Defenders of the OBBBA cuts claim that, because a large share of these cuts result from introducing new bureaucracy around work-reporting requirements for “able-bodied adults without dependents” (ABAWDs), they will not fall on more vulnerable populations like children or retirees. This is not true. The OBBBA has many near-direct cuts to vulnerable populations’ participation in these programs. More importantly, these cuts will have large spillover effects through families and communities that will harm vulnerable populations—including children.

This post highlights how important Medicaid and SNAP spending is to children, with a particular focus on how these programs support public education. It then outlines some ways that the legislated cuts in the OBBBA will damage this support, either directly or through clear spillover effects through damage to local economies.

The importance of Medicaid and SNAP to children and schooling

Around 40% of school-age children are covered by Medicaid for health insurance, and nearly 30% of school-age children live in families that receive SNAP benefits. Medicaid funding is key for public education. It provides an estimated $7.5 billion annually to public schools to fund essential health and learning and development services. As a share of total K–12 student revenue, Medicaid provides up to 2% of school funding to some states and up to $325 per pupil in revenue in some states.

Medicaid is particularly crucial for special education. Public schools are required by law to provide appropriate care and services for individualized education plans, and Medicaid is a big source of funding for these plans. In a recent survey of school districts, 86% reported they use Medicaid funds for school health staff salaries, and 59% use the funds for contracted services for mental and behavioral health. When asked what they would have to cut if they lost Medicaid funding, 8 in 10 school district staff predicted reductions in school health personnel and services.

How Medicaid and SNAP cuts will still harm children through direct fiscal pressures

While the OBBBA cuts to Medicaid and SNAP do not directly harm children through cuts in children’s health insurance or their food stamp eligibility, changes to eligibility criteria and cost pressures on state budgets will make it onerous to maintain current spending levels for one of the main public institutions that support children: public schools. For example, if states want to maintain coverage for any ABAWDs who lose coverage because of the work requirements stipulated in the OBBBA, states will have to come up with funding for it themselves.  Additionally, the SNAP legislation requires that states now pay for 25% of their administrative costs that previously were fully funded from federal sources. With less federal money, states will either have to cut spending elsewhere in their budgets or (preferably, but politically difficult) raise revenue. None of these are easy political choices, and they all have some spillover effects. As one of the largest budget items in states, K–12 education funding will likely be squeezed in any state looking to maintain any of the services cut in the OBBBA without raising revenue.

How Medicaid and SNAP cuts will harm children through damage to local economies

Beyond these direct budgetary impacts, the OBBBA Medicaid and SNAP cuts could also reduce purchasing power in local economies and put upward pressure on unemployment rates, which could reduce economic security and opportunity for children in those areas.  Adults who receive Medicaid and SNAP don’t have to use their household budget to pay for health care or (some) groceries. Medicaid and SNAP allow them to maintain access to these necessities while also purchasing other goods in their local economy, such as electricity, child care, or rent. When these programs are cut, people face higher health and food costs, which can force them to cut back on purchases and reduce demand throughout the local economy.  

Moreover, areas particularly dependent on Medicaid and SNAP funding are least likely to be able to weather a reduction in aggregate demand for goods and services. Figure A shows that there is a clear positive relationship between a county’s unemployment rate and the income from Medicaid and SNAP. In other words, counties with high unemployment levels are also counties where a large share of their total income comes from Medicaid and SNAP funding.  

To be fair, at the national level, it is possible that the reduction in spending caused by Medicaid and SNAP cuts will be neutralized by policies that raise incomes and demand elsewhere (say, by the tax cut provisions of the OBBBA or a Federal Reserve interest rate cut). But areas that are already facing high unemployment are missing out on positive trends in the U.S. economy. For these counties, the demand shock caused by Medicaid and SNAP cuts could be large, leading to job loss in these counties.

Damage to local economies hurts students and workers

Job loss from the spillover effects of the OBBBA cuts to local economies will create stress and financial insecurity for families, a catastrophe that research has shown can harm student achievement.

Parental job loss plays a key role in reducing parent and child well-being  and has been shown to  reduce a child’s likelihood of grade completion. Moreover, parental job loss is associated with a lower likelihood of obtaining postsecondary education, particularly in Black families. Causal evidence on community level job losses found a reduction in test scores for students, following the closing of a business. The effects were stronger for older children and for children in lower-income households. Even if the Medicaid cuts mostly target adults (ABAWDS), the reduction in local aggregate demand stemming from these funding cuts will hurt all families in a given region, and particularly for children, stand to harm their educational achievement. 

Conclusion

The cuts to Medicaid and SNAP mandated by the OBBBA will harm children. Medicaid and SNAP currently fund key health and food services for public education, and while these functions aren’t directly threatened under the OBBBA, the cost pressures states will face from federal funding cuts will threaten the ability of these programs to serve students. Moreover, there are clear spillover effects through damage to local economies. By reducing the amount of available income in these areas, Medicaid and SNAP cuts run the risk of imposing a sharp anti-stimulus to local economies. This effect could be large in demand-constrained counties (studies on the multiplier effect of Medicaid consistently show it has large effects on spending).   The claim that OBBBA won’t harm children is patently wrong, and the harms from it will plague children for a long time to come.

As part of the passage of ARPA, the U.S. Department of the Treasury issued extensive rules outlining both how State and Local Fiscal Recovery Funds (SLFRF) could be spent and how the spending should be tracked. Unlike most other federal disbursements to state and local governments, recipients had great discretion in how they used their SLFRF allocation. This was one of the great strengths of the program, as it allowed each recipient to tailor its use of the funds to meet their specific needs.

