Rising authoritarianism and the need to upend the failed Southern economic development model

For generations, Southern politicians backed by powerful business interests have promoted a Southern economic development model—characterized by low wages, regressive taxation, lax environmental regulations, a weak social safety net, and vicious opposition to unions—while claiming such policies will attract business and thereby generate regional economic gains. But data actually show a grim reality. The South lags all other regions on most indicators of economic health including job growth and wages, and Southern workers and their families experience significantly higher rates of poverty than in other parts of the country (Childers 2024a).

The truth is that this Southern economic development model was never designed to benefit most Southerners; rather, it is historically rooted in efforts of white plantation owners to retain their wealth following emancipation and ensure continued access to the labor of Black people for as little compensation as possible (Childers 2025). Foundational to these efforts was an authoritarian approach to state governance that suppressed popular democracy and worker organizing—an approach that also sanctioned prison labor, sharecropping, a century of Jim Crow laws, lynching, and other forms of state-sponsored terror and exploitation. Until partially challenged by federal legal and policy interventions won by post-WWII civil rights movements, many Southern states for decades held elections that served merely to provide a cover of legitimacy to one-party rule of white, wealthy elites—functionally excluding Black voters from the electorate and blocking working-class constituencies from any meaningful participation in governance (Mickey 2015; Perez 2024; Mast 2025).

Today, the Trump administration’s increasingly authoritarian actions echo this troubling Southern history. At their foundation, the administration’s approaches to bypassing constitutional checks and balances—while rolling back civil rights, worker rights, and environmental protections; terrorizing immigrant communities; deploying military troops in U.S. cities; and attempting to engineer election outcomes via gerrymandering and other forms of voter suppression—are rooted in authoritarian models developed and tested in the U.S. South, and that Black, brown, and immigrant communities across the country are no stranger to.

Recent attempts to terminate federal employee collective bargaining agreements, for example, are familiar to public employees in Southern states for whom collective bargaining has long been banned or severely restricted. The Trump administration’s use of military-style policing in communities across the country echoes Southern histories of weaponizing law enforcement (or National Guard troops) to suppress organizing and instill fear, while prioritizing the expansion of the carceral state over investments in housing, education, and public services. Trump’s efforts to override the authority of state officials mirror Southern state uses of abusive preemption laws to strip policymaking authority from local governments. And administration attempts to halt clean energy investments and environmental protections threaten to repeat harms familiar in Black and brown communities in the South, where corporations have insisted on lax environmental regulations that allow them to degrade air, water, and climate quality, while profiting from the exploitation of local natural resources and labor.

Seizing opportunities to reverse decades of anti-worker, anti-democratic policymaking in the South at a moment of rising authoritarianism in the U.S. is a daunting and unavoidably urgent challenge. It will require robust new forms of multiracial organizing and labor-community coalition building across a broad set of industries in the South. Labor-community coalitions can leverage community benefits agreements (CBAs) as a powerful tool to transform economic power relations in Southern workplaces and communities. Because CBAs are private agreements between labor-community coalitions and project owners, they do not rely on government action and can therefore shape economic outcomes of major projects even in otherwise hostile political environments. CBAs have traditionally been fought for and won by labor and community groups coming together and building necessary public pressure to hold developers, corporations, and elected leaders accountable for ensuring that public investments in major new developments truly benefit workers and communities.

In this report, we analyze the potential for labor-community coalitions to pursue strong CBAs that secure significant economic benefits for Southern manufacturing workers and communities, drawing on examples of existing agreements to model potential impacts. We examine the scale of recent public investments in Southern manufacturing and examine how strong CBAs on major publicly-subsidized private projects could improve the quality of newly created construction and production jobs; open up pathways to unionization; ensure equitable hiring and training opportunities for local residents; and address community needs such as child care, affordable housing, and natural resource protection.

We contend that upending the failed Southern economic development model and the authoritarian structures that underpin it will require building new forms of labor and community power to increase union density in the South. Well-known research shows that unions promote economic equality and help workers win improvements in pay, benefits, and working conditions (Economic Policy Institute 2021). But unions also powerfully affect people’s lives outside of work. They help foster solidarity, increase democratic participation, enable working-class communities to shape economic policies affecting their lives, and serve as a counterweight to corporate power in our economy and democracy (McNicholas et al. 2025). Historically, unions have been engines of resistance to entrenched and undemocratic power—mobilizing working people to challenge inequality, defend civil rights, and push back against authoritarianism in all its forms. For all these reasons, strengthening labor-community coalitions and pathways to unionization in growing Southern industrial sectors is not just good economic policy—it is also a democratic imperative amid national authoritarian backsliding.

Worker and community power can ensure new manufacturing investments yield good jobs and community benefits

The latest wave of manufacturing growth in the South presents both opportunities and pitfalls for workers and communities. Southern states continue to lure businesses—including large manufacturing facilities—with promises of low corporate tax rates, low wages, lax regulations, and massive public subsidies. The automotive manufacturing industry has been a key recipient of public subsidies, receiving billions of dollars from Southern states in recent decades (Childers 2024a; Todd 2021). This system of low taxation and corporate giveaways starves other essential public goods, like education and social safety net programs (Mast 2025b). Likewise, weak or nonexistent environmental regulations have contributed to toxic sites and resource degradation that disproportionately affect Black and brown families, reflecting often intentional decisions to site hazardous facilities in low-income communities of color (Bergman 2019).

Some announced manufacturing projects have been cancelled or reduced in size after the Trump administration’s slashing of federal supports for strategic industries, but many projects launched during the Biden administration continue to move forward. These manufacturing investments, both in traditional industries and nascent ones such as electric vehicle (EV) and EV battery manufacturing, are spurring significant job growth in some Southern communities. Yet past experience shows that new investments and resulting jobs are unlikely to generate economic benefits for most Southerners unless local residents are able to ensure that developers and corporations respect workers’ rights, protect local natural resources, and contribute a fair share toward addressing priority community needs.

Community benefits agreements can be powerful vehicles for communities to secure lasting local economic benefits from major industrial development, at both new and existing facilities. A CBA is a legally enforceable contract between a private developer or company and a local coalition—typically made up of labor, community, faith, environmental, and other grassroots organizations—that details how a project will benefit workers and the community, and in turn how the community will support the project (including via potential public investment). Benefits spelled out in a CBA can include commitments to strong labor standards; respect for workers’ rights to organize; equitable workforce recruitment, training, and hiring practices; affordable housing; environmental protections; or a broad range of other community-identified priorities. CBAs are a well-developed model for responsible community development—so far mostly, but not entirely, in regions outside the South—and have been used for many different types of major projects including sports stadiums, events centers, manufacturing plants, airports, transit projects, and more (WRI n.d.).

CBAs can likewise mitigate risks for project developers by ensuring local project support and addressing important concerns early on, whereas failure to engage local communities in major development decisions can otherwise lead to strong community opposition, interruption of development, obstacles to obtaining necessary siting permits or rezoning approvals, or significant legal costs. In an example from June 2024, developers shelved plans for a $1.3 billion data center in Indiana after facing significant local opposition over environmental concerns (Fazili et al. 2025).

Because a CBA is a private, legally binding agreement, it does not require government action and can be used to shape outcomes of major projects even in contexts (as in most of the South) where state legislators have preempted local governments from establishing their own job quality or environmental standards (EPI 2025a). That being said, state and local governments can still have a role in facilitating, negotiating, or enforcing community benefits. Cities like Detroit and Cleveland have ordinances requiring developers of projects using public resources to engage in a community benefits plan process (City of Detroit n.d.; City of Cleveland n.d.). In 2005, Atlanta passed an ordinance specifying worker and community benefits for the Beltline redevelopment (WRI 2025). However, government involvement in community benefits plans does not guarantee strong agreements on its own. A strong labor-community coalition remains essential for securing meaningful community benefits.

Another key strength of a CBA is that it can set standards across all stages of a project’s development to ensure long-term benefits for the community at large. Private developers or public entities sometimes negotiate Project Labor Agreements (PLAs) or Community Workforce Agreements (CWAs) with building trades unions and community partners to set wages, working conditions, and timelines for the construction phase of a complex development project. A CBA can be negotiated alongside a PLA to also ensure pathways to quality jobs for local residents during the operational phases of a project, including any future expansions of the facility or additions to its workforce. A CBA can also secure commitments to build affordable housing, strengthen environmental standards, and provide other benefits to the community such as child care, public parks, or other community spaces.

To be successful, a CBA must also include defined enforcement mechanisms that hold all parties to the agreement accountable. It must clearly establish the obligations of each party, metrics for measuring progress, and ongoing monitoring of compliance with the agreement’s provisions (Last 2025; PWF and CBLC 2016). If the company or the coalition fails to make good-faith efforts on the agreement’s commitments, an arbitration process is initiated. While monitoring of the agreement is an ongoing responsibility of all members of the coalition, providing a pathway for workers to organize in the operational phase of a project is of particular importance. A newly established union at the project site is well-positioned to monitor the commitments of the CBA and hold the company accountable over the long term.

Organizers and advocates should be clear-eyed that while strong CBAs can yield powerful economic outcomes, such agreements are by no means easy to win. There are generally no legal requirements for a particular company or developer to recognize or engage with a labor-community coalition, much less to agree to negotiate and implement a CBA. Building the broad-based, durable coalitions and leverage necessary to compel private interests to engage in CBA negotiations (and then to implement and enforce the terms of a CBA) is unavoidably a challenging, long-term, resource-intensive organizing project. And like any worthwhile organizing, the formation of strong, durable labor-community coalitions is itself a key outcome of successful CBA campaigns. Vastly expanding the capacity of broad-based coalitions and labor, faith, environmental, and other grassroots organizations to gradually build community and worker power in Southern communities is the most essential ingredient for transforming existing power imbalances and, ultimately, upending the failed Southern economic development model.

Indeed, recent initiatives to win CBAs in Southern states have proven so threatening to some corporate interests that they have sought to undermine them. In 2025, Tennessee Republicans passed legislation prohibiting any company that enters into a CBA from receiving state economic development funds—aiming to create obstacles to replication of a highly successful CBA covering Nashville’s soccer stadium, and to discourage a coalition of West Tennessee residents and allied groups calling on Ford and SK Innovation to negotiate a CBA covering its massive BlueOval electric vehicle and battery manufacturing complex (Abrams 2025). In Tennessee and elsewhere, however, labor-community coalitions are nonetheless continuing to organize to ensure that massive, publicly subsidized new facilities yield good jobs and community benefits.

A new wave of Southern manufacturing is an opportunity to transform working conditions in growing industries—and across the South

Growth in Southern manufacturing industries presents a significant opportunity for labor-community coalitions to shape labor standards and community benefits in new plants and facilities—and to shape economic outcomes for generations of Southern workers to come. In recent years, the South has seen a wave of manufacturing investments. Between 2017 and 2023, manufacturing construction doubled in the East South Central Census division (Alabama, Kentucky, Tennessee, and Mississippi) (O’Brien 2023). The West South Central division (Arkansas, Louisiana, Oklahoma, and Texas) has the highest amount of manufacturing construction spending of any division in the U.S. These investments are part of a long-term trend of manufacturing industries locating in the South, which in recent years was accelerated by large federal investments through the Inflation Reduction Act, Infrastructure Investment and Jobs Act, and CHIPS and Science Act. These federal investments included both direct public subsidies and tax credits to businesses that invested in key clean energy manufacturing industries such as the production of batteries, electric vehicles, solar panels, and wind energy products.

In contrast to the typical economic development approach of many Southern states, some recent federal investments have included incentives meant to encourage strong labor standards on projects receiving public funds. While the future of many of these investments (and accompanying incentives) is now uncertain, the U.S. has in the past two years experienced its largest investment in clean energy manufacturing ever, and much of that has occurred in Southern states.{{1}} Since the third quarter of 2023, more than $125 billion worth of clean energy manufacturing investments were announced across Georgia, North Carolina, South Carolina, Tennessee, Kentucky, and Texas (CET 2025). Advancing even a portion of these projects would result in thousands of jobs for Southern workers.

Independent of the future of federal support for clean energy manufacturing, the South will likely continue to be the largest manufacturing employer of all U.S. regions. Figure A shows manufacturing employment by region in the United States since 1990. While manufacturing employment overall has fallen during the last three decades, the South has retained the largest share of manufacturing employment of any region. In 2024, 35% of U.S. manufacturing employment was in the South. Furthermore, since 2010, manufacturing employment in the South has grown by 17%, the quickest growth of any region.

Figure A

Manufacturing jobs are often considered to be well-paid, benefit-providing “middle-class” jobs, but there is nothing inherent to the sector that determines their quality. Manufacturing jobs in some industries became “good jobs” thanks to relatively high levels of unionization during the mid-20th century, which improved wages, benefits, and working conditions (Bayard et al. 2024; Rhinehart and McNicholas 2020). As Figure B shows, unionization in manufacturing has fallen in all regions since 1983, but the South has almost without exception had the lowest unionization rate of any region.

Conservative Southern policymakers have long been hostile to union organizing. For example, every Southern state except Maryland and Delaware has passed anti-union so-called right-to-work (RTW) laws, which make it harder for workers to form, join, and sustain unions. Southern states like Florida and Arkansas were among the first to pass such laws in the 1940s, amid a wave of big business backlash against new federal labor laws and white supremacist campaigns to maintain racial hierarchies and suppress multiracial worker organizing. RTW laws suppress unionization rates and, as a result, have driven down wages for both union and nonunion workers alike across the South (Sherer and Gould 2025; Childers 2023).

Figure B

In 2025, Southern manufacturing had a 6.7% unionization rate—slightly below the national unionization rate for private-sector workers (6.8%). Unionization in Southern manufacturing grew by more than a percentage point between 2024 and 2025, a notable one-year reversal of the industry’s long-standing unionization decline, consistent with overall union gains in the South (McNicholas, Poydock, and Shierholz 2026). Nevertheless, Southern manufacturing’s unionization rate remains well below the Midwest’s (11.2%), the region where manufacturing is the most heavily unionized. Unions have a strong impact on job quality because they leverage worker power collectively to raise wages, win benefits like health care and retirement, and enact other meaningful workplace improvements, such as improved health and safety standards. These benefits can extend beyond unionized workers themselves, helping set standards across a workplace, and with enough density, across an industry.

As unionization declines in an industry or region, so does job quality. For instance, as unionization rates have fallen in auto manufacturing, the pay advantage for auto workers compared with the median worker has declined significantly (Barrett and Bivens 2021). Figure C demonstrates how this relationship holds across regions in 2025. Manufacturing jobs in the South have a pay advantage of 7%, the lowest of any region. Southern manufacturing workers also experience the lowest median hourly pay of any region ($24.41).{{2}}

Figure C

The Southern economic development model clearly hurts the region’s workers by denying them their right to organize and suppressing their wages, but there are harmful spillover effects for their communities as well. Corporate tax breaks with no strings attached provide billions of dollars to corporations that could otherwise be used to invest in schools and other essential government services. These types of tax breaks might be worthy of consideration if manufacturing employers were required to create high-quality jobs for local workers and make long-term investments in local community development needs (i.e., housing, infrastructure, education, etc.). Without such protections, they are simply taxpayer-funded giveaways that often drain the very resources needed to develop the local workforce recruited by large new facilities.

Southern states enact little to no regulation of workplace safety or environmental pollution. This results in unsafe workplaces with greater levels of injury and death (Childers 2024a). Environmental pollution from manufacturing sites can negatively affect public health by contaminating water, air, and soil. New manufacturing investments also can mean significant changes to the demand for housing in a community. A new plant or factory can drive up the cost of living for nearby residents without yielding any economic benefits to a local community. Labor, community, and environmental groups need to collaborate on shared solutions to effectively address these intertwined challenges.

Labor-community coalitions can obtain commitments that ensure “economic development” means shared prosperity for all

Labor-community coalitions organizing around manufacturing projects can secure commitments that offer direct economic benefits to workers and communities, while also establishing groundwork for the growth of worker and community power in the area. While a campaign to win a CBA can be the impetus for forming a local labor-community coalition, the alignment and relationships built through this shared work can lead to longer-term, sustainable coalitions capable of transforming local and state power relationships.

The following section analyzes a set of commitments that can be included in a CBA for a manufacturing project. The CBA framework is flexible and allows for the inclusion of many different types of commitments prioritized by particular groups of workers, community members, and environmental groups. This report focuses on key types of commitments including union neutrality agreements, living wage floors, equitable workforce development practices (such as local or targeted hire policies and programs to expand pathways to apprenticeship training), affordable housing provisions, child care benefits, and environmental protections. Each type of commitment is analyzed in terms of its economic impacts and effectiveness in reshaping local economic development to ensure that public investments generate broadly shared community benefits.

