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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Other localities should brace for similar consequences

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Notes

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

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

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

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

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

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

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Key takeaways

• Proposed state legislation to extend full, equal collective bargaining rights to all state and local government workers can help Virginia:
  • reduce the state’s large public-sector pay gap
  • improve public services
  • reduce staff vacancies and turnover
  • decrease racial and gender wage disparities
• Strong collective bargaining rights and increased unionization rates are highly correlated with numerous, widely shared benefits including higher wages, more equitable state economies, and healthier democracies.
• Virginia currently has one of the largest public-sector pay gaps in the nation. State and local government employees in Virginia earn, on average, 26.7% less than private-sector peers with similar education and experience.
• The public-sector pay gap varies across states and is largest in states like Virginia where most public employees lack collective bargaining rights. In Virginia, collective bargaining is currently banned for state employees and only recently became permitted for some local government employees.

In 2026, Virginia lawmakers are poised to consider transformative legislation that would extend full collective bargaining rights to public employees at all levels of state and local government. The benefits of comprehensive collective bargaining rights would extend far beyond affected public employees who would enjoy better working conditions. Stronger state collective bargaining laws can help improve the quality of public services and economic outcomes for all Virginians.

Data show that strong collective bargaining laws help states address persistent public-sector pay gaps, reduce staff vacancies and turnover, and lead to higher unionization rates (Morrissey and Sherer 2024). Increased unionization rates are highly correlated with numerous, widely shared benefits including more equitable state economies and healthier democracies (McNicholas et al. 2025).

For Virginia, expanding public-sector bargaining is a critical next step in building an economy that works for all. The expansion will reverse a long history of anti-worker state policies that have suppressed wages and limited workers’ power in the labor market by blocking pathways to unionization. Such policies have resulted in greater income inequality and persistent racial and gender wage disparities (Bivens and Shierholz 2018; Mishel and Bivens 2021). Strong, comprehensive state legislation covering public employees’ labor rights is also especially important at a moment when the federal government has been attacking the jobs, working conditions, and union contracts of over 235,000 federal civil servants residing in Virginia, and threatening long-standing federal protections of all workers’ rights (EPI 2025b; Oakford and Poydock 2025). 

This report examines how public-sector workers with limited or no collective bargaining rights fare compared with public-sector workers with well-established collective bargaining rights. To do so, we estimate pay differences between state and local government workers and private-sector workers with similar education and experience. In this analysis, Virginia is among a minority of states in which state employees have no bargaining rights and only some local government employees have limited bargaining rights. By contrast, 27 states have well-established collective bargaining rights for state and local government workers (Table 1).

The right to bargain collectively over pay is associated with higher unionization rates (union membership as a share of the workforce) in a given state. This report shows that collective bargaining rights and union strength help state and local government workers narrow the pay gap with private-sector workers. We show that the pay gap for public employees is significantly larger when these workers have weak or no bargaining rights, like public employees in Virginia, which has one of the largest public-sector pay gaps in the nation (-26.7%).

Virginia public employees lack collective bargaining rights

Proposed legislation in Virginia would, for the first time in the state’s history, guarantee that all state and local government employees enjoy labor rights similar to those of their private-sector peers (whose rights to collectively bargain are covered under the federal National Labor Relations Act) (HB 1263 and SB 378). The Virginia Assembly passed similar legislation (HB 2764 and SB 917) in 2025, only to have it vetoed by then-Governor Glenn Youngkin (McGinley 2025). 

Virginia is one of a handful of Southern states that for decades explicitly banned public employees and employers from entering into collective bargaining agreements. In 2020, Virginia took an important step toward making collective bargaining newly optional for local governments, but the state’s policies remain out of step compared with most states. Virginia lacks a statewide collective bargaining statute covering all local government employees and still has a ban in place barring state employees from collective bargaining (Borja 2022).

As shown in Table 1, the majority of states and Washington, D.C., already ensure collective bargaining rights for most public employees, including state workers. Many states have had statewide public-sector bargaining statutes in place for decades (Rueben 1996; Sanes and Schmitt 2014). Such laws typically set clear, uniform guidelines for union elections and contract negotiation processes and establish state labor boards charged with fostering productive labor-management relations (including timely contract settlements), ensuring broad awareness of and compliance with statutory guidelines, and mediating or adjudicating disputes as needed.

Table 1

Who are public employees in Virginia?

In 2024, approximately 560,000 Virginians worked in state and local government occupations (BLS-CES 2020–2025). This includes teachers and school staff, firefighters, transit operators, law enforcement, administrative staff, and employees serving the state’s public safety, transportation, health care, judicial, corrections, and higher education systems. As shown in Table 2, 21.2% of Virginia state government employees and 20.4% of Virginia local government employees are Black, and 57.3% of state government employees and 64.5% of local government employees are women. Many public-sector workers in the state are highly educated. Virginia public-sector workers are more than twice as likely to have advanced degrees as private-sector workers and are much less likely to have a high-school level or less education.

Table 2

Anti-union state policies are rooted in racism and harm all Virginia workers

Virginia’s ban on union contracts for public employees is a Jim Crow-era policy with deep roots in the history of slavery and white supremacy. After the passage of federal labor laws accelerated worker organizing in the 1930s, Virginia joined several Southern states in adopting anti-union state laws designed to prevent multiracial union organizing and suppress Black workers’ wages and power (Childers 2023). The Virginia Assembly first took an explicit stance on public-sector bargaining in response to the unionization of Black hospital employees at the University of Virginia in 1946, via a joint resolution declaring it against the public policy of the state to negotiate with public employee unions (a stance later affirmed by state supreme court decisions and codified in statute in 1993). Virginia was also among the first states to adopt anti-union so-called right-to-work legislation in 1947, an anti-labor policy jointly promoted by white supremacist organizations and industry groups intent on slowing the growth of unions to maintain access to cheap labor—especially in Southern states (The Commonwealth Institute 2022; Watts 2021; Pierce 2017, 2018; Sherer and Gould 2024).

As a result of these long-standing anti-union state policies, unionization rates in Virginia for both public- and private-sector workers are well below national averages.

Figure A

Narrowing Virginia’s large public-sector pay gap

Across the country, public-sector employees earn less than their private-sector counterparts, and this pay gap has widened in recent years. In the latest available five-year period (September 2020–August 2025), state and local government employees earned, on average, 17.2% less than private-sector employees with similar education and experience. The size of the public-sector pay gap varies across states and is largest in states like Virginia where most public employees lack collective bargaining rights. Public-sector workers with strong bargaining rights experience a narrower pay gap (-14.3%) than those with weak (-19.6%) or no bargaining rights (-22.5%) (see Table 3).

Virginia currently has one of the largest public-sector pay gaps in the nation. Among all 50 states, Virginia’s -26.7% public-sector pay gap appears to be the second highest, though differences among states clustered at the bottom of the rankings are not statistically significant. (Pay gap statistics are for full-time wage and salary workers ages 18–64, based on the authors’ analysis of pooled September 2020–August 2025 Current Population Survey microdata downloaded from Flood et al. 2025 and EPI 2025a.)

