Sale prices are displayed for items at a grocery store in San Rafael, California, on Sept. 10, 2024. Grocery prices are just one piece of the U.S. economy, which is key to many voters in their pick for president. (Photo by Justin Sullivan/Getty Images)

The economy is key to many voters in their pick for president, but that fervor also makes it an attractive subject for distortions, misinformation, and oversimplification.

Nearly eight? in 10 U.S. voters say that the economy is one of the most important issues to them in this upcoming presidential election, according to an AP-NORC poll conducted in September. Although 66% of voters say the economy is very or somewhat poor, six in 10 also say their personal finances are good.

Millions have already cast their ballots through early or mail voting. But those who are still deciding between the two main candidates – Democrat Kamala Harris and Republican Donald Trump – have until Nov. 5 to wade through various myths and exaggerations to understand the state of the economy and each candidate’s record on related issues.

What is the state of inflation in the U.S.??

The most recent cycle of inflation reached its peak in June 2022 at 9.1%. Inflation has fallen considerably since then and to a more manageable 2.4% in September’s Consumer Price Index, a measure of inflation. Wage growth, meanwhile, has beaten inflation for more than a year. The Federal Reserve cut its key interest? rate by half of a percentage point for the first time in four years in September after inflation neared ?toward its goal of 2%.

But those macro figures don’t hit home with everyone, because of the prices of groceries and other essentials.

The literal prices that people see on goods make them think that they’re not doing as well because they feel that they are higher than they think they should be,” said Elise Gould, senior economist at the left-leaning Economic Policy Institute. But, those prices are actually lower as a share of their wages than they were four years ago.”

This doesn’t mean that many voters’ experiences of struggling to afford basic items aren’t real. The cost of housing is very high and puts a strain on people’s budgets. The Fed’s interest rate policy affected credit card rates, and thus, people’s ability to make purchases.

Gould said that despite the positive news of slowing inflation, the lack of long-term wage growth before this recent increase has been hard on many Americans.

“Even though things are good, we know that for the vast majority of people over the last several decades, they’ve been faced with relatively slow wage growth and so it can be hard to feel like you’re going to get ahead,” she said.

Was unemployment higher under Biden or Trump??

The unemployment rate under Donald Trump was fairly low, at 4.7%, when he took office in 2017 , and it mostly trended lower until the beginning of the pandemic. It then shot up to 14.8% in April 2020 and fell sharply for the rest of Trump’s term, which ended in January 2021. The unemployment rate was 6.7% during Trump’s last full month in office.

The labor market has been fairly hot under President Joe Biden. The unemployment rate was 6.4% during the month he and Harris were sworn into office. But since then, it largely fell, and from February 2022 to April 2024, the unemployment rate was below 4%. In September, the unemployment rate was 4.1% but the economy continues to show strong job growth.

Looking at the Biden-Harris administration’s record and Trump’s record outside of the immediate economic impact of the recession and supply shocks during their presidencies, unemployment remained fairly low. Overall, unemployment averaged 3.8% since 2022 and averaged 4% between 2017 and 2019, before the pandemic hit the economy in 2020.

Labor force participation rates and the employment-to-population ratio, measures of the number of people in the labor force and workers employed versus the working age population, were high in the last jobs report and show signs of a healthy labor market.

Skanda Amarnath, executive director of Employ America, a left-leaning group focusing on economic policies, said that it’s also important to understand the percentage of the population adjusting for age, the prime age employment rate. It is marginally higher now, by about 0.3%, than it was right before Covid struck, during the Trump administration, he said.

“We’ve seen generally slower paces of employment gains more recently and that might be just because a lot of people are now back in the labor force itself. It’s probably a little harder to grow employment quickly when you’re coming from a high level as opposed to a low level,” Amarnath said. “Nevertheless, we’re at an employment rate where there’s been a reasonably strong labor demand, a little bit combined with the fact that people are also moving out into their retirement years.”

The American Rescue Plan Act, CHIPS and Science Act, Inflation Reduction Act, and bipartisan infrastructure deal, enacted during Biden’s presidency, helped fuel the recovery, Amarnath said. The CARES Act, which was signed into law byTrump, likely helped the U.S. avoid a protracted recession, he added.

What would Trump’s proposed? tariffs do to the U.S. economy

In an interview with John Micklethwait, editor-in-chief of Bloomberg News at the Economic Club of Chicago on Oct. 15, former president Trump said tariffs would be good for economic growth.

“We’re going to bring companies back to our country … We’re going to protect those companies with strong tariffs because I’m a believer in tariffs,” he said.

The Trump campaign has also proposed a 60% tariff on goods from China, one of the U.S.’s largest trading partners, and 10-to-20% on other imports. The Tax Foundation, a business-friendly research think tank, estimated that if Trump’s proposed tariffs were to be implemented, it would reduce GDP by at least 0.8% and eliminate 684,000 jobs.

Tariffs would likely result in lower trade and retaliatory tariffs from other countries, raising prices, and costing each household between $1,900 to $7,600 in 2023 in dollars, according to the Budget Lab at Yale, a nonpartisan policy research center.

“If the tariff wars back in President Trump’s first term are any indication, they’re going to respond with their own tariffs and other trade actions,” said Mark Zandi, chief economist at Moody’s Analytics. “Broadly, tariffs are going to raise prices for imported goods, weaken consumer purchasing power and slow growth.”

Zandi added that although the retail sector would be particularly hard hit by these tariffs, he doesn’t think any industry would come away unscathed by the policy.

How do Harris and Trump’s economic plans compare??

Harris has said her plans, which include building more affordable housing supply, restoring and expanding the child tax credit, and supporting legislation to expand labor rights, have been approved by respected economists and sources of financial research.

“Please do check out the Wall Street Journal or Goldman Sachs or the 16 Nobel laureates or Moody’s, who have all analyzed the plans and said mine will strengthen the economy, his will make it weaker,” Harris said.

The reality is a little more complicated. Some of the reports Harris referred to do not say the economy would weaken under Trump but would grow less than the economy under Harris in certain scenarios, depending on the political breakdown in Congress.

Others show the GDP falling more as a result of Harris’ proposals. The Penn Wharton Budget Model looking at Trump and Harris proposals shows the GDP falling 0.4% under Trump by 2034 and declining 1.3% under Harris over the same period, but notably, it does not factor in proposals not to tax tips, mentioned by both candidates, or Trump’s tariff policies.

Before Biden withdrew his candidacy, 16 Nobel-prize winning economists said Biden’s investments in the economy through signing legislation to improve infrastructure and manufacturing would boost economic growth. They spoke out against Trump’s tariff plans. Although Harris is part of the Biden administration, they did not address her specific plans as a candidate. On Wednesday, 23 Nobel-prize winning economists, including the economist who led the last letter, Joseph Stiglitz, endorsed Harris’ specific policies.

The U.S. Bureau of Labor Statistics released a report showing a strong labor market with growing wages, a lower unemployment rate, and the addition of 254,000 jobs to the economy. (Photo by Joe Raedle/Getty Images)

A month before voters cast their ballots, the U.S. Bureau of Labor Statistics released a report showing a strong labor market with growing wages, a lower unemployment rate, and the addition of 254,000 jobs to the economy.

Eighty-one percent of registered voters say the economy is key to their vote for president this fall, according to a September Pew Research report.

“We saw job creation beating expectations, unemployment rate ticking ever so slightly down, and we saw great wage growth which has continued to outpace inflation,” said Kitty Richards, senior strategic advisor at Groundwork Collaborative, a progressive economic policy think tank. “We don’t have the new inflation numbers for last month, but wage growth is strong and has been outpacing inflation for about 16 months now and those are all really good things.”

The unemployment rate in September was 4.1% compared to 4.2% in August and 4.3% in July. A rising unemployment rate earlier in the year had caused some economists to worry that the Federal Reserve’s decision in the past few months not to cut the federal funds rate was beginning to hurt the labor market.? In September, the Fed decided to cut the rate by half a percentage point, allaying those worries.

The Fed began an aggressive campaign to beat inflation by raising rates in March 2022 and stopped in mid-2023 but the rate remains high and has affected the economy, particularly the housing market, economists say. Inflation has significantly cooled since its peak in June 2022.

“If today’s job report had said that the labor market was softening further, I think a lot of us would be more aggressively concerned about the risks posed to the labor market by high interest rates,” Richards said. “It’s great to see that those risks have not tipped over yet … But there are risks and we need to be really mindful of what it would mean if we started to see the unemployment rate picking up again.”

The report also showed continued job growth in healthcare, government, social assistance and construction last month. Wage growth was strong, rising 4% over the past year.? Adult men saw their unemployment rate fall, at 3.7%, last month. Women, Black people, Asian people, white people, Hispanic people, and teens all had little or no change in their unemployment rates in September.

The prime-age employment-to-population ratio, which is a measure of how well the economy provides jobs for people who are interested in working, remains at a 23-year high in today’s jobs report.

“I think the labor market continues to be healthy and strong and it’s great to see labor force participation and employment-to-population rates staying high,” Richards said. “That’s what we want to see in the kind of economy that is going to drive wage gains for working people and continue some of the gains that we’ve seen since the COVID recession.”

But she added that there is still room for those measures to grow.

“We’ve seen that the economy can outperform what a lot of people thought before we had this really prolonged period of low unemployment coming out of the COVID recession. And I hope that we continue to see this kind of growth,” she said.

Kristie Hilliard opened her new shop, Kristie Kandies, in downtown Rocky Mount, N.C., after getting tired of her factory job at the local Pfizer plant. She’s seen a steady flow of customers, but says she’s doesn’t think either Vice President Kamala Harris or former President Donald Trump would change her economic fortunes. (Kevin Hardy/Stateline)

Editor’s note: This five-day series explores the priorities of voters in Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin as they consider the upcoming presidential election. With the outcome expected to be close, these “swing states” may decide the future of the country.

ROCKY MOUNT, N.C. — The signs on the empty historic buildings envision an urban utopia of sorts, complete with street cafes, bustling bike lanes and a grocery co-op.

“IMAGINE What Could Be Here,” gushes one sign outside the empty, Neoclassical post office. “IMAGINE! A Vibrant Downtown,” reads another mounted on the glass front of a long-ago closed drug store.

In a place like Rocky Mount, North Carolina, it’s not such a stretch: Just across the street, white-collar workers peck away at laptops and sip lattes at a bright coffee bar lined with dozens of potted tropical plants. A few blocks away, a mammoth events center routinely brings in thousands of visitors from across the country. And alongside a quiet river nearby, a meticulously redeveloped cotton mill would be the envy of any American city, with its modern breweries, restaurants and loft living.

An industrial community long in decline, Rocky Mount is slowly building itself back. But in this city of about 54,000, sharply divided by race and class, many residents struggle to cover the basic costs of groceries, housing and child care.

North Carolina reflects the duality of the American economy: Unemployment is low, jobs are increasing and businesses are opening new factories. But high housing and food costs have squeezed middle-class residents despite the gains of rising wages.

“The economy stinks,” said Tameika Horne, who owns an ice cream and dessert shop in Rocky Mount.

Her ingredient prices have skyrocketed, she said, but she can’t continuously raise prices on ice cream cones or funnel cakes. She said last month was her slowest ever, with only $2,000 in sales.

It’s not just the slow sales at her store: Only a few years ago, she paid $700 a month to rent a three-bedroom apartment. Now, her similarly sized rental home costs her $1,350 a month.

Aside from the ice cream shop, Horne also runs a cleaning business with her family and just started a job delivering packages for FedEx.

“It’s just hard right now,” she said.

The economy, a top issue for voters during any election, is particularly important this presidential cycle: Prices of necessities such as groceries aren’t rising as fast as they were, but years of post-pandemic inflation have soured voter attitudes.

And across the country, millions of families are struggling with rising housing costs. In four of the seven swing states — Arizona, Georgia, Michigan and Nevada — more than half of tenant families?spend?30% or more of their income on rent and utilities, according to the 2023 American Community Survey.

In North Carolina, voter anxiety about the soaring rents and grocery bills could tip the scales.

“In terms of its political influence, it’s not actually your personal financial situation that is important, it’s your vision of the national economy,” said Matt Grossmann, a political science professor at Michigan State University. “So if I get a raise, I tend to credit myself. If I see higher prices, I tend to blame the government or the current situation.”

Around the corner from Horne’s ice cream store in downtown Rocky Mount, Kristie Hilliard greets a steady flow of customers to her new shop, Kristie Kandies. An armed cop, a nurse in scrubs and waist-high kids trickle in to grab a sweet treat.

After getting tired of her manufacturing job at the local Pfizer plant, Hilliard started making confections at home. As her following grew, she got a concession trailer and now has a storefront selling candied grapes, plums, kiwis and pickles.

Hilliard’s treats have attracted attention on social media, causing some buyers to drive in from as far away as Pennsylvania, she said.

A Democrat, she said she still hadn’t made up her mind on the presidential race. But she doesn’t believe either a Harris or a Trump administration would drastically change much for her business.

“They ain’t doing nothing for me now,” she said. “So, what would change?”

A community divided looks to the future

About 60 miles northeast of the state capital, Rocky Mount lies between the prosperous Research Triangle area and North Carolina’s scenic beach communities.

Railroad tracks and a county line slice through the middle of downtown. On the one side is the majority Black and lower-income Edgecombe County. On the other, the more prosperous and whiter Nash County.

While some officials say long-standing attitudes centered on division are fading, the county line has for decades provided a clear delineation of class, race and politics.

Edgecombe County is a Democratic stronghold, but the more populous Nash County is a bellwether of sorts. It was among the?10 closest of North Carolina’s 100 counties in the last presidential election, and one being closely watched this cycle. With 51,774 ballots cast, President Joe Biden took Nash County by 120 votes.