Because of the wide flexibility they were given, state and local governments had to follow very clear procedures in accounting for the funds. Passing a budget alone was insufficient; governments had to formally obligate their ARPA funds through written contracts or interagency memoranda.

While this process did indeed cause some confusion, especially among smaller local governments with less experience dealing with federal funds, Treasury provided local governments with regular updates, held informative webinars, and created an extensive FAQ document to address the many issues that arose. Additionally, groups like the National League of Cities and the National Association of Counties provided extensive assistance to local governments to help them navigate SLFRF.

Pulaski County, like all other cities, counties, states, and tribal governments, was required to fully obligate its fiscal recovery funds by December 31, 2024. Despite this, the Democrat-Gazette found that the county could not account for over half of the funds it received—at least $38.6 million of the $76 million—and much of the information the county did provide the paper did not meet the Treasury Department’s reporting standards.

An EPI analysis of the county’s most recent filings with Treasury, from the end of 2025, bear this out. Pulaski County reported over $41 million falling under “Administrative Expenses,” but that category is supposed to be used only for the costs of “administering the SLFRF program.” Only five governments (out of more than 30,000 total state and local governments receiving funds) reported spending more than $41 million on administrative expenses: Three were states/commonwealths, and the other two were the City of Detroit and Fulton County, Georgia, whose SLFRF allocations were much larger than Pulaski County’s. It is difficult to imagine that Pulaski County needed to use 54% of its total SLFRF funds just to administer its use of SLFRF funds.

Moreover, the Democrat-Gazette reported the county’s reserve fund ballooned by almost $40 million during the same period. Treasury’s rules specifically prohibit SLFRF from being used for rainy-day funds or to replenish reserves. The funds were intended to be spent to address the myriad challenges arising from the COVID-19 pandemic.

SLFRF was a vital resource

It is important that state and local governments are held to account for their use of fiscal recovery funds. The case of Pulaski County illustrates that accountability safeguards for the program are necessary and effective rather than being bureaucratic burdens. Pulaski County’s apparent failure to follow the guidelines for using SLFRF funds is a rare exception. The Treasury Department implemented a novel, flexible program with guardrails and responsibilities that the vast majority of state and local governments were able to abide by. SLFRF was a vital component of ARPA, and did much to speed the economic recovery and prevent a Great Recession like the U.S. saw in 2008–2009.

SLFRF was vital in preserving and rebuilding the public-sector workforce. In the wake of the Great Recession, it took 11 years for state and local government employment to recover. Because of SLFRF, it took a fraction of that time (just three years and eight months) for the public sector to recover from the COVID-19 downturn. This rapid recovery mirrored the recovery of the overall job market. The typical U.S. state needed 77 months after the start of the Great Recession for its job numbers to recover; it only took 29 months after the beginning of the COVID-19 pandemic for the same level of recovery.

Additionally, SLFRF allowed states and localities to enact programs of social insurance and income support that directly responded to immediate community needs. In just the first two years of SLFRF’s operation alone, more than 4.5 million households received mortgage, rent, or utility assistance. Emergency programs offered housing to people who had been displaced by the pandemic and direct government assistance to food pantries and other programs that helped people facing food insecurity. These programs were valuable tools for helping working families in need.

Pulaski County, therefore, missed a tremendous opportunity to use its fiscal recovery funds to spur economic recovery and provide assistance to working families. The $350 billion SLFRF program was a vital resource during the pandemic and its aftermath. The example of Pulaski County demonstrates the importance of federal accountability requirements for largely unrestricted funds, not the failure of the program. Lessons from the vast majority of localities that successfully used SLFRF funds and the rare exceptions in which local governments failed to do so should continue to inform future policy design for similar programs.

Today's jobs report came in weaker than expected. The economy added 57k jobs in June and prior months were revised down. April and May are a combined 74k lower than previously reported. Analysts believe the World Cup added 40k to June numbers—without that, job growth would have been 17k.
#EconSky

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— Elise Gould (@elisegould.bsky.social) July 2, 2026 at 8:48 AM

The household survey came in even weaker. While the topline unemployment rate ticked down, it happened for the wrong reasons as labor force participation fell by 720k while employment fell by 507k. Even the prime-age employment-to-population ratio, which had remained resilient, fell 0.6ppts in June.

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— Elise Gould (@elisegould.bsky.social) July 2, 2026 at 8:58 AM

Given expectations around the World Cup, it's surprising to me that leisure and hospitality fell by 61k in June (and May growth was revised down by 30k). Perhaps those gains are offset by reduced discretionary spending as real wages fall.
#NumbersDay #EconSky

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— Elise Gould (@elisegould.bsky.social) July 2, 2026 at 9:18 AM

We won't get the inflation data for June until July 14, but recent price data suggest year over year real wages likely fell in June. Workers and their families are finding it increasingly difficult to make ends meet and real wages are most surely now below where they were in January 2025.
#EconSky

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— Elise Gould (@elisegould.bsky.social) July 2, 2026 at 9:18 AM

Manufacturing employment is crawling along, gaining 3k jobs in June, all in durable goods. After downward revisions, manufacturing lost jobs in May.

Since January 2025 when Trump took office, the manufacturing sector has lost 75,000 jobs.

#EconSky

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— Elise Gould (@elisegould.bsky.social) July 2, 2026 at 9:30 AM

While there's been little change this year, federal employment has shrunk an alarming 324,000 jobs since January 2025. The vital services federal employees provide cannot be done without these essential workers.
#NumbersDay #EconSky

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— Elise Gould (@elisegould.bsky.social) July 2, 2026 at 9:31 AM

In the last two years, Republicans in Tennessee have attempted to push legislation that would violate Plyler to set the stage to challenge the court decision (although neither proposal passed). Last year, the state proposed charging undocumented students tuition for public schools, and this year, Tennessee attempted to pass legislation to track the immigration status of all public school students.