Compensation packages of public employees, on average, include more robust benefits than those of private-sector workers, but Virginia’s public-sector compensation gap remains large, even when factoring in more robust benefits. Benefits are an estimated 32.0% of pay for private-sector workers in the South Atlantic region and an estimated 51.3% of pay for Virginia public-sector workers. Factoring in benefits, Virginia’s public-sector compensation gap shrinks to a still sizable 16.0% (authors’ estimate based on BLS-ECEC 2020–2025 and Public Plans Data 2020–2024; see Morrissey and Sherer 2024 for methodology).{{1}}

Table 3

Addressing high staff vacancy and turnover rates in Virginia’s public sector

The growing public-sector pay gap has become a particular concern at a moment when low pay has created serious challenges to recruiting and retaining teachers and other public employees across the country (Cooper and Martinez Hickey 2022; MissionSquare Research Institute 2023; Wething 2024a, 2024b; Martinez Hickey 2025). Virginia has faced particularly acute staffing shortages in public education and in units of state government in recent years (Manzanares 2025; Cantor 2025).

The latest (2025) biennial compensation report from the state’s Department of Human Resource Management notes that “Years without any salary adjustments in the past have made it difficult for state agencies to build a proactive and sustainable approach to addressing compensation, recruitment and retention concerns” (VDHRM 2025). Between 2001 and 2023, low average salary increases for state workers (just 2.9% per year, compared with 3.4% annually in the private sector) have led to high vacancy and turnover rates. As of 2024, roughly 1 in 5 (22.4%) state jobs were unfilled, and the median salary across the state workforce was just $61,305—a full $5,000 less than the median city employee salary in Richmond, which has adopted its own collective bargaining ordinance (McGinley 2025).

Chronic state employee staffing shortages are already having direct impacts on the health, safety, and quality of life of Virginians. To take one example, in 2025 the Virginia Department of Juvenile Justice (DJJ) drew headlines after reporting that inability to adequately staff large facilities for incarcerated youth had led to unsafe conditions, lockdowns, increased restrictions on out-of-cell time, and a lack of rehabilitative services. DJJ directors indicated ongoing difficulty recruiting for open positions, despite participating in job fairs, college and university visits, outreach to military and veteran communities, and offering signing bonuses and referral incentives (Manzanares 2025). The root causes of understaffing identified by Virginia state agencies like DJJ—from burnout and high workloads to low starting salaries, lackluster raises, and difficult or unsafe working conditions—are precisely the topics that a structured collective bargaining process would allow state agencies to address, with direct input from frontline employees.

Addressing racial and gender pay gaps to improve recruitment and retention of workers of color and women

The public-sector pay gap disproportionately affects Black workers and women, who are more likely to be employed in public-sector jobs and who are disadvantaged in the broader labor market (Childers 2025). Strengthening collective bargaining rights for government workers in Virginia therefore promises to narrow the pay gap and reduce racial and gender inequalities in public institutions and across the labor market.

For example, a 2024 RAND report showed that Black teachers nationally receive lower average salaries and pay raises than white teachers do, a difference linked directly to the fact that Black teachers were less likely to live in states where public educators had collective bargaining rights. 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 (e.g., nationwide over half of all students are children of color, but the teaching workforce remains around 80% white) (Steiner et al. 2024; Gopalan 2025). Likewise, data show that in states like Wisconsin where legislators have weakened formerly strong collective bargaining rights in the past two decades, resulting decreases in unionization levels and worker wages have measurably widened public-sector pay gaps and gender pay gaps (Nack et al. 2019; García and Han 2021; Biasi and Sarsons 2022).

Building on success and remedying limitations of current state law that only permits local collective bargaining

In 2020, Virginia partially lifted its long-standing ban on public-sector collective bargaining with legislation creating an “opt-in” system that has allowed local governments to set their own policies on whether and how to bargain with their own employees. While this opening fell far short of creating a consistent statewide framework for collective bargaining, it has resulted in at least 17 of Virginia’s largest cities, counties, and school boards adopting collective bargaining ordinances and creating new pathways to union contracts for substantial numbers of public employees—including, for example, 27,000 teachers and school staff and 12,000 county employees in Fairfax County; nearly 4,000 City of Richmond employees; and others (Borja 2022; Sharma 2022; Khalil 2023; Lukert 2024; Pope 2025; Walter 2026).

The local “opt-in” system was a positive step forward that has already revealed high levels of interest in collective bargaining among Virginia workers. The system resulted in new union contracts covering tens of thousands of frontline educators and civil servants, providing an initial boost to Virginia’s historically low unionization rate.

Significant limitations of the new “opt-in” system have also quickly become clear. As noted above, the major shortcoming of the current law is that it does not ensure equal collective bargaining rights for all public employees. Virginia state employees remain barred from collective bargaining, and in local government where collective bargaining is permitted (but not required), workers continue to lack collective bargaining rights, unless they are able to persuade local officials to adopt and then implement a collective bargaining ordinance. When localities do adopt such ordinances, they may vary in strength and effectiveness (Overman 2023).

As a result, Virginia’s current “opt-in” system for local collective bargaining has generated an uneven patchwork of highly variable (and potentially unstable) collective bargaining policies across the state. Some local governments have continued to block workers’ path to a union contract by rejecting appeals from their own employees to adopt local collective bargaining ordinances (Murphy 2024; Cooper 2025; Lytle 2025; Wilkinson 2025). Because current state law leaves the burden of collective bargaining policy development up to each individual local government, some jurisdictions have expressed interest in or support for collective bargaining while remaining reluctant to invest the necessary time or scarce administrative or legal resources to developing and implementing a local ordinance. Even in larger local jurisdictions with strong collective bargaining ordinances now in place, the “opt-in” system remains fragile and highly vulnerable to instability whenever turnover occurs among elected leaders or administrators with experience necessary to maintain unique local labor-management systems.

Creating a state labor board to provide efficiency and stability for all Virginia public employers and employees

A proposed state labor board equipped to administer a statewide, uniform collective bargaining framework would serve all Virginia state and local government entities and provide consistency, efficiency, stability, and economies of scale. All Virginia public employers and employees would benefit from access to a central, independent state board with capacities to advise public employers and employees about collective bargaining procedures, administer union elections, and mediate contract negotiations. The creation of such state capacities is also especially important at moment when federal labor agencies with similar capacities have been eliminated or rendered non-functional. Indeed, across the country, many states are relying more than ever on their existing state labor boards, and in some cases, are exploring paths to expanding state labor board capacities in order to ensure consistent protections of workers’ rights to unionize and collectively bargain (H.B. 3005; Walter and Madland 2025).

Conclusion

In 2026, Virginia lawmakers should seize the opportunity to enact strong, comprehensive collective bargaining legislation that covers all state and local government workers and creates a state labor board to administer the new system. Under Virginia’s current state law (where collective bargaining is banned for state employees and allowed only for some local government workers), pay for Virginia public employees has lagged far behind that of private sector counterparts with similar education and experience.