Around Rocky Mount’s downtown area, stately red brick churches and banks line the wide streets. But just a few blocks away, weeds overtake vacant lots, glass is smashed out of abandoned buildings, and razor wire tops the fencing of no-credit-needed car lots and used tire shops.

While the nearby Raleigh metro area has experienced explosive suburban growth, Rocky Mount Mayor Sandy Roberson said his community has seen an erosion of its middle class with the loss of corporate headquarters and factory jobs.

But he’s optimistic.

Young business owners are investing in downtown. Industries with operations in the Raleigh area are moving east. And both Republicans and Democrats just celebrated the news that Natron Energy plans to build a $1.4 billion electric vehicle battery plant nearby that will employ more than 1,000 people.

“We’ve got a lot of great things that are happening,” the mayor said. “But the key is, how do you build and retain a middle class? Because that’s who does the living and the dying and the investing in a community.”

The mayor’s position is nonpartisan, but Roberson is a Republican who in 2022 ran in the Republican primary for a congressional seat here. This election, however, is a difficult one for him.

Roberson said the economy and his financial position were unquestionably better during Trump’s term, but the Jan. 6, 2021, insurrection and the chaos of the last Trump presidency make him hard to support. At the same time, Roberson worries about Harris’ economic policies; he believes the current administration has accelerated inflation by pumping too much money into the economy.

“At some levels, it feels like I’m voting for somebody who wants to either be a dictator or somebody who wants to create a socialist state,” Roberson said. “And I’m not in either place.”

‘Nobody is immune’

In North Carolina and other swing states, Trump’s television ads hammer the vice president over high prices and “Bidenomics.”

Nash County Republican Party volunteer Yvonne McLeod said the economy, along with immigration, are the top concerns locally. Businesses still struggle to hire, rents have soared and food prices are still up, she said.

“Economically, we’re hurting,” she said.

Democrats must be honest about the financial pressures facing voters, said Cassandra Conover, a former Virginia prosecutor who now leads the Nash County Democratic Party. She noted that Harris ads running in North Carolina speak directly to middle-class concerns.

“Nobody is immune from what’s going on,” Conover said. “She’s telling all of us who are hurting, ‘I know, and we’re working for you.’”

Polling has shown voters are sour on the economy, with?63%?saying the economy was on the wrong track in a Harvard-CAPS-Harris poll released this month. Republicans take a far dimmer view than Democrats.

“From past experience, we would expect Harris to inherit some of the blame or credit for the current economy, but so far in the polls, I would say there has been a surprising willingness of voters to not extend the blame for inflation that they had for Joe Biden onto Kamala Harris,” said Grossmann, the Michigan State University professor.

Housing anxiety

Housing costs have?outstripped?income gains in the past two decades, but those challenges have intensified since the COVID-19 pandemic, when demand increased, construction costs soared and interest rates spiked.

“It doesn’t matter if you’re a buyer or a renter,” said Molly Boesel, an economist at CoreLogic, a financial services information company. “You’re seeing your housing costs increase.”

Affordability is “the No. 1 issue” among voters in Nevada this year, said Mario Arias, the Nevada director of the Forward Party, a centrist political party founded by former Democratic presidential hopeful Andrew Yang.

A resident of the Las Vegas area, 30-year-old Arias said housing is his biggest financial concern. Throngs of Californians have moved into Nevada to lower their housing costs, but it’s driven up costs for everyone else, he said.

“If you want to get out of being a renter, you have to be in not just a good financial situation, but in a very stable financial situation,” he said.

The Federal Reserve cut interest rates last week for the first time in four years, whichcouldopen the housing market to more homebuyers as mortgage rates ease in the coming months.

The Biden administration has?proposed?several housing-related policies, including incentives to loosen zoning regulations and capping rent increases from corporate landlords. Harris has announced a proposal to provide up to $25,000 in housing assistance for a down payment to some potential first-time homeowners and promised tax incentives that she say’s would lead to 3 million more housing units by the end of her first term, if she’s elected.

Trump has not waded far into the details of how he would address the affordability issue in a second term. He has?said?he plans to bring down prices by barring immigrants in the country without legal authorization from getting mortgages. But his proposed?immigration policies?could further reduce the labor force for building homes. Previously, Trump’s administration talked about trying to cut state and local housing regulations, and it suspended federal regulations on fair housing.

In North Carolina, more than a quarter of the state’s households are cost burdened, meaning they spend more than 30% of their income on housing costs. It’s particularly challenging for renters, nearly half of which are cost burdened, according to the North Carolina Housing Coalition, a nonprofit affordable housing organization.

Stephanie Watkins-Cruz, housing policy director at the coalition, noted that the federal government’s calculation of fair market rent in North Carolina has shot up 14% in just one year — and 38% over the past five years.

“So unless everybody and their mama’s getting 14 to 20 to 38% raises, the math begins to not math,” she said.

It’s a familiar challenge in every swing state.

Wendy Winston, a middle school math teacher in Grand Rapids Michigan, said that though no one political candidate is responsible for the state of the economy, the cost of groceries and housing is hard to ignore.

“I don’t think the economy is terrible. It is sometimes difficult to make ends meet,” Winston said. “I don’t believe that it’s the fault of the government or policies of the government. I feel like it’s the individual corporations trying to make profit off the backs of the middle class.”

The average rent for a two-bedroom apartment in Grand Rapids is about $1,550 a month, according to rental site Apartments.com. Though Michigan ranks fairly average compared with other states for rent prices, the state saw some of the steepest rent increases in the country in recent years, and wages have not kept up. Residents unable to rent new, “luxury” apartments find themselves short of options for places they can afford.

“It’s not just cost, it’s availability,” Winston said. “There are a lot of new housing developments. Apartments and condos and things are being built, but I’m priced out of them. And I have a college degree, so I don’t think that’s helping our families.”

Hoping for revival

Back in North Carolina, near the banks of the Tar River, Rocky Mount Mills has a healthy waiting list for the apartments and the revamped homes it rents.

A former cotton mill?built and once operated?by slave labor, the campus closed in 1996, reopened in 2015 after a $75 million renovation, and is now home to breweries, restaurants and dozens of high-end apartments.

Chapel Hill native and entrepreneur Cameron Schulz never had Rocky Mount on his radar. But the development’s brewery incubator helped him launch HopFly Brewing Co., now one of the state’s largest self-distributing breweries.

After outgrowing its original space, HopFly relocated to Charlotte, but still operates a taproom in Rocky Mount. The Mills project has reinvigorated the city, Schulz said.

“Rocky Mount’s got one of the most beautiful, quintessential downtown strips that I’ve ever seen anywhere,” he said. “We’ve just got to fill it up with cool places to go, and people to go into those places.”

Main Street suffered for decades after the arrival of malls and a highway bypass. Over at Davis Furniture Company, two employees keep watch over an empty storeroom of sofas, beds and home decor.

Co-owner Melanie Davis said business has been good, though she believes customers are anxious about the presidential election.?Pointing down the sidewalk to new restaurants and some loft apartments overlooking the railroad tracks, Davis said she’s bullish on the trajectory of downtown.

“I do feel like we’re on an upswing,” she said.

Michigan Advance’s Anna Liz Nichols contributed reporting.

Home mortgage rates are posted outside a real estate office in Los Angeles after the Federal Reserve interest rates announcement on Wednesday, Sept. 18, 2024. Federal Reserve Chairman Jerome Powell announced a half-point cut to its benchmark interest rate in the first rate cut since the early days of the COVID pandemic. (Photo by Mario Tama/Getty Images)

The Federal Reserve’s first key interest rate cut in four years coincides with another major four-year event: the homestretch of the presidential election.

Fed Chair Jerome Powell downplayed the central bank’s role in the race between Vice President Kamala Harris and former President Donald Trump on Wednesday, in announcing the half-percentage point cut in its benchmark rate. But that didn’t stop the candidates’ campaigns from weighing in, and it could prove a key factor for voters.

“This is my fourth presidential election at the Fed, and it’s always the same. We’re always going to this meeting in particular and asking what’s the right thing to do for the people we serve,” Powell said. “Nothing else is ever discussed.”

The decision to cut for the first time during the Biden Administration indicates the Federal Reserve’s Board of Governors believe the economy has beaten the COVID-19 pandemic-induced wave of inflation that has plagued it since mid-2021. The Fed hiked its key rate 11 times between March 2022 and July 2023.

Inflation peaked at 9.1% in June 2022. The Consumer Price Index, a measure of inflation, rose 2.5% over the past year, according to the latest release from the Bureau of Labor Statistics in August. The unemployment rate was 4.2% in August, down from 4.3% in July, but still much higher than 3.5% in July 2023 when the Fed made its last rate hike.

“We now see the risks to achieving our employment and inflation goals as roughly in balance, and we are attentive to the risks of both sides of our dual mandate,” Powell said.

Wednesday’s was the first in what is expected to be a series of key rate cuts. For now, that benchmark rate is 4.75 to 5%

One member of the Fed’s governing board, Michelle Bowman, dissented with the rest of the group, marking the first time a governor has done so since 2005. Bowman preferred a 25 basis point – or quarter percentage point – cut.

Timing of the rate cut

Both campaigns quickly reacted to the news from the Fed.

Trump, speaking at a crypto-themed bar in New York, said the cut should have been smaller.

“I guess it shows the economy is very bad to cut it by that much, assuming they’re not just playing politics,” the Republican nominee said. “The economy would be very bad or they’re playing politics, one or the other. But it was a big cut.”

Harris, in a prepared statement, was forward-looking.

“While this announcement is welcome news for Americans who have borne the brunt of high prices, my focus is on the work ahead to keep bringing prices down,” the Democratic nominee said. “I know prices are still too high for many middle class and working families.”

Sarah Binder, a senior fellow in governance studies at the nonpartisan Brookings Institution and author of, “The Myth of Independence: How Congress Governs the Federal Reserve,” said there is a long history of presidents pressuring the Fed, from John F. Kennedy to Richard Nixon and Trump, as a president and now as a presidential candidate.

In order to be effective in its role in keeping the economy moving, Binder said, the Fed needs to be trusted as legitimate, and its political support is contingent on doing a good job.

“The Fed doesn’t have the liberty of sitting it out or not doing enough, which can also bring the Fed into politicians’ crosshairs where they really, really don’t want to be,” she said.

Skanda Amarnath, executive director of Employ America, a research group that advocates for full employment, said the Fed should be examining the economic data.

“That’s what they should look at, not where they are in the electoral seasonal cycle,” she said. “I think that’s the case, by and large. I don’t see anything that’s just a real politicization here.”

What a Fed rate cut means for the economy

Many economists and economic advisers have argued for the Fed to cut rates for months to avoid significant damage to the labor market and in the worst case, a recession.

Now, consumers should begin to see lower costs for borrowing money to buy houses, cars and other necessities.

Kitty Richards, senior strategic adviser at Groundwork Collaborative, a progressive think tank based in Washington, D.C., said the Fed should not hold back on cutting rates now that inflation is slowing.

“The Fed pursued four back to back 70-basis-point rate hikes when inflation was heating up. There’s no reason they should allow inertia to hold them back from normalizing rates now that inflation is under control,” she said.

Because shelter makes up so much of inflation, Richards has expressed concern that by keeping rates where they are, mortgage rates have been pushed so high that the housing market is unaffordable for many Americans. This, in turn, affects inflation, she said, creating a vicious cycle.

Dean Baker, senior economist at the Center for Economic and Policy Research, a progressive economic policy think tank, stated that the Fed decision is a good sign for the housing market.

“It is good that the Fed has now recognized the weakening of the labor market and responded with an aggressive cut. Given there is almost no risk of rekindling inflation, the greater boost to the labor market is largely costless,” Baker said in a statement. “Also, it will help to spur the housing market where millions of people have put off selling homes because of high mortgage rates.”

People watch the ABC News presidential debate between Democratic nominee, U.S. Vice President Kamala Harris, and Republican nominee, former U.S. President Donald Trump, on Tuesday, Sept. 10, 2024, at a watch party at The Abbey, a historic gay bar in West Hollywood, California. The economy will remain central to both campaigns even as inflation cools and wages increase. (Photo by Mario Tama/Getty Images)

Inflation hit a three-year low last month, just as the presidential election is heating up.

But the high cost of housing and other necessities will keep the economy central to both of the major campaigns, as seen in the Sept. 10 debate between Kamala Harris and Donald Trump.

The Consumer Price Index, a measure of inflation, rose 2.5% in the past year, which is the smallest jump since February 2021, according to the latest Bureau of Labor Statistics data released Wednesday. The main driver of this increase was shelter, which moved up 0.5% in August. Airline fares, car insurance, education, and apparel also rose that month. But wages also rose 0.4% in August and 3.8% over the past year, and the average workweek increased by 0.1 hour — welcome news for workers trying to keep up with the cost of living.

Voters continue to say the economy is key in deciding who should be president, at 81%, and four in 10 say the economy and inflation are the most important issues guiding that? decision.

Trump, the former president and Republican nominee, blamed the Biden administration for high prices early on during last week’s presidential debate in Philadelphia, falsely claiming the post-pandemic wave of inflation is the worst ever.

“We’ve had a terrible economy because inflation, which is really known as a country buster, it breaks up countries, we have inflation like very few people have ever seen before, probably the worst in our nation’s history,” Trump said.

The worst inflation rate in U.S. history was actually in 1980, at 14%. The current wave – the highest inflation spike since then – peaked at 9.1% in June 2022.

During her debate with Trump, Democratic nominee and Vice President Harris responded to a question about the economy by touting tax cut proposals to combat housing costs.

“The cost of housing is far too expensive for far too many people. We know that young families need support to raise their children and I intend on extending a tax cut for those families of $6,000, which is the largest child tax credit that we have given in a long time so that those young families can afford to buy a crib, buy a car seat, buy clothes for their children,” she said.

