakly protected, the conventional textbook model discussed above systematically exaggerates how much workers gain from tariffs that benefit their industry. Wages rise along with productivity growth when labor rights are well protected, but wages don’t go up at all if labor rights are regularly violated (Dean 2016; Bivens, Hersh, and Weller 2005).

There was a time when labor unions like the UAW and USW were powerful enough to secure higher wages and profit sharing for the majority of U.S. auto and steel workers. In 1983, the UAW represented 62% of all U.S. autoworkers, and the USW represented 50% of all U.S. steel workers. With unionization now down to 16% and 18% of these industries respectively, unions have less power to translate gains to the wider economy.

Trump combines high tariffs with union busting

The already narrow benefits of Trump’s new tariffs shrink even further when we look holistically at the administration’s trade and labor policies together. Since workers need strong unions to share in the benefits of high tariffs, it is crucial to understand that the Trump administration is systematically weakening American unions. Trump has quickly taken a hatchet to workers’ rights, illegally firing government employees, illegally terminating the collective bargaining agreement with Transportation Security Administration workers, and illegally revoking the collective bargaining rights for roughly 1 million federal workers (McNicholas et al. 2025; Berger and Leibenluft 2025; AFGE 2025; EPI 2025). Labor historian Joseph McCartin (Glass 2025) characterized the Trump administration’s activity as “by far the largest single action of union-busting in American history.”

Trump kneecaps the National Labor Relations Board

Perhaps most troubling for unions like the UAW and USW, which mostly represent workers in the private sector, are Trump’s efforts to paralyze the National Labor Relations Board (NLRB), the federal agency that adjudicates disputes about union elections and unfair labor practices (Wiessner 2025). In January 2025, Trump illegally fired Gwynne Wilcox, a member of the National Labor Relations Board, before the end of her term (Kaye and Davis O’Brien 2025). This unprecedented action left the board without a quorum, effectively halting its operations (Cohen 2025). Now, when employers break the law by firing union organizers or intimidating workers to vote against joining a union, workers will literally be denied their day in court. 

Even with a functioning NLRB, such illegal union busting was extremely common; in union elections in workplaces with more than 60 employees, employers were charged with violating federal labor law 54% of the time (McNicholas et al. 2019). Union-busting employers will only be emboldened in their illegal activity now that the NLRB lacks the quorum needed to make final decisions and levy penalties for unfair labor practices.

Weak enforcement of labor law has a chilling effect on unions

Trump’s effective termination of federal labor law enforcement is the exact opposite of what U.S. workers need. In fact, many scholars believe that the already weak enforcement of labor law before Trump’s new term was a main cause of union decline. At the heart of this debate is the growing gap between increasingly high public support for unions and declining union density. Recent surveys find that 71% of Americans have a favorable view of unions, and roughly half of workers say that they would vote to join a union if they had the opportunity (AFL-CIO 2023; Poydock et al. 2025). According to law professor Kate Andrias (2016), the problem is that American labor law is failing to protect workers’ right to join a union: “weak enforcement mechanisms, slight penalties, and lengthy delays—all of which are routinely exploited by employers resisting unionization—fail to protect workers’ ability to organize and bargain collectively with their employers.” Americans want unions, but Trump is making sure they can’t have them.

Trump’s anti-union reforms, especially his paralyzing of the NLRB, pose an existential threat to the country’s remaining powerful unions like the UAW. The growing presence of nonunion auto plants run by multinational companies in the American South has gradually eroded the UAW’s bargaining power with the Big-Three auto companies in the Midwest. These companies point to lower wages and benefits in Southern plants to justify offering lower wages and benefits (Butzel Long 2013). As Bob King, ex-president of the UAW, explained more than 10 years ago, “if we don’t organize these transnationals, I don’t think there’s a long-term future for the UAW” (Krisher 2023). Since the early 1980s, union density in the U.S. auto industry has dropped by 74%. With Trump’s anti-union reforms, high auto tariffs will only mean higher profits for increasingly nonunion auto companies.

How U.S. economic policies compare with those in other countries

Trump’s combination of high tariffs and weak labor rights is moving the U.S. toward a development strategy that will funnel the benefits of re-industrialization to capital instead of labor. If we zoom out and compare Trump’s economic policies with those in other countries, there are striking similarities with Italy in the 1930s, and Brazil and South Korea in the 1960s and 1970s. These are all countries in which authoritarian governments used high tariffs to protect manufacturing industries alongside labor repression to break unions and ensure that wages lagged behind productivity (Zamagni 1993; Seidman 1994; Deyo 1989). 

Of course, there are other examples that the U.S. could follow. There are countries whose governments have combined tariff protection with pro-union policies that made sure workers shared in the benefits of industrialization. In the 1930s, Norway used a combination of high tariffs and pro-labor reforms to build an industrial economy that led to shared economic growth (Grytten 2002). In the middle of the 20th century, Argentina and India both used high tariffs and pro-union policies to spur rapid industrial growth as well as stronger unions, higher wages, and lower income inequality (James 1988; Kohli 2012). Argentina’s and India’s overall development strategies faltered in the late 20th century, but for decades, they produced gains that were broadly shared with workers.

Proposals to expand investment in sustainable new energy industries similarly envision an industrial policy that combines tariffs and subsidies for green industries like wind turbines and electrical vehicles with pro-labor reforms that will make it easier for workers in these industries to join a union and secure a share of the benefits (Tucker et al. 2024). Something similar is playing out now in the European Union, where the trade protection and strong unions of the Green Deal Industrial Plan jointly support good jobs in green industries (European Commission 2023).

History shows that worker support for tariffs isn’t set in stone

When discussing how tariffs will make America great again, Trump often praises President McKinley’s high tariffs in the 1890s (Cabral 2025). Ironically, there is no better example to illustrate that workers will only share in the benefits of high tariffs if they have a strong union. Even better, it shows that the spell can be broken— that workers will understand that high tariffs and weak unions promise nothing more than wealth extraction.

The crucial historical precedent is the infamous Homestead steel strike, which culminated in the election of Grover Cleveland, a Democrat, in 1892 (Dean 2015b). The Republican Party of the late 19th century promised that high tariffs would deliver higher wages for U.S. workers. When a Republican Congress passed the protectionist McKinley tariff of 1890, steel prices and profits started to soar.

Just months before the 1892 general election, the Amalgamated Association of Iron and Steel Workers (the precursor of today’s United Steelworkers) was locked in contract negotiations with the Carnegie Steel Company (the precursor of today’s U.S. Steel). The union argued that “with the metal tariff as it is… there is no reason why the labor of the mills should not have part of the plum of profits that the ownership has been enjoying” (National Labor Tribune 1890). In response, the company locked out the workers and proclaimed that “hereafter, the Homestead steel works will be operated as a non-union mill” (Brody 1960).

The ensuing conflict ultimately ended with four striking workers killed, the town of Homestead occupied by the Pennsylvania National Guard, and the union decimated (Burgoyne 1893).

Although the steelworkers lost the strike, the conflict became a major focal point in the 1892 presidential election. Workers throughout the country began to question whether the GOP’s high tariffs actually delivered benefits to U.S. workers.

While the steelworkers had loyally voted for Republicans for decades, their new views on tariffs led many of them to throw their support to the Democratic Party (Arizona Republican 1892). The industrial states of Illinois, Indiana, New York, and Wisconsin all voted for Grover Cleveland, the victorious Democratic candidate for president.

What does all this mean for today’s politics? 

Trump’s 2018 tariffs, which increased average U.S. tariffs from 2% to 4%, helped him win voters in 2020 (Tradingeconomics.com 2025; Autor at al. 2024). Will Trump’s more aggressive 2025 tariffs, which are set to increase average tariffs to 16% or more, do the same (The Budget Lab 2025)? Given the recent memory of high inflation, many Democrats hope that linking Trump’s new tariffs to rising consumer prices will help win back working-class voters (DNC 2025).

There is some evidence that this time might be different, with overall public support for tariffs decreasing dramatically since Trump began increasing tariffs at the start of his second term. In early June, a survey found that 64% of independent voters opposed Trump’s tariff plans (Keene 2025).

And yet, Trump’s tariffs still resonate with many Americans. According to a recent Gallup poll, half of Americans expect tariffs to create more manufacturing jobs, and 69% are willing to accept at least some economic disruption to realize such gains (Brenan 2025). Or consider a recent focus group with Pennsylvania voters who voted for Biden in 2020 but Trump in 2024 (Talev 2025). Most of these swing voters expressed continued support for Trump and his tariffs because “things have been so screwed up for so long and he’s finally doing something about it.”

When the next elections arrive, will voters in swing states like Pennsylvania and Michigan reward Trump for following through on one of his main campaign promises, or will they reward Democrats for attacking tariffs in ways that sound a lot like defending free trade (Stiglitz 2024)?

How to construct a progressive message on tariffs

Thankfully, there is an alternative. Progressives can explain that Trump’s economic policies are meant to benefit businesses and not workers. As long as working-class voters believe that they benefit from tariffs, they will only be further alienated by politicians who critique tariffs for roiling the stock market and creating business uncertainty. Progressives will defeat Trumpism by embracing a progressive version of economic populism that combines tariffs and pro-labor reform to deliver shared prosperity (Reston 2025).

Union leaders need to communicate this message to rank-and-file members, as well as nonunion workers. Trump’s tariffs will only benefit the small minority of workers that have the bargaining power to win improvements in the workplace. And with Trump’s anti-labor policies simultaneously crushing unions, those benefits will be enjoyed by fewer and fewer workers. In the short term, workers who want to share in the potential benefits of high tariffs need to join a union. In the long term, workers who want to share in the prosperity of re-industrialization need to fight for policies that strengthen workers’ unions as well as their industries.

About the author

Adam Dean is an associate professor in the Department of Political Science at George Washington University. He is the author of two books on international trade and labor politics: From Conflict to Coalition (2016) and Opening Up by Cracking Down (2022), both of which were published by Cambridge University Press.

Notes

1. Proclamation No. 14266, 90 Fed. Reg. 15625 (April 9, 2025).

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Who are low-income families of color?

Families in which the household head identifies as

• Black
• Hispanic
• American Indian or Alaska Native (AIAN)
• Asian American or Pacific Islander (AAPI)

With at least one child under the age of 18 living at home

With a total family income below 200% of the federal poverty line (below $64,300 in 2025 for a family of two adults and two children)

Introduction

Low-income families of color live in a permanent cycle of economic insecurity and uncertainty. These families make up a disproportionate share of the nearly 10 million families with children (9.7 million) who are either poor or vulnerable to poverty. As a result of their economic precarity, these families are among the first to experience the painful consequences of a recession. This was evident during the last two business cycle downturns: the Great Recession and the pandemic recession. We find that these two economic contractions dealt a mighty blow to the employment security of these families, triggering a rise in poverty and housing insecurity.

Given the weak policy response to the Great Recession, it took economically vulnerable families of color nearly a decade to recover in nearly all the economic domains we examine, including employment, poverty status, and housing insecurity. While the bold response to the pandemic recession led to a relatively faster rebound in employment, economically vulnerable families of color remain disproportionately burdened by poverty and housing insecurity.

Instead of easing the pain of economically vulnerable families, the Trump-Vance administration and congressional Republicans have been on the attack in the first half of 2025. They have gone after the agencies, laws, and programs that help protect these families from joblessness, discrimination, poverty, hunger, and premature death. In just its first 100 days, the administration deliberately cut the wages of workers, rolled back protections against bias in employment, and hacked away at staffing at agencies that support the well-being of low-income families (like the Department of Education and the Department of Health and Human Services). As if this weren’t enough, the administration and congressional Republicans prioritized dealing a historic blow to Medicaid and Supplemental Nutrition Assistance Program (SNAP). They cut spending on programs that provide desperately needed health care and nutritional support to families by more than $1 trillion (CBO 2025b).

The chaos and uncertainty ushered in by the economic mismanagement of the Trump-Vance administration even led to the first quarterly contraction in economic growth since 2022. With the prospects of another recession rising, the administration has done everything in its power to leave low-income families even more vulnerable to the pain ahead. As we illustrate in this report, economic downturns hit these families the hardest, and while we’ve learned a great deal since 2007 about how to protect them, the administration has chosen not to build upon those lessons. Instead of protecting the strong labor market they inherited, empowering workers to bargain for better pay and working conditions, and strengthening basic needs programs, the Trump-Vance administration is fighting for an economic agenda centered on austerity for the economically vulnerable and subsidies for the rich.

In just a short period of time, the Trump-Vance administration has left low-income families more economically insecure and vulnerable to pain as recession risks continue to rise

Since taking office, the Trump-Vance administration has worked to dismantle the basic protections that help shelter low-income families from even deeper economic insecurity and hardship. This attack on families has taken the form of executive actions undermining civil and workers’ rights. While some of President Trump’s executive orders have been challenged in court, their introduction has altered the policy discourse and the lived experience of low-income families of color throughout the U.S. with an explicitly racist and xenophobic agenda. Beyond executive actions, the Trump-Vance administration and congressional Republicans also passed one of the most sweeping cuts to the U.S. social safety net in recent history, gutting basic needs programs and making Medicaid and SNAP benefits much more difficult for families in need to access (Shierholz 2025). All of this was done to help offset the cost of tax cuts that disproportionately benefit rich households and corporations (The Budget Lab 2025).

Few policy issues have received as much priority in the Trump-Vance administration as their attack on economic justice and initiatives promoting diversity, equity, and inclusion (DEI). In just his first day in office, President Trump rolled back numerous executive actions expressing the federal government’s commitment to racial justice for Black, Hispanic, Native American, and Asian American, Native Hawaiian, and Pacific Islanders (EPI 2025d). President Trump later also rescinded executive actions that identified systemic barriers impeding Black Americans’ opportunity to fully participate in American society on a level playing field (EPI 2025e). Equity in the classroom is also under attack. This was evident when President Trump rescinded an executive order stating that all students should be guaranteed an educational environment free from discrimination, including discrimination in the form of sexual harassment, sexual violence, and on the basis of sexual orientation or gender identity (EPI 2025c). These efforts form part of more than a dozen executive actions signed by President Trump in his first 100 days to roll back years of progress on racial and economic justice (McNicholas et al. 2025).

The Trump-Vance administration is also working to roll back anti-discrimination protections by weakening the Equal Employment Opportunity Commission (EEOC) (Maye and Wilson 2025). Just days into his second term, President Trump dismissed two EEOC commissioners and the agency’s general counsel, years before the expiration of their appointment (Olson and Savage 2025; EPI 2025b). As a result of these dismissals, the commission lost the quorum needed to perform key functions. Trump has also redirected the EEOC’s priorities to focus more on investigating so-called DEI-motivated race and sex discrimination and anti-American national origin bias and discrimination (EEOC 2025; DOJ 2025). Because wages are the primary source of income for low-income families, weaker enforcement of anti-discrimination laws leaves families of color more vulnerable to employment and pay discrimination in the labor market.

The EEOC is not the only federal body that the Trump-Vance administration has weakened to the detriment of low-income families. In March 2025, President Trump signed an executive order that would effectively eliminate the U.S. Department of Education (ED). The U.S. Supreme Court later lifted a lower court decision that had blocked the administration from firing more than 1,300 employees at ED (Sherman 2025). While the merits of the case before the Supreme Court have yet to be decided, the gutting of ED will disproportionately harm children from low-income families of color that benefit from federal funding for under-resourced schools and programs aimed at closing learning and achievement gaps (Dianis 2025; EPI 2025a; Santhanam 2025).

More broadly, ED serves an essential role in helping enforce Title VI of the Civil Rights Act, which prohibits discrimination based on race, color, or national origin in programs or activities that receive federal financial assistance (ED n.d.). Even the U.S. public health infrastructure is now under attack, as the Trump administration is committed to carrying out layoffs at federal health agencies focused on reducing premature and preventable deaths associated with pervasive racial health disparities (Moore 2025).

