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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Figure A

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

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

Figure B

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

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

Figure C

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

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

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

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

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

The construction phase and Project Labor Agreements (PLA)

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

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

Removing obstacles to unionization: Neutrality and labor peace agreements

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

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

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

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

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

Importance of unionization to improve manufacturing jobs and wages

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

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

Table 1

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

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

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

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

Living wage floor

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

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

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

Figure D

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

Table 2

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

Local and/or targeted hire policies

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

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

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

Figure E

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

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

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

Equitable workforce development through apprenticeships and pre-apprenticeships

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

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

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

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

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

Child care

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

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

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

Table 3

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

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

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

Affordable housing

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

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

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

Figure F

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

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

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

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

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

Environmental standards, funding, and monitoring

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

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

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

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

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

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

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

Conclusion

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

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

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

Acknowledgements

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

Appendix

Appendix Table 1

Notes

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

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

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

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

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

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

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Throughout 2025, the Trump administration has discriminated against Black and brown federal employees—and taken actions that make it easier for all employers to follow suit—by weaponizing the enforcement of antidiscrimination laws against the people they were justifiably created to protect. This includes redirecting EEOC priorities toward so-called “DEI-motivated race and sex discrimination and anti-American national origin bias,” restricting use of disparate impact liability, and effectively ending enforcement of equal employment laws for the civilian federal contracting workforce by gutting the Office of Federal Contract Compliance Programs. The administration’s actions clearly demonstrate how risky it is for workers not to have the protections of a legally binding union contract.

A key element of any union contract is protection from unfair and arbitrary dismissals. For school employees, as for so many, the greatest risk is an employer who plays favorites. Whenever an employer has the unfettered right to decide who stays and who goes, workers suffer. In K–12 education, the risk of layoff is a persistent issue because school districts face endemic funding challenges and are frequently forced to reduce staffing levels. Because educator unions don’t want to give principals and superintendents the right to pick and choose who gets laid off based on their own whims, they have traditionally fought for seniority protections, often known as “last in, first out,” or LIFO. Under LIFO contract provisions, seniority is the sole determining factor in layoff decisions, with newer teachers laid off before more senior ones.

However, LIFO has a tremendous drawback: It hinders efforts to recruit and retain Black and brown teachers. In Minneapolis, for example, only 20% of Minneapolis teachers are people of color, even though fully two-thirds of the student body is Black or brown. Similar patterns are observed nationally. Almost half (49.5%) of K–12 students in the U.S. are Black, Hispanic, or Asian American and Pacific Islander, compared with only 24.4% of teachers. As studies have long documented, LIFO contributes to this disparity because even if a school district is able to hire more Black and brown teachers, they will be the first let go as more senior white teachers are retained.

At the same time, however, teachers’ unions are right to fight for layoff provisions that take away the arbitrary power of school districts to pick and choose who they keep. A core function of unions has always been to protect workers across occupations from being subject to the whims of supervisors. Indeed, Black and Hispanic workers report higher levels of unfair dismissals, suggesting that racial inequities would persist or even get worse in the absence of union protections. Union protections are also critical to narrowing pay disparities. According to a 2024 Rand report, Black teachers received lower average salaries and pay raises than white teachers. This difference was further linked to the fact that Black teachers were less likely to live in states with collective bargaining. The inadequacy of pay is one of the main reasons teachers report for leaving the profession, further contributing to the demographic mismatch between teachers and students.

This is the conundrum that MFE sought to address when the union went on strike in 2022: preserving protections against unfair dismissal while mitigating the inequities of LIFO. The solution they reached in 2022, a solution approved by 76% of MFE’s majority-white membership, was elegant and fair. The contract does not guarantee that Black or brown teachers will be protected from layoffs, contrary to the claims of right-wing groups that the contract is “woke” and “racially discriminatory.” Rather, the contract states that, when the district is forced to lay off teachers, it will protect teachers from populations that are “underrepresented among licensed teachers in the district.”

This means the contract’s protections can and will shift over time, as the composition of the teaching workforce changes. If and when Black teachers are no longer underrepresented in the district, they will no longer be afforded special protections against layoffs. Indeed, if someday it is white teachers who are underrepresented, the same contract provisions would apply to them. Far from embedding racial discrimination into the contract, these provisions support the development of a diverse teaching workforce while protecting worker rights.

The goal of a diverse teaching workforce is not just a noble one but also supports the success and well-being of students of color. Research indicates that the presence of teachers who reflect the diversity of the student body is linked to lower rates of suspension, lower dropout rates, greater college aspirations, and improved test scores. The contract MFE fought for will support the careers of Black and brown teachers and will lead to a teaching staff that looks more like its students, while continuing to protect all educators from arbitrary dismissal. The Department of Justice’s claims are a complete distortion of reality. Sadly, that is what we have come to expect from this administration, which seems dead set on rolling back decades of civil rights protections and abdicating the 60-year position of the federal government in setting a higher standard for employing a workforce that represents the diversity of the U.S. population. Hopefully, the courts will recognize this and allow Minneapolis Public Schools to continue its innovative program to protect a diverse workforce.

