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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Other localities should brace for similar consequences

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notes

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

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

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

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

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

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

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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.

Summary:

• From 1916–1970, 6 million Black Americans fled the violence and economic oppression of the rural South. Among the legacies of this Great Migration is the concentration of Black Americans in urban areas.
• Today, 10 metro areas—New York, Atlanta, D.C., Chicago, Dallas, Houston, Philadelphia, Miami, Los Angeles, and Detroit—have the largest Black populations in the country and are home to 38.6% of the Black labor force.
• This analysis finds evidence of relative economic prosperity and hardship across and within these 10 metro areas, demonstrating huge stakes associated with federal budget and job cuts, anti-equity backlash, and growing concerns of a self-inflicted recession.
• Since taking office, Trump has pushed an anti-equity agenda that rolls back the clock on hard-won federal policies establishing equal employment and core labor standards and protections for Black workers. The passage of those laws was pivotal in expanding rights and opportunities sought across the decades of the Great Migration and Civil Rights Movement.
• Mass firings of federal employees and budget cuts will have harmful consequences for Black Americans across class lines.
  • Given the large share of the state’s federal workers in metro Atlanta (51% of GA total), D.C. (60% of combined D.C., MD, VA & WV total) and New York (63% of combined NY & NJ total), Trump’s attack on the public sector threatens what has historically been a pathway to better, more equitable jobs for Black Americans—thanks to robust anti-discrimination policies and public-sector collective bargaining.
  • Although these cities anchor metro areas with some of the highest Black median household incomes in the nation, federal grant funds provide critical support to under-resourced inner-city communities. Many of those federal investments in low-income and working-class communities were cut in the Republican-led budget reconciliation bill.
• In addition to his attacks on equity and workers’ rights, Trump’s policy path leads straight to recession—jeopardizing Black workers’ labor market gains in recent years, including historically low unemployment and faster wage growth.
• Based on 2023 estimates from the American Community Survey, metro area Black unemployment was lower than the Black national average in Atlanta, D.C., Dallas, Miami, and Philadelphia.
• While overall real median household income declined 1.1% between 2019 and 2023, Black median household income grew by 2.8%.
• In 2023, Black median household income exceeded the national median of $53,927 in all but two (Chicago and Detroit) of the metros observed. It was highest in the D.C. ($89,912) and Atlanta ($70,969) metro areas.
• In the face of federal rollbacks of civil and worker’s rights and growing concerns about recession, state and local governments should act to maintain and strengthen basic protections, like minimum wage and unemployment insurance, while continuing local efforts to advance racial equity and justice. However, local leaders in red states, like Florida and Texas, face state-imposed obstacles to passing progressive economic and racial justice policies. 

The concentration of Black Americans in urban areas is one of the legacies of the Great Migration—the period between 1916 and 1970 when 6 million Black Americans fled the violence and economic oppression of the rural South in search of safety and better job opportunities in cities throughout the Northeast, Midwest, and West. But even in non-Southern U.S. cities, many continued to face poor working conditions as well as employment and pay discrimination, leaving them just marginally better off than in the places they fled. Rather, significant gains in economic status only became possible through sweeping changes to federal labor and civil rights laws born from years of protest and political pressure during the decades of the Great Migration and beyond. While landmark federal labor laws passed during the 1930s improved working conditions for most white workers, many Black workers were initially excluded from the right to organize unions under the National Labor Relations Act of 1935, or minimum wage and overtime pay protections under the Fair Labor Standards Act of 1938. The steady demand for equal protection under these and other laws led to the passage of the Civil Rights Act of 1964, prohibiting segregation at all places of public accommodation and discrimination by employers and labor unions based on race, color, religion, or national origin. These federal labor and civil rights laws set a national standard for fair working conditions and equal treatment that some state and local governments have enhanced to varying degrees based on local political and economic conditions. In many cities with large Black populations, policy decisions and local economic conditions yield both positive and negative results for Black Americans.

The diverse experiences of Black people across metro areas{{1}} exemplify the notion that Black America is not a monolith. The unique political and economic dynamics in each place produce relative economic prosperity and hardship that make up the collective economic experience of Black Americans. However, even areas once sought as places of refuge and economic opportunity are now contending with a president whose actions undermine federal laws establishing equal employment and other civil rights, as well as core labor standards and protections.

Since taking office, Trump has pushed a revisionist version of history that erases any acknowledgement of the racism, violence, and oppression that created persistent racial inequities and forever changed the demographic composition of U.S. cities. This includes issuing a barrage of executive orders that roll back the clock on hard-won federal policies that have helped Black Americans attain many of the opportunities sought through the Great Migration and Civil Rights Movement of the 1950s and 1960s. Instead, Trump’s anti-diversity, equity, and inclusion (DEI) rhetoric centers white men as the primary victims of discrimination and calls into question the “merit” or qualifications of almost anyone else. He has used those false narratives to justify eliminating the use of disparate impact liability and redirecting enforcement priorities at the Equal Employment Opportunity Commission and Office of Federal Contract Compliance Programs—severely weakening the two agencies responsible for making sure employers comply with anti-discrimination law. Trump’s anti-equity agenda—along with efforts to decimate the federal workforce, cut services and programs that working families and low-income communities rely on, and attacks on labor standards and workers’ union and collective bargaining rights—are just some of the many harmful actions that hurt workers and put the economy at risk (McNicholas et al. 2025).

As a benchmark for assessing what’s at stake under Trump’s harmful economic policies and anti-equity agenda, we explore economic conditions for Black Americans in 10 U.S. metro areas with the largest Black populations. This list includes nine of the country’s largest metros overall—anchored by the principal cities of New York, Atlanta, Washington, D.C., Chicago, Dallas, Houston, Philadelphia, Miami, and Los Angeles—as well as Detroit. Today, these 10 metro areas, including four in Southern states, are home to 38.6% of the Black labor force and 26.9% of the total labor force. Each of these metro areas account for at least one-third of their respective state’s Black labor force. Additionally, Black Americans are the largest demographic group in the principal cities of Detroit (75.9%), Atlanta (46.4%), Washington, D.C. (40.9%), and Philadelphia (39.5%) and represent over one-fifth of the population in all but Los Angeles (8.5%) and Miami (14.1%).

We examine unemployment rates, median household income, the size of the federal workforce, and federal grant dollars awarded to these places in 2023. Our analysis compares economic outcomes for Black Americans across metro areas and relative to national and state averages and considers some of the factors contributing to those differences. This cross-metro analysis allows us to go beyond a simple categorization of economic conditions as good versus bad or equal versus unequal. Instead, it raises important questions about why conditions are better in some places and worse in others. Finally, we explore the potential for state and local policy to provide a buffer against damaging federal actions that increase the risk of recession, harm workers, and exacerbate racial inequities.

Metro area unemployment rates and income reveal relative economic prosperity and hardship among Black Americans

The chaotic and harmful actions of the second Trump administration have raised the risk of recession for the otherwise strong and resilient labor market Trump inherited. One of the greatest casualties of a completely self-inflicted recession would be the labor market gains experienced by Black workers in recent years, including historically low unemployment and faster wage growth (Cid-Martinez, Maye, and Marvin 2025).

According to official estimates from the Bureau of Labor Statistics (BLS), the average annual Black unemployment rate in 2023 was a record low (5.5%), compared with an overall national unemployment rate of 3.6%. This analysis compares estimates of national, metro, principal city, and state unemployment rates for Black workers using data from the American Community Survey (ACS). ACS provides better coverage of metro area and principal city Black unemployment rates, but 2023 national estimates are higher than those reported by BLS due to differences in the survey reference periods.{{2}}

As shown in Figure A, in 2023, five of the 10 metro areas—Washington, D.C., Miami, Atlanta, Dallas, and Philadelphia—each outperformed the ACS-estimated national average of 7.2% for Black Americans. Across all 10 metro areas, Black unemployment ranged from a low of 5.6% in metro Atlanta to a high of 10.4% in the Chicago metro area.

Figure A

Figure B reveals that metro area Black median household income exceeded the national median of $53,927 in all but two of the metros observed. The exceptions were the Midwestern metro areas of Chicago and Detroit—the same places where Black unemployment was highest in 2023. Although incomes of Black residents in metro Chicago and Detroit were lower relative to the national median and other metros, their incomes were higher than the median Black household in the states of Illinois and Michigan. Median Black household incomes in those states were also the lowest among the states observed for this analysis.

Figure B

At the opposite end of the scale, Black median household income was highest in the D.C. ($89,912) and Atlanta ($70,969) metro areas. Notably, metro D.C.’s Black median household income was also significantly higher than the overall national median of $77,719. Black households in the New York ($65,758) and Dallas ($63,376) metro areas also had substantially higher median incomes than the typical Black household nationwide.

Relatively higher incomes and lower unemployment in metro D.C. and Atlanta are consistent with the fact that these places also had the largest shares of highly educated Black workers. The share of Black college graduates in the D.C. (40.8%) and Atlanta (36.2%) metro areas is well above the share of Black college graduates nationally (26.2%) and at least as high as the share of all college graduates nationwide. In contrast, the Detroit metro area had the lowest share of Black college graduates (20.8%). As we will discuss later, the high concentration of federal employment and related professional job opportunities in metro D.C. is a likely factor in attracting Black college graduates to the area.

The strength of the 2023 labor market and rise in employment among Black Americans also contributed to the growth in median Black household income. As shown in Figure C, while overall real median household income declined 1.1% between 2019 and 2023, Black median household income grew by 2.8%. The spike in inflation during this period generally muted real income growth; however, increased employment of Black workers managed to counteract the negative impact of inflation on income (Moore and Maye 2023). Black median income growth also outpaced total income growth in six of the 10 observed metro areas—Miami, Atlanta, Chicago, Detroit, Philadelphia, and Dallas. In places where real incomes declined, the decline was smaller among Black Americans.

Figure C

Echoes of the Great Migration

Across all the observed metro areas, there is a clear distinction in the average economic status of Black Americans in the principal city compared with the broader metro area, which includes surrounding suburbs. We characterize these consistent place-based differences as echoes of the Great Migration. One of the factors contributing to these differences was “white flight”—the mass relocation of white people from urban centers to suburbs in response to the rising Black population in cities during the Great Migration. More than just a demographic shift, white flight initiated a draining of economic resources away from cities that continued as more affluent Black families moved to suburbs following the passage and enforcement of fair housing laws.

Across all 10 metro areas, Black unemployment was higher in principal cities compared with the broader metropolitan statistical area (MSA) and the state. Referring again to Figure A, in 2023, Black unemployment in the city of Atlanta (8.4%) was 2.8 percentage points higher than metro Atlanta where Black unemployment was lowest and closest to the overall national average. Similarly, the Black unemployment rate was more than 3 percentage points higher in the cities of Washington, D.C. (9.9%) and Miami (9.7%), relative to the respective metro areas. In Chicago (12.3%) and Detroit (11.7%), Black unemployment was nearly 2 percentage points above metro area rates that were already at least 2 percentage points above the Black national average. Recession-level Black unemployment rates in the Midwestern cities of Chicago and Detroit are also reflected at the state level for Illinois and Michigan. For Detroit, in particular, a second wave of white flight followed the post-1980s decline in manufacturing jobs and union density, once critical sources of Black economic mobility in the region (Scott et al. 2022). 

Similarly, Black median household income was substantially lower in principal cities than the metro area and the state. Figure B shows that across all 10 metro areas, Black median household income was at least $6,400 lower in the principal city than in the metro area. The largest gap was in the D.C. metro area, where there was a difference of nearly $30,000 between Black median household income in the principal city of Washington, D.C., and the broader metro area. In other metro areas with relatively high Black median incomes, like metro Atlanta and Dallas, the difference was $17,066 and $14,849, respectively. However, even in the Detroit metro area where Black incomes were lowest, there was a gap of more than $10,000 between households in the principal city and those in the broader metro area.

Federal grants are critical to filling resource gaps in urban areas

Federal grants are critical to filling the resource gaps in principal cities since those funds are often directed toward poorly resourced communities. Table 1 provides a summary of federal grant dollars flowing to each city in recent years based on data available at USAspending.gov.{{3}} The grant amounts include funds from block, formula, project, and cooperative agreement grant obligations, and encompass COVID-19-related obligations from the American Recovery Plan Act.

As shown in Table 1, D.C. and New York received the most in federal grant funds (an annual average of more than $6 billion each over fiscal years 2022–2024) followed by Atlanta. However, when adjusted for population size, D.C. and Atlanta had the highest per capita averages ($9,158 and $6,769 per person, respectively).

Although these cities anchor metro areas with some of the highest Black median household incomes in the nation, federal grant funds are directed toward the needs of less advantaged residents. For example, over the last three years, Atlanta’s largest federal grants were from the Department of Education to support students from low-income families in Title I schools. The largest federal grants to Washington, D.C., were from the Environmental Protection Agency, authorized through the Inflation Reduction Act to reduce greenhouse gas emissions and other pollutants and to bring green projects to low-income and disadvantaged communities. Most of the federal grant dollars going to the city of New York were from the Department of Housing and Urban Development (HUD) to support public housing.

The Department of Health and Human Services (HHS) was a major source of federal grants awarded in nine of the 10 cities. While the agency is most often associated with Medicaid funding for states, HHS funds programs like Head Start, HIV emergency relief, cancer treatment, and children’s hospitals at the city level. Across all 10 cities, the Departments of HHS, HUD, and Transportation were commonly among the top three awarding agencies, representing critical investments in health and well-being, housing, and transportation infrastructure in urban areas.

Table 1

However, due to the upside-down priorities of the current Congress, many federal investments in low-income and working-class communities have been cut to give tax cuts that overwhelmingly benefit the wealthy. In July 2025, Congress passed the Republican-led Budget Reconciliation Bill (or H.R. 1) which guts Medicaid and slashes the Supplemental Nutrition Assistance Program (SNAP), while also eliminating clean energy tax credits established under the Inflation Reduction Act, potentially putting over half a million jobs at risk (Seeburger et al. 2025). The bill results in 16 million fewer people having health coverage through 2034 and places approximately 11 million individuals at risk of losing SNAP benefits. Medicaid cuts alone could depress local spending enough to force the loss of 850,000 jobs (Bivens 2025). Overall, the Congressional Budget Office estimates that annual income for households in the lowest decile would decline by about $1,600—highlighting the devastating impact this bill will have on vulnerable families and the added strain it would place on state and local budgets (CBO 2025).

The city of Washington, D.C., was placed in a uniquely precarious position when the House’s reconciliation bill reverted D.C. to its 2024 budget. That decision slashed the city’s 2025 budget by more than $1 billion, an impossible deficit to close without laying off many city employees and severely cutting public programs and services. At of the time of this report’s publication, the House had yet to vote on an unanimously passed Senate fix that would reverse the budget cuts, needlessly placing the city’s budget in limbo. In response to House’s inaction, the mayor of D.C. proposed a 2025 supplemental budget that cuts services and freezes hiring to cover the budget gap while avoiding layoffs. Combined with federal job cuts, these actions represent a major blow to the area’s economic base and fiscal autonomy that would be especially tragic for Black Americans across class lines in the D.C. metro area.

Federal jobs cuts threaten relative economic security for the Black middle class

For Black Americans, public-sector employment has historically been a pathway to better, more equitable job opportunities. Through executive actions and legislation introduced in the 1960s and 1970s, the federal government once led in adopting anti-discrimination and affirmative action practices that increased the number of Black workers in the federal government. In the decades that followed, federal jobs have provided stable employment, excellent benefits, and opportunities for career advancement that supported a robust Black middle class. Public-sector collective bargaining has also helped to maintain the quality of these jobs through labor contracts that foster transparency through clearly defined policies and pay structures. This plays a critical role in reducing discrimination and providing workers with critical protections and recourse against other forms of exploitation or mistreatment.

That history stands in sharp contrast to the Trump administration’s efforts to dismantle the public sector, beginning with workers in DEI departments within federal agencies. Trump’s attacks on the federal workforce also include attempts to limit the approval of collective bargaining agreements with federal workers. The targets of such actions include skilled and often highly educated Black workers who typically experience less employment volatility, even during economic downturns. Nationally, Black federal workers average 12.3 years of service and 45.3% hold at least a bachelor’s degree (compared with 26.2% overall) (Maye and Marvin 2025).