The 1982 ruling of Plyler v. Doe is notable because it stated that the harm of not educating undocumented children would be worse for society than providing a basic education to all children in the U.S. The ruling recognized the huge positive spillovers public education has on the U.S. labor market, public health, and civil society and that leaving immigrant children out of public education would create an “underclass” in U.S. society.

Moreover, if the move to deny public education to children in the U.S. is successful, particularly in pockets of the country where immigrant children are a substantial share of the student population, it will lead to an extraordinarily high cost for the students who remain in public school.

Some school costs are hard to adjust, regardless of the number of students

Across the country, an estimated 17% of school-aged children live with at least one noncitizen adult, according to the Kaiser Family Foundation. If these students were to leave suddenly, schools would be left to educate a fewer number of kids without any time to adjust their fixed costs. For example, when Alabama passed an immigration data collection law, more than 13% of Hispanic schoolchildren withdrew from classes.

At first, it would seem that reducing enrollment would reduce both total revenue and the number of students needing educational services proportionately, which should leave the schools’ ability to provide education unaffected. But schools can’t adjust every educational cost quickly: School bus routes still need to circulate to all stops, even if there is one fewer child in need of transit; buildings need to be heated and cooled, even if classroom size goes down; and guidance counselors and support staff are still required to support the remaining students.

School districts will pay more per pupil if student enrollment declines because of immigration enforcement

Since these fixed costs can’t be adjusted in the short run, when total revenue declines due to families’ fears of deportation, districts are stuck paying more per pupil on costs they can’t adjust. Effectively, native-born students who remain in public schools receive no additional benefit when immigrant students are denied services and rights. Districts instead will be paying more on costs that can’t be adjusted and getting less on the costs that can be adjusted for fewer students.

Calculating the cost under two different scenarios

We call all the costs of downward adjustment that occur when enrollment is reduced the fiscal externality. This means the per-pupil funds each district would require to maintain the same level of spending for remaining public school students due to a rapid decline in enrollment. This cost is entirely borne by state and local education budgets and leaves districts unable to deliver the same level of instruction to the remaining public-school pupils.

For districts with a large share of school-aged children in immigrant families, the costs of losing these students could be substantial. Table 1 shows the top-25 school districts, based on the number of K–12 students that are in immigrant families and the corresponding fiscal externality for two scenarios. In the first scenario, half of these students stop attending public school (referred to as the lower bound in the table). In the second scenario, all of these students stop attending public school (referred to as the upper bound in the table).

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The implications of a reversal of Plyler v. Doe or any type of policy restricting immigrant children’s access to public education would be extreme for these districts. In Houston, Texas, where 62% of students in the school district are Hispanic, we estimate that nearly 63,000 students may live in a household with immigrants and as such, might be vulnerable to dropping out of school due to anti-immigration efforts. The lower bound shows the costs if half of these students stopped showing up. Houston School District would have to reduce services by $1,654 for each remaining (and disproportionately native-born) public school student. This decline translates to a total fiscal externality of $268 million a year, or 11% of the total budget for the school district.

The extraordinarily high cost to native-born students of losing students in immigrant families due to anti-immigrant policies highlights the hypocrisy in the anti-immigrant movement. If all students in immigrant families stopped attending public school tomorrow, not only would those students suffer from the lack of public education, but the quality of public education would be much worse for the remaining students in those same schools. In short, no one wins. When the costs are tallied up, it’s clear that these policies are not about improving education quality for native-born students, but instead are malicious attacks on the institution of public education in the U.S.

Figure A

These increases continue to be crucial for low-wage workers as they contend with the affordability crisis. The average increase in annual wages for a full-time, year-round worker resulting from these minimum-wage hikes ranges from $573 in Oregon to $811 in Alaska. These pay raises directly boost workers’ incomes, giving them a leg-up in the race against rising prices—a straightforward example of how policymakers can often more easily tackle affordability challenges through policy decisions that boost wages, such as setting strong wage floors.

A higher minimum wage has a positive impact on more than just the workers who currently earn the minimum wage; indirectly affected workers will see their pay go up too as employers adjust their wage ladders to the new wage floor. Our analysis of the increases in Alaska, Oregon, and Washington, D.C., accounts for these “spillover” effects and finds:

• Women make up more than half (56.3%) of affected workers.
• The wage increases disproportionately benefit Black and Hispanic workers. Black workers make up 15.3% of affected workers, despite making up 10.4% of the workforce across the three areas. Hispanic workers make up a similar percentage of the workforce (12.4%) but make up more than a fourth (26.0%) of affected workers.
• The vast majority (89.3%) of affected workers are age 20 or older, and more than 3 in 5 workers (62.1%) are 25 or older.
• More than half (52.9%) of the affected workers work full-time.
• The increases will raise wages for those who need it the most. Half (50.5%) of affected workers belong to households whose incomes are less than 200% of the poverty line.
• More than 1 in 5 (23.6%) of affected workers are parents.

Table 1

State and local policymakers should combat cost-of-living challenges with minimum wages

Because costs of living can vary significantly within a state, local policymakers should establish strong wage floors if the state minimum wage is inadequate for their area. In June, city councilors in Albuquerque, New Mexico, took an important step in that direction, passing a minimum-wage increase to $15 an hour by 2029. Whereas the current state minimum in New Mexico is $12 an hour, EPI’s Family Budget Calculator shows that a living wage for a single adult working full-time in Albuquerque is $17.56 an hour.1 The proactive step taken by local elected officials will provide significantly more economic security for low-wage workers in the city.