The construction phase and Project Labor Agreements (PLA)

This report mostly focuses on community benefits for workers during the operational phase of a manufacturing plant. Nevertheless, it is just as vital to set high labor standards during the construction phase. Strong community benefits agreements are ideally developed in tandem with strong project construction labor standards set via project labor agreements (PLAs). A PLA is a multiparty agreement between a project owner and a coalition of labor unions that sets out labor standards and dispute resolution procedures to promote stability and efficiency on complex infrastructure projects while also ensuring the project will generate good jobs. PLAs ensure that construction projects run smoothly, are safer, and pay workers fairly (Mangundayao, McNicholas, and Poydock 2022). By setting negotiated wage and benefit levels for each type of work on a project, PLAs level the playing field in highly competitive construction bidding processes; they ensure that contractors base bids on their ability to deliver on quality and efficiency, rather than low-ball cost estimates that reflect intent to pay substandard wages or cut corners on safety. By standardizing wage and benefit levels and taking them out of the competition in the bidding process, PLAs incentivize the use of skilled union labor, which is 14% more productive than nonunionized construction work (McFadden, Santosh, and Shetty 2022). PLAs typically set wages, fringe benefits, and working conditions but can also include requirements to utilize certain numbers of apprentices, hire locally or from certain target worker populations, and/or provide child care or other benefits that open up pathways to good union construction jobs for members of underrepresented groups.

Several of the types of standards for construction workers typically included in a PLA have analogous labor standards in the operational phase. For instance, a CBA can secure commitments for local or targeted hiring and the development of registered apprenticeship programs in a manufacturing facility, extending equitable recruitment and high-quality training requirements that a PLA typically sets for construction into the operational phase of a project.

Removing obstacles to unionization: Neutrality and labor peace agreements

Protecting workers’ freedom to unionize has historically been key to turning manufacturing jobs into good jobs. This remains just as true today. However, like workers across the country, Southern manufacturing workers continue to face formidable obstacles—including weak labor laws, powerful anti-union corporations, and hostile politicians—to exercising their legally protected rights to form or join a union. Employers are charged with violating federal labor law in more than 40% of union elections and spend more than $400 million a year on “union avoidance” consultants (McNicholas et al. 2019; McNicholas et al. 2023). Because existing weak labor laws do not effectively deter employers from union busting, these tactics are treated by many employers as a normal cost of doing business—stacking the deck unfairly against workers seeking to exercise their rights to organize and collectively bargain.

Union neutrality agreements can help safeguard workers’ right to form unions free of the types of interference employers often deploy. Under a neutrality agreement, an employer agrees to remain “neutral” and not interfere with workers’ decisions on whether to unionize. Such agreements typically include joint commitments to a “card check” process for verifying whether a majority of employees have indicated interest in forming a union. Unions and employers sometimes also enter into a labor peace agreement, where unions agree not to engage in certain types of picketing, work stoppages, or other economic disruptions during the organizing process in exchange for employer neutrality.

Employers can also choose to commit to union neutrality as a matter of principle or company policy. Union neutrality—providing workers a more free and fair choice to decide whether to unionize—has been a key component of successful unionization drives in Southern manufacturing. To take two recent examples:

• In 2024, workers at the Volkswagen (VW) Chattanooga plant voted to join the United Auto Workers. Like many European corporations, the German-based VW has an established policy of maintaining neutrality in union election processes, although workers still voiced concerns that in its U.S. facilities, VW management tried to intimidate and dissuade workers from forming a union (Bomey 2024).
• In tandem with community benefits agreement negotiations with New Flyer in Anniston, Alabama, the United Steel Workers and Communications Workers of America negotiated three neutrality agreements with New Flyer and its subsidiaries in 2022. Over the two years that followed, these union neutrality agreements enabled workers to pursue five successful union drives, including at the New Flyer facility in Alabama (Last 2025; Sasha 2024).

Successful recent instances of union organizing in Southern manufacturing facilities have been powerful enough to generate their own backlash. Because of the threat that union neutrality agreements represent to the reigning Southern economic development model, several conservative state legislatures in the South have used model legislation developed by the American Legislative Exchange Council to pass laws intended to interfere with these agreements (Sachs 2024). While the legality of such measures remains in question and has not yet been tested, Alabama, Tennessee, and Georgia now all have legislation in place stating that employers who agree to a union neutrality agreement will be barred from receiving state economic development funds, disincentivizing companies from participating in these agreements (Stephenson 2024).

Importance of unionization to improve manufacturing jobs and wages

Securing unionization in Southern manufacturing can have significant wage benefits for workers. Unionized manufacturing jobs are more likely to provide family-sustaining wages. Unionization in manufacturing is associated with a 17.9% wage premium for workers (Scott et al. 2022). This means that compared with similar workers in terms of education, occupation, experience, race, and ethnicity, unionized manufacturing workers are paid almost a fifth more per hour than their nonunionized counterparts.

Table 1 translates this union premium into how much more unionized workers in the South could make on an hourly, annual, and plant-wide basis. The average nonunionized manufacturing worker in the South earns $34.50 an hour, so with the typical union premium, that worker would be earning an additional $6.18 an hour. If that worker works full time, year-round, the hourly premium translates to $12,846 more a year. To illustrate the potential impact of unionization in an entire plant, we take the example of the BlueOval auto manufacturing investment in Tennessee, which is projected to create 6,000 jobs (TN Office of Governor 2023). For a plant of that size, unionization could mean more than $77 million in additional wages for workers.

Table 1

Wage gains from successful unionization are not hypothetical for manufacturing workers in the South. For example, in 2024, workers at New Flyer in Anniston, Alabama, ratified a union contract with significant pay raises, with some workers gaining raises of up to 38% through 2026 (CWA 2024). Establishing a union contract with transparent pay ladders will also help New Flyer workers combat persistent pay gaps between white and Black workers in Anniston’s manufacturing industry (Erickson 2021).

The benefits of unionization go far beyond hourly wage increases. The workers at New Flyer also achieved significant gains in terms of vacation time and retirement contributions. Unionized workers secure critical benefits like health care and sick days at greater rates than their nonunion peers. Adjusting for differences in industry, sector, and region, union workers are 18.3% more likely to have employer-covered health insurance than their nonunion counterparts (EPI 2021). Almost 9 in 10 private-sector union workers have paid sick days, compared with less than three-fourths of nonunion private-sector workers (EPI 2021).

Unions also contribute to safer and healthier working conditions across a wide range of industries (Dean, McCallum, and Venkataramani 2022). By strengthening workers’ voice on the job, unions empower workers to report safety issues and demand better protocols. One example of this is that unionized construction sites experience significantly lower rates of Occupational Safety and Health Administration (OSHA) violations than nonunionized sites (Manzo IV, Jekot, and Bruno 2021). This is despite the fact that unionized workplaces actually experience greater rates of OSHA inspections than other workplaces, likely because many unions maintain active health and safety committees and because unionized workers have greater access to education on how to recognize safety hazards and are less afraid of reprisals from their employer for reporting them (Leigh and Chakalov 2021).

As the New Flyer agreement demonstrates, a strong CBA includes (or is negotiated in tandem with) union neutrality commitments ensuring that workers have a free and fair choice to unionize, without employer interference or retaliation. Securing a pathway to unionization can provide direct benefits to workers at a particular facility, while also increasing local organizing capacity and coalition strength for future negotiations over new projects and local development decisions. Not only is a new union a legally recognized institution that can monitor and hold the company accountable for commitments in the CBA, but it can also play a critical role in amplifying demands of workers and communities outside of the workplace and building power for working people more broadly.

Living wage floor

CBAs can also include commitments to minimum wage floors for the workers who will operate a new facility. For example, the 2018 Nashville Soccer CBA in Tennessee included a commitment to an hourly wage of at least $15.50 for stadium workers (SUN 2018). This provision set the stadium’s wage floor well above the minimum wage in Nashville, where workers—like all Tennessee workers and many across the South—are otherwise subject to the federal minimum wage of $7.25 an hour.

If a wage floor set by a CBA is high enough, it can help workers achieve a living wage in the place that they live. What constitutes a living wage must be determined by labor and community partners (Gould, Mokhiber, and DeCourcy 2024). For example, a living wage could be defined narrowly as covering the necessities for a single adult, or more broadly as including the needs of a working parent and their children. A living wage target must also make assumptions about nonwage income such as health care benefits and government transfers. Manufacturing workers in the South can also rightfully seek wages that not only cover bare necessities but provide the family-sustaining resources needed to be healthy and thrive.

Figure D shows the share of manufacturing workers in the South earning less than $30 an hour, or $62,400 a year in wages for a full-time worker. More than 3 in 5 (60.8%) manufacturing workers in the region earn less than $30 an hour. Around 80% of Southern Black and Hispanic manufacturing workers earn below the $30 threshold. Women in manufacturing are also more likely to earn below $30 an hour (71.8%) than men (59.1%).

Figure D

A $30 wage floor exceeds the minimum costs for a single adult in most jurisdictions in the U.S., but still barely covers needs for many families with children in manufacturing-dense counties nationwide. EPI’s Family Budget Calculator estimates living wage standards by county that cover modest but necessary costs families face like food, rent, and transportation in the United States. Table 2 shows three Southern counties with significant clean energy manufacturing investments in recent years (CET 2025). Each county has significant manufacturing employment, exceeding the U.S. average for manufacturing employment density. For each county, living wage standards from the Family Budget Calculator are listed for different family types. In Morgan County, Georgia, and Maury County, Tennessee, a single adult with a child must earn at least $30 an hour to cover basic needs. For a single economic provider to cover the costs of a four-person family, they must earn over $35 an hour in all the counties listed. These living wage standards indicate that a $30 wage floor would provide significant economic security for workers with smaller families or multiple wage-earners.

Table 2

A CBA that secures a strong living wage standard in a manufacturing facility can create a virtuous cycle that brings about greater prosperity in the area. Higher wages for low- and middle-income workers boost spending in the local economy because these workers spend a greater share of their paycheck than high-income workers (Anderson 2014). Other employers in the area might have to raise their wages to compete for workers with the CBA-bound employer. The establishment of a living wage also demonstrates to other workers in the area that higher wages are a feasible goal through collective action.

Local and/or targeted hire policies

Local and targeted hiring refers to policies that prioritize recruitment of individuals from the local community, or workers from specific groups who are otherwise underrepresented in a given workforce relative to local population demographics, such as women, people of color, veterans, low-income workers, formerly incarcerated workers, or workers with disabilities (Lawliss, Finfer, and Sherer 2022). A local hire policy can require that a certain percentage of hours worked on a project be completed by local workers. These policies can also require giving local workers the first option to apply for jobs on a project. For the prosperity created through manufacturing investments in the South to be shared equitably, it is important that local community members have access to the jobs that are created during both the construction and operation phases of a development. Workforce policies also should be designed to remove barriers to employment for groups of workers—especially workers of color and women—who have historically been excluded from many construction and manufacturing career opportunities. Increasing access to these well-paying jobs can increase economic mobility for workers with more limited opportunities.

Despite these benefits, some state policymakers have been hostile to local hire as a public policy. In 2015, Nashville voters passed a ballot initiative that required city-funded construction projects to dedicate 40% of construction hours to Nashville residents, with 25% of those hours going to low-income Nashville residents (Blair et al. 2020). The Tennessee state legislature then quickly passed a bill that preempted the city from creating its own local hire policy.

As Figure E shows, the harm of Tennessee’s preemption of local hire falls disproportionately on workers of color. The construction workforce in the Nashville metro area has a higher share of workers of color and immigrant workers compared with the state construction workforce overall. Black workers are 8.2% of the construction workforce in Davidson County, but 5.5% of the overall state workforce. More than half (51.5%) of construction workers in Davidson County are Hispanic, compared with less than a quarter (20.1%) of the state overall. Davidson County construction workers are also more than twice as likely to be immigrants (40.2%) than in all of Tennessee (14.8%). State preemption of local hire prevented Nashville from ensuring that public spending would benefit local workers. However, private agreements like CBAs offer an opportunity to incorporate local hire and/or targeted hire requirements into publicly subsidized developments, even in heavily preempted jurisdictions.

Figure E

In 2018, three years after the preemption of Nashville’s local hire policy, the labor-community coalition Stand Up Nashville was able to leverage $275 million in public subsidies for a new professional soccer stadium into a successful CBA (SUN 2018). The Nashville Soccer CBA included commitments to local hire for stadium workers, particularly workers from “Promise Zones,” i.e., high-poverty areas with fewer economic opportunities (SUN 2020). Through the CBA, Nashville Soccer Holding, LLC agreed to consider qualified Promise Zone resident referrals for jobs at the stadium. So far, the program has succeeded in hiring Promise Zone residents. In 2023, Nashville Soccer Club had hired 180 employees, 80 of whom were residents of Promise Zones (SUN 2023).

CBAs in the South and throughout the country are securing similar commitments to local and targeted hiring in clean energy and manufacturing investments. In Alabama, the New Flyer CBA commits the company to ensuring that at least 45% of new hires and 20% of promotions are members of “Historically Disadvantaged Groups” (Sabin 2022).{{4}} In Massachusetts, a new offshore wind terminal entered into a CBA with the City of Salem—setting targets for hiring of local workers, workers of color, and women workers (Sabin 2024). The CBA for Maine Aqua Ventis, an offshore wind facility, includes local hiring opportunities for residents of Monhegan, Maine (Sabin 2017). 

These types of agreements help ensure that local residents benefit from large investments in their communities, particularly when policymakers have invested public dollars in the form of tax breaks or corporate subsidies to support a new facility. Ensuring local workers are prioritized in training programs and hiring processes for newly created jobs also helps community members stay in the area when housing costs are driven up by a large new manufacturing investment. And in the longer term, providing pathways for local workers to benefit directly from these investments strengthens the labor and community alliances needed to hold developers and corporations accountable over time.

Equitable workforce development through apprenticeships and pre-apprenticeships

In addition to local hire policies, which help create equitable pathways for local workers to secure good jobs at a manufacturing site, construction and manufacturing projects require a skilled workforce to operate safely and productively. A robust ecosystem of registered apprenticeship and pre-apprenticeship programs can help ensure both that employers find the skilled workers they need in a large new manufacturing facility, and that local workers can access pathways to newly created jobs.

Registered apprenticeship programs are training programs vetted by federal or state agencies to ensure use of high-quality, best-practice training standards and approved curriculum aligned with skills needed to succeed in a particular occupation. Registered apprenticeships combine paid on-the-job and classroom training and result in a recognized, portable credential certifying that a worker has the skills and experience necessary for a specific occupation. Pre-apprenticeship programs (also known as apprenticeship readiness programs) recruit and prepare participants for registered apprenticeships—often partnering with community organizations—to open pathways to apprenticeship for women, Black and brown youth, immigrants, workers with disabilities, or others historically excluded from skilled trades occupations. The best practice is for these apprenticeships and pre-apprenticeships to be joint programs between unions and employers, providing high-quality instruction tailored to industry needs and training that leads to placement in a high-quality job with wages, conditions, and benefits negotiated into a union contract. Often, a vital building block for successful manufacturing apprenticeship programs is the establishment of a unionized workforce at a facility.

Unlike lower-quality workforce development programs, registered apprenticeships pay workers fairly for their labor during their training—and in joint apprenticeship programs, the wages and benefits of apprentices are negotiated into a union contract and typically include scheduled increases as apprentices progress through the training program. Registered apprentices (across joint and non-joint programs) typically see their earnings increase 49% between the year before they enter the program and the year after completing it (Walton, Gardiner, and Barnow 2022). These increases in earnings are greater than for similar workers who do not enter the apprenticeship during the same time period (Katz et al. 2022). Apprenticeships can also be particularly attractive to workers because they are debt-free. Most apprentices (60%) consider debt avoidance the most important reason for choosing to enroll in an apprenticeship (Walton, Gardiner, and Barnow 2022).

Apprenticeships can be a powerful tool for increasing the diversity of construction and other industry workforces. While participation of women and workers of color in apprenticeships has grown in recent years, this growth has been painfully slow for decades (CEA 2024). Research finds that union-based (joint) apprenticeship programs have been more successful than other types of apprenticeships at increasing diversity in the construction industry (Ormiston and Bilginsoy 2024). Joint apprenticeships enroll a higher share of women, Black workers, and Hispanic workers than non-joint programs, and have higher program completion rates for all workers, including for women and workers of color. Community benefits agreements can secure commitments and partnerships that equitably grow this pipeline of workers and set enforceable local and targeted hiring goals which in turn spur diversification of construction and manufacturing apprenticeship programs.

For instance, the New Flyer CBA creates a partnership between the company and coalition partners to develop pre-apprenticeship and technical training programs that expand access to manufacturing jobs for workers with low incomes and from disadvantaged groups (Sabin 2022). For these programs to succeed, community groups and educational institutions must have an active role in shaping the programs and connecting workers to these opportunities. The development of a growing skilled workforce and a robust, high-quality workforce development ecosystem can in turn be a strong incentive for bringing more facilities to an area over time. In 2015, Polaris stated that a significant factor in its decision to choose Huntsville, Alabama, for a new production facility was the area’s skilled workforce (Polaris 2015). As more workers participate in high-quality training programs that lead to union jobs, the organized workforce of the region will grow, strengthening labor-community coalitions the next time there is an opportunity to shape new development in the region.