Harris also pitched a proposal for a $50,000 tax deduction for small startup businesses.

Taylor St. Germain, an economist at ITR Economics, a nonpartisan economic research and consulting firm based in New Hampshire, said the latest data shows inflation is slowing enough to suggest it’s time for the Federal Reserve to start cutting interest rates.

“It’s encouraging to see that inflation is slowing and slowing to these much lower levels,” said St. Germain said. “However, it is, of course, still elevated and one of the reasons it’s still elevated is that shelter costs are driving a significant portion of that inflation, with rents rising as well, especially as we looked at this latest CPI report.”

The Fed began raising interest rates in March 2022 to bring down inflation, raising interest rates 11 times, and made its last rate hike in July of last year.

Economists are watching closely to see if the Fed cuts rates during its meeting next week, which is expected to have an impact on the housing market and other costs.

Kitty Richards, senior strategic adviser at Groundwork Collaborative, a progressive think tank based in Washington, D.C., said the Fed’s decisions are contributing to housing costs.

“The problem with housing is fundamentally a supply problem. And the Fed’s actions are actually making that supply problem worse by locking up the housing market and making it more expensive to buy, build or rehab housing,” she said. “Housing is such a big part of people’s experience of the economy and it really matters to folks when they might want to move and look around and they can’t. They can’t even afford to buy a house that is the same price as the house they live in because the interest rates are so high.”

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Editor’s note: This story has been updated to correct Kitty Richards’ title. She is senior strategic adviser at Groundwork Collaborative.

Porchá Perry demonstrates with other workers in Lansing, Michigan, in favor of bills restoring local control to pass workforce and labor policies on Sept.13, 2023. A new report finds growing union organizing across the country has triggered an anti-labor legislative response in some states, but cities and counties are increasingly pushing back. (Photo courtesy of SEIU Local 1)

Growing union organizing across the country has triggered an anti-labor legislative response in some states, but cities and counties are increasingly pushing back, a new report found.

The report, released this month?by the New York University Wagner Labor Initiative and Local Progress Impact Lab, a group for local elected officials focused on economic and racial justice issues, cites examples of localities all over the U.S. using commissions to document working conditions, creating roles for protecting workers in the heat and educating workers on their labor rights.

In the face of increased worker organizing and Americans’ higher approval of labor unions in the past few years (hitting levels not seen since the 1960s), many states have introduced bills aimed at stopping payroll deduction for union dues and punishing employers that voluntarily recognize a union through the card check process. In April, several governors in Southern states, including Tennessee, Alabama, Georgia, and Mississippi, advocated against auto workers voting for a union.

“We know that there has been an increase in worker organizing and definitely an increase in high-profile worker organizing and certainly that action has had a reaction,” said Terri Gerstein, director of the NYU Wagner Labor Initiative and co-author of the report.

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However, state preemption laws, which can make local ordinances void and could prevent many localities from implementing more worker-friendly policies, are also on the rise. There was a surge in preemption laws from 2015 to 2017 on everything from the minimum wage to paid leave, according to a June 2024 analysis from the Economic Policy Institute, a left-of-center think tank.

Although the passage of preemption legislation has slowed, according to the EPI analysis, the effects on localities are still damaging to workers’ rights, authors of the report explain. But labor and policy experts say there are still opportunities for localities to push back against efforts to limit labor organizing and gut the enforcement of labor protections.

“Localities are doing more to fight for working people and advance workers’ rights, and I think in states where there is rampant state hostility and abusive state preemption, local governments are also the leaders of trying to advance workers rights in those states and address new challenges and threats like heat, for example,” said the report’s other co-author, LiJia Gong, the policy and legal director at Local Progress.

Some business organizations, such as the National Federation of Independent Business, say preemption laws help small businesses, which don’t have the capacity “to navigate duplicative, overlapping and potentially contradictory local labor laws.”

“NFIB has supported legislation that creates statewide, uniform standards for minimum wage rates and legislation that establishes a preemption of paid sick leave proposals by local governments,” the group said in a prepared statement.

Gerstein and Gong argue that these efforts are not always concerned with uniformity, such as taking away a locality’s ability to raise the minimum wage when the state does not set a higher minimum wage itself.

In states where there isn’t state-level wage enforcement, localities can pass ordinances that allow workers to file complaints and get stolen wages back without a lawyer, as some Florida localities have done.

There are also things cities and counties can do to prevent heat-related injuries and illnesses, including in the workplace. Miami-Dade County, Phoenix, and Los Angeles have chief heat officers whose role it is to protect people from the effects of extreme heat.

“Unlike a lot of other hazards, people don’t really understand how dangerous workplace heat is and that there are workplace fatalities. But research also shows that there are high rates of worker injuries and accidents of various kinds on hotter days,” Gerstein said.

Amid state efforts to weaken child labor laws, schools are also some of the best tools localities have to ensure kids aren’t working in dangerous conditions, the authors said. School boards could use their power to include workers’ rights education in the curricula, for example.

“School districts can do a lot to educate families on child labor laws and age-appropriate employment opportunities, and they can also play an important role in identifying students who might be working in prohibited occupations and refer those cases to state and federal labor enforcers,” Gong said.

Worker boards can also document and seek to improve working conditions on the local level. The boards, created by local governments, have worker representation and can conduct worker outreach and make policy recommendations on wages and benefits. Last year, the Detroit City Council voted to create an industry standards board for workers at pro sports facilities including Ford Field, Little Caesars Arena, and Comerica Park.

Board member Porchá Perry, a mother of two children who works at Comerica Park and Ford Field, said her role is reaching out to workers to share their experience of working conditions. Workers say they are concerned about low wages, child care, transportation and safety. Perry said that although she is personally less concerned about finding child care, she wouldn’t have to work multiple jobs if wages were higher and she would be able to see her kids more.

“It’s hard to have quality time,” she said.

The board also has spots for city council members and the mayor’s office.

“It’s a voice for everybody – government officials, employees, the management department. It’s somewhere for everybody to sit at the table and speak,” she said.

Britain Forsyth, legislative coordinator for Step Up Louisiana, a group that organizes for economic and education justice, said New Orleans has focused on becoming a model employer. New Orleans increased the minimum wage to $13.25 for city employees, which became effective in 2022, and rose to $15 in 2023. In 2023, the New Orleans City Council codified city employees’ right to organize. Louisiana does not have a state minimum wage law, so the city’s minimum wage is far above $7.25, the federal minimum wage.

Step Up Louisiana is also working to pass a workers’ bill of rights on the November ballot in New Orleans. It would add to the bill of rights in the city’s home rule charter that workers deserve a living wage, paid leave, safe workplaces and health care coverage and says that all laws and regulations regarding unions should be respected.

“We call the question to the city about what we believe in, and we make it clear to employers here and folks who want to open businesses here that this is how we think workers should be treated,” he said.

Authors of the report also suggest that more localities should take on wage theft, since state and federal authorities frequently struggle to enforce wage judgments and recover wages.

These agencies are often under-resourced, have frequent staff turnover and manage complex cases, Gerstein said. Local labor agencies could provide help conducting interviews or prepare cases for state or federal agencies to follow up on. San Diego County has a fund for staff to pursue employers for wages and provides $3,000 to people who are victims of wage theft and have final unpaid wage orders from the state.

Gerstein said she’s seeing cutting-edge approaches to enforcing worker protections in places like Seattle, Boston, New York City and Denver, where the state is friendlier to workers. For example, in Sept 2022, Boston Mayor Michelle Wu created the Worker Empowerment Cabinet, including the Office of Labor Compliance and Worker Protections.

Jodi Sugerman-Brozan, Boston’s deputy chief of worker empowerment and the director of the office of labor compliance and worker protections, said her office has done educational outreach, including free OSHA training sessions for over 1,200 people and a set of trainings for how to create a heat illness prevention plan. Last year, Wu signed an ordinance that requires certain safety standards and training for city construction projects.

“Cities and countries don’t have a lot of power but they can use the power of contracting and vending to drive labor standards,” Sugerman-Brozan said.

But Gerstein added that local governments in more employer-friendly states are also stepping up to advocate for workers.

“It’s a very different landscape where the local government may be the only place where the government is standing up for workers,” she said. “There is largely stagnation in Congress because of the filibuster and other reasons, an unfriendly state government, and your state department of labor isn’t particularly worker protective and is more focused on being employer and business-friendly. State AG offices aren’t really doing anything.”

Even a small local office can make a difference, Gerstein said.

“Hire dedicated staff to be the worker rights person. Create an office and an army of one. That’s how these things can start.”

A sign advertising units for rent is displayed outside of a Manhattan building on April 11, 2024. The Biden administration and the Harris campaign are making their housing policy case to the American people as Vice President Kamala Harris and former president Donald Trump compete for voters’ trust on economic issues. (Photo by Spencer Platt/Getty Images)

As renters and would-be homeowners struggle with the high cost of housing, the Biden administration has announced policies to address this strain on household budgets.

That includes $100 million in funding for a program to incentivize affordable housing production and streamlining loan application processes to expedite building more housing.

Some of those proposals – such as a cap on rent increases from corporate landlords – call for congressional action, while others are rules and grants that can be done without legislative approval. The U.S. Department of Housing and Urban Development will also be finalizing a rule to allow different kinds of housing, such as duplexes and triplexes, to be built under the agency’s manufacturing and safety standards.

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The Biden administration and the Harris campaign are making their housing policy case to the American people as Vice President Kamala Harris and former president Donald Trump compete for voters’ trust on economic issues. An August Financial Times/Michigan Ross poll shows that Harris is slightly ahead of Trump when it comes to who voters trust more on the economy, by 1 percentage point. Although that is a very small advantage, it is a change from July, when 35% of voters approved of President Joe Biden’s job on the economy compared to 41% for Trump.

Plans would cut red tape, but housing stock is still low??

The administration’s plans to address supply and soaring prices also include repurposing federal land in Nevada and a cap on rent increases from corporate landlords, which would require congressional action. Housing and homelessness experts say many of these changes are positive, particularly zoning changes, while others argue that a few of these actions are insufficient for the crisis at hand.

On Friday, Vice President Kamala Harris announced her plans for boosting housing affordability if she wins the presidency. Harris’ plans are similar to some of the Biden administration’s approaches to housing policy, with an emphasis on stopping corporate landlords from driving up rents and knocking down local zoning barriers to building affordable housing. She also announced a policy to provide up to $25,000 in payment assistance for first-time homebuyers on the condition that they paid rent on time for two years.

“We will take down barriers and cut red tape, including at the state and local levels, and by the end of my first term, we will end America’s housing shortage by building 3 million new homes and rentals that are affordable for the middle class,” Harris said at a campaign event in Raleigh, North Carolina on Friday.

Indivar Dutta-Gupta, who focuses on policy research and seminars at the Georgetown University McCourt School of Public Policy, applauded developments to make it easier and less costly to build affordable housing through the Pathways to Removing Obstacles to Housing program, which provides funding for communities getting rid of barriers such as “outdated” zoning policies and a “lack of neighborhood amenities.”

“It’s very difficult for a builder to just kind of copy and paste their plans from one community to another. Secondly, we’re not just talking about requirements for special permitting and land use that are tedious,” he said. “They’re time consuming and that dramatically increases the cost of housing, so if you can knock down a process that takes 12 months to six months, that can make a big difference for housing affordability.”

Kenneth Chilton, professor at the department of public administration at Tennessee State University, said there are certainly homes being built – just not enough affordable ones between $100,000 and $300,000 in the area he lives in Nashville. Wages have also not caught up to those prices, he added.

“The market has catered to the more affluent households, so there are new houses being built, but they’re million dollar-plus houses for people who can afford or are willing to put themselves in a financial burden to afford a million dollar house,” he said. “… It’s becoming harder and harder to afford the discretionary income needed to save up for down payment.”

The Biden administration and Congress has also focused more on corporate landlords of late, who are influencing the housing market. Dutta-Gupta and Chilton said that even in situations where they make up a smaller percentage of landlords, their practices influence other landlords and drive up rents. Chilton, who has studied how firms that can quickly snatch up all kinds of properties can influence regional housing markets, said it’s hard for the average homeowner to compete.

“You have a lot more corporations and investors who are buying up housing,” he said. “Some of those are institutional, but there’s been recent reports that even smaller local landlords are kind of adopting the same business practices of one-year leases with built-in cost of living adjustments. They’re operating like corporate landlords.”

He said that none of the Biden administration proposals he saw accounted for potential homebuyers, who have to apply for loans, failing to compete with groups and investors making all-cash purchases without inspections. Democratic lawmakers have introduced legislation in Congress to limit corporate landlords’ power, but it has not passed.

Dutta-Gupta said the Biden administration’s recent efforts are putting “meaningful dollar amounts” into the quest for affordable housing through grant opportunities, even though they are probably below the demand. He said he’s also heartened to see that the U.S. Department of Transportation is making sure its discretionary infrastructure grants give preference to communities with more “pro-housing policies,” to give localities more incentives to favor affordable housing. But he said the administration has to make sure it effectively communicates this through outreach.

“There’s going to have to be a meaningful effort to explain to the communities that there’s a new preference and this is how those communities can potentially fall into that category of the preference,” he said. “You don’t want to just let them know there’s a preference and then no change in behavior happens.”

Although Trump has talked about mortgage rates during his campaign, he hasn’t provided a lot of detail on housing policies. The Federal Reserve’s federal funds rate has an influence on mortgage rates and Trump has said the president should “have at least a say” in Fed policy. The Republican Party’s 2024 platform also includes a section on housing affordability, which mentions tax incentives to “promote homeownership,” allowing for new home construction on some federal lands, and reducing regulations that “raise housing costs.”