This summer, the minimum wage will increase in localities in California, Illinois, and Maryland (Table 2) due to “indexing”—automatic annual adjustments written into the minimum-wage law that require the wage floor be adjusted for price increases each year. Without indexing, the minimum wage is worth less and less every year as prices rise. With time, this can dramatically erode the value of the minimum wage. For example, the federal minimum wage of $7.25 an hour—which has not increased since 2009—has now lost 30% of its purchasing power.

Table 2

Indexing to inflation is a commonsense policy enacted in dozens of cities and states across the country, but it is not the strongest way to protect the value of the minimum wage. Adjusting for price increases mostly protects the real value of a low-wage worker’s paycheck (although low-wage workers are more vulnerable to inflation than top-of-the-line inflation measures indicate). However, in a well-functioning economy, wages for most workers—especially higher wage workers—will grow faster than inflation. If the minimum wage only rises at the rate of price growth, then over time, this can increase inequality between low-wage workers and everyone else.

One way to address this issue and ensure that low-wage workers do not fall further away from the middle class is to index the minimum wage to median wage growth. EPI’s latest vision for a federal minimum wage explicitly targets a wage floor that rises to two-thirds of the median wage and remains indexed there thereafter. This policy both creates a high floor that provides significantly higher wages for workers across the country and protects the minimum wage’s value against price increases and increases in wage inequality over time.

Oklahoma fails to pass minimum-wage ballot measure

In June, a minority of eligible Oklahoma voters rejected a ballot initiative (State Question 832) that would have increased the state’s minimum wage to $15 an hour by 2029. The initiative’s failure is a costly missed opportunity to increase wages for Oklahoma workers. More than 1 in 5 workers in the state earn less than $15 an hour, and if passed, the ballot initiative would have provided more than $783 million in increased earnings for low-wage workers.

During a time when cost of living and inflation are some of the most important concerns for voters, Oklahomans might have worried that increasing the minimum wage would have hurt affordability in the state. In fact, the opposite is true. Although raising the minimum wage can lead some affected businesses to increase prices, the resulting price increases are extremely modest—far smaller than the increase in pay that would go to low-wage workers. Even some of the most ambitious wage floor policies, such as California’s $20 fast food minimum wage, only increased fast-food prices 2.1% (around eight cents for a $4 item). A 10% increase in the minimum wage is associated with a 0.14 percentage point increase in CPI increase. In contrast, a 10% minimum-wage increase boosts income at the 10th percentile by around 3.6%, an order of magnitude greater. The average full-time, year-round Oklahoman worker affected by SQ 832 would have gained $2,322 in annual wages if voters had approved the initiative.

It is also important to highlight SQ 832’s winding path to the ballot. Ballot initiatives have historically been an important mechanism for passing minimum-wage increases in states with conservative-dominated legislatures like Florida, Missouri, and Nebraska. While Oklahoma is one of only three states in the South that has a ballot initiative process, conservative politicians have been increasingly curtailing it.

The Oklahoma minimum-wage ballot initiative is a prime example of this. Advocates originally began collecting signatures for SQ 832 in the lead-up to the November 2024 general election. Despite collecting nearly twice the necessary signatures in enough time to qualify for the ballot, advocates were thwarted when Governor Kevin Stitt delayed the State Question until the June 2026 gubernatorial primary election, a low turnout election in contrast to a general election with presidential candidates on the ballot. Voter turnout in the 2026 primary election was 26%, around half of what it was in the 2024 election.

In response to the emergence of SQ 832, the Oklahoma legislature also passed restrictions on the signature-gathering process, limiting the number of signatures that can be gathered from populous areas like Tulsa and Oklahoma City. These restrictions will make it more costly and logistically challenging to pass a future minimum-wage increase in Oklahoma. With such low voter turnout and marked interference in the ballot initiative process, it is difficult to say that SQ 832’s failure reflects a lack of popular support for minimum-wage increases in Oklahoma. Regardless of the cause, without a future minimum-wage increase, the issue of low pay in Oklahoma is only going to grow.

When policymakers like those in Oklahoma fail to adequately set the wage floor, it suppresses worker pay, not just for the lowest-paid workers, but for low-wage workers in general. Workers need a raise to help them overcome the affordability crisis, and the minimum wage is an evidence-backed tool under policymakers’ control to help them do that.

1. Assuming 81% of income comes from wages.

According to today’s Consumer Price Index (CPI) release, overall inflation was 4.2% over the last year. The sudden burst in inflation, along with slowing nominal wage growth, means that the average hourly real wage for private-sector workers is now no higher than it was in January 2025.

So far, excessive inflation has been limited to energy and airfares. But as long as the war continues, there is a heightened threat that price increases will spill over to the broader economy, triggering a more permanent increase in the cost of living and further reductions in real earnings.

Over the last five years, workers have won unions in several high-profile campaigns, including Amazon workers in Staten Island and Starbucks workers in Buffalo. These examples are a testament to workers’ determination and desire for greater agency in their workplace. But these Amazon and Starbucks workers have yet to reach a first contract with their employer, illustrating the issues many workers face when they win a union and begin collectively bargaining. Far too often, employers refuse to bargain in good faith with workers, significantly delaying a first contract. Currently, on average, it takes workers 465 days to bargain a first contract.

Today, the U.S. House of Representatives will likely consider legislation aimed at ensuring workers can reach a first contract without unnecessary delay. The Faster Labor Contracts Act establishes a timeline from bargaining to mediations and, if necessary, binding arbitration. These provisions discourage delay and promote good-faith bargaining, which is exactly how the law should work.