President Trump’s attacks on federal agencies that are vital to the provision of public goods and services for families are part of a larger war his administration has waged on workers. In his first 100 days, Trump replaced the leadership of the National Labor Relations Board (NLRB)—the federal agency tasked with protecting the most fundamental U.S. labor rights—with members more likely to carry out his agenda to erode workers’ union and collective bargaining rights (McNicholas et al. 2025). This will hurt the ability of workers to form and join unions at work. Unions are vital to working families, as union workers enjoy better wages and working conditions than their nonunion peers (Banerjee et al. 2021).

Beyond executive actions, the main legislative priority of the Trump-Vance administration imposed more than $1 trillion in cuts to basic needs programs in exchange for continuing a tax regime that overwhelmingly favors rich households and corporations (CBO 2025b; Shierholz 2025). Extending the 2017 tax cuts that President Trump enacted in his first term will not just favor the rich disproportionately. On its own, this extension can even suppress economic growth over the long run and leave policymakers with significantly less room to respond to another recession (Bivens 2025b). To help offset the cost of these large tax cuts to the rich, the Republican-led budget reconciliation bill that Trump signed into law adds more stringent work requirements to Medicaid and SNAP on top of historic cuts.

This combination will leave more than 22 million families at risk of losing some or all of their SNAP benefits and strip away health coverage for more than 11 million people (CBO 2025a; Wheaton et al. 2025). These cruel and misguided efforts will disproportionately hurt low-income families of color and children who are more likely than their peers to rely on Medicaid and Children’s Health Insurance Program (CHIP) for health insurance, and SNAP and other nutritional assistance programs to avoid going hungry in the face of growing food insecurity (Cid-Martinez, Moore, and Maye 2025; Cid-Martinez 2025).

In its totality, the policy positions President Trump has advanced in his first 100 days via executive orders and legislative priorities will leave low-income families of color and children much more vulnerable to hardship. In the face of a recession, which is no longer a hypothetical scenario, the consequences would be devastating. The Bureau of Economic Analysis (BEA) reported the first quarterly contraction of economic growth since 2022, and while growth climbed again in the second quarter, the U.S. economy is now growing significantly slower in the first half of 2025 than in the previous year (BEA 2025). And the chaotic economic climate that the current administration has generated with its trade, immigration, and macroeconomic policy management has increased the prospects of a recession (Bivens 2025a).

The fear of an approaching recession increased with the downward revision of employment gains that defined the weak jobs report published in August 2025 (EPI Staff 2025). What we see in the first half of 2025 is an economy being held back by anemic growth and a deteriorating labor market.

The upheaval that this administration has produced leaves low-income families of color exposed to future hardship. Without a bold policy response to recessions and the support of a strong welfare state, these families are hit hardest by economic downturns and sluggish economic recoveries (Bivens et al. 2025). This report sheds light on this reality by examining how the last two recessions impacted the well-being of low-income families, as captured by their employment situation, poverty status, and housing insecurity.

Low-income families of color with children and the last two recessions

What do we mean by low-income families of color with children?

The sample of families included in this analysis are those in which the household head has at least one child of their own, under age 18, living at home. Within these households, there may also be other members who have children under 18. Families of color are broadly defined as those whose household head identifies as Black, Hispanic, American Indian or Alaska Native (AIAN), or Asian American or Pacific Islander (AAPI).[1]

We further restrict this sample to a subset of economically vulnerable, or low-income, families, defined as having total family income below 200% of the federal poverty threshold.[2] To place the poverty threshold in context, the federal poverty line (FPL) for a single individual in the 48 contiguous states (excluding Alaska and Hawaii), and Washington, D.C., is $15,560 in 2025. While the FPL increases by $5,500 for each additional family member, a year-round worker earning the federal minimum wage ($7.25 an hour) can’t afford to keep their family out of poverty in 2025 (Hickey and Cid-Martinez 2025). For the remainder of this report, we will use families (of color) to refer to families (of color) with children, and the terms “economically vulnerable” and “low income” will be used interchangeably.

Drawing a demographic portrait of economically vulnerable families

While our main economic analysis is focused exclusively on Black and Hispanic families due to data limitations associated with the sample size of other groups, this section provides a demographic picture of low-income families of color more broadly. Table 1 shows low-income families by race and ethnicity, using data from the 2023 American Community Survey (ACS). As depicted in Table 1, families of color are generally overrepresented among the 9.7 million families with children that are economically vulnerable. While Black, Hispanic, AIAN, and AAPI families collectively account for 44.4% of all families with children, they represent 61.1% of economically vulnerable families with children. Although white families make up a larger share of low-income families than any other single racial or ethnic group, they are underrepresented among low-income families (38.9%) relative to their share of all families (55.6%).

More than 3 in 10 (32.6%) low-income families are Hispanic and more than 1 in 5 (21.5%) are Black. Together, Black and Hispanic families represent more than half (54.1%) of all low-income families with children, but just over one-third (35.1%) of all families with children. While less than 1.5% of all families are AIAN, they too are slightly overrepresented (1.8%) among the economically vulnerable. AAPI families account for 7.9% of all families and 5.2% of economically vulnerable families; however, the aggregate socioeconomic status of AAPI families hides important differences that become evident when we separate groups by country of origin (Cid-Martinez and Marvin 2023).

Immigrant families also make up a disproportionate share of low-income families and are especially prevalent among low-income Hispanic and AAPI families. Foreign-born families made up 23.6% of all families in 2023, but a higher share (30.5%) of low-income families were immigrant families. Slightly more than 8 in 10 (81.1%) economically vulnerable AAPI families are foreign-born, as are more than 6 in 10 (61.9%) comparable Hispanic families.

Beyond economic insecurity, these families face ongoing threats under Trump’s draconian mass deportation agenda, which the administration and congressional Republicans bolstered with new financing in the budget reconciliation bill that Trump signed into law (Costa 2025; NIJC 2025). These attacks on immigrant families and the immigrant workforce will also have ripple effects on the labor market, costing the U.S. economy nearly 6 million jobs, particularly in construction and child care (Zipperer 2025). All of this will also put upward pressure on food and housing prices (McNicholas et al. 2025).

In terms of family structure, low-income families are generally more likely to be headed by women or a non-married household head.[3] However, one finds noticeable variations in these patterns across racial and ethnic groups. For example, Black and AIAN families are most likely to be headed by women, 78.7% and 69.5% respectively, compared with less than half (43.3%) of low-income AAPI families. There are also differences in marital status. Low-income AAPI families are significantly more likely to be led by a married couple (76.2%), compared with about half of white (50.5%) and Hispanic (51.6%) families. More than one-third of low-income AIAN families and one-quarter of low-income Black families are led by married couples. Apart from Black families, less than 1% of low-income families report having a partner or spouse of the same sex in 2023. Because most low-income Black families are headed by women, attacks on women’s reproductive rights, along with efforts to undermine nondiscrimination enforcement for racial and ethnic minorities, women, and LGBTQ+ individuals, impose additional disadvantages for these families.

Economically vulnerable families are also more likely to have more than one child (under age 18): 67% of low-income families have two or more children, compared with 58.7% of all families. However, among low-income families, there is little variation in the number of children across racial and ethnic groups. For example, about two-thirds of all low-income families has two or more children, and only 12.6% have four or more children.

The share of low-income families with either a disabled child or parent of a child shows considerable variation across race and ethnicity. AIAN families stand out as having the highest prevalence of disability. About 1 in 3 (33.7%) AIAN households has a parent or child with a disability. Similarly, more than one-quarter of white families, and more than 1 in 5 Black and Hispanic households have a parent or child with a disability. AAPI households had the smallest share (16.2%) of households with a disabled parent or child.

The share of low-income families that is a part of intergenerational households varies significantly by race and ethnicity group. More than 1 in 8 (13.1%) AAPI households are multigenerational or intergenerational, followed by 7.8% of Hispanic households and 5.9% of AIAN households. Economically vulnerable white families are the least likely to be intergenerational, as less than 4% have a grandparent in the household.

Table 1

The Great Recession and the pandemic recession: Differences and similarities

As this report contrasts the economic experience of families during two different recessions, it is important to first understand the severity and duration of these events.

By official accounts, the Great Recession began in December 2007 and ended in June 2009, representing the longest economic downturn to impact the U.S. economy in the postwar period (NBER 2010). We assess the severity of the Great Recession by examining the impact that it had on the labor market via the employment situation of workers of color (EPI 2025g). These workers are among the first to lose a job during a downturn of the business cycle. Between 2007 and 2010, for example, the unemployment rate for Hispanic workers more than doubled, rising from 5.6% to 12.5%. Similarly, the unemployment rate for Black workers shot up from 8.3% in 2007 to 15.9% in 2010. While the recession had been declared officially over by 2009, it took nearly a decade for the unemployment rate of workers of color to fully recover. This prolonged suffering was largely due to the anemic policy response that followed the Great Recession, largely characterized by austerity measures at both the federal and state levels (Bivens 2019; Bivens 2011). 

Compared with the Great Recession, the pandemic recession was considerably shorter. Officially, the pandemic recession only lasted two months, from February 2020 to April 2020, making it the shortest economic contraction in U.S. history (NBER 2021). But this doesn’t mean that the impact on workers was less severe. Just between February 2020 and April 2020, the unemployment rate for Hispanic workers more than tripled, and that of Black workers more than doubled.

Unlike previous contractions, the economic impact on women was particularly pronounced (Alon et al. 2021).[4] By April 2020, more than 1 in 5 (20.3%) Latina workers were out of a job and seeking employment, as the unemployment rate of these workers quadrupled between February and April of that year.[5] Similarly, the unemployment rate of Black women more than tripled during this period, rising from 5% in February 2020 to 16.4% in April 2020.[6] The nature of the economic shock explains much of the disproportionate impact on these workers, as the public health crisis and mitigation efforts fell most heavily on low-wage industries and occupations in which women of color are overrepresented due in large part to occupational segregation (Wilson 2020).

Despite the sharp rise in joblessness caused by the pandemic recession, the economic suffering didn’t last as long as during the Great Recession. Within two years, the unemployment rate for Black and Hispanic workers had fully recovered to 6.2% and 4.3% respectively, reaching historical lows (EPI 2025g). Black women and Latinas experienced similar rebounds; by 2022, the unemployment rate for Black women and Latinas (at 6.2% and 4.4% respectively) was among their lowest in recorded history (EPI 2025g). This swift and atypically even rebound was not just a function of a much shorter recession. As we detail later in this report, the swift and bold policy response to the pandemic and the economic contraction that followed was qualitatively different from that of previous recessions in the United States. Rather than the austerity and conditional support provided during the Great Recession, policymakers responded to the pandemic crisis with more generous cash transfers and extended support for unemployed workers and families with children.

Weathering crises: How did the last two recessions impact the employment security, poverty status, and housing insecurity of economically vulnerable families?

In this section, we examine how the Great Recession and the pandemic recession impacted the well-being of low-income families in three domains: their employment security, poverty status, and housing insecurity.

Employment security: Labor market attachment of families and employment rate of parents

One way of assessing the impact that business cycle downturns have on the economic well-being of families is by examining the impact that these events have on their employment security and attachment to the labor market. Since earnings represent the primary source of income for most families, involuntary separation from the labor market is likely to magnify the economic hardship experienced by these households. In this section, we examine changes in the labor market attachment of economically vulnerable families by looking at the share of families with at least one full-time earner and by capturing shifts in the employment rate of parents between the ages of 25 and 54.

Labor market attachment

Given the importance of work for low-income families, the prevalence of full-time employment in the household provides a measure of their attachment to the labor market. On average, more than two-thirds of low-income families had at least one full-time earner before the Great Recession. However, as can be seen in Figure A, differences in attachment existed by race and ethnicity even before the crisis. In 2007, 63.6% of Black families had at least one full-time earner, compared with more than 67.7% of white families and 77.7% of Hispanic families.

The Great Recession, and the weak policy response that followed, left a major dent in the labor market attachment of families. By 2010, the attachment gap between white and Black families had widened, as only 56% of Black families had at least one full-time earner that year, compared with 63.1% of their white counterparts. The share of low-income Hispanic households with at least one full-time earner also fell by nearly 10 percentage points, from 77.7% in 2007 to 68.1% in 2010. Comparatively, the rate of attachment for white families dropped by less than five percentage points during this period. While Hispanic families were more likely to report a stronger attachment to the labor market than their white peers, this advantage declined during the crisis and its aftermath. Overall, Black and Hispanic families took nearly a decade to recover, as their attachment to the labor market remained below the pre-crisis level in 2016. 

Leading to the COVID-19 pandemic and the recession, families of color regained a significant measure of the employment they had lost during the Great Recession. By 2018, for example, 64.4% and 76.6% of Black and Hispanic families respectively had at least one full-time earner. Largely due to the much shorter duration of the contraction and the robust policy response that followed, the pandemic recession had a much more muted impact on the labor market attachment of these families. Between 2018 and 2020, the share of economically vulnerable families of color with at least one full-time earner in the household declined only marginally, by about three percentage points for Black and Hispanic families.

By 2022, the share of Black families with a full-time earner had rebounded to 68.1%. This figure was nearly identical to the attachment rate for white families in the same year, and it represented the highest rate for Black families since 2007. While that number declined in 2023, it was still higher than in most years since 2007. On the other hand, by 2023, Hispanic families continued to lag considerably behind their 2007 peak.

Figure A

Employment rate of prime-age low-income parents

Examining changes in the prevalence of full-time earners within the household can provide us with a sense of the impact that crises have on the annual labor market attachment of families. But it does not capture monthly changes in the employment situation of parents over the business cycle. This is particularly important in the context of the pandemic recession since it represents the shortest economic recession in U.S. history. To best capture the impact that this economic contraction had on the employment situation of economically vulnerable parents of color, we examine changes in the employment-to-population (EPOP) ratio of low-income parents between the ages of 25 and 54.

In Figure B, prime-age Hispanic parents enjoyed higher employment rates than their Black and white peers before the pandemic. This pattern is also consistent with those shown in Figure A. Leading to the pandemic in January 2020, 94.7% of low-income Hispanic parents between the ages of 25 and 54 were employed, compared with 89.8% of white parents and 88.6% of Black parents, who face the greatest employment disadvantage historically.

As evidenced in Figure B, the gap in employment between Black and white prime-age parents widened during the pandemic recession. Much of this is explained by the disproportionate impact that the pandemic recession had on parents of color. Between January 2020 and April 2020, the employment rate of prime-age low-income Black and Hispanic parents plummeted by more than 32.7 and 27.0 percentage points respectively. By April 2020, only around half (55.9%) of prime-age Black parents had a job. At this point, prime-age Hispanic parents also saw their employment rate drop to a low of 67.7%. While the employment rate of white parents declined by 17.6 percentage points between January 2020 and April 2020, these parents remained about 29% and 7% more likely to be employed in April 2020 than their Black and Hispanic peers respectively. 

While the employment rate of parents of color declined to historically low levels in 2020, the bold policy response to the pandemic recession led to a quick rebound in the labor market. By the end of 2023, 88.9% of prime-age low-income Black parents and 91.6% of their Hispanic peers had a job. The strong recovery of parents of color also helped narrow the racial gaps in employment seen at the height of the pandemic recession in April 2020.

Figure B

Poverty status: Prevalence of poverty and severe poverty

As low-income families are largely dependent on wage earnings to meet their financial obligations, business cycle fluctuations can significantly affect their economic vulnerability. Without a proportional policy response or adequate social protection systems, these families are the first to fall victim to material hardship during an economic downturn. The Great Recession and the pandemic recession exemplify this, as these crises pushed more low-income families of color into poverty and severe poverty. This is evident when we examine changes in the prevalence, severity, and distribution of poverty over time.