Stronger collective bargaining rights can help shrink Virginia’s large public-sector pay gap, reduce racial and gender pay gaps, and improve recruitment and retention of qualified public employees. Removing barriers to unionization for public employees is also a critical step toward reversing the impacts of long-standing anti-worker state policies in Virginia that have for decades suppressed all workers’ wages and contributed to growing income inequality. Lastly, state action to shore up public employee rights is especially important at moment when the federal government is attacking civil servants, public education, health care, and all public services. By extending full collective bargaining rights to historically excluded state and local government workers, state lawmakers can help lead the way to a more vibrant, equitable economy rooted in multiracial democracy in Virginia, the South, and the nation.

Notes

{{1.}}If anything, our comparison likely minimizes the public-sector compensation gap in Virginia by comparing benefits for private-sector workers in the South Atlantic region to public-sector workers throughout the country because public-sector data for the South Atlantic region is not available from the Bureau of Labor Statistics. Our comparison does account for the fact that Virginia pension benefits are less generous than public pensions in many parts of the country, though possibly not in two Northern Virginia counties with their own retirement systems. It does not fully account for other differences in benefits between Virginia public-sector workers and their counterparts in other states, though it does account for the fact that public-sector workers in Virginia are covered by Social Security (not true in some states) and adds 1% for public-sector retiree health benefits that are not included in BLS compensation statistics. Finally, it compares all public-sector workers with all private-sector workers, when arguably the better comparison would be between public-sector workers and private-sector workers employed by large employers, who tend to provide more generous benefits than small employers.

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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.

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

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

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

What characterizes the Southern economic development model?

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

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

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

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

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

Low wages

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

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

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

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

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

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

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

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

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

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

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

Minimal levels of regulation

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

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

Low income and corporate taxes

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

The roots of the South’s tax structure

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

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

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

Low corporate and income taxes force reliance on regressive sales taxes

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

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

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

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

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

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

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

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

A weak safety net

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

Southerners face greater insecurity when they lose their jobs

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

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

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

Southerners face barriers to health care access

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Anti-union policies

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

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

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

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

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

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

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

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

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

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

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

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

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

The Southern economic development model: A summary

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

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

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

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

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

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

Southern states are well represented among the lowest-GDP states

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

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

Figure B

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

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

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

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

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

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

Figure C

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

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

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

Figure D

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

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

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

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

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

Table 1

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

Table 2

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

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

Figure E

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

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

Figure F

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

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

Table 3

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

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

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

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

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

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

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

Figure G

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

Figure H

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

Figure I

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

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

Figure J

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

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

Conclusion

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

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

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

Notes

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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In Colorado, state government employees gained the right to collective bargaining in 2020. Legislators have since proposed extending that right to teachers and school staff, firefighters, and other local government employees (Vo 2022). Other Western states, including New Mexico and Nevada, have recently made changes that strengthen collective bargaining rights for public-sector workers.

Some local government workers in Virginia have recently won the right to bargain collectively, under a new state law permitting local governments to bargain with employees upon approval of a collective bargaining ordinance or resolution. Public-sector organizing efforts are now under way in several counties, cities, and school districts in that state, where collective bargaining was previously prohibited (Borja 2022).

This brief examines how public-sector workers in states with limited or no collective bargaining rights fare compared with public-sector workers in states with well-established collective bargaining rights. To do so, we estimate pay differences between local government workers and private-sector workers with similar education and experience over the years 2015–2019. In this analysis, Virginia is among the states with no bargaining rights since the Virginia legislation was not in effect at that time. Colorado is among the states with limited bargaining rights. By contrast, 27 states had well-established collective bargaining rights for local government workers during those years.

The right to bargain collectively over pay is associated with higher union density (union membership as a share of the workforce). This brief shows that collective bargaining rights and union strength help local government workers narrow the pay gap with private-sector workers.{{1}} We show that the pay gap for local government workers is significantly larger in states with weak bargaining rights, like Colorado, where local government workers earn 19.2% less than their private-sector peers. The gap is even larger in states that have prohibited collective bargaining, like Virginia, which has one of the largest public-sector pay gaps in the nation, at -29.9%.

This is particularly important at a moment when state and local governments face staffing shortages and serious challenges to recruiting and retaining qualified employees. A 2019 study showed Colorado state agencies facing high employee vacancy rates even prior to the pandemic, with employee turnover rates up 73% in a decade (Jones 2019). Extending collective bargaining rights to state employees in 2020 has created new opportunities to begin addressing this crisis. An initial contract negotiated under the new law will improve benefits and boost pay for unionized state employees with a new $15 minimum wage and three years of annual 3% wage increases scheduled to begin in July 2022 (Ducassi 2021; Poblete 2021).

Nationwide since February 2020, state and local government employment levels have fallen more than in any sector except leisure and hospitality—with the lion’s share of losses occurring in K–12 education. As of December 2021, public elementary and secondary school employment was down 376,300 (4.7%) from its February 2020 level on a seasonally adjusted basis, with particularly sharp declines among bus drivers, teachers, and custodians. In Colorado, public education employment fell 4.2% between 2019 and 2021, and it declined 3.8% over the same period in Virginia (Cooper and Hickey 2022).

Combined with significant pandemic pressures, low pay is a key factor driving the staffing crisis facing schools and other units of state and local government. In this report we consider how the absence of collective bargaining rights contributes to long-standing gaps between what local government workers and their similarly educated counterparts elsewhere in the economy are paid, and how expanding collective bargaining rights can help address this pay gap.

The pay gap is especially large among workers with a bachelor’s degree or more education, who make up the majority of public-sector workers. Though public-sector workers have more generous benefits, these benefits do not make up for lower wages and salaries for most workers. The exception is workers with less formal education in states with strong bargaining rights, where unions raise the public-sector wage floor and bargain for more generous and secure benefits, reducing poverty and inequality and benefiting society.

Low pay for public-sector workers disproportionately affects Black workers and women, who are more likely to be employed in local government jobs. Since these workers are also disadvantaged in the broader labor market, strengthening collective bargaining rights for local government workers should reduce racial and gender inequality in the labor force and potentially attract more Hispanic, Asian American/Pacific Islander (AAPI), and other underrepresented workers to public-sector jobs.

Data and methodology

Unless otherwise noted, statistics cited in this brief are based on the authors’ analysis of 2015–2019 microdata from the U.S. Census Bureau’s Current Population Survey (CPS) (Flood et al. 2020). The sample includes full-time (35+ hours weekly) wage and salary workers ages 18–64 who are employed in local government or the private sector, including workers employed by private nonprofits. Statistics on benefits for private-sector and state and local government workers are from U.S. Bureau of Labor Statistics (BLS) Employer Costs for Employee Compensation (ECEC) tables for 2015–2019 (BLS 2015–2019). More information on data and methodology is provided in the methodology appendix.