Corporate mergers and acquisitions are an example of how quickly employers can reach a deal when they want to: these complicated, multibillion-dollar deals can often be reached in a matter of weeks. When these corporate deals take longer, it is often due to government regulators challenging the legality of the corporate merger—not corporate conduct.

To demonstrate the difference in corporate conduct in bargaining with workers for a first contract versus corporate mergers and acquisitions, Table 1 shows examples of companies who have engaged in negotiations with workers and corporate mergers. While Starbucks completed a merger in 67 days, they have taken at least 1,643 days (and counting) to bargain a first contract with their unionized workers.

It is clear that corporations can move quickly to reach a deal related to a merger or acquisition but are far too often unwilling to apply that same priority to negotiations with their workforce for a fair first contract.

Table 1

The authors thank the Student Policy Network at the University of Notre Dame for their contribution to this research. 

The latest jobs report came in stronger than expected this morning. The economy added 172,000 jobs in May and the unemployment rate held steady at 4.3%. Nominal wage growth continued to decelerate, further exacerbating affordability as prices rise.
#EconSky #NumbersDay @epi.org

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— Elise Gould (@elisegould.bsky.social) 7:46 AM · Jun 5, 2026

Job growth was strongest in leisure and hospitality, state and local governments, and health care. Losses continued in financial activities in May.

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— Elise Gould (@elisegould.bsky.social) 7:58 AM · Jun 5, 2026

Manufacturing employment rose by 7,000 in May, slowly clawing back the large losses last year.

Since January 2025 when Trump took office, the manufacturing sector has lost 68,000 jobs.

#EconSky

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— Elise Gould (@elisegould.bsky.social) 8:00 AM · Jun 5, 2026

While there’s been little change this year, federal employment has shrunk an alarming 333k jobs since Jan 2025. The vital services federal employees provide cannot be done without these essential workers.
#NumbersDay #EconSky

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— Elise Gould (@elisegould.bsky.social) 8:08 AM · Jun 5, 2026

Nominal wage growth continued to slow in May, now 3.4% over the year. While we don’t get the May inflation data until next week, it’s very likely, given recent trends, that real wages will continue to fall and workers and their families will find it increasingly difficult to make ends meet.
#EconSky

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— Elise Gould (@elisegould.bsky.social) 8:14 AM · Jun 5, 2026

Key takeaways:

• So far this year, at least 13 states have introduced bills weakening child labor protections, and four have enacted them.
• Meanwhile, only three states have introduced bills to strengthen standards in 2026, compared with 15 in 2025.
• Industry-backed attacks on child labor standards have followed four troubling trends: 1) lowering minimum wages for teen workers; 2) weaponizing “youth apprenticeships”; 3) eliminating youth permits; and 4) weakening safeguards for teen child care workers.
• The Trump administration has undermined federal enforcement of child labor standards, even amid rising violations.
• Oregon enshrined current federal child labor standards into state law, offering a replicable model for states to hold the line against potential federal rollbacks.

Many state lawmakers took encouraging steps in 2023 and 2024 to strengthen their child labor standards—in response to high-profile reporting of widespread child labor violations across the U.S. and simultaneous efforts to weaken state child labor standards in the wake of COVID-19. But trends in 2026 suggest that this momentum may be waning despite continued increases in child labor violations. Meanwhile, opponents of strong child labor standards have continued to erode state standards and—in effect—chip away at the basis for federal standards, which have also come under threat.

In fiscal year 2025, more cases of federal child labor violations were uncovered than during any other year since the Great Recession, and hazardous work violations ticked up again after declining in the year prior (see Figure A). The rate of young worker deaths nearly doubled between 2020 and 2024, and at least one minor was killed on the job in the past year. At the same time, enforcement of federal child labor standards appears to have diminished under the Trump administration, which has proposed weakening existing standards. Since Trump was inaugurated in January 2025, the U.S. Department of Labor’s Wage and Hour Division (WHD) has published news releases about only three child labor enforcement actions. In the last year of the Biden administration, WHD published news releases about 26 cases.

Figure A

Amid this growing child labor crisis, a few states are taking necessary action to shore up or strengthen standards, but in far too many states industry-backed attacks are continuing to succeed in rolling back child labor laws.

Oregon enshrined current federal standards into state law, a model other states can emulate

The 1938 Fair Labor Standards Act (FLSA) sets guidelines for the hours and nonhazardous jobs for which employers can hire minors. It sets a floor above which states can adopt and enforce their own stronger standards, but where state standards are weaker, federal law applies. Oregon, the only state to pass a bill strengthening child labor standards so far this year, enacted a law that enshrines into state law FLSA work hours for minors as of January 2026. Prior to the change, Oregon law followed federal hours guidelines for 14- and 15-year-olds,1 but had prevented the adoption of any state guidelines more restrictive than those in federal law (FLSA). The new law locks in current standards and guards against potential future erosion of federal standards, stipulating that Oregon’s minor work hours rules must be no less restrictive than FLSA standards as of January 1, 2026, and giving the state freedom to implement its own higher standards for minor work hours if needed in the future. Other states can propose legislation that enshrines federal child labor standards into state law and can go further by establishing standards that improve upon the existing federal floor.

Three other states proposed bills to strengthen existing standards

In 2026, Maryland, New Jersey, and New York lawmakers also made progress on bills to strengthen state child labor standards, but none have been enacted as of this publication. A 2025 New York bill mandating that minor workers receive information on their workplace rights in order to receive work authorization passed the Senate in March; a New Jersey bill proposes establishing minimum penalties and increasing penalties for certain child labor violations; and a Maryland bill establishing civil penalties and preventing the executive branch from seeking waivers from the FLSA passed the House but was not taken up by the Senate. The Maryland bill’s provision prohibiting FLSA waivers was likely a response to a proposal in Project 2025 that would allow states to opt out of certain FLSA provisions, which would erode workers’ right to federal minimum wage and overtime protections. Next year, lawmakers should recommit to advancing stronger state standards, especially given the distinct possibility that federal standards will come under threat.