Prevalence of poverty

Leading to the Great Recession, economically vulnerable Black and Hispanic families were more likely than their white peers to fall below the federal poverty line (FPL).[7] In 2007, more than half (53.6%) of low-income Black families were poor, relative to 44.6% and 38.7% of Hispanic and white families respectively (see Figure C). The Great Recession and the inadequate policy response to the downturn pushed a larger share of these families into poverty quickly and for a prolonged period of time. By 2010, more than half (51.2%) of Hispanic families fell below the FPL. The poverty rate for Black families continued to rise the following year, reaching nearly 6 in 10 (58.5%) in 2011. The poverty rates of both Hispanic and Black families did not return to pre-Great Recession levels until 2015, more than half a decade later. While racial gaps first widened and then narrowed throughout the crisis and the slow recovery, poverty rates remained much higher among Black and Hispanic families, relative to their white counterparts. 

By the lead-up to the COVID-19 pandemic and the recession that followed, the poverty rates of families of color were lower than they were in 2007, but a large racial poverty gap remained. While less than half (49.3%) of Black families fell below the FPL in 2018, they remained about 30% more likely to suffer material hardship than their white peers.

Largely because of policy, the material situation of families was not impacted as severely by the pandemic recession as it was during the Great Recession. While Hispanic families experienced a marginal increase in poverty between 2019 and 2022, rising by 3.3 percentage points (relative to the larger increase, of 6.6 percentage points, during the previous downturn), the share of Black families that fell below the FPL during this period declined. By 2022, low-income Black families recorded the lowest poverty rate (44.1%) in the entire period between 2007 and 2023. After economic relief measures expired, poverty rates were relatively stable for Hispanic families but had increased for Black families.

Figure B

Prevalence of severe poverty 

Economic downturns don’t just push economically vulnerable families into poverty. Without the support of a strong social safety net, families can fall deeper into economic deprivation when parents lose their jobs during a recession. The parents struggle to make ends meet and provide their children with the resources they need to flourish and to participate in society without shame. This happened far too often during the Great Recession as an increasing share of low-income families experienced severe poverty, with an income below half (50%) of the federal poverty line. To place this figure in context, the severe poverty threshold for the 48 contagious states and Washington, D.C., amounts to $7,825 annually for a single individual in 2025 (HHS n.d.).

Before being hit by the Great Recession, more than 1 in 4 (26.1%) Black families suffered severe poverty in 2007 (see Figure D). At this stage, Black families were about 61% more likely than their white peers to fall among the poorest of the poor. While Hispanic families fared relatively better in 2007 (with a severe poverty rate close to that of white families), disparities quickly widened. By 2010, more than 1 in 5 (21.6%) Hispanic families fell among the poorest of the poor, and an even larger share (30.3%) of Black families experienced similar material hardship, compared with 18% of their white peers. The anemic policy response to the Great Recession left an elevated share of these families under a prolonged state of economic deprivation until about 2015.

The strong policy response to the pandemic recession prevented a large uptick in the prevalence of poverty, especially for Black families, but severe poverty rates rose significantly for families as the material shortcomings of the most vulnerable worsened. Between 2018 and 2020, the share of Black families that fell among the poorest of the poor increased by 4.7 percentage points, from 22.5% to 27.2%. Hispanic families fared slightly better, as the severe poverty rate for these families rose from 15.6% in 2018 to 18.9% in 2021.

While the exposure of families of color to severe poverty fell in 2022, reaching a historic low of 22% for Black families, severe poverty again rose once economic relief measures ended. By 2023, the share of Black and Hispanic families among the poorest of the poor remained above the pre-recession levels of 2018. In contrast, severe poverty among white families had returned to the pre-recession rate by 2023.

Figure D

Housing insecurity: Prevalence and severity

Business cycle downturns that lead to significant job losses don’t just leave low-income families more vulnerable to poverty. Recessions also leave families much more exposed to housing insecurity, irrespective of whether these families own or rent their homes. As we illustrate below, this is because housing represents a significant expense for resource-constrained families. Low-income families of color are particularly vulnerable to even more pain during downturns as they are also forced to contend with an economy that suffers from an obstinate deficit in affordable housing and one in which the housing and lending markets have historically discriminated against them (Moore and Maye 2024).

In this section, we examine the impact that both the Great Recession and the pandemic recession had on the rent and homeownership rates of families of color. We also look at how the cost burden of housing evolved for both renters and homeowners during and after the crises.

Renters and housing insecurity

Given the high economic barriers to homeownership, Black and Hispanic families are generally more likely to rent, relative to their white peers (see Appendix Table 1). But, as homeownership rates declined during the Great Recession, the share of low-income families who rent has increased. Leading to the COVID-19 pandemic, in 2018, more than 80% of Black families and more than 70% of Hispanic families were renters. In contrast, slightly more than half (55.3%) of white families rented their homes that same year. While the share of renters was lower post-pandemic, racial gaps widened in 2023 with Black and Hispanic families being 61% and 36%, correspondingly, more likely to rent than their white peers.

The pandemic and the short economic downturn that followed exacerbated the already precarious position that low-income renters found themselves in after the Great Recession. By 2017, nearly a decade after the Great Recession, the share of economically vulnerable families that spend 30% or more of their income on rent remained above the pre-recession levels of 2007 (see Figure E). In 2018, for example, more than 8 in 10 Black and Hispanic families that rent were housing poor. The strong pandemic recovery did little to shelter these families from the housing affordability crisis in the U.S. that was amplified by the global health crisis (Moore and Maye 2024). By 2023, racial gaps had widened as the share of Black and Hispanic families that spend over 30% of their income on rent climbed above the peaks reached in the aftermath of the Great Recession.

Figure E

The impact of the last two recessions on families fell most heavily on those that spend more than half of their income on rent. While some of these renting families had recovered by the time that the pandemic recession rolled in, the share of Hispanic families experiencing severe housing insecurity remained above pre-recession levels in 2019 (see Figure F). Black families were particularly disadvantaged. Nearly half (48.3%) of low-income Black families spent over half of their income on rent in 2019. The situation quickly worsened for all families, as the strong economic recovery failed to protect these families from the growing affordability crisis in housing. By 2023, a higher share of white, Black, and Hispanic families spent more than half of their income on rent than at any other point since 2007. Low-income Black and Hispanic families remain most disadvantaged, as more than half of these families spend over 50% of their income on rent.

Figure F

Homeowners and housing insecurity

The Great Recession deepened the racial divide in homeownership rates, as families of color were disproportionately touched by the crisis (see Appendix Table 1). The share of low-income Black families that owned their home declined from 21.5% in 2007 to 15.7% in 2016, and from 34.6% to 28.3% during the same period for their Hispanic peers. By 2017, a decade after the start of the crisis, the homeownership rate of families had yet to recover, and racial disparities had widened. At this stage, economically vulnerable white families were 169% and 48% more likely than their Black and Hispanic peers respectively to own their home. 

Despite the steep gaps in homeownership, the pandemic recession didn’t quite lead to a suppression of homeownership rates for families. Partly as a function of younger households transitioning toward ownership, low interest rates, and the generous (albeit temporary) economic relief measures enacted in response to the pandemic recession, the downturn failed to reverse the gains in homeownership that economically vulnerable families of color were already experiencing in 2018 and 2019 (Sanchez-Moyano 2024; Callis 2023).

By 2023, slightly more than one-third (34%) of low-income Hispanic families owned their home, compared with about 3 in 10 (29.7%) in 2018. Black families also experienced gains. During this period, the homeownership rate of low-income Black families increased by 5.3 percentage points, from 16.4% in 2018 to 21.7% in 2023. By 2023, the homeownership of low-income Black and Hispanic families had achieved a near full recovery from both the Great Recession and the pandemic recession. While these achievements in homeownership helped narrow racial disparities, economically vulnerable families of color remained significantly less likely to own their homes in 2023 compared with their white peers.

While owning a home can be an important step toward wealth creation, economically vulnerable homeowners spend a significant share of their income on housing costs associated with mortgage payments, taxes, insurance, and more (U.S. Census Bureau 2004). Leading to the pandemic recession, Black homeowners remained more likely to spend over 30% of their income on housing costs (see Figure G). At this stage in 2019, 65.2% of economically vulnerable Black families who owned their homes were housing poor, compared with fewer than 6 in 10 Hispanic and white families. Despite the economic relief measures that helped economically vulnerable families weather the shock of the pandemic recession, housing insecurity rose for nearly all families. By 2023, a slightly higher share of Black and Hispanic families who owned their homes spent over 30% of their income on housing than in 2019.

Figure G

The impact of the pandemic recession and the increasing cost of housing in the U.S. is even more evident when we examine the situation of low-income families suffering from severe housing insecurity (Moore and Maye 2024). These are homeowning families who spend over half of their income on housing. Despite the short duration of the most recent downturn, the share of economically vulnerable families who face severe housing insecurity climbed by more than four percentage points between 2019 and 2023 (see Figure H). By 2023, Black families remained disproportionately vulnerable to economic pain with a prevalence of severe housing insecurity comparable to the hardship they experienced in the lead-up to the Great Recession. Since 2007, more than 2 in 5 economically vulnerable Black families who own their homes were unable to escape severe housing poverty as a result of having to spend over 50% of their income on housing costs.

Figure H

Lessons learned: Key policy choices that made a difference during the pandemic recession and are still needed to break the cycle of economic vulnerability for families

By nearly every measure of economic well-being examined above, low-income families of color weathered the pandemic recession better than the Great Recession largely because of policy choices. The weak policy response to the Great Recession, centered on austerity at the federal and state levels, contrasted sharply with the bold response to the pandemic recession guided by economic relief measures and public investments. This enabled families to avoid a prolonged separation from the job market and a worsening of their material conditions.

The last two recessions and their distinct recoveries left us with a clear blueprint for action. The economic lessons are not unfamiliar:

• Full employment policies that create tight labor markets also promote economic equity for workers and their families.
• Good jobs are union jobs.
• A strong social safety net helps families avoid unnecessary and scarring economic deprivation.

Breaking the vicious cycle that leaves low-income families more susceptible to hardship during recessions will require a renewed commitment to full employment, stronger worker rights and unions, and a robust welfare state that meets the needs of families and children. While the policies that can accomplish these objectives commonly face political headwinds, actions taken by the Trump administration and Congress will create even worse conditions.

Full employment policies are equity-enhancing policies 

While economists debate the overall rate of unemployment that constitutes full employment, there is less debate about the equity-enhancing effects of a tight or “high-pressure” labor market, one in which willing workers can obtain access to a job and the working hours they prefer (Bivens 2021; Bivens and Zipperer 2018). Sustained periods of low unemployment can effectively boost the earnings of low-wage workers and help narrow persistent racial disparities in a labor market that disproportionately disadvantages the employment situation of workers of color and the economic well-being of their families (Wilson 2023; Bivens 2021). The narrowing of these gaps would not constitute full healing from the legacy and continued expression of structural racism and xenophobia in the U.S. economy, but it would be a step in the right direction. Historical evidence points to increased economic equity via low unemployment and rapid job growth. 

The recent economic recovery from the COVID-19 pandemic and the economic contraction that followed serves as a good example of a policy regime that aimed, in large part, to provide a strong or high-pressure labor market. Unlike the economic recovery from the Great Recession, the rebound from the pandemic recession has been characterized by bold fiscal policies, via much-needed relief and strategic public investments, and more accommodating monetary policy that kept downward pressure on unemployment (Wilson 2023; Bivens 2024; Bivens 2016). The results of this policy regime are unambiguously clear: Workers of color made historic gains over the last five years in both employment and earnings, with Black and Hispanic real wages (adjusted for inflation) growing more than three times faster over the last five years than the four decades prior (Cid-Martinez, Maye, and Marvin 2025).

Instead of providing continuity to the economic regime they inherited, the Trump-Vance administration is pursuing a macroeconomic and trade policy that is sowing economic uncertainty and chaos and has already led to a contraction of economic growth in the first quarter of 2025.

Unions help narrow economic disparities that hurt workers and their families

It is easy to envision growing income disparities that threaten the economic security of working families as endemic features of the U.S. economy. Between 1979 and 2023, for example, the real annual earnings for the top 1% of earners increased by 181.7%, while the earnings for the bottom 90% grew just 43.7% (Gould and Kandra 2024). This economic divide mirrors another increasing gap between economywide productivity and the hourly pay of the typical worker, a gap that is even more pronounced for the typical Black and Hispanic worker (Moore and Banerjee 2021). But none of these trends is inevitable.

Behind these rising inequities one finds a wide range of deliberate policies choices that have weakened labor standards and stripped workers of their ability to bargain collectively for better compensation and working conditions (Mishel and Bivens 2021), including the erosion of union membership since the late 1950s (Bivens et al. 2023b).

Workers of color have been disproportionately touched by the decline of union density in the U.S. economy since they typically receive a larger wage boost from union membership. Compared with the premium of the average worker, the union pay premium is higher for Black and Hispanic workers (Bivens et al. 2023a). Black workers, for example, are more likely than white workers to be unionized (13.1% vs 11.2%), and the wage advantage unionized Black workers receive from being covered by collective bargaining is 12.6% (EPI 2025f; EPI 2025h). This premium is higher than the 11.9% average wage premium for unionized white workers. While Hispanic workers have slightly lower union coverage (9.7%) than white workers, they claim a higher union wage advantage of 16.4%.

Unions can also protect workers from discrimination and improve working conditions. Because private employment in the U.S. is for the most part “at will,” employers can terminate workers for nearly any reason, without providing notice or severance. This power imbalance harms workers of color disproportionately, as they are more likely than their white peers to report unfair dismissals (Bivens et al. 2023a). Unions protect these workers with the provision of “just cause” rights that shelter workers from discriminatory and retaliatory practices and unfair dismissals. Unions also offer workers better employment conditions. This is important for economically vulnerable families who face care needs alongside scarce resources. Unionized workers, for example, are more likely than their nonunion peers to have access to paid sick days and employer-sponsored health and retirement benefits (Shierholz et al. 2024).

Low-income working parents stand to gain the most from union membership. However, few of them belong to a union. Only 8% of prime-age Black parents and 4.9% of Hispanic parents belonged to a union in 2023. Similarly, only 5.3% of economically vulnerable white parents between the ages of 25 and 54 belonged to a union in the same year.

Instead of strengthening the rights of workers to bargain collectively, President Trump has openly embarked on an anti-worker agenda centered on weakening the federal agency tasked with protecting the most basic and fundamental U.S. labor rights, the National Labor Relations Board (McNicholas et al. 2025). These efforts will leave families of color much more vulnerable to discrimination in the labor market and to wage theft and mistreatment at work.

The social safety net expanded in response to the pandemic, which demonstrated that poverty remains a policy choice

The welfare of economically vulnerable families of color and their children is not an insurmountable problem beyond the reach of public policy. This became most evident during the COVID-19 pandemic. The federal government responded to this crisis boldly with an array of economic relief measures, such as economic impact or stimulus payments; with provisional expansions of social programs like the Supplemental Nutrition Assistance Program and the unemployment insurance (UI) program; with temporary enhancements of tax credits, such as the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC); and with increased federal assistance to state and local governments. Overall, these measures kept millions of people out of poverty in 2021 (Banerjee and Zipperer 2022). The economic impact or stimulus checks alone kept nearly 9 million people out of poverty in 2021, including more than 2 million children (Shrider and Creamer 2023).