In general, differences between states or groups of states reported in tables may or may not be statistically significant, but those highlighted in the text are statistically significant at the 0.05 level unless otherwise noted.

Who are local government workers?

Occupations. The largest occupational groups in local government are teachers, police officers, and firefighters. However, these three groups together do not constitute a majority of local government workers. Local government workers are employed in a wide variety of occupations in preschool, K–12, and higher education; public safety, courts, and corrections; child care, health care, and social services; transportation, public utilities, and sanitation; parks and recreation; housing and environmental protection; libraries, museums, historical sites, and other cultural institutions; and legislative bodies and executive offices, including those handling public finance, recordkeeping, and regulatory compliance.{{2}}

Table 1

Education. Local government workers are highly educated. Fifty-nine percent have a bachelor’s degree or higher; 31% have an advanced degree. In contrast, only 37% of private-sector workers have a bachelor’s degree or higher, with 12% having an advanced degree. Local government workers in Colorado and Virginia are even more highly educated than their counterparts in the rest of the country, with 62% and 68%, respectively, having a bachelor’s or advanced degree (Table 1).

Race and ethnicity. White and Black workers are more likely to work in local government than Hispanic and AAPI/Other workers (Table 2). Black workers are overrepresented in most states despite being less likely to have the bachelor’s or advanced degrees required for many public-sector jobs. The relative scarcity of Hispanic and AAPI workers partly reflects age differences, since public-sector workers tend to be somewhat older and have more work experience than private-sector workers, whereas the Hispanic and AAPI populations are growing demographic groups that tend to be younger. Hispanic workers’ underrepresentation also reflects disparities in educational attainment. Hispanic workers with bachelor’s degrees are as likely as white workers with bachelor’s degrees to work in local government (not shown in table).

Public-sector jobs are rungs to the middle class for Black workers, who often face labor market discrimination, especially in the private sector where employers may be less likely to follow standardized hiring and promotion practices. In addition to seeking greater protections against discrimination, Black workers may be drawn to public-sector jobs because they provide more secure pension and other benefits. These benefits are especially valuable to Black workers because discriminatory policies and practices have historically relegated these workers to jobs lacking secure benefits, have prevented Black families from accumulating home equity, and have generally hindered Black Americans from achieving financial security and transferring wealth to younger generations (Rothstein 2017).

Table 2

Earnings. Public-sector earnings are less unequal than private-sector earnings, with more workers clustered in the middle of the earnings distribution and fewer workers with very low or very high earnings. Local government workers at the 90th percentile of the earnings distribution earn 3.8 times what those at the 10th percentile earn. Among private-sector workers, this multiple is 5.3. Roughly three in 10 (29% of) local government workers without bachelor’s degrees earn less than $15 per hour, as compared with nearly four in 10 (38%) of their private-sector counterparts.

Middle-class government jobs have societal benefits that extend beyond the workers and their families. A large middle class fosters economic and social mobility and gives talented people from modest backgrounds more opportunity to contribute to society (Krueger 2012; Olinsky and Post 2013). Careful research has found that high union density decreases inequality beyond the direct effect of raising the wage floor for members (Farber et al. 2021). The likely channels for this effect are that unions support higher minimum wages and other labor standards; change social norms and workers’ expectations about pay, including spillover effects on to nonunion workplaces; decrease pay inequality within unionized workplaces; and generally support policies that foster economic opportunity and mobility.

Gender. Women are much more likely to be employed in local government jobs than men, especially in teaching. Teachers’ relative pay is especially low considering that 52% of teachers in the United States have advanced degrees (51% in Colorado and 58% in Virginia). The survey sample used in this analysis likely leaves out many public school teachers, because a larger-than-expected share (23%) of elementary, middle school, and high school teachers in the sample report being state employees. Many of these teachers are likely employed by local school districts but are misreported as state employees, possibly because most teachers participate in statewide benefit plans. Including these teachers in the analysis below would likely show larger pay gaps for local government workers since teachers are among the best-educated and most underpaid government workers.

How do collective bargaining rights vary across states?

The National Labor Relations Act excludes public-sector employees from coverage, leaving states to set policy on union and collective bargaining rights for public employees. Collective bargaining rights vary widely across and even within states. This brief looks at Colorado, Virginia, and other states where local government workers had weak or nonexistent collective bargaining rights in 2015–2019, and it compares these states with states where these workers had stronger collective bargaining rights.

Collective bargaining rights can vary across several dimensions, including:

• which matters related to compensation or working conditions must be or can be discussed in bargaining;
• whether bargaining is purely voluntary on the part of employers or whether employers are obligated to bargain under certain conditions, such as majority support for the union;
• what steps a group of workers must take to gain or maintain recognition and/or legal certification as a recognized union for purposes of collective bargaining;
• what mediation or arbitration procedures are prescribed if the two sides reach an impasse in bargaining; and
• whether workers have the right to strike.

Keefe (2015), Frandsen and Webb (2017), and others have found that such differences in public-sector workers’ collective bargaining rights are associated with differences in compensation. Laws governing how workers form unions and whether individual workers can opt out of paying union fees also affect workers’ bargaining strength (Keefe 2015), though the agency fee issue became moot after the 2018 U.S. Supreme Court decision in Janus v. AFSCME Council 31. In that 5–4 decision, the Supreme Court ruled that public-sector unions could not negotiate union security agreements requiring all workers covered by a collective bargaining agreement to pay agency fees to cover the costs of representation (McNicholas, Mokhiber, and von Wilpert 2018; McNicholas 2018). Though the Janus decision has not had the predicted effect of reducing union membership, it has forced unions to expend resources on outreach efforts (McNicholas, Shierholz, and Poydock 2021).

Focus of this analysis

The current analysis focuses on legal rights to collective bargaining established by statute, case law, or state constitutions.

These legal rights are not the only factors in determining whether workers have the leverage to bargain for better pay and working conditions. In addition to collective bargaining and union security rights, workers’ leverage also depends on local economic conditions, states’ partisan tilt, unions’ institutional capacity, and other factors. These factors are outside the scope of this brief, though one version of the regression analysis takes into account whether a state was among the 23 states plus the District of Columbia that allowed agency fees prior to the Janus ruling.

These states largely overlap with the states that require public-sector employers to engage in collective bargaining with most workers, but six states with a broad duty to bargain did not allow agency fees before Janus (Florida, Iowa, Michigan, Nebraska, Nevada, and South Dakota), while two states lacking a broad duty to bargain (Maryland and Kentucky) did allow agency fees.

Evolution of public-sector collective bargaining rights

Variations in collective bargaining rights among states have historical antecedents, notably in Southern states where racism contributed to the enactment of anti-union policies (Dixon 2009; Kaufman 2018; Stelzner, Hoyt, and Ramchurn 2019).

One exception to the rule that Southern states do not allow collective bargaining for most public-sector workers is Florida, where a statewide teachers’ strike and strong unions flexing their muscles during the construction of Disney World pushed the state to broaden collective bargaining rights in the early 1970s (McGuire 1973; IUPAT 2017). However, with the exception of Arizona, all states that ban public-sector collective bargaining are in the South.