Child care

Child care is an essential but extremely costly expense for many working families across the South. Average annual infant care costs in the South range from $6,868 in Mississippi to $14,277 in Virginia.{{5}} The Department of Health and Human Services recommends that 7% or less of family income go toward infant child care costs, but typical Southern families spend significantly more. In Alabama, infant care costs are 9.8% of median family income, while in Oklahoma the share is 15.4% (EPI 2025b).

Increasing access to high-quality, affordable child care not only makes work more accessible to parents (and especially to women, who on average continue to assume disproportionate care responsibilities), but is a powerful investment in children’s development that can help narrow class and racial inequalities (Morrisey 2020). In addition, child care workers tend to work for very low wages and experience poverty at greater rates than the typical worker.

A large manufacturing investment in a locality might produce a significant number of jobs, and in turn increase the demand of workers and their families to live nearby. This is likely to increase the need for child care services in the region. However, data show that child care employment has not kept up with manufacturing growth in Southern counties. Table 3 compares counties with high manufacturing density, where manufacturing employment makes up more than the national average (9% in 2009), with those with lower manufacturing employment density (EPI 2025c).

Table 3

Between 2009 and 2024, manufacturing employment in high-manufacturing-density counties in the South grew 15.9%, achieving faster growth than similar counties in the U.S. overall (12.1%). However, over the same period, child care employment only grew 4.5% in Southern high-manufacturing-density counties, far below the national rate of 14.2%. Child care employment growth in the South for low-manufacturing-density counties (22.3%) is also below the national level (28.5%). The South systematically underinvests in child care, despite its importance to a healthy economy in the region.

CBAs and PLAs have been used to secure both the construction of physical child care spaces and financial support for actual services. The Nashville Soccer CBA reserved 4,000 square feet for the development of a child care center (SUN 2020). In 2001, the CBA for the North Hollywood Commons mixed-use development project in Southern California secured a commitment to an on-site child care center. Fifty child care spaces at the center were reserved for low- and moderate-income families (Sabin 2001). In the Boston area, unions have secured Project Labor Agreements that seek to address the unique child care needs of the construction industry. The PLA for the Winthrop Center in Boston established a child care access fund to research, develop, and implement alternative child care models within the construction industry, with a particular focus on assisting single mothers with child care while supporting their career (NEREJ 2019).

These types of investments are vital supports for working families, particularly mothers, seeking to balance professional and care work. Combined with union neutrality for the child care workers at these facilities, commitments to providing child care can further elevate worker power in the region and help large new facilities recruit and retain the skilled, experienced workforces they need to succeed.

Affordable housing

Without strategies to address the housing needs of a community impacted by a new manufacturing investment, local residents can experience increased economic precarity or forced displacement. The local housing impacts of a large industrial investment can be complex. A significant manufacturing investment can make a local community more attractive as workers move into the area to be close to their place of work. Manufacturing investments are also likely to be paired with prospective real estate investments in anticipation of future development around the original project. State and local governments might use eminent domain and other purchasing mechanisms to secure land for roads and other new infrastructure. These dynamics can increase housing costs for residents, particularly renters who are most vulnerable to the impacts of housing speculation and prospective rent increases. For instance, the BlueOval development in West Tennessee is already reported to have increased property prices and housing rents (TCG 2023). Homeowners, particularly those with fixed incomes, can also be more burdened with housing costs as higher demand in the area increases property tax valuations (Payne 2019).

On the other hand, extreme proximity to an industrial site can expose residents to environmental hazards and noise pollution, and may be considered unsightly, which decreases property values (Currie et al. 2016; Upton and Talpur 2024). The exact distribution of these changes in demand for housing across a community will depend on the type of industry and any other types of development included in the project.

Industrial investments like manufacturing facilities tend to take place in rural and semirural areas, in part because land is relatively inexpensive (Wiley 2015). While the counties with a higher share of manufacturing employment tend to have lower housing costs than urban areas, housing affordability remains a significant issue for workers. On average, across high-manufacturing-density counties in the South, a two-adult, two-child household must cover more than $14,000 a year in housing costs.{{6}} A large share of renters in high-manufacturing-density counties in the South still are cost-burdened by housing, meaning they spend more than 30% of their income on rent, utilities, and other housing costs. As shown in Figure F, across the Southern states, the share of cost-burdened households in high-manufacturing-density counties ranges from 28% in Arkansas to 47% in Florida. More than 2 in 5 (42%) of Texas renters in these counties are also housing cost-burdened.

Figure F

A strong CBA will secure commitments to build a certain number of affordable housing units or dedicate a share of housing at the site as affordable. The Nashville Stadium CBA created agreements that at least 12% of residential units in the development would be affordable and that 20% of those units would be three-bedroom units to accommodate families (SUN 2020). The Staples Center CBA in Los Angeles, California, was another successful example of strong affordable housing benefits. The 2001 agreement for the development of an expanded convention center, theater, and surrounding housing, hotel, and retail space secured commitments that 20% of housing units would be affordable. The developer also agreed to provide $650,000 in interest-free loans to nonprofit affordable housing developers in the local community (WRI 2001).

Even in situations where a labor-community coalition is unable to reach a final CBA with a company, coalition organizing around community demands can still deliver meaningful affordable housing victories. Between 2002 and 2006, a labor-community coalition in Denver pressured Cherokee Investment Partners to provide community benefits as part of their redevelopment of the site of the Gates Rubber Company. The coalition leveraged zoning changes necessary for the project and a potential subsidy package from the city to extract benefits including an affordable housing plan for hundreds of rental and for-sale affordable housing units (Ingram and Hong 2011; PowerSwitch Action 2025).

In 2005, the labor-community coalition organized by Georgia STAND-UP was able to attach community benefits to an Atlanta city ordinance allocating $2 billion in public funding for the Atlanta Beltline transit-oriented development project. The city resolution shaped by the coalition established an affordable housing trust fund and a goal of developing 5,600 affordable housing units (PowerSwitch Action 2025). As of 2024, more than 4,100 affordable units have been created as part of the project (Atlanta Beltline, Inc. 2024).

Labor-community coalitions can also pursue other land-use commitments beyond the development of affordable housing. The BlueOval Good Neighbors coalition in West Tennessee has demanded commitments to protect land for farmers in the area. The development of the Ford factory has pushed Tennessee’s Department of Transportation to pursue land for new roadways through purchase and eminent domain. The area targeted for new roadways is a majority Black farming community, and several farmers are engaged in lawsuits with the state over the state’s meager compensation offers for their land (Wadhwani 2023). The coalition has demanded that farmers be offered replacement land in exchange for their sold land, as well as the creation of a 10,000-acre community land trust (BlueOval Good Neighbors n.d.).

Creating or protecting affordable housing is essential for protecting the communities that are necessary for any effective labor-community coalition. Large developments can cause instability within the community as new residents arrive, and existing residents are buffeted by rising housing costs. Because of historic and ongoing racial discrimination in housing policy, labor policy, and real estate practices, the costs of these changes are most likely to impact Black and Hispanic workers. Black families and other workers of color are the most likely to be cost-burdened by housing (JCHS 2024). Creating housing for workers and families to remain in the area is vital for continued collective action to secure benefits from developers and hold those developers accountable for their promises.

Environmental standards, funding, and monitoring

Large-scale manufacturing projects often have significant environmental impacts, both during construction and once they are in operation. Air, noise, and groundwater pollution; harm to wildlife habitats; and residents’ exposure to toxic byproducts are just a few examples of common concerns, and these consequences can be severe when projects are approved without sufficient environmental consideration. The consequences of large manufacturing projects often disproportionately harm communities of color and low-wealth areas throughout the South (Brouk 2024). For decades, poor and Black residents in the region have been exposed to toxic chemicals, pollution, and other environmental dangers at alarming rates (Bergman 2019).

In 2021, the Tennessee governor approved the construction of a General Motors lithium battery supplier in the city of Spring Hill, on the banks of the Duck River. Though the project was seen as an economic success, the plant’s operation has taken a toll on the fragile river ecosystem. The lithium battery factory is not the only strain—just eight companies along the river drain tens of millions of gallons of water daily (Wadhwani 2024). This enormous water usage has lowered river water levels, threatened biodiversity, and harmed local tourism and recreation. Advocates for the river’s health blame the state’s prioritization of manufacturing expansion without regard to the long-term environmental or economic consequences for local residents or other existing local industries.

CBAs are a tool that may help community-labor coalitions address the environmental impacts of data centers in the South. Data centers are booming across the United States, but particularly in Southern states like Georgia, Texas, and Virginia (Walker and Goldsmith 2026). New centers are heavy users of water and energy, create noise and air pollution, and are driving up electricity costs nationwide both by increasing demand for energy and requiring utilities to invest in new infrastructure paid for by all ratepayers (Merchant and Guerra 2025; Bizo et al. 2021; AI NOW 2025; Reed 2025). For example, in Virginia, electric bills were on track to increase as much as 25% in 2025 because of data centers (Penn and Weise 2025).

Growing community concerns surrounding data centers could create leverage for labor-community coalitions to pursue CBAs and other community benefits strategies. In 2025, community opposition blocked or delayed $64 billion in data center projects across the nation (Data Center Watch 2025). As community resistance to data centers continues to grow, more developers may recognize the need to come to the table with local coalitions to negotiate binding commitments on environmental and economic outcomes to secure project approvals. A handful of localities have begun to create agreements with data center developers regulating water use and securing commitments to green energy use (Turner Lee and West 2026).

Past development projects provide examples of how communities have used CBAs to secure long-term commitments to clean energy transition and protection of local natural resources in a multitude of ways, from mandating that any new construction must meet specific sustainability standards to requiring companies to contribute a set dollar amount to a city’s renewable energy transition fund. In Virginia, the City of Richmond Resort Casino CBA ensured the developing and operating company would design and construct all project buildings to Leadership in Energy and Environmental Design (LEED) Silver standards and would use previously existing pavement where possible (WRI 2021). The agreement also required the developer to attempt to reduce the urban heat island effect by planting shade trees along sidewalks and using other landscaping methods (WRI 2021). These agreements can mitigate additional environmental harm in areas that have already been polluted. A CBA between the Town of Waterloo, New York, and Seneca Meadows, Inc. regarding a landfill expansion commits the waste management company to pay for the development of new public water lines and other potable water infrastructure if existing public water wells become contaminated (WRI 2005).

CBAs can also be used to expand the positive impact of an already climate-friendly project. In New York, a CBA with an offshore windfarm developer stipulates that the company must contribute $2 million to the town of East Hampton’s Ocean Industries Sustainability Program (WRI 2018). Additionally, Deepwater Wind South Fork, LLC must spend $200,000 to establish an Energy Sustainability and Resilience Fund to support East Hampton’s transition to 100% renewable energy (WRI 2018). CBAs with environmentally focused companies provide valuable opportunities for communities looking to address climate change, especially where state governments have failed to invest in environmental programs.

A CBA can achieve a variety of climate and environmental commitments from a company but is also a strong starting point for building local capacity to monitor resource use, pollution, and other environmental priorities. A strong coalition of community, labor, and environmental groups can play essential roles in implementing and enforcing CBA commitments in contexts where understaffed government agencies have limited ability to monitor or investigate pollution and other environmental harms. Instead, workers and community members are often the first to report harmful practices and safety concerns. A strong CBA can provide opportunities for labor and environmental groups to work together to monitor and protect worker and community health, natural resources, and ecosystems.

Conclusion

For decades, Southern economic policies shaped by dominant business and corporate interests have resulted in poor working conditions and failed to ensure that profits generated by publicly subsidized development are shared with local workers and communities. Confronting the deep, long-standing imbalances of power that have entrenched this failed economic development model will require significant organizing and coalition-building to increase the collective power of workers and community members to shape different outcomes from the latest Southern manufacturing boom. Building new forms of worker and community power will be equally necessary to counter escalating authoritarian actions of the Trump administration, which closely parallel many features of the failed Southern economic development model that by design prioritizes corporations over workers and communities.

Our analysis shows that community benefits agreements could be powerful tools for Southern labor and community groups building the shared power necessary to reshape local and eventually regional economies. When strong coalitions of labor, environmental, faith-based, and other grassroots community organizations are able to build the necessary power to bring a company or developer to the table to negotiate an enforceable agreement, such coalitions can secure measurable economic benefits like higher wages, respect for workers’ rights to unionize, local or targeted hiring, protection of natural resources, or more affordable housing. Such economic gains are beneficial in themselves, but they also raise expectations, build local capacity to pursue additional gains, and demonstrate to the community at large that local residents can shape their own economic futures, and that these types of victories are achievable in the face of the Southern status quo.

While the urgent project of upending the Southern economic development model will require vigorous and persistent organizing across many sectors and geographies, community benefits agreements are one key strategy for turning manufacturing jobs into good jobs, ensuring long-term local economic gains from new industrial investments, and even renewing democracy in contexts where it has long been suppressed. Forming strong, long-lasting labor-community coalitions is essential to winning concrete gains for local workers as well as reshaping the political fabric of Southern communities and increasing working people’s influence over broader state or regional economic policy decisions. Winning and implementing any strong CBA requires the formation of an empowered labor-community coalition, which ideally endures and gains greater strength, experience, and influence over time. Just as the economic benefits of unionization extend far beyond an individual workplace, establishing a strong CBA coalition can create broader positive impacts across a community or region—delivering higher-quality jobs; more equitable tax systems; stronger public services; and healthier, more inclusive political systems.

Acknowledgements

The authors wish to thank the AFL-CIO Center for Transformational Organizing for their partnership and invaluable contributions in the production of this report. The authors are also grateful to Athena Last and Ian Elder at Jobs to Move America and Ben Beach at PowerSwitch Action for their expert feedback.

Appendix

Appendix Table 1

Notes

{{1.}} Clean energy manufacturing includes manufacturing of batteries, electric vehicles, mineral products, solar energy products, and wind energy products.

{{2.}} Workers in Southern states experience lower wages than in other regions even after adjusting for cost-of-living differences (Childers 2023).

{{3.}} The facilities covered by these agreements included plants in Alabama, California, Kentucky, Minnesota, New York, and Wisconsin.

{{4.}} This category includes workers who are Black, Indigenous, and/or people of color; women; LGBTQ+ persons; systems-impacted people (formerly incarcerated people); persons emancipated from the foster care system; residents of Anniston, Alabama, lacking GED or high school diploma; and veterans.

{{5.}} Southern states excluding D.C., Delaware, and Maryland.

{{6.}} EPI analysis of Family Budget Calculator and Quarterly Census of Employment and Wages data.

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Zessoules, Daniella, and Olugbenga Ajilore. 2018. Wage Gaps and Outcomes in Apprenticeship Programs. Center for American Progress, December 2018.

What is happening?

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

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

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

Impact on Black families across 10 major metro areas

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

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

Table 1

Figure A

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

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

Table 2

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

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

Table 3

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

Table 4

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

Table 5

Why is this happening?

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

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

Why does this matter for public health?

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

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

Why does this matter for racial health disparities?

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

What will this mean economically for workers and their families?

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

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

What should we do about it?

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

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

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

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

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

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

Methodology

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

References

Acemoglu, Daron, Peter Diamond, Oliver Hart, Simon Johnson, Paul Krugman, and Joseph Stiglitz. 2025. “An Open Letter From Six Nobel Laureate Economists: The Upside-Down Priorities of the House Budget.” Economic Policy Institute, June 2, 2025. 

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

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

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

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

Cid-Martinez, Ismael, and Ben Zipperer. 2023. “The End of Key U.S. Public Assistance Measures Pushed Millions of People into Poverty in 2022.” Working Economics Blog (Economic Policy Institute), September 12, 2023.

Employee Benefit Research Institute (EBRI). 2000. The Economic Costs of the Uninsured: Implications for Business and Government. EBRI Policy Forum held in Washington, D.C., May 3, 2000.

Gould, Elise. 2022. “Child Tax Credit Expansions Were Instrumental in Reducing Poverty Rates to Historic Lows in 2021.” Working Economics Blog (Economic Policy Institute), September 22, 2022.

Groundwork Collaborative. 2025. “Another Trump Price Hike for Working Class Americans as Health Insurance Premiums Set to Spike Up to 600% This Fall.” Innovative Research (blog post), October 1, 2025.

Hill, Latoya, Nambi Ndugga, Samantha Artiga, and Anthony Damico. 2025. Health Coverage by Race and Ethnicity, 2010–2023. KFF, February 2025.

KFF. 2025. “Marketplace Enrollment, 2014–2025” (web page). Accessed January 16, 2026.

Khan, Jahangir A.M., and Rashidul Alam Mahumud. 2015. “Is Healthcare a ‘Necessity’ or ‘Luxury’? An Empirical Evidence From Public and Private Sector Analyses of South-East Asian Countries?” Health Economics Review 5, no. 3. https://doi.org/10.1186/s13561-014-0038-y.