The expanded social safety net had a notable impact on alleviating the material hardship experienced by families of color. This is most evident when we look at trends in the prevalence of child poverty. For this, we rely on child poverty rates based on the Census Bureau‘s Supplemental Poverty Measure, which accounts for cash and in-kind transfers as well as geographic differences in housing costs. By this measure, the post-pandemic social policy regime looks particularly effective in its ability to reach children of color and to alleviate the human suffering that accompanies deprivation at a young age. Between 2019 and 2021, for example, child poverty rates fell by more than half across nearly all groups, reaching their lowest levels in recorded history (see Figure I). Before the pandemic, more than 1 in 5 Black and Hispanic children fell below the supplemental poverty line in 2019. By 2021, these rates plummeted by nearly 60%, as the Black and Hispanic child poverty rate dropped to 8.3% and 8.4% respectively. The Asian American and AIAN child poverty rates also declined by more than 40% during this period, reaching historic lows of 5.1% and 7.4% respectively in 2021.

Many of the gains in poverty reduction were driven by the expansion of the Child Tax Credit (Gould 2022). Relative to all income transfers in 2021, the expanded CTC drove an estimated 44% of the reduction in child poverty that year (Parolin 2023). The impact was especially pronounced for children of color (Burns and Fox 2022). For example, this expanded credit lifted an estimated 1.2 million Hispanic children out of poverty in 2021. Similarly, more than 700,000 Black children and over 100,000 Asian children avoided falling below the supplemental poverty line in 2021 because of the expanded CTC. The rest of the social policy levers (aside from Social Security) that drove the bulk of the historic reduction in child poverty had also been provisionally expanded under the American Rescue Plan Act (ARPA), including EITC, SNAP, and UI benefits.

Despite the powerful effect these measures had in extinguishing poverty, nearly all the enhanced social safety net measures under ARPA expired by 2022. This purposeful expiration erased the bulk of the gains in poverty alleviation that families and children of color had achieved economically in 2021 (Cid-Martinez and Zipperer 2023). This is evident when we examine how the end of the expanded welfare state impacted the prevalence of poverty for children of color. Between 2021 and 2023, the poverty rates of Black, Hispanic, Asian, and AIAN children had more than doubled, returning to or exceeding 2019 levels (see Figure I). This increase marked an obliteration of the gains achieved in poverty reduction between 2019 and 2021. In fact, by 2023, the poverty rates of all groups were either higher, or no different, than the pre-pandemic estimates of 2019. 

Instead of expanding the CTC to help more low-income parents meet the basic needs of their children and reduce poverty, the Republican-led budget reconciliation bill that Trump signed into law fails to increase benefits for the 17 million children who receive less than the full value of the credit because their parents earn too little to meet the earnings requirement (Maag 2025). The Republican law is also particularly harmful to children of migrant parents, as it revokes the credit eligibility of children that are U.S. citizens if both spouses in a married couple lack a Social Security number (Tax Policy Center 2025). At least one spouse will now need to have a Social Security number in order for a U.S. citizen child to qualify for the CTC. While the Republican law increases the maximum credit from $2,000 to $2,200 per child, no significant changes in the refundability structure and earnings requirement mean that CTC benefits will remain out of reach for the children of the poorest of the poor, while middle- and high-income families continue to receive most of the benefits (Collyer et al. 2025; Crandall-Hollick, Maag, and Jha 2025).

The Republican budget reconciliation bill that the president signed into law also missed an opportunity to break the cycle of economic vulnerability that poor children face with the “Trump accounts.” These new tax-free investment accounts will provide a single government contribution of $1,000 to every child born in the next four years (Hamilton and Pressley 2025). The current administration is also discussing these accounts as a “back door for privatizing Social Security,” a program that helps narrow racial and income disparities, lifting more than one million children out of poverty in 2023 (Price and Mascaro 2025; Morrissey and Bivens 2025; Shrider 2024).

Unlike the more popular Baby Bonds, which require sustained contributions from the federal government throughout childhood with the goal of narrowing the racial wealth gap, the Trump accounts are built on the mistaken premise that low-income families lack an incentive to save when the real issue is that they lack enough discretionary income to put into a savings account (Markoff, Radcliff, and Hamilton 2025). The employment, income, and wealth disadvantages that low-income families with children face leave them in a perennial struggle to access basic necessities like health care, housing, and child care. These families are often an emergency away from falling into poverty or severe poverty. Helping families escape this generational challenge will require more than a new savings vehicle that will further widen the divide between the rich and poor by providing yet another giveaway to rich families.

Figure I

Conclusion

Low-income families of color were disproportionately impacted by the economic suffering that came in the wake of the last two recessions. Both the Great Recession and the pandemic recession worsened the employment security, poverty status, and housing insecurity of these families. In contrast with the Great Recession, policymakers responded to the pandemic with a show of strength that helped families recover their employment and bounce back from poverty significantly faster. But housing insecurity and poverty continue to leave these families particularly vulnerable when the next recession strikes.

While the prospects of a recession continue to rise due to the chaos and uncertainty generated by the Trump-Vance administration, they are deliberately ignoring the lessons of the past. This administration has failed to protect the strong labor market they inherited, has failed to empower workers to bargain for better pay and working conditions, and has failed to strengthen basic needs programs. Instead, the administration is proudly advancing an economic agenda that forces austerity on low-income families, strips away protection from discrimination for people of color, and offers more tax cuts for those who do not need it—the ultrarich. This economic agenda will push even more families into poverty and prolong the pain that follows a recession.

Appendix

Appendix Table 1

Acknowledgments

Support for this research was provided by the Robert Wood Johnson Foundation. The views expressed here do not necessarily reflect the views of the Foundation.

Notes

[1] Our classification of race and ethnicity is mutually exclusive, such that white families are non-Hispanic white, and Black families represent all families in which the head identified their race as Black in combination with other races. Hispanic families include those in which the head identified Hispanic origin, irrespective of race. Among the remaining pool, those who identified as American Indian in combination with other races are listed as AIAN, and respondents who identified as Asian or Pacific Islander in combination with other races (such as Asian and white or Pacific Islander and white) are listed as AAPI.

[2] Total family income is the sum of the individual incomes of each family member. Because unmarried partners are nonrelated household members, the unmarried partner’s total income is not incorporated in the primary family’s total family income. In cases where the income statuses of the household head and the unmarried partner are different, we use the income status of the household head.

[3] Similarly to race and ethnicity, the marital status of the family is informed by the status of the household head, such that married captures respondents who identify as married, irrespective of the presence of the spouse. All other responses are classified as not married.

[4] As we point out below, this disproportionately affected low-income families of color,  which are more likely to be headed by women.

[5] The unemployment rate here is captured by the seasonally adjusted unemployment rate of Hispanic women, 20 years old and over.

[6] The unemployment rate here is captured by the seasonally adjusted unemployment rate of Black women, 20 years old and over.

[7] This federal poverty line is informed by the official poverty measure (OPM) published annually by the Census Bureau since 1967. This measure uses a set of money income thresholds that vary by family size and composition to determine who is in poverty. While the Supplemental Poverty Measure (SPM) is considered to be a more accurate and comprehensive measure because it accounts for government transfers and geographic cost-of-living expenses, including housing, published estimates only go back to 2009 (Shrider 2024). For the purpose of this analysis, we rely on OPM to capture the impact of both the Great Recession and pandemic recession.

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Price, Michelle L., and Lisa Mascaro. 2025. “Bessent Says New Trump Child Savings Accounts Are ‘Back Door for Privatizing Social Security.’” Associated Press, July 30, 2025.

Ruggles, Steven, Sarah Flood, Matthew Sobek, Daniel Backman, Grace Cooper, Julia A. Rivera Drew, Stephanie Richards, Renae Rodgers, Jonathan Schroeder, and Kari C.W. Williams. 2025. IPUMS USA: Version 16.0 . Minneapolis, MN: IPUMS. https://doi.org/10.18128/D010.V16.0

Sanchez-Moyano, Rocio. 2024. Pandemic Homebuyers: Who Were They, and Where Did They Buy? Federal Reserve Bank of San Francisco, October 2024.

Santhanam, Laura. 2025. “Trump Cuts to Education Department Grants Will Cost Students Opportunities, Educators and Former Employees Say.” PBS News, May 28, 2025.

Sherman, Mark. 2025. “Supreme Court Allows Trump to Lay Off Nearly 1,400 Education Department Employees.” Associated Press, July 14, 2025.

Shierholz, Heidi. 2025. “The Radical Republican Budget Bill Steals from the Poor to Give Tax Cuts to the Rich.” Working Economics Blog (Economic Policy Institute), July 2, 2025.

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.

Shrider, Emily A. 2024. Poverty in the United States: 2023. U.S. Census Bureau, Current Population Reports, P60-283, September 2024.

Shrider, Emily A., and John Creamer. 2023. Poverty in the United States: 2022. U.S. Census Bureau, Current Population Reports, P60-280, September 2023.

Tax Policy Center. 2025. “Comparing Child Tax Credit Legislation in 2025” (web page). Last updated July 10, 2025.

The Budget Lab at Yale (The Budget Lab). 2025. “Distributional Effects of Selected Provisions of the House and Senate Reconciliation Bills.” June 30, 2025.

U.S. Census Bureau. 2004. Differences Between the Housing Cost and Housing Quality Estimates from the American Community Survey and the American Housing Survey (fact sheet). November 30, 2004.

U.S. Census Bureau. 2024. Poverty in the United States: 2023, “Table B-2. Number and Percentage of People in Poverty Using the Supplemental Poverty Measure, by Age, Race, and Hispanic Origin: 2009 to 2023.” [Excel file]. Accessed May 2025.

Wheaton, Laura, Linda Giannarelli, Sarah Minton, and Ilham Dehry. 2025. “How the Senate Budget Reconciliation SNAP Proposals Will Affect Families in Every US State.” Urban Institute, July 2, 2025.

Wilson, Valerie. 2020. “Inequities Exposed: How COVID-19 Widened Racial Inequities in Education, Health, and the Workforce.” Testimony before the U.S. House of Representatives Committee on Education and Labor, Washington, D.C., June 22, 2020.

Wilson, Valerie R. 2023. “Tight Labor Markets Are Essential to Reducing Racial Disparities in the Labor Market and Within the Purview of the Fed’s Dual Mandate.” Journal of Policy Analysis and Management 43, no. 1: 322–328. https://doi.org/10.1002/pam.22545.

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

This FAQ provides essential background and facts, as well as answers to some of the most frequently asked questions. It confirms that Social Security is an extraordinarily valuable public program that is well run, strategically designed, eminently sustainable, and popular with the public. It will of course need some policy tweaking in coming years to ensure that it continues to provide the same (or even greater) level of economic security it provides today, but these changes are manageable and would be welcomed by the public.

What is Social Security and how is it financed?

What Social Security benefits do people receive?

Why is Social Security facing a shortfall?

Want to learn more?

• Center on Budget and Policy Priorities (Top Ten Facts about Social Security)
• Center on Budget and Policy Priorities (Social Security Disability Insurance)
• Congressional Research Service (Primer on Social Security)

• Immigration FAQ home
• Immigrants and the economy
  1. How many immigrants live in the United States?

  2. What is immigration status? What are the different immigration statuses, and how many people are in each?

  3. What is the makeup of the U.S. immigrant population in terms of race and ethnicity?

  4. How much do immigrants contribute to the economy?

  5. How many immigrants work in the United States?

  6. How much workforce growth has been attributable to immigration?

  7. What are the education and wage levels of immigrants?

  8. What are the top occupations for immigrants?

  9. How do immigrants affect the economy?

  10. Do immigrant workers affect wages for U.S. workers?

  11. Immigration policy often favors employers over workers and needs to be reformed.

• Unauthorized immigrants and the economy
  1. How many unauthorized immigrants live in the United States?

  2. Which regions and countries are unauthorized immigrants from?

  3. How many unauthorized immigrants work in the U.S.?

  4. What share of unauthorized immigrants work in the U.S.? Which occupations employ the most unauthorized immigrants?

  5. What is the fiscal impact of unauthorized immigrants at the state and federal level?

  6. Unauthorized immigrants are generally ineligible for public benefits like SNAP and SSI

  7. What will mass deportation do to the economy?

  8. What are the policy options for current U.S. residents who are unauthorized immigrants?

  9. If unauthorized immigrants get legal status, how would this improve wages and labor standards for all workers?

• Immigration enforcement in the workplace
  1. What are ICE worksite raids and I-9 inspections?

  2. How many I-9 inspections does ICE carry out every year?

  3. Worksite raids devastate workers and communities, while employers get a slap on the wrist

  4. What is E-Verify?

  5. How does E-Verify impact worker rights and the economy?

  6. The federal government spends 14 times more on enforcing immigration laws than it does on labor standards that protect workers

• Immigrant workers in your state
• Note on terminology
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  Immigrants and the economy FAQ

  Unauthorized immigrants and the economy FAQ

  Immigration enforcement and the workplace FAQ

Immigration is among the most important economic and political issues and a main topic of discourse and debate among policymakers and the public. But misperceptions persist about many fundamental aspects of this crucial topic, such as:

• the size and composition of the immigrant population
• the effects of immigration on the economy and workforce
• the difference between permanent immigration pathways that lead to green cards versus temporary and precarious immigration statuses
• various other facets of the U.S. employment-based migration system
• policy options for reform

This document provides essential background and facts, as well as answers to frequently asked questions, including relevant data, charts, and extensive citations to key sources.

How many unauthorized immigrants live in the United States?

There are a handful of existing estimates on the number of persons in the United States who lack an immigration status. These persons are often referred to as undocumented immigrants, unauthorized immigrants, or irregular migrants. The four most recent and commonly cited statistics on the size of the unauthorized immigrant population come from:

• the Migration Policy Institute, which has estimated the population at 13.7 million in 20231
• the Center for Migration Studies, which has estimated the population at 11.7 million in 20232
• the Pew Research Center, which has estimated the population at 11 million in 2022, accounting for 3.3% of the total U.S. population and 23% of the total foreign-born population3
• the U.S. Department of Homeland Security (DHS), which estimated the population at 11.0 million in 20224

Read the full answer

There are a handful of existing estimates on the number of persons in the United States who lack an immigration status. These persons are often referred to as undocumented immigrants, unauthorized immigrants, or irregular migrants. The four most recent and commonly cited statistics on the size of the unauthorized immigrant population come from:

• the Migration Policy Institute, which has estimated the population at 13.7 million in 20231
• the Center for Migration Studies, which has estimated the population at 11.7 million in 20232
• the Pew Research Center, which has estimated the population at 11 million in 2022, accounting for 3.3% of the total U.S. population and 23% of the total foreign-born population3
• the U.S. Department of Homeland Security (DHS), which estimated the population at 11.0 million in 20224

Figure A shows all the existing estimates from these four sources as a time series for the years for which they are available. All estimates show a decline in population, which occurred during the years of the Great Recession. The estimates available for 2023 are from the Migration Policy Institute (MPI) and the Center for Migration Studies, which both show an increase in the size of the unauthorized immigrant population since 2022.5

Existing research shows that a significant share of the current unauthorized immigrant population has resided in the United States for many years. A 2024 DHS report found that 79% of unauthorized immigrants—nearly 8 in 10—have resided in the United States since before 2010 for at least a dozen years).6

Figure A

The Pew Research Center recently reported on the geographic distribution of unauthorized immigrants in the United States and highlighted their top six states of residence:7

• California (1.8 million)
• Texas (1.6 million)
• Florida (1.2 million)
• New York (650,000)
• New Jersey (475,000)
• Illinois (400,000)

The Pew authors also note that unauthorized immigrants have become less geographically concentrated among U.S. states, with the top six states previously accounting for 80% of the unauthorized population in 1990, but only 56% in 2022.8

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Notes

1. Jennifer Van Hook, Ariel G. Ruiz Soto, and Julia Gelatt, The Unauthorized Immigrant Population Expands amid Record U.S.-Mexico Border Arrivals, Migration Policy Institute, February 2025.

2. Robert Warren, US Undocumented Population Increased to 11.7 Million in July 2023: Provisional CMS Estimates Derived from CPS Data, Center for Migration Studies, September 5, 2024.