In 2020, Virginia repudiated this legacy by taking a step to expand public-sector collective bargaining rights to some local government workers (Rankin 2020; Schweitzer 2021). Starting in May 2021, local government bodies in Virginia can voluntarily agree to bargain with unionized workers, though this falls short of a statewide duty to bargain. In 2021, next-door neighbor Maryland took steps to extend bargaining rights to previously excluded public workers, such as community college employees and some county library staff, and is now considering proposals to add bargaining coverage for additional county libraries and graduate employees at state universities (Shwe 2022, IAMAW 2022).

Three Western states—Colorado, Nevada, and New Mexico—have also taken steps to strengthen public-sector bargaining rights since 2019 (AFSCME 2019; Hindi 2020; Lewis 2020; Goodland 2021). Nevada, where local but not state government employees had collective bargaining rights for decades, extended collective bargaining rights to state employees in 2019. New Mexico overhauled its public-sector bargaining statute in 2020, including restructuring the state’s labor board system to strengthen previously weak or inconsistent enforcement of employee bargaining rights. Colorado granted collective bargaining rights to state employees in 2020 and could extend these rights to local government employees this year.

Other states have moved to weaken workers’ rights in recent years. Over the past decade, six states—Indiana, Kentucky, Michigan, Missouri, West Virginia, and Wisconsin—have passed so-called right-to-work laws,{{3}} though the Missouri law was overturned by referendum without taking effect. The five new right-to-work states joined 22 Southern, Midwestern, and Western states that already had laws in place preventing unions from collecting fees from nonmembers to cover the cost of representation. Most of these laws were enacted in the mid-20th century (NCSL n.d.).

Though these right-to-work laws primarily affect the rights of private-sector workers—only Michigan’s right-to-work law affected public-sector workers before the Supreme Court’s Janus decision—the recent wave of right-to-work laws were part of broader attacks on union rights, and laws aimed at public-sector workers were passed in several states around the same time (García and Han 2021; Malin 2012). Indiana and Oklahoma, for example, eliminated employers’ duty to bargain with public-sector workers; Nebraska implemented an arbitration procedure that limited compensation increases unless compensation was below that of comparable communities, with reduced compensation targets during economic downturns; and Wisconsin restricted the scope of bargaining to base wages, with increases capped at the rate of inflation.{{4}} More recently, Arkansas prohibited collective bargaining for all state and school district employees, leaving bargaining rights in place only for police, firefighters, and other city or county employees (Wickline 2021). With one exception—Iowa, discussed below—these changes took effect before or after the time frame of this study and in many cases did not affect how states would be classified for the purpose of this statistical analysis. Nevertheless, many of the changes likely had a significant impact on workers’ bargaining power.

Classifying states by collective bargaining rights

The statistical analysis in the next section differentiates between (1) states where collective bargaining or similar negotiation over compensation is banned for local government workers; (2) states where such bargaining is permitted but not required; and (3) states where employers have a duty to bargain with local government workers.

These rights can vary across occupations, with public safety workers and teachers often having more rights than other local government workers. The analysis therefore differentiates between the following groups: public prekindergarten through high school teachers and teaching assistants (“teachers” for short); local police; local firefighters; and miscellaneous local government employees. (For examples of the latter, see “Occupations” in the section, “Who are local government workers?”) Rights for state employees can also differ but are outside the scope of this analysis.

Classifying states by collective bargaining rights is not as straightforward as it might seem. Many states either lack laws on public-sector bargaining or rely on vague statutes and case law that can be interpreted in different ways. Tennessee, for example, formally bans collective bargaining for government employees but requires school districts to engage in nonbinding “collaborative conferencing” with teachers. Likewise, in Alabama, unions cannot negotiate binding agreements with public employers, but teachers unions can “meet and confer” with school districts. In many states, there is no statewide right to collective bargaining, but local jurisdictions may allow or even require it. Thus, while Maryland is here classified as a state where public-sector collective bargaining is permitted but not required for local government workers other than teachers, in practice it more closely resembles a duty-to-bargain state since the largest jurisdictions engage in bargaining (see, e.g., Montgomery County n.d.; Prince George’s County n.d.; Baltimore City Code 2010).

One state, Iowa, saw a change in collective bargaining rights during the 2015–2019 time frame. In February 2017, the Iowa General Assembly passed a law restricting the scope of mandatory bargaining to base wages, with wage increases capped at the level of inflation, though public safety workers were exempt from these changes. Previously, employers had a duty to bargain over a range of topics. Since bargaining exclusively over base wages gives workers little say over their compensation (because, for example, wage increases can be offset by changes to health insurance or other benefits), this is not considered collective bargaining for the purposes of this analysis. Unlike Wisconsin, however, which also restricted the scope of bargaining to base wages and capped wage growth to inflation for non-public-safety workers, Iowa continued to allow voluntary bargaining over most other topics related to compensation and working conditions (University of Iowa Labor Center 2018). Therefore, for the purposes of this study, public-sector collective bargaining in Iowa is considered “required” in 2015–2016 and “permitted” in 2017–2019 for teachers and miscellaneous local government workers, whereas bargaining for these workers in Wisconsin is considered “banned” over the entire period since the scope of bargaining is so restricted as to render it almost meaningless.

As shown in Figure A, there is a predictable relationship between collective bargaining rights and union density. The light blue bars indicate states where miscellaneous local government workers are barred from collective bargaining (“banned”). The middle shade denotes states where these workers may engage in bargaining but there is no statewide bargaining mandate (“permitted”). The dark blue bars identify states where employers have a duty to bargain with these workers (“required”). Union density shown in the figure is for all local government workers, including teachers, police, and firefighters, who may have stronger collective bargaining rights than other local government workers (see Table 6 in the methodology appendix). The outliers in Figure A are Wisconsin—which had strong bargaining rights before it effectively (though not officially) ended collective bargaining—and Maryland—whose largest jurisdictions have a duty to bargain and which allows agency fees. Iowa is shown as a “permitted” state but until 2017 was a “required” state, as noted above. Virginia and Colorado are fairly typical of states with no or limited bargaining rights in those years.

Figure A

Table 3

How does the pay of local government workers compare with that of private-sector workers?

On average, local government workers’ weekly earnings are 14.1% lower than that of similar private-sector workers after controlling for education, age, hours worked, state, and year using regression analysis (Table 3) (see the methodology appendix for details). The gaps are much larger for local government workers who have no (-22.9%) or weak (-16.6%) bargaining rights than for those with strong bargaining rights (-10.5%). The gap in Colorado (-19.2%) appears somewhat larger than in other states with weak bargaining rights, though the difference between Colorado and the other states with weak bargaining rights is not statistically significant. The gap is even larger in Virginia (-29.9%) than in other states that, like Virginia, had no bargaining rights during this period.