While federal jobs losses will obviously have an impact in the D.C. metro area, over 90% of federal workers are employed outside the nation’s capital (McNicholas and Oakford 2025). The ripple effects from large-scale job cuts are expected to show up in higher unemployment and the disruption of critical public services and government functions throughout the nation. Table 2 shows the number of federal workers who live in each of the 10 metro areas, as well as the metro’s share of total federal jobs in the state. For metro areas that cross state lines, including metro D.C., Chicago, New York, and Philadelphia, we calculate metro area jobs as a share of the combined state totals. Over 300,000 federal workers reside in the D.C. metro area, accounting for 60% of all federal workers in the District of Columbia and surrounding states of Virginia, Maryland, and West Virginia. The second largest number of federal workers (over 100,000) are in the New York metro area, representing 63% of all federal workers in New York and New Jersey. Among the single state metro areas, Atlanta is home to over half (51%) of Georgia’s federal workforce and 47% of Michigan’s federal workers are in metro Detroit.

Table 2

While metro-level federal employment numbers by race are unavailable, EPI analysis of state-level data from the Office of Personnel Management (OPM) reveals that 43.8% of Georgia’s federal workers are Black—the largest share in the country (Wilson 2025). The District of Columbia, Maryland, and Virginia each have larger numbers of federal workers than Georgia, and Black workers are just over one-fourth of the federal workforce in each those states—28.8% in D.C., 27.9% in Maryland, and 26% in Virginia.

Between January and July of 2025, BLS reported a loss of 84,000 net federal jobs but the full impact and consequences of those job losses are yet to be revealed. Though thousands of fired federal workers were reinstated by court orders in February 2025, the Supreme Court later sided with the Trump administration when it lifted a lower court’s block on mass federal layoffs, clearing the way for the Trump administration to proceed with planned large-scale cuts to the federal workforce. However, DOGE’s lack of transparency and the Trump administration’s broader data erasure efforts make it difficult to keep track of whether job cuts fall disproportionately on certain groups of workers.{{4}}

Troubling changes at the EEOC stifle equity and would be harmful to economic growth

As a large independent federal agency, the Equal Employment Opportunity Commission (EEOC) is relatively small compared with many cabinet level agencies experiencing job cuts. Headquartered in Washington, D.C., the EEOC operates 53 district and field offices across the country,{{5}} including locations in each of our 10 featured cities with large Black populations. For 60 years, the EEOC has been integral to the enforcement of U.S. anti-discrimination laws—efforts that helped reduce employment discrimination and boost average living standards by an estimated $493 to $1,233 per person since 1960 (Maye and Wilson 2025). However, troubling changes to the structure and priorities of the agency paralyze some of the commission’s key functions and weaken enforcement against racial and gender discrimination—the most common types of discrimination claims filed (Mark, Gurley, and Rein 2025).

Instead, the Trump administration has redirected the EEOC’s priorities to focus more on investigating so-called DEI-motivated race and sex discrimination and anti-American national origin bias and discrimination (DOJ 2025; EEOC 2025). Trump also issued an executive order designed to end the use of disparate impact liability, a legal standard that works to prevent otherwise “race-neutral” policies and practices from perpetuating racial inequities (EPI 2025b). This restructuring of priorities threatens to turn the mission of the EEOC on its head by framing equity efforts intended to remedy decades of documented employment discrimination as discriminatory.

Just as the presence of EEOC offices in these cities signaled the federal government’s nationwide vigilance over employment discrimination, efforts to undermine the agency signal that employment discrimination—particularly against racial, ethnic, sexual, or religious minorities—will go unchecked. The impact of those changes extends beyond the millions of Black Americans working in and around these 10 cities alone and erodes workplace equity writ large.

State and local policy levers

As the Trump administration pushes the federal government toward a more anti-worker and anti-equity stance, decisions made by state and local policymakers will determine what kinds of protections workers in their states and cities will retain. Table 3 presents a sample of state and local policy positions related to workers’ rights for the ten metro areas featured in this analysis. These positions represent the relative progressivity of those state and local governments which could indicate their propensity to provide some buffer against harmful federal actions that raise the risk of recession, weaken labor standards, and exacerbate racial inequities. These policies include unemployment insurance (UI), minimum wage, paid leave, state preemption of local minimum wage or paid leave policies, and right-to-work laws. As a measure of the likelihood that state and local leaders will fight to maintain or strengthen equity efforts, we also include the number of Black mayors elected in each city and the existence of state or local reparations initiatives.

A basic scan of state and local policies reveals that while there is some variation in the generosity of UI benefits across states, the need for expanded federal support will once again be essential for recovery from the next recession. The scan also shows that local leaders in red states face state-imposed obstacles to passing progressive economic and racial justice policies.  

Table 3

Unemployment insurance

Unemployment insurance benefits are among the most efficient sources of support to families and the economy during a recession. Since they are targeted at individuals whose income falls due to a job loss, UI benefits provide direct income support to eligible unemployed workers while also helping to stabilize aggregate demand, the largest driver of economic growth. Estimates suggest that each dollar in UI benefits can generate nearly $2 in local spending (Evermore 2024). Despite the efficiency of UI benefits, they are often the target of austerity politics fueled by exaggerated and frequently debunked claims that overly generous benefits suppress employment (Martinez Hickey and Cooper 2021). 

While adequate federal action and support for expanding UI during a recession are critical to a quick recovery, state policymakers have some flexibility in determining how their UI programs are structured and resisting the austerity impulse. As a joint state and federal program, each state can adjust its own eligibility requirements, length of time for available benefits, and maximum weekly benefits in coordination with federal guidelines. Among the states represented in Table 3, Florida and Michigan are the only two that currently cap the number of weeks benefits can be received at less than 26 weeks. However, the maximum weekly benefit for unemployed individuals varies from a high of $605 per week in Pennsylvania (Philadelphia) to a low of $365 per week in Georgia (Atlanta).

The COVID-19 pandemic revealed the potential for major federal reforms to boost UI as a macroeconomic stabilizer by enhancing the duration, generosity, and eligibility of UI benefits (Bivens and Banerjee 2021). The pandemic also exposed administrative and fiscal inadequacies in state UI systems. Federal funds were allocated by the American Rescue Plan Act (ARPA) to improve UI systems administration, prevent fraud, and increase equitable access (DOL n.d.). However, few states took steps to strengthen severely underfunded state UI systems long term by increasing their taxable wage base (Sawo and Sherer 2022). UI reform advocates recommend increasing the taxable wage base to half of the taxable maximum for Social Security (Bivens et al. 2021). The increase would result in employers paying state unemployment taxes on a larger percentage of higher wage earners’ pay, generating more revenue and sustaining more fairness, equity, and administrative efficiency over time. Among the states considered, only New York and Illinois have a taxable wage base above $10,000, but still far below the much higher recommended base of $88,500 needed to address underfunding.{{6}}

In red states, a city’s ability to enact pro-worker policies is often at the mercy of state preemption

Several states and localities across the country have established minimum wage ordinances that exceed the federal standard. Since the federal minimum wage has remained stuck at $7.25 for over 15 years, failing to keep up with rising costs and inflation, this is a critical policy lever for supporting workers and their families’ right to a livable wage (Payne-Patterson and Maye 2023). Rasing the minimum wage supports all workers, but especially Black workers who are overrepresented in low-wage occupations.

Currently, 19 states and Washington, D.C., have passed laws raising their own minimum wage to at least $15 an hour by 2027, including several cities listed in Table 3 with local minimum wages well above the federal minimum (Hickey 2024; EPI 2025a). Washington, D.C., New York, Los Angeles, and Chicago all have a minimum wage standard of at least $15 an hour and Detroit’s minimum wage increased to $12.48 in 2025.

Sadly, four cities with large Black populations—Atlanta, Dallas, Houston, and Philadelphia—have not raised their minimum wage above the federal level. In June, the Pennsylvania state House passed a bill that would raise Philadelphia’s minimum wage to $15 an hour after years of failed attempts to increase the state’s minimum wage to that level (Huangpu 2025). The House proposal now awaits approval by the state Senate. For relatively progressive cities that also happen to be in red states, state preemption laws are a major barrier to passing a higher local minimum wage. In Atlanta, workers not covered by the Fair Labor Standards Act are paid a minimum of $5.15 an hour—$2.10 below the already insufficient federal minimum wage (GDOL n.d.). While local governments are prohibited in establishing a higher city-wide minimum wage, Dallas, Houston, and Atlanta have each passed increases for city, county, or contract workers (Cooper 2024; Barrera and Heilman 2025). Apart from preemption, right-to-work laws in these states also present barriers that limit workers’ collective bargaining rights, resulting in lower wages and benefits for all workers.

While raising the minimum wage can raise living standards for low-wage hourly workers, paid family leave enables workers to avoid the difficult tradeoff between income stability and caring for family. There is no federal law that guarantees paid family or medical leave to workers; up to 12 weeks of unpaid leave are available to eligible employees under the Family and Medical Leave Act (FMLA). However, as of 2025, 13 states and Washington, D.C., have passed their own paid family leave laws (Williamson 2024). Of the states listed in Table 3, only California, New York, and the District of Columbia currently have paid leave policies on the books. In D.C. and New York, eligible employees receive up to 12 weeks of paid leave (DCPFL n.d., NYSPFL n.d.). In California, eligible employees receive up to eight weeks of paid time off (EDD n.d.). All three policies allow workers to use this leave for caring for a loved one, bonding with a child, or military assistance. In New York, employees taking paid family leave receive 67% of their average weekly wage, while in California, workers can receive about 70–90% of wages earned five to 18 months before the claim start date. D.C. Paid Family Leave provides wage replacement of 90% of wages up to 1.5 times D.C.’s minimum wage and 50% of wages above 1.5 times D.C.’s minimum wage (DCPFL n.d.).

Will local steps toward racial reckoning withstand the rising tide of federal and state anti-equity backlash?

Every city and town in the United States has its own complicated racial history to reckon with. That history is infused in local policy and politics and shapes social and economic outcomes. As is true at the national level, decisions made by local elected leaders can either widen or narrow racial disparities. Leadership also reflects and sets the tone for how a city acknowledges, confronts, and seeks to resolve current and historic racial injustice. As measures of perceived racial progressivity, we consider the number of Black mayors elected in the principal city for each metro area and whether any local reparations initiatives have been introduced since 2020. While these are admittedly imperfect metrics, we interpret them as signals of the local political will to advance racial equity and defend current efforts. However, it is uncertain how much local efforts will be jeopardized by legal challenges triggered by aggressive federal and state anti-equity policies.

Table 3 shows that among the 10 cities observed, all except Miami have elected at least two Black mayors. The cities with the longest history of Black leadership are Washington, D.C., and Atlanta, having had seven and six Black mayors, respectively. Five Black Americans have served as mayor of Detroit. Since Black Americans are the largest demographic group in each of these cities, the larger number of Black mayors elected in these cities reflects city demographics and perhaps the degree of influence Black Americans wield in local elections. A more comprehensive analysis of city management and the policy priorities of individual mayors would be needed to assess their direct impact on Black economic outcomes or racial equity.

While little progress has been made to advance the issue of reparations at the federal level, since 2020, several state and local governments have taken initiative in addressing their own histories of racial and economic injustice against Black Americans. Reparations initiatives exist in all except the three cities in red states whose governors have aggressively pushed anti-DEI legislation: Miami in Florida, and Dallas and Houston in Texas. In most places where a reparations initiative exists, activity has been at the city or county level. However, both city- and state-level initiatives exist in California and New York. Current state and local reparations efforts range from the appointment of a task force to study the issue, to exploring plan options, approving legislation, and implementing a plan. While there are open questions about whether local plans are truly reparative or will have any measurable economic effect on closing the racial wealth gap, they are at least a signal of willingness to confront and seriously consider government accountability for eliminating racial inequities (Moore 2023).{{7}}

Conclusion

The strong and stable economy Trump inherited withstood months of his administration’s harmful and chaotic policy actions before clear signs of a softening labor market became evident in the July jobs report. Large downward revisions to May and June payroll employment estimates signaled a weaker labor market than originally reported, bringing average three-month job growth down to just 35,000 net new jobs compared with 127,000 over the preceding three months. Rather than taking this sobering news as a sign that he should reconsider the current policy path, Trump misrepresented the news as a politically motivated personal attack and fired BLS Commissioner Erika McEntarfer. Such careless actions unjustifiably erode confidence in one of the world’s most respected statistical agencies and endangers sound economic decision-making.

If the Trump administration and Congress continue along the current path, there is a very real risk of a recession in the coming months—and a lot at stake for Black Americans who typically suffer higher rates of unemployment and take longer to recover lost jobs and income from a downturn. In recent years there have been economic gains that should be protected and expanded. Five metro areas in this analysis had Black unemployment rates below the national average in 2023 and the median Black household income was above the national median in eight metros. At the same time, there is evidence of persistent inequities and economic hardship that demand a commitment to long-term solutions and investment in underserved communities. Two metro areas were below national measures of Black unemployment and income, but across all 10 metro areas, principal city residents had higher unemployment and lower incomes compared with the broader metro area which includes surrounding suburbs. Trump’s anti-equity, anti-worker agenda undermines both of those objectives by decimating the federal workforce and attacking public sector unions; cutting the federal budget for Medicaid, SNAP, and other programs that benefit low-income families; weaponizing civil rights enforcement to discourage diversity, equity and inclusion; and weakening core labor standards and protections.

State and local governments have some policy levers at their disposal for improving worker protections, but the effect those policies can have on the economic well-being of Black Americans varies by place, and in some cases is conditional on federal or state actions. For example, while cities and states have some capacity to increase their minimum wage or pass paid leave policies, preemption is a major barrier for local leaders seeking to pursue more progressive policies in red states. The law allows states some flexibility to adjust the duration and amount of unemployment insurance benefits, one of the most efficient sources of income support during a recession. Yet severe underfunding of state systems due to a far too low state taxable wage base starves their capacity to make substantial improvements in the fairness, equity, or generosity of benefits without federal funding. Moreover, in a recession, there is little any state can do to expand benefits and speed recovery without increased federal support—a step we can’t assume to be a priority of the current Congress or president. Finally, while many of cities we observe could be considered more racially progressive than the country as a whole, federally led anti-DEI backlash raises the possibility of legal challenges against local policies in support of equity and racial justice.

Black America is not a monolith. That statement is an assertion of the right to self-determination and individual expression that racism denies Black Americans. It is also a reflection of the varied experiences shaped by differences in local policy, economic conditions, political influence, and culture. Still, history shows that the pursuit of collective freedom, justice, and equity for Black Americans has always required decisive national actions that raise the standards for fair and equal treatment of all people in this country. The Trump administration’s denial of that history and lowering of those standards is not just several steps backwards for Black Americans, but moves all of the United States in the wrong direction.

Notes

{{1.}} A metro area is a region that includes a principal city and surrounding cities and towns with economic and social ties to the urban core.

{{2.}} The labor market statistics produced by BLS are based on data collected in the Current Population Survey (CPS). CPS interviews are conducted in a single designated week each month and annual averages align with the calendar year, whereas respondents answer the ACS at times that vary throughout the month and year and annual figures are averaged over the prior 12 months.

{{3.}} USAspending.gov is the official open data source of federal spending information, including information about federal awards such as contracts, grants, and loans. Since annual grant totals can change as data are updated on a rolling basis, we use a three-year average to minimize the sometimes substantial effect updates can have on a single year’s grant total. A downloaded transaction summary as it existed at the time of our analysis is available upon request.

{{4.}} The OPM data used to report the share of Black federal workers are no longer publicly available.

{{5.}} Workers can call or visit EEOC field offices to ask questions about potential employment discrimination or to directly file an individual complaint. Field offices may also recommend charges for EEOC Commissioners to pursue against specific employers.

{{6.}} The $88,500 corresponds to half of the 2025 taxable wage limit for Social Security, which was $176,100, up from $168,600 in 2024.

{{7.}} In May 2025, FirstRepair and Decolonizing Wealth Project launched a mapping tool that documents state and local reparations initiatives across the United States. See: FirstRepair and Decolonizing Wealth Project, “Mapping the U.S. Reparations Movement” (web page), https://www.reparationsresources.com/.

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The overtime provisions of the Fair Labor Standards Act (FLSA) provide protections to most hourly workers and many low-salaried workers, guaranteeing time-and-a-half pay for hours worked in excess of 40 a week. FLSA overtime rules apply to all private businesses with annual revenue of at least $500,000, as well as hospitals, care centers, schools, and public agencies. Because federal law otherwise sets no limits on the hours employers can require people to work (and no requirements for rest breaks or days off), overtime pay is an especially important policy to disincentivize overwork and encourage employers to share work across more employees, bolstering hiring.

What are the threats to federal overtime protections?