The challenge of keeping people housed

Given the challenges to building the supply of more affordable housing, the National Alliance to End Homelessness would like to see broader policy approaches to prevent more people from becoming homeless. Homelessness reached a record high in 2023.

Although the Biden administration has taken steps to expand housing access for groups particularly vulnerable to homelessness, such as veterans and survivors of intimate partner violence, Steve Berg, chief policy officer at the National Alliance to End Homelessness, would like to see more of a universal approach, such as housing vouchers that meet the scale of the need. He said targeted emergency rental assistance combined with eviction moratoriums in places where homelessness is particularly high and rising quickly would also be effective at reaching the people who need it most.

“The eviction moratorium combined with subsidies for landlords to help when people got behind on their rent were very effective interventions,” Berg said of earlier pandemic policies to keep people housed.

Why political leaders are focused on housing

The Federal Reserve has signaled it is close to cutting key interest rates as inflation has slowed and the housing market has begun to cool in response to high mortgage rates. The Fed started to raise interest rates in 2022 and hiked them 11 times until late 2023, putting pressure on the housing market during a time of high demand for housing and a shortage of affordable homes.

In May, U.S. rent growth was up 3.2% from a year ago, which was the biggest gain there has been in more than a year, according to CoreLogic’s single family rent data. A lack of housing affordability is also closely tied to homelessness. From 2019 to 2023, the number of people who had to go to emergency shelters for the first time rose more than 23%, a 2024 report from the National Alliance to End Homelessness shows.

“The Federal Reserve primarily slows the economy by making construction of residential housing, and generally taking out loans, more costly. People are certainly experiencing the higher cost of housing right now due to the higher interest rates, so the timing [of the policies] may be fortuitous,” Dutta-Gupta said.

People with symptoms of long COVID attend a Senate Committee on Health, Education, Labor and Pensions hearing on long COVID in January. A group of senators is now urging the Social Security Administration to grant greater access to disability payments for people with long COVID symptoms. (Photo by Drew Angerer/Getty Images)

Seven U.S. senators have called on the Social Security Administration to make it easier for people with long COVID to access disability benefits, actions that disability rights advocates and patients say are desperately needed.

In a letter released Monday, they said the agency should make the process more transparent, track and publish data on long COVID applications, and consider expanding the listing of impairments the SSA considers in applications for benefits. The letter was signed by Sens. Tim Kaine (D-VA), Ed Markey (D-MA), and Tammy Duckworth (D-IL), Bernie Sanders (I-VT), Tina Smith (D-MN), Angus King (I-ME), and Richard Blumenthal (D-CT).

“In some situations, these symptoms can be debilitating and prevent an individual from being able to work, take care of their family, manage their household, or participate in social activities,” the senators wrote to SSA Commissioner Martin O’Malley.

Long COVID is a chronic health condition, which often includes fatigue, brain fog, and shortness of breath, following a COVID-19 infection. About three in 10 American adults have had long COVID at some point?according to KFF’s April analysis of long COVID data. About 17 million people had it in March 2024. In 2021, the U.S. Department of Health and Human Services released guidance on long COVID as a disability under the Americans with Disabilities Act.

Kaine has been outspoken about his own experience with long COVID and Sanders introduced legislation this month to provide $1 billion in funding each year for 10 years to support long COVID research by the National Institutes of Health.

Lisa McCorkell, co-founder of the Patient Led Research Collaborative, a group of long COVID patients and patients with associated illnesses, told States Newsroom, “Creating a ruling or listing would be a huge improvement — having that specific guidance for how to document long COVID, its related diagnoses, and its associated impairment would assist physicians who may not be as knowledgeable about long COVID.”

The SSA administers disability benefits through Social Security Disability Insurance and Supplemental Security Income programs. The former program requires past employment payment into Social Security. The latter one does not have those restrictions and is based on financial need but to receive benefits, applicants have to prove they qualify as having a disability. The average monthly disability benefit for Social Security Disability Insurance is $1,538.

Long COVID’s economic cost

Researchers and economists are still trying to understand the full impact of COVID-19 infections and long COVID on the workforce. A 2023 study estimated that COVID-19 brought down the labor force by 500,000 people and that the average loss of labor is equivalent to $9,000 in earnings. More than 25% of people with long COVID said their condition had an impact on their employment or work hours, according to a 2022 Minneapolis Fed paper.

Long COVID is not going to go away, particularly as government protections on the federal, state, and local level to reduce the spread of COVID are “severely lacking,” said Marissa Ditkowsky, who serves as the disability economic justice counsel at the National Partnership for Women & Families, an organization focused on health, economic justice, and reproductive rights for women and families.

“While COVID continues to be a reality, we know that COVID disproportionately impacts women, disabled folks, and people of color, and the folks who are most impacted already have issues with access to appropriate health care, access to employment, and access to equitable wages,” said Ditkowsky, who has long COVID herself. “A lot of folks might be working in low-wage jobs where they’re in the service industry and constantly out there and more likely to contract COVID. It starts not just with the programs for how to deal with folks with long COVID, but how to prevent people from getting long COVID.”

In the meantime, she said people with long COVID, as well as other people with disabilities, would benefit from the changes senators are advocating, such as restoring the treating physician rule, which was repealed in 2017. The rule allowed the agency to give greater weight to medical evidence from a physician who treated a patient for years compared to, say, a doctor who examines a patient once.

“Giving your own doctor the weight [they] deserve is huge,” Ditkowsky said.

Mia Ives-Rublee, senior director of the disability justice initiative at the Center for American Progress, a liberal think tank, said there is an opportunity for the Biden administration or the next administration to revamp how the agency administers disability benefits. She said that given the aging population, there is more reason than ever for the agency to make significant improvements to the application process. Advocates for people with disabilities say it’s also imperative to boost funding for the agency.

“Not only are we seeing an increase in disability in younger folks, but we’re also looking at the big boomer generation getting older … We’re going to see a huge pressure on the [SSA] and we need to see real changes and funding and think of ways to manage the wide variety of experiences that people have in order to deal with differences in applying for these benefits,” she said.

Texas National Guard soldiers stand on patrol near the bank of the Rio Grande on April 2, 2024 in El Paso, Texas.?A new study shows that undocumented immigrants paid nearly $100 billion in federal, state, and local tax revenue in 2022. The findings run counter to anti-immigrant rhetoric that immigrants who inter the U.S. illegally hurt social programs. (Photo by Brandon Bell/Getty Images)

A new study shows that undocumented immigrants paid nearly $100 billion in federal, state and local tax revenue in 2022 while many are shut out of the programs their taxes fund. The findings run counter to anti-immigrant rhetoric that undocumented immigrants are “destroying” social programs.

In 40 states, undocumented immigrants paid higher tax rates than the top 1% of the income scale in those states, according to a study released Tuesday from the Institute on Taxation and Economic Policy, a left-leaning, nonprofit think tank.

The study, which uses estimates of undocumented immigrants’ tax contributions as of 2022, shows those totaled $96.7 billion that year. Study authors also found that undocumented immigrants would contribute $40.2 billion more per year in federal, state and local taxes if all of the undocumented population had access to work authorization. The Institute on Taxation and Economic Policy reasoned that this boost would come from higher wages associated with employment authorization and easier compliance with income tax laws.

The report also shed further light on the tax revenue provided by undocumented immigrants on the state and local level. Undocumented immigrants are paying 46% of their state and local tax payments through sales and excise taxes. Six states — New Jersey, New York, California, Florida, Texas, and Illinois — were able to raise more than $1 billion each in tax revenue from undocumented immigrants, the nonprofit said.

Undocumented immigrants pay property taxes and sales taxes, and federal payroll taxes taken from their wages, as well as income tax returns using Individual Taxpayer Identification numbers. Despite those payroll taxes funding Medicare, Social Security and Unemployment Insurance, undocumented immigrants are not eligible to enroll in and receive regular benefits from these social programs. They can also face barriers to getting tax refunds, including getting scammed by unscrupulous tax preparers who target immigrant communities, said Jackie Vimo, senior analyst of economic justice policy at the National Immigration Law Center in a media call on the report.

“There are tons of laws that prevent undocumented workers from getting benefits…” said Richard C. Auxier, a principal policy associate at the Urban-Brookings Tax Policy Center, a nonpartisan think tank that was not involved in the study. “…They get a lot of political attention. At the end of the day, they’re just normal people paying normal taxes.”

Alexis Tsoukalas, senior policy analyst at Florida Policy Institute, a nonprofit focused on economic mobility for Floridians, told reporters on Monday that she was struck by how much the state collected from undocumented immigrants in taxes compared to the wealthiest in the state. The current tax rate for undocumented immigrants in Florida is 8% compared to the top 1% of the state at 2.7%.

“This means hundreds of thousands of everyday people are contributing more than their share to public services they cannot even access meanwhile those with the most to give and the most to benefit contribute the least,” Tsoukalas said.

The study was released in the backdrop of a political climate where states have passed laws to arrest people who they suspect of entering the U.S. illegally, which has been a federal power,? the Biden administration announced an executive action to allow for the deportation of many asylum seekers without processing their claims, and the 2024 Republican Party platform promises the “largest deportation operation in American history” if former President Donald Trump is reelected over presumptive Democratic nominee Kamala Harris. Tax policy will also be front and center for Congress and the White House next year as provisions of Trump’s tax law, passed in 2017, are set to expire.

Aside from the human cost of deportations on families, policy experts and researchers are making the case that undocumented immigrants are a boon to the economy, making it an economic cost as well. Immigration and economic experts who spoke about the significance of the report on Monday highlighted the Congressional Budget Office’s July report on the rise in immigration and its effects on the economy and budget, which found that this increase in immigration would add $1.2 trillion in federal revenue from 2024 to 2034.

Carl Davis, research director at the Institute on Taxation and Economic Policy, said there are economic ripple effects to consider in the deportation of undocumented immigrants in the U.S. beyond taxes.

“If you deported someone and they’re no longer making taxable purchases in their community, that number would reflect a reduction in their sales tax payments to the community but it wouldn’t capture that second ripple effect of the business has less profits because they have fewer customers,” Davis said in a media call on the study.

Auxier said that researchers have found children in an undocumented immigrant household are receiving education benefits that could be larger than the tax payments of the lower income working adults, but that this is more of an income issue than a specific immigration issue. The other side of that coin, Auxier notes, is that in the future, undocumented households may in fact give back more than they received.

“Those same studies tend to note that if the children go to school and they then go get jobs, now the American household is giving more than it got because the parents came here, worked, paid into Social Security, Medicare, and didn’t get any benefits,” he said. “The kid went to school and then they got a job and then they started earning enough money that they were a net contributor.”

Policy experts also pointed to a labor shortage — 8.1 million job openings and 6.8 million unemployed workers — as a reason to embrace the economic contributions of undocumented immigrants. South Dakota, North Dakota, Maryland, Vermont, Maine, and South Carolina are some of the states facing the greatest labor shortages, according to a Washington Post analysis of Bureau of Labor Statistics data.

“Immigrants are already filling that [labor] gap and if we have mass deportations where millions of immigrants are torn from their family members and the country they have made home, we will not only have the human impact of this but we’ll have a severe effect on the economy and available workforce,” said Vimo of the National Immigration Law Center, a group that focuses on racial, economic and social justice for low-income immigrants.

A sign advertising a home for sale is displayed outside of a Brooklyn brownstone on April 11, 2024, in New York City.?U.S. house sales continued to fall in June as median home prices hit a record high for the second month. (Photo by Spencer Platt/Getty Images)

U.S. median home prices hit a record high for the second month in a row as sales continued to fall, according to a report released this week, as potential buyers continue to lie in wait for lower mortgage rates.

Existing home sales fell 5.4% in June and median home sales reached its highest level on record since prices were first tracked by the National Association of Realtors in 1999. The median price rose the most in the northeast region at 9.7%. In June, existing home sales plummeted 8% in the Midwest, the greatest fall among the regions, according to the report released on Tuesday.

New home sales, released on Wednesday by the U.S. Census Bureau, fell 0.6% in June and is 7.4% lower than new home sales a year ago. The median sales price of a new home was $417,300, lower than the existing home sales median price of $426,900. Housing experts say that this closeness in price is unusual, since new homes have usually sold for much more in the past 10 years and may be reflective of changing demands for smaller and more affordable homes.

Despite that change, these two measures have shown that home prices still remain out of reach for many and that in response, sales have been slow. What is driving these prices and when will they abate? Housing economists say there are many factors at play, including Fed policy and an aging population.

Why are home sales low and home prices high?

High demand for homes and lower inventory levels have contributed to higher home prices in recent years. These expensive home prices and high mortgage rates have resulted in this housing market shift.

Matthew Walsh, economist at Moody’s Analytics, said low housing affordability and the “persistently high” mortgage rate is contributing to cooling housing activity. Unless housing becomes more affordable soon, he said he expects to continue to see lower existing home sales. The 30-year fixed mortgage rate was 6.78% as of July 25, according to Freddie Mac.

“Buyers are very responsive to mortgage rates and with the information being so readily available and the anticipation that mortgage rates are going to come down, I think that’s keeping people on the sidelines,” said Selma Hepp, chief economist at CoreLogic.

But she said homebuyers face a double-edged sword. When mortgage rates do come down, there will be a lot of pent-up demand that will also put pressure on home prices. A rise in cash buyers could also be pushing prices higher, Hepp said. All cash buyers were 28% of home transactions in June.

“A lot of these cash buyers are actually baby boomers who maybe cashed out on their existing home. We do know that home equity is at an all-time high and if you’re moving from a very expensive home price area to a lower-priced area, you obviously will have a lot of cash,” she added.

Housing inventory is changing but is it enough?