Whether a state allowed agency fees before the Janus decision appears to have been an even more important factor in narrowing the local government pay gap than whether the state had a duty to bargain. The local government pay gap in states that did not require employers to bargain but did allow unions to collect agency fees was -10.9%, versus -14.6% in states that required bargaining but did not allow agency fees. In states with both a duty to bargain and allowance of agency fees, the pay gap was -9.3% (results for regressions with agency fees not shown in table). However, both the duty to bargain and allowance of agency fees likely capture other factors that affect workers’ bargaining power in each state, so the Janus decision banning agency fees may not have as strong an effect as is implied by this finding. Adding control variables for race, ethnicity, gender, and marital status reduces the local government gap slightly, from -14.1% to -12.2% (Table 3). Including these variables, however, has the effect of normalizing the lower pay of women and Black workers, who are more likely to be employed in local government. To the extent that the lower pay for these workers is due to discrimination rather than unobserved differences in job qualifications, this tends to minimize the public-sector pay gap between equally qualified workers (see the methodology appendix).

Pay gaps by education

The local government pay gap is largely due to lower pay for workers with bachelor’s or advanced degrees (Table 3). Nationwide, the gap is -23.0% for workers with bachelor’s degrees or more education and a statistically insignificant -0.6% for workers without bachelor’s degrees. In states with strong collective bargaining rights, workers without bachelor’s degrees actually earn 6.8% more than their private-sector counterparts, mostly because unions raise the wage floor for less educated workers. Excluding low-wage workers earning below $15 per hour, the pay for workers without bachelor’s degrees is slightly higher (2.9% more) in local government in these states (not shown in the table).

Pay gaps by race/ethnicity

Racial and ethnic pay disparities are much smaller in the public sector. Whereas non-Hispanic Black workers earn 20.8% less than their non-Hispanic white counterparts in the private sector, the gap is roughly one-third the size (-7.3%) in local government. Similarly, whereas Hispanic workers earn 19.6% less than non-Hispanic white workers in the private sector, the gap is less than half (-9.4%) in local government. As in all regressions, these estimates control for education, age, hours worked, state, and year.

Because racial and ethnic pay disparities are so much larger in the private sector, non-Hispanic Black workers in local government are paid about the same as in the private sector (0.5% less, but not statistically significant). Hispanic workers are paid slightly more (+2.6%). However, this is not true in Virginia, where the local government pay gap remains large for non-Hispanic Black workers (-18.6%) and Hispanic workers (-11.4%). It is even larger for non-Hispanic white workers (-31.7%).

In Colorado, Black workers in local government are more likely to be in jobs that do not require a college degree and that typically pay more in the public sector (26.9% more, in their case). This pay premium also likely reflects greater diversity in the Denver area, where pay is higher than the state average and many public-sector workers belong to unions (pay comparisons do not control for metro area or union membership). Hispanic workers are paid roughly the same in the two sectors (1.2% more in local government than in the private sector, but the difference is not statistically significant). White workers in Colorado are more likely to be in jobs requiring college degrees and are paid 24.3% less in local government.

As shown in Table 4, Black and Hispanic workers especially benefit from public-sector collective bargaining. In states where employers are required to bargain, Black and Hispanic workers earn more in local government than in the private sector, where they face large racial pay gaps. However, this is not true in states where collective bargaining is banned. In states where collective bargaining is permitted but not required, Black and Hispanic workers are paid about the same in both sectors (the small public-sector pay gaps shown in the table are not statistically significant). As in all regressions, these estimates control for education, age, hours worked, state, and year.

Table 4

Pay gaps by gender

The gender pay gap is the same (-21.7%) in local government as in the private sector (not shown in table). Women in the public sector are disproportionately employed in teaching, an occupation in which highly educated workers are paid much less than their counterparts in historically male occupations.

How does total compensation compare in local government and the private sector?

Though public-sector workers usually have more generous benefits, these are not enough to close the compensation gap for most workers. According to the U.S. Bureau of Labor Statistics (BLS), employee fringe benefits were equal to 36.5% of earnings in the private sector and 56.6% of earnings in state and local government (all estimates are 2015–2019 averages) (see the methodology appendix).

This is not an apples-to-apples comparison, however, because public-sector workers are better educated, work for larger employers, and are more likely to work full time than private-sector workers. Workers with these characteristics usually have more generous benefits. However, it is difficult to adjust for these combined factors using the BLS data, especially since there is no information on worker characteristics, such as educational attainment, and only limited information on employment characteristics, such as establishment size, especially for government workers. According to BLS, however, benefits for full-time private-sector workers were 38.8% of earnings, and benefits for private-sector workers in establishments with 500 or more workers were 44.5% of earnings—less than for public-sector workers but more than for private-sector workers as a whole.

In addition, the BLS measure for public-sector worker benefits is inflated because it includes amounts going to pay down, or “amortize,” unfunded pension liabilities associated with past employment. Thus, while employer contributions toward state and local government pensions averaged 16.3% of earnings based on employer contributions in the BLS data, the employers’ share of the normal cost of local government pensions was only 6.5%–10% of payroll based on the plans’ own actuarial valuations (Aubry and Wandrei 2020).{{5}} Unlike the BLS measure, which includes amortization payments, normal cost estimates include only the present value of future pension benefits earned by workers in the current year.

On the other hand, the BLS measure of health benefits, expressed as a share of earnings or total compensation, may underestimate the full cost of these benefits since many government employers do not prefund retiree health benefits. Though some of the cost of health benefits for retirees is included in the BLS measure in the form of higher premiums for active workers with whom they are pooled, this does not capture the full cost of covering retirees if employers contribute a portion of retirees’ health insurance premiums or if future benefits are more costly as a share of payroll than current benefits. Since retiree health benefits are more common in the public sector than in the private sector, this slightly inflates the public-sector compensation gap.

Erring on the conservative side to account for retiree health care benefits, we use the larger of the two normal cost estimates for local government pensions and add a percentage point, such that these workers’ total benefits equal roughly 51% of earnings versus 44.5% for private-sector workers in large establishments. Based on an earnings gap of 14.1%, then, total compensation is roughly 10% lower for local government workers than for comparable private-sector workers (see the methodology appendix).

Employee benefits for local government workers in Virginia are less generous than in other parts of the country. In 2015–2019, retirement benefits for these workers were 7.1% of payroll, as compared with 16.3% for state and local government workers nationwide. The 7.1% figure includes 6.1% for pensions and 1.0% for retiree health and other post-employment benefits (authors’ estimates based on 2015–2019 Virginia Retirement System Comprehensive Annual Financial Reports). Adding a percentage point to the BLS measure for Social Security contributions (that is, increasing it from 5.2% to 6.2%), because all government workers in Virginia participate but some public-sector workers in some states do not, benefits for Virginia public-sector workers equaled 48.4% of earnings (56.6% − 16.3% + 7.1% + 1% = 48.4%). Since these workers earn 29.9% less than their private-sector counterparts, the local government compensation gap in Virginia is 28.0%, almost certainly one of the highest in the country (see the methodology appendix).