3. Jeffrey S. Passel and Jens Manuel Krogstad, “What We Know About Unauthorized Immigrants Living in the U.S.,” Pew Research Center, July 22, 2024.

4. Bryan Baker and Robert Warren, Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2018–January 2022, Office of Homeland Security Statistics, U.S. Department of Homeland Security, April 2024.

5. See for example, Wendy Edelberg and Tara Watson, New Immigration Estimates Help Make Sense of the Pace of Employment, The Hamilton Project, The Brookings Institution, March 7, 2024; Ariel G. Ruiz Soto, Julia Gelatt, and Jennifer Van Hook, “Diverse Flows Drive Increase in U.S. Unauthorized Immigrant Population,” Commentaries, Migration Policy Institute, July 2024.

6. Bryan Baker and Robert Warren, Estimates of the Unauthorized Immigrant Population Residing in the United States: January 2018–January 2022, Office of Homeland Security Statistics, U.S. Department of Homeland Security, April 2024.

7. Jeffrey S. Passel and Jens Manuel Krogstad, “What We Know About Unauthorized Immigrants Living in the U.S.,” Pew Research Center, July 22, 2024.

8. Jeffrey S. Passel and Jens Manuel Krogstad, “What We Know About Unauthorized Immigrants Living in the U.S.,” Pew Research Center, July 22, 2024.

Which regions and countries are unauthorized immigrants from?

Table 1, which comes from the Migration Policy Institute,9 shows the top-10 countries of origin for the unauthorized immigrant population in 2023. Forty percent of all unauthorized immigrants hail from Mexico, at 5.5 million out of the total 13.7 million. The share from Mexico has declined over the years, decreasing from 62% in 2010.10 

Read the full answer

Table 1, which comes from the Migration Policy Institute,9 shows the top-10 countries of origin for the unauthorized immigrant population in 2023. Forty percent of all unauthorized immigrants hail from Mexico, at 5.5 million out of the total 13.7 million. The share from Mexico has declined over the years, decreasing from 62% in 2010.10

Other top countries of origin are Guatemala, Honduras, and El Salvador in Central America; Venezuela, Colombia, Brazil, and Ecuador in South America; and the Philippines and India being the top countries of origin outside of the Western Hemisphere.

Table 1

Table 2, which also comes from the Migration Policy Institute,11 shows the regions of birth of unauthorized immigrants in the United States as of 2023. It shows that more than two-thirds are from Mexico and Central America (68%). There are also 1.7 million unauthorized immigrants from South America; 851,000 from Asia; 504,000 from Europe, Canada, and Oceania combined; 575,000 from the Caribbean; and 415,000 from Africa.

Table 2

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Notes

9. Adapted from Table 2 in Jennifer Van Hook, Ariel G. Ruiz Soto, and Julia Gelatt, The Unauthorized Immigrant Population Expands amid Record U.S.-Mexico Border Arrivals, Migration Policy Institute, February 2025.

10. See Table 2 in Jennifer Van Hook, Ariel G. Ruiz Soto, and Julia Gelatt, The Unauthorized Immigrant Population Expands amid Record U.S.-Mexico Border Arrivals, Migration Policy Institute, February 2025.

11. Adapted from Table 1 in Jennifer Van Hook, Ariel G. Ruiz Soto, and Julia Gelatt, The Unauthorized Immigrant Population Expands amid Record U.S.-Mexico Border Arrivals, Migration Policy Institute, February 2025.

What share of unauthorized immigrants work in the U.S.? Which occupations employ the most unauthorized immigrants?

A 2022 estimate from the Center for Migration Policy’s data tool on the unauthorized immigrant population15 is represented in Table 1 and shows that 74.1% of the unauthorized immigrant population were employed in 2022, with 3.1% unemployed, and 22.8% who were not in the labor force at the time. 

Read the full answer

A 2022 estimate from the Center for Migration Policy’s data tool on the unauthorized immigrant population15 is represented in Table 1 and shows that 74.1% of the unauthorized immigrant population were employed in 2022, with 3.1% unemployed, and 22.8% who were not in the labor force at the time.

The major occupations of employment were services in which 25.5% of unauthorized immigrants were employed; maintenance at 24.8%; management, business, science, and arts at 19.1%; production, transportation, and material moving at 18.3%; and sales and office occupations at 11.3%.

Table 1

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Notes

15. Center for Migration Studies, Estimates of Undocumented and Eligible-to-Naturalize Populations by State [data tool], last visited April 11, 2025. To derive the estimates, the Center for Migration Studies developed a series of statistical procedures based on microdata collected by the U.S. Census Bureau’s American Community Survey. For more information, see the methodology page, Center for Migration Studies, “About the Data: Estimates of the Undocumented Population,” last visited April 11, 2025. 

Do immigrant workers affect wages for U.S. workers?

The most rigorous work on the effect of immigration on wages finds extremely modest effects for native-born workers, including those with low levels of education. A review by Giovanni Peri of more than 270 estimates from 27 published studies found that the average effect of immigration on native-born wages is essentially zero.48

Read the full answer

The most rigorous work on the effect of immigration on wages finds extremely modest effects for native-born workers, including those with low levels of education. A review by Giovanni Peri of more than 270 estimates from 27 published studies found that the average effect of immigration on native-born wages is essentially zero.48

Two-thirds of these studies were clustered around zero, finding small positive or small negative effects. The comprehensive National Academies of Science review from 2017 found that “when measured over a period of more than 10 years, the impact of immigration on the wages of natives overall is very small.”49 A recent study by Alessandro Caiumi and Giovanni Peri found even more positive effects, with immigration raising the wages of the average U.S.-born worker, even those with lower levels of education.50

There are several reasons why immigration does not significantly depress U.S.-born workers’ wages at the macro level. One is that while immigration increases the supply of labor available to employers, it does not necessarily push down market wages because immigration also increases the demand for goods and services, as immigrants purchase food and housing, raising the overall demand for labor. Capital investment adjusts to the change in population, reducing the possibility of negative effects on average wages.

Figure A shows estimates from Caiumi and Peri of the effect on wages by education level for U.S.-born workers stemming from immigration flows from 2000–2022.51 The estimates are very small, but positive: Over more than two decades, immigration has raised the average U.S.-born worker’s wage by 0.8%. Workers with a high school diploma or less education saw slightly larger increases in the range of 2.8% to 3.2%. The estimated impact for college-educated workers is slightly negative, but its effect translates into less than 4 cents per hour over more than two decades.52

It is important to note that the above results are for U.S.-born workers only. Previous research by Ottaviano and Peri (from 2012) showed that wage effects of larger immigration flows were more negative for immigrant workers who already resided in the United States.53 This is likely still true,54 as newly arriving immigrants are more likely to possess skills that are similar to those of previous immigrant arrivals. This fact reinforces our emphasis that immigration policies must ensure that immigrant workers arrive in the United States with full labor and workplace rights.

Moreover, because these studies assess immigration at the macro level, they may obscure important differentials in impact based on the immigration status of workers. For example, a recent EPI report discusses the impact of immigration status on wages and working conditions.55 EPI has also published research that demonstrates how work visa programs may permit employers to underpay migrant workers relative to average wage rates, and there is evidence that industries with high concentrations of unauthorized immigrant workers also experience high rates of wage theft and other violations that can undermine standards more broadly.56

Figure A

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Notes

48. Giovanni Peri, “Do Immigrant Workers Depress the Wages of Native Workers?” IZA World of Labor 42: 1–10, May 2014.

49. National Academies of Sciences, Engineering, and Medicine, The Economic and Fiscal Consequences of Immigration, National Academies Press, 2017.

50. Alessandro Caiumi and Giovanni Peri, “Immigration’s Effect on US Wages and Employment Redux,” National Bureau of Economic Research, Working Paper no. 32389, April 2024.

51. Alessandro Caiumi and Giovanni Peri, “Immigration’s Effect on US Wages and Employment Redux,” National Bureau of Economic Research, Working Paper no. 32389, April 2024.

52. The mean wage in 2023 for those with a college degree or higher level of education was $47.72, and a 0.075% change translates into less than $0.04 per hour.

53. Gianmarco I.P. Ottaviano and Giovanni Peri, “Rethinking the Effect of Immigration on Wages,” Journal of the European Economic Association 10, no. 1: 152–197, February 1, 2012.

54. See for example, Heidi Shierholz, Immigration and Wages: Methodological Advancements Confirm Modest Gains for Native Workers, Economic Policy Institute, Briefing Paper #255, February 2010.

55. Daniel Costa, Josh Bivens, Ben Zipperer, and Monique Morrissey, The U.S. Benefits from Immigration but Policy Reforms Needed to Maximize Gains: Recommendations and a Review of Key Issues to Ensure Fair Wages and Labor Standards for All Workers, Economic Policy Institute, October 2024.

56. See for example, Daniel Costa and Ron Hira, H-1B Visas and Prevailing Wage Levels: A Majority of H-1B Employers—Including Major U.S. Tech Firms—Use the Program to Pay Migrant Workers Well Below Market Wages, Economic Policy Institute, May 2020; Ron Hira and Daniel Costa, New Evidence of Widespread Wage Theft in the H-1B Visa Program: Corporate Document Reveals How Tech Firms Ignore the Law and Systematically Rob Migrant Workers, Economic Policy Institute, December 2021; Annette Bernhardt et al., Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America’s Cities, Center for Urban Economic Development, National Employment Law Project, and UCLA Institute for Research on Labor and Employment, September 2009.

The data in this report show that over the last several years, job growth across South Carolina has outpaced job growth at the national level. The state also boasts a low unemployment rate. But when we look beyond the headline numbers, we see that many workers across the state are being paid very low wages and family incomes are falling short of what is needed for a modest yet adequate lifestyle. South Carolina’s levels of inequality and poverty rates are high; in 2023, 13.9% of the state’s population fell below the poverty line, compared with a national poverty rate of 12.5%. Workers across the state also lack access to basic resources like paid sick leave and public transportation. Access to these resources would help many would-be workers participate in the labor market more easily.

These outcomes for workers and families reflect, at least in part, the long shadow of worker exploitation that started with the state’s horrific embrace of slavery and what continued to closely resemble slavery after it was outlawed. Today, South Carolina is one of just five states that has no state minimum wage and its workers have some of the lowest typical wages in the country. It is one of two dozen states with so-called right-to-work (RTW) laws that undermine workers’ ability to form unions and contribute to the lowest unionization rate in the country. These and other laws in South Carolina are designed to disempower workers, ensuring that wealthy corporations can continue to exploit their labor.

The state is now being presented with an opportunity to shift its strategy from labor exploitation to worker- and family-centered policies that would strengthen the economy for all South Carolinians. Pro-worker policies that allow more South Carolinians to participate in the labor market, be more productive, and share in the wealth they create are, in fact, pro-business policies that can help sustain the state’s economic growth. The federal funding bills mentioned above include pro-worker policy levers that state policymakers can use to ensure that the jobs being created in South Carolina are good jobs that truly serve workers and families, instead of reinforcing the inequities that have left so many across the state economically insecure.

The health of the economy nationally and in states are impacted by a myriad of factors. State policymakers have little to no control over some of these factors such as federal macroeconomic policy, natural disasters, foreign supply chain disruptions, or global pandemics. Their responses to these events, however, determine how well and how quickly the economy recovers. Below we examine South Carolina’s economy with a special focus on the post-pandemic period and how workers are faring in that economy.

South Carolina’s industrial mix from the antebellum period until today

The industrial composition of South Carolina’s economy has shifted substantially over time, but it continues to be shaped by its history of slavery and the relentless pursuit of free or exploitable labor. This is best exemplified by the state’s textile manufacturing industry, which began to flourish in the mid-1800s. Enslaved Africans were forced to farm the raw materials—namely cotton—on which textile manufacturing depended. South Carolina’s manufacturers were able to siphon off business from manufacturers in New England with the promise of low labor costs and weak labor standards. Wages were as much as 50% lower in South Carolina than in New England, mills were kept running 60 hours or more every week, and 30% of mill workers were children (Carlton 2016). By the mid-1950s, South Carolina’s mills produced more than half the clothing worn in the United States. As exploitative as mill work was, poor white South Carolinians viewed it as preferable to farm work, which was even more difficult and lower-paid.

Through the 1900s, the mills asserted near-complete control over economic and social life for a large share of white South Carolinians. Mills not only housed workers, but they also ran local schools, stores, religious institutions, and recreational activities—in part to “keep their workers close” and quell organized resistance to labor exploitation and dangerous working conditions (WYFF News 4 2022). The economic opportunity and generational wealth building provided by jobs in the mills were largely out of reach for Black South Carolinians. Under state law, Black people were legally excluded from all but the most menial jobs in the textile industry until civil rights lawsuits mandated integration during the mid-1960s (Bainbridge 2018). The textile industry was quicker to integrate than other industries, leading Black employment in the industry to grow significantly through the 1980s. However, Black advancement was curtailed by the passage of the North American Free Trade Agreement in 1992, which facilitated the pursuit of even lower cost labor outside the U.S. over the 1990s and 2000s and ushered in the collapse of South Carolina’s dominance in the industry.

Figure A shows a rapid decline in the number of workers employed in textile mills by the end of the 2000s. It also shows that this rapid decline in the textile industry was followed by rapid growth in another industry: the transportation equipment manufacturing industry, beginning around 2011. Today, what’s left of the textile industry in the state primarily supplies the U.S. military and the automative industry—South Carolina’s new primary manufacturing industry (Holdman 2024).

Figure A

South Carolina’s industrial mix has become much more diverse. Yet, as we show below, it continues to be characterized by the exploitation of workers, strong opposition to worker organizing, subsidies to wealthy corporations, and lax regulation of businesses (Childers 2024a). South Carolina also continues to use this low-road economic development model to lure businesses from other states and countries, contributing to growth across several industries—especially auto, steel, tire, and aircraft manufacturing—as well as the expansion of warehousing, transportation, and logistics, among other sectors (AFL-CIO 2019; Childers 2024b; SCDC 2024a).

Figure B shows job growth across industries in the U.S. and in South Carolina between June 2010 and June 2019, when the state experienced significant job growth. These data reveal that job growth in South Carolina exceeded job growth nationally across almost all industries during this period. Professional and business services experienced the greatest growth at 38.2%, followed by the construction industry (33.3%), leisure and hospitality (30.9%), and manufacturing (25.6%). The growth in manufacturing in the state stands out when compared with an increase of just 11.1% nationally over this period.

Figure B

South Carolina saw the least growth in state and local government, which grew by just 5.2% from 2010 to 2019, despite a population growth of 10.7% (America Counts 2021). According to the South Carolina Department of Employment and Workforce (SCDEW 2023a, 19), most state and local public-sector workers work at the local level (233,400 in local government compared with 110,000 in state government). These local government workers are public school teachers and staff, police and firefighters, public health care staff, and other municipal employees. A significant number of both state and local government workers are employed in state (50,700 workers) and local educational services (112,400).

Job growth since the COVID-19 pandemic

South Carolina has had strong job growth as the state recovered from the COVID-19 pandemic. Figure C shows the percentage change in jobs for South Carolina and the nation between January 2020 and December 2023. These data show that South Carolina’s job losses during the pandemic were somewhat less than national losses. The data also show that since the recovery got underway, South Carolina and the Southern region had stronger job growth than the nation as a whole. This is not surprising given that across this period, South Carolina was one of the states experiencing the fastest population growth (U.S. Census Bureau 2023; U.S. Census Bureau 2024b).

Figure C

Figure D shows that South Carolina has outperformed on job growth since the pandemic across a range of industries. These data show that the greatest growth since 2019 has been in the financial sector, which includes not just finance but also insurance, real estate, and rental and leasing, reflecting in part the growth in population across the state. Education and health (15.9%) and trade, transportation, and utilities (10.1%) both experienced greater than 10% growth. The industries with the least growth over this period were manufacturing (4.3%) and state and local governments (1.3%).