Over a dozen state legislatures attempted to roll back child labor standards this year

So far in 2026, at least 13 states have introduced bills that weaken child labor protections, and four have enacted them (see Table 1). In contrast, only three states have introduced bills to strengthen child labor protections in 2026, and only one has enacted such legislation.2 For comparison, 15 states introduced bills to strengthen child labor standards in 2025.

Table 1

Proposals to erode existing standards this year included: weakening protections from hazardous work; implementing or expanding minimum wage exemptions for minors; extending the number of hours employers can schedule minors to work; eliminating the state’s youth employment documentation system; and lowering minimum age requirements for workers in child care centers (see Table 1). Four particularly troubling patterns have emerged in legislation attempting to weaken child labor standards across multiple states:

1. Attempts to lower the minimum wage for teen workers;
2. Attempts to use state legislation on “youth apprenticeship” or “work-based learning” programs as a vehicle for weakening state child labor standards;
3. Elimination of youth work permits or other systems that ensure the documentation of minor employment; and
4. Attempts to lower or remove safety standards and staffing ratios for teen workers in child care facilities.

Lawmakers continued to propose excluding teen workers from voter-approved state minimum wage increases

As in previous years, state lawmakers continued to advance proposals that would subject minor workers to lower minimum wages than adults, particularly in states where successful ballot measures recently increased the state minimum wage. Florida, Missouri, and Nebraska voters approved ballot measures in recent years that increased the state minimum wage to $15 an hour (Florida’s minimum wage will increase from $14 to $15 in September). Legislators in the same three states are now attempting to exclude minor workers from these higher minimum wages.

Florida lawmakers reintroduced a bill to allow minors in work-based learning programs to “opt out” of receiving the constitutionally-mandated state minimum wage; Missouri lawmakers proposed paying minors nearly $3 less than the state’s new $15 minimum wage; and Nebraska lawmakers successfully enacted a bill that increased the state’s temporary youth training wage but also implemented a permanent subminimum wage for 14- and 15-year-olds. Such proposals undermine the stated goals of lawmakers to boost youth employment, address the “labor shortage,” and allow teens to earn for their futures. Youth subminimum wages do not benefit young people and erode the wage floor, depressing wages for all workers—teens and adults alike.

States continued a troubling trend of using unregulated state “youth apprenticeship” programs to roll back child labor protections

As shown in Table 1, three states proposed bills to weaken hazardous work protections for minors enrolled in work-based learning programs, marking a continued trend of attempts to erode standards that ensure early career training programs provide valuable experiences and skills without unnecessarily exposing young people to hazards known to pose a high risk of illness, injury, or fatality.

In Pennsylvania, lawmakers proposed exempting minors enrolled in work-based learning programs from state child labor standards, except where such standards reflect federal law. In Virginia, lawmakers introduced legislation that would allow employers to set the standards for appropriate work in hazardous occupations, undermining existing state laws that require work-based learning programs to be accredited by the U.S. Department of Labor or state Board of Education. However, education advocates managed to neutralize the bill’s harms by removing that provision, limiting the scope of work-based learning programs to particular industries, and adding language requiring such programs to comply with federal laws prohibiting employers from exposing teens to hazardous work.

In West Virginia, lawmakers used their recently created “youth apprenticeship program” to further erode state child labor standards for all minor workers, exacerbating troubling conflicts between state and federal child labor law created by earlier state legislation. In 2024, West Virginia lawmakers established a new “youth apprenticeship program” (YAP) that appears to permit YAP-enrolled minors to be employed in any of the 17 hazardous occupations prohibited by federal law, even though federal law provides limited exemptions for apprentices and student learners for only seven of the 17 hazardous occupation orders. This year, lawmakers expanded the program by removing the requirement that hazardous work assigned to youth apprentices be “occasional and incidental” to their training. This guardrail, which originates in federal law, is meant to protect youth apprentices from being treated as adult workers in hazardous jobs and to ensure that they are assigned hazardous work very rarely and only when it is necessary to further their training.

As part of the same legislation, West Virginia lawmakers also removed from state code the list of hazardous occupations prohibited for minors under state law. As a result, working minors not covered by the FLSA will no longer have protection from being employed in the deadliest jobs, and if federal protections are unenforced or eroded as Trump’s Project 2025 agenda has threatened, all West Virginia minors working in these jobs would lack protection. Many states have their own list of state hazardous occupation orders, which may differ slightly from the federal list. Where state and federal standards differ, the more protective standard prevails. Removing the state’s list will both endanger young workers and create confusion for employers who may not realize they must still follow federal law in areas where state law has been eroded, leading to increased reputational risk and legal liability for the state’s businesses.

Several states have weakened restrictions on hazardous work while eliminating the state’s ability to identify and investigate child labor violations

The West Virginia playbook for rolling back state child labor laws represents a troubling pattern for lawmakers and advocates to continue to monitor and resist. In 2024, the state created a new work-based learning program that did not conform to federal law, then eliminated youth work permits (and replaced them with weaker age certificates, which have now also come under threat), and a year later further weakened the state’s hazardous work protections using their new work-based learning program as a vehicle.

In just the past three years, two other states—Indiana and Iowa—have both eliminated their systems for documenting youth employment while also weakening prohibitions on hazardous work for minors. In 2023, Iowa lawmakers eliminated youth work permits, weakened hazardous work protections for youth enrolled in “work-based learning” programs, and added new provisions allowing state agencies to “waive” restrictions on hazardous work that violated federal law, among a host of other changes.