One bright spot for homebuyers is that total housing inventory has been rising. Inventory increased 3.1% from May and was up 23.4% from a year ago according to the June existing home sales report. Walsh said some households may be deciding they can’t wait to make a life change and are moving out of homes for larger or smaller options.

“It’s a lot of households that can no longer postpone plans to sell, whether that’s because their household is expanding because they’re having children or it’s shrinking and they need to sell their larger home in the Northeast and move to a smaller home to retire in the South,” Walsh? said. “They can no longer put up with the homes that they’re in and sacrifice their low mortgage rate for a higher rate.”

Still, Hepp said the inventory is far lower than pre-pandemic levels and where demand has picked up — in Boston, New York, and Chicago, for example — there’s not a proportionate increase in the supply of housing.

Some homebuyers may be watching the Fed’s plans to cut interest rates, which affect mortgage rates, for some financial relief. A majority of economists say they believe the Fed will cut rates in September and December, according to a recent Reuters poll. Cutting rates may help bring some buyers back into the market and pump up inventory, but the effect will likely not be strong enough to bring home sales back to where they were before the pandemic, Walsh added.

What is the government doing?

The Biden administration announced a flurry of proposals this month to make housing more affordable, some of which would impact homebuyers as well as the repurposing of public lands in Nevada to bring at least 15,000 affordable rental and homeownership units to the area. In February, the White House also announced the opening of grant applications for assistance to homeowners to replace dilapidated homes.

Donald Trump, the Republican nominee for president, said at a July rally in Iowa that he would address problems in the housing market through cutting interest rates, according to Newsweek. Although presidents nominate the chair of the Fed for a four-year term, they do not have power over whether the Fed cuts rates.

States have been pursuing their own policies to improve housing inventory and affordability, including Utah and Oregon, which passed legislation to use funds for loans to developers who plan to build more affordable homes. A Maryland bill signed into law by Democratic Gov. Wes Moore in May would push property owners to make plans for vacant properties by letting cities raise taxes on those properties.

Black voters overwhelmingly supported President Joe Biden in 2020, but some polls show their support now wavering. (Photo by Megan Varner/Getty Images)

The economy is top of mind for caregiver and driver Jennifer Garner as the U.S. heads toward the November presidential election.

Garner, 46, lives in Cleveland and can bring in about $800 a week working extra hours at both jobs. But between debt payments on $56,000 in student loans and $1,300 in rent — among other monthly bills — the money doesn’t go far enough.

She voted for Biden in 2020, but says now that she’s researching other candidates — although she has ruled out former President Donald Trump.

Black voters overwhelmingly supported President Joe Biden in 2020 and were key to his win, but as many like Garner struggle to make ends meet now, there is some evidence that Black voter enthusiasm for Biden may be slipping. And Trump is hoping to capitalize on that. He spoke last month at a meeting of the Black Conservative Federation and he argues that Black voters were better off financially when he was in office. Even if Black voters don’t buy that message, voters’ frustration could result in them turning to a third party candidate, Cornell Belcher, a pollster who worked for Barack Obama, told The New York Times.

To counter Trump, the Biden campaign is spending millions on radio ads in swing states at Black-owned and Latino-owned radio stations to point out the administration’s accomplishments, including investments in historically Black colleges and universities through grant funding and the American Rescue Plan Act, the cancellation of student loan debt for 3.9 million borrowers, and reducing Black child poverty in 2021, which it has connected to the then expansion of the child tax credit.

“I have to work two jobs overtime just to even try to cover my rent, which means I have no time to be able to enjoy life, period,” Garner said. “The only way things are going to get better is if people start talking and just let them know the economy sucks. We need better jobs and more money.”

According to a January NBC News poll, 75% of Black voters said they would vote for Biden in the general election this year. In 2020, 92% of Black voters cast their votes for Biden, a Pew Research Center report shows. This criticism of the economy lines up with surveys about Black voters’ financial experiences.

A May 2023 report from the Joint Center for Political and Economic Studies found that 30% of Black people said their financial situation had worsened over the past year, compared to 44% who said it had stayed the same. Although key economic indicators that economists look to to understand the state of the economy have shown a stable labor market, slowing inflation, and rising wages, it’s clear that many Black voters are still feeling the financial pressure of high prices at the grocery store, an expensive housing market, and the burden of student debt payments restarting.

On Monday, Biden announced another student debt relief proposal to cancel accrued interest for 23 million borrowers, with up to 25 million receiving some kind of interest cancellation. Under this new plan, 4 million borrowers would also have their student debt canceled entirely and 10 million borrowers could benefit from $5,000 in relief. It’s unclear when exactly the Biden administration will release a formal proposal.

Keisha Deonarine, director of opportunity, race and justice at the NAACP, shares the frustrations many Black voters say they have with the financial burden of student debt. She said before Biden’s Monday announcement that the president needs to push harder to cancel student debt to have a lasting impact on the economic experiences of Black Americans and many other voters.

“If we really want to think about four-year degrees and we want to think about middle class America, we’ve got to cancel student debt,” she said.

Deonarine said she’s encouraged by the Biden administration’s work to reduce and provide more transparency on junk fees, however, which includes regulations to reduce credit card late fees. She said that could help reduce costs that put stress on voters’ household budgets.

Audrianna Lewis, who voted for Biden in 2020, is one of those voters. She has to budget for high rent and healthcare costs.

Lewis, 32, works in Hattiesburg, Mississippi, as a customer service representative for Maximus, a government contractor that helps administer Medicaid, Medicare, and other programs. She makes $17.78 an hour and has about $9,000 in student debt. Her rent has gone up from $860 last year to $1,000 this year.

On top of her climbing rent and student debt, Lewis has asthma and said her healthcare doesn’t sufficiently cover her breathing treatments, which has required her to go into her savings. She said her coworkers are also struggling financially.

“Some of my coworkers are homeless,” she said. “People are not able to pay for doctor visits and prescriptions.”

In March of last year, Black people’s unemployment rate hit a record low and the economic recovery shows that by historical standards, Black and Hispanic workers have had faster wage growth these past few years. The unemployment rate for Black people has begun to tick up again, but economists say they’re waiting for more data before considering it a long lasting trend.

But Melanie Campbell, president of the National Coalition on Black Civic Participation, said the unemployment rate for Black Americans does not tell the whole story.

“The other part of that message has to do with, ‘OK, I may be employed but I’m still working three jobs just to pay my rent,’” she said.

Sarah Wallace, 49, a Philadephian who lives on Social Security Disability Insurance, says she has to spend the lion’s share of it on $1,500 in rent each month. She voted for Biden in 2020, but said she may vote third party this time.

“I think Biden sold all of us on his dream to get into the office … And that was that,” she said.

Wallace said she doesn’t believe the economy has improved under Biden and that she doesn’t see inflation easing enough to make a difference for her at the grocery store.

“Buying food, you’re never buying the most healthy [food] because they’re more expensive. So you kind of have to improvise what you can do, you know?” she said.

Wallace, who has more than $200,000 in student debt and said she struggles to get Ozempic to treat her diabetes, wants to see political leaders do more on student debt relief and make healthcare more affordable and accessible.

Workforce data from 2021 shows that 48% of frontline workers at Maximus — where Lewis, of Mississippi, is employed — are Black and Latina women.

Although Lewis said her pay is better under Biden than it was when Donald Trump was president, she said she still isn’t sure if she’s voting for Biden. Although like Garner, the Cleveland caregiver, she ruled out voting for Trump, she hasn’t ruled out voting for someone other than Biden.

Garner, who is civically engaged as a member organizer through One Fair Wage, a group that wants to end subminimum wages, said she wasn’t “leaning towards anybody just yet.”

Garner said that although she knows the courts have stopped Biden from moving forward with his more ambitious student debt cancellation plan, she wants to see him do more on the issue and other financial burdens she faces.

“Don’t tell me what you’re going to do. Show me what you’re going to do,” she said.

People work in a donut shop in Manhattan on Jan. 5, 2024 in New York City. As the American economy continues to outperform expectations, the March jobs report showed that employers added 303,00 positions for the month with an unemployment rate of 3.8%. For the first time, hospitality and leisure has returned to its pre-pandemic level after adding 49,000 jobs. (Photo by Spencer Platt/Getty Images)

The sturdy labor market continued to chug along in March, with an unemployment rate of 3.8%, marking the 26th straight month of an unemployment rate under 4%.

The economy added 303,00 jobs, according to the monthly report released by the Bureau of Labor Statistics on Friday. Economists, researchers, and policy experts say that the strong but no longer hot labor market should be encouraging news for the Fed as it decides whether to cut rates after a long campaign to fight inflation.

Aaron Sojourner, an economist and senior researcher at the W.E. Upjohn Institute for Employment Research, a nonprofit research organization headquartered in Kalamazoo, Michigan, said the labor market is “strong and healthy.”

“It’s remarkable that the economy added over 300,000 jobs at this point and job growth seems to be accelerating,” Sojourner said.

Which sectors are adding jobs?

Health care and government continued to add jobs in March, with the two sectors adding above their average monthly gains, at 72,000 and 71,000.

Elise Gould, senior economist at the Economic Policy Institute, an economic policy think tank based in Washington D.C., said government is a sector economists will be looking to see more growth in education jobs. She added that public sector workers can fuel private sector employment growth as well.

For the first time, hospitality and leisure has returned to its pre-pandemic level after adding 49,000 jobs. Researchers and economists took this development as a good sign for the economy and for workers. Gould said it was a “great milestone” but also noted that many sectors have already hit that level and more.

Sojourner said it may be a good sign that it took this long for leisure and hospitality to return to this employment level.

“The fact that it didn’t immediately recover is in a sense, good news, because a lot of people found better opportunities outside the sector and employers had to raise wages and the quality of the jobs that they were offering in order to attract people back to the sector,” he said.

Construction also added about double the average of monthly jobs it added over the past year, at 39,000 jobs.

Skanda Amarnath, executive director of Employ America, a policy research and advocacy group with a headquarters in Washington D.C., said it’s hard to pinpoint exactly what drove that rise in jobs. The CHIPS and Science Act, the Inflation Reduction Act, and bipartisan infrastructure deal have supported employment in construction. Residential construction has been “reasonably robust,” he said. But these jobs could also be tied to a rise in hiring for construction in the spring months.

What do experts make of Black people’s rising unemployment rate?

The last four months of jobs data has shown an increase in Black people’s unemployment rate, from 5.2% in December to 6.4% in March. Black women’s unemployment rate was 5.6% compared to 4.4% last month and 4.1% a year ago. Black men had an unemployment rate of 6.2% versus 6.1% in February and 5.1% a year ago.

Gould said the uptick in the unemployment rate for Black people is concerning to her, because it has happened for a few months now, but not yet alarming because of the volatility in the data collected.

“I think that it’s something that we need to watch,” she said.

Sojourner agreed that while more data is necessary, it’s important to keep an eye on the unemployment rate for Black Americans, particularly if it’s an indication that Black people are having difficulty finding jobs rather than a sign of more people entering the labor market and looking for work.

He added that the effects of a recession tend to hit Black people before other groups.

“That’s very concerning because often you’ll see, Black Americans are on the leading edge … The recessionary stuff hits them first,” he said.

What does prime age employment tell us??

The prime age employment-population ratio, which measures the share of the working-age population, or 25- to 54-year-olds, who are employed, is also pretty high this month, at 80.7%. In April 2000, it reached an all-time high of 81.9%.

Amarnath said this is encouraging news.

“Right now we’re operating at levels that are especially high. Ideally, they can continue to move higher through the year, but these are levels that prior to the last 12 months we haven’t seen since I believe, more than 20 years ago …,” he said. “You think of [prime age employment] as being the best way of evaluating how many people are employed, adjusting for the aging of the population, adjusting for changes in participation.”

Are we seeing healthy wage growth??

Wages have continued to outpace inflation, at an increase of 4.1% over the past year. In March, they rose 12 cents or 0.3%. The wage growth numbers, as well as the number of jobs added, show a steady job market but not one that is threatening the Federal Reserve’s attempts to bring down inflation, Gould said.

“When I look at those wage growth numbers, I think it’s pretty clear that is continuing to normalize very much in line with Fed targets as the inflation rate continues to come down. I think we’re in an economy that is getting where we wanted it to be and, I think, what the Fed is looking for as well. We’re seeing strong job growth, and that’s promising. More people are coming back into the labor force looking for opportunities,” she said.

A customer shops for food at a grocery store on March 12, 2024 in San Rafael, California. High prices at the grocery store and consumers’ memories of their pre-pandemic budgets may be playing a role in how Americans feel about their finances as recession fears recede. (Photo by Justin Sullivan/Getty Images)

Americans are still worried about their financial stability even as their recession fears lessen. High prices at the grocery store and consumers’ memories of their pre-pandemic budgets may be playing a role. Here’s what financial and economic experts have to say about what economic indicators tell us about people’s perception of the economy.

What is driving consumer confidence?

The Consumer Confidence Index, released last week by the business nonprofit and research organization the Conference Board, is a survey indicating how optimistic or pessimistic consumers feel about their financial well-being and the economy.

The Consumer Confidence Index fell slightly in March from 104.8 to 104.7, well below some economist expectations of 106.5. Although consumers’ perception of the likelihood of a recession fell this month, consumers were less confident about their family’s financial situation in the next six months. The percentage of consumers who expected their incomes to fall rose from 11.9% in February to 13.8% in March.

Elizabeth Pancotti, director of special initiatives for the Roosevelt Institute, said that consumers’ experience of the economy and their financial situation may come down to crises they’re feeling that may not show up at a macro level but may strike their budgets particularly hard.

“When egg prices finally come down and chicken prices finally come down, but orange juice is high because of some random citrus greening disease or some other shocking food item, your total grocery bill doesn’t come down and that really highlights it,” she said. “There’s one crisis after another at a micro level, which I think is really why we’re not seeing that divergence between overall economic strength and at a very micro level, the feelings of average consumers.”