Current threats to overtime pay include:

• Excluding workers from overtime by lowering the salary threshold for automatic eligibility: The first Trump administration took action to lower the salary threshold at which workers become automatically eligible for overtime pay when they work more than 40 hours in a week, denying eligibility to millions of low-salaried workers. It is widely anticipated that the second Trump administration will likewise block a new proposed rule to raise the salary threshold, again denying coverage to millions of workers who earn between $35,568 and $58,656 (likely by refusing to defend the rule against ongoing court challenges from business groups).
• Stripping overtime coverage from direct care workers: The Trump administration has proposed rule changes that would reverse a 2013 regulation expanding overtime coverage to include “direct care” workers, such as home health aides and certified nursing assistants, employed by agencies.
• Allowing employers to deny overtime pay: Proposals laid out in Project 2025 recommend altering the FLSA to allow employers broad new discretion to deny workers overtime pay by altering calculations of what counts as a workweek, substituting time off in place of overtime pay, and/or deeming remote employees ineligible for overtime pay.
• Increasing likelihood of underpayment or nonpayment of overtime: Failure to pay overtime is one of the most common forms of wage theft, and diminished U.S. Department of Labor (DOL) capacity to enforce wage and hour laws will exacerbate this problem.

How can states maintain and strengthen overtime protections?

States have legal authority to establish their own overtime standards so long as they are at least as protective as those in the FLSA; federal overtime laws set a floor above which states can adopt and enforce their own stronger standards. Given the very real risk that aspects of FLSA overtime protections could be eliminated (or will go unenforced), it is important for states to at least lock in existing FLSA overtime protections. Additionally, states should seek to go beyond the current floor, as some FLSA provisions—such as those exempting certain categories of workers from overtime—are long overdue for an update.

Step I: Update state statutes to lock in current federal protections

Because for decades most states have deferred to the FLSA’s overtime standard and relied at least in part on federal enforcement of overtime laws, existing overtime language in state statutes is often outdated, incomplete, or inadequate. For example:

• Minnesota state law only requires overtime after 48 hours of work in a week; in Kansas it is 46. These laws are of no practical import right now, because the FLSA overrules them, but in the absence of FLSA protections, workers in these states would have to work more hours to qualify for overtime.
• In several states—including Iowa, Oklahoma, Tennessee, and others—there is no state statutory right to overtime. At present, workers with unpaid overtime claims in these states can only go to the federal government for redress, meaning that if DOL lacks adequate enforcement capacity, workers’ recourse may become limited. Moreover, while the FLSA currently covers workers in all states, if FLSA overtime protections disappear, workers would have no right to overtime pay at all in these and other states with no overtime language in state code.
• Some states, like Hawaii and Michigan, do require overtime pay after 40 hours in a workweek but currently exclude employment that is subject to the FLSA from state coverage. States with such exclusions should remove them to ensure consistent state coverage and enforcement jurisdiction, rather than expecting some workers to rely solely on tenuous federal overtime standards and enforcement.

Many states, such as New Jersey, New Mexico, and Pennsylvania, already mirror the basic overtime provisions of the FLSA, guaranteeing overtime pay after 40 hours in a workweek. Lawmakers in other states should act quickly to ensure their state codes at a minimum follow suit. There is no harm in codifying overtime protections in state law even if federal standards don’t change, whereas delaying updates to state law puts workers at risk of real harm if federal protections are diminished or left unenforced.

One legislative model for states to consider is the 2025 “trigger law” enacted in Illinois that directs state agencies to ensure all state wage and hour standards remain at least as protective as existing federal wage and hour standards in the event that federal standards are weakened or eliminated. 

State overtime rules, if they exist, are typically part of state labor and employment or wage and hour statutes. Policymakers and advocates should review their state’s laws to assess whether overtime language codifies at least the same level of protection currently provided under the FLSA and to ensure that the state has the power to enforce its own overtime laws without relying on the federal government.

Step II: Close critical gaps in overtime coverage

While the FLSA sets an important floor for overtime pay, it is an 80-year-old statute with notable gaps in coverage that state policymakers should try to close. Priority steps states can take to update overtime coverage include:

1. Eliminate occupational exemptions: Agricultural workers are not covered by the FLSA, a racist holdover from when the act was initially passed in 1938. And while some domestic service workers such as nannies and house cleaners were covered in 1974, certain home care workers providing care for seniors and persons with disabilities remain excluded. A 2013 Obama-era rule that extended coverage to many home care workers is at risk of being rolled back by the Trump DOL. Other exceptions apply to smaller categories of workers. States have it in their power to eliminate these exemptions. For example, several states—including California, Washington, and Colorado—already cover agricultural workers under state minimum wage and overtime laws. And some states like California have already taken action in 2025 to ensure that state law will guarantee home care workers overtime pay in response to proposals to remove existing federal protections. 
2. Raise and automatically update the salary threshold for exemption of workers in executive, administrative, and professional (EAP) jobs: Currently, workers in EAP roles are exempt from FLSA overtime requirements if they earn more than $684 per week. The Biden administration issued a rule to update that threshold to $844 per week in 2024, $1,128 per week in 2025, and to automatically adjust for inflation thereafter. This rule was blocked by the courts and there is every expectation that the Trump administration will not defend the new rule. States can move to lock in the new threshold and assure regular future updates. Six states—Alaska, California, Colorado, Maine, New York, and Washington—already have an EAP salary threshold above the federal level. For example, Washington will by 2028 remove the exemption for any employee making the equivalent of 2.5 times the state minimum wage or less. Because the state minimum wage is indexed to inflation, the state’s salary threshold will continue to rise with the state minimum wage.

Step III: Modernize overtime policies to fit today’s economy, improve safety and productivity, and promote work-life balance

In addition to codifying FLSA overtime rules and closing coverage gaps, there are many steps states can take to serve priority policy goals like preventing overwork, stabilizing work schedules, and increasing work-life balance. Indeed, overtime pay was incorporated into the 1938 FLSA as a compromise, following decades of international worker struggles for the eight-hour day and during a period of intense debate over whether public policy should place some limits on the often near-absolute control many employers exerted over workers’ time. These are questions worth revisiting in the context of state policymaking today, when overtime pay alone has failed to curb excessive use of forced overtime or scheduling practices that in some industries include dangerously long shifts or months of consecutive shifts with no days off, both of which are closely correlated with declining productivity and adverse health and safety impacts.

1. Add overtime pay to discourage excessively long shifts, encourage periodic days off, and promote fair scheduling. Many state laws include useful examples of overtime policies targeted at discouraging excessive consecutive hours of work or days of work without time off:
   • California mandates that workers receive double time (not just time-and-a-half) after 12 hours of work in a day.
   • In Alaska, overtime pay applies to all eligible employees working more than eight hours in a day. Other states have more limited expansions; for example, Oregon requires manufacturing employers to begin paying overtime after 10 straight hours.
   • A number of states, including Alaska, Florida, Nevada, and Oregon, make some employees eligible for overtime pay after a certain shift length, regardless of the number of hours worked in the week.
   • Kentucky requires overtime pay for all work done on a seventh straight day of work. California requires overtime pay for all work done beyond eight hours on a seventh straight day of work.
   • Fair scheduling laws, which Oregon and a number of cities have adopted, similarly require employers to provide advance notice of schedules and extra pay for schedule changes. Some laws also crack down on “clopenings”—the practice of requiring an employee to work late in the evening and start again early the next morning—by requiring extra pay for shifts within 12 hours of each other.
2. Guarantee rights to refuse excessive forced overtime: States could also ensure that hourly workers have the right to decline excessive overtime hours without fear of retaliation. For example, Maine proposed legislation to protect overworked paper industry workers—who were sometimes forced to work 24-hour shifts—guaranteeing a right to refuse more than two hours of overtime in a day, and requiring seven days advance notice of schedules.
3. Expand overtime laws to incentivize transitions to shorter work weeks: Well before passage of the FLSA and up to the present day, workers and advocates have proposed that productivity gains should result in shorter work hours (with no loss of pay). Numerous versions of proposals to move to a four-day or 32-hour standard work week have been introduced in several states, including pilot and study bills. State expansions of overtime pay to hours worked beyond 32 in a week (or other numbers less than 40) could help incentivize shifts toward shorter work weeks.
4. Look to tested overtime language in collective bargaining agreements for policy models: Collective bargaining agreements negotiated between unions and employers often contain more expansive overtime and scheduling provisions that can serve as models for more ambitious policy ideas. For example, language in such agreements may list additional circumstances when overtime or other forms of premium pay are required for work on weekends, holidays, on-call hours, or following scheduling changes. These agreements may also set out processes for workers to accept or decline additional work hours or new shift assignments, timelines for employers to provide notice of work schedules, fair procedures for assigning overtime, and more.

Additional recommended resources 

• State minimum wage [and overtime] laws (U.S. Department of Labor) 

• Overtime laws by state (Bloomberg Law) 

• Explaining the Department of Labor’s new overtime rule that will benefit 4.3 million workers (Economic Policy Institute) 
• Home care worker rights in the states after the federal companionship rules change-2013 (National Employment Law Project; note that this resource is an excellent tool for identifying relevant state code sections, but may not reflect more recent changes to state laws) 

Editor’s note: This piece was revised on October 24, 2025, to add an “Additional recommended resources” section and include updates on federal and state policy developments that took place after initial publication. 

The 1938 Fair Labor Standards Act (FLSA) sets guidelines for the hours and nonhazardous jobs for which employers can hire minors under 16. The FLSA also empowers the Secretary of Labor to prohibit all minor employment in occupations that are particularly dangerous through “hazardous occupations orders.” It covers employers that conduct at least $500,000 in annual sales or any employees engaged in interstate commerce (this coverage is interpreted broadly with respect to child labor—if a firm engages in any form of interstate commerce, its minor workers are covered). Federal law sets an important but limited and increasingly outdated floor for child labor standards. For example, federal child labor standards in agriculture are much weaker than in nonagricultural employment, hazardous occupations orders have not been updated in decades, and there are no work hours protections for minors over the age of 15 (see Table 1).

Table 1

What are the threats to federal child labor standards?

Threats to federal child labor standards include federal proposals to weaken child labor protections and ongoing state-level efforts to erode the FLSA by proposing or enacting state child labor legislation that conflicts with federal law:

• Project 2025, the anti-worker policy roadmap being implemented by the Trump administration, proposes:
  1.  Eliminating federal hazardous occupations orders, which protect minors from employment in particularly dangerous jobs, like mining and roofing; and
  2. Allowing states to obtain waivers from the FLSA—including provisions that prevent harmful forms of child labor.

• In recent years, a coordinated, industry-backed campaign to erode child labor standards has generated proposals in dozens of states to weaken or eliminate state standards exceeding the minimal federal “floor” for child labor protections. Some state lawmakers have gone even further, proposing or enacting bills that directly conflict with federal minimum standards, while stating intent to build pressure for the eventual relaxation or elimination of FLSA standards for the whole country. Common targets for these attacks on state child labor standards include:
  • Eliminating youth work permits
  • Eliminating hours of work guidelines for 16- and 17-year-olds
  • Eliminating meal or rest break requirements for minors
  • Expanding employers’ ability to hire minors for previously prohibited hazardous jobs
  • Lowering the age at which minors can serve alcohol and/or work in establishments serving alcohol
  • Establishing or expanding laws that allow employers to pay students or other youth a subminimum wage
  • Creating new exemptions from state child labor protections, for example for homeschooled youth or youth in certain occupations
  • Creating new systems—such as unregulated “internship” or “work-based learning” programs—that allow employers to skirt child labor laws or hire minors for otherwise prohibited hazardous work

By repeatedly proposing—and in some cases implementing—standards that conflict with federal law, these states are chipping away at the already fragile federal floor for workplace protections.

How can states maintain and strengthen child labor protections?

States have legal authority to establish their own child labor standards; the FLSA sets a floor above which states can adopt and enforce their own stronger standards.

States have historically played a prominent role in setting child labor standards—some states have protections in place that predate the FLSA, and many have long legislated above federal law. Other states maintain standards that generally mirror the FLSA, with few additional protections, and some states have standards that are significantly weaker than the FLSA. In many cases, a state’s standards are stronger than the FLSA in some areas and weaker in others. When a state standard is weaker than the FLSA, federal law applies. However, since only federal agencies can enforce federal laws, state laws that fall short of federal law increase the risk of federal violations while shifting the enforcement burden to already-overburdened federal agencies. Amid Trump administration attacks, federal agencies are now facing even more pronounced staffing shortages that will further limit their enforcement capacity.

In response to increasing child labor violations, many states are already taking action to strengthen state child labor standards and enforcement. Given the very real risk that aspects of FLSA child labor protections could be eliminated (or will go unenforced), all states should at a minimum lock in existing FLSA standards and ensure state capacity to enforce them. Beyond this, states have critical opportunities and responsibilities to modernize child labor standards beyond the minimal, outdated FLSA floor to ensure that minors who must work or choose to work can access safe work experiences that don’t harm their health or education. Fortunately, state lawmakers have an array of options to consider and tested legislative models to use as a guide.

Step I: Update state statutes to lock in current federal protections.

State standards should be at least as strong as those in the FLSA. Ensuring that state standards mirror FLSA minimums protects both employers and children from the risks and confusion that arise when state standards contradict federal law. For example, after a Utah employer was fined for violating federal child labor law for incorrectly following state child labor guidelines that were weaker than FLSA standards, Utah enacted a bill to align state guidelines on hours of work for minors under 16 with FLSA standards.

Weaker standards often appear in areas of state code covering work hours or prohibited hazardous occupations. For example:

• Idaho allows employers to schedule 14–15-year-olds up to nine hours a day or 54 hours per week. Federal law allows employers to schedule 14–15-year-olds up to three hours a day or 18 hours per week in a school week and up to eight hours per day and 40 hours per week in a nonschool week.
• Iowa allows employers to hire 14-year-olds in industrial laundries and 15-year-olds in light assembly work, among other weaker standards. Federal law does not permit 14–15-year-olds to work in these settings.
• West Virginia allows employers to hire 16–17-year-olds enrolled in a “youth apprenticeship program” for all 17 hazardous occupations prohibited for minors under federal law. Federal law allows 16–17-year-olds to perform certain types of intermittent work in only seven of these occupations when enrolled in a bona fide registered apprenticeship program meeting certain stringent standards.

State policymakers should review their child labor statutes alongside federal child labor laws to identify areas of weakness. At a minimum, states should ensure that their guidelines for hours of work and hazardous occupations orders are at least as protective as the FLSA.

Step II: Close coverage gaps and address weaknesses in FLSA minimum protections

States can address many longstanding limitations and gaps in federal child labor protections. Examples of priority actions for state lawmakers to consider include:

1. Maintain effective youth work permit systems: Youth work permits have been shown to reduce child labor violations and aid in enforcement. The FLSA suggests—but does not require—that employers maintain certificates confirming the age of minors they employ. It also does not require minors to receive a permit as a condition of employment. Instead, youth work permit policies have historically been left to states. Most states already have some sort of permit system in place. Youth work permits are often simple, one-page forms that engage employers, parents, youth, and sometimes educators, in ensuring a child’s employment is legal, safe, and age-appropriate. Permits remind employers of existing child labor laws, inform parents of their child’s rights and affirm their consent, and aid state agencies in investigations of potential violations. States without work permit systems should implement them and states with existing work permit systems should assess and modernize their systems, as recently done in Illinois and New York and proposed in California.
2. Implement or expand work hour guidelines for 16- and 17-year-olds: The FLSA sets standards to protect children from excessive hours of work, especially during the school year. However, the FLSA was passed at a time when fewer than half of students completed high school, and its hours of work guidelines have never been updated to cover older minors (16- and 17-year-olds). In the absence of state standards, older teens can be scheduled to work unlimited hours per day or per week, including during school weeks. Some states have already adopted standards to address this gap, but fewer than half of states have hours guidelines in place for older teens. States should set maximum daily and weekly work hours for 16–17-year-olds and prohibit overnight work during the school week. Minimum standards should include limiting employers to scheduling 16–17-year-olds for no more than 32 hours in a school week, as nine states already do,{{1}} and prohibiting employers from scheduling 16–17-year-olds to work after 10 p.m. or before 6 a.m. (or similar), as 20 states and D.C. already do.{{2}}
3. Update prohibitions on hazardous child labor: The FLSA prohibits minors under 18 from working in a list of 17 nonagricultural occupations and 11 agricultural occupations that have been found to be particularly hazardous for minors. Many of these hazardous occupations orders have never been updated. And new orders have not been created to account for new forms of hazards in our modern economy, particularly in agriculture. Moreover, the FLSA opens the door to dangerous exemptions from some hazardous orders,{{3}} with language that allows student apprentices and learners enrolled in approved training programs to do certain types of hazardous work under close supervision. State lawmakers can update prohibitions on hazardous child labor by expanding existing hazardous orders, creating new orders to cover hazardous occupations not covered under federal law, and ending student learner and apprentice exemptions. Lawmakers can use the 2002 National Institute for Occupational Safety and Health recommendations to the U.S. Department of Labor as a guide for revising state hazardous orders. For example, Illinois recently updated and clarified state law to prohibit employment of minors in hazardous workplaces not covered under federal law, such as gun ranges and establishments primarily involved in the sale of tobacco or alcohol.
4. Extend equal protections to children working in agricultural occupations: Agriculture is the most dangerous sector of employment for minors, yet federal child labor standards remain much weaker in agriculture than in nonagricultural industries. State lawmakers can address this longstanding gap in federal law by aligning agricultural child labor standards for work hours and hazardous work with standards for nonfarm work. For example, in 2025, New Jersey lawmakers introduced a bill to raise the minimum age for agricultural employment to 14 and align work hours and hazardous work protections in agriculture with nonagricultural standards, among other updates to protections for farmworkers of all ages.
5. Increase civil penalties to deter violations and update them based on inflation: Under most existing state penalty structures, civil monetary penalties for child labor violations are very limited and, in some cases, nonexistent. Some states levy no civil penalties at all, and many states have not reviewed or updated penalty amounts in decades. In Indiana, for example, penalties range from a warning letter for an initial violation to a maximum of only $400 for a fourth violation within two years. Low or nonexistent penalties that can easily be absorbed as a “cost of doing business” do not deter employer violations and leave state enforcement agencies with few tools for ensuring compliance by bad actors. To ensure penalties serve as effective deterrents and enforcement tools, state lawmakers should set meaningful minimum penalties for first offenses and very high maximum penalties for serious or repeat offenses, as Illinois did in 2024. States can use federal civil penalties and annual adjustments as a benchmark; for example, current federal maximum civil penalties for a child labor violation range from $16,035 to $145,752, and rates are adjusted for inflation each year.
6. Strengthen state enforcement capacity and authority: Ensuring adequate state enforcement of child labor laws will become particularly important as federal enforcement capacity is diminished.
   • States should ensure funding for dedicated child labor enforcement staff so as not to take resources away from other wage and hour investigations. For example, a Virginia lawmaker recently requested an increased budget appropriation for child labor enforcement.
   • States should grant labor agencies sufficient authority to fulfill enforcement goals. For example, Nebraska recently enacted a bill that gives its labor agency power to subpoena records from employers suspected of violating the law.
7. Eliminate youth subminimum wages: The FLSA allows workers under age 20 to be paid as little as $4.25 per hour for their first 90 days of employment and allows employers to pay a lower minimum wage to full-time students in certain occupations, student learners, and apprentices. In recent years, some states have taken action to close these gaps so that all workers—regardless of their age—have a right to the minimum wage. All states should follow suit.