Figure D

In many ways, South Carolina’s strong growth across industries in recent years served to diversify South Carolina’s economy and bring its industry mix more in line with the national economy. Figure E shows the share of South Carolina workers employed in each industry across the state in 2024. The single largest sector is trade, transportation, and utilities, which employs 18.9% of the workforce—almost one in five workers. This is just slightly more than the national average (18.3%). The largest individual subsector of the trade, transportation, and utilities industry in South Carolina is transportation and warehousing, which made up 20.6% of the industry as of December 2023 (SCDEW 2023a, 19). In addition to transportation and warehouse jobs, this industry further includes utilities, wholesale trade, and retail trade (including motor vehicle and parts dealers, food and beverage stores, clothing and clothing accessories stores, and general merchandise stores).

Figure E

While state and local government experienced little growth since 2010, the public sector makes up the second largest sector of the state’s economy. The public sector includes workers who perform a range of important tasks for South Carolinians. Many of these workers are critical to maintaining public order, safety, and providing key services as teachers, police officers, firefighters, garbage collectors, bus drivers, and many other critical roles.

Despite strong job growth, the financial and the construction industries respectively make up just 5.2% and 4.9% of South Carolina’s economy. Their share of the state’s economy closely resembles their share of the total U.S. economy—5.8% and 5.2%, respectively.

Notably, despite strong growth in education and health, these industries account for a far smaller share of jobs in the state than the national average: 12.5% and 16.6% respectively. This may be indicative of the fact that South Carolina is one of only 10 states that has failed to adopt the Medicaid expansion under the Affordable Care Act, depriving the state’s health care industry of billions of dollars of federal funds and its residents of a key resource for health care (KFF 2024).1 It is also likely a reason the state is ranked 39th in education quality and 46th in health outcomes for children in the Annie E. Casey Foundation’s 2024 Kids Count Databook. As described in fuller detail later, a large swath of 17 mostly poor, rural counties in South Carolina have been dubbed the state’s “Corridor of Shame” because they have failed to provide students in those counties with even a “minimally adequate” education (Click and Hinshaw 2015; Temoney and Ullrich 2018).

Finally, while the data in Figure E are for nonfarm workers, the South Carolina Farm Bureau (n.d.) reports that agribusiness is actually South Carolina’s largest economic sector, contributing just under $42 billion to the economy and employing more than 200,000 workers. That means agribusiness is about 9% of all employment in the state.2 The largest industry sector within agriculture is poultry processing, production, and other poultry-related products (Von Nessen 2022). Non-poultry meat and beef production are also among the top agricultural sectors .

Black and brown South Carolinians make up a large segment of these workers. Black South Carolinians, for example, make up 26% of the population in the state but are 37.1% of all food production workers and 63.5% of animal slaughter workers. Hispanic workers are just 7.5% of the population but are 11.7% of all food production workers (U.S. Census Bureau 2024a).3

Finally, immigrant workers, including those who are undocumented, make up 11.7% of the food production workforce. In 2023, South Carolina was one of the top five states for H-2A visas—visas that allow migrant workers to come into the U.S. on a temporary basis, often to fill jobs Americans don’t want to do. These workers constitute a pool of labor with few protections, making them easy to exploit (Atkinson 2024).

Low-wage service and retail workers

Some of South Carolina’s lowest-wage workers work in food services, retail, and hospitality. With low rates of unionization and very low minimum wages for both tipped and non-tipped workers, these workers often lack the bargaining power to demand better pay and working conditions. As a result, service and retail workers regularly deal with low wages, limited benefits, and serious safety concerns in the workplace.

The median hourly wage of food industry workers in 2023 was $12.95. The lowest paid positions were bartenders and waiters/waitresses, whose median 2023 hourly wages were $8.95 and $8.98 respectively. This number includes tips. Because South Carolina has no state minimum wage for tipped or non-tipped workers, the federal minimum wage applies. Thus, for these workers who receive tips, employers only have to pay the federal minimum subminimum wage of $2.13, forcing these workers to rely on tips from customers for the majority of their income.

But even with tips, many workers are unable to afford basic goods and services. Figure F shows the median annual earnings for full-time workers in each of the occupations in the figure. These data show that a full-time waiter or waitress making $8.98 an hour earns just $18,680 annually. To provide context for these wages, we used EPI’s Family Budget Calculator to estimate the amount of income it would take for a single adult with no children to afford a modest yet adequate standard of living in each of the four largest metro areas in South Carolina. These data show that none of these occupations pay workers enough to reach even this low standard.

Figure F

Figure F also shows the median annual earnings of some key hospitality occupations. Tourism is a key industry in South Carolina, as shown in Figure E. The South Carolina Department of Parks, Recreation, and Tourism says one in 10 South Carolinians work in hospitality, supporting over 200,000 jobs. In places like Myrtle Beach, tourism is the largest sector of the economy (Perez 2024). Many of those who work in hospitality, however, don’t make enough to live in these communities. The median wage for hotel desk clerk is just $28,610 a year. The estimated cost of living to have modest economic security in Myrtle Beach for a single adult with no children, however, is $46,117. For those workers trying to support families, the economic strain is even greater.

Finally, Figure F shows that retail salespersons are also paid very low wages. These workers are paid a median wage of just $13.89 or $28,900 per year. Like many service and hospitality workers, retail workers face employers who show little regard for their safety and health (Sainato 2023; Vasquez 2023). Dollar General, for example, has the largest number of retail stores of any retail chain in the nation with over 18,000 stores in 47 states (Sainato 2023). MacGillis (2020) reports high rates of violence and deaths at Dollar General stores and Dollar Stores more generally. While there are multiple factors contributing to this, understaffing and disarray within and outside the store are noted as key factors making these stores targets for robberies and other crimes. In 2022, the federal Occupational Safety and Health Administration (OSHA) proposed adding $3.4 million in fines to the over $21 million in fines that had been proposed since 2017 after inspecting nine Dollar General locations in four states. These fines were for blocked emergency exits, fire extinguishers, and electrical panels. Boxes and materials were stacked unsafely, causing fire and crushing hazards and blocking the ability of employees to exit in emergencies. In one store, OSHA reported at least six employees had been exposed to toxic vapors with three seeking medical treatment. OSHA found that Dollar General had not provided workers with adequate respiratory protection or personal protective equipment, and they failed to train workers how to safely handle hazardous chemicals and how to properly clean them up (DOL OSHA 2023).

In many of these cases, federal OSHA officials can step in, as noted above. South Carolina, however, is one of 22 states in the country where state government is responsible for enforcing OSHA standards, rather than falling directly under the enforcement authority of federal OSHA. South Carolina has been approved to run its own operations and oversight as long as it is “at least as effective as OSHA in protecting workers and in preventing work-related injuries, illnesses and deaths” (DOL OSHA n.d.). There is some concern that South Carolina is not meeting this standard. The Service Employees International Union (SEIU) reported that in 2022, South Carolina’s Department of Labor, Licensing & Regulation had an OSHA inspection rate less than one-third that of neighboring states—where South Carolina conducted an average of 1.9 inspections per 1,000 establishments, North Carolina, Tennessee, and Virginia’s rates were respectively 6.2, 7.8, and 6.2 inspections per 1,000 establishments. These states also have state plans (DOL OSHA n.d.).

Additionally, South Carolina refuses to enforce sufficient consequences for businesses who violate OSHA standards. The state’s OSHA office levied an average penalty of $2,019 for violations across the private sector, a number significantly below the national average of $3,259 for serious violations (SEIU 2023). Fewer inspections and weaker fines mean employers feel empowered to commit more violations and continue to exploit vulnerable workers with impunity.

Yet despite the imbalance of power between workers and employers, workers at a Dollar General in Irmo, SC, went on strike in January 2023. They cited many of the safety concerns reported in media and that federal OSHA officials found in Dollar General stores in other states: mold, extreme heat, dangerous exposure to improperly stored chemicals, and unpaid wages (Martinez 2023). This strike was led by workers under the newly formed Union of Southern Service Workers.

Job growth was industrially diverse, but geographically concentrated

Although spread across a range of industries, South Carolina’s job growth was highly concentrated in major metropolitan areas. Table 1 shows that of the 174,264 jobs created between January 2020 and December 2023, 89.4% (or more than 155,000) were located in eight metropolitan areas of the state. Most of these jobs were located in just four metro areas: Charleston-North Charleston (45,750), Greenville-Anderson-Greer (38,795), Myrtle Beach-Conway-North Myrtle Beach (25,870), and Columbia (24,961), four of the state’s largest metro areas. The remaining four metro areas received less than 5% of all jobs.

Table 1

When we consider the distribution of the population, the geographic concentration of this job growth becomes even more stark—and potentially more problematic. More than four in 10 (42.7%) South Carolinians live outside of the top four metro areas that have collectively received more than 77% of all new jobs. More than one in four (25.6%) live outside the eight metro areas shown in Table 1. The uneven distribution of new jobs means that South Carolinians in other areas and those in more rural parts of the state will have less opportunity to benefit from this job growth. One reason is that those outside the major metropolitan areas may not have the same access to information about available new jobs, computers or broadband commonly needed to apply for many jobs, or transportation to reach these jobs. They will also incur greater costs in terms of transportation and commuting time if they are able to fill these jobs.

While South Carolina has experienced strong job growth and the state’s industrial composition has diversified, the state’s per capita gross domestic product (GDP) remains among the lowest in the nation. The GDP per capita is the total value of goods and services produced by the state’s economy, divided by the number of people. GDP grows primarily when the demand for goods and services increases and when government and businesses invest in the state. These might be investments in machinery, technology, or public infrastructure, all of which make workers and businesses more productive. Or they could be investments in workers’ education, training, and compensation, improving workers’ skills and ensuring that they have the resources to afford their basic needs and the ability to balance work and family demands.

Figure G shows the GDP for the U.S. and the 10 states with the lowest per capita GDPs in the nation. Only four states—Alabama, Arkansas, West Virginia, and Mississippi—have a lower GDP than South Carolina.

Figure G

Workers’ engagement with the labor market across the Palmetto state

The data above show that South Carolina has had strong job growth across industries that have diversified rapidly over the last decade and a half. The state’s low per capita GDP, however, may be an indicator of weakness in the labor market. Below, we examine workers’ engagement with South Carolina’s labor market.

Unemployment

The first indicator we examine is the unemployment rate. The unemployment rate is the share of people in the labor market without a job who are actively looking for work. In 2020, the COVID-19 pandemic swept across the nation and many “non-essential” businesses closed their doors as people isolated in their homes. This led to the COVID-19-induced recession with a dramatic rise in unemployment. Figure H shows that while unemployment rose considerably nationally and in South Carolina, both peaked in April 2020 at 14.8% and 11.8% respectively. These data also show the unemployment rate in South Carolina consistently remained below the national average. As of June 2024, South Carolina had an unemployment rate of 3.6%, up slightly from the 3.2% in April.

Figure H

The benefits of low unemployment did not extend to all South Carolinians equally. Figure I shows annual unemployment rates for Black and white workers nationally and in the state of South Carolina from 2019 through 2023. Black and white workers in South Carolina have lower rates of unemployment than nationally and the disparities between them are smaller. The unemployment rate for white workers in South Carolina fell below the pre-recession rate by 2023, while Black workers’ unemployment rate was still above pre-recession levels in 2023.

Figure I

While the annualized data in Figure I show Black unemployment had not dropped below the pre-recession level in 2023, more recent data show that both Black and white unemployment may be increasing—with a much larger increase for Black workers. Figure J shows the unemployment rate for Black, Hispanic, and white workers over the last two quarters of 2023 and the first two quarters of 2024. These data show a slight increase of 0.2 percentage points in unemployment for white workers between the first and second quarter of 2024. Black (0.9 percentage points) and Hispanic (0.5 percentage points) South Carolinians have had larger increases.

Figure J

As of mid-2024, overall unemployment was lower in South Carolina than in the nation as a whole and racial disparities were smaller but substantial. Still, unemployment for Black workers in South Carolina was still above its pre-recession rate, while unemployment for white workers was lower than before the pandemic.

Employment as a share of the population

Rapid job growth across the state and low levels of unemployment may indicate that South Carolina’s economy is strong, but data on employment rates challenge this notion. Figure K shows the employment-to-population ratio (EPOP) for prime-age workers (ages 25–54) in both 2019 and 2023. We exclude workers younger than 25 and older than 54 because many of these younger workers may be out of the labor force completing their education or gaining additional skills and some workers 55 and older may have retired early.

Figure K

These data show that in 2019, before the pandemic, there was little difference in the EPOPs for South Carolina and the South more broadly at 78.8% and 79.0% respectively. The EPOP nationally was higher at 80%. From 2019 to 2023, the employment rate among prime-age workers rose from 80.0% to 80.7% nationally and from 79.0% to 79.8% in the South. In South Carolina, however, it remained essentially flat falling from 78.8% to 78.7%, widening the gap with the broader region and the nation. In 2019, South Carolina’s prime-age employment rate was 39th out of 50 states plus D.C.; by 2023, it had fallen to 42nd.

When we examine prime-age EPOPs by race and ethnicity, the data show significant disparities. Figure L shows prime-age EPOPs by race, ethnicity, and gender for South Carolina and the nation. These data show that across racial and ethnic groups, women are less likely to be employed—with the lowest employment rate among Hispanic women (61.1%), followed by Black women (73.9%). White women have the highest employment among South Carolina’s women (76.7%) but still lag behind women nationally.

Figure L

These data also show that most groups of workers in South Carolina—white men, white women, Black women, and Hispanic women in particular—are less likely to be employed than their counterparts nationally.4 In contrast, Black and Hispanic men in the state are just slightly more likely to be employed compared with their counterparts nationally.

These data in the context of strong job growth and low unemployment rates in the state suggest that many South Carolinians experience significant barriers to employment. The Bureau of Labor Statistics (2024) tracks the number of unemployed people—those looking for a job—compared with the number of job openings in their Job Openings and Labor Turnover survey (JOLTS). This ratio in South Carolina was 0.5 in May 2024. This means that there were twice as many job openings as there were people looking for a job. In the following sections, we discuss some of the likely barriers keeping would-be workers out of the labor market.

Despite job growth exceeding national rates, a lack of worker power means the strong labor market fails to translate into wage growth for workers

Wages and economic insecurity

One likely reason that many jobless South Carolinians are not actively looking for work is poor job quality (Millan Chicago LLC 2022). In other words, the available jobs do not provide adequate wages for workers to support themselves and their families and lack basic benefits, such as paid sick leave or paid family and medical leave. As discussed above, poor job quality has long been a fixture of South Carolina’s economy.

First, many working South Carolinians are paid exceptionally low wages. Figure M shows the share of workers that are paid less than $15 per hour nationally, across the South and in South Carolina. These data show that 18.5% of South Carolinians (almost one in five) are paid less than $15 per hour compared with 15% across the South and 12% nationally.

Figure M

Figure N shows the median wage—i.e., the wage of a worker paid more than 50% of all other workers in the economy and less than the other half—for workers nationally, across the South, and for South Carolina in 2019 and 2023 (in constant 2023 dollars). While the South generally has lower wages than other regions of the country, these data show that in 2023, middle-class workers in South Carolina were paid even less than their peers in the region—$22.46 per hour compared with $22.57. When compared with workers’ wages nationally, the typical (median) South Carolina worker was paid considerably less—$1.52 less per hour.

Figure N

These data also show that while wages have risen for workers across each geography since 2019, workers in South Carolina saw the smallest increase. The typical worker in South Carolina saw their wages rise by just $0.17 (0.8%) per hour over the four-year period, despite exceptionally strong job growth and many employers reporting they were unable to find enough workers (Bivens 2024; Green 2023). Workers across the South saw a larger increase of $0.39 (1.8%), but workers nationally saw an increase more than five times greater than in South Carolina at $0.87 (3.8%) per hour.