Employer-provided retirement benefits for local government workers in Colorado are also meager, especially considering that most do not participate in Social Security. Workers shoulder most of the normal cost of their own pensions. Local government employers outside of Denver contribute as little as 2.7% of pay toward the cost of current retirement benefits—3.7% factoring in 1% for retiree health benefits (COPERA 2021)—while workers themselves contribute 8% or more (Table 5). Since most employers contribute 6.2% to Social Security, Colorado public-sector employers are contributing much less than what employers normally contribute toward workers’ retirement and disability benefits—even employers who do not have an employer plan.

Adjusting the BLS estimate of the employer cost of state and local government employee benefits, the overall employer cost for benefits for miscellaneous local government workers who do not participate in Social Security in Colorado is 38.8% of pay (56.6% − 16.3% − 5.2% + 2.7% + 1%), coincidentally the same as for full-time private-sector workers (38.8%), but less than for private-sector workers in large establishments (44.5%). Since these workers earn 19.2% less than their private-sector counterparts, the total compensation gap for these Colorado government workers is -22.4% if these workers are compared with similar private-sector workers in large establishments (see the methodology appendix).

Table 5

Collective bargaining can correct a power imbalance between workers and employers

Employment relationships almost never resemble perfectly competitive markets described in introductory economics textbooks, where employers who pay workers a penny more than the market rate would be put out of business by competitors and those who pay a penny less would lose all their workers (Manning 2005; Ashenfelter, Farber, and Ransom 2010; CEA 2016; Bivens and Shierholz 2018). In the real world, rather than a precise, nonnegotiable market wage that adjusts quickly to changes in supply and demand, employers and workers negotiate across a range of potential wages within which neither the employer nor the worker would gain by severing the employment relationship. The employer would face significant recruiting, training, and other costs associated with hiring new workers, and the employee would face significant search and other costs associated with looking for a new job.

In these real-world circumstances, collective bargaining, like a higher minimum wage, corrects a power imbalance between individual workers and employers, who generally have informational and other advantages over individual workers. Employers also often have a strong incentive to deny individual workers a raise since it may trigger higher wage demands by other workers. Employers are also reluctant to raise wages because it is difficult for morale reasons to reduce them later in response to changing economic conditions, though real wages can be gradually eroded through inflation. These factors help explain why some private-sector employers in the post-pandemic recovery are offering hiring bonuses but appear reluctant to raise wages despite complaining about difficulties hiring workers.

Unions representing public-sector workers negotiate directly with school districts and other employers and indirectly with elected officials and the taxpayers who elect them. Politicians have an incentive to overpromise the public services they can deliver with existing revenues and to claim credit for saving taxpayers money by going after workers’ compensation while ignoring the effect on services. For small-government ideologues, a disgruntled workforce slowly eroded of those workers with the best outside options may be seen as a feature, not a bug, of limits on public-sector bargaining rights—a way to tarnish the government “brand.” For these politicians, weakening unions as a force in politics may be a goal in itself.

Public-sector workers, meanwhile, are reluctant to quit careers devoted to public service, especially with pension and other benefits designed to encourage retention. For this reason, elected officials and public-sector employers may be able to get away with cutting pay for extended periods before being faced with increased turnover, difficulty recruiting new workers, or even waves of strikes, as occurred among teachers in recent years or among bus drivers working under challenging pandemic conditions in 2021 (Poydock et al. 2022). However, in the long run, the quality of public services suffers when the pay gap between private-sector and public-sector compensation is larger than any advantages to working in the public sector, including, for some workers, a preference for serving the public.

In these real-world situations, closing the public-sector pay gap benefits not only workers and their families, but also the general public. The broader benefits of strong public-sector unions are outside the scope of this brief, but they include fostering social mobility, advocating for better public services, strengthening whistleblower protections, raising labor standards in all sectors, lowering poverty, and reducing expenditures on safety net programs (Banerjee et al. 2021).

Conclusion

Teachers and school staff, bus drivers, firefighters, police, and other local government employees earned, on average, 14.1% less than comparable private-sector employees in 2015–2019. Though public-sector workers receive more generous benefits, these were not enough to close the pay gap. Total compensation was still approximately 10% lower among local government workers, though a precise estimate is not possible given data limitations.

Unions help narrow the public-sector pay gap. In states where employers have a duty to bargain with local government workers, the earnings gap is -10.5%, whereas in states where collective bargaining is banned outright, the earnings gap is -22.9%. In states where collective bargaining is permitted but not required, the gap lies in between (-16.6%).

The earnings gap was especially large in Virginia (-29.9%), which until 2021 banned public-sector collective bargaining. In Virginia, benefits for local government employees are also meager by public-sector standards, so the total compensation gap remains very large (-28.0%). Virginia local government workers are now just beginning to form unions and negotiate over their pay in multiple cities and counties since the lifting of the state’s bargaining ban. Closing the compensation gap in Virginia and elsewhere would especially help Black workers and women, who are overrepresented in local government jobs.

In Colorado, where most local government employees lack collective bargaining rights, the earnings gap is -19.2%. Additionally, these Colorado workers bear most of the cost of their pension benefits and many do not participate in Social Security. Total compensation for miscellaneous local government workers who do not belong to a union and do not participate in Social Security is 22.4% lower than for comparable private-sector workers in the state.

Colorado made important progress with 2020 legislation extending collective bargaining rights to state employees, and now has the opportunity to extend bargaining rights to the roughly twice as many Coloradans who work in local government. Such measures can help the state reduce public-sector pay gaps, increase equity, especially for women and Black workers, and help public employers address critical staffing shortages to improve the stability and quality of public services for all Coloradans.

Acknowledgments

The authors are grateful to Melat Kassa and Sebastian Martinez Hickey for excellent research assistance, and Krista Faries for her editorial polish.

Methodology appendix

Earnings. The pay analysis uses pooled, inflation-adjusted, 2015–2019 data from the U.S. Census Current Population Survey Outgoing Rotation Group data downloaded from the University of Minnesota’s IPUMS site (Flood et al. 2020). Observations with imputed weekly earnings are dropped from the sample for reasons explained by Allegretto and Mishel (2019). Top-coded weekly earnings values are estimated separately by year and gender assuming a Pareto distribution.

The sample is restricted to full-time wage and salary workers between the ages of 18 and 64 who are employed in local government or the private sector, excluding, among others, state government, federal government, and self-employed workers. The private-sector sample includes nonprofit workers. The full-time workforce is defined as workers working 35 or more hours a week who report regular weekly hours. Though the sample includes some teachers and other workers who do not work year-round, focusing on weekly earnings permits apples-to-apples comparisons.