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

Lukens, Gideon, and Laura Harker. 2024. Closing Medicaid Coverage Gap Would Help Diverse Groups and Reduce Inequities. Center on Budget and Policy Priorities, July 2024.

Monaghan, Maureen. 2014. “The Affordable Care Act and Implications for Young Adult Health.” Translational Behavioral Medicine 2014, no. 2 (June): 170–174. https://doi.org/10.1007/s13142-013-0245-9.

Moore, Kyle K., and Adewale A. Maye. 2023. “Despite a Strong Labor Market, the Choice to Allow Pandemic-Era Public Assistance Programs to Expire Increased Poverty Across All Racial Groups in 2022.” Working Economics Blog (Economic Policy Institute), September 18, 2023.

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

Ortaliza, Jared. 2025. “An Additional 8.2 Million People Are Expected to Be Uninsured from Changes in the ACA Marketplaces.” Quick Takes (KFF), June 10, 2025.

Ortaliza, Jared, Matt McGough, and Cynthia Cox. 2025. The Affordable Care Act 101. KFF, October 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, M.N.: IPUMS, 2025. https://doi.org/10.18128/D010.V16.0.

Sartini, Marina, Alessio Carbone, Alice Demartini, Luana Giribone, Martino Oliva, Anna Maria Spagnolo, Paolo Cremonesi, Francesco Canale, and Maria Luisa Cristina. “Overcrowding in Emergency Department: Causes, Consequences, and Solutions—A Narrative Review.” Healthcare (Basel) 10, no. 9 (Aug 25, 2022): 1625. doi: 10.3390/healthcare10091625. PMID: 36141237; PMCID: PMC9498666.

Sommers, Benjamin D., Sharon K. Long, and Katherine Baicker. 2014. “Changes in Mortality After Massachusetts Health Care Reform: A Quasi-Experimental Study.” Annals of Internal Medicine 106, no. 9: 585–593. https://doi.org/10.7326/M13-2275.

Sparks, Grace, Lunna Lopes, Alex Montero, Marley Presiado, and Liz Hamel. 2025. Americans’ Challenges with Health Care Costs. KFF, December 2025.

In reality, this economic development model is fundamentally flawed as a strategy for improving living conditions for most Southerners. In fact, the Southern economic development strategy was never designed to help the vast majority of working Southerners; rather, it reflects efforts to ensure continued access to the cheap labor of Black people following emancipation, and that of Black and brown people more generally today. 

In this report, we describe the Southern economic development model in detail and document the historical evolution of various components of the model. We show how politicians and the wealthy across the South have used racism and drawn on notions of white supremacy to divide the population along racial, ethnic, nativist, and economic lines. This has prevented Southerners from coming together in solidarity to demand policies that would uplift everyone in the region.

Many Southern politicians try to obscure and distort the historical record on race and the origins and purposes of many of their policies. They point to population growth over the last 50 years and the increasing number of businesses—primarily in manufacturing—that have located in some Southern states to try to sell their deceptive narrative. In this report, and in the companion reports and fact sheets in this series, we will scrutinize such claims and draw on empirical data to illustrate how the Southern economic development model has failed most workers and families across the U.S. South.

This project exposes the exploitative policies and practices that impoverish Southerners across demographic groups and highlights their complex connections to the prevailing power structure in the South. This report begins with a detailed description of the Southern economic development model. What follows is a brief history of the origins of the model, which developed as a way for wealthy and powerful people to ensure continued access to the labor of Black people following the Civil War and to that of Black and brown Southerners today, for little or no compensation. Finally, the report emphasizes that civil rights for Black and brown Americans are intimately intertwined with the rights of workers, independent of race. This reality is recognized by many conservative economic and political leaders and has led to their vociferous opposition to unions, an institution that can create cross-racial solidarity, empower workers, and undermine the racial hierarchy across the region.

Figure A

What is the Southern economic development model?

The Southern economic development model is designed to enable businesses to extract labor from large pools of workers as cheaply as possible. Businesses in the South have particularly sought the labor of Black and brown Southerners. For over 300 years, these laborers have been used to cultivate cotton and tobacco, produce the food we eat, care for our children and the elderly, build the nation’s infrastructure, and perform many other critical jobs—often for little or no compensation. The labor provided by enslaved men and women was overwhelmingly unpaid.{{1}} After emancipation, many Black men and women—who faced limited employment opportunities—were often forced into sharecropping. They worked the land and grew crops on plantations owned by former enslavers who typically took half or more of the value of their crops (Bode 2020; USDA 2003). It was also common for Black men and women to work as porters and maids on Pullman railcars, where they were forced to rely on tips for most, if not all, of their income (Hasso 2021; Trotter Jr. 2019; Tye 2005). Today, incarcerated workers can be required to work without pay and they often are (ACLU and GHRC 2022; Mast forthcoming a).

The racist roots of this model have been obscured in favor of a more acceptable “pro-business” narrative. The pro-business narrative suggests that low wages, low taxes, anti-union policies, a weak safety net, and limited regulation on businesses creates a “rising tide that lifts all boats.”

Below we examine the key features of the Southern economic development model in detail. We then trace the development of this model over time, highlighting the ways civil rights for Black and brown Southerners are necessary for ensuring that all workers are empowered.

Low wages

Many states across the South promote low wages for many workers by the policies they implement or, in many cases, the policies they choose not to implement. For example, five Southern states—Mississippi, Louisiana, Alabama, Tennessee, and South Carolina—have no state minimum wage at all. Georgia has a minimum wage set at $5.15 per hour. Because the federal minimum wage is set at $7.25 per hour and $2.13 per hour for tipped workers, all workers across the South are supposed to be paid at least these minimums (EPI 2023).

Fewer than half of the Southern states (six states plus D.C.) have a minimum wage higher than the federal minimum wage of $7.25 per hour. In every other region, most states have minimum wages higher than $7.25 (EPI 2023). In fact, of the 20 states where the federal minimum wage applies, 10 are in the South.

Many Southern states have weak, if any, labor law enforcement. This means that workers in the South, who are already receiving low minimum wages, are particularly vulnerable to wage theft. This is especially true in industries such as food and drink services, agriculture, and retail (Cooper and Kroeger 2017).

Cooper and Kroeger (2017) analyze data on the share of workers who have experienced minimum wage violations—i.e., were paid less than the applicable minimum wage—in the 10 most populous U.S. states. They find that large shares of low-wage workers in Florida (24.9%), North Carolina (12.3%), Texas (10.8%), and Georgia (9.4%) have experienced minimum wage violations.

Failing to pay the minimum wage is just one of the ways employers cheat workers out of their earnings.{{2}} Employers who commit wage theft are rarely punished (Cooper and Kroeger 2017). In Florida, for example, there is no state Department of Labor to enforce wage standards; all of the state’s wage and hour enforcement is deferred to federal authorities. While Alabama, Delaware, Georgia, Louisiana, Mississippi, and South Carolina are states which technically do have Departments of Labor (DOLs), their DOLs do not make any concrete effort to recover wages that are stolen by employers (Mangundayao et al. 2021).

Wage theft victims can technically pursue action against an unscrupulous employer by submitting claims with the U.S. Department of Labor’s Wage and Hour Division. However, in the absence of in-state enforcement, businesses face little risk of being held accountable if they cheat their employees.

Notably, some Southern states have actively fought against federal government efforts to raise wages in their states. In 2022, the attorneys general of Texas, Louisiana, and Mississippi sued the federal government to prevent an increase in the wages of federal contractors (Texas v. Biden 2022).

It is important to understand that federal standards governing minimum wages, overtime, and even what activities are to be included in the number of hours worked were designed to keep wages low in the South. When the Fair Labor Standards Act (FLSA) was enacted in 1938 establishing these rules, large categories of workers—primarily agricultural workers, domestic workers, tipped workers, and public-sector workers—were excluded from its protections.

Agricultural workers, domestic workers, and tipped workers were excluded specifically because the formerly enslaved were limited almost entirely to these lines of work across the South; Southern lawmakers would not agree to vote for the legislation without these exclusions (Dixon 2021; Perea 2011). The practice of using tips to compensate service workers in the United States in fact proliferated in the 19th century after the end of slavery; it allowed businesses to hire the formerly enslaved without having to pay them, instead forcing them to rely on tips (Dixon 2021; Tye 2005).

When the FLSA was amended in 1966 to include service workers—among other coverage expansions—a special “tip credit” was created that allowed employers to count tips received by staff against a portion of the minimum wage the employer was required to pay, effectively creating a separate, lower minimum wage (Allegretto and Cooper 2014). Today, Southern tipped workers continue to rely heavily on their tips. The federal minimum wage for tipped workers, which applies in most Southern states, is only $2.13 per hour—a level that has remained unchanged since 1991 (Schweitzer 2021).

We continue to see the influence of racism and sexism in the low wages and lack of protections offered to workers in jobs that were historically held by enslaved people. Domestic work, for example, has historically been—and continues to be—performed by Black, brown, and immigrant women. These women work as nursing, psychiatric, and home health aides; personal and home care aides; and nursing assistants in private households. Across the South, Black women make up 43% of home health care workers, followed by Hispanic women at 17% (Childers, Sawo, and Worker 2022). Workers in these jobs remain undercompensated despite the clear value of this work—providing care that allows families to work and that allows elderly and disabled Southerners to age in their homes (Childers, Sawo, and Worker 2022; Robertson, Sawo, and Cooper 2022).

Minimal levels of regulation

Another key component of the Southern economic development model is regulating businesses as little as possible. As noted in the previous section, this means lack of regulation or enforcement around labor laws such as federal minimum wage laws, overtime laws, and safety standards for workers (Cooper and Kroeger 2017; Fleischman and Franklin 2017; FPI 2022; Terrell and St. Julien 2023; Waldman 2017). It also includes minimal regulation of business activities that pollute the air, water, and soil, which disproportionately impact Black and brown communities.

In Louisiana, there is a roughly 130-mile-long area between Baton Rouge and New Orleans running along the Mississippi River that is known as “Cancer Alley.” Cancer Alley has a heavy concentration of 200 or more oil refineries and petrochemical plants spewing toxic chemicals into the air, elevating cancer and other health risks among the area’s predominantly Black residents (Laughland 2023; Terrell and St. Julien 2022). Terrell and St. Julien (2023) found that lax permitting processes in the state have resulted in Black and brown communities across Louisiana having a seven to 21 times greater exposure to air pollutants—especially those from chemical manufacturers—compared with white communities.{{3}}

Younes et al. (2021) mapped the spread of cancer-causing chemicals in air pollution across the country that moves into residential neighborhoods and exposes residents. They identified places across the country where residents were exposed to hazardous chemicals, with or without their knowledge. Younes et al.’s study found that almost all states with the highest levels of exposure are Southern states, with Texas and Louisiana being the states whose residents have the greatest excess exposure. In Texas, for example, one of the largest refineries globally has put millions of pounds of toxic chemicals in the air over the years. The result is an excess risk of cancer in these areas of three to six times what is considered acceptable by the EPA (Younes et al. 2021).

These communities are exposed to these dangerous chemicals because of the lax regulations of policymakers in Southern states. For example, in Louisiana, land use plans which label many majority-Black districts as “industrial” or “future industrial” have been approved despite these being residential communities (Laughland 2023). And according to a lawsuit by residents of these communities, every request by these large industrial corporations to locate in predominantly Black communities is approved by local governments (Laughland 2023).

Instead of expanding their staffing for pollution control, states with the worst environmental exposures have actually cut funding to state environmental agencies. In Texas and Louisiana, the states whose residents face the highest rate of exposure to toxic chemicals, funding for state environmental agencies was cut by 35.2% and 34.8% respectively between 2008 and 2018. Funding was down by 33.7% in North Carolina, 32.8% in Delaware, 20.8% in Georgia, 20.3% in Tennessee, and 10% in Alabama. But not all Southern states cut their operational funding for state environmental agencies: Maryland, South Carolina, Arkansas, Oklahoma, Florida, and West Virginia increased their funding (EIP 2019).

Low income and corporate taxes

Next, the Southern economic development model seeks to severely limit corporate and personal income taxes, particularly any that would increase the tax burden on higher-income households and individuals.

The roots of the South’s tax structure

To understand public attitudes toward taxes across the South, it is important to consider the roots of the current stance on taxes in the Southern economic development model. Before the Civil War, taxes on enslaved people were paid primarily by wealthy plantation owners and constituted a significant source of revenue for states across the South (Hill et al. 2019; Lyman 2017).

After slavery was abolished, plantation owners represented themselves as “concerned taxpayers” who opposed compensating for lost state revenue from taxes on enslaved people with rising property taxes. They were joined by poor white farmers who would now also be subject to rising property taxes raised by newly—and temporarily—empowered Black political leaders.

These leaders were raising taxes to provide basic services such as public education and to rebuild infrastructure after the devastation of the Civil War. But wealthy Southerners stoked racial animus to divide poor and working-class Southerners along the lines of race and ensure majority support to implement highly regressive tax policies (Williamson 2021; Young 2023).

Low corporate and income taxes force reliance on regressive sales taxes

Today, Southern politicians, business interests, and other wealthy Southerners continue to seek to eliminate or severely limit corporate and personal income taxes. For example, several Southern states used temporary budget surpluses—surpluses resulting from the distribution of federal dollars to states intended to address COVID-19 and the associated recession—as an excuse to further cut already low income-tax rates (Das 2022b).

Corporate and personal income taxes tend to be progressive, meaning they are structured such that higher-income earners pay a larger share of their income in taxes, while lower-income earners pay a smaller share. But when collection of corporate and personal income taxes declines, states are forced to rely more heavily on sales and property taxes, which are regressive. When sales and property taxes are assessed, lower-income people end up paying a larger share of their income for those taxes than higher-income people do (Wiehe et al. 2018; Young 2023).

Texas, Florida, and Tennessee have no income tax. In other Southern states with income taxes, tax rates are so low that they fail to raise adequate revenue, requiring the state to rely on sales and property taxes and fees and fines to pay for many public services including education, public health, public safety, infrastructure, and other services.

In 2019, sales tax accounted for more than 40% of all state and local tax revenue in many Southern states. These included Tennessee (56.6%), Louisiana (53.3%), Florida (50.9%), Arkansas (49.6%), Alabama (48.0%), and Mississippi (45.5%). These shares are substantially higher than the 34.4% of state and local tax revenue that sales taxes account for nationally (Das 2022a).

To generate this revenue, these states had sales taxes ranging from 4.0% in Alabama to 7.0% in Mississippi and Tennessee. And while most states at least exempt food from sales taxes, as of January 2023, Mississippi, Alabama, and Oklahoma did not (Tax Policy Center 2023).{{4}}

This approach to taxes means that public services are underfunded in the South

Proponents of this tax model argue that it increases the incomes of all households by allowing them to keep more of their money. Further, they argue that it allows businesses to reinvest and grow their businesses, thereby increasing tax revenue. But this regressive approach to taxes simply means there is not sufficient revenue to properly fund education, health care, public transportation, water and sewer system maintenance, and the many other public services Southerners rely on (Das 2022b).

The lack of resources to provide services for ordinary Southerners is further exacerbated when state governments give huge subsidies to private companies. For example, Mississippi gave a $247 million subsidy to Steel Dynamics in 2022, and South Carolina spent $1.3 billion on a subsidy for Scout Motors in 2023 (Good Jobs First 2023a, 2023b). To illustrate how these subsidies harm South Carolinians specifically, we can consider the impact of abatements on public education. In fiscal year 2021, South Carolina public schools reported that they lost $534 million in property tax revenues to abatements, money that would have gone to funding school staff and providing services to students (Wen 2022). The districts that lost the most funding had a majority of students coming from low-income households that qualified for free or reduced-price lunches (Wen 2022). This harms students, families, and communities—with the harshest impacts on those facing the greatest hardships.

A weak safety net

The Southern economic development model is further characterized by a weak social safety net. Most Southern states offer relatively few and weak protections against hardship for individuals and families who suffer some kind of economic shock, such as the loss of a job, an illness, or the need to care for someone. This weak social safety net cements low-income Southerners’ precarity, further disempowering the labor force by making any economic shock all the more harmful. In this context, a Southern worker with little private savings is more likely to take or endure exploitive or underpaid work.

Southerners face greater insecurity when they lose their jobs

Unemployment insurance (UI) , is a crucial component of the social safety net, meant to ensure families have economic security in the face of a job loss by replacing some percentage of their prior earnings (Bivens and Banerjee 2021). During times of crisis, such as the COVID-19 recession, UI also helps stabilize the broader economy by enabling households to continue spending, which helps maintain overall consumer demand (Bivens et al. 2021). While the UI system is funded jointly by federal and state funds, it is the state that has primary control over who is eligible to receive benefits, the levels and duration of benefits, and how the system is financed (Bivens et al. 2021).