The federal Occupational Safety and Health (OSH) Act—passed in 1970 after decades of fierce advocacy by organized labor and its allies—mandates that workplaces be “free from recognized hazards that could cause death or serious physical harm to employees.” To implement this mandate, the Act created the Occupational Safety and Health Administration (OSHA) to develop and enforce workplace health and safety standards. OSHA standards are designed to limit workers’ exposure to hazards; ensure access to adequate safety equipment; and require that employers monitor workplaces for hazards and report injuries and illnesses. OSHA also provides training and compliance assistance to workers and employers and gives workers the right to request workplace inspections. The OSH Act established the National Institute for Occupational Safety and Health (NIOSH), the sole agency responsible for conducting research to inform OSHA policymaking with evidence-based assessments of injury and fatality risks, and providing actionable guidance for employers to improve safety. Since OSHA was created, fatalities and work-related injuries have dropped by 65%, even while the U.S. workforce has doubled in size.

Separately, following a century of lawmaking related to mine safety, the 1977 Federal Mine Safety and Health Act created the Mine Safety and Health Administration (MSHA), which is charged with enforcing mine safety rules with the goal of reducing deaths, injuries, and illnesses in U.S. mines.

The OSH Act establishes roles for both federal OSHA and states on occupational safety and health protection. The relationship between federal government and state OSH mandates is complicated. The OSH Act grants the federal government jurisdiction over worker health and safety law, but states have the option to establish their own state-level OSHA standards and enforcement systems (known as “state plans”) that are then monitored by federal OSHA. State OSHA plans must be approved by federal OSHA, be “at least as effective” as federal OSHA, and must cover state and local government employees at a minimum. Currently, federal OSHA can only cover private-sector workers. The cost of running a state plan is shared between the state and federal government. At present:

• 29 states are under federal OSHA jurisdiction (“federal OSHA” states). Federal OSHA covers all private businesses engaged in commerce and all federal agencies but does not cover state and local governments (see Figure A). Self-employed workers are excluded and employers with 10 or fewer employees are exempt from OSHA’s record-keeping requirements (though they are still required to comply with OSHA standards and to report serious injuries and fatalities).
• 21 states have OSHA-approved state plans that cover both private-sector and state and local government workers.{{1}}
• Six states have “hybrid” plans, where private-sector workers fall under federal OSHA jurisdiction, but public-sector employees are covered by a state plan.{{2}}

Figure A

What are the threats to federal workplace health and safety protections?

Threats to federal workplace health and safety protections include:

• Diminishing capacity to enforce or develop workplace safety standards: OSHA has long been understaffed and underfunded. Federal and state OSHAs collectively employ fewer than 2,000 inspectors to cover 161 million workers; it would take the agency 185 years to inspect every U.S. workplace just once. Trump administration actions have already significantly exacerbated OSHA’s existing capacity and enforcement constraints, by:
  • Attempting to close OSHA and MSHA offices, as well as attempting to eliminate NIOSH;
  • Issuing guidance allowing OSHA staff to reduce certain employer OSHA violation penalties by up to 70%; and
  • Announcing self-audit programs that carve out inspection exemptions for employers. These programs reduce the agency’s enforcement powers and create a system that relies on self-policing and individual companies’ voluntary adherence to the law.
• Restricting the General Duty clause: Trump’s Department of Labor has proposed carving out exemptions to this foundational OSHA protection, which ensures that employers have a basic obligation to protect workers from known and preventable dangers not covered by other OSHA regulations. This rule change would exempt certain industries from this obligation and has dangerous implications for the future of OSHA.
• Blocking or delaying long-overdue standards on serious hazards like silica dust or heat exposure: The Trump administration has already paused enforcement of a new mine safety rule on silica exposure that would prevent black lung disease and death from silicosis among coal miners. It is widely anticipated that the administration will block or weaken a proposed new OSHA standard to protect workers from extreme heat exposure.

How can states maintain and strengthen workplace health and safety protections?

State authority to enact and enforce health and safety standards depends on whether a state is a “federal OSHA” or “state plan” state, as follows:

• Federal OSHA states are preempted from enacting standards in areas already addressed by federal OSHA but can still enact policies covering areas of occupational health and safety not addressed by federal law.
• States with state OSHA plans have authority to enact standards that exceed the federal floor—for example, by strengthening existing standards or adopting standards in additional areas, as well as strengthening enforcement programs and imposing civil monetary penalties that exceed federal amounts.