Step III: Modernize child labor standards to protect children’s health and wellbeing, safeguard their right to education, and improve their career prospects

The most effective child labor laws implement evidence-based guardrails to prevent excessive and hazardous work—as discussed above—alongside innovative policies to empower youth workers, deter violations, and provide meaningful redress and support to victims if violations occur. State lawmakers need not be bound by traditional areas of policy covered by the FLSA and can also:

1. Require workers’ rights education: If young workers do not know their rights, they will be less likely to report unsafe or illegal working conditions. States can invest in labor education to address this information gap. For example, California mandated that high schools annually teach students about workplace rights and the labor movement following a curriculum developed by the UC Berkeley Labor Center.
2. Mandate employer training on child labor laws and commitment to following the law: For example, Washington requires businesses who hire minors to obtain a special endorsement on their business license affirming compliance with child labor laws.
3. Encourage reporting by protecting whistleblowers and victims: Most labor investigations depend on worker reporting. Because young workers lack experience and knowledge about workplace rights and may fear employer retaliation, loss of wages, or immigration enforcement, many workplace abuses go unreported and uninvestigated. To address these enforcement challenges, state lawmakers should:
   1. Provide multiple avenues for child labor victims to be made whole after they report violations and risk losing their job. In most states, civil penalties for child labor violations are deposited into the state’s General Fund, and minors receive no compensation in the form of damages owed by the employer. Moreover, when a child is injured or killed on the job while employed illegally, they (or their family members in the event of the child’s death) are generally limited to the workers’ compensation system as their sole source of financial compensation. However, several states have enacted or proposed bills to make aggrieved minors eligible for additional compensation in the form of damages; for example, Colorado recently made it possible for minors who are injured while employed under illegal conditions to pursue private legal action and receive monetary damages.
   2. Enact whistleblower and anti-retaliation protections to protect workers who report labor abuses, as recently done in Minnesota.
   3. Remove provisions of state law that may discourage reporting of violations, such as those holding parents criminally responsible for allowing a child to be employed under illegal conditions, as Colorado recently did.
   4. Provide wraparound services to victims of illegal child labor to address root causes of excessive or hazardous work. For example, unaccompanied migrant youth should be provided with legal services, assistance in securing safe and age-appropriate work, and connections to community-based organizations or local government agencies that can provide additional supportive services.
4. Use innovative enforcement strategies to meaningfully hold employers accountable: Civil monetary penalties are a necessary but insufficient deterrent. State lawmakers should take a holistic approach to changing employer behavior and significantly increase the financial and reputational costs associated with breaking the law. They should:
   1. Use “hot goods” provisions and “stop work” orders to immediately disrupt the normal business of employers who are actively violating the law. “Hot goods” provisions allow courts to stop the flow of goods produced using illegal child labor and are currently in place federally. “Stop work” orders allow labor agencies to require the cessation of business until child labor violations are addressed, increasing the cost of violating the law. New Jersey permits such orders to be used when minimum wage violations are occurring.
   2. Bar violators from receiving public funding as proposed in Alabama, and implement other penalties, like revoking an employer’s permission to hire minors when they violate the law, as enacted in Washington.
   3. Create lead corporation accountability, so corporations are held jointly responsible for violations committed by their subcontractors or staffing agencies as proposed in a federal bill.
   4. Make employer violations data more accessible to the public—as recently mandated in Colorado—or publicly shame companies that violate the law by posting about violations on the state labor agency’s website—similar to New Jersey and New York.
   5. You can read more about these and other policies to address and deter violations here: Policies for states and localities to fight oppressive child labor.

Additional recommended resources 

• Child labor state legislation tracker (Economic Policy Institute) 

• Campaign to End US Child Labor 

• Child Labor Coalition at the National Consumers League 

• Federal child labor regulations under the Fair Labor Standards Act  

• State child labor laws (U.S. Department of Labor; note that this page may not reflect all recent state legislative changes) 

• How states can stop the corporate campaign to roll back child labor protections (State Innovation Exchange and Economic Policy Institute) 

Editor’s note: This piece was revised on October 24, 2025, to add an “Additional recommended resources” section. 

{{1.}} Connecticut (32 hours), Florida (30), Kentucky (30), Maine (24), Michigan (24), New Hampshire (30), New York (28), Pennsylvania (28), Washington (20). See https://www.dol.gov/agencies/whd/state/child-labor.

{{2.}} Alabama (10 p.m. to 5 a.m.), Arkansas (11 p.m. to 6 a.m.), California (10 p.m. to 5 a.m.), Connecticut (10 or 11 p.m. to 6 a.m.), Florida (11 p.m. to 6:30 p.m.), Indiana (10 p.m. to 6 a.m.), Kentucky (11 p.m. to 6 a.m.), Louisiana (11 p.m. or 12 a.m. to 5 a.m.), Maine (10:15 a.m. to 7 a.m.), Massachusetts (10 p.m. to 6 a.m.), Michigan (11:30 p.m. to 6 a.m.), Minnesota (11 p.m. to 5 a.m.), New Jersey (11 p.m. to 6 a.m.), New York (10 p.m. to 6 a.m.), North Carolina (11 p.m. to 5 a.m.), Ohio (11 p.m. to 7 a.m.), Pennsylvania (12 a.m. to 6 a.m.), Rhode Island (11:30 p.m. to 6 a.m.), Tennessee (10 p.m. to 6 a.m.), Washington (10 p.m. to 7 a.m.), and D.C. (10 p.m. to 6 a.m.). See https://www.dol.gov/agencies/whd/state/child-labor.

{{3.}} Hazardous occupation (HO) 5. Power-driven woodworking machines; HO 8. Power-driven metal-forming, punching and shearing machines; HO 10. Power-driven meat-processing machines, slaughtering and meat packing plants; HO 12. Balers, compactors, and power-driven paper-products machines; HO 14. Power-driven circular saws, band saws, guillotine shears, chain saws, reciprocating saws, wood chippers, and abrasive cutting discs; HO 16. Roofing operations and work performed on or about a roof; HO 17. Trenching and excavation operations.

Political and religious coercion in the workplace is a growing problem affecting workers from all backgrounds and across the political spectrum. U.S. employers have tremendous power over worker conduct under current federal laws. For example, employers can require workers to attend “captive audience” meetings—and force employees to listen to political, religious, or anti-union employer views—on work time.

In the face of this growing threat, legislators in 18 states have advanced bills to protect workers from offensive or unwanted political and religious speech unrelated to job tasks or performance. These bills are designed to prohibit employers from threatening, disciplining, firing, or retaliating against workers who refuse to attend mandatory workplace meetings focused on communicating opinions on political or religious matters.

Importantly, these state laws do not limit employers’ rights to express their beliefs freely or even to continue inviting employees to attend workplace political or religious meetings. These laws simply empower workers to opt out of unwelcome political speech by protecting them from financial harm or retaliation if they choose not to attend such meetings.

A growing number of states are taking action to protect workers’ freedom of thought and association

So far, six states have enacted laws designed to protect employees’ dignity and freedom of thought and association. Table 1 summarizes these laws, additional bills currently under consideration, as well as bills that have been previously proposed.

Table 1

Because most workers (in the absence of a collective bargaining agreement) are considered “at-will” employees who can be terminated at any time, employers often try to exercise vast authority over employees’ lives, including their political activities or freedom of association.

This power is routinely abused to coerce workers into attending political rallies, religious discussions, or anti-union meetings under the threat of disciplinary action. State legislators, however, are working to fill the void left by continued congressional inaction. State legislation that creates a minimum labor standard to protect workers from abusive forms of employer coercion can help workers more fully exercise their basic rights.

Current labor and employment laws allow bosses to bombard workers with politics and religion

Employers are increasingly using the workplace to advance their political interests, and the lack of legal protections for workers has created a situation ripe for coercion. Traditionally, employers have relied on donations, lobbying, and political action committees to advance their political interests. However, nearly universal “at-will” employment laws and recent legal rulings are emboldening employers to politically mobilize their own employees.

Pervasive “at-will” employment laws give employers the right to terminate workers without cause or for virtually any reason—including their political beliefs. And the 2010 landmark Supreme Court decision in Citizens United v. Federal Election Commission extended First Amendment protections to corporate political spending and gave employers the green light to hold political captive audience meetings. In tandem, these laws have had dire implications for workers and the democratic process.

A 2015 study revealed how widespread political communication is in U.S. workplaces. One in four U.S. workers has been contacted by their employer regarding a political matter. Of these workers, 20% (representing 5% of all U.S. workers) received messages from their boss that included one or more threats of job loss, business closure, or changes to wages and hours. Under current federal labor and employment laws, it is perfectly legal for an employer to threaten, discipline, or terminate an employee for objecting to their boss’s political views.

Political coercion affects U.S. workers of all backgrounds and across the political spectrum. Consider the following examples in which workers were pressured to vote in specific ways or forced to donate to political campaigns or lobby other voters to support legislation.

• In 2014 at a ConocoPhillips’ site in Alaska, some 200 construction workers were called into a “safety stand-down” meeting—typically held after serious workplace incidents. Rather than addressing a safety concern, a ConocoPhillips’ representative discussed the company’s stance on the upcoming August primaries, emphasizing its opposition to a ballot measure to repeal a significant tax cut for oil companies. The message to the workers was that their jobs relied on tax breaks, and voting against the repeal could harm their industry and livelihoods. One worker described the meeting as an abuse of safety protocol, while others reported fearing for their jobs.
• During the 2012 election, presidential candidate Mitt Romney spoke at an Ohio coal mine at the invitation of Murray Energy’s CEO, Robert Murray. Workers later said that mine operations were halted, and they were forced to attend the event without pay. Managerial staff also reported being pressured to donate to Murray Energy’s political action committee. Internal records later revealed that employee donations were monitored and that employees who failed to donate generously enough faced potential demotions and missed bonuses.
• In 2018, D.C. voters introduced Ballot Initiative 77 that would have raised the tipped wage from $3.33 to the regular minimum wage ($12.50 an hour at the time). Restaurant industry representatives embarked on a vigorous campaign opposing the initiative called “Save Our Tips,” warning of widespread restaurant closures and job losses. Around the city, restaurants displayed “Save Our Tips” and “NO on 77” signs. Some employers distributed weekly newsletters to employees featuring anti-Initiative 77 content and provided workers with instructions on how to vote on the initiative. Other employers held captive audience meetings during work hours to tell workers that Initiative 77 would harm them. Additionally, workers were encouraged to inform customers about the perceived negative impacts of the initiative.

While Title VII of the Civil Rights Act explicitly prohibits religious discrimination by employers, religious coercion is rampant in U.S. workplaces. For example:

• In an infamous Oregon case, a formerly incarcerated worker of Native American descent attended weekly, hour-long Bible study sessions out of fear “that he wouldn’t be able to find other work” if he declined. Following six months of weekly attendance, the worker declined to attend further sessions and was subsequently fired.
• A North Carolina-based home renovation company required employees to attend daily worship sessions that included prayer and Bible reading. A lawsuit alleged that the company owner would track attendance and reprimand employees who were absent. Additionally, when a manager asked to be excused from prayer, the owner subsequently cut his pay and then fired him.
• Employees at a Long Island, New York, firm alleged they were compelled to pray, chant, and partake in spiritual interpersonal workshops as part of a program called “Onionhead.” Workers described the workplace as “cult-like” with religious ceremonies where incense was burned to purify the workspace and lights were dimmed to deter demons. Employees and later the Equal Employment Opportunity Commission asserted that employees who resisted were disciplined or terminated.

Employers use ‘captive audience’ meetings to support union-busting

Captive audience meetings have likewise become one of employers’ preferred union-busting tactics. Workers who express interest in unionizing are routinely required by employers to hear one-sided propaganda. Workers have no right to ask questions or hear opposing viewpoints during these meetings. Analysis of National Labor Relations Board (NLRB) elections documents shows that 89% of all employers conduct captive audience meetings in response to unionization efforts. And the use of captive audience meetings caused the average union election win rate to fall from 73% to 47%.

Today, employers spend over $400 million per year on “union-avoidance” consultants, who specialize in using captive audience meetings along with a host of other tactics designed to intimidate and instill fear in workers for the purpose of union-busting. Legislation giving workers the right to opt out of captive audience meetings without fear of discipline or termination is fundamental to restoring workers’ basic right to organize without interference.

The unequal impact of coercive speech on workers

Legislation to protect workers from coercive speech is particularly important for the workers most likely to encounter discrimination at work.

Particularly vulnerable to such coercion are Black, brown, disabled, formerly incarcerated, LGBTQ, and other groups of workers who have historically faced discrimination and unequal treatment in the labor market. Structural racism and discrimination in the form of systematically higher unemployment rates, higher job search costs, lower wages, and greater tolerance for unfair treatment, put these workers in a disadvantaged position to resist employer abuses.

Further, the United States’ piecemeal approach to holding employers accountable for discrimination often puts the onus of enforcement on workers, leaves many exposed to retaliation, and excludes many of the most vulnerable workers altogether. Given the precarity of employment for non-union workers in the United States, there is a clear need for comprehensive and enforceable worker protections from coercive speech.

Conclusion: State-level solutions to coercion

State lawmakers have the power to fight back against employer coercion and address gaps in weak, outdated federal laws. States can legislate to protect workers from unwanted speech, as affirmed by the Supreme Court’s 1988 ruling Frisby v. Schultz. Many of the proposed state-level laws also have the advantage of offering quicker enforcement mechanisms than federal proceedings and include provisions for “injunctive relief” (emergency court intervention to immediately stop damaging employer behavior), restitution for lost wages, reinstatement with retained benefits and seniority, and coverage of attorney fees. As the national spotlight intensifies on growing economic inequality and decades-long erosion of workers’ rights, it is clear that state-led initiatives could play a pivotal role in shaping the future of worker rights in the U.S.

Legislators in all states should continue to build on existing momentum to protect the freedom to avoid offensive or unwanted political and religious speech at work. Lawmakers can enact enforcement mechanisms to protect workers against financial harm and retaliation if they opt out of such speech. This legislation will help safeguard democracy by protecting citizens from undue influence over their political views, donations, or votes; guaranteeing workers’ freedoms; and ensuring all workers can fully exercise their rights in the workplace.