And this year, Indiana lawmakers eliminated the state’s “youth employment system” for documenting minor employment after implementing the system to replace eliminated youth work permits in 2020. As a result, state agencies will have no record of teen employment—a change the legislature’s own fiscal analysts acknowledged will impede enforcement of child labor laws. Indiana’s 2026 rollback comes on the heels of numerous changes enacted in 2024 that extended work hours for minors, eliminated night work restrictions, weakened protections for hazardous work, and—though this provision was amended out of the final bill—proposed giving employers complete civil immunity for workplace fatalities of minors enrolled in work-based learning programs.

Recent research shows that youth work permits play an important role in preventing child labor violations by enhancing awareness of child labor standards, creating legal accountability, and aiding in enforcement. In 2024, Wisconsin lawmakers passed legislation eliminating work permits for minors under 16, but the governor vetoed the legislation and stated in his veto message that he objected to eliminating a process that protects youth from exploitation. This year, Wisconsin’s Department of Workforce Development uncovered more than 1,600 child labor violations by a single Burger King franchisee—the largest in the state’s history—including 593 work permit violations. Recent research has shown that states with work permit mandates have fewer child labor violations. Employers violating work permit rules are also often violating work hours and hazardous work protections.

Continued efforts to weaken protections for teen child care workers are part of a larger deregulatory agenda in the care industry

This year, for the third time since 2022, Iowa lawmakers proposed legislation to weaken standards related to teen supervision of children in child care facilities. In 2022, Iowa enacted a bill that lowered the minimum age for child care workers and increased the number of children facilities could place under the care of a single staff person. In 2024, lawmakers proposed allowing a 16-year-old to be charged with the care of four infants, seven toddlers, or 10 three-year-olds without direct supervision, but the bill failed. The bill was supported by the billionaire-founded right-wing dark money group Americans for Prosperity, which also lobbied in support of a 2023 Kansas bill to allow minors as young as 14 to care for young children and allow 16-year-olds to provide child care with no adult supervision.

In 2025, Iowa enacted additional changes through the administrative rulemaking process, allowing teenagers as young as 16 to care for children of any age in limited circumstances. And this year, lawmakers proposed allowing 15-year-olds to care for children without supervision. The 2026 Iowa bill received significant support from lobbyists representing The Family Leader and Family Leader Foundation, Iowa’s state affiliate of the Family Research Council, an anti-LGBTQ and anti-abortion hate group.

Michigan also issued new administrative rules effective April 2026 that increased child-to-staff ratios and allow 16-year-olds to care for numerous young children without supervision—in both group and family child care homes.

The push to lower the minimum age for child care providers and increase child-to-staff ratios is part of a larger industry agenda to deregulate the care economy and avoid reckoning with its true costs. This agenda—which has also involved reducing the education and experience requirements necessary for provider licensing and even using state power to block stronger local standards—has strained providers, degraded the quality of care, and led to injuries and even deaths of young children in recent years. Placing the burden of responsibility of caring for young children on teenagers who are still themselves children harms everyone while sidestepping the real issues facing our child care system: insufficient public investment to make child care affordable and to pay providers adequately.

In an era of federal retrenchment and continued state rollbacks amid rising violations, more state lawmakers should seek to strengthen standards

Though the news media has largely moved on and federal enforcement attention appears to have waned, child labor violations remain a persistent issue and may be getting worse. Fiscal year 2025 saw more child labor cases generally and more minors employed in violation of hazardous occupation orders than any year in recent memory. While some states continued advancing legislation to strengthen child labor standards in 2026, and Oregon succeeded in enacting legislation to guard against federal rollbacks, far more states focused their efforts on weakening existing standards.

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.

1. Maximum of 3 hours per day, 18 hours per week when school is in session; 8 hours per day, 40 hours per week when school is not in session. See: https://www.dol.gov/agencies/whd/state/child-labor

2. We exclude legislation related to child influencers. At least five states have introduced bills to increased protections for children featured in video content in 2026 (AZ, MD, MO, NJ, TN), and two states (NJ, TN) have enacted such legislation.

Key takeaways:

• Misclassification of workers as independent contractors is a pervasive and widespread problem. AAPI workers are overrepresented in three of the 11 commonly misclassified occupations: manicurists and pedicurists, home health aides, and personal care aides. Vietnamese, Bangladeshi, Filipino, Samoan, and other Pacific Islander workers are overrepresented within these occupations.
• Groups with lower median hourly wages also have larger shares of their working populations in the 11 commonly misclassified occupations.
• Federal protections against misclassification are limited and currently under attack by the Trump administration. The state and local landscape for curbing misclassification is varied, which leaves some workers less protected than others.

In March, EPI published updated research highlighting the cost to workers of being misclassified as an independent contractor for 11 commonly misclassified occupations. Asian American and Pacific Islander (AAPI) workers were overrepresented in three of those occupations—manicurists and pedicurists, home health aides, and personal care aides—relative to their share of the overall workforce.

Most federal, state, and local labor laws apply only to employees and not to independent contractors, so misclassification strips workers of key protections such as minimum wage laws or qualifying for employer-provided health insurance and retirement benefits. Additionally, both misclassified workers and social insurance funds lose out on income: the report conservatively estimates that for the three jobs in which AAPI workers are overrepresented, misclassification costs workers at least $7,000 annually and costs social insurance programs $600 to $800 per worker each year.

With the understanding that the umbrella term “AAPI” encompasses an immensely diverse population both in ethnic origin but also in economic outcomes, this piece goes beyond the narrow view that all AAPI workers are high-wage earners. Below, we provide more detail on which groups of AAPI workers are most likely to be employed in lower-wage commonly misclassified occupations.