UI is also a system that, if properly designed, helps support workers’ bargaining power. By giving workers support when they lose a job, UI allows those workers to take the time necessary to find a job that matches their skills and that pays as well as the one they lost. Conversely, weak UI benefits force many workers to take the first available job—even if it suits their skills poorly or pays less than the job they lost.

While many states’ UI systems need reform, the level and ease of accessing benefits in many Southern states is particularly problematic. Data show that of the 10 states with the lowest maximum weekly UI benefit amounts, seven—Mississippi ($235), Alabama ($275), Florida ($275), Louisiana ($275), Tennessee ($275), South Carolina ($326), and North Carolina ($350)—are in the South (The Century Foundation 2023). Many Southern states also have particularly onerous requirements for accessing benefits, which are made available for incredibly short durations. For example, most states make standard UI benefits available for a maximum of 26 weeks. Only 13 states set their maximum number of weeks below 26, more than half of which are Southern states: Alabama (14 weeks), Arkansas (16), Florida (12), Georgia (14), Kentucky (12), North Carolina (12), South Carolina (20), and Oklahoma (16) (CBPP 2023b).

The fact that the states where most Black Americans live have the least accessible UI systems with the least generous benefits, shortest durations for receiving benefits, and some of the most onerous requirements is not a coincidence or an accident. The UI system as structured is rooted in a racist agenda: Southern Democrats agreed to support the New Deal only if states controlled access to UI and other social benefits. This allowed them to design systems that would limit Black workers’ access to benefits (Edwards 2020; Traub and Diehl 2022).

Southerners face barriers to health care access

Full participation in the economy—not to mention in one’s family and community—are much easier when one is healthy both physically and mentally. Unfortunately, far too many people in the United States lack access to quality, affordable health care. This problem is particularly salient across Southern states; Southerners are less likely to have access to health insurance than those living in other regions. In 2020, 7.7% of all children living in Southern states lacked health insurance coverage compared with 3.3% in the Northeast, 4.4% in the Midwest, and 4.9% in the West. For working age adults, the share was 16.4% in the South, 6.6% in the Northeast, 8.6% in the Midwest, and 11.3% in the West (Keisler-Starkey and Bunch 2021).

The 2010 Patient Protection and Affordable Care Act (ACA) included an expansion of Medicaid eligibility to adults with incomes up to 138% of the official poverty line. While most states have adopted and implemented the expansion, 10 states have failed to adopt it, seven of which are in the South: Mississippi, Alabama, Georgia, South Carolina, Florida, Tennessee, and Texas (KFF 2023).{{5}} This is one reason Southerners are less likely to have health insurance coverage, which is particularly concerning given high rates of illness and comorbidities across the South (Akinyemiju et al. 2016).

The failure to expand Medicaid creates additional challenges even for those who have insurance coverage but live in rural areas, denying increased revenue to many rural hospitals that were already facing closure (Levinson, Godwin, and Hulver 2023).

Southern states have some of the lowest levels of cash assistance for families with children

Aid to Families with Dependent Children (AFDC), a cash assistance program for poor families with children, was established in 1935 as Aid to Dependent Children (ADC).{{6}} In 1996, the Personal Responsibility and Work Opportunity Act (PRWORA) replaced AFDC with the Temporary Assistance to Needy Families (TANF). TANF differs from AFDC in several important ways. Under AFDC, states could receive unlimited federal matching funds. Under TANF, federal support is distributed to states through a block grant. TANF also has five-year lifetime limits on the receipt of benefits and requires that states increase their work participation rates for TANF recipients (DHHS n.d.).

TANF is funded by the federal government, but states determine benefit levels, set income and resource limits, and administer or oversee administration of the program. They have a great deal of discretion in how they use TANF funds because the specific goals of the program are so broad. The stated goals of the program are to (1) assist families in need so children can be cared for in their own homes; (2) reduce parental dependence on government by promoting job training, work, and marriage; (3) prevent out-of-wedlock pregnancies; and (4) encourage two-parent families (CBPP 2022; DHHS n.d.).

Under the first goal, states can provide direct cash assistance to families to provide for their children (CBPP 2022; DHHS n.d.). In 1997, 71% of TANF dollars were spent in direct cash assistance, but by 2020, this share had fallen to just 22% nationally (Azevedo-McCaffrey and Safawi 2022). There are, however, large variations in TANF spending by state. In 2021, 15 states spent 10% or less of TANF dollars to provide cash assistance to families. Almost half of these—Alabama, Arkansas, Delaware, Louisiana, Mississippi, North Carolina, and Texas—are in the South.{{7}} Alabama spent just 7% of their TANF dollars on general spending, most in cash dollars. They spent 1% of their TANF dollars on work supports, 11% on childcare, but 29% on “other” services (CBPP 2023a).{{8}} Mississippi spent 6% in general spending, with only 3% going to childcare, while 17% of spending fell under the “other” category (CBPP 2023c). Across the South, only the District of Columbia and Kentucky spent 30% or more of their TANF funds on direct assistance, and in Kentucky, more than half of those funds went to foster care for children fostered by relatives and adoption and guardianship subsidies (Azevedo-McCaffrey and Safawi 2022).

Despite spending millions of dollars on TANF-related activities, states had millions of unspent TANF dollars as of 2021.{{9}} For example, Alabama had $113 million in unspent TANF dollars in 2021—amounting to 122% of their $93 million block grant for the year (CBPP 2023a). At $98 million, Mississippi’s unspent TANF funds amounted to 113% of their $86 million grant for that year (CBPP 2023c). Texas and Oklahoma each had more than $300 million in unspent TANF funds (CBPP 2023d; CBPP 2023f). Tennessee was even worse, with $798 million in unspent funds (CBPP 2023e).

Compounding the impact of unspent TANF dollars are low benefit levels in many states, especially in the South. The maximum monthly benefit for a single mother with two children ranges from $204 in Arkansas to a high of $1,151 in New Hampshire. There are only four Southern jurisdictions with a benefit amount of $500 or more for a one adult three-person family: the District of Columbia ($665), Maryland ($727), Virginia ($587), and West Virginia ($542) (Thompson, Azevedo-McCaffrey, and Carr 2023).

The maximum nominal TANF benefit in 2022 is the same or lower than it was in 1996 in 16 states, seven of which—Arkansas, Delaware, Florida, Georgia, Kentucky, North Carolina, and Oklahoma—are in the South. The result is that the inflation-adjusted value of TANF benefits in these states is 45% to 56% lower than it was in 1996 (Thompson, Azevedo-McCaffrey, and Carr 2023).{{10}}

The current structure of TANF in many Southern states reflect efforts of politicians to control the behavior and reproduction of Black women and compel their participation in the low-wage labor market (Floyd et al. 2021; King v. Smith 1968; CBPP 2022). Historically, states have used concepts of “deservingness,” “suitable homes,” and the “man in the house” to exclude Black families from the program.

To be deserving, a mother needed to be widowed, have her husband be unable to provide due to disability, or have been abandoned by the children’s father “through no fault of the mother.” A home was “unsuitable,” by definition, if the mother was unwed or engaged in sexual activity outside of marriage (Floyd et al. 2021; Floyd and Pavetti 2022). The “man in the house” rule denied mothers benefits if a man was found in the house or if the mother was found to be sexually active even if no man lived in the house with her and her children. These rules applied regardless of whether the man the mother was involved with was the children’s father (Floyd et al. 2021; King v. Smith 1968; O’Connor 1969). Today, states with larger Black populations—primarily Southern states where most of the Black population lives—tend to have more stringent requirements for accessing TANF benefits, and those benefits tend to be more meager (Shrivastava and Thompson 2022).

Anti-union policies

Crucially, advocates of the Southern economic development model vociferously oppose unions and other collective actions in which workers band together—especially across racial, ethnic, and immigration statuses. Research has shown that higher rates of unionization are associated with higher wages, better working conditions, less inequality, less racial animosity, greater economic mobility, and greater civic participation (Banerjee et al. 2021; Freeman et al. 2015; Frymer and Grumbach 2020; Mishel 2021; Mishel, Rhinehart, and Windham 2020). Given these effects, it is unsurprising that states across the South have adopted policies that hamstring workers’ ability to form unions, which pose a threat to the Southern economic development model.

First, unions threaten the Southern economic model because they have historically been the primary counterweight against businesses seeking to keep workers’ wages and benefits low. In this way, unions threaten the central economic goal of the Southern model, which is to keep labor costs as low as possible. Second, the labor movement in the U.S. today is one of the foremost institutions promoting cross-racial solidarity. Strong unions could potentially undermine the racial and class divisions that the wealthy and their political supporters have used to promote and preserve the Southern model. Third, they are a key driver of greater equity in the workplace; racial and gender wage and wealth gaps are smaller among unionized workers, and union contracts ensure that all workers receive negotiated benefits. Further, unions protect Black and brown workers from discriminatory, retaliatory, or other arbitrary firing with the “just cause” and “due process” protections they provide (Bivens et al. 2023; EPI 2021; Gould and McNicholas 2017). Finally, unions threaten the Southern economic development model because they educate and encourage civic engagement among union members. Unions shape how voters understand their interests by discussing issues and candidates. They also activate their members to actively engage in campaigns and to turn out voters (EPI 2021; Feigenbaum, Hertel-Fernandez, and Williamson 2018).

Race and the Southern economy

Historically, the economy of the American South was largely agrarian and heavily dependent on cotton, tobacco, sugar cane, and other labor-intensive agricultural products (Baptist 2014, Conlin 2018). The intense need for large pools of labor and the desire to retain the wealth generated from that labor lies at the heart of the economic policies implemented across the South since even before the colonies became the United Sates. This includes policies of enslaving African people, supporting child labor, opposing unions, and allowing corporations to pollute the environment and poison the air and water—all in the name of keeping costs low and profits high.

Even as workers have fought to improve working conditions, many Southern lawmakers have used their power to ensure employers in their states retain access to large numbers of workers at poverty-level wages. While the economy was predominantly agrarian in the past, today there are significantly more auto manufacturing, professional, technological, and business services jobs across the South. There remain many jobs in oil and gas production, animal slaughter and processing, and service jobs as well. Yet even as the industrial composition of the South has modernized, much of the region’s business practices, labor standards, and underlying political economy has not. Below is a brief historical overview of the battle to maintain a low-wage labor force, particularly one comprised of Black and brown workers.

Extracting cheap labor from indentured and enslaved people

Since before the founding of the United States, the states that would become the American South have relied on cheap labor to drive economic growth and generate the illusion of widespread prosperity. The colonies imported white indentured servants and African people to meet their labor needs. The African people would eventually shift from being indentured to becoming enslaved people (Bennett 1962; Hannah-Jones 2021). Their enslavement ensured a consistent source for Southern businesses and landowners labor needs, while minimizing the costs of that labor. Plantation owners in the South used as much cruelty as was necessary to drive ever-increasing productivity from those enslaved Africans who worked in the fields producing ever-higher yields (Baptist 2014). This not only benefited wealthy Southern planters, but also Northern industrialists, financiers, and universities. The cotton that was produced in the South was processed in Northern factories and financed by Northern banks, creating wealth for everyone except those whose labor produced the wealth (see Baptist 2014).

Little changed following emancipation

Following the Civil War, the South remained tied to an agricultural economy. Instead of relying on enslaved people to provide much of the backbreaking labor required, they shifted to a sharecropping and tenant-farmer model which still relied on “freed” Black men and women’s labor. Plantation owners would “lend” newly freed men and women resources for sharecropping, but they ensured the vast majority would never be paid enough to pay off their debts. This was a system known as debt peonage which effectively meant that most freed Black men and women were often forced to work on the same plantations and for the same wealthy white landowners who had enslaved them. This effectively tied sharecroppers to their employers and, for many Black sharecroppers, their conditions under this system were difficult to distinguish from bondage.

States across the South also employed many other ways of ensuring they could retain access to Black labor for little or no compensation. They passed sets of laws known as Black Codes. These codes were designed to closely control the actions of Black men and women and maintain the racial hierarchy. These laws made it illegal for Black people to drink from white water fountains, attend white schools, or have a supervisory position over white workers (Dewey 1952; Hill 1965). In fact, Black men and women were often limited to the same menial jobs they held before the Civil War and were often pushed out of skilled work they had previously performed (Hill 1965). And to ensure that Black people would have no other choice but to take these jobs, it was common to require proof of employment from Black men and women. If they could not prove they were employed, they could be arrested and “rented” out to work on plantations, to build railroads, or just to provide general unskilled labor. Black women were often forced back into the same domestic work roles in white homes or in agricultural work alongside Black men. These laws were justified using the constitutional loophole in the 13th Amendment that allows “slavery” and “involuntary servitude” as a punishment for crime (Alexander 2020; Mercer 2022).

Extracting cheap labor from Black and brown Southerners today

This loophole enables Southern states to incarcerate a disproportionate number of Americans. For every 100,000 people nationally in 2021, the U.S. had 664 people incarcerated in prisons, jails, and other forms of confinement. This rate far exceeds the incarceration rates of our peer nations, such as the United Kingdom (129 for every 100,000 people), Canada (104), France (93), and many other democratic nations (Widra and Herring 2021).

While the national U.S. incarceration rate dwarfs those of our peers, the prison and jail incarceration rates of 13 of the 16 Southern states and the District of Columbia exceed the national average, with Louisiana (1094), Mississippi (1031), Oklahoma (993), and Georgia (968) having the highest rates of incarceration (Mast forthcoming a; Widra and Herring 2021). Further, Black Americans are disproportionately represented among the prison populations. While Black people are just over 32% of the population in Louisiana, they are 66% of those incarcerated in prisons and 57% of those in jails (PPI 2021a). In Mississippi, they are 37% of the population but 61% of the prison and 49% of the jail population (PPI 2021b). In Oklahoma they are 7% of the population but are 27% of the prison population and 23% of those incarcerated in jails (PPI 2021c).

Of the 1.2 million state and federal prisoners in the U.S., nearly 800,000 are forced to work in the prisons themselves, in prison industries, for other state or local government agencies, or for private-sector businesses (ACLU and GHRC 2022; Mast forthcoming a, PPI 2017).{{11}} These prisoners, disproportionately Black men, are often paid very low wages, if they are paid at all—the vast majority of work done by prisoners in Alabama, Arkansas, Florida, Georgia, Mississippi, South Carolina, and Texas is unpaid (ACLU and GHRC 2022). In many instances, mass incarceration effectively reinstates the slave system (Alexander 2020).

Hispanic men and women, especially immigrant workers, also continue to face exploitation by wealthy business owners and corporations across the South. According to Gershon (2020), by the early 1960s, 95% of meatpacking workers outside the South were unionized with wages comparable to those of steel production workers. Meatpacking companies responded by moving operations to more rural areas, and, by the 1990s, they began seeking immigrant workers to keep wages low. Black workers make up the majority of meat processing workers in states across the South (56.4% in Maryland, 67.1% in South Carolina, and 73.1% in Mississippi) but the representation of immigrant and Hispanic workers in these grueling, low-wage jobs is high. Hispanic workers make up 25.8% of the South’s meat processing workers and 26.2% are foreign-born workers (Gershon 2020; Hickey forthcoming).{{12}}

The Southern economic development strategy helps maintain the racial hierarchy

Race and ethnicity have long been used by politicians and varied economic interests to divide Southerners along racial lines and increase animosity and distrust between groups (Haney López 2014; McGhee 2021). Southern politicians fearmonger about immigrants or Black and brown people receiving “unearned” benefits as the population of young Black and brown Southerners continues to increase. This is often achieved by drawing on stereotypes or racist tropes. One example is when politicians make receiving benefits (e.g., food stamps or Medicaid) conditional upon fulfilling work requirements or passing drug tests.{{13}} Such practices create deep divisions, which are likely among the key reasons why the South has not become more progressive—given that Black and brown communities generally favor more progressive policies and politicians—despite the increasing diversity of the population.

In the current political climate, it has become common, particularly among conservative politicians and commentators, to hear arguments that “American” voters are being disenfranchised by voters who vote “illegally” or who “cheat.” Typically, “American” appears to apply to white voters while “cheaters” and “illegal” voters seem to refer to Black and brown Americans who are simply casting their ballots legally. For example, the places where challenges and lawsuits were filed in the 2020 presidential election were primarily places with large Black and brown populations (Phillips 2020).

We also see that in many states across the country, with the South being well represented, there is a push to privatize public education and to push public dollars into privately run charter schools (Pierce 2021). Pierce (2021) writes that this move toward privatization was largely in response to the Supreme Court decision in Brown v. Board of Education which ordered states to desegregate. In other words, the push towards privatizing education in the United States aimed to preserve the racial hierarchy. Similarly, it is not uncommon to hear arguments about immigrants coming to the United States and living on public benefits (Thomas 2020). The goal of these arguments is to make the broader white population feel that their tax dollars are going to people who are deemed “undeserving” and increase the white public’s support for policies that would exclude Black and brown Southerners.