Step I: Update state laws and standards to lock in current federal protections

In state plan states, OSHA standards and enforcement must be at least as strong as the floor set by federal OSHA. However, many state plan states have not achieved this basic standard. Meanwhile, federal OSHA states run the risk of leaving workers unprotected if federal OSHA standards are eliminated or enforcement is further weakened.

Federal OSHA states should:

1. • Ensure OSHA coverage for all public employees: Federal OSHA excludes millions of workers from its protections because it does not cover state and local government employees. Six federal OSHA states have passed protections covering all public employees, but 23 federal OSHA states and the District of Columbia have not yet taken necessary steps to extend protections to state and local government employees. All federal OSHA states should extend coverage to public-sector workers, as is currently under consideration in Pennsylvania. (Because state OSHA plans often struggle with underfunding and capacity constraints that limit their effectiveness, advocates should remain aware that extending coverage to public employees under this model is an important short-term solution, while a best-case long-term scenario would be an expanded federal OSHA that covers all private- and public-sector workers).
   • Pass worker health and safety trigger laws: Federal OSHA states cannot strengthen or adopt standards in areas already regulated by federal OSHA. However, states can safeguard against the possibility of existing federal standards being eliminated by passing legislation to automatically incorporate into state code any eliminated federal standards to ensure workers are not left unprotected. For example, a recently enacted Illinois law directs state agencies to ensure state wage and hour, occupational health and safety, and mine safety standards remain at least as protective as existing federal standards in the event that certain federal protective standards are eliminated.

State plan states should:

• • Ensure full adoption of all current federal standards: Too many state plan states have track records of failing to adopt required new federal standards in their OSHA plans. For example, during the COVID-19 pandemic, the state of Arizona failed to adopt an emergency temporary standard (ETS) for health care workers and failed to align with federal OSHA’s new increase in penalties. After federal OSHA threatened to revoke Arizona’s state plan privilege, the state met its obligations to adopt these standards and penalty increases. Some states, like Kentucky, have failed to update their penalty policy to align with federal minimum standards.

Step II: Close critical gaps in workplace health and safety protections

• All states should adopt standards in key areas federal OSHA fails to cover: Federal OSHA lacks standards in several areas where workers face serious and ongoing workplace hazards, but intense industry opposition has blocked or stalled federal OSHA rulemaking. Fortunately, all states have latitude to adopt their own standards in these areas and can do so by drawing on existing, evidence-based proposals already developed (but not enacted) by federal OSHA, relying on recommendations from NIOSH, or replicating strong standards already implemented in other states.
  • Heat exposure: Heat is a serious and deadly hazard for many workers. There is currently no federal heat standard; it is unlikely that the proposed protection moving through the rulemaking process will be finalized. In the absence of a federal standard, several states have implemented their own state heat standards, which vary in strength and coverage. Lawmakers seeking model policies can look to states like California, Maryland, and Oregon, where strong heat standards apply to both indoor and outdoor workplaces and there are clear temperature thresholds for when protections kick in.
  • Wildfire smoke: Wildfires are becoming more frequent and severe, yet there is no federal OSHA standard requiring protection from wildfire smoke. States can follow the lead of California, Oregon, and Washington, which have all promulgated rules that require employers to follow protocols to protect many workers, not just responders. Outdoor and indoor workers need protection from wildfire smoke when airborne particulate matter reaches a certain concentration threshold.
  • Ergonomics: Ergonomic hazards like repetitive lifting, twisting, and forceful hand and wrist motions have long been a leading source of workplace injuries, especially in industries like warehouse work, meat processing, health care, and construction. A federal ergonomics standard was enacted in 2000 but then promptly repealed by Congress. A few states have passed rules to protect workers in certain industries from musculoskeletal disorders, such as hotel housekeepers in California and meatpacking workers in Minnesota. New York recently passed a warehouse worker protection act that includes specific protections against musculoskeletal disorders, among other workplace health and safety concerns.
  • Workplace violence: Workplace violence has worsened over the past five years and is now the third-leading cause of death on the job, yet federal efforts to implement a workplace violence standard have so far been unsuccessful. California, however, is in the process of developing a general standard for workplace violence protections after the state legislature passed SB 553 and mandated comprehensive protections. Cal/OSHA had already implemented a workplace violence prevention standard for employees in health care industries. Several other states proposed standards this year.
  • Infectious disease: In the absence of a federal OSHA standard on airborne or aerosolized infectious disease, U.S. workers—particularly health care workers, low-wage workers, and workers of color—continue to face high risk of workplace exposure during major infectious disease outbreaks. A 2021 OSHA Emergency Temporary Standard established to address COVID-19 in health care settings was withdrawn six months later and OSHA’s stated intent to develop a broader infectious disease rule for health care remains in limbo. During the pandemic, at least 14 states implemented temporary COVID-19 worker safety protections. Other states, such as New York, have adopted limited infectious disease standards. Unfortunately, no state has adopted a comprehensive, enforceable measure yet.
  • Right to refuse work under dangerous conditions—including during climate emergencies: While federal OSHA law has some retaliation protections for workers refusing to work under dangerous conditions, they are weak and largely unenforced. It is therefore urgent that states take steps to ensure that workers may refuse to work under dangerous conditions without being subject to retaliation—and that they continue to be paid so long as the dangerous workplace condition remains unremedied. The need for this protection is only increasing as the climate crisis causes more severe and more frequent emergencies. Some states—such as California and Oregon—and localities like Miami-Dade County, Florida, have enacted laws that prohibit employers from taking adverse action against non-essential workers who refuse to continue work when emergency conditions are present or imminent.
  • Mandate injury and illness prevention programs (IIPPs): Federal OSHA does not have a specific standard to require an IIPP but has issued formal recommendations that employers adopt comprehensive safety programs. Several states, including California, Minnesota, and Washington, have created regulations that require that employers implement an injury and illness prevention plan.
  • Strengthen anti-retaliation protections for workers that voice concerns about safety and health hazards: Though federal OSHA law contains some language on protecting workers from retaliation when exercising their rights under the law, the provisions are weak and the OSHA offices that enforce the provisions are critically understaffed. Providing workers with a private right of action so that they may go to court if they are retaliated against is critical for ensuring workers are protected. States with existing whistleblower laws should expand them to protect workers who notify fellow workers or the public about workplace hazards (not just workers who file complaints).
• State plan states should strengthen existing standards: State plan states should increase protections for workers by implementing stronger versions of existing weak or outdated federal standards. State plan agencies can look to states like California and Washington, whose OSH agencies regularly pass the nation’s most stringent standards, for guidance.