Pancotti acknowledged that housing is also one of the highest expenses for consumers right now, and those prices aren’t showing as much movement as other areas of consumers’ budgets.

“For most families, it is the largest purchase they make every month,” she said.

Why isn’t consumer sentiment higher?

Consumer sentiment, a smaller survey conducted by the University of Michigan, also gauges people’s sense of the economy overall, the labor market, and how they see inflation. On Thursday, U.S. consumer sentiment jumped to 79.4 from 76.9 in February and 62 a year earlier, making this its highest level since July 2021.

Joanne Hsu, director of the survey, said in the report that this number is an indication that consumers believe the economy is “holding steady.”

“As the election season progresses and debates over economic policy become more salient for consumers, their outlook for the economy could become more volatile in the months ahead,” she added.”

Kevin Kliesen, business economist and research officer at the Federal Reserve Bank of St. Louis, said consumer confidence and consumer sentiment are still far below pre-pandemic levels and that it’s a puzzle as to why when the economy has “been growing fairly strongly” in the past year and a half. But like Pancotti, he added that high prices at the store compared to pre-pandemic prices may be playing a role in those measures.

“If you’re like me, you look at something, and you go, ‘Oh my gosh. I remember when it was so much less before the pandemic.’ So I think that calls into question, probably, a lot of people’s perceptions of the overall state of the economy and importantly their consumer finances,” he said.

What can we expect from inflation and the Fed?

As the Federal Reserve looks to its favorite inflation measure, the personal consumption expenditures price index, economists are watching the PCE closely for signs the Fed will cut rates in the coming months. This policy change is expected to have effects on the housing market as well as the growth of businesses.

The PCE rose 0.3% from January to February and 2.5% over the past year, according to the? Bureau of Economic Analysis’s Friday release. Fed Chairman Jerome Powell responded to the news when he spoke at the San Francisco Fed and said the numbers were “in line with expectations” but not as reassuring as the numbers Fed officials saw last year.

Despite this reception from Powell, some financial experts believe inflation will ease up soon. Cristian Tiu, associate professor of finance at the University at Buffalo, said that although the economy is adding jobs, he doesn’t believe the quality of those jobs is high enough to sustain this price growth for much longer.

“Prices basically on consumer goods can’t be driven up forever just by the very top of the wage distribution. The rest of the wage distribution actually looks pretty modest. So I don’t think these price increases can actually be sustained,” Tiu said.

For this reason, he doesn’t think the Fed should continue to put brakes on the economy through restrictive monetary policy. Tiu added that he sees inflation as driven partly by corporate profit-seeking, with companies taking advantage of inflation to continue to keep prices higher than they can justify for the American consumer.

The Federal Reserve said Wednesday that it has insufficient evidence that inflation is slowing fast enough to justify a rate cut. Chair Jerome Powell said cuts are possible later in the year. (Photo by Anna Moneymaker/Getty Images)

The Federal Reserve declined Wednesday to cut interest rates, saying it remains uncertain inflation is slowing enough, but some economists warned the financial regulators risk waiting too long to make cuts.

Fed Chairman Jerome Powell said the Fed has a lack of sufficient data that inflation is slowing enough to justify taking the pressure off interest rates yet. The Fed started raising the federal funds rate in March 2022 to battle inflation and continued until the? latter half of last year, when it decided to pause rates

The Fed issued a statement that it is waiting until it “has gained greater confidence” that inflation is moving toward its 2% goal to begin cutting rates.

The Fed’s preferred inflation indicator, the Personal Consumption Expenditures Price Index or PCE for short, rose 0.3% from December to January compared to 0.1% from November to December, which some economic experts say may be partly behind the decision to hold off on rate cuts. The PCE climbed 2.4% from a year ago compared to 5.4% from January 2022 to January 2023, an indication that inflation has been slowing in the long term.

Powell said, “We believe that our policy rate is likely at its peak for this tightening cycle and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”

He added that the Fed does not want to ease too much or too soon if that would risk a chance that inflation returns. Powell did not rule out pausing the rate for longer.

Skanda Amarnath, executive director of Employ America, an economic policy research group, and a former analyst at the New York Fed, said the Fed should avoid being too reactive to monthly inflation data, particularly in January and February, which have been hotter months for inflation in the past few years. A lot of businesses revise pricing with the new calendar year, Amarnath added, which can contribute to the rise.

Powell acknowledged on Wednesday that seasonal factors could have affected the data but that they didn’t add to the Fed’s confidence in slowing inflation either.

“Inflation is a volatile beast. Month to month, it can do weird things. But by and large, we’re seeing if you look at the year-over-year change in the [Consumer Price Index] and PCE, you’re broadly seeing progress,” he said.

The economy has also not shown signs of overheating for some time, Amarnath added.

“From everything we’re learning from the past, especially the last three to six months, it is a more normalized pace of job growth, a more normalized pace of wage growth … It’s largely moved in totality towards a still respectable and strong labor market,” he said.

Rakeen Mabud, chief economist and managing director of policy and research at the Groundwork Collaborative, an economic think tank, said she is worried that the Fed could wait too long to cut rates and damage the economy.

“All the Fed can do at this point is break this really strong recovery that we’ve had … I’m worried now because rate hikes are a really imprecise tool that acts with lags. I don’t know exactly when the full impact of these rate hikes are going to play out and neither does Jerome Powell,” she said.

Amarnath said that because Fed policy, although it is far from the only factor, has played a role in the past three recessions, the Fed should be careful with how it uses the federal funds rate in its campaign against inflation.

“You may not need to cut at this very meeting. But if you press your luck a little too long in terms of ‘OK, the economy is not collapsing right this second,’ and if you wait till something breaks, it may prove to be too late,” he said.

Americans say their top policy priority this year is strengthening the economy, according to a Pew Research Survey taken in January.

The Fed’s interest rate policies also affect housing supply and affordability. Mabud said that the Fed’s approach to meeting one of its stated goals — lowering prices — is helping to drive up housing costs, which in turn affects inflation measures. The Consumer Price Index, another inflation measure, shows that in February, shelter and gasoline were responsible for more than 60% of the index’s rise.

“Shelter costs continue to be a significant driver of inflation,” she said. “We’re seeing high mortgage rates which are driving up the cost of buying a house, which then pushes folks back into the potential rental market, which also pushes rents higher. The Fed’s high interest rate regime is also making constructing new houses more expensive. We have a shortage of 6.5 million homes, at least, in this country.”

The number of people recorded as unhoused on a single night rose to its highest level in January 2023, according to U.S. Department of Housing and Urban Development data released in December. The department attributed the rise in the number of unhoused people to the rental market, which has had high rent growth, and the ending of programs implemented early in the pandemic to keep people housed during an economic downturn.

President Joe Biden delivers the State of the Union address during a joint meeting of Congress in the House chamber at the U.S. Capitol on Thursday, March 7, 2024, in Washington, DC. This is Biden’s last State of the Union address before the general election this coming November. Biden was joined by Vice President Kamala Harris and Speaker of the House Mike Johnson (R-LA). (Photo by Chip Somodevilla/Getty Images)

The White House retweeted Cookie Monster about it. The president made his own Super Bowl video about it.

And then President Joe Biden made it a point in his State of the Union speech: “Shrinkflation” must be stopped.

Biden said Thursday during his annual address that he is taking on corporations that are making more money by selling reduced amounts of their products but not lowering the price — giving consumers less bang for their buck. He’s also focusing more on practices of so-called price gouging that are weighing on American families’ budgets.

“Too many corporations raise their prices to pad their profits, charging you more and more for less and less,” Biden said. “That’s why we’re cracking down on corporations that engage in price gouging or deceptive pricing from food to health care to housing.”

The “less and less” Biden referred to is shrinkflation. “In fact, the snack companies think you won’t notice if they change the size of the bag and put a hell of a lot fewer — same size bag — and put fewer chips in it,” Biden added.

Heading into the general election after Biden and former President Donald Trump both racked up needed delegates to secure their parties’ nominations on Super Tuesday, Biden used part of his speech to focus voters on their pocketbooks. A recent Pew Research survey says Americans rank the economy as their No. 1 policy issue for 2024.

The Biden administration recently launched a joint task force of the U.S Department of Justice and Federal Trade Commission to focus on corporate pricing.

Some economists have argued that despite some of the labor and nonlabor costs easing, corporate profit remains high, suggesting that corporations are keeping prices much higher than necessary to make juicy profits. Corporate profits as a share of national income rose 29% since 2020 and drove 53% of inflation in the second and third quarter of 2023, according to Groundwork Collaborative’s analysis of Federal Reserve and Bureau of Economic Analysis data.

“What they’re doing during this period of high inflation is actually expanding their profit margins above and beyond historical averages,” said Lindsay Owens, executive director of Groundwork Collaborative, an economic policy think tank. “Companies have really been using the kind of cover of inflation and the fact that Americans expect prices to increase to go a little further than they needed to. And they’ve brought in really considerable profits as a result.”

The personal consumption expenditures index, a measure the Federal Reserve focuses on more in its fight to reduce inflation, moved up 0.3% in January and 2.4% in the past 12 months. Wages were up 4.3% over the past year, according to the February jobs report, outpacing inflation.

But slowing inflation doesn’t mean that prices are affordable for most Americans and research has shown that factors other than supply chain issues, the war in Ukraine and climate change — such as a corporate drive for profits — may play a role.

This is having an effect on common household products many families have no choice but to purchase. In the highly concentrated diaper market, Procter & Gamble and Kimberly Clark have helped keep diaper prices elevated for parents despite the cost of a major component of diapers falling, the Groundwork Collaborative report explained. The cost of disposable diapers in 2019 was 16.54 compared to $22.17 as of Feb. 24, according to NIQ’s consumer data. NIQ determines the cost by the average cost of a diaper package not by a specific package size of diapers.

Some economists have pointed out that these high profits during the economic recovery are nothing like the profits businesses have made in past economic cycles. Chief economist at the Economic Policy Institute, Josh Bivens, explained in 2022 that, “Evidence from the past 40 years suggests strongly that profit margins should shrink…”

During his speech, Biden shouted out a bill introduced by U.S. Sen. Bob Casey (D-PA) that he said would help address the problem. The legislation, which he introduced in February, allows the Federal Trade Commission to pursue regulations that establish it as a deceptive or unfair practice. Casey is also a cosponsor of the Price Gouging Prevention Act, which was reintroduced in February and would establish price gouging as an unfair or deceptive practice as well.

Edgar Dworsky, founder of Consumer World, a consumer resource guide, said companies use all kinds of tricks to deceive customers about the size of what they’re buying,? from deep indentations on the bottom of peanut butter jars and large cereal boxes with much smaller bags of cereal inside than packaging would suggest. Paper goods, candy, chips, orange juice, and specialty milks are some of the products that tend to be most subject to “shrinkflation,” he said, although corporations have broadly implemented the practice across product types.

As a consumer advocate who has been focusing on shrinkflation for many years, Dworsky said it was encouraging to see the president use his State of the Union speech to draw attention to the issue.

“I’ve been warning people about the downsizing of products and trying to raise awareness of it,” he said. “And to have the likes of the president and Cookie Monster come out and help raise public awareness about it, I just think it’s sensational.”

Construction workers build a residential high rise on Oct. 2, 2023, in Miami. Inflation is slowing and job growth has surged, but housing costs are still high, partly because of high demand, low inventory and mortgage rates. (Photo by Joe Raedle/Getty Images)

Inflation is slowing and job growth has surged, but many Americans still feel the burden of expensive housing – fueled in part by high demand, low inventory and mortgage rates.

Home prices across the U.S. rose 5.5% over the past year as of December 2023 and they are projected to increase 2.8% year over year by December 2024, according to CoreLogic, a consumer and business information company. None of the states in CoreLogic’s data showed home price declines.

Rents shot up 23.9% between the beginning of 2020 and the start of of 2023 and home prices rose 37.5% according to Harvard University’s Joint Center for Housing Studies’ 2023 state of the nation’s housing report. The median sales price of a home sold in the U.S. is $417,700, according to the St. Louis Fed.

Given the state of housing affordability in the U.S., here’s what to know about ongoing construction shortages, high interest rates, where housing prices are climbing, and what policymakers could do about it.

How did the housing market get this way?

Much of the current predicament renters and homebuyers face is linked to high housing demand, low housing inventory and the Fed’s cycle of hiking interest rates.

Very low mortgage rates – January 2021 saw the lowest recorded mortgage rate at 2.65% – fueled demand but drove up prices, exacerbated by low housing inventory, Matthew Walsh, economist at Moody’s Analytics explained. The Federal Reserve then raised interest rates in 2022 to combat inflation, which in turn influenced mortgage rates.

Those rates reached near 8% in October, and higher rates put constraints on housing supply, with more homeowners staying put. It’s now 6.77% for a 30-year fixed rate mortgage.

A lack of housing stock, both in for sale and overall inventory, is a key long-run problem for housing affordability, said Robert Dietz, chief economist for the National Association of Home Builders. A lack of accessible rental inventory that provides both single family and multi-family rental housing is a problem, he said.

“We simply don’t have enough developed land to build on, particularly in the places where it’s needed the most, which tends to be highly dense, more regulated markets in the largest metros where there’s a lot of population growth,” he said.

He added that a lack of? construction labor as well as expensive building materials – partly affected by supply chain problems – have exacerbated the problem.

A 2023 Home Builders Institute report found that construction would need to add hundreds of thousands of workers to meet residential construction demand. An HBI survey done in 2021 found that around 90% of home builders for single family homes said there was a shortage of carpenters and that more than 80% of remodelers said there was a shortage in most of the construction trades they needed subcontractors for.

What is the Federal Reserve doing with interest rates?