It is particularly remarkable that even as South Carolina’s job growth outpaced the rest of the region and the country, overall wage growth in the state remained tepid. This underscores how unbalanced South Carolina labor market is, and how policies have stacked the deck against the state’s workers.

Raising wages would strengthen the state’s economy and bring workers back into the labor market. A key reason that wages are lower in South Carolina is that it does not have a state minimum wage. This means that for most workers in South Carolina (and the other four states without a minimum wage5) the federal minimum of $7.25 applies.6 And those not covered by the federal minimum wage can be paid even less. The lack of a suitable floor on wages means that workers in the state can have some of the lowest wages in the country, holding down wages for workers higher up the wage scale. An analysis by the Economic Policy Institute showed that raising the minimum wage to $17 would lift the wages of 584,000 workers in South Carolina alone, including 220,000 workers who would be earning above the minimum (Zipperer 2023).7

Voters and lawmakers in most states have recognized that a $7.25 minimum wage is too low for workers to support themselves and their families, which is why more than half of all states have set their minimum wage above the federal minimum. The failure to make any effort to raise the lowest wages in South Carolina reflects state lawmakers embracing the Southern economic development model that relies heavily on low wages for workers (Childers 2024a).

Auto manufacturing jobs are growing in South Carolina, but their wages are falling

A substantial contributor to South Carolina’s strong job growth in recent years is the rapidly growing auto and auto parts manufacturing sector. The state boasts a range of auto manufacturing, auto suppliers, and auto parts manufacturing companies moving into the state or expanding their operations. These companies include BMW, Michelin, Giti Tire, Mercedes-Benz, Honda, and Volvo (SCDC 2024a; SCDEW 2023b, 4). The South Carolina Department of Employment and Workforce (SCDEW 2023b, 5) reports South Carolina ranks third overall in exports across their auto manufacturing industry with over $12 billion in sales in 2022. The state is also number one in exports of tires (Carroll 2024; SCDC 2021).

Figure O shows the number of auto manufacturing jobs has grown more than 63% over the past decade in South Carolina, increasing from 23,207 jobs in 2013 to 37,838 in 2023. While auto manufacturing jobs fell from 2019 to 2020 during the COVID-19 pandemic and related recession, these data show a steady increase in auto manufacturing jobs in each subsequent year.

Figure O

These numbers only include jobs in the actual manufacturing of autos and auto parts; they do not include the many other jobs required in these sectors or the jobs that are created up and down the supply chain. For example, BMW’s Spartanburg plant employs more than 11,000 people, including many who may not directly work in auto parts production (Carroll 2024; SCDEW 2023b).

There are multiple reasons auto manufacturing jobs are increasingly locating in the South generally, and in South Carolina, in particular (see Childers 2024b for trends in job growth by region). First, the Inflation Reduction Act (IRA) incentivizes automobile and parts manufacturers to make their cars, batteries, and electric vehicles in the U.S., as opposed to in a foreign country. Since the passage of the IRA, nationally there has been $110 billion in capital investments announced for electric vehicle manufacturing alone (Carroll 2024).

Within the U.S., there are several reasons corporations specifically choose South Carolina. The state provides auto and auto parts manufacturers with massive subsidies to locate in the state. Volkswagen’s Scout Motors, for example, received $1.29 billion in state incentives and up to $180 million in job development tax credits to build their plant in the state (Shepardson 2023; Udavant 2023). The subsidies provided to automakers can include subsidies for infrastructure such as the construction of facilities and transportation systems. They can also provide state funding for employee training and even for employees’ wages (AFL-CIO 2019).

Because the massive subsidies provided to auto and auto parts manufacturing companies have not been coupled with requirements that workers and local communities also benefit from the new projects and facilities, these economic development projects may bring jobs, but they also could bring real harm to workers and communities. In the simplest sense, these subsidies divert funds away from the provision of public goods and services (such as public schools, roads, and health care) and instead give those dollars to large, multinational corporations and their shareholders. For example, South Carolina’s public schools report the highest total tax abatement revenue losses of any state in the country (Wen 2022). In fiscal year 2021, for example, $534 million that would have gone to South Carolina public schools, a school system already facing a major K-12 funding crisis, was lost to tax abatements. Further, public school losses to abatements have been increasing each year and some of the largest increases are in poor districts and districts with larger numbers of students of color including Chester, Dillon, Lee, and Richland (Wen 2022).

South Carolina also has corporation-friendly tax policies that further allow large national and international corporations to maximize their profits at the expense of workers and local communities. The South Carolina Department of Commerce (SCDC 2024b) notes the state’s 5% corporate tax rate is the lowest in the Southeast. It also reports ways for corporations to further lower their tax rate including a job tax credit, which eliminates up to 50% of their tax liability over multiple years.

Finally, South Carolina has the lowest union coverage rate of any state. According to Carroll (2024), 85% of the $110 billion in capital investments into EVs went to so-called right-to-work states where union coverage rates are lower (Sherer and Gould 2024). Data show that lower union coverage rates are associated with lower wages for workers (Banerjee et al. 2021). While auto manufacturing jobs in South Carolina pay more than many other jobs in the state, they are paid considerably less than their counterparts in Midwestern states (Childers 2024b).

Table 2 shows the median hourly wage for the three industries that make up auto manufacturing in the ten largest auto manufacturing states. These data show that auto manufacturing workers in South Carolina don’t have the lowest wages of the top ten states, but they are lower than in many of the states in the Midwest and West, especially Michigan, Illinois, and California. Motor vehicle body and trailer manufacturing workers, however, face a substantially lower wage than their counterparts across all other states except Tennessee.

Table 2

Not only are they lower, however, the real value of auto manufacturing wages in South Carolina are falling. Table 3 shows the hourly wages for auto and auto parts manufacturing workers for 2012 and 2023, both in 2023 dollars. The real value of median wages for all three groups of auto workers have fallen since 2012. This is a remarkable trend—that a fast-growing industry with many employers needing to rapidly staff new facilities would face so little pressure to raise pay (such that that typical wages for workers in this industry would not even keep up with inflation) exemplifies just how little bargaining power workers in South Carolina have.

Table 3

The decline in the purchasing power of auto worker’s wages is substantial. The decline is largest for motor vehicle and trailer manufacturing workers, whose wages fell by $11.58 per hour. That amounts to a decline of $463.37 for a 40-hour work week. Motor vehicle manufacturing (-$4.37) and motor vehicle parts manufacturing (-$2.09) workers saw smaller, yet substantial, declines that would amount to a loss of $175.00 and $83.60 respectively, for each 40-hour work week.

As more auto and auto parts manufacturing companies move into or expand in the state and the region, they are investing billions of dollars building up plants, facilities, infrastructure, and supplier networks. For example, Scout Motors, mentioned above, has broken ground on their new $2 billion plant that will span about 1,600 acres in Blythewood, SC. (Santaella 2024). Redwood Materials, a battery recycling company, has broken ground on a $3.5 billion battery plant in Charleston (Visconti 2024). Envision AESC, a battery supplier for BMW, has announced an $810 million battery cell production plant in the state (SCDC 2022). There are nearly 500 auto-related companies in the state (SCDC 2021). South Carolina also provides one of the few deep-water ports on the east coast (Udavant 2023).

These factors along with massive state and federal subsidies and access to established supply networks provide auto workers in South Carolina with a key source of leverage to demand better pay and greater investments in their communities. Unionization has been crucial to other workers as a way to achieve these goals, especially long term.

The largest occupations in the state pay low wages, particularly to Black workers

As noted above, many states outside the South where wages are considerably higher have raised their state’s minimum wage. In South Carolina, not only has the state not raised its minimum wage, but state lawmakers have enacted abusive preemption laws that prevent localities within the state from doing so (EPI 2024a). Below we examine what this means for workers in some of the most common occupations in the state.

Table 4 shows the 15 largest occupations in the state, the number of workers in the occupation, and earnings of workers at the 25th percentile and the median. The workers in just these 15 occupations make up 31% of all workers in the state. They fill crucial roles in the state’s economy, including caring for the sick and elderly; ensuring the fast-growing trade, transportation, and utilities sector continues to be strong; and making sure the hospitality industry (so crucial to South Carolina’s economy) is thriving.

Table 4

At $20.30, the median wage among all workers in South Carolina is too low to provide a full-time, year-round worker with enough income to meet their most basic needs in any metropolitan area in the state for which we have data.8 And most of the workers represented in these top 15 occupations are paid much less. Waiters and waitresses are paid just $8.98, fast-food and counter workers are paid just $12.40, cashiers are paid $12.69, and retail salespersons are paid just $13.89 per hour.

Because the median is often used to represent the typical worker in an occupation, there is a tendency to overlook the even more dire struggles of the half of workers in low-wage jobs that are paid less than the median. These data highlight the need to account for the variation in wages within occupations. For example, the largest occupation in Table 4 is “retail salespersons” who were paid a median wage of $13.89 per hour (or $28,900 annually) for someone working full time, year-round. This would leave a two-parent family with two children and both parents working full time unable to live a modest yet adequate lifestyle (EPI 2024c). Because half of retail salespeople are paid less than the median, they will struggle even more to provide for their families. For example, retail salespeople at the 25th percentile are paid just $11.15 per hour or $23,190 annually—$5,710 less than workers at the median.

Looking at the racial makeup of workers in these occupations also shows that low wages also reinforce racial inequality. Table 5 shows the racial composition of workers across the 15 largest occupations in the state. While workers across racial and ethnic backgrounds are represented in all 15 occupations shown, the jobs that pay the most are filled primarily by white South Carolinians, while Black South Carolinians are overrepresented in lower-wage jobs. Black workers make up almost a quarter of the workforce—24.9% of all workers—but they are seriously overrepresented among home health and personal care aides (57.7%), miscellaneous assemblers and fabricators (52.3%), laborers and freight, stock, and material movers, hand (42.2%), and cashiers (36.5%). They are underrepresented however, among general and operations managers who are 77.3% white workers and registered nurses who are 79.4% white.

Table 5

Now is the time for state lawmakers and employers to reconsider compensation policies and break from historically all-too-common practices that exploit workers. Figure P shows the 20 occupations projected to add the largest numbers of new jobs by 2032. Many of these are low-wage jobs that make up the largest occupations in the state today. Of the 20, less than half have hourly pay rates at or above the $20.30 median for all workers. None of the top five occupations pay at or above this rate despite constituting the vast majority of new jobs—45.5% of the 20 occupations projected to add the largest numbers of new jobs by 2032 and 18.3% of all projected new jobs.

Figure P

All workers, independent of race, gender, or other characteristics, should have sufficient earnings to allow them to purchase food, housing, transportation, and all the other items that support a basic standard of living and help fuel the state’s economy. When large segments of the population cannot afford to buy basic necessities, consumer demand is reduced, shrinking the pool of potential customers that businesses need to buy their goods and services. Further, inadequate pay can make it difficult for many people to remain fully attached to the workforce. For instance, if someone cannot afford child care or a car payment, they may opt to stay out of the formal workforce or may be forced to work sporadically or only part time. This only further weakens the state’s long-term growth if large segments of the potential workforce are not fully participating in the labor market.

Jobs in South Carolina lack many basic workplace benefits

Workers across the state not only face low wages but they are also less likely than workers nationally to have access to key workplace benefits, such as paid family leave. In 70% of households with children across the state, all parents are in the labor market (National Partnership 2023b). A lack of paid family leave coverage forces workers to lose income if they take time off to welcome a child into their family, to care for an elder parent, or to receive care themselves for an extended period. In many cases, it can mean losing their jobs or opting to stay out of the workforce. According to data from the National Partnership for Women and Families (2023b), about 1.9 million workers in South Carolina, or 78% of the state workforce, do not have access to paid family and medical leave. They estimate that if women in South Carolina participated in the labor market at the same rate as women in countries that do have paid family leave, there would be an additional 82,000 people working in the state.

Workers across South Carolina are also less likely to have paid sick leave, another key workplace benefit. Paid sick leave ensures workers can take time off from work if they or a family member are sick or injured. Since South Carolina does not have a law requiring paid sick leave, it is up to employers to decide whether to offer this benefit to their workers. Many employers choose not to do so and, predictably, access to paid sick leave in South Carolina is lower than the national average. While nationally almost 78% of workers have paid sick leave, just 67% do in South Carolina (Mehta and Milli 2023). Worse, employers of low-wage workers—the very workers least able to afford to lose any income—are much less likely to have access to paid time off (Gould and Wething 2023). This is not just a hardship for workers and families, it also endangers public health when workers go to work sick or must send their children to school or daycare when they are ill.

Poor job quality is a product of policymakers’ decisions that have disempowered workers

One key reason that job quality is lower in South Carolina and much of the South is the lack of worker power. Employers are only able to retain staff despite low wages and poor job quality when employees lack the bargaining power to demand better working conditions or to find a new job. As noted, lawmakers in South Carolina—and in many other Southern states—have advanced an economic development strategy designed to keep wages low, limit regulations on corporations, and not require worker benefits or supports, such as employer-provided health insurance or paid leave. This allows lawmakers to advertise their state as “business friendly” to lure businesses into the state (Childers 2024a). A key feature of this strategy is to prevent and undermine workers’ ability to join together with their coworkers in unions. Unions are one of the most powerful means for workers to negotiate better wages and benefits. In fact, one of the best indicators of job quality is whether workers are unionized.

Unionized workers have higher wages; are more likely to have employer-provided health care, paid sick leave, paid family and medical leave; and they experience less inequality compared with nonunion workers (Banerjee et al. 2021). Many employers therefore oppose workers’ efforts to form a union, frequently with the help of lawmakers. For instance, South Carolina is one of 25 states in which lawmakers have passed a deceptively named right-to-work law. These laws do not guarantee workers a job; rather, they make it more difficult for workers to form and maintain unions by limiting collective bargaining rights. RTW laws emerged in the 1940s as a means of preventing workers from joining together in solidarity, especially across racial lines.

Given how central slavery and racial division were to South Carolina’s history, the state’s fierce opposition to unions may be viewed as just one more part of that legacy. Figure Q shows that South Carolina has the lowest union coverage rate of any U.S. state—meaning that a smaller share of the state’s workers is covered by a union contract than in any other state in the country.9

Figure Q

Another factor in lower rates of unionization is the composition of the jobs across the state. As we show above, many of the largest occupations in the state—retail salesperson, fast-food and counter workers, cashiers, home health and personal care aides—are occupations that have traditionally been more difficult to organize for several reasons, including high turnover rates among workers and workers being spread out across different employment sites. Moreover, some of the largest industries in South Carolina are those in which workers lack collective bargaining rights under federal labor law. Agricultural workers, domestic workers, and state and local public-sector workers are explicitly omitted from federal labor laws, leaving legal protections for these workers up to states. Unlike most states—which have enacted policies extending some form of collective bargaining rights to public employees—South Carolina law explicitly declares collective bargaining illegal for all state and local government workers (CLJE 2024, 10).

Even for those workers who are protected by federal labor law, trying to form a union is an incredibly difficult undertaking. Employers nationwide collectively spend hundreds of millions of dollars each year to dissuade workers from exercising their right to form a union. And many employers willfully violate workers’ rights to organize and form a union knowing they will face minimal, if any, repercussions (McNicholas et al. 2019; Shierholz et al. 2024).

Still, workers across the South are working to overcome these barriers to organize in new ways. For example, the Union of Southern Service Workers (USSW) organizes across workplaces in South Carolina, North Carolina, and Georgia. The federal funding from the BIL, IRA, and the CHIPS Act is leading to rapid growth in industries such as manufacturing, especially auto manufacturing. New public and private investments promise to create good jobs that are providing potential new leverage for organizing. Labor, faith, and community coalitions are forming to try to take advantage of this opportunity to make sure that they and their communities also benefit from these investments and not just wealthy corporations, many of which are foreign companies (AFL-CIO 2019). 