The federal government’s response to the COVID-19 pandemic was different. By providing strong fiscal relief at the scale of the problem, federal lawmakers protected the country from a protracted recession and provided regional policymakers with the resources to make transformative investments in support of working families.

However, as federal government relief efforts wind down, Midwestern policymakers must take full advantage of an improving economy and new federal resources made possible through recent legislation. They can use these resources to bolster public systems (e.g., education, health care) and rebuild the structures and programs that will create high-quality union jobs in infrastructure, manufacturing, and clean energy technologies.

The Midwest’s story as a place of opportunity for workers building the core products of the U.S. economy need not be lost to the past. Regional lawmakers have a historic opportunity to restore that character, advancing equity and economic opportunity for all who call the region home.

Midwestern policymakers have an opportunity to change course to improve the lives of working families in the region

This report closely examines the economy of the Midwest as the nation recovers from the COVID-19 pandemic. The influx of federal funds from the CARES Act, the American Rescue Plan Act (ARPA), and other federal legislation blunted the worst economic effects from COVID, but those supports are now waning. Policymakers across the Midwest have choices to make, choices that will critically shape the economic trajectory for working families in the region going forward.

Midwestern policymakers enacted numerous anti-worker policies in the wake of the Great Recession

The 12 states of the Midwest region{{1}} faced just such a moment of decision over a decade ago. The Midwest entered the Great Recession as a region with (on the whole) high workforce participation, strong public- and private-sector unions, and many dynamic local governments that were supporting strong labor standards and safe workplaces (Pabst 2011; McKinney 2021; Wolfe et al. 2021).

In the wake of the Great Recession, though, right-wing politicians took control in all Midwestern states except Illinois and Minnesota (Tope, Pickett, and Chiricos 2015) and began passing policies that had negative outcomes for workers, especially for Black and brown workers. The majority of Midwestern states embraced fiscal austerity, disinvested in public services, and rolled back workers’ rights. Further, they restricted local governments from (among other things) raising minimum wages, enacting paid leave, or setting high-road labor standards for publicly funded development projects. The predictable outcomes were an increase in inequality, wage stagnation, and worsening racial wage and employment gaps.

Table 1 notes some of the key policy decisions Midwestern states made from the Great Recession through the beginnings of the COVID-19 pandemic.

Table 1

Anti-worker policy changes

RTW laws. So-called right-to-work (RTW) laws limit the power of private-sector unions. RTW laws have been shown to exacerbate income inequality, lower worker wages, and widen racial wage and employment gaps (Sherer 2023).

Five Midwestern states already had RTW laws on the books before the Great Recession; in the 2010s, Indiana, Michigan, and Wisconsin joined them. Missouri also enacted RTW in 2017, but Missouri’s voters overturned that decision in a 2018 ballot measure, with 67% of those voting opposed to RTW (Missouri Secretary of State 2018).

Restrictions on public-sector unions. In addition, eight Midwestern states passed legislation limiting the rights of public employees to organize and collectively bargain. The first of these was passed in a once pro-union state. In 1959, Wisconsin was the first state to grant public employees the right to collectively bargain (Lichtenstein 2002). The passage of Act 10 in March 2011 undermined those rights.

Wisconsin’s Act 10 prohibited negotiations over most workplace issues (such as hours of work, employee discipline, health insurance, and safety) and limited unions’ rights to collect union dues through payroll deduction. It also forced all unions to annually hold a recertification vote to maintain their status as a collective bargaining representative. The law further prevented public employers and unions from agreeing to worker raises above the Consumer Price Index without subjecting it to a voter referendum. The law’s clear purpose was to limit the power of workers, and it resulted in a significant decline in union membership in the state.

Preemption. A third policy enacted by most Midwestern state legislatures was the preemption of local labor standards. Preemption refers to state laws restricting the right of local governments (mostly cities and counties) to enact local ordinances on certain issues. Three particular local government actions were targeted by these preemption laws, which prohibited cities and counties from:

1. Setting a minimum wage higher than that of the state. In Kansas City, Missouri, and Milwaukee, Wisconsin, preemption laws forced a reduction in the cities’ existing minimum wages.
2. Enacting paid leave requirements for employers receiving public money.
3. Setting standards for municipal contracts and procurement through mechanisms common elsewhere such as project labor agreements (PLA)—contracts used in the construction industry to set basic conditions for safety, pay, and benefits on municipal projects—and prevailing wage laws.

Worker-friendly policy changes

Minimum wage increases. There is strong evidence that higher minimum wages are an effective policy for raising the pay of low-wage workers (EPI 2023b). Six of the 12 Midwestern states passed laws to raise their minimum wages during this period. However, the minimum wage in five Midwestern states is still set at the federal level of $7.25.

Medicaid expansion. Medicaid expansion reduces a state’s uninsured rate (Guerra-Cardus and Lukens 2023) and is associated with lower mortality rates, especially among women and Black people (Lee, Dodge, and Terrault 2022). Ten Midwestern states have expanded Medicaid through the Affordable Care Act; two have not (KFF 2023).

Expansion of collective bargaining rights. Two states in the Midwest—Minnesota and Illinois—took steps during this period to strengthen workers’ rights. Minnesota banned noncompete clauses and captive audience meetings, among other measures, and Illinois enshrined collective bargaining rights in the state’s constitution.

Midwestern states should pursue pro-worker policies to build on post-pandemic progress

With the onset of the COVID-19 pandemic, the region’s economy was bolstered by significant investment from the federal government. This investment—through the CARES Act, the American Rescue Plan Act, and other legislation—provided relief at the scale of the problem.

When millions of jobs were lost in the initial months of the pandemic, most of the unemployed and their families were reasonably protected. Indeed, pandemic safety net programs kept millions out of poverty (Banerjee and Zipperer 2022). Supports for businesses and fiscal aid to state and local governments prevented more severe layoffs. With household income reasonably maintained by federal programs, strong consumer demand fueled a rapid recovery, with employers eager to rehire staff. This tight labor market gave low-wage workers leverage, leading to strong real wage growth for most workers and a job market that had largely recovered by the end of 2022.

Midwestern states now have an opportunity to build on this momentum and shift away from the policy choices that weakened worker power prior to the pandemic. Going back to the anti-union, anti-worker austerity of the 2010s will exacerbate inequality, suppress wages, and weaken public services. That is not the path the Midwest should take. Instead, the Midwest should take the high road. Policies to support collective bargaining, strengthen labor standards, and invest in public services will lead to better lives for working families across the region.

Subsequent sections of this report describe how the Midwest economy has performed coming out of the pandemic, and how that performance compares both with the period leading up to the outbreak of COVID-19 and with the period of economic recovery following the Great Recession. We first look at the recovery of jobs and at trends in unemployment rates and employment levels. Next, we look at wages and other measures of job quality. We then discuss poverty and inequality in the region. We close with a discussion of the role of unions and collective bargaining in strengthening job quality and the lives of working families.

Jobs and unemployment

The Midwest continues to face job deficits relative to other regions

As of May 2023, the Midwest has gained 151,700 jobs (+0.5%) since February 2020—the second-smallest gain of any region. The Northeast gained less than 3,000 jobs (+0.01%), while the South gained over 2.5 million jobs (+4.6%) and the West gained nearly 1.1 million jobs (+3.0%) (Economic Policy Institute analysis of BLS-CES various years).

While the raw numbers seem to imply the Midwest is doing better than the Northeast, the Midwest is in fact the only region facing a jobs deficit—the gap between the current level of jobs and the level of jobs expected under pre-recession employment rates when accounting for population growth. The region would need to add about 116,000 jobs to regain its February 2020 employment at its May 2023 population size.

Meanwhile, all other regions have added more jobs than we would expect had they not experienced a recession. The West has added almost 330,000 jobs above this counterfactual (employment levels if the pandemic recession had not occurred), while the South has added over 188,000 jobs and the Northeast has added almost 38,000 (see Figure A).

Figure A

The Midwest’s unemployment rate is at a historic low, but racial disparities remain a concern

As a result of federal action to promote a strong jobs recovery from the COVID-19 pandemic recession, by 2022 all regions had achieved near-full or full recoveries to 2019 unemployment rates. The Midwest was no exception.

The region has enjoyed comparatively low unemployment rates over the medium term: The Midwest’s unemployment rate has been lower than the U.S. average for the past 13 years and has been the lowest of any region for seven of those years (see Appendix Figure A). As of May 2023, the Midwest’s unemployment rate—3.2%—was once again lower than any other region’s and has reached a historic low for the region (FRED 2023).

Within Midwestern states, unemployment remained highest in Illinois (4.1%) and Michigan (3.7%) as of May 2023. As shown in Table 2, all other Midwestern states had unemployment rates below the national average of 3.7% (BLS-LAUS various years).

Table 2

Workers of all races and ethnicities fared better during the current economic recovery than after the Great Recession. Over the first three years of the post–Great Recession recovery (2007–2010), the unemployment rate increased by over 6 points for Black, Hispanic, and AAPI/AIAN/multiracial workers{{2}} and nearly 4 points for white workers in the Midwest (see Figure B). After the Great Recession, these unemployment rates did not return to pre-recession rates until 2015—eight years later.

Figure B

In contrast, between 2019, the year just prior to the pandemic, and 2022, the unemployment rate declined among white workers (0.2 percentage points) and AAPI/AIAN/multiracial workers (0.8 percentage points). The unemployment rate for Black workers stayed the same. Among Hispanic workers, it increased 0.3 points.

Throughout this period, though, severe disparities have persisted. The unemployment rate for Black workers and AAPI/AIAN/multiracial workers was more than 2.5 times the white unemployment rate in 2022. Reducing these disparities requires bold investments, including expanding workers’ rights and worker power, investing in the care economy and public sector, addressing the affordable housing crisis, and reducing barriers to employment for formerly incarcerated Midwesterners (Kamper 2022a).

Employment

The Midwest achieved a quick return to pre-pandemic employment and must resist austerity to sustain progress

Arguably the best measure of labor market health, the prime-age employment-to-population ratio or prime-age “EPOP” is the share of workers ages 25–54 who are currently employed. Whereas other measures—such as the unemployment rate and the labor force participation rate—can mask labor market weakness resulting from workers’ decisions to seek work or be skewed by demographic changes, the prime-age EPOP is a straightforward calculation of what share of the core working-age population has a job.

The Midwest is a region that works. As shown in Figure C, since the mid-1980s, the Midwest has consistently had the highest employment-to-population ratio of any region of the country, reaching a peak of 84.3% in 1999.

However, failure to restore the public sector in the wake of the Great Recession in most states has stalled employment growth, and racial and gender employment gaps persist. The post-2000 decline in the prime-age EPOP nationwide was a result of fiscal austerity, which sapped aggregate demand (spending by households, businesses, and governments) and prevented a full recovery of employment (Bivens 2014). In the Midwest, harmful trade policy exacerbated these dynamics by further reducing aggregate demand (Shields and Stettner 2020).

Fortunately, fiscal stimulus in the wake of the COVID-19 pandemic has quickened the recovery of the prime-age EPOP relative to the early aughts.

Figure C shows that despite the unprecedented job losses caused by the COVID-19 pandemic, in both the Midwest and other regions, the prime-age EPOP recovered significantly faster after the pandemic-induced recession than it did following the Great Recession. In the Midwest, the prime-age EPOP took 11 years following the Great Recession to recover to its 2007 levels, and all regions exhibited similar trends. In contrast, in all regions, the prime-age EPOP has nearly recovered to its 2019 rates within three years. In 2022, the Midwest prime-age EPOP of 82% remains the highest in the country (see Figure C). Nationwide, the June 2023 prime-age EPOP rate—80.9%—is approaching the all-time high of 81.9% reached in April 2000 (Irwin 2023).

The federal response during the pandemic hastened the region’s employment recovery. However, without policies to support high-road jobs, the Midwest risks further decline in job quality, weakening workforce participation, and continued growth in inequality.

Figure C

Though the prime-age EPOP varies widely across states, all Midwestern states’ prime-age EPOPs recovered faster after the pandemic than after the Great Recession

Within the Midwest, the prime-age EPOP varies widely across different states but has exhibited similar trends since 2007. The prime-age EPOP is consistently highest in North Dakota, South Dakota, Iowa, Nebraska, and Minnesota, and lowest in Michigan, Ohio, Indiana, and Illinois.

In all Midwestern states, the prime-age EPOP fell during the Great Recession and faced an uneven recovery over the subsequent decade. During the pandemic recession, the prime-age EPOP fell more quickly and recovered more quickly than during the Great Recession, following a v-shaped pattern in most states.

Compared with 2007, the year prior to the Great Recession, and 2019, the year prior to the COVID-19 pandemic, four states exhibit prime-age EPOPs that are higher in 2022 than in both key previous years: Indiana, Illinois, Missouri, and Iowa. However, the other eight Midwestern states are faring worse on prime-age EPOP in 2022 relative to at least one of those years—or relative to both, as is the case in Ohio and Wisconsin. Wisconsin’s 2022 prime-age EPOP lags furthest behind 2007 levels, followed by slightly smaller gaps in Ohio, North Dakota, and South Dakota. South Dakota’s prime-age EPOP increased over its 2019 rate more than any other Midwestern state; the opposite is true for Wisconsin (see Figure D).

Figure D

Employment disparities by race and gender persist and, in some cases, have grown

Despite high employment rates overall and progress for Black workers, disparities remain in employment based on race/ethnicity and gender.

Employment rates by race/ethnicity

While the gaps between the white EPOP and the AAPI, Hispanic, and Black EPOPs have narrowed over the last 15 years, significant gaps remain, and the prime-age EPOP gap between white workers and AIAN/multiracial/other workers has grown (see Figure E). The Black prime-age EPOP (76.4% in 2022) is 7.1 percentage points lower than the white rate of 83.5%. The AIAN/multiracial/other prime-age EPOP (68.0%) is 15.5 points lower than the white rate.

The prime-age EPOP among white, Hispanic, and AIAN/multiracial/other workers has not recovered to 2019 levels. However, the prime-age EPOP among Black and AAPI workers has exceeded 2019 levels by 1.3 percentage points and 3.9 percentage points, respectively.

The recovery of the Black prime-age EPOP is an especially positive development given long-standing race-based disparities in labor market outcomes. The Black prime-age EPOP faced a slow recovery after the Great Recession but has reached an all-time high in the current recovery. This is likely the result of a tight labor market spurred by policy investments during the pandemic recession.

Figure E

Employment rates by gender

Little progress has been made to close the gap between the prime-age men’s and prime-age women’s rates of employment. The share of prime-age men in the Midwest with a job has consistently been at least 10 percentage points higher than that of women in the Midwest since 2007 (see Figure F).

A key reason for the gender gap in employment is our nation’s care economy crisis. Women bear the brunt of caregiving responsibilities, both paid and unpaid, both for children and other family members (Gould, Sawo, and Banerjee 2021). The lack of accessible and affordable care forces women to make impossible choices between unpaid care work at home and underpaid work in the formal economy. Investments in the care economy would create opportunities for high-quality jobs in care work and enable unpaid caregivers to enter the labor force.

Figure F

Employment rates at the intersection of race/ethnicity and gender

When considering the intersection of race and gender on prime-age employment in the Midwest, there is a clear clustering of white, Hispanic, and AAPI prime-age men exhibiting high EPOP rates (88%–90% in 2022), as seen in Figure G. Meanwhile, AIAN, multiracial, and other race/ethnicity men and women—as well as Black, Hispanic, and AAPI prime-age women—are employed at much lower rates (65%–75%). The prime-age EPOP for white women falls in between these two clusters (79%). While the prime-age EPOP for Black men has historically been low relative to white women, Black men’s prime-age EPOP in 2022 was equal to that of white women.

The intersection of gender and race/ethnicity disparities in caregiving work plays a role in the low prime-age EPOP rates among AAPI, Black, and Hispanic women. Women of all race/ethnicity groups spend more time providing unpaid care work at home, with Hispanic women spending the most time caregiving across all demographic groups (Gallagher, Robbins, and Mason 2023).

Figure G

Employment by industry

The employment recovery has been successful overall but varies by industry, and state and local government shortfalls persist

The pandemic’s initial effects on Midwest employment varied dramatically across different industries. As was the case nationwide, industries that involved face-to-face interactions—restaurants, retail, travel—were hit particularly hard. From February to April 2020, Midwest employment in leisure and hospitality was nearly cut in half (-48.9%)—a drop that was second only to the Northeast. Notably, Midwest employment losses over the same period in government and manufacturing were larger than in any other region, with losses of nearly 7% and 15%, respectively (Economic Policy Institute analysis of BLS-CES various years).