Disaggregated data shed light on particular AAPI communities that may be vulnerable to misclassification

Across all occupations, AAPI workers comprise approximately 8% of the total workforce. For three of the 11 occupations highlighted in the report—manicurists and pedicurists, home health aides, and personal care aides—AAPI workers make up 67%, 13%, and 10% of employment, respectively, according to Current Population Survey (CPS) data.

Table 1 provides a detailed breakdown of the composition of the AAPI workforce for the three occupations in which AAPI workers are overrepresented. Here, we use the American Community Survey (ACS) as it offers detailed race definitions which the CPS does not offer due to sample size restrictions.

Asian Indian and Chinese populations combined make up over 40% of the working-age AAPI population, thus their relatively large shares of the AAPI workforce in these occupations are not surprising. However, several groups are disproportionately represented across these occupations compared with their share of the overall AAPI workforce.

For example, Bangladeshi workers make up 5.1% of AAPI workers employed as home health aides while only constituting 1.1% of the total AAPI workforce. Chinese workers represent almost half (47.7%) of AAPI home health aides while representing just over one-fifth of the overall AAPI workforce (20.9%). AAPI employment among manicurists and pedicurists is largely held by those of Vietnamese origin (71.4%).

Finally, a majority of AAPI personal care aides are either Filipino (32.8%) or Chinese (20.8%). Filipino workers, however, are overrepresented by twice their share of the overall workforce. While Samoans and other Pacific Islanders comprised a much smaller share of personal care aide employment, they are also overrepresented in this occupation by more than twice their share of the overall workforce.

Table 1

Figure A provides a more comprehensive picture of the share of each detailed group employed across all 11 commonly misclassified occupations, revealing that smaller communities—often overlooked because of their size relative to the aggregate AAPI workforce—may be among the most vulnerable to misclassification. Workers belonging to seven of those groups are more likely than the average U.S. worker to be employed in one of those occupations. Almost 20% of Vietnamese workers are employed in one of those occupations, with over half concentrated as manicurists and pedicurists.

Samoan, Hawaiian, and other Pacific Islanders have the next highest shares working in the 11 occupations, making up 15% or more of their total working-age population. These groups also earn lower median hourly wages than the national median and the aggregate AAPI median hourly wage. Their disproportionate representation in commonly misclassified occupations further exposes these workers to wage suppression due to misclassification.

Misclassification enforcement varies by state—meaning different AAPI populations can be disproportionately impacted

Federal protections from misclassification are limited and are currently under attack by the Trump administration, which has proposed a rule to weaken standards to determine worker classification under the Fair Labor Standards Act, the Family and Medical Leave Act, and the Migrant and Seasonal Agricultural Protection Act. The proposed rule narrows the definition of who is a covered employee under these statutes, encouraging employer schemes to reclassify their employees as independent contractors to evade those obligations.

Broadly, the Trump administration has been actively dismantling long-standing federal worker protections, leaving states to bear the responsibility of ensuring workers are given rights and protections and that they can exercise them. For most states, labor and employment protections only apply to workers classified as employees, meaning workers misclassified as independent contractors are denied their legal rights and protections.

EPI’s 2026 misclassification report outlines state and federal policy recommendations that ensure proper enforcement mechanisms to curb misclassification. One of the recommendations includes implementing the ABC test. Unlike the six-part “economic reality” test or the “common law” test, the ABC test presumes that a worker is an employee unless they can demonstrate they are an independent contractor based on three criteria. Placing the onus on the employer to determine the employment status of a worker provides protections against misclassification and extends proper protections to workers. Many states have adopted the ABC test for unemployment insurance programs and, to a lesser extent, for wage and hour orders and other employment applications.

As shown in Figure B, The AAPI population is highly concentrated across a handful of states. Almost half of the prime-age working Asian population is concentrated in California, New York, and Texas, and a majority of the Pacific Islander population resides in California, Hawaii, and Washington. Overall, 21 states have significant numbers of AAPI residents, and some are home to large shares of specific AAPI communities. For example, the Hmong community in Minnesota and the Burmese community in Indiana are concentrated in states that have smaller total AAPI populations.

The current landscape for state policy protections against misclassification is quite varied. For example, among the states with the largest AAPI populations, California is the only state to adopt the ABC test for both unemployment insurance and employment law, although certain occupations are exempt from the test—including app-based drivers. California also institutes penalties for misclassifying a worker, which can include restitution payments and, if the misclassification was willful, a penalty between $5,000 to $25,000 per violation.

Texas, on the other hand, has significantly less state enforcement. Apart from using the common law test for its unemployment insurance program and providing a definition of an independent contractor for workers’ compensation, Texas mainly relies on federal law for classifying workers as employees. In the last 15 years, Texas lawmakers have introduced several bills that would create penalties for misclassifying workers in the construction industry, but all have stalled or failed.

Figure B

Comprehensive protections are needed to protect workers from misclassification

AAPI workers are facing multi-pronged attacks from the Trump administration through the degradation of federal protections for workers, immigration, and equity. Occupational segregation and other labor market disparities lead women, people of color, and immigrants to be disproportionately represented in occupations that are commonly misclassified. These factors—in addition to historical and current geopolitical relations that shape the flow of labor to the U.S., immigration and citizenship status, and English language proficiency—can contribute to the concentration of AAPI workers in these occupations. Disaggregated data further identify which specific AAPI communities are overrepresented, revealing that smaller, less economically secure groups are often most exposed to the costs of misclassification. Strong policies at the federal, state, and local levels are needed to combat misclassification and to ensure workers can exercise their rights.