Using dog whistles to divide

Politicians and other influential and powerful interests activate racism in ways that they and their supporters can deny by using dog whistles. A dog whistle in political speech refers to discourse that uses a code that specific segments of the population understand as racial but that gives people cover to deny that they are being racist to those who abhor racism. Haney López (2014) refers to the practice of dog whistles as “a steady drumbeat of subliminal racial grievances and appeals to color-coded solidarity” (3).

The development of the concept of the “taxpayer” provides one clear example of this practice. The common appeal to the “taxpayer” developed out of racism and white supremacy. During the Reconstruction period directly following the abolition of slavery, large Black populations in states like South Carolina were large enough, especially with the support of some poor whites, to elect Black leaders. Many poor white men voted in support of policies that required raising taxes on white landowners to fund things like schools, roads, and a basic safety net. Williamson (2021) reports that the wealthy white landowners developed the identity of the “taxpayer” as a means of dividing poor white landowners and Black freedmen. Since most Black freedmen lacked any substantial landholdings, wealthy landowners could engender hostility among poor white landowners toward Blacks, even if their material conditions were not dramatically different. This approach allowed powerful interests to oppose paying taxes for general welfare and encouraged poor white Southerners—especially poorer landowners who would also be taxed—to identify with the wealthy white landowners rather than with Black elected officials (Williamson 2021).

When the concept of “taxpayer” is invoked, it is used as a dog whistle to imply that “undeserving” people—particularly “undeserving” Black, Hispanic, and immigrant people—will take advantage of public resources paid for by hardworking white people who pay their own way and do not ask for “handouts.” This also instills the idea that asking for assistance is shameful, which further reinforces the status quo.

Meanwhile, poor, working- and middle-class workers of all racial backgrounds—especially Black and brown men and women who are disproportionately low-income—pay much larger shares of their incomes for sales, income, social security, and other taxes (see Mast forthcoming b).

The conservative strategy

While these dog whistles have been part of the conservative strategy at least since Reconstruction, they have been essential in convincing the majority to support racist, exploitative, and regressive politicians and policies. For example, John Ehrlichman, Assistant to the President for Domestic Affairs under then President Richard Nixon, admitted that the Nixon administration intentionally linked anti-war hippies and Black people with drug use and then proceeded to heavily criminalize drugs in order to “arrest their leaders, raid their homes, break up their meetings, and vilify them night after night on the evening news” (Baum 2016). Campaigns based on “law and order” or appeals to increase criminal punishments for violence and/or drug use were thinly veiled racial appeals. This was especially the case following the tumultuous era of the Civil Rights Movement when Black Americans were demanding equality. Many white Americans opposed that equality, and Black rebellions—often called “riots”—broke out across the nation. These so-called riots were in response to police violence, high poverty rates, poor housing, and the many other inequities that Black communities were, and are, facing (Alexander 2020; Haney López 2014; Purnell and Hinton 2021).

When Ronald Reagan kicked off his presidential campaign, he began in the South, specifically in Philadelphia, Mississippi, which is known for the murders of James Chaney, Andrew Goodman, and Michael Schwerner for trying to register Black people to vote. Reagan used this first campaign stop to state his support for states’ rights, a signal to segregationists to support him (Sharon 2021). As his campaign moved forward, he became ever-more explicit in his racist appeals. He painted a picture of a “Chicago welfare queen,” who drove a Cadillac while using 80 different names to receive Medicaid, food stamps, and welfare totaling over $150,000 annually and of “a strapping young buck” buying T-bone steaks (presumably with food stamps) while the implied hardworking white person whose taxes provided the food stamps could only afford to buy hamburger for their family (Haney López 2014).

The key to the effectiveness of dog whistles is to deny that they have anything to do with race. It is common to hear political and economic leaders claim that it is in fact the people calling out the racism that are racist. Fortunately, we have the words of one of these conservative political leaders who was willing to admit this was indeed what they were doing. According to Lee Atwater, they had to adjust the way they used race in their electoral strategy:

You start out in 1954 by saying, “Nigger, nigger, nigger.” By 1968 you can’t say “nigger”—that hurts you, backfires. So, you say stuff like, uh, forced busing, states’ rights, and all that stuff, and you’re getting so abstract. Now, you’re talking about cutting taxes, and all these things you’re talking about are totally economic things and a byproduct of them is, blacks get hurt worse than whites.… (Perlstein 2012)

This shift can also be seen in the work of MacLean (2021). She describes how white supremacists—who wanted to maintain Jim Crow segregation in education and who had been explicitly using race to resist the Brown v. Board of Education decision—learned from Milton Friedman that they could make more progress by using more “neutral” language. They thus began saying “personal liberty,” “government failure,” and the “need for market competition” to move toward school vouchers and private schools to preserve Jim Crow segregation.

In many of the Southern states with the largest Black populations—such as Mississippi, Louisiana, and Georgia—state legislatures have been more likely to implement regressive policies that produce higher negative outcomes such as poverty, food insecurity, incarceration, reliance on fees and fines to fund government, high infant and maternal mortality, and a host of other negative outcomes. Although all low- and middle-income Southerners are negatively impacted by these policies, Black Southerners experience the worst outcomes.

Despite large and growing Black and brown populations in many Southern states, communities and workers of color still struggle to enact policy changes that would improve their economic conditions. One reason for this is state lawmakers—who are overwhelmingly white—enacting “preemption” laws to prevent elected officials in cities and counties from enacting their own local policies. Southern legislatures have preempted local governments from passing laws on everything from environmental protections and progressive taxes to minimum wages and paid sick day requirements (Blair et al. 2020). State lawmakers further interfere with these communities’ ability to improve economic conditions through restrictions on voting and practices such as gerrymandering legislative districts. Gerrymandering disempowers and dilutes the voting power of Black and brown communities, denying them greater representation in state legislatures. Yet the Black and brown populations of cities, counties, and states across the South will keep growing—even as state lawmakers continue their efforts to prevent them from deviating from the Southern economic development model.

Civil rights and labor rights

While the fight for civil rights is often discussed separately from the fight for workers’ rights, these movements have often been one and the same. Race and racism have been leveraged to weaken both movements. Dr. Martin Luther King Jr., the face of the Civil Rights Movement in the 1950s and 1960s, was standing with striking sanitation workers in Memphis when he was assassinated. He was fighting for the poor and for workers and families independent of race and ethnicity.

Whenever civil rights and labor leaders have been able to bring Black and white workers together to fight to improve their working conditions, Southern elites wielded notions of white supremacy and implemented policies to undermine labor generally and labor unions specifically. This was designed to ensure permanent divisions along racial lines and maintain Jim Crow race and labor relations (Pierce 2017). While right-to-work laws were pushed across the country, they initially took root in the Southern states where—due to racial terrorism, poll taxes, literacy tests, and outright violence—most Black people (and many poor white people) could not vote. Working together would have empowered both Black and white workers, but it also would have undermined the racial order in the South.

According to Pierce (2017) and Griffith (1988), while unions like the Congress of Industrial Organizations (CIO) were organizing both Black and white workers, the Christian American Association was raising money from wealthy Southern planters and industrialists to get anti-union laws enacted. This same group was also enlisted to help fight against the New Deal. Similarly, when Black and white workers came together to form the Knights of Labor following the Civil War in Virginia, Black voters were disenfranchised once white politicians were able to regain control of state government and white workers were offered privileges not available to Black workers to maintain the racial hierarchy (Scribner 2021).

Opponents to interracial solidarity and union organizing warned:

White women and White men will be forced into organizations with Black African apes…whom they will have to call ‘brother’ or lose their jobs. (Pierce 2017)

Other material designed to maintain the racial divisions include Figure B, a flyer produced to motivate support for right-to-work in North Carolina, which highlights that George Benjamin, a Black man, would be in charge of organizing white workers.

Figure B. This flyer was an effort to mobilize racial prejudice against the CIO. The irony here is that, according to Griffith (1988), the Tobacco Workers International Union under criticism was an American Federation of Labor (AFL) affiliate, one which did not share the CIO’s progressive position on interracial organizing. (Photo by David Haberstich. Courtesy of Donald McKee, cited in Griffith 1988.)

In 1944, Arkansas and Florida became the first two states to adopt the anti-worker right-to-work laws. When the key leader of these efforts, Vance Muse, was called out for his use of racism to achieve his goals, he reportedly said “They call me anti-Jew and anti-nigger. Listen we like the nigger—in his place” (Pierce 2017).

Southern politicians and employers were not only interested in using their state and local policies to maintain the racial hierarchy; they also wielded power at the national level as well, threatening to oppose federal legislation that did not exclude Black workers and families from the protections and benefits of federal laws. The exclusion of Black workers was not explicit in the legislation. Testimony and debates over federal legislation leaves little doubt about their goals, however. For example, when the Fair Labor Standards Act was being debated, Southern Democrats threatened to tank the legislation if Black workers were included:

The organized Negro groups of the country are supporting [the FLSA] because it will, in destroying state sovereignty and local self-determination, render easier the elimination and disappearance of racial and social distinctions…. (Congressman Cox of Georgia, cited in Perea 2011)

Another congressman, Representative J. Mark Wilcox of Florida remarked:

There has always been a difference in the wage scale of white and colored labor. So long as Florida people are permitted to handle the matter, this delicate and perplexing problem can be adjusted; but the federal government knows no color line and of necessity it cannot make any distinction between the races. We may rest assured, therefore, that …it will prescribe the same wage for the Negro that it prescribes for the White man. …Those of us who know the true situation know that it just will not work in the South. You cannot put the Negro and the White man on the same basis and get away with it. (Perea 2011)

It was not just politicians; however, employers shared the same sentiments with one employer stating:

A Negro makes a much better workman and a much better citizen, insofar as the South is concerned, when he is not paid the highest wage. (Perea 2011)

These attitudes and threats to the passage of important legislation was not limited to the FLSA. The same threats were made to ensure the exclusion of agricultural and domestic workers—jobs primarily filled by Black men and women across the South—from the protections of the National Labor Relations Act. As noted above, racism and maintaining the racial hierarchy in the South was at the root of many policies including taxation, policing, and economic policies. In institution after institution, efforts were made to ensure that Black labor could be extracted as cheaply as possible. And while there was also a great desire to get white labor cheaply as well, there was a clear sense that white workers must always be above Black workers to maintain the racial hierarchy (Perea 2011; Dixon 2021).

The changing demography of the South is an opportunity to uplift everyone

The American South is a dynamic region of the country with a growing population that is increasingly diverse. Made up of 16 states and the District of Columbia—including Texas and Florida, two of the largest states in the country—the South is home to almost four in 10 Americans. These are Americans whose lives and livelihoods are heavily shaped by the state and local policies implemented across the region. Not only is the South the largest region of the country, but it is also the fastest growing. Figure C shows that over the last few decades the share of the population living in the South grew faster and larger than the population of any other region. In fact, the share of Americans living in the Midwest and the Northeast declined.

Figure C

This growth in the population of the South reflects a natural increase in the region—more births than deaths. It also reflects international immigration–especially across the Southern border from Mexico, Central and South America, and the Caribbean—as well as domestic migration to the region. While politicians point to population growth across the South to argue for the positive impacts of their policies, this increase tends to be concentrated in specific states and cities. For example, while Texas and Florida had the highest population growth from 2021 to 2022, Louisiana, West Virginia, Maryland, and Mississippi were in the top 10 for population decline (U.S. Census Bureau 2022).

Many of those moving to the South from other regions, including New York and California, are seeking cheaper housing (Henderson 2016). Land generally tends to be cheaper across the South, contributing to housing that is much more affordable than places like California and New York. Texas and Florida also benefit from immigration across the Southern border and the Caribbean.

The widespread use of air conditioning during the 1960s and 1970s further contributed to population growth across the region. The oppressive heat during summer months along with high humidity left many Southerners in misery. This has been fundamentally changed, however, by air conditioning in cars, homes, and businesses (Arsenault 1984). As Figure C shows, before 1980 the share of the population living in the South fluctuated around 30–31%. From 1980 onward, it has continued to increase in each subsequent decade.

This report highlights the true origins of key components of the failed Southern economic development strategy—the extraction of labor from Black Americans after the end of slavery and from Black and brown Americans today as cheaply as possible. The emphasis on low wages, lack of regulation, regressive taxation and giveaways to corporations has not, and cannot, produce broadly shared prosperity. It was never designed to do so.

The youthful and increasingly diverse population across the South, however, presents a great opportunity to shift the policy landscape across the region. While wealthy and powerful people across the region have fought long and hard to keep the people divided and to maintain the racial hierarchy that maintains these divisions, Southerners can choose a different way forward. Southerners can demand an economic strategy that raises wages, strengthens the safety net, implements fair and progressive taxation, and perhaps most importantly, empowers workers to act on their own behalf by unionizing. This approach can help eliminate the racial hierarchy that holds all Southerners back from an economically secure future. But, as long as the powerful can keep low- and middle-income Southerners focused on racial, political, and economic divisions, they can keep them from seeing what they have in common: They are all being exploited by those at the top.

Notes

{{1.}} Enslaved men and women might be “hired out” to a third party if their labor was not immediately needed. In some instances, they might be allowed to retain a portion of the money generated (Butler 2022).

{{2.}} See Cooper and Kroeger 2017 for descriptions of other forms of wage theft.

{{3.}} While “Cancer Alley” is a high-profile area in the environmental racism literature, Terrell and St. Julien (2023) report that there are other industrial areas of the state with higher exposure to these toxins.

{{4.}} As of September 1, 2023, the sales tax on food in Alabama dropped from 4.0% to 3.0%. For more information, see Sell 2023.

{{5.}} North Carolina has adopted the expansion of Medicaid, but as of September 2023, it had not yet been implemented; implementation is dependent on the passage of the 2023–2024 budget. Virginia and Oklahoma adopted the Medicaid expansion in 2016 and 2021, respectively (KFF 2023).

{{6.}} ADC was changed to AFDC in 1962.

{{7.}} The remaining states spending 10% or less of funds in direct assistance were primarily in the Midwest, with two in the Northeast. The Midwestern states spending 10% or less are North Dakota, Michigan, Illinois, Indiana, Missouri, and Kansas. The Northeastern states are Connecticut and New Jersey. See the complete map here.

{{8.}} “Other” includes a wide range of expenditures across states, but can include short-term benefits for families in crisis; transfers to the social services block grant; after school programs; pregnancy prevention; and programs promoting two-parent families (Azevedo-McCaffrey and Safawi 2022).

{{9.}} States can carry unspent federal TANF dollars over into future years.

{{10.}} To a see graphic representation of change in the real value of TANF benefits, see here.

{{11.}} Mast (forthcoming a) is a fact sheet focused on mass incarceration and how it continues the tradition of extracting cheap labor from primarily Black Americans in states across the South. It describes ways that Black Americans continue to have their labor extracted by the state or leased out to private companies.

{{12.}} Hickey forthcoming includes fact sheets that will address the experiences of immigrant workers and provide a deep dive on domestic workers and food processing workers, especially meat processing workers.

{{13.}} Arkansas Department of Human Services 2023 and Reuters Fact Check 2022 are examples of these dog whistles.

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Many states across the Southern United States{{1}} employ an economic model that prioritizes business interests and the wealthy over ordinary citizens. This model—which we refer to in this report as the “Southern economic development model”—is characterized by low wages, low taxes, few regulations on businesses, few labor protections, a weak safety net, and vicious opposition to unions. The model is marketed as the way to attract businesses into Southern states, with the implicit promise that this will lead to an abundance of jobs and shared economic prosperity for all Southerners.

The reality is this economic development model is fundamentally flawed as a strategy for improving living conditions for most Southerners. In fact, the Southern economic development strategy was never designed to help the vast majority of working Southerners; rather, it reflects efforts to ensure continued access to the cheap labor of Black people following emancipation. Today the cheap labor sought is increasingly diverse, yet it is still overwhelmingly made up of Black and brown workers across the region.

In this report, we use empirical data to show that the Southern economic development model has failed to provide economic security for workers and families across the South. In fact, the South lags other regions of the country on most indicators of economic health.{{2}} We also show—through historical context and case examples—how the Southern economic development model continues to serve as a means of maintaining racial hierarchies across the South.{{3}}

What characterizes the Southern economic development model?

To maintain the disproportionate levels of wealth and power enjoyed by many Southern politicians, corporate interests, and many wealthy and powerful people across the nation, businesses in the South have relied on access to large pools of cheap labor.

Businesses in the South have particularly depended on the labor of Black and brown Southerners. These laborers are used in cotton and tobacco fields, to produce the food we eat, to care for our children and the elderly, to build the nation’s infrastructure, and to perform many other jobs for little or no compensation.

Enslaved Africans were not paid at all. After the end of slavery, many Black workers, such as the Pullman porters, were forced to rely on tips. Today, while slavery is illegal in most cases, incarcerated workers can be—and often are—required to work without pay (ACLU and GHRC 2022). Below, we discuss other ways worker’s wages are kept low or kept from them entirely.

The racist roots of this model have been obscured and have been replaced by a more acceptable “pro-business” narrative. The pro-business narrative suggests that low wages, low taxes, anti-union policies, a weak safety net, and limited regulation on businesses creates a rising tide that “lifts all boats.”