That said, throughout the country, total nonfarm employment (which includes most public- and private-sector workers) has recovered much faster in the current recovery than after the Great Recession. In the lead-up to the Great Recession, Midwest nonfarm employment peaked in January 2008 and did not return to that level until November 2014—81 months (nearly seven years) later (see Figure H). In contrast, before the pandemic recession, nonfarm employment peaked in February 2020, declined sharply, and recovered to pre-pandemic levels by February 2023—a span of 35 months, or just shy of three years. Federal pandemic relief, including loans to businesses to hire employees and stimulus payments to households that allowed workers to return to the labor market, strongly curtailed the Midwest’s period of low employment and created the conditions necessary for a quick recovery.

Figure H

The Midwest’s two largest industries by shares of overall employment are trade, transportation, and utilities and education and health. The five largest Midwest industries are listed in Figure I. (See Appendix Table 1 for employment levels in all industries in the Midwest.)

While total nonfarm employment in the region has now surpassed its pre-recession peak, not all industries have regained the jobs they lost. As shown in Figure I, state and local government faces a deficit of over 2.2% (nearly 100,000 jobs). Education and health faces a smaller but still substantial deficit of 0.3% (15,300 jobs). Trade, transportation, and utilities and professional business services have recovered (and exceeded) their pre-recession employment levels in the Midwest.

Smaller Midwest industries include construction, financial services, and leisure and hospitality. Construction has grown 5.0% since February 2020—the largest increase of any Midwest industry—and financial services has grown 0.6%. Meanwhile, leisure and hospitality remains 2.7% below February 2020 employment (Economic Policy Institute analysis of BLS-CES various years).

While the pandemic recovery has been uneven across industries, it has nevertheless been much faster than the recovery from the Great Recession. Figure J demonstrates this for three specific industries—manufacturing, leisure and hospitality, and state and local government. For example, after the pre–Great Recession business cycle peak, manufacturing still had not recovered 144 months later. After the pre-pandemic business cycle peak, manufacturing recovered within a span of 29 months.

Figure I

Figure J

State and local government employment shortfalls in the Midwest and across the country pose harm to workers and communities

The continued weakness in state and local government hiring is a serious problem for the Midwest and the country more broadly. From the start of the pandemic through 2021, employment in state and local public education—which represents the lion’s share of state and local government losses—fell by nearly 5% overall (Cooper and Martinez Hickey 2022). The dire conditions faced by public schools, public health systems, unemployment insurance offices, and other public agencies during the pandemic made clear how critical these public services are, particularly in times of social and economic distress.

In periods of weakened consumer demand, government spending is the primary tool to boost economic growth. This includes spending to support public-sector employment. In the decade following the Great Recession, policymakers in the Midwest largely chose to defund, rather than invest in, public-sector employment. This choice resulted in sluggish overall job growth, persistent high unemployment rates, and real median wages that barely budged (and even declined in several years).

At least in some cases, policies that have eroded public-sector collective bargaining rights have reduced real wages enough that state and local governments are facing soaring job vacancy rates, as workers opt for better-paying jobs in the private sector. A prime example is Wisconsin (Gunn 2023). The passage of Act 10 in 2011, which reduced union rights and limited the ability of local governments to raise public-sector pay, reduced worker wages and household incomes (Cooper 2018). Not only does Wisconsin have 8.5% fewer state and local government jobs than it did before the beginning of the Great Recession, but it is also having trouble filling vacancies for the jobs it still has (BLS-LAUS various years).

In the current economy, the public-sector employment shortfall has not been as pronounced; however, the longer it persists, the more harm it causes both workers and communities. Cuts in public-sector employment are particularly harmful to Black workers and women, who are disproportionately employed in the sector. State and local government has historically been a key source of family-sustaining middle-class jobs, particularly for workers of color (Cooper and Wolfe 2020).

Moreover, a depleted public-sector workforce means that state and local governments are less able to provide essential goods and services, such as public education, unemployment insurance, and other social safety net protections. Within the Midwest, eight states have state and local government employment deficits that exceed the U.S. average: Missouri, Nebraska, Illinois, Michigan, Kansas, Minnesota, Wisconsin, and Ohio (see Figure K).

Figure K

Wages

Low-wage workers have seen historic gains, but median-wage workers are faring worse than in any other region

Policy decisions to not raise minimum wages in six Midwestern states, laws preempting local governments from passing their own minimum wage increases, and legislation weakening unions have had a predictably deleterious effect on wages in the region. No region has seen slower wage growth over the past 15 years.

A significant bright spot of the current recovery—nationwide and in the Midwest—has been the largely unprecedented improvement in wages for the economy’s lowest-paid workers (discussed below). However, the state of typical worker wages in the Midwest is less encouraging. The Midwest fared the worst of any region on the recovery of median wages (the wages of workers in the middle of the wage distribution) in the wake of both the Great Recession and the more recent pandemic recession (see Figure L). Between 2007 and 2010, real (inflation-adjusted) median wages fell across the Midwest, while other regions saw increases in their median wages. Median wages in the Midwest did not start increasing again until 2015.

The Midwest has fared similarly poorly on real median wage growth in the current economic recovery. Between 2019 and 2022, real median wages increased only $0.08 (0.4%) in the Midwest, while the Northeast and West saw increases of over a dollar (5.7% and 4.7%, respectively). Relative to 2007, median wages have grown only 5.8% as of 2022, slower than any other region.{{3}}

Figure L

As a result of sluggish wage growth, wage levels in the Midwest lag almost every other region, faring only slightly better than the South—a region known for its low wages, limited worker protections, and hostility to unions (Henderson 2022). As seen in Figure M, in 2022 the median worker was paid $22.10 an hour in the Midwest, lower than the U.S. average of $22.88, and much lower than the median in the West ($24.01) and Northeast ($24.94).

Figure M

As shown in Figure N, the Midwest-to-U.S. median wage ratio—that is, the Midwest median wage relative to (divided by) the U.S. median wage—has been on a downward trajectory since 1979. Additionally, the relative median wage has declined more in the Midwest than in any other region—8.4% between 1979 and 2022.

In 1979, the typical worker in the Midwest earned 5.5% above the typical worker nationwide, bested only by the typical (median) worker in the West, who made 10.4% more than the national median worker. By 2007, after three decades of active hostility toward unions, trade policy that incentivized offshoring, and the erosion of various labor standards, the median worker in the Midwest was paid 1.5% less than the median worker nationwide.

Notably, this decline in the relative wages of typical Midwest workers persists today. In 2022, the median wage in the Midwest was 3.4% less than the national median—only slightly higher than the 6% lower median wage of workers in the South.

Figure N

Half of Midwestern states experienced median wage growth since 2019, but 10 states’ median wages are still lower than the national median

Within the Midwest, there has been significant variability in median wage growth over the past two economic downturns, so it is useful to examine state-by-state dynamics.

While the country and the Midwest region overall fared better in the recovery from the pandemic recession than in the recovery from the Great Recession, Ohio, Iowa, South Dakota, and Missouri fared worse, and Wisconsin’s wage growth was flat (see Figure O).

Between 2007 and 2010, in the wake of the Great Recession, median wages grew most significantly in North Dakota, South Dakota, and Nebraska, largely due to the fracking boom of the early aughts and its ripple effects in neighboring states (Rusyn 2015). Yet these gains appear to have been short-lived in North Dakota and South Dakota, where median wages barely grew (North Dakota) or even declined (South Dakota) over the last three years. As demand for, and prices of, natural gas have flattened, the job market (and thus wage growth) for these states has cooled (Rickman and Wang 2018). In Nebraska, wages increased from 2019 to 2022. Nonetheless, wages in these three states remain below the national median of $22.88.

Minnesota and Illinois were the only Midwestern states with median wages above the national median in 2022, and they are the only two Midwestern states with median wages that are consistently above the national median. In Minnesota, wages have been an average of nearly two dollars ($1.87) higher than the U.S. median over the past 15 years. In Illinois, median wages have been an average of $0.64 above the national median (see Appendix Table 2).

Figure O

Low-wage workers have seen strong gains in the current recovery, but 10th-percentile wages remain too low and the Midwest’s low-wage workforce remains large

Despite sluggish wage growth at the median, low-wage workers in the Midwest have seen large gains in the current recovery. The 10th-percentile wage—the value at which only 10% of workers are paid less and 90% of workers are paid more—has risen 8.6% since 2019. This is, by a wide margin, the fastest wage gain at the 10th percentile of any three-year business cycle since 1979 and an over-fivefold increase compared with the post–Great Recession recovery (see Figure P). These wage gains are largely the result of substantial federal spending bills passed in 2020 and 2021. These spending packages prevented a steep drop-off in economic demand, kept numerous businesses afloat, and fueled a tight job market, leading to an increase in wages for the lowest-paid workers across the whole country (Gould and deCourcy 2023).

Figure P

As shown in Figure Q, the “dot-com” bubble of the late 1990s and early 2000s was marked by a tight labor market and fast wage growth—at the time, the period of fastest wage growth since the 1950s. The bubble burst in 2000 and the U.S. economy entered a recession. However, wage growth at the 10th percentile continued to rise until 2002. This was due to composition effects (not for positive reasons): Low-wage workers disproportionately lose their jobs in economic downturns, so the resulting wage distribution skews upward.

In 2002, 10th-percentile wages in the Midwest were nearly identical to those in the Northeast and West (see Figure Q). However, in the decades that followed, the Midwest began to fall further behind the West and Northeast. This trend became particularly pronounced after 2010, when conservative lawmakers took power in many Midwestern states and began weakening—or failing to strengthen—labor standards.

As other regions more aggressively raised the minimum wage, Republican-controlled Midwestern states did not. Many instead adopted preemption laws preventing local jurisdictions from enacting higher minimum wages.

Every region, including the Midwest, has made significant progress on raising the wages of the lowest-paid workers over the past three decades. But despite gradual gains over time, the 10th-percentile wage—$12.45 in the Midwest in 2022—remains too low for workers to make ends meet in any part of the region (EPI 2022).

Figure Q

Another way to evaluate the progress made in improving pay for low-wage workers is to look at the share of the workforce earning less than $15 per hour. As shown in Figure R, there have been steep declines nationwide in the share of workers earning less than $15 an hour in the years since 2015. During this time, the Midwest’s share has been nearly halved (28.1% in 2015, 14.7% in 2022). This shows good progress for low-wage workers overall.

Over the last two decades, the Midwest has persistently had the second-highest share of workers earning less than $15 of any region, with only the South having a higher share (20.2% in 2022). The 14.7% share of the Midwestern workforce paid less than $15 an hour in 2022 amounts to nearly 4.5 million workers throughout the region. In three states, over half a million of the state’s workers are paid less than $15 an hour: Ohio (835,000), Illinois (720,000), and Michigan (671,000) (EPI analysis of BLS-CPS various years). In Ohio, Iowa, and Kansas, that amounts to 1 in 6 workers (Figure S).

Figure R

Figure S

Safety net and worker protections

Federal legislation during the pandemic greatly expanded unemployment benefits and introduced limited but important paid leave benefits. This federal intervention ran counter to the pre-pandemic trend in most Midwestern states to weaken unemployment insurance protection and prevent local governments from enacting paid leave provisions. In the wake of the pandemic, some Midwestern states are following the federal government’s lead and strengthening the safety net. However, many more are adopting policies that mark a return to pre-pandemic austerity.

The Midwest lags other regions on paid sick leave, both as an employer benefit and as a legal right

A common statistic used to understand paid sick leave access is the share of private-sector workers who report receiving paid sick days as an employer-provided benefit. In the Midwest, 72% of private-sector workers report having access to paid sick leave.

It is important to remember that in most states employer-provided paid sick days are a benefit that can be rescinded at any time (not a right), that they vary across employers, and that access to this benefit is vastly unequal. While 93% of the highest-wage workers had access to paid sick days in 2019, only 30% of the lowest-paid workers were able to earn sick days (Gould 2020). The COVID-19 pandemic exposed these inequities and the urgent need to enact a national paid sick leave policy (Gould 2022).

In the absence of federal action on paid sick leave, many states have enacted their own laws mandating that employers provide paid sick leave to their workers. However, Midwestern states have largely failed to enact guaranteed paid sick leave (in some cases actively opposing such policies), and the region lags in access as a result.

While the Midwest (and all regions) have improved considerably on employer-provided paid sick leave access over the past 15 years, the Midwest (72%) lags the West (89%), Northeast (82%), and national average (77%) (see Figure T). Increasing access to paid sick leave since 2007 has taken a nonlinear trajectory. Between 2007 and 2015, limited progress was made in expanding access to paid sick leave, but access rates actually declined nationally and in many regions between 2012 and 2014. In 2015, the Obama administration called on states (White House 2015) to increase access to paid sick leave and later signed an executive order granting federal contract workers access to paid sick leave (DOL-WHD 2015). Rates of access increased in most Census Divisions through 2020 and have leveled off as of 2022.{{4}}

Paid sick leave access is highest in the West, home to California, Oregon, and Washington. California passed paid sick leave in 2014, followed by Oregon in 2015 and Washington in 2016. Most of the Northeast states—except Pennsylvania and New Hampshire—also have paid sick leave policies in place.

Unlike in the West and Northeast, state legislatures in the Midwest have largely failed to enact statewide measures guaranteeing access to paid sick leave. In the absence of statewide measures, localities have attempted to pass their own paid sick leave measures, but state legislatures have used preemption to block these measures from taking effect. The ability of Midwest localities to require employers to provide paid sick days has been preempted in six Midwest states: Wisconsin in 2011, followed by Indiana in 2013; Michigan, Iowa, and Missouri in 2015; and Ohio in 2016 (Wolfe et al. 2021).

Of the 12 states that make up the Midwest, only two have passed statewide paid sick leave laws—Michigan in 2018 and Minnesota in 2023. In the wake of the COVID-19 pandemic, Minnesota lawmakers enacted a law that mandates employers to provide workers with one hour of paid sick time for every 30 hours worked (six sick days per year for full-time workers). The law covers employers of all size and will benefit as many as 900,000 part-time and full-time workers in the state (Ferguson 2023). In contrast, Michigan’s paid sick leave law, as adopted, excludes a large share of the state’s workforce (Ruark 2018) and remains embroiled in legal challenges—as a result, the state effectively has no paid sick leave policy as of this publication (Miller 2023).

While paid sick leave is important for short-term absences, it is ill-suited for longer family and health-related absences. Access to paid family and medical leave (PFML) is critical for such circumstances; however, access to PFML is even less common than access to paid sick leave (Gould-Werth 2022). In the absence of a federal paid family and medical leave program, many states have implemented their own programs mandating paid time off for workers to care for a new child, care for a sick family member, or take care of their own serious illness. However, the Midwest has been similarly slow to enact paid family and medical leave or has actively preempted it. Minnesota is the only state in the region to have enacted such a program. Minnesota’s paid family and medical leave law was approved in May 2023 and will go into effect in 2026 (Weston Williamson 2023).

Figure T

Midwestern lawmakers must strengthen unemployment insurance systems to support workers and sustain progress on its unemployment rate

Federal legislation passed during the first year of the pandemic both expanded eligibility for and the generosity of unemployment benefits. The quick jobs recovery, in the Midwest and elsewhere, served as a powerful refutation of the harmful argument that adequate unemployment benefits lead to people being “too lazy” to work (Martinez Hickey and Cooper 2021). A strong and robust unemployment insurance system is a vital tool in navigating economic downturns.

However, harmful legislation to reduce the generosity of unemployment benefits threatens to undo the Midwest’s progress on unemployment. While the standard unemployment benefit in most states is 26 weeks, four Midwestern states provide unemployment recipients with fewer than 26 weeks of benefits (CBPP 2023): Iowa and Kansas (16 weeks), Missouri and Michigan (20 weeks). In Missouri, 20 weeks of benefits are available only when the unemployment rate exceeds 9%. If the unemployment rate is below 6%, the maximum number of weeks is 13. The South is the only region where more states (7 states) provide fewer than 26 weeks of benefits. Two Midwestern states—Iowa and Wisconsin—are among the four states (the other two being Kentucky and Louisiana) that passed laws limiting unemployment benefits in 2022 (Gwyn 2022). The Iowa law cuts the number of weeks recipients can claim benefits from 26 to 16 and forces UI claimants to accept a job that pays lower wages than their previous job. The Wisconsin law would have reduced the number of weeks from 26 to 14, depending on the state’s unemployment rate, but Governor Tony Evers vetoed the legislation.