Step III: Use proven strategies to increase effectiveness of enforcement, encourage compliance, and expand community awareness

• State plan states should implement targeted, more effective enforcement and penalty strategies. They should:
  • Increase agency resources and staff: Where possible, states should dedicate more resources to their state OSH agency. Like federal OSHA, state plans are plagued with staffing shortages that severely limit their ability to carry out regular, sufficient inspections. As of 2024, state plan states had an average ratio of one OSHA inspector per 84,937 employees.
  • Increase penalties to meaningful levels: Penalties are effective for deterring violations only if they’re substantial enough to compel employers to take notice and remove hazards. While state plans are required to maintain statutory maximum penalties that are at least equivalent to those of federal OSHA, Kentucky is one of several states that has failed to raise its penalties after Congress required OSHA to raise its penalties in 2016 and index them to inflation. There are also often significant disparities between the already low average penalties assessed by federal OSHA and the average penalties assessed by state plans, even among those that have adopted new maximums. In fiscal year 2024, the average penalty for a serious violation under federal OSHA was $4,083, compared with an average penalty under state OSHA plans of only $2,580. These penalties are far too low to serve as effective deterrents; state plan states should raise penalty rates substantially across the board. In addition, states should resist adopting the new federal OSHA penalty reduction policy that the Trump administration announced in July.
  • Implement instance-by-instance citations: States can use instance-by-instance citations to cite and fine employers for each individual iteration of a willful and serious violation. This strategy can have a significant impact by compounding OSHA’s otherwise low penalties. Washington’s Department of Labor & Industries, for example, fined a manufacturing company over $2 million after it found 31 willful serious, seven willful general, 94 serious, and more than 40 general violations across three of the corporation’s locations. 
  • Cite all involved employers for violations: It is often the case that companies do not directly employ many of the workers who perform tasks for them—work is often outsourced via other entities such as subcontractors, temporary agencies, and workers misclassified as independent contractors. Multiple employers may also operate at the same site. Federal OSHA has maintained a multiemployer policy since the 1970s, but it is underutilized and not regularly enforced. When workers’ safety rights are violated in situations that involve multiple employers, state plans should cast as wide a net of responsibility as is legally feasible and hold all involved companies that possess control over working conditions financially responsible.
  • Require workplace hazards to be addressed while citations are being contested: Federal OSHA and most state plans do not require employers to abate workplace hazards identified during an OSHA inspection while that violation is being contested. State plan states should require employers to address recognized hazards whether they appeal the violation or not, as is done in Washington.
• Monitor and expose routine violators: Federal OSHA’s Severe Violator Enforcement Program designates agency resources toward inspecting and monitoring employers that have “demonstrated indifference” to their OSH Act obligations. Severe violators are subject to additional inspections and are publicly listed on the Severe Violator Enforcement Program Log. This program has been found to be effective at deterring violations by peer employers. States can implement a state-level “wall of shame” like New Jersey’s Workplace Accountability in Labor List (WALL), a publicly accessible list of employers with outstanding wage/benefit theft or tax liabilities, and can issue press releases publicizing serious and willful violations by employers.
• Provide or require workers’ rights education: States can mandate that both youth and adults receive education on workplace health and safety and their rights under OSHA. For high school students, “workplace readiness” curricula—like the one implemented in California and those proposed in other states—can include education on workplace rights including health and safety protections. States can implement use of NIOSH’s “Youth@Work—Talking Safety” curriculum in schools and develop state-level versions of programs like the federal Susan Harwood Training Grants Program, which provides funding to nonprofit organizations to provide workplace health and safety training—particularly to marginalized workers in high-hazard industries.