Below we examine the key features of the Southern economic development model in detail.

Low wages

Many states across the South promote low wages for many workers by the policies they implement or, in many cases, the policies they choose not to implement.

For example, five Southern states—Mississippi, Louisiana, Alabama, Tennessee, and South Carolina—have no state minimum wage at all. Georgia has a minimum wage set at $5.15 per hour. Because the federal minimum wage is set at $7.25 per hour and $2.13 per hour for tipped workers, all workers across the South are supposed to be paid at least these minimums (EPI 2023).

Fewer than half of the Southern states (six states plus D.C.) have a minimum wage higher than the federal minimum wage of $7.25 per hour. In every other region, more than half of states have minimum wages higher than $7.25 (EPI 2023).

Because many Southern states have weak, if any, labor enforcement, wage theft is common across the South. That means some workers are not even paid these too-low minimum wages. This is especially true in industries like food and drink services, agriculture, and retail (Cooper and Kroeger 2017).

Cooper and Kroeger (2017) analyze data on the share of workers who have experienced minimum wage violations—i.e., were paid less than the applicable minimum wage—in the 10 most populous U.S. states. They find that large shares of workers in Florida (24.9%), North Carolina (12.3%), Texas (10.8%), and Georgia (9.4%) have experienced minimum wage violations.

Failing to pay the minimum wage is just one of the ways employers cheat workers out of their earnings.{{4}} Employers who commit wage theft are rarely punished (Cooper and Kroeger 2017). In Florida, for example, there isn’t a state department of labor to enforce wage standards; employers therefore have no reason to fear being caught or punished. In Alabama, Delaware, Georgia, Louisiana, Mississippi, and South Carolina—which technically do have departments of labor (DOLs)—the DOLs do not in practice make any effort to recover wages that are stolen by employers (Mangundayao et al. 2021).

Notably, some Southern states have actively fought against federal government efforts to raise wages in their states. In 2022, the attorneys general of Texas, Louisiana, and Mississippi sued the federal government to prevent an increase in the wages of federal contractors.{{5}}

It is important to understand that federal standards governing minimum wages, overtime, and even what activities are to be included in the number of hours worked were designed to keep wages low in the South. When the Fair Labor Standards Act (FLSA) was enacted in 1938, establishing these rules, large categories of workers—primarily agricultural workers, domestic workers, tipped workers, and public-sector workers—were excluded from the FLSA’s protections.

Agricultural workers, domestic workers, and tipped workers were excluded specifically because the formerly enslaved were limited almost entirely to these lines of work across the South; Southern lawmakers would not agree to vote for the legislation without these exclusions (Dixon 2021; Perea 2011). As noted above, the practice of using tips to compensate service workers in the United States began in the 19th century after the end of slavery. This practice allowed businesses to hire the formerly enslaved without actually having to pay them (Dixon 2021; Tye 2005).

When the FLSA was amended in 1966 to include service workers—among other coverage expansions—a special “tip credit” was created that allowed employers to count tips received by staff against a portion of the minimum wage the employer was required to pay—effectively creating a separate, lower minimum wage (Allegretto and Cooper 2014). Today, Southern tipped workers continue to rely heavily on their tips. As noted above, the federal minimum wage for tipped workers, which applies in most Southern states, is only $2.13 per hour—a level that has remained unchanged since 1991 (Schweitzer 2021).

We continue to see the influence of racism and sexism in the low wages and lack of protections offered to workers in jobs that were historically held by enslaved people. Domestic work, for example, historically has been—and continues to be—performed by Black, brown, and immigrant women. These women work as nursing, psychiatric, and home health aides; personal and home care aides; and nursing assistants in private households. Across the South, Black women make up 43% of home health care workers, followed by Hispanic women at 17% (Childers, Sawo, and Worker 2022). But workers in these jobs remain undercompensated despite the clear value of this work—providing care that allows families to work and that allows elderly and disabled Southerners to age in their homes (Childers, Sawo, and Worker 2022; Robertson, Sawo, and Cooper 2022).

Minimal levels of regulation

Another key component of the Southern economic development model is ensuring that businesses aren’t “hampered” by regulation. This includes minimal regulation of business activities that pollute the air, water, and soil. It also means lack of regulation or enforcement around labor laws such as federal minimum wage laws, overtime laws, or safety standards for workers (Cooper and Kroeger 2017; Fleischman and Franklin 2017; Florida Policy Institute 2022; Terrell and St. Julien 2023; Waldman 2017).

Issues resulting from weak regulatory standards can be particularly widespread in Black and brown communities (Donaghy et al. 2023). Terrell and St. Julien (2023), for example, found that, due to a lax state permitting process, these communities across Louisiana had a seven to 21 times greater exposure to air pollutants, especially those from chemical manufacturers, compared with white communities. Black and brown communities experience similar disproportionate impacts from coal ash, which contains toxic metals that pollute the air and water in North Carolina and other states (Bienkowski 2016; SELC 2019).

Low income and corporate taxes

Next, the Southern economic development model seeks to limit corporate and personal income taxes, particularly any that would increase the tax burden of higher-income households and individuals.

The roots of the South’s tax structure

To understand attitudes toward taxes across the South, it is important to understand the roots of the current stance on taxes in the Southern economic development model. Before the Civil War, taxes on enslaved people—considered the private property of slaveholders—were paid primarily by wealthy plantation owners and constituted a significant source of revenue for states across the South (Williamson 2021).

After slavery was abolished, plantation owners represented themselves as “concerned taxpayers” who opposed rising property taxes. They were joined by poor white farmers who would now also be subject to rising property taxes raised by newly—and temporarily—empowered Black political leaders.

These leaders were raising taxes to provide basic services such as public education and to rebuild infrastructure after the devastation of the Civil War. But wealthy Southerners stoked racial animus to divide poor and working-class Southerners along the lines of race and ensure majority support to implement highly regressive tax policies (Williamson 2021; Young 2023).

Low corporate and income taxes force reliance on regressive sales taxes

Today, Southern politicians, business interests, and other wealthy Southerners continue to seek to eliminate or limit corporate and personal income taxes. For example, several Southern states used temporary budget surpluses—surpluses resulting from the distribution of federal dollars to states intended to address COVID-19 and the associated recession—as an excuse to further cut already low income-tax rates (Das 2022a).

Corporate and personal income taxes tend to be progressive, meaning they are structured such that higher-income earners pay a larger share of their income in taxes, while lower-income earners pay a smaller share. But when collection of corporate and personal income taxes declines, states are forced to rely more heavily on sales and property taxes, which are regressive. When sales and property taxes are assessed, lower-income people end up paying a larger share of their income for those taxes than higher-income people do (Wiehe et al. 2018; Young 2023).

Texas, Florida, and Tennessee have no income tax. In other Southern states, income tax rates fail to raise adequate revenue, requiring those states to rely on sales and property taxes and fees and fines to pay for many public services, including education, public health, public safety, infrastructure, and other services.

In 2019, for example, more than 40% of all state and local tax revenue came from sales taxes in many Southern states. These included Tennessee (56.6%), Louisiana (53.3%), Florida (50.9%), Arkansas (49.6%), Alabama (48.0%), and Mississippi (45.5%). These shares are substantially higher than the 34.4% of state and local tax revenue that sales taxes account for nationally (Das 2022a).

To generate this revenue, these states had sales taxes ranging from 4.0% in Alabama to 7.0% in Mississippi and Tennessee. And while most states at least exempt food from sales taxes, as of January 2023 Mississippi, Alabama, and Oklahoma did not (Tax Policy Center 2023).{{6}}

This approach to taxes means that public services are underfunded in the South

Proponents of this tax model argue that it increases the incomes of all households by allowing them to keep more of their money. Further, they argue that it allows businesses to reinvest and grow their businesses, thereby increasing tax revenue. In reality, this regressive approach to taxes simply means there is not sufficient revenue to properly fund education, health care, public transportation, water and sewer system maintenance, and the many other public services Southerners rely on (Das 2022b).

The lack of resources to provide services for ordinary Southerners is further exacerbated when state governments give huge subsidies to private companies. For example, Mississippi gave a $247 million subsidy to Steel Dynamics in 2022, and South Carolina spent $1.3 billion on a subsidy for Scout Motors in 2023 (Good Jobs First 2023b, 2023c).

A weak safety net

The Southern economic development model is further characterized by a weak social safety net. Unemployment insurance (UI), for example, is a crucial component of the social safety net, meant to ensure families have economic security in the face of a job loss by replacing some percentage of their prior earnings (Bivens and Banerjee 2021). During times of crisis, such as the COVID-19 recession, it also helps stabilize the broader economy (Bivens et al. 2021).

Southerners face greater insecurity when they lose their jobs

While the UI system is funded jointly by federal and state funds, it is the state that has primary control over who is eligible to receive benefits, the level and duration of those benefits, and how the system is financed (Bivens et al. 2021).

The fact that the states where most Black Americans live have the least accessible UI systems with the least generous benefits and some of the most onerous requirements is not a coincidence or an accident. The UI system as structured is rooted in a racist agenda: Southern Democrats agreed to support the New Deal only if states controlled access to UI and other social benefits. This allowed them to design systems that would limit Black workers’ access to benefits (Edwards 2020; Traub and Diehl 2022).

Data show that of the 10 states with the lowest maximum weekly UI benefit amounts, seven—Mississippi ($235), Alabama ($275), Florida ($275), Louisiana ($275), Tennessee ($275), South Carolina ($326), and North Carolina ($350)—are in the South and have large Black populations (The Century Foundation 2023).

Southerners face barriers to health care access

The South is also the least likely of any region to ensure its constituents have access to health care. This is particularly concerning given high rates of illness and comorbidities across the South (Akinyemiju et al. 2016).

The 2010 Patient Protection and Affordable Care Act (ACA) included an expansion of Medicaid eligibility to adults with incomes up to 138% of the official poverty line. While most states have adopted and implemented the expansion, 10 states have failed to adopt it, and seven of these—Mississippi, Alabama, Georgia, South Carolina, Florida, Tennessee, and Texas—are in the South (KFF 2023).{{7}}

Southern states have some of the lowest levels of cash assistance for families with children

Aid to Families with Dependent Children (AFDC), a cash assistance program for poor families with children, was established in 1935 as Aid to Dependent Children (ADC).{{8}} In 1996 the Personal Responsibility and Work Opportunity Act (PRWORA) replaced AFDC with the Temporary Assistance for Needy Families (TANF).

TANF differs from AFDC in several important ways. Under AFDC, states could receive unlimited federal matching funds; under TANF, federal support is distributed to states through a block grant. TANF also has five-year lifetime benefit limits and requires that states increase their work participation rates for TANF recipients (DHHS n.d.).

While the federal government funds TANF, states determine benefit levels and income and resource limits, and they administer or oversee administration of the program. States have a great deal of discretion in how they use TANF funds because the specific goals of the program are so broad. The stated goals of the program are to (1) assist families in need so children can be cared for in their own homes; (2) reduce parental dependence on government by promoting job training, work, and marriage; (3) prevent out-of-wedlock pregnancies; and (4) encourage two-parent families (CBPP 2022; DHHS n.d.).

Under the first goal, states can provide direct cash assistance to families to provide for their children (CBPP 2022; DHHS n.d.). In 1997, 71% of TANF dollars were spent for this purpose, but by 2020 this share had fallen to just 22% nationally (Azevedo-McCaffrey and Safawi 2022).

There are large variations in spending by state. In 2021, 15 states spent 10% or less of TANF dollars to provide cash assistance to families. Seven of these states—Alabama, Arkansas, Delaware, Louisiana, Mississippi, North Carolina, and Texas—are in the South and have large Black and Hispanic populations. Of the remaining states spending 10% or less of funds in direct assistance, six were in the Midwest and two were in the Northeast.{{9}} Across the South, only the District of Columbia and Kentucky spent 30% or more of their TANF funds for direct assistance (Azevedo-McCaffrey and Safawi 2022).

Benefit levels are also low in many states, especially in the South. The maximum monthly benefit for a single mother with two children ranges from $204 in Arkansas to a high of $1,151 in New Hampshire. Only four Southern jurisdictions—the District of Columbia ($665), Maryland ($727), Virginia ($587), and West Virginia ($542)—have a benefit amount greater than $500 for a three-person family (Thompson, Azevedo-McCaffrey, and Carr 2023).

In 16 states, the nominal TANF benefit in 2022 is the same as or lower than it was in 1996. Seven of these states—Arkansas, Delaware, Florida, Georgia, Kentucky, North Carolina, and Oklahoma—are in the South. The failure to raise the nominal benefit means that in these states, the inflation-adjusted value of the benefit is 45% to 56% lower than it was in 1996 (Thompson, Azevedo-McCaffrey, and Carr 2023).{{10}}

The current structure of TANF in many Southern states reflects efforts of politicians to control the behavior and reproduction of Black women and compel their labor into the low-wage labor market (Floyd et al. 2021; CBPP 2022).{{11}} Historically, states like Alabama and Louisiana have used “deservingness,” “suitable homes,” and “man in the house” rules to exclude Black families from the program. States began to pass these morals-based eligibility rules in the 1940s as the ADC rolls began to become more diverse (Floyd et al. 2021; Gordon and Batlan 2011; O’Connor 1969).

To be “deserving,” a mother needed to be widowed, have a husband that was unable to provide for the family’s needs due to disability, or have been abandoned by the children’s father “through no fault of the mother.” A home was “unsuitable,” by definition, if the mother was unwed or engaged in sexual activity outside of marriage (Floyd et al. 2021; Floyd and Pavetti 2022).

The “man in the house” rule denied mothers benefits if a man was found to be living in the house or if the mother was found to be sexually active, even if no man lived in the house with her and her children. In either case, it did not matter whether the man involved was the children’s father or not (Floyd et al. 2021; O’Connor 1969).{{12}}

Today, those states with larger Black populations—primarily Southern states where the majority of the Black population lives—tend to have more stringent requirements to access TANF benefits, and those benefits tend to be more meager (Shrivastava and Thompson 2022).

Anti-union policies

Finally, and perhaps most importantly, advocates of the Southern economic development model vociferously oppose unions and other collective actions in which workers band together, especially across racial, ethnic, and immigration statuses.

Research has shown that higher rates of unionization are associated with higher wages, better working conditions, less inequality, less racial animosity, greater economic mobility, and greater civic participation (Banerjee et al. 2021; Freeman et al. 2015; Frymer and Grumbach 2021; Mishel 2021; Mishel, Rhinehart, and Windham 2020). Despite this, states across the South have adopted policies that hamstring workers’ ability to form unions because they pose a threat to the Southern economic development model.

First, unions threaten the Southern economic development model because they have historically been the primary counterweight against businesses seeking to keep wages and benefits low. Second, the labor movement in the U.S. today is one of the foremost institutions promoting cross-racial solidarity. Third, unions are a key driver of greater equity in the workplace (Bivens et al. 2023).

Labor unions have not always fulfilled the roles of cross-racial solidarity or racial equity in the workplace—many unions have a history of anti-Black racism. Throughout the 20th century, businesses would pit Black and white workers against one another, including by using Black workers as strikebreakers (Arnesen 2003).

Many white workers viewed Black workers as competition. This—coupled with the belief that Black workers were inferior to them—led them to oppose including Black workers in their unions. Unions such as the American Federation of Labor and many trade unions would not organize Black workers (Hill 1959). In response, Black workers began forming their own unions. A. Philip Randolph, for example, organized Black porters in the Brotherhood of Sleeping Car Porters (AFL-CIO 2014; Tye 2005).

Not all unions were opposed to organizing workers across race, though. Some, like the Congress of Industrial Organizations, realized that as long as workers were divided, their power would continue to be undermined. As noted above, when Black workers or any other group of workers are systematically excluded from joining a union, they can then be used as strikebreakers. This makes it less likely that a strike will be effective and less likely that workers’ demands will be met.

Despite the negative experiences many Black workers had with discriminatory unions, many civil rights leaders were also labor leaders who wanted to bring workers together to demand economic justice and equality for all workers. The organizers of the 1963 March on Washington for Jobs and Freedom, which everyone remembers for Dr. Martin Luther King Jr.’s “I Have a Dream” speech, included A. Philip Randolph. Randolph had not only led the Brotherhood of Sleeping Car Porters but had also demanded racial integration of the military and called for a march on Washington in the 1940s to force President Roosevelt to issue an executive order banning discrimination in war industries (AFL-CIO n.d.).

Figure A. Racist flyer used to drive opposition to the Congress of Industrial Organizations (CIO) in the 1940s. (Photo by David Haberstich. Courtesy of Donald McKee, cited in Griffith 1988.)