The Fed is expected to cut rates this year, which should have some impact on housing prices. The Fed may not cut rates until May or later, but economists have forecast multiple rate cuts this year.

Many homebuyers and renters are hoping that a cut in interest rates could provide lower home and rental prices, since a lack of homebuying can drive up rental costs.

But economists say there won’t be meaningful relief anytime soon.

“It should push mortgage rates down into the low 6% range and perhaps in 2025 moving into the high 5s,” Dietz said. “That’s not the 2 to 3% rate that we saw earlier, but it will help price in some demand by lowering the monthly payment on a hypothetical mortgage. It is going to have a disproportionate impact on first-time buyers who tend to be particularly sensitive to changes in rates because they don’t have any home equity as first-time buyers.”

Selma Hepp, chief economist at CoreLogic, said home prices will remain pricy for quite some time, even when mortgage rates come down.

“Because home prices have gone up 40%, no matter how much you adjust mortgage rates —? and we’re not expecting them to come down to 2% any time soon if ever again — you’d really have to get them to 2% to get that affordability back,” she said.

What are home price trends in different parts of the U.S.?

New Jersey, Connecticut and Rhode Island saw the highest home price increases in December, according to CoreLogic’s data, but no states saw home prices go down.

Hepp said that is significant because until this report, a couple states continued to show year-over-year declines: Utah and Idaho as well as the District of Columbia. She said that change may have been fueled by people moving from parts of California and from Seattle who drove up home prices in their new states.

A Moody’s Investor Service report released in October showed Florida, Montana, Nevada, and Idaho had the largest decline in affordability, due in part to growth in new residents.

But no part of the country is being spared by the effects of rising housing prices. Walsh said some of the fastest price appreciation he’s seen is in parts of the northeast and midwest because some of those markets are more affordable compared to parts of the country that saw an influx of residents earlier in the pandemic, such as metro areas in Mountain states including Colorado and Arizona

“The places where we’ve seen the most moderation in home prices have been in the places that lost that affordability edge…,” he said. “… Some of the fastest growing places in the northeast, like upstate New York, a place that really hasn’t seen quick increases in home prices in a long time, have been showing signs of life over the past year.”

How are policymakers helping?

Some states and cities are stepping up to the challenge of improving its affordable housing stock.

A program in Maine is funding more affordable rental housing, which includes the improvement of existing housing. Minnesota’s Family Homeless Prevention and Assistance Program is expanding rental assistance.

Voters in Phoenix and Albuquerque, New Mexico, last year supported bond measures that will spend millions on affordable housing. In 2022, voters approved housing bonds to fund more affordable housing for Buncombe County, North Carolina; Columbus, Ohio, and Kansas City, Missouri. Localities in Colorado and Montana voted to use tax revenues on affordable housing development and projects in 2023 as well.

On the federal level, the Biden administration announced in July it would address low housing supply by incentivizing projects with greater density and creating a program to fund projects that focus on zoning reforms. In October, the administration also introduced new housing initiatives to increase homeownership, such as loans to boost affordable housing on tribal lands and letting homeowners use prospective rental income from “dwelling units” at their home as part of their income when they want to qualify for FHA-insured mortgages. Some economists say that zoning is far too restrictive to increase housing supply and make it more affordable.

Government policies to address housing affordability should include “thinking about ways to incentivize state and local governments to reduce regulatory burdens and enact zoning reform to promote density where the market demands it,” Dietz said.

U.S. Federal Reserve Board Chairman Jerome Powell speaks during a news conference at the headquarters of the Federal Reserve on January 31, 2024 in Washington, DC. The Federal Reserve announced today that interest rates will remain unchanged. (Photo by Anna Moneymaker/Getty Images)

The Fed held key interest rates steady again Wednesday, as expected, and signaled that a decision that could affect everything from credit card rates to the housing market to new business creation could still be months away.

It was the fourth consecutive time the central bank has left the rate unchanged since its September 2023 announcement. In March 2022, the Fed began aggressively raising rates to stop ballooning inflation.

Following the announcement, Federal Reserve Chair Jerome Powell said that confidence is growing that inflation is coming down to meet the Fed’s target of 2%, it needs to see more data to decide to cut rates, particularly in the 12-month core inflation data.

But Powell said its confidence likely won’t be strong enough to cut rates by March as many economists believed would happen, meaning it could be May before a decision is made to cut rates.

“I think to get to that place where we feel comfortable starting the process we need some confirmation that inflation is in fact coming down, sustainably to 2%,” Powell said.

Powell added that serious changes to the labor market would affect the Fed’s decisions about when to cut rates.

“If we saw an unexpected weakening certainly in the labor market, that would weigh on cutting sooner,” he said. “And if we saw inflation being stickier or higher, or those sorts of things, we’d argue for moving later.”

The decision to hold rates steady was in line with economists’ expectations for the meeting. The issue of when to stop increasing rates and when to begin cutting rates, to avoid harming the economy and cause high unemployment, has been a matter of intense debate among economists and policymakers during this latest cycle of rate hikes. ver the past six months, core inflation or the Personal Consumption Expenditures price index is 1.9%, leading some economists to argue that it’s time to begin cutting rates.

Konczal said it would make sense for the Fed to begin cutting rates soon.

“[A cut] is appropriate given how much inflation has fallen, both faster and in a more broad way than the Federal Reserve thought even six or nine months ago,” said Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute, a progressive think tank. “The Fed is targeting a level of inflation that is just not the reality right now in the economy.”

The Federal Reserve has a pivotal decision to make in the coming months — when to start cutting interest rates after an aggressive campaign of rate hikes to combat inflation. Some economists worry that if the Fed doesn’t cut rates soon enough, now that the rise in core inflation over the past six months is in line with the Fed’s 2% inflation target, it could damage the labor market and send ripples through the economy.

There is some risk to waiting too long to cut rates, Konczal said. Although the economy is adding jobs and decent wage growth continues, he’s looking for signs of cracks underneath the surface of an otherwise stable labor market. He said that the rate for people leaving their jobs and being hired for new ones has slowed.

If the Fed waits too long to change course, he said there could be some danger of the unemployment rate ticking up too fast.

“Once those things start to fall, they fall very quickly,” he said.

Several Democratic senators have urged the Fed to begin cutting rates, arguing that it could hurt the economy not to do so as soon as possible, a reminder that the economy will be a big issue in the fall elections. Sen. Sherrod Brown (D-OH) , chair of the Senate Committee on Banking, Housing, and Urban Affairs advocated for Powell to lower rates in a letter addressed to the chairman this week.

Brown wrote his own letter, which highlighted the struggles of Ohioans he said are not able to rent or buy homes, a problem he said has been exacerbated by higher interest rates.

“I hear from so many Ohioans that they feel trapped – those who rent feel like they’ll never be able to afford to buy and those who already own their homes feel like they will never be able to afford a larger one if they decide to grow their family,” Brown wrote.

Sometime after the Fed cuts rates, Americans can expect to see relief in the housing market, where homeowners have struggled with low housing supply and high prices, and high demand for rentals that has also pushed up rental prices.

“The first place where we see the reaction in the economy is the housing market and is in those mortgage applications, like some refinancing, for example,” Lara Rhame, chief U.S. economist and managing director of FS Investments. “The other places we see it are things like auto sales, which are very interest-rate sensitive. It’s worth noting that credit card interest payments have really increased, but that doesn’t move until the Fed actually cuts rates. That’s a shorter term interest rate, but when the Fed cuts, that will start to come down a little bit.”

William Hauk, associate professor of economics at the University of South Carolina, said it could take a while for the average person to feel a shift in the economy as a result of Fed policy changes.

“How quickly this translates into changes for the rest of the economy is a matter of some debate. Making it easier for people and firms to borrow and/or refinance loans does typically have a positive impact on economic demand,” he said. “And people spending money is good for keeping the economy out of recession. However, this effect typically hits the broader economy with a lag, perhaps as long as 12 to 18 months.”

Wells Fargo is one of the major banks that would be affected by a new overdraft rule proposed by the Consumer Financial Protection Bureau. (Photo by Justin Sullivan/Getty Images)

The cost of overdrawing your bank account could ease considerably under a rule proposed recently by the Consumer Financial Protection Bureau. The proposed regulation is in line with a larger effort that the Biden administration has championed the past few years to crack down on “junk fees,” which are tacked onto everything from ticket prices to hotel bills.

The agency says roughly 23 million households use overdraft fees each year and while most consumers’ overdrafts on debit cards are less than $26, they usually have to pay overdraft fees around $35. Regulators are proposing instead three options for banks: They could offer overdraft loans that comply with lending laws, set a fee that reflects the actual cost or charge a standard fee set by the agency. And while regulators haven’t settled on that benchmark fee yet, amounts being considered range from a low of $3 to a high of $14.

The overdraft rule would apply to insured banks and credit unions with more than $10 billion in assets. The regulation, which has to go through a review and public comment period, would likely take effect in October 2025.

President Joe Biden called on federal agencies to come up with a plan for lowering and disclosing junk fees at a White House Competition Council meeting in September 2022, and in February of 2023, Biden devoted a portion of his State of the Union speech to his agenda on lowering junk fees. He said that although these costs may seem small to some, they are burdensome to many households. In financial services, these fees may include onerous overdraft fees or credit card late fees that the CFPB says are often profit-driven..

Marc Jarsulic, a senior fellow and the chief economist at the Center for American Progress, a progressive think tank, said deceptive and unfair fees are prevalent and that this is backed up by estimates of the cost to consumers when they can’t easily understand prices and compare them to other options.

“There’s a second kind of cost aside from this, the search cost, which is when you can’t figure out easily what the price of something is and what the price of alternatives or substitutes might be. … They can spend limited income on things that they normally wouldn’t if they knew what the relative prices were,” he said.

Although regulators and policymakers have been aware of the problems with junk fees for a decade or more, the prominence of this issue for the Biden administration and the awareness it brings to consumers is unusual, and putting it all into one non-industry specific effort is a substantial change from previous approaches, said Sharon Tennyson, an economist and a professor at Cornell University in the department of policy analysis and management.

“We’re all aware that we’re facing these fees and they’re a big annoyance but to actually get consumers to realize that, hey, this might even be an illegal practice, I think is an important advance of what we’re seeing in the new policy environment,” she said.

Tennyson said it’s fairly rare to see presidents talk about consumer rights.

“It’s highly unusual for presidents in these high level speeches to focus on citizens as consumers at all,” she said.

Credit card regulations, banking fines

The new overdraft regulations follow a rule proposed last year that aims to bring down credit card late fees, which the CFPB estimates cost Americans $12 billion each year. The rule, which could be finalized as soon as this month, could reduce those fees by $9 billion each year, the CFPB says. Under current regulations, a credit card company can charge $30 for a first late payment and $41 for subsequent ones, and up to 100% of the required payment, if it can prove the costs it incurs are higher than $41. But under the CFPB’s proposal, the late fee could never be more than $8 or 25% of the required payment, if the credit card issuer proves that its costs exceed $8.

Banking groups, including the American Bankers Association and Consumer Bankers Association, oppose the rule, claiming that it will make it harder for consumers to obtain credit cards and that consumers will be forced to turn to payday loans, which will end up costing them more money.

The agency also has released guidance for banks on what it calls “surprise depositor fees” and “surprise overdraft fees,” which they said may be illegal under the Consumer Financial Protection Act.

The crackdown on these types of fees has already had an effect on banks’ behavior.

“There have been financial penalties on individual banks that have caused banks to change their behavior and we’ll know more about that as the CFPB continues to monitor reports of abusive treatment of customers,” Jarsulic said.

In July, Bank of America was fined and ordered by the CFPB to stop charging customers repeat non-sufficient fund fees. Wells Fargo paid more than $2 billion to customers and $1.7 billion as a civil penalty in December 2022 for surprise overdraft fees and freezing accounts based on mistaken fraudulent activity. As a result, Wells Fargo has been ordered not to charge overdraft fees to banking customers who had money at the time of their transaction. The agency took a similar enforcement action against Regions Bank in 2022 for its surprise overdraft fees.

Regulating wallet apps

In addition to monitoring banks, regulators say they want to make sure that non-banking companies’ fees and other business activity adheres to the law as well. In November, the CFPB proposed a rule to apply the same banking safeguards it provides to banks — such as deposit insurance — to businesses like Venmo and Apple Pay that provide “digital wallets.” Under the regulations, the agency would be able to monitor these companies to make sure consumers’ rights to privacy and the transfer of money are being protected.

“What they’re saying is there are potentially deceptive practices, and that there is some risk that people are being surveilled by the operators of these apps in ways they might not like and that those data can be misused potentially by big digital firms to manipulate consumers algorithmically or otherwise try to influence their behavior,” Jarsulic said. “That proposal is essentially a beginning step to get the data that’s needed and figure out what’s going on in an area that is itself not transparent.”

Airport workers and supporters march during a rally at Ronald Reagan Washington National Airport on March 7, 2023 in Arlington, Virginia. The group, organized by the Service Employees International Union, is demanding Metropolitan Washington Airports Authority mandate paid sick leave and employer-paid health care for airport service workers at Washington National and Dulles International Airport. Virginia law does not require employers to provide paid sick leave. (Photo by Kevin Dietsch/Getty Images)

When the Minnesota legislature was debating a paid sick leave bill last year, business owners argued that such a law would not allow them to provide as many employee “perks” or be as “adaptive” to employee needs as they say they would be without such a requirement.? But a half dozen witnesses made a case for the need, with many workers sharing examples of the numerous times they had to work while ill.

Maria Vazquez, a member of a worker organizing group in Minneapolis, told lawmakers she frequently felt too sick to work her job as a housekeeper but couldn’t afford to not show up.