In 2023, Iowa lawmakers introduced another bill restricting access to UI by increasing the number of work searches claimants need to conduct in order to remain eligible for benefits, as well as lowering the weekly benefit rates for unemployed Iowans with three or more dependents (Iowa Legislature 2023). Missouri lawmakers introduced a bill that reduces the state’s maximum benefit duration further—from 20 weeks to eight weeks if the state unemployment rate is below 3.5% (Missouri Legislature 2023), even if unemployment exceeds this rate in some areas of the state (Missouri Budget Project 2023). Bills to restrict access to unemployment insurance were also introduced in Ohio (SB 116) and Wisconsin (SB 233). (See Ohio Legislature 2023; Wisconsin State Legislature 2023.) Each of these bills received lobbying support from the Opportunity Solutions Project, the lobbying arm of the Foundation for Government Accountability, a right-wing think tank working across the country to deregulate employment and shrink the public sector (Bogage and Paúl 2023).

However, not all Midwestern states are seeking to weaken their unemployment insurance systems; some are instead expanding unemployment benefits. In Minnesota, the state legislature recently passed a bill to extend eligibility of unemployment benefits to public school support staff during the summer months. Illinois passed a similar bill in 2020. These benefits are a lifeline to school employees, who are disproportionately women and workers of color, paid low wages, and—until recently—forced to go months without pay or unemployment benefits (Wolfe and Kamper 2021).

Instead of making unemployment insurance benefits less generous and more difficult for unemployed workers to access, the Midwest should follow the lead of states like Minnesota and Illinois. This would benefit both workers and the macroeconomy of the region.

Poverty

To assess economic well-being following the Great Recession, we rely on the official poverty measure (OPM) published by the U.S. Census Bureau. When looking at the recovery from the pandemic recession, we expand our analysis to also use the supplemental poverty measure (SPM), which became available in 2011 after the Great Recession.

Poverty is the result of policy choices

Federal- and state-level policies can help lessen the impact that economic shocks and contractions have on the well-being of millions across the country and in the Midwest. A weak policy response to the Great Recession contributed to a large and prolonged increase in the official poverty rate in the Midwest in the years that followed.

In the wake of the pandemic recession, the official poverty rate rose only slightly. The more interesting narrative, though, is found in looking at the supplemental poverty rates. A strong policy response to the pandemic and its economic aftermath—including federal aid to state and local governments—meant that supplemental poverty rates actually declined in its wake. However, a return to the pre-pandemic status quo in 2022 led to a significant increase in supplemental poverty, as seen in recently released poverty data from the Census Bureau.

Official poverty grew and persisted after the Great Recession amid a weak policy response 

Official poverty estimates in the Midwest have trended below—but tracked with—the national poverty rate since 2007 (see Figure U). The Great Recession and the weak policy response that followed (Bivens 2019) led to a relatively large increase in poverty in the Midwest, tracking with an increase nationwide. The share of individuals who struggle to make ends meet below the official poverty line increased by 2.5 percentage points nationally from 2007 to 2011, rising from 12.5% to 15%. In the Midwest, the poverty rate increased by 2.9 percentage points during the same period, rising from 11.1% in 2007 to 14% in 2011.

Figure U

Some states in the Midwest were hit particularly hard by the Great Recession and the anemic policy response. Between 2009 and 2011, the average poverty rate in Indiana, Michigan, and Missouri was higher than the national average of 14.8% (see Table 3).

The misguided focus on austerity measures after the Great Recession prolonged the financial hardship of economically vulnerable Americans. Poverty was slow to recover from the Great Recession across the United States, but it was even slower to recover in the Midwest. At the national level, official poverty did not recover to its pre-recession rate until 2017, nearly a decade later. It took the region of the Midwest an additional year, until 2018, to recover its pre-recession rate (Figure U). Between 2015 and 2017, the majority of states in the region still had higher official poverty rates than a decade prior, between 2005 and 2007 (Table 3).

Table 3

Supplemental poverty declined quickly after the pandemic recession due to a bold policy response

Low-income Americans were able to weather the economic impact of the pandemic with more resilience than during and following the Great Recession. This was due in large part to the strong policy response of the federal government. This bold policy response included economic relief measures, such as stimulus payments; the temporary expansion of programs like unemployment insurance; the temporary expansion of refundable tax credits, such as the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC); and increased federal assistance to state and local governments. In concrete terms, these policies prevented millions of Americans from falling below the supplemental poverty line.

Despite a larger contraction in economic activity and employment relative to the Great Recession, the COVID-19 pandemic recession led to only a relatively marginal increase in the official poverty rate. At the national level, the poverty rate rose by just over one percentage point from 10.5% in 2019 to about 11.6% in 2021. In the Midwest, the prevalence of poverty remained statistically unchanged, increasing by less than one percentage point from 9.7% in 2019 to 10.4% in 2021.

Due in large part to economic relief measures enacted in the wake of the pandemic, such as economic impact/stimulus payments and the expansion of the Child Tax Credit, the supplemental poverty rate was considerably lower than the official poverty rate at the national level and in the Midwest region between 2019 and 2021. During this three-year period, the official poverty rate stood at 11.2% at the national level and averaged about 9.6% for states in the Midwest. The supplemental poverty rate was lower than the official poverty rate by about 1.6 percentage points at the national level (9.6% vs. 11.2%) and by 2.9 percentage points for the Midwest region (6.7% vs. 9.6%) between 2019 and 2021.

During this three-year period, all states in the Midwest reflected a lower supplemental poverty rate than official poverty rate as economic relief measures enacted after the pandemic helped families avoid economic deprivation during a time of uncertainty (see Table 4). The state of Ohio recorded the highest share of individuals below the official and supplemental poverty lines between 2019 and 2021, at 12.2% and 8.1%, respectively.

Table 4

Annual estimates of poverty at both the national and regional levels show that supplemental poverty fell between 2020 and 2021. During this period, the share of Americans below the supplemental poverty line declined nationally by about 1.4 percentage points, from 9.2% in 2020 to 7.8% in 2021. Similarly, the Midwest experienced a decline in supplemental poverty of about one percentage point during the same period, from 6.7% in 2020 to 5.6% in 2021. Both declines in poverty, in the Midwest and at the national level, during this period were statistically significant.

The impact of economic relief measures during the pandemic is reflected in the drop of the supplemental poverty rate in the region between 2020 and 2021. While the supplemental poverty rate in the Midwest declined during this period, the official poverty rate remained nearly unchanged, increasing from 10.1% in 2020 to 10.4% in 2021. In 2021 alone, the supplemental poverty rate for the Midwest region (5.6%) was just over half of the official poverty rate (10.4%), reflecting that more than 2.5 million Americans in the Midwest were kept out of poverty largely because of government support via transfers and social protection programs.{{5}}

The end of key economic relief measures that helped families weather the shock of the pandemic pushed millions into poverty in 2022 (Cid-Martinez and Zipperer 2023). The Midwest was not immune to the rise in poverty: The number of people in the region who fell below the poverty line increased by more than 2 million in 2022. This change reflected a rise in the supplemental poverty rate of more than 3 percentage points, from 5.6% in 2021 to 9.1% in 2022.

In 2023, state and local governments in the Midwest have an opportunity to use additional funds from the American Recue Plan to keep additional people from falling into poverty and to ensure that all families in the region are being reached by public policy (Kamper 2022b).

Unions and collective bargaining

The Midwest has historically been one of the centers of the American labor movement. The international workers’ holiday—May Day—started in Chicago in 1886, as part of a campaign in support of the eight-hour workday (Banerjee, Sherer, and Kamper 2022). The seminal moment in the labor upsurge of the 1930s was the Flint sit-down strike in Michigan (Guerrero 2017). The first statewide law for public-sector collective bargaining was passed in Wisconsin in 1959 (Nack 2019).

However, despite its history, the Midwest’s union strength has been declining precipitously. Anti-union policies enacted by many Midwestern states in the 2010s have contributed to increasing inequality and wage stagnation and have caused Midwestern unionization rates to fall faster than anywhere else in the country since the beginning of the Great Recession.

As a result of anti-union policies, the Midwest’s union density has declined over time, leading to growing inequality

Throughout the 1950s, 1960s, and 1970s, the Midwest had the highest union density of any region in the country. In 1979 it was nearly 30% and almost 5 percentage points higher than the national average.

However, union membership across the country has declined precipitously over the past 40 years, including in the Midwest. By 2022, the Midwest’s union membership rate had fallen to just 11%—less than a percentage point above the 10.1% union membership rate nationwide (see Figure V). In 1979, four Midwestern states (Illinois, Ohio, Michigan, and Wisconsin), were among the top 10 states in the country for union membership (Hirsch, MacPherson, and Vroman 2001). Today, as shown in Table 5, only Minnesota is in the top 10 (Unionstats.com 2023).

Figure V

Table 5

Research shows that unions reduce income inequality across the economy (Banerjee et al. 2021), counteract racial and gender labor market inequities (EPI 2021), and reduce public-sector pay gaps (Morrissey and Sherer 2022). In decades when union density was higher, there was less income inequality (measured by looking at the share of income going to the top 10%) than there is today. As unionization rates have declined—particularly after 1979—income inequality has worsened. Though not the sole reason for the growth in inequality, the decline in workers’ ability to collectively negotiate for higher pay and other equity-minded policy changes has allowed businesses, corporate executives, and other wealthy interests to capture a larger share of the country’s income.

This national trend is also visible in the Midwest region, where declining unionization rates have been accompanied by a rising share of income accruing to the top 10%. Figure W shows that precipitous declines in the Midwest’s union membership rate since 1979—from 28.9% to 11.0%—were accompanied by a stark increase in income inequality, with the share of income going to the top 10% growing from one-third to nearly half of all income in the region in 2018.

Figure W

Midwestern lawmakers must reverse anti-union policies to advance worker rights

There is nothing natural about the decline in unionization rates in the Midwest and across the country. Instead, this trend is the result of relentless attacks on unions by conservative lawmakers and their corporate allies seeking to maintain political control by undermining worker power (Lichtenstein 2002; Lafer 2017; Grumbach 2022). As a result of federal rulings eroding the rights of unions, the proliferation of so-called right-to-work laws at the state level, and increasingly aggressive anti-union tactics by employers, it has become increasingly difficult for workers to form and join unions—even though support for unions is at an all-time high (Mishel, Rhinehart, and Windham 2020).

But this trend can be reversed, and there is reason to believe the Midwest can lead the way. Over the course of the past decade, Midwest voters, when given the chance, have strongly supported workers’ rights to collective bargaining. In 2011, Ohioans voted 61–39 to overturn Ohio Senate Bill 5, which sought to weaken public-sector collective bargaining rights in a manner similar to Wisconsin’s Act 10 earlier that year (Fields 2011; Policy Matters Ohio 2011). In 2018, voters in Missouri overturned the state legislature’s passage of an RTW law by a 2:1 margin (Neuman 2018).

More recently, in November 2022, Illinois voters approved a constitutional amendment guaranteeing all workers organizing and collective bargaining rights (Sherer 2022). After Midwest voters elected Democratic trifectas in Minnesota and Michigan, Michigan became the first state in decades to repeal its harmful RTW statute. And recently passed industrial policy legislation—including the CHIPs and Science Act, the Infrastructure Investment and Jobs Act (IIJA), and the Inflation Reduction Act (IRA)—represent a historic opportunity to create well-paid union jobs in manufacturing, transportation, utilities, and other industries through project labor agreements, prevailing wage standards, and registered apprenticeship requirements.

Midwestern lawmakers must act to sustain pandemic recovery progress and work toward a more equitable future

The federal response to the Great Recession was marked by extreme austerity at the federal level, forcing states to address the recession’s impacts largely on their own. States diverged in their responses. For its part, the Midwest responded to the Great Recession with a shift toward austerity, and states in the region elected leaders (particularly governors) committed to that agenda. Midwestern states severely cut public employment, which hindered overall economic growth. Their mistake was to lean into austerity, prolonging economic recovery and ushering in a set of economic policies that harmed workers and their families.

Today, state policymakers face a different challenge and are on the verge of making a different mistake: failing to use historic federal investments to support workers through higher wages and benefits, boost public-sector employment, and address our broken care economy. As a result of significant federal pandemic stimulus funding and $350 billion allotted to states to spur economic recovery through the American Rescue Plan Act, the Midwest was able to avoid a prolonged and painful economic recession. On many indicators, the region has even exceeded pre-pandemic levels of economic health.

Yet states in the Midwest have yet to spend 60% of their ARPA fiscal recovery funds, leaving more than $33 billion on the table that could be used to address persistent poverty and inequality and buffer their states against future economic downturns (Treasury Department 2023). In addition, the passage of the Bipartisan Infrastructure Law, the CHIPs and Science Act, and the Inflation Reduction Act in the past two years offer substantial opportunities to create well-paid union jobs with billions of dollars in federal subsidies and investments, if policymakers embrace the opportunity (Hersh 2022).

It’s clear that austerity failed to promote economic recovery in the Midwest and around the country following the Great Recession. In the current economic recovery, Midwest policymakers have the opportunity to choose a different path. But as federal investments begin to phase out, time is running short. Midwest policymakers must act now to maximize the impact of federal relief funds by restoring the public sector, investing in workers, and building a care infrastructure that supports health and well-being for all who live there.

Appendix

Appendix Figure A

Appendix Table 1

Appendix Table 2

Notes

{{1.}} In this report, Midwest, Northeast, South, and West refer to the four geographic regions of the United States as defined by the U.S. Census Bureau. The 12 states of the Midwest region are Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin.

{{2.}} AAPI stands for Asian American and Pacific Islander, and AIAN stands for American Indian and Alaska Native.

{{3.}} Economic Policy Institute analysis of Current Population Survey Outgoing Rotation Group microdata.

{{4.}} Census Divisions, as defined by the U.S. Census Bureau, are geographic entities between the state and Census Region level. The West Census Region comprises the Pacific and Mountain Census Divisions. The Midwest comprises the West North Central and East North Central Census Divisions. The South Census Region comprises the West South Central, East South Central, and South Atlantic Census Divisions. The Northeast Census Region comprises the Middle Atlantic and New England Census Divisions.

{{5.}} Estimate is based on the difference between the lower bound confidence interval for the official poverty measure and the upper bound confidence interval for the supplemental poverty measure.

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I am testifying in strong support of SB 170 and SB 171—two bills to repeal Public Act 98 and Public Act 105, respectively. Public Act 98 has prohibited local governments from entering project labor agreements on publicly funded projects since 2011, and Public Act 105 has prohibited local governments from enacting a wide range of important labor standards since 2015.

For several years, EPI has closely tracked the ways in which the spread of abusive forms of “preemption”—state interference in local policymaking—is not only preventing shared prosperity but also deepening economic inequality.{{1}} Preemption in this context refers to situations in which state lawmakers block local ordinances from taking effect—or dismantle existing local ordinances outright. In the past decade, lawmakers in some states have increasingly misused preemption to interfere with local governments’ ability to set job quality standards. Blocking these local policies results in wage suppression for all workers and contributes to maintaining racial and gender pay gaps.

Preemption of local policymaking is embedded in a racist history

The use of preemption laws to block local labor standards is deeply intertwined with a long history of racism. In the 2020 EPI report Preempting Progress, we trace current-day preemption of workers’ rights back to state-sanctioned policies and practices begun in the post-Reconstruction South, which disadvantaged Black and brown workers, as well as women and low-income workers.{{2}} In a 2021 EPI report focused on Midwestern states, we looked further at how the abuse of state preemption is entangled in histories of segregation, redlining, and other policy choices that reinforced anti-Black racism and white supremacy following the Great Migration.{{3}} I begin with this background because the deep inequalities plaguing our economy today remain rooted in this history of racism and worker exploitation.

Today, preemption laws are often passed by majority-white legislatures, erecting barriers to economic security in cities whose residents are majority people of color. State lawmakers who have used preemption to disempower local governments are often bending to pressure from corporate interests and right-wing groups such as the American Legislative Exchange Council (ALEC).{{4}}

Preemption of local labor standards suppresses wages and increases economic inequality

Michigan’s legislature in 2015 used preemption to deny local governments the ability to improve job quality by passing Public Act 105, nicknamed the “Death Star Bill” for its complete destruction of localities’ power to enact nearly any policy that could benefit workers —ranging from minimum wage increases to fair scheduling laws, paid leave, and a host of other standards.

The result stripped cities and counties of their ability to address growing inequality and declining worker wages. As recently as 2005, Michigan boasted a relative state median wage that was 7% above the national median. But as Figure A illustrates, Michigan’s wage advantage has since disappeared, and for the past decade Michigan’s relative median wage has remained below the U.S. median.

Figure A

During this same period, state preemption deprived local Michigan communities of policy tools that could have improved the lives of workers and their families.