Where to go next

This document is designed to be a primer on OSHA, as well as to provide insight into the complex relationship between the federal OSHA and state plan states. It is a first step for those interested in improving worker health and safety conditions in their state. It does not provide enough details to guide drafting of laws or regulations for your state. If you are interested in advocating for specific policies mentioned in this brief, please contact us at earn@epi.org. We will be happy to connect you with relevant health and safety experts and organizations for further technical assistance.

Additional recommended resources:

• AFL-CIO’s Death on the Job report
• AFL-CIO’s resources for workers
• Health & Safety resources from National Employment Law Project
• National Council for Occupational Safety and Health
• Workplace Justice Lab at Rutgers University

Acknowledgments

The authors are grateful to Debbie Berkowitz and Rebecca Reindel for their expertise and guidance.

{{1.}} These states are Alaska, Arizona, California, Hawaii, Indiana, Iowa, Kentucky, Maryland, Michigan, Minnesota, Nevada, New Mexico, North Carolina, Oregon, South Carolina, Tennessee, Utah, Vermont, Virginia, Washington, and Wyoming. Puerto Rico also operates a state plan.

{{2.}} These states are Connecticut, Illinois, Maine, Massachusetts, New Jersey, and New York. The Virgin Islands also operate a hybrid plan.

Discrimination in the workplace—either in employment, promotion, job assignments, pay, benefits, discipline, discharge, and layoffs—is illegal in the United States. Research shows that actions taken to reduce discrimination not only improve equity but also support economic growth. Federal law defines workplace discrimination on the basis of a worker’s membership in designated protected classes, with the rationale that disparate treatment violates the law when it would not have happened to an individual “but for” that aspect of their identity. These protected classes are enshrined by legislation and include the following:

• Race, color, religion, sex (including pregnancy, sexual orientation, and gender identity), and national origin (Title VII of the Civil Rights Act of 1964)
• Age (Age Discrimination in Employment Act of 1967)
• Disability (Americans with Disabilities Act of 1990)
• Genetic information (Genetic Information Nondiscrimination Act of 2008)

The extent to which these protected classes can be expanded is subject to legal interpretation. For example, over time, the definition of “sex discrimination” has been amended to explicitly include disparate treatment related to pregnancy and childbirth with the Pregnancy Discrimination Act of 1978, as well as sexual orientation and gender identity following Supreme Court decisions in 2020.

In addition to protection from unjust unequal treatment, federal law also protects workers from retaliation for filing discrimination claims or from beginning the process of filing a discrimination claim. These federal laws cover most employees whether they work full time or part time and irrespective of citizenship status. Employers with 20 or more employees are required to comply with all nondiscrimination laws at the federal level; employers with less than 20 employees are still subject to many nondiscrimination standards, though standards are less stringent.

The Equal Employment Opportunity Commission (EEOC) is the independent federal agency responsible for investigating claims of employment discrimination at the federal level and for enforcing federal workplace nondiscrimination law. The EEOC does this both by fielding discrimination claims against employers and by requiring annual reports from employers on employment outcomes by protected class characteristics to assess potential patterns of discrimination.

What are the threats to federal workplace nondiscrimination protections?

Current threats to workplace nondiscrimination protections include:

• Executive actions constraining EEOC’s mission and functions: Since taking office, Trump has undermined or limited key functions of the EEOC by:
  • Illegally firing two of the three commissioners and the general counsel, leaving the Commission unable to alter policy or vote on rulemaking for several months. In October 2025, the Senate confirmed Brittany Panuccio as an EEOC commissioner, establishing a three-person quorum. With a quorum in place, the EEOC will likely rescind their 2024–2028 strategic enforcement plan, guidance on arrest and conviction records, and EEO-1 reporting requirements. Additionally, the agency will likely move forward with announced plans to significantly revise its Pregnant Workers’ Fairness Rule and Harassment Guidance.  
  • Imposing new limits on the collection of data necessary to accurately assess discriminatory impact by shortening annual reporting periods and removing nonbinary gender reporting entirely from forms used to collect demographic data from private employers and federal contractors.
  • Directing the EEOC to focus more on so-called “DEI-motivated race and sex discrimination and anti-American national origin bias and discrimination.”
• Politicizing the EEOC and constraining independent state and local agencies: EEOC Chair Andrea Lucas has repeatedly affirmed her commitment to restructuring the EEOC’s priorities toward those of the administration, rather than enforcing anti-discrimination law as an independent federal agency. In an effort to impose the administration’s agenda on state and local enforcement agencies, Lucas has proposed changes that would weaponize the funding relationship between those agencies and the EEOC. While state and local agencies operate independently, they receive funding from the EEOC in the form of reimbursements for jointly filed cases they take on behalf of the federal agency. With the exception of a few large states, such as New York or California, most states significantly rely on this funding to cover their operational costs. Since serving as acting chair, Lucas has reversed course on the EEOC’s enforcement of disparate impact and sex discrimination cases by:
  • Withholding funding for state and local Fair Employment Practice Agencies (FEPAs) that choose to take on cases concerning gender identity discrimination.
  • Threatening to decertify state and local FEPAs that draw conclusions on gender identity and disparate impact charges that differ from those of the EEOC.
  • Instructing the agency to close charges that solely concern disparate impact by September 30, 2025, without developing them for litigation or for conciliation.
• Diminished EEOC enforcement capacity: The extent to which workers are protected from workplace discrimination at the federal level is dependent on the EEOC’s capacity to monitor employment practices, investigate claims of workplace discrimination, and reliably enforce sanctions against employers who violate nondiscrimination law. But for decades, inadequate funding and staffing has limited the EEOC’s capacity to investigate and resolve charges in a timely manner. Actions of the second Trump administration further exacerbate these problems:
  • In March 2025, the Department of Government Efficiency (DOGE) announced plans to close and consolidate EEOC field offices. Once the EEOC reestablishes a quorum, the agency may begin these closures, which threaten the job security of EEOC field staff and further constrain their enforcement capacity.
  • The EEOC plans to break up its data analytics office, signaling that robust data collection and analysis—critical tools for enforcement and assessing charges—will be less of a priority for the agency. Rolling back data collection is a step toward the Project 2025 prescribed goal of ending EEO-1 data collection.
• Executive actions attacking nondiscrimination law: The Trump administration has prohibited the consideration of disparate impact liability in discrimination claims, making it more difficult to hold employers accountable for unfair employment practices and outcomes without being able to prove that employers explicitly intended to discriminate (including efforts to hold companies accountable for AI-driven algorithmic bias).  

While many threats are coming directly from the federal level, workplace nondiscrimination protections are also under threat in states that have chosen to follow the lead of the White House in passing anti-diversity, equity, and inclusion (DEI) laws. Many states have already closed DEI-related offices and initiatives, cut funding to programs, and restricted the use of language and consideration of protected classes in higher education. While these actions do not remove existing workplace nondiscrimination laws, workers in those states could be left without recourse if legislative trends continue and federal nondiscrimination protections continue to deteriorate.

How can states maintain and strengthen workplace nondiscrimination protections?

States have legal authority to establish their own employment discrimination laws that provide more expansive coverage than federal law. States can provide legal protections for more traits or characteristics, lower the minimum employment threshold required to file a discrimination claim, and extend the window of time employees have to file a claim after the alleged discriminatory incident occurred.

Many states and local governments have Fair Employment Practices Agencies{{1}} that investigate workplace discrimination claims in accordance with state and local nondiscrimination law, often in concert with field offices of the federal EEOC. FEPAs may have authority to enforce state or local standards for nondiscrimination that exceed those laid out by the federal government. Workers who believe they have been discriminated against can file a claim with the EEOC and/or their state or local FEPA, depending on the standards being violated, the types of relief available to victims, the deadlines for filing charges, or other factors related to the claim. The Trump administration is actively working to undermine the independence of FEPAs by weaponizing their funding arrangement, particularly on enforcement of disparate impact and gender identity discrimination protections. For state agencies that rely on federal funding for a significant share of their operating budget, these changes present serious challenges to their ability to properly maintain and expand enforcement capacity.

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

Most states have passed state-level employment discrimination laws that codify employment discrimination protections for at least the same protected classes that are federally protected. Today, 24 states and Washington, D.C., have discrimination laws that cover a more expansive range of protected traits than federal law. However, 19 states, including Idaho, Louisiana, and Oklahoma, offer less protection than federal laws. Alabama’s employment discrimination law is by far the least comprehensive, as it only protects against age discrimination from 40 years of age.  

Other states have enacted certain discrimination laws that only protect public employees. For example, Georgia’s discrimination laws have mixed levels of protection based on the sector of employment. Protections for discrimination against race, color, religion, pregnancy, sexual orientation, and gender identity are only extended to public-sector employees. Private-sector employees are provided protections for disability and equal pay discrimination. Similarly, Mississippi’s employment discrimination laws only apply to public employees.  

States typically have a commission or division dedicated to enforcing state nondiscrimination laws. Alabama, Arkansas, and Mississippi do not have their own state agency and solely rely on the EEOC for anti-discrimination enforcement. Additionally, North Carolina does not have an agency where private employees can file discrimination claims.