Unless wages are raised and workers have stronger leverage to fight for better wages and benefits, current economic and racial inequalities will be reinforced and deepened in the future. Not only will this impact workers directly, but it also has implications for their families, broader communities, and the overall economy.

Low wages, paltry benefits, and a lack of public supports leaves many South Carolinians in poverty

Perhaps the most commonly used measure of economic well-being is the official poverty rate. An individual or family is considered in poverty if their total personal or family income falls below the federal poverty threshold for their family’s size and composition. For example, in 2023, a family with two parents and two children had a poverty threshold of $30,900 (U.S. Census Bureau 2024c). A family with income below this amount would be considered in poverty—a level of income below which most, if not all, families would struggle to meet their families’ basic needs.

In South Carolina, 13.9% of the population falls below the poverty line. This is higher than the poverty rate in the South (13.5%) and the U.S. as a whole (12.5%). South Carolina’s poverty rate in 2023 was the 12th highest in the country. The state also has a substantially higher child poverty rate than the nation at 19.1% compared with 16.0% nationally.10 Its child poverty rate is the 10th highest in the nation.

There is particularly acute racial inequity among those facing poverty in South Carolina. Like the country as a whole, the poverty rate for Black and Hispanic South Carolinians is markedly higher than the poverty rate for white South Carolinians. Table 6 shows that in both South Carolina and nationally, the poverty rate among non-Hispanic white people in 2023 was 9.4%. Nationally, the poverty rate among Black people was more than twice that at 20.8%, while Hispanic poverty was slightly less than double at 16.6%. In South Carolina, however, both the Black and Hispanic poverty rates were markedly higher, at 23.0% and 22.0% respectively. Notably, the Black poverty rate in South Carolina is much higher than both the national rate and the poverty rate for Black people in the South as a whole (which is actually lower than the national rate).

Table 6

With lower earnings and high poverty rates across the state, the average family in South Carolina has a family income that is well below what would be needed to attain an adequate yet modest standard of living. EPI’s (2024c) Family Budget Calculator estimates metro- and county-specific costs for families based on the number of parents (1 or 2) and presence of and number of children (up to 4) for all counties and metro areas in the United States. It includes the cost of housing, transportation, food, health care, child care, and taxes. This provides a more accurate and complete measure of economic security than the federal poverty measure.

Figure S shows the family income a typical two-parent household with two children would need to cover the basics in seven of South Carolina’s major metropolitan areas along with the median family income in those metro areas. The data show that in no metropolitan area for which we have data is the typical family income at a level that meets the needs of families. The metro area where the median family income comes closest is the Charleston-North Charleston Metro, with much larger gaps in other metro areas.

Figure S

The prevalence of low incomes in the state means that many South Carolina families struggle to afford basic necessities and likely face considerable hardship caring for themselves and their families; enjoying whatever leisure time they may have; and trying to find and maintain regular employment. For low-income families, any economic shock—such as an unexpected medical bill or car repair—can be all it takes for them to be put into default, be evicted from their home, face repossession on a vehicle, among many other potential challenges that can lead them deeper into economic despair. In the following sections, we examine how housing, transportation, and food insecurity represent additional challenges for many low-income South Carolinians.

Low incomes and inadequate public investment make it hard for families to afford the basics

Housing security

Without housing, everything else falls apart.
– Rev. Jason W. Myers, Director, Chester Worker Empowerment Center

Housing is a basic need that is fundamental to achieving economic security. Reliable, safe, and affordable housing increases the ability of people to participate in the labor market, apply for jobs, and maintain employment once they have a job. When people lack reliable housing, they are less able to focus on finding a job since their attention and energy will often be focused on securing a place to sleep. Further, reliable housing increases the likelihood they will have access to the technology to search for and apply for a job. The process of applying for jobs requires applicants have a fixed address in addition to a current phone number and email address to send and receive communications with potential employers. Finally, having reliable housing further increases the likelihood that workers are ready to work, rested, in appropriate attire, and able to focus on skill development.

Unfortunately, many South Carolinians—especially those who rent—are housing insecure. Compared with the South and the U.S., South Carolina homeowners spend a slightly smaller share of their household income on the monthly costs of homeownership (19.6% of homeowners spend 35% of monthly household income on these costs, compared with 20.8% in the South and 21.3% in the U.S.; U.S. Census Bureau ACS 2022a). However, renters in South Carolina are more likely to be cost burdened.

There are over 150,000 households in South Carolina designated as extremely low income (below the poverty line or 30% of the area’s median income), and nearly three-quarters (73%) of those households are severely cost burdened, meaning they spend more than half of their income on housing. There is a shortage of nearly 90,000 rental homes available and affordable to extremely low-income renters (NLIHC n.d.). Beyond being unaffordable and in short supply, the existing housing stock in many low-income areas is substandard or even dangerous. For example, advocates in Chester County reported that a natural disaster relief organization came to Chester in 2017 and returned in 2018. They stepped in to demolish and rebuild houses that were in severe disrepair. Advocates noted that some families were living in homes with no running water and one family was living in a house that had been knocked off its foundation.14

Transportation access

Lack of transportation is another major barrier for many workers across the state, especially when jobs are not in areas where job seekers are located. Not all counties or all parts of all counties have access to public transportation, according to the South Carolina Department of Transportation annual report (SCDOT 2024). South Carolina ranks 49th in the nation (ahead of only Alabama) for public transit usage in terms of the annual average number of miles per resident traveled via public transit. South Carolina’s largest public transit systems, measured in passenger trips, are the Charleston Area Regional Transportation Authority (2,142,165 trips in 2023) and the Central Midlands Regional Transportation Authority (1,725,176 trips in 2023). All other bus systems in the state provide fewer than 100,000 trips per year (FTA 2024).

Lack of transportation was one of the top reasons given for not having a job in a survey conducted by the South Carolina Department of Employment and Workforce (Millan Chicago LLC 2022). The report indicates that the federal Infrastructure Investment and Jobs Act (IIJA) is providing substantial dollars for public transit. If this results in more low-cost, accessible public transportation that allows workers without private transportation to connect with available jobs, it could not only increase employment and economic security for many South Carolinians, but it will also likely make it easier for businesses to recruit workers.

Lacking adequate public transit options, many South Carolinian workers drive to work and they too face substantial challenges, including long commute times on dangerous and failing roads. According to a 2024 report, 41% of South Carolina’s major roads are in “poor or mediocre condition,” costing drivers $2.8 billion a year in repairs, vehicle depreciation, and increased fuel consumption. Fortunately, the 2021 federal IIJA is expected to provide $5 billion in state funds for highway and bridge improvement in South Carolina. As of mid-2024, federal funds supported over half (56%) of the state’s spending on such improvements (TRIP 2024a).

South Carolina has some of the deadliest roads of any state15 and its roads have gotten more dangerous over time. In 2023, the state’s traffic fatality rate was 1.7 fatalities per million vehicle miles traveled (compared with 1.26 in the U.S.) and 1,028 people were killed, a 34% increase since 2013 (TRIP 2024c). Rural roads are particularly deadly, and South Carolina’s fatality rate on rural roads is also the highest in the nation (TRIP 2024b).

Food insecurity

Over 300,000 households in South Carolina (14.4% of households in the state) are unable to acquire adequate food due to limited resources. South Carolina is one of only seven states where food insecurity is higher than the national average, and it is one of only six states where the prevalence of very low food security is higher than average.16 Very low food security is a severe form of food insecurity in which one or more household members are forced to eat less because of limited resources. South Carolina was the only state in the nation to see statistically significant increases in very low food security from 2013 to 2023, while these rates declined in 18 states (Rabbit et al. 2024).17 South Carolina has the fourth highest share of free lunch-eligible children18—70% of the state’s K-12 students relied on free schools meals during the 2022–2023 school year (ED NCES 2024).

Despite high rates of food insecurity, including among children, South Carolina lawmakers have not invested in policy solutions to address hunger. In fact, two Republicans cosponsored a 2023 federal House bill to expand the already harsh work requirements of the Supplemental Nutrition Assistance Program (SNAP).19 The bill would put SNAP benefits at risk for 30% of households participating in the program, one of the highest state participation rates in the nation (Bolen, Rosenbaum, and Nchako 2023). And Governor McMaster opted out of the 2024 Summer Electronic Benefits Transfer program, which would have given eligible families food vouchers to use during the summer break when students do not receive free lunch (Brams and James 2024). These provide further examples of how lack of public investment makes it more difficult for families to meet their basic needs.

Conclusion

South Carolina has a long history of exploitative labor practices extending back to before it was even a state with the first enslaved African arriving in 1526 (Brockell 2019). The state’s labor policies and practices today are, in many ways, a direct extension of that same strategy to extract labor at the lowest possible cost while keeping workers disempowered. It is this model that has meant that despite South Carolina’s economy experiencing exceptional job growth during and after the recovery from the COVID-19 pandemic with employers struggling to find workers, wages remain low and show less growth than wages across the South or the nation.

Compounding the challenges facing workers in South Carolina, recent job growth has been distributed unequally across the state. Many employers fail to provide workplace benefits, such as paid leave, that might allow or encourage more working parents and caregivers to fully participate in the workforce. Many South Carolinians lack access to safe, reliable, affordable transportation that might give them access to these job centers. For all these reasons, a substantial share of the prime-age South Carolina population is not participating in the labor market at all.

Many South Carolinians, especially children and Black and brown residents, are experiencing high rates of poverty and overall economic insecurity.

Policymakers across the state have the opportunity to shift directions. Instead of continuing to embrace anti-worker policies, they can begin to adopt pro-worker policies that will allow South Carolinians broadly to share in the prosperity their labor creates. This could begin with state lawmakers implementing a minimum wage for the state that is truly a living wage. This would be a first step toward ensuring that all jobs in the state are good jobs.

State lawmakers could also embrace the job quality levers built into the BIL, IRA, and CHIPS bills. For instance, lawmakers could require that workers on federally funded projects are paid prevailing wages—setting a wage floor for workers—and that new infrastructure and manufacturing facilities are built using project labor agreements.

State lawmakers could further ensure that large employers benefiting from federal and state public subsidies enter community benefits agreements (CBAs), legally binding agreements between community coalitions that can include labor organizations, racial justice groups, environmental advocates, government agencies, and developers and contractors (Reimagine Appalachia n.d.). These commitments range from hiring local workers, paying prevailing wages, and ensuring minimum benefits and safety standards for workers. They can also include agreements on land use and contributions to affordable housing and child care. These agreements help ensure that workers, their families, and their communities also benefit from the public tax dollars spent to build up infrastructure, like roads and bridges.

State lawmakers could also ensure workers have access to basic benefits that would allow them to balance work and family demands. Paid family and medical leave, for example, has been shown to have significant benefits for families including increasing their economic security and overall better health outcomes (National Partnership 2023a). But this also benefits employers because access to state paid leave programs have been shown to reduce turnover among workers and it makes participation less expensive for small businesses (Corley 2016; National Partnership 2023a). Thus, this should be a priority for lawmakers concerned about labor force participation and who care about healthy families.

State lawmakers can also respect workers’ right to unionize. As discussed above, workers joining together with their coworkers in a union gives them better bargaining power with their employers and a stronger voice in their workplace. Workers who are unionized have higher wages, smaller wage gaps, and are more likely to have benefits such as health insurance, retirement benefits, and paid leave.

Finally, South Carolina, along with many states across the South, have passed preemption laws at the state level that prevent cities, counties, and other local entities from raising standards for workers and families in their communities. Some of the specific labor standards that have been preempted in South Carolina are raising the minimum wage, establishing a paid family leave program, regulating wages and working conditions for so-called gig workers, and preventing the requirement of project labor agreements when private businesses receive public dollars.

Because local governments are also an important force in economic development, they should use their leverage to encourage things like CBAs where they can (Gerstein and Gong 2024). Where they are preempted, however, their ability to contribute to overall economic development is hindered. State lawmakers should therefore rescind the preemptions, giving local communities the opportunity to pass laws that respond to their needs.

Together, these policies would improve workers lives by raising wages and help ensure their hard work allows them to provide for themselves and their families, to balance the demands of work and family, and give them a voice on their jobs. These policies would give local communities within South Carolina more control and raise standards for families and broader communities across the state.

Notes

1. The Affordable Care Act expanded Medicaid coverage to most adults with incomes up to 138% of the federal poverty level. To date, 40 states and D.C. have adopted the Medicaid expansion. The 10 states that have failed to adopt the Medicaid expansion are Alabama, Florida, Georgia, Kansas, Mississippi, South Carolina, Tennessee, Texas, Wisconsin, and Wyoming (KFF 2024).

2. Dividing 200,000 jobs by the 2,279,240 jobs in the state would produce an estimate of 8.8% of all jobs in the state. The total number of jobs shown in Table 1 assumes that all farm workers are included in the total number of jobs in the state. The QCEW data, however, exclude small farms so it is unclear how many of these jobs are represented in these data. If the 200,000 agribusiness jobs are in addition to the jobs shown in Table 1, the total number of jobs would be 2,479,240.

3. EPI analysis of ACS data.. Share of food production workforce and animal slaughter workers based on EPI analysis of the 2017–2019, 2021–2023 one-year American Community Survey. Sample sizes too small to estimate racial and ethnic composition of other food production occupations such as crop production. 

4. The exceptionally large discrepancy between Hispanic women’s employment rate in South Carolina compared with their national employment rate deserves greater attention than is possible in this report and it should be explored in future research.

5. The remaining states without state minimum wage laws are Alabama, Louisiana, Mississippi, and Tennessee. While Georgia and Wyoming have minimum wage laws, their minimum wages are lower than the federal minimum wage, so the federal minimum wage applies.

6. There are exceptions that allow some workers to be paid less than the $7.25 federal minimum wage. Some groups covered by these exceptions include tipped workers, workers with disabilities, some youth workers, and seasonal or agricultural workers. However, when a state law requires a higher minimum wage than federal law, the state law would apply (DOL n.d.).

7. They would get a raise as employers adjust pay scales to reflect the new minimum.

8. Median hourly earnings in Table 4 differ from that in Figure N because they are taken from a different source, which allows us to examine earnings across detailed occupations. Earnings for detailed occupations should be compared only with overall median earnings in Table 4.

9. Union density, the share of South Carolina workers who belong to a union, is even lower at 2.3% (EPI analysis of Current Population Survey.)

10. ACS 2023 one-year estimates.

11. The unofficially defined counties include Bamberg, Beaufort, Calhoun, Clarendon, Colleton, Darlington, Dillon, Dorchester, Florence, Hampton, Jasper, Lee, Marion, Marlboro, Orangeburg, Sumter, and Williamsburg.

12. Bamberg (60.6%), Clarendon (45.6%), Darlington (41%), Dillon (46.4%), Florence (42.8%), Hampton (52.7%), Lee (62.9%), Marion (56.3%), Marlboro (49.4%), Orangeburg (61.5%), Sumter (45.9%), and Williamsburg (63.6%).

13. According to Click and Hinshaw (2015), the high court returned the case to the circuit court in 1999 and reduced the number of plaintiff districts to eight—Allendale, Dillon 4 (previously Dillon 2), Florence 4, Hampton 2, Jasper, Lee, Marion 7 and Orangeburg 3.

14. The source is a discussion with advocates from South Carolina who helped inform this report. These advocates included Rev. Jason W. Myers, Director, Chester Worker Empowerment Center and Leslie Brakefield, among others from the local community.

15. As measured by traffic fatalities per vehicle mile traveled.

16. Statistically significantly higher.

17. Data cover three-year period such that 2013 data include data from 2011–2013 and 2023 data include data from 2021–2023.

18. After Mississippi, Nevada, and New Mexico.

19. H.R. 1581.

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