For example, in our 2021 report, we examined the fair scheduling prohibition included in Michigan’s preemption law to assess preemption’s direct impact on workers. Unfair scheduling practices can take many forms. Some employers use computer algorithms to make last-minute staffing decisions. Others use on-call scheduling, where workers are asked to stay available without pay, but are not told whether they are required to come in until immediately before a shift. Alternatively, workers may be scheduled for full shifts but then sent home early with no notice, depriving them of income while still requiring them to pay for child care, transportation, or other arrangements. Such practices are widespread in retail and food service jobs also characterized by low wages and meager benefits.{{5}}

Fair scheduling laws mitigate these practices by ensuring workers receive advance notice of schedules or additional pay when schedules change without notice. Because of the importance of predictable schedules for workers and families, cities from New York to Chicago to San Francisco have adopted fair workweek ordinances.{{6}}

But in Michigan, state legislation has denied local governments the opportunity to adopt similar policies that could especially benefit women and workers of color, who are far more likely to hold low-wage jobs subject to erratic schedules.{{7}} For example, if Detroit were able to enact fair workweek legislation, we estimate that 38,702 workers in retail and food service would benefit. As Table 1 shows, the vast majority (29,943 or 77.4%) of those workers are Black. Women would particularly benefit from a fair workweek ordinance focused on retail and food service, where they make up over half the workforce.

Table 1

Empowering local government to set job quality standards is especially critical at a time of unprecedented opportunity for Michigan communities to compete for historic federal investments in infrastructure, clean energy, and manufacturing

Massive federal investments now flowing to state and local governments via scores of programs created by the Bipartisan Infrastructure Law (BIL), the CHIPS and Science Act, and the Inflation Reduction Act (IRA) present huge opportunities to accelerate the transition to clean energy while creating good jobs in communities that need them most.

To maximize the benefits of federally-funded projects, cities, counties, and school boards need immediate access to a full range of implementation tools including local policy options that Michigan state preemption laws currently prohibit. Specific local policy tools like project labor agreements (PLAs), prevailing wage standards, and apprentice utilization thresholds are especially important for shaping job outcomes on public infrastructure and green energy projects.{{8}}

PLAs can also serve as the foundation for broader agreements—known as community workforce or community benefits agreements— through which local governments can ensure that major public construction projects target priority community needs. A host of competitive grant programs administered by federal agencies (Departments of Energy, Labor, Transportation, and others) explicitly encourage state and local applicants for funds to use project labor agreements or more expansive community benefits agreements to set minimum standards for all jobs on a project.

To illustrate with just one example, the Department of Energy’s Regional Clean Hydrogen Hub program (created by the Bipartisan Infrastructure Law) designates $7 billion for 6–10 regional projects to advance clean hydrogen production and use. The program requires applicants for these funds to submit a Workforce and Community Agreement Statement describing any plans to negotiate a project labor agreement or community benefits agreement to ensure projects generate high-quality jobs. Proposals including strong plans are scored higher, increasing their chances of drawing down the largest federal funding awards for their communities.{{9}}

To take a second—potentially transformative—example: Under the Inflation Reduction Act, cities, counties, and school districts can maximize their access to direct payments from the IRS to recoup the cost of clean energy projects only if the projects pay workers a prevailing wage and utilize a certain percentage of registered apprentices.

Cities like Boston, Chicago, Los Angeles, New York, or Seattle—in states where local governments have not been restricted by preemption—have long experience using these policy tools to maximize high-road economic impacts of major projects. These cities are already exercising their competitive advantage in drawing down new rounds of federal funds via competitive grant programs.{{10}}

Given current opportunities for local governments to leverage federal funds toward good jobs, there is no time to waste in empowering Michigan cities, counties, and school districts to attach prevailing wage, PLAs, and apprenticeship requirements to upcoming infrastructure and green energy projects. 

Reversing preemption of local standard-setting is the next essential step in restoring Michigan’s role as leader in good job creation

Workers, advocates, and policymakers across the country have begun to push back on the trend of harmful state preemption after years of observing its economic damage. There was a time when the Midwest was a leader in incubating local laboratories of democracy—including progressive cities, counties, and school districts that enacted innovative policies to support working families. By taking steps today toward passage of SB 170 and 171, Michigan can restore its position as a regional leader on the path back to a high-road economy. Michigan workers need and deserve better jobs and opportunities, and passage of these two bills will restore the critical ability of local governments to enact labor standards necessary to help reverse inequality and build local economies that work for everyone.

Notes

{{1.}} The Economic Policy Institute’s Workers’ Rights Preemption in the U.S.: A Map of the Campaign to Suppress Workers’ Rights in the States, last updated in August 2019, tracks state legislation that preempts local action on key worker rights including minimum wage, fair scheduling, project labor agreements, prevailing wage, paid leave, and labor standards in the gig economy.

{{2.}} Hunter Blair et al., Preempting Progress: State Interference in Local Policymaking Prevents People of Color, Women, and Low-Income Workers from Making Ends Meet in the South, Economic Policy Institute, September 30, 2020.

{{3.}} Julia Wolfe et al., Preempting Progress in the Heartland: State Lawmakers in the Midwest Prevent Shared Prosperity and Racial, Gender, and Immigrant Justice by Interfering in Local Policymaking, Economic Policy Institute, October 14, 2021.

{{4.}} Lisa Graves, ALEC, “Model” Legislation, and Preemption, Local Solutions Support Center, March 15, 2023.

{{5.}} Daniel Schneider and Kristen Harknett, It’s About Time: How Work Schedule Instability Matters for Workers, Families, and Racial Inequality, The Shift Project at the Institute for Research on Labor and Employment, University of California at Berkeley and University of California at San Francisco, October 2019.

{{6.}} HR Dive, “Predictive Scheduling Laws: A Running List of States and Localities That Have Adopted Predictive Scheduling Requirements” (web page), last modified February 13, 2023.

{{7.}} Leila Morsy and Richard Rothstein, Parents’ Non-Standard Work Schedules Make Adequate Childrearing Difficult: Reforming Labor Market Practices Can Improve Children’s Cognitive and Behavioral Outcomes, Economic Policy Institute, August 6, 2015.

{{8.}} Karla Walter, 4 Job Quality Questions All Applicants for Federal Funds Should Answer, Center for American Progress, June 20, 2023.

{{9.}} U.S. Department of Energy, Office of Clean Energy Demonstrations, Guidance for Creating a Community Benefits Plan for the Regional Clean Hydrogen Energy Hubs, last updated October 17, 2022.

{{10.}} U.S. Department of Labor, Project Labor Agreements as Tools for Equity; New York City Mayor’s Office of Contract Services, “Project Labor Agreements” (web page).

For decades, Michigan boasted the highest unionization rate in the country—and relatively higher median wages resulted for the state’s workers. In this blog post, we find that as recently as 2005, Michigan’s unionization rate was 1.69 times the national rate, and the state’s median wage was 6% higher than the national median.

But after lawmakers passed RTW in 2012, Michigan’s unionization rates declined faster than in the nation as a whole, and the state’s relative median wage fell below the U.S. median. Attacks on Michigan workers’ rights have especially benefited the rich—declines in unionization rates have been accompanied by dramatic increases in income inequality, with half of all income in the state now going to the top 10%.

The repeal of RTW in Michigan—in tandem with Illinois voters approving a constitutional Workers’ Rights Amendment (which bans future RTW laws) in 2022 and Missouri voters overwhelmingly rejecting their legislature’s attempt to impose RTW restrictions in 2018—would also signal an important turning point after a decade of extreme anti-union state legislation in the Midwest that has suppressed wages and eroded job quality.

So-called right-to-work laws perpetuate inequality and result in lower wages and benefits for all workers

As Martin Luther King, Jr. pointed out in 1961, “right-to-work” is a “false slogan” because RTW laws provide neither rights nor work, and are in fact designed “to rob us of our civil rights and job rights [and] to destroy labor unions and the freedom of collective bargaining by which unions have improved wages and working conditions of everyone.” Decades later, research bears out King’s contention that “wherever these laws have been passed, wages are lower.”

RTW laws are designed to diminish workers’ collective power by prohibiting unions and employers from negotiating union security agreements into collective bargaining agreements, making it harder for workers to form, join, and sustain unions. As a result, states with RTW laws generally have lower unionization rates than non-RTW states. Even after controlling for other factors that can be related to unionization (such as industry, occupation, education, age, gender, race, ethnicity, and foreign-born status), private-sector workers in RTW states are less likely to be covered by a union contract than peers in non-RTW states.

Consequently, workers in states with RTW laws have lower wages, reduced access to health and retirement benefits, and higher workplace fatality rates. Both unionized and nonunionized workers in RTW states are paid 3.1% less, on average, than workers with similar characteristics in non-RTW states, according to previous EPI research. Figure A illustrates that unionized workers are 58% more likely to have employment-provided health insurance and 65% more likely to have employment-provided retirement benefits than their nonunion counterparts.

Figure A

RTW laws are historically rooted in racism and designed to maintain unequal power. When private-sector workers first gained legal protection to unionize after the passage of the federal National Labor Relations Act in 1935, unionization rates grew quickly (see Figure B). In response, anti-union, explicitly white supremacist campaigns to limit worker power and maintain Jim Crow labor relations pursued state legislation as a means to constrain workers’ newly won federal union rights via RTW policies, initially in Southern and Western states. These restrictions on collective bargaining rights have since spread to 27 states and continue to generate economic outcomes that disadvantage all workers.

State policies that reverse these legacies and empower all workers to unionize and collectively bargain should be considered top priorities for legislators in Michigan and across the country because they are fundamentally linked to key economic and labor market outcomes. Data show that unions reduce income inequality across the economy, counteract racial and gender labor market inequities, and reduce public-sector pay gaps.

By weakening unions, ‘right-to-work’ laws fuel economic inequality—especially in Michigan

Through bringing workers’ collective power to the bargaining table, unions are able to win better wages and benefits for working people—reducing income inequality as a result. In decades when union density was higher, there was less income inequality (measured as the share of income going just to the top 10%) than there is today, as seen in Figure B. But as unionization rates declined—particularly after 1979—income inequality worsened.

Figure B

Similarly, declining unionization rates in Michigan have been accompanied by a rising share of income accruing to the top 10%, but Michigan’s income inequality has become even more extreme than nationally. Figure C shows that declines in Michigan’s union membership rate since 1978 were accompanied by a stark increase in income inequality, with the share of income going to the top 10% growing from one-third to now half of all income in the state.

Figure C

Michigan used to boast the highest unionization rate in the country. In 1978, 34.9% of Michigan workers were union members, placing its unionization rate at 1.55 times the national average (as shown in Figure D). As recently as 2005, Michigan’s unionization rate was 1.69 times the national rate. During those same periods, median wages in Michigan were about 6% higher than the national median. But in the past decade, unionization rates in Michigan fell faster than in the nation as a whole, and the state’s relative median wage fell along with it. Today, Michigan’s median wage has fallen below the U.S. median.

Figure D

‘Right-to-work’ laws erode job quality but have no measurable impact on job growth

Despite persistent claims from RTW proponents that weakening unions will lead to state job growth, comparisons of RTW and non-RTW states over decades show no relationship between employment levels and RTW laws.

Figure E illustrates the employment-to-population ratio—the share of workers ages 25–54 with a job—among three sets of states: those that have remained non-RTW, those that adopted RTW before 2010, and those that adopted RTW after 2010. The prime-age employment-to-population ratios among these states reveal no clear differences. There are no measurable employment advantages between RTW or non-RTW states.

Figure E

Prior studies have likewise shown no causal link between a state’s RTW status and its job growth. For example, studies of Oklahoma after the state enacted RTW in 2001 found a significant reduction in private-sector unionization, but no measurable effect on employment growth. Similarly, researchers at the University of Kentucky examined state economic performance across Southern U.S. states from 1964 to 2004 and found that RTW status had no relationship to state economic outcomes. When studies have claimed to find such effects, it is often due to failure to control for other critical factors such as education levels of the workforce, proximity to transportation hubs, advances in technology, or natural resources.

Michigan can lead the way to restoring worker power and democracy after a decade of attacks in Midwestern states

The very need for Michigan to take special action to restore workers’ union rights is a reminder that for too many U.S. workers, the internationally recognized human rights to organize and collectively bargain are either entirely off limits under broken federal labor laws or restricted by a patchwork of state statutes (RTW among them) left to shifting political whims of legislative leaders.

During the past decade, corporate-backed lobby groups have waged an attack on workers’ rights in Michigan and neighboring states by pushing to weaken public-sector workers’ collective bargaining rights, repeal state prevailing wage laws, and pass RTW legislation. Following the 2010 midterm elections, newly elected Republican governors and legislative majorities prioritized these and other forms of extreme anti-union state legislation—especially in the Midwest. EPI analysis at the time documented a clear pattern of cookie-cutter, anti-union bills introduced in multiple state legislatures and driven largely by politics rather than economics. Backed by a network of wealthy individuals and industry groups, including the Chamber of Commerce, National Association of Manufacturers, Americans for Prosperity, and the American Legislative Exchange Council (ALEC), these state legislative attacks focused on undermining worker power in both the public and the private sectors.

In 2011–2012, Wisconsin, Ohio, and Indiana joined Michigan in passing legislation to substantially restrict collective bargaining rights of public-sector workers. During the same period, 19 states introduced RTW legislation, and Indiana joined Michigan in passing a RTW law. Within the next five years, Republican-majority legislatures in Kentucky, Missouri, West Virginia, and Wisconsin all passed RTW laws (in Missouri, voters restored full bargaining rights for covered private-sector workers by repealing the new RTW law via a 2018 ballot initiative).

As illustrated in Figure F, 27 states now have RTW laws on the books. The majority of these RTW laws were enacted in Southern and Western states in the mid-twentieth century, but after 2010, five states—all in the central U.S.—have newly adopted RTW laws.

Figure F

Figure G shows the losses in unionization broken down by RTW status, differentiating among the states shown above that adopted RTW either before or after 2010. Unionization has declined far more sharply in the states that adopted RTW most recently, falling 3.8 percentage points between 2010 and 2022. By 2022, unionization rates were 4.8% in states that had adopted RTW prior to 2010, 9.7% in states that adopted RTW after 2010, and 14.6% in non-RTW states.

Figure G

The steep declines in unionization rates in Michigan and other states that adopted RTW in the past decade (often as part of a package of multiple anti-union legislative changes) have devastating and multi-faceted impacts for workers. By lowering the share of workers who have union coverage, RTW laws weaken workers’ bargaining power and allow business owners and corporate shareholders to capture more of the income generated by firms, resulting in lower wages and benefits.

All workers experience a wage disadvantage in states where RTW laws are in place, and data show these disparities are especially pronounced for women and workers of color (who make up two-thirds of today’s union workers). When unions are strong, they improve wages and benefits for all workers (not just those in unions) and reduce racial and gender wage gaps, helping to counteract disparate outcomes resulting from occupational segregation and discrimination in the labor market. When unions are weak, women and workers of color have less hope of working under a union contract, where equal pay for equal work and non-discrimination protections are enforceable guarantees.

Because unions also have powerful effects on workers’ lives outside of work, states that constrain worker bargaining power end up with less equitable economies and less robust democratic participation from voters. Disparities in worker power across states shape the quality of life, the strength of democracy, and the well-being of all workers, unionized or not. Workers who live in states with higher levels of unionization not only earn higher average wages, but also are more likely to have access to unemployment insurance, paid sick leave, and paid family and medical leave than workers in states with lower union densities. Likewise, strong correlations between state-level voting restrictions and low union density show that the future of state-level democracy is itself linked to strengthening workers’ ability to exercise basic rights to organize and collectively bargain.

Repealing RTW and restoring prevailing wage laws are critical steps to rebuilding worker power and reversing this economic damage, but much more remains to be done. Far too many U.S. workers still lack any legal pathway to a union contract, and until Congress enacts major federal labor law reforms, states like Michigan must continue to take the lead on ensuring all workers—including the millions of public-sector, agricultural, and domestic workers who are otherwise excluded from federal labor law—have full union rights. 

At a moment of historic inequality and record corporate profits, it is no surprise we are also seeing historically high levels of approval for unions. Workers are looking to unions as critical vehicles for fixing what’s broken at work and in our wildly unequal economy. The large gap between the share of workers who want a union and the share of workers who are in a union underscores that our system of weak federal labor laws, which are further undermined by RTW measures in over half of U.S. states, is not working. Fundamental reform is required to rebuild an economy that guarantees all workers the freedom to unionize and collectively bargain, and no longer leaves most workers behind.

Past generations of Michigan workers birthed industrial unions that turned poverty-wage factory jobs into living-wage careers, transformed the nation’s manufacturing sector, and sustained worker-led multiracial organizations that laid a foundation for 20^th-century civil rights and women’s rights movements. Repeal of RTW in Michigan is a crucial first step to ensuring that current generations of workers have the same chance to come together to reinvigorate our democracy, confront new forms of 21^st-century inequality, and restore a fair balance of power to our economy.