In pushing back against interracial labor organizing, wealthy and powerful Southerners would invoke white supremacy to thwart these efforts for collective economic justice. During a campaign to get a so-called right-to-work (RTW) law on the books in Arkansas, advocates made clear that RTW was critical to maintaining racial segregation. (RTW laws require unions to represent all workers but restrict their ability to collect dues, thereby weakening the unions.) To advance their cause, they drew on the racial animus of white Southerners with the warning that

White women and White men will be forced into organizations with Black African Apes…whom they will have to call “brother” or lose their jobs. (Pierce 2017)

In another instance, those trying to mobilize racial prejudice in the 1940s against the Congress of Industrial Organizations (CIO)—which supported interracial organizing—produced the flyer shown in Figure A. The flyer shows a photo of George Benjamin, a Black man, with a caption noting that Benjamin had been put in charge of organizing the tobacco workers. In all capital letters it states, “INCLUDING THE WHITE EMPLOYEES.” Ironically, the Tobacco Workers International Union under attack was in fact an American Federation of Labor (AFL) affiliate and was not as supportive of interracial organizing as the CIO (Griffith 1988).

In many Southern states, the campaigns to get RTW laws passed were successful (NCSL 2023). In the 1940s, Florida and Arkansas were the first two states to adopt these anti-worker laws. It is important to emphasize that—contrary to the “right to work” moniker—these laws in no way guarantee workers a right to a job or a right to work; instead, they simply make it more difficult for workers to form and maintain unions.{{13}}

Across the South, states have continued to adopt RTW laws, with some legislatures enshrining them in their state constitutions (Ballotpedia 2022). One result is that Southern states have some of the lowest rates of union coverage in the country. While nationally union coverage rates stand at 11.3%, rates were as low as 1.9% in South Carolina, 3.9% in North Carolina, and 5.4% in Georgia in 2022 (BLS 2023).{{14}}

The Southern economic development model: A summary

Collectively, these economic policy positions form what we refer to as the Southern economic development model. Most states across the South census region—with the exception of Maryland, Delaware, and the District of Columbia{{15}}—adhere to most, if not all, of these components and have adopted a wide range of policies consistent with this model. Some Southern states—such as Alabama, Mississippi, Louisiana, Arkansas, South Carolina, Kentucky, and West Virginia—adhere to this model particularly closely.

Future reports from EPI will delve deeper into the Southern economic development model and how it manifests in specific states across the region.

Throughout the rest of this report, we examine several key indicators of economic well-being for workers and families across the South. We compare the South with other regions and look at variations across states within the South. The data show that those states that adhere most closely to the Southern economic development model fare worse in general than those states that have taken a different path.

The Southern economic development model has failed to promote the economic well-being of workers and families across the South

On the surface, the Southern economic development model may seem purely like a set of economic policy choices. However, as we describe above, it in fact emerged out of efforts in the late 1800s and beyond to maintain racial hierarchies across the South—hierarchies that would ensure continued access to the cheap labor of the newly freed Black population (Harris 1993; Perea 2011).

Below, we use empirical data to refute proponents’ argument that this model creates jobs and overall prosperity. We show that it actually produces worse outcomes for workers and families across the South.

Southern states are well represented among the lowest-GDP states

If the Southern economic development model led to better economic performance, one likely place that would show up would be in measures of state GDP. The gross domestic product, or GDP, is the total value of goods and services produced in an economy. It is a comprehensive measure that represents overall spending by government, the output of businesses and their workers, investments made by actors in the economy, and the trade conducted with economic actors in other jurisdictions. It is an important measure of overall economic trends; a rising per-worker GDP is necessary (although insufficient on its own) to achieve rising living standards for the broad population.

The data indicate that on this overall measure of economic growth, the South does not perform particularly well. Figure B lists the 15 states with the lowest per-worker GDP in 2019 before the COVID-19 recession. Nine of these states are in the South. Mississippi has the lowest per-worker GDP in the nation. The other eight Southern states on the list are Arkansas, Alabama, Kentucky, South Carolina, Florida, Oklahoma, West Virginia, and Tennessee.

Figure B

Of the remaining states in the South census region (not shown in Figure B), the majority have per-worker GDPs below the U.S. average. Only Maryland, Delaware, and the District of Columbia have per-worker GDPs above the national average. As noted above, these three jurisdictions adhere less closely to the Southern economic development model than other Southern states.

Job growth across the South largely reflects population growth, not economic growth

The health of an economy is also frequently assessed by looking at job growth. As demand for goods and services grows among the general population, workers are hired to provide those goods and services. When demand is weak or constrained, workers are not hired and some may lose their jobs, further dampening GDP and weakening the growth that can improve living standards.

Many Southern politicians have argued that the policies associated with the Southern economic development model produce greater job growth and that this exceptional job growth creates a “rising tide that lifts all boats.” They point to the strong job growth across the South that has occurred since the late 1970s—i.e., the larger increase in the total number of jobs in the South compared with other regions of the country. When we examine the data, however, we find that job growth across the South largely reflects a growing Southern population.

Various factors largely unrelated to the South’s economic development strategy (e.g., the widespread adoption of air conditioning, proximity to the Southern U.S. border, and increased domestic and international migration) have driven strong population growth in the South (Arsenault 1984; Frey 2023). Yet job growth across the region has lagged population growth since the early 2000s.

Figure C shows that between 1976 and 2001, job growth in the South generally moved in tandem with population growth but never exceeded growth in the working-age population. Since 2001, job growth has failed to keep up with population growth, especially after the Great Recession of 2008–2009. This is in contrast to the Northeast and Midwest regions, where job growth has exceeded population growth for the majority of the more-than-four-decade period.

Figure C

Southern states are well represented among the states with the lowest prime-age employment-to-population (EPOP) ratios

Arguably the best way to assess labor market health is to evaluate whether job growth is providing adequate employment for everyone in their prime working years. We can measure this by looking at the prime-age employment-to-population (EPOP) ratio, which is the share of workers ages 25 to 54 with a job. If the Southern model provided exceptionally strong job growth, we would expect Southern states to have relatively high EPOPs.

Figure D shows the 10 states with the lowest prime-age EPOP. Of the 10 states with the lowest EPOP nationally, seven are Southern states. The five states with the lowest EPOPs—Louisiana, Alabama, New Mexico, Mississippi, and West Virginia—have more than a fourth of their prime-age population out of the workforce; four of these are in the South.

Figure D

Of the remaining states in the South census region (not shown in Figure D), the majority have prime-age EPOPs below the U.S. average. Only Maryland, Virginia, Delaware, and the District of Columbia have prime-age EPOPs above the national average. As noted above, Maryland, Delaware, and D.C. adhere less closely to the Southern economic development model than other Southern states.

Many of the workers missing from the EPOPs are not in the labor force at all—they are not employed and they are not looking for work. While there are a variety of reasons why prime-age workers would leave the labor market, one of the most common reasons is they have become discouraged. They have been unable to find suitable work or they face obstacles—such as the need for child care or transportation—that prevent them from seeking or keeping employment.

Workers in Southern states tend to have lower earnings even after adjusting for regional differences in the cost of living

Table 1 shows the nominal median annual earnings and median annual earnings adjusted for regional differences in the cost of living for all 50 states and the District of Columbia. States are ranked from highest to lowest cost-of-living-adjusted earnings. States in the South census region are marked with an asterisk.

Three Southern states—Maryland, Virginia, Delaware—and the District of Columbia are among the top 20 highest-earning states. As noted previously, three of these jurisdictions—Maryland, Delaware, and D.C.—do not adhere to the Southern economic development model as closely as the nine Southern states that fall into the 20 lowest-earning states. Three states that adhere particularly closely to this model—Florida, South Carolina, and Mississippi—fall into the 10 lowest-earning states.

Table 1

Wages are even lower for some groups in the South. Table 2 highlights dramatic differences in earnings across the region by gender and race/ethnicity. The state-level median earnings listed in Table 1 may not be representative of the typical earnings of Black and Hispanic workers in those states, especially Black and Hispanic women, who are generally paid even less than their male counterparts. On average, Black women in the South are paid $35,884 at the median and Hispanic women just $30,984, compared with $58,008 for white men.

Table 2

Poverty rates in most Southern states are higher than the national rate

Arguably the best-known measure of economic well-being is the official poverty rate. According to the official poverty measure, a family of four with two minor children in 2019 would fall below the poverty line if their family income was less than $26,000. Figure E shows official poverty rates for each state in the South and for the nation as a whole in 2019. The data provide a clear indicator that the Southern economic development model is leaving large numbers of Southerners in dire economic conditions.

Figure E

The poverty rate nationally, at 12.3%, is much higher than it should be in a nation as wealthy as the United States. However, the poverty rate is significantly higher in many states across the South. Almost 1 in 5 residents in Mississippi and Louisiana fall below the poverty line. Only three states in the South have a poverty rate below the national rate: Delaware, Virginia, and Maryland. As noted above, Maryland and Delaware do not adhere as closely to the Southern economic development model as other states in the South census region.

While overall poverty rates across the South are appalling, when we consider differences by race and ethnicity they become even more so. Black women across the South have a poverty rate of 20.0% and Hispanic women are at 18.5% (see Figure F).

Figure F

These extremely high rates of poverty—roughly 1 in 5 women—are not due to unwillingness to work. Black women in fact have a higher prime-age employment-to-population ratio than women from any other racial or ethnic group in the South.{{16}}

Table 3 shows that Black women in the South have a higher poverty rate than Black women in the Northeast (19.0%) or the West (19.2%), although Black women’s poverty rates are highest in the Midwest (23.4%). Black men’s poverty rates across the South (15.7%) are higher than in the West (15.5%) but lower than in the Northeast (16.0%) and the Midwest (20.1%). Extreme disparities by race/ethnicity and gender in the U.S. are not limited by geographic boundaries.

Table 3

Hispanic men and women have the highest poverty rates in the Northeast (13.9% and 20.6%, respectively), followed by the South (12.4% and 18.5%). Their lowest poverty rates are in the West (11.3% and 15.7%) and the Midwest (11.6% and 16.9%).

Asian American and Pacific Islander (AAPI) men and women living in the South actually have lower poverty rates than AAPI men and women in other regions. In the South, their poverty rates are 8.7% and 9.6%, respectively. These are lower than in the West (8.9% and 9.8%), the Northeast (10.4% and 11.4%), or the Midwest (11.0% and 11.2%). Lower rates of poverty among AAPI men and women in the South likely reflect the fact that they tend to live in higher-earning Southern states such as Maryland (Childers 2023c).

Finally, white men and women across the South have much lower poverty rates than Black and Hispanic Southerners but have higher poverty rates than white men and women in any other region. In the South, white men and women have poverty rates of 8.2% and 10.8%, respectively, while in the Midwest their poverty rates are 7.5% and 10.1% and, in the West, 7.8% and 9.5%. Their poverty rates are lowest in the Northeast, at 6.7% and 8.6%.

One reason Black women’s poverty rates remain high in the South—despite a relatively high EPOP—is that they are disproportionately employed in jobs consistent with the occupations they were largely limited to during and after the end of slavery: care work, cleaning, and food production, including agricultural and animal slaughter work. Because this work is largely done by Black, brown, and immigrant workers, consistent with the Southern economic development model, these jobs pay very low wages.

While Black and Hispanic men are paid more than Black and Hispanic women in the South, their earnings are lower than white men’s earnings. This means that among two-adult households, Black and Hispanic households are more likely to rely on Black and Hispanic women’s earnings to meet household needs than white households do. Black women in particular are frequently co-breadwinners in their households (Banks 2019; Glynn 2019).

Child poverty is higher in the South than in any other region

Low wages across the South also mean that many children will suffer economic hardships. Their parents’ earnings determine to a great degree the resources available to them, especially when public safety nets are as limited as they are across most of the South. Figure G shows the geographic distribution of all U.S. children living in households where the household head is paid less than $10.00 per hour. More than half of these children, 53.4%, live in Southern states.

Figure G

The large number of Southern children in households where the head of household is paid less than $10.00 per hour, and high rates of poverty overall, mean that many children across the South live in poverty. Figure H shows that child poverty is significantly higher in the South than in other regions. At 20.9%, child poverty rates in the South are 3.7 percentage points higher than the region with the next-highest child poverty rate, the Midwest at 17.2%. While child poverty across the South is clearly worse than in other regions, it is troubling that the lowest regional rate nationwide is as high as 16.6%, in the Northeast.

Figure H

The high overall child poverty rates obscure extreme racial inequities in child poverty. As seen in Figure I, across Southern states, Asian American children have the lowest poverty rates, at 9.9%, followed by 12.5% of non-Hispanic white children. The next-highest rate is more than double that; 26.3% of American Indian and Alaska Native children, 28.1% of Hispanic children, and 33.0% of Black children live in poverty across the South.

Figure I

High levels of income inequality are seen in every state across the South

In this final section, we consider how the Southern economic development model has performed in addressing income inequality. Figure J shows the share of all household income that goes to the top 5%, the top 20%, and the bottom 20% of households in each Southern state and across the U.S.

Figure J

In every Southern state, more than 20% of all household income goes to just the richest 5% of households. In most Southern states, more than 50.0% of all household income goes to the richest 20%. The bottom 80% of households share the remaining 50%, with the bottom 20% sharing between 2.0% and 3.5% of all household income. Further, the share to the top 5% has increased over the last decade and the share to the bottom 20% has declined (not shown in Figure J).{{17}}

It is important to note here that this is the one indicator on which the South does not differ from the rest of the nation. Though the South has not performed worse than the rest of the country on this particular measure, it also has not performed any better. Indeed, this pattern of inequality holds for every state in the nation.

Conclusion

Efforts to instigate racial division today may not be as overt as the flyers featuring George Benjamin, but we know that racial dog whistles are still at play across the South. When states gerrymander maps to dilute the voting strength of Black and brown residents or engage in voter suppression, or when wages are kept low in jobs held primarily by Black, brown, and immigrant workers, this is all done in the service of maintaining a racial hierarchy across the South.

Many Southerners may believe their politician’s arguments that the Southern economic development model will deliver good, well-paying jobs. However, the data presented here show clearly and emphatically that this model has failed those living in Southern states. This economic model has garnered vast amounts of riches for the wealthiest and most powerful people across the region but is leaving most Southerners with low wages, underfunded public services, a weak safety net in times of economic downturns, deep racial divisions, and high rates of poverty.

The failed Southern economic development model is still being used to maintain the color line across the South and to exploit and oppress Black, Hispanic, Indigenous, poor, and women residents. While these exploited groups face the greatest hurdles to social and economic security, all Southerners are harmed by this failed model.

Notes

{{1.}} In this report we follow the definition of the South used by the U.S. Census Bureau, which includes Alabama, Arkansas, Delaware, the District of Columbia, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, and West Virginia.

{{2.}} Census-defined regions outside the South include the Midwest, the Northeast, and the West. The Midwest includes Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin. The Northeast includes Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont. The West includes Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming.

{{3.}} States in other regions may draw on some components of the Southern economic development model, for example, lowering tax rates or implementing so-called right-to-work laws. States across the South, however, are much more likely to consistently implement all or almost all components of the model and to implement them to a greater degree.

{{4.}} See Cooper and Kroeger 2017 for descriptions of other forms of wage theft.

{{5.}} Texas v. Biden (S.D. Tx. 2022).

{{6.}} As of September 1, 2023, the sales tax on food in Alabama dropped from 4.0% to 3.0%. For more information, see Sell 2023.

{{7.}} North Carolina has adopted the expansion, but as of September 2023 it had not yet been implemented; implementation is dependent on the passage of the 2023–2024 budget. Virginia and Oklahoma adopted the Medicaid expansion in 2019 and 2021, respectively (KFF 2023).

{{8.}} ADC was changed to AFDC in 1962.

{{9.}} The Midwest states spending 10% or less are North Dakota, Michigan, Illinois, Indiana, Missouri, and Kansas. The Northeastern states are Connecticut and New Jersey. See this map (Azevedo-McCaffrey and Safawi, Figure 2).

{{10.}} For a graphic representation of change in the real value of TANF benefits, see this chart (Thompson, Azevedo-McCaffrey, and Carr 2023, Figure 2).

{{11.}} See also King v. Smith, 392 U.S. 309 (1968).

{{12.}} See also King v. Smith, 392 U.S. 309 (1968).

{{13.}} For more information on RTW, see Sherer and Gould 2023.

{{14.}} See BLS 2023 for union membership and union coverage rates for all states.

{{15.}} For simplicity, we refer to the District of Columbia as a state in this report.

{{16.}} EPI analysis of the 2017–2021 Current Population Survey Basic data. Data on the prime-age EPOP by race/ethnicity and gender in the South will be examined in more detail in a forthcoming report (Childers 2023a).

{{17.}} EPI analysis of American Community Survey Table B19082, “Shares of Income by Quintile,” from the U.S. Census Bureau. Analysis of income distribution in the Southern states over time will be discussed in a forthcoming report (Childers 2023b).

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Arnesen, Eric. 2003. “Specter of the Black Strikebreaker: Race, Employment, and Labor Activism in the Industrial Era.” Labor History 44, no. 3: 319–335. https://doi.org/10.1080/002365603200012946.

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