As the Trump administration makes it easier for employers to discriminate by weakening the federal EEOC, failure to cover private employers under state law and a lack of state level enforcement capacity will leave even more workers in those states without recourse. States can—and should—act to plug these gaps by, at a minimum:

• Ensuring their state code includes at least all the protected classes covered in federal nondiscrimination law;
• Ensuring state nondiscrimination laws cover all workers (in both public and private sectors) and mirror federal employment minimum thresholds for coverage; and
• Establishing and adequately funding a state commission or division with enforcement authority that, at minimum, mirrors federal policies for filing deadlines.

Step II: Include additional protections already implemented in other states 

• Extend protections to additional traits: Most states have extended protections for marital status, sexual orientation, gender identity, and gender expression. While states may be financially disincentivized to pursue cases concerning gender identity discrimination, there is currently no threat to simply extending legal protections. Some states have also incorporated additional traits such as reproductive health decision-making, medical conditions, status as a victim of domestic violence, housing status, arrest/court/conviction record, and military or veteran status as protected traits (see Figure A). Additionally, several states including New York and Oregon and D.C. have lowered the age limit to be considered for age discrimination.  
• Codify inclusive definitions for protected traits to fortify employment nondiscrimination protections: Many states include definitions of protected traits that better encompass the types of discrimination employees may face. For example, since 2019, the CROWN Act has been adopted by states across the nation to include hair discrimination as a form of racial discrimination. More than half of U.S. states have passed the CROWN Act and eight states have defined race-based discrimination to include discrimination based on traits associated with race in their state code. 

Figure A

Step III: Modernize nondiscrimination policies by extending and locking in coverage across classes of workers and collecting comprehensive data

• Extend coverage to contract workers: Independent contractors are not considered employees, so they may not be inherently covered by employment discrimination laws. As of 2019, only four states (Maryland, Minnesota, New York, and Rhode Island) protect independent contractors from discrimination protection, while 24 states and D.C. explicitly exclude them. Extending discrimination protections to independent contractors is important as they have significantly less labor protections than employees. Additionally, states could explicitly enforce anti-discrimination and equal employment opportunity laws for state contract workers to ensure fair employment practices among private employers that conduct business with the state. In a climate with increased hostility against those who are not white, male, heterosexual, and cisgender, it is imperative that the classification of a worker does not dictate the rights they have to protect themselves from discrimination.
• Emphasize protections for workers regardless of their citizenship and immigration status: Federal law prohibits discrimination on the basis of national origin, and employees are protected by Equal Employment Opportunity statutes regardless of citizenship or immigration status. Given changing federal treatment of immigrants, states should emphasize and enforce fair treatment regardless of documentation status to ensure workers remain protected. They should also strengthen anti-retaliation protections and practices.  
• Collect employment and pay data at the state level: Federally, the EEOC requires employers with more than 100 employees to submit an annual report (the EEO-1 form) providing critical workforce demographic data. With the future of federal data collection at risk, states should seek to collect their own equal employment data, including pay data, to support anti-discrimination enforcement mechanisms. Currently, only three (California, Illinois, Massachusetts) states require employers to submit this data.

Additional recommended resources 

• Trump is making it easier for employers to discriminate. This stifles equity and hurts economic growth. (Economic Policy Institute) 

• Trump-led attacks on equity are setting the stage for our next public health crisis (Economic Policy Institute) 
• Trump’s assault on independent agencies endangers us all (Economic Policy Institute and The Century Foundation) 

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

{{1.}} These agencies are often referred to as commissions on civil rights, human rights, human relations, etc. See a list of agencies here: University of Minnesota Human Rights Library.

The Fair Labor Standards Act (FLSA)—which establishes wage and hour standards that apply to most workers at private businesses with annual revenue of at least $500,000, as well as hospitals, care centers, schools, and public agencies—requires that covered employers keep employee time and pay records. Beyond this minimal recordkeeping requirement, other important questions about wage payment are left up to states. The FLSA does not specify, for example, how and whether employers make time and pay records available to employees; when or how often employees must be paid; the manner in which pay can be issued (e.g., cash, check, direct deposit, electronic pay card, etc.); whether and under what circumstances employers can take deductions from workers’ pay; and how and by when employees must be paid following separation from employment.

What are the threats to federal wage payment protections?

Current threats to wage payment protections include:

• Diminished federal Department of Labor (DOL) enforcement capacity: Wage theft is an epidemic across the country, and diminished DOL capacity to enforce federal wage and hour laws will exacerbate this problem. As of May 2025, the number of federal DOL Wage and Hour Division investigators is at an all-time low.
• Attempts to close the Consumer Financial Protection Bureau (CFPB): The 2006 Electronic Funds Transfer Act included important protections for workers who encounter fraud or abuse when attempting to access wages issued via electronic pay cards (including disclosure requirements, error resolution rights, and rights to other options for receiving pay). Trump administration efforts to eliminate CFPB may leave the federal government with little or no ability to enforce these protections.