The regression model, using the natural log of weekly earnings as the dependent variable, is based on Allegretto and Mishel’s (2019) model, with some modifications. Since the public-sector sample includes all occupations, not just teachers, the overall sample is not restricted to workers with bachelor’s degrees or more education. Likewise, the coefficient of interest is the pay difference for all local government workers rather than the pay difference for teachers. Similar to Allegretto and Mishel’s (2019) analysis, our analysis controls for age, including a quadratic to capture diminishing returns to experience; educational attainment (less than high school, high school, some college, bachelor’s degree, advanced degree); and state. It also controls for the year and number of hours worked, which varies even among full-time workers. Allegretto and Mishel do not control for hours worked to assuage critics who claim that teachers’ weekly hours may be overstated. While teachers, police, and firefighters report working longer hours than full-time private-sector workers, this is not true of other local government workers, who tend to have slightly shorter work hours. Therefore, omitting a measure of hours worked could result in an exaggerated (not conservative) measure of the pay penalty faced by local government workers.

Controls for race, ethnicity, gender, and marital status are similar to those used by Allegretto and Mishel (2019) but are not included in most regressions examining the local government earnings gap (or the local government earnings gap in states with nonexistent, weak, or strong collective bargaining rights). While such demographic characteristics are associated with differences in pay, these differences often reflect labor market discrimination rather than differences in job skills and qualifications. Since women and Black workers tend to be overrepresented in the public sector, in part because civil service hiring practices reduce the scope for discrimination, controlling for race and gender tends to explain away some of the public-sector pay gap. However, because pay differences associated with race, ethnicity, and gender may also reflect unobserved differences in work experience or other job qualifications—for example, if women are more likely to have taken time out of the labor market to care for young children—some researchers prefer to include these demographic controls as proxies for these unobserved differences. Key results are reported both ways to show that conclusions about the local government pay gap do not hinge on including or excluding these controls.

Additional regressions estimate the size of pay gaps for women and Black, Hispanic, and AAPI/Other workers within each sector, and the size of the public-sector pay gap for each demographic group. These regressions also control for educational attainment, age, year, state, and hours worked.

Employee benefits and total compensation. The source for the cost of employee benefits in 2015–2019 is the Bureau of Labor Statistics (BLS) Employer Costs for Employee Compensation (ECEC) downloaded from the BLS website for state and local government employees, full-time private-sector workers, and private-sector workers in establishments with 500 or more workers. Benefits are adjusted to exclude supplemental pay, which is added to the earnings measure. Benefits in this brief are expressed as a share of earnings or payroll, whereas those in the BLS data are expressed as a share of total compensation (converting from one to the other is straightforward).

To compare total compensation across sectors, we first normalize private-sector workers’ earnings to 1 so that government workers’ earnings are 0.859 if the earnings gap is -14.1% nationwide. From this, we derive total compensation by multiplying private-sector earnings by 1.445 if these workers’ benefits equal 44.5% of earnings and multiplying government workers’ benefits by 1.51 if these workers’ benefits equal 51% of earnings. Dividing government workers’ compensation by that of private-sector workers, we see that government workers’ compensation is about 10% lower on average, since (0.859*1.51)/1.445 ≈ 0.898. The same logic in the Colorado case results in (0.808*1.388)/1.445 ≈ 0.776 and in the Virginia case results in (0.701*1.484)/1.445 ≈ 0.720.

The source for employer pensions (the total service cost minus employee contributions), and the annual payroll for teachers and political subdivision employees in Virginia is from Virginia Retirement System (VRS) Comprehensive Annual Reports for 2015–2019. The cost of other post-employment benefits (OPEBs) as a share of payroll is based on the cost for all participants in the 2017–2019 VRS Comprehensive Annual Reports because these costs are not broken down by groups of workers nor are they provided for earlier years.

Unions and collective bargaining rights. The pay gap analysis includes all private-sector and local government workers, whether or not they belong to unions. Nonunion workers’ pay is affected by collective bargaining rights because unions are obligated to negotiate on behalf of all workers in a bargaining unit, including those who choose not to join the union, and because there are spillover effects on workers outside the bargaining unit, including those in managerial positions, as employers adjust pay to preserve hierarchies. Therefore, estimates of the local government pay gap in states with and without strong collective bargaining rights may understate the likely impact on the public-sector pay gap of establishing bargaining rights for local government workers in isolation—that is, without strengthening private-sector workers’ rights at the same time.

Sources consulted for assessing public-sector collective bargaining rights by state and broad occupation groups are the following:

• Sanes and Schmitt 2014
• The National Bureau of Economic Research (NBER) Public Sector Collective Bargaining Law Data Set (Valletta and Freeman 1988) and updates by Rueben (1996) and Dippel and Sauers (2019)
• The National Council on Teacher Quality (NCTQ) 2019
• The National Education Association (NEA) 2020
• Han 2019 and García and Han 2021
• Frandsen and Webb 2017
• The American Federation of State, County, and Municipal Employees (AFSCME), cited in McNicholas et al. 2020
• Brannick 2019 and the Commonwealth Foundation public-sector labor law database (Commonwealth Foundation 2021)

These secondary sources use different criteria, cover different groups of workers or years, rely on different primary sources, or differ for unexplained reasons. Where sources’ assessments of collective bargaining rights conflicted, statutory language and case law cited in these sources was also consulted.

The source for whether unions were able to collect agency fees before Janus was an amicus brief filed by New York and other states in the Janus case (Schneiderman et al. 2018).

Table 6

Notes

{{1.}} Though this brief focuses on the pay gap for local government workers, previous research has found similar pay gaps for state government employees, including public-sector workers in Virginia (Morrissey 2020).

{{2.}} See Wolfe and Schmitt 2018 for a detailed profile of state and local government workers.

{{3.}} “Right-to-work” (RTW) is a misleading descriptor for laws designed to undermine unions and benefit employers. For a discussion of how right-to-work laws hurt workers, see Cooper and Wolfe’s (2021) report focusing on Montana, where state legislators tried—and failed (Cunningham-Cook 2021)—to enact a right-to-work law in March 2021.

{{4.}} Other changes implemented in 2011 and 2012 include the following: Idaho made teacher collective bargaining contingent on a union validating that at least half of a district’s teachers were members, and the state limited the scope of collective bargaining to a one-year agreement on compensation; Indiana restricted the scope of public-sector bargaining to wages and related items; Michigan limited the scope of bargaining for teachers, weakened impasse procedures for police and firefighters, and allowed the state to declare a financial emergency to reject a contract agreement; Nevada took bargaining rights away from some workers and required contracts to provide for reopening during fiscal emergencies; Oklahoma restricted the right to organize and bargain collectively to employees of municipalities with populations above 35,000; Tennessee officially banned collective bargaining for teachers but required school boards to engage in “collaborative conferencing” with teachers’ representatives; and Wisconsin banned collective bargaining for state employees and eliminated agency fees for public employee unions.

{{5.}} The share 6.5% is the median employer contribution for a representative sample of plans in the Public Plans Database covering local government employees in 2015–2019, estimated for EPI by Alex Brown of the National Association of State Retirement Administrators, May 19, 2021. The share 10% is based on Aubry and Wandrei 2020.

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