How can states maintain and strengthen wage payment protections?

States have legal authority to establish their own wage payment standards since most issues related to wage payment are not covered by the FLSA.

Step I: Lock in and enhance federal recordkeeping requirements

At a bare minimum, all states should ensure that state code requires employers to keep detailed employee time and pay records.

• For example, California requires “payroll records showing the hours worked daily” by employees, and California wage orders contain more specific recordkeeping provisions “showing when the employee begins and ends each work period” as well as meal periods and split shift intervals (CA Code Regs Title 8, Ch. 11010, Sec. 7).

Step II: Ensure state code requires timely and accurate payment of wages for all workers

1. Require pay stubs (written wage statements) with each paycheck: Most states require employers to provide workers with a print or electronic pay stub at each payday. Pay stub requirements vary widely by state, and should at a minimum guarantee that workers receive critical information such as the rate of pay, hours worked, gross and net wages, and itemized accounting of any withholdings or deductions. The six states (Alabama, Arkansas, Louisiana, Mississippi, South Dakota, and Tennessee) that still lack a pay stub requirement should adopt one, as Ohio did recently.
2. Ensure timely pay on established paydays: State codes vary widely on the question of how frequently employers are required to pay workers and a few states lack any standard to ensure workers are paid at timely, predictable intervals. As a minimum standard, states should ensure employers are required to issue paychecks at least biweekly or twice per month on a regularly scheduled payday.
3. Regulate forms of payment to prevent wage theft: The proliferation of third-party vendors contracting with employers for payroll services that include use of electronic pay cards or debit cards has increased the risk that workers are charged fees for accessing their pay or are unable to access part or all of their wages. Eleven states already require that employers provide employees the option to receive payment of wages by check and many others set additional guardrails for the use of pay cards. For example, in Connecticut and Illinois employers can only use pay cards if they first obtain employee consent; explicitly offer direct deposit and paper check/cash as alternatives; provide clear written notice disclosing fees and terms of pay cards; and allow employees to revoke pay card authorization and switch to another method of payment at any time. Connecticut also requires that pay cards must allow at least three free withdrawals per pay period without fees.
4. Prevent unauthorized deductions from paychecks: The FLSA minimally bars employers from making deductions that bring a worker’s hourly pay below the federal minimum wage, with exceptions for the “reasonable cost” of items provided to benefit the employee, such as food or lodging. States should at a minimum prohibit employers from taking deductions from workers’ pay without clear written notice and employee authorization. For example, New York state code and accompanying regulations require employee authorization of payroll deductions and specify types of deductions considered legal or illegal.
5. Mandate prompt payment of final paychecks: To prevent the withholding of final paychecks after separation from employment (a common form of wage theft) many states set a deadline by which an employer must issue a worker’s final pay. For example, New Hampshire requires employers to issue final paychecks within three days to workers who are terminated, and no later than the next regular payday if a worker resigns. In Nevada, workers must receive a final paycheck “immediately” if they are terminated, or within a week if they resign or quit. In West Virginia, workers must receive a final paycheck on or before the next regular payday.

Step III: Strengthen wage payment accountability and enforcement

1. Require written notice at time of hire: More states should follow the lead of Minnesota and others by requiring employers to provide written notice of terms of employment at time of hire. This type of notice includes very basic information about employment terms but can be a critical tool for workers and enforcement agencies in the event that wage commitments are not met. Such notices should at a minimum specify the employer(s) name(s) and contact information; the work location, the nature of the work, and expected period of employment; the wage rate including when overtime or premium pay will apply; and benefits to be provided and at what cost (with information provided in a language understood by workers).
2. Strengthen enforcement: States have a host of opportunities to strengthen enforcement of wage payment laws, including:
   • Updating penalty frameworks to ensure fines and damages are adequate to serve as deterrents;
   • Allowing workers to pursue a private right of action (in addition to agency remedies) to address wage payment violations;
   • Enacting strong non-retaliation protections to ensure all affected workers can speak up about violations;
   • Equipping state agencies with adequate resources and staffing;
   • Pursuing joint employer liability for wage claims when necessary; and
   • Adopting tested best practices for strategic enforcement, co-enforcement, and employer and worker outreach and education.

Recommended sources for model legislation on these and related policies:

• Winning Wage Justice (National Employment Law Project)
• The DNA of Worker Rights: Key Building Blocks of California’s Model Framework of Wage and Hour Standards (UC Berkeley Center for Law and Work)
• Wage Theft Policy Playbook (State Innovation Exchange)
• The Labor Standards Enforcement Toolbox (Rutgers Workplace Justice Lab)

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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