“And so there have been many times I have presented to work, not only with a high fever but to the point where my legs could barely support me and people would ask me why are you working and there wasn’t really a choice without the sick and safe time,” Vazquez said.

The earned sick and safe time bill ultimately passed and the law went into effect this month. Another bill providing paid family and medical leave also passed last year but takes effect in January 2026. Minnesota joins 14 other states and the District of Columbia that now require paid sick days. Meanwhile 13 states and DC provide paid family leave and medical leave, which provides for longer time off, according to KFF. Washington, which has had a paid sick leave law since 2018, has updated its law to cover accrual of sick time for construction workers, to take into account that these employees may have multiple employers in a short period of time. Those changes took effect Jan. 1. California workers recently won an increase in the number of paid sick days employers must provide, from three days to five days. In July, Chicagoans will be able to get five sick days each year.

And while there are still plenty of states like Kentucky that offer no paid time off — either for sick days or family and medical needs — the political momentum for paid sick leave is continuing in other states this year. Policy experts say that momentum may eventually force the federal government to pass federal legislation as more people recognize the economic value of paid sick leave.

Advocates for paid sick time in Alaska, Nebraska and Missouri are pushing ballot initiatives this year. The group Paid Sick Leave for Nebraskans wants to see full-time workers enjoy a minimum of five to seven days of paid sick time and for other employees to receive some paid sick time as well. Missourians for Healthy Families and Fair Wages has launched a campaign to get paid sick time and an increase in the minimum wage on the ballot this year in their state. The amount of paid sick time for employees would correspond to their hours and employer size.

Policy advocates and economists say a lack of paid sick leave, which tends to impact the most economically unstable workers, forces workers to choose between financial stability and their own wellness as well as the health of their family and coworkers.

The issue is particularly pressing this month as respiratory viruses are surging. According to the Centers for Disease Control’s Jan. 5 update on respiratory virus activity, which includes the flu, RSV, and COVID-19, shows that visits to the emergency department are “elevated in all age groups” and rising, with the exception of school-aged children. Wastewater levels indicating infections are 27% higher. Hospitals are reporting a rise in COVID-19, flu, and RSV cases, including in Michigan, Ohio, Maryland, and New Jersey.

COVID-19 driving discussions

Molly Weston Williamson, senior fellow at the Women’s Initiative at the Center for American Progress, said the COVID-19 pandemic played a part in driving the policy discussion about paid sick time.

“The pandemic placed a new level of attention on the need for paid sick leave, driving home the critical public health stakes as well as the economic and human costs of the status quo — a need only underscored by union action like the rail workers’ fight for paid sick leave,” she said. “That led to increased policy attention, from temporary COVID paid leave at the federal level in 2020 to new and expanded state and local protections.”

To improve these working conditions, some Democrats and labor advocates are advocating for the passage of legislation such as the federal Healthy Families Act, which would provide a national right to earn time off that is job protected and provides a way to calculate the accrual paid sick time, and the FAMILY Act, which provides paid family and medical leave benefits. (The Family Medical Leave Act, or FMLA, which was passed by Congress in 1993 over opposition from the business community, requires employers of a certain size to only offer unpaid family leave.)

A House bipartisan family leave working group has released a framework for legislative options for paid leave, such as public-private partnerships for state-run programs and paid family and medical leave tax credits. A federally funded program for paid leave was not included in those options.

In the past, Republicans on the federal level have disagreed with Democrats over how broadly to provide family and medical leave and how to fund that leave.

Sherry Leiwant, co-president and co-founder of A Better Balance, said that the released framework is a good step toward advancing more worker-friendly policies in Congress.

“Maybe the Republicans are coming around to recognizing that this is really important to people.”

And with more states passing laws on paid sick time, Leiwant said businesses may be realizing that they need more consistency, especially if they operate across state lines.

An economic necessity

The need for paid sick days to help stabilize workers’ finances is clear through the data, according to an Economic Policy Institute report released in November. Compared to 63% of private sector workers having access to paid sick days in 2010, 78% now do and during the same period, the percentage of the lowest wage workers who had paid sick days almost doubled, the think tank found. The report’s authors also calculated what workers would be giving up in housing, groceries, transportation, and other essentials for their unpaid sick days.

“If we think about taking off work without any assets or savings, that could have a very big impact on the family budget,” said Hilary Wething, an economist at the Economic Policy Institute, and one of the report’s authors. “If a worker loses wages for taking off five days for example, if they have RSV or their kid has RSV that could be their entire grocery budget for the month. If they take three days off, it could be the entire monthly budget of utilities and two days could be a monthly budget of gas, which could make it difficult to get to work. You can see how a series of events could cascade for them and become a much bigger problem than it had to be.”

State Republican lawmakers and business groups have often argued that paid family leave and paid sick time is a burden on businesses and may reduce workers’ benefits. But Wething said such arguments against paid sick time are not supported by the available research and that the stability in both the health and finances of workers could also benefit employers.

“If we have a healthier workforce, we have a more productive workforce and we have to remember that every sick worker can reduce businesses’ productivity,” she said. “I think a federal mandate allowing more people the opportunity to earn paid sick leave, essentially by having fewer people show up to work sick, will have an effect on the economy writ large from a public health perspective that’s going to be great for employers’ bottom lines.”

Williamson of the Center for American Progress, said it’s about time that the federal government learned from the effects of the COVID-19 pandemic and passed the Healthy Families Act.

“We know that paid sick leave works — for workers, for businesses, and for the health of our communities,” she said. “And yet, as we approach four years since a deadly pandemic hit our shores, at the federal level, the United States still does not guarantee a single day of paid sick time.”

The health care industry continues to add jobs, in part because of the U.S.’s aging population. (Photo by Mario Tama/Getty Images)

Friday’s jobs data showed a strong, resilient U.S. labor market with wages outpacing inflation — welcome news for Americans hoping to have more purchasing power in 2024.

The December jobs report unveiled another unemployment rate below 4%, as it has for two years, at 3.7%, the same as it was for November. The economy added 216,000 jobs, many of which were concentrated in health care, local government, construction and social assistance, which includes child care, social workers and home care aides, according to the Bureau of Labor Statistics data.

Democrats celebrated the news and took it as an opportunity to voice their frustrations with Republicans as policymakers grapple with another possible government shutdown over U.S.-Mexico border policy and other issues. Congress has deadlines of Jan. 19 for four government spending bills and Feb. 2 for eight government spending bills.

President Joe Biden stated on Friday morning that the jobs data “confirms that 2023 was a great year for American workers.

“The strong job creation continued even as inflation fell to the pre-pandemic level of 2 percent over the last six months …,” he added.

Rep. Bobby Scott (D-VA), ranking member of the House Committee on Education and the Workforce, touted the strong jobs report and stated, “Now is not the time to reverse our progress on the economy. I remain committed to opposing any effort that gambles with the lives of everyday Americans in order to engage in political grandstanding.”

Economists and data analysts provided States Newsroom with their takeaways on key news in the report, from wages to job growth in healthcare.

Wage growth and cooling inflation provide relief

Wages are outpacing inflation, with average hourly earnings increasing by 15 cents and rising by 4.1% over the past year, well over 3.1% inflation. With inflation coming down fairly quickly, wages are solidly above inflation, economists said.

Moody’s Analytics Chief Economist Mark Zandi said wage growth is now firmly above the rate of inflation, which means people’s real purchasing power is improving.

“They got creamed back in 2021 and particularly in 2022 when inflation outpaced wages,” Zandi said. “And I think that’s one reason why people are so uncomfortable with their financial position, but that’s improving now and improving very quickly as wage growth remains strong and firm and inflation is lower and continues to moderate.”

Elise Gould, senior economist at the Economic Policy Institute, added that lower wage workers in particular have seen that increased purchasing power for longer.

“For the last six months, the average hourly earnings for private sector workers has been beating inflation so their purchasing power has increased and on average, over the last few months, we also know from other data that lower wage workers have been seeing stronger wage growth,” she said. “They’ve been beating inflation for a lot longer. Overall, the purchasing power has certainly been increasing as inflation has been coming down faster.”

Health care and government continue to add jobs?

The government workforce grew by 52,000 people with the majority of those jobs — 37,000 — in local governments.? According to the Bureau of Labor Statistics, the average gains of jobs per month in 2023 was more than double the average for job growth in 2022.

Gould said there still seems to be room for government employment to continue to grow.

“We still have a lot of catching up to do there because when we think about government employment, it has not kept up with population growth in any way,” she said. “You would think that the services that are being provided by the government would need to grow even more. So I think there’s a fair amount of room there that we are not back to normal in that sense.”

Health care also continues to see job growth, which Gould expects to continue partly because of the U.S.’s aging population. Health care jobs rose by 38,000 in December. Ambulatory health care services and hospitals added 19,000 jobs and 15,000 jobs, respectively.

Zandi sees these sectors as mostly playing catchup after the private sector crowded out some of these jobs during the recovery by offering higher pay.

“Private businesses were willing to pay up big wage increases to hold on to workers and hire new ones,” he said. “And that was impossible for local governments or for hospitals to keep up with. But now that the private sector is fully recovered, we’re now starting to see these other sectors be able to hire again, find workers and bring them on the payrolls.”

Economists watch for signs of a slowdown

Economists had mixed responses to the changes in the labor force participation rate and employment-population ratio, which both fell 0.3% percentage point in December. The labor force participation rate sheds light on the economy through the percentage of working age people in the labor force, which includes both those actively seeking work and people who are currently employed. The employment-population ratio shows the number of people employed as part of the working age population.

Gould said she’s watching this data closely to see whether these changes are a source for concern but she says it’s important to keep in mind that unemployment is still very low.

“Is that just volatility in the series or is there something to watch for?” she said. “…It’s not indicative of some huge problem but it’s something we want to keep watching. I didn’t like the drop in employment, particularly prime-age employment and participation is soft.”

Zandi said it’s hard to read too much into any month-to-month change in this data yet but that the labor market is slowing down a bit.

“I think the general pattern in the data shows that the job market is resilient, continues to create lots of jobs, and unemployment remains low. But it is throttling back. Job growth is definitively slowing and other measures of the strength of the labor market are, are moderating. You’re seeing fewer hours of work and temp employment is declining,” he said.

On the labor force participation rate, Zandi said he suspects that participation is not going to continue to rise.

“Boomers are retiring en masse and that’s going to wash out any increase in participation by other groups. Broadly speaking, I think the report is consistent with an economy that remains strong but is slow and consistent with getting inflation back to something we all feel comfortable with,” he said.

Trends in state pay

Data released by ADP, a payroll processing firm, on Thursday, confirmed Zandi’s view on a cooling labor market as pay increases for people staying at their jobs were down in December from November. ADP’s median year-over-year pay change was higher in states such as Montana, where pay shot up 8.2% and Idaho, where pay rose 7.5%. New Mexico and Arizona also had higher increases in pay compared to many other states at 6.7% and 6.2%. Washington, Oregon, Wyoming, North Dakota, and South Dakota also had pay growth over that time period.

Liv Wang, lead data scientist at the ADP Research Institute, told States Newsroom that ADP saw higher pay growth for lower-paid workers during the recovery.

Wang added in an email, “….some of the states with higher percentage increases in pay have lower median pay levels. This is true for some states in both the Northwest and Southwest. This same trend also applies to the Leisure and Hospitality industry, which has been leading pay increases. However more broadly, pay gains have slowed down recently and the pay premium for changing jobs has been falling.”

When pandemic rental funding and protections ended rents soared across the country and many people became homeless for the first time. New programs proposed by states and Biden administration aim to reverse that trend. (Photo by Joe Raedle/Getty Images)

Maine’s housing authority received $35 million in 2023 — the first time in 54 years it has received a direct appropriation from the state budget — to help build more affordable rental housing for communities that have struggled to keep up with high housing prices.

The state’s program provides funding to developers for affordable housing projects with between five to 18 units, a size that housing advocates say is sorely needed in many rural communities. That includes construction for new housing, reuse of buildings for housing, and rehabilitation of existing housing.

Mark Wiesendanger, director of development at MaineHousing, said that as the Federal Reserve raised interest rates it was difficult for the independent state agency to support itself at the level the program needed, but that political leaders saw the value of their work and were able to make the historic investment because of a $141 million budget surplus.

Wiesendanger said there’s a lack of housing across the income spectrum in the state, which has some of the oldest housing stock in the nation. He said some of the housing needs to be condemned and replaced, and that much of it is inefficient to heat. To make matters worse, when the pandemic began and many people with the ability to telecommute moved to the state, the population shift drove up housing prices and wages didn’t keep up.

“[The coast of Maine] is a very expensive place to live,” he said. “Folks that work there as fishermen or people who work in the local restaurants, local mechanics and firefighters, have a hard time paying to live in those towns.”

The scenery may be different from state to state but the housing landscape is much the same across the country: People are struggling to find a home they can afford. Legislators, state agencies and the Biden administration this year proposed a raft of legislation and programs to tackle the problem. Advocates say states need to do even more to prioritize housing needs.

The problem renters are facing

From January 2019 to January 2023, the average rent in a U.S. city shot up 19.38% according to St. Louis Fed data. In 22 states and the District of Columbia, people need a wage above $26 an hour to afford a two-bedroom rental home, according to the National Low Income Housing Coalition. According to rental data from CoreLogic, a company that analyzes property, financial, and consumer information, the median renter household pays $500 more than it did in 2020.

The combination of high mortgage rates and low housing inventory contributed to those soaring rental prices which hit just as the federal programs and protections put in place during the COVID-19 pandemic ended.

Andrew Aurand, senior vice president for research at the National Low Income Housing Coalition, said long-standing problems in the housing market were exacerbated by rental inflation in 2021 going into 2022.

“We saw that massive increase in rental inflation that fortunately has flattened now and rent prices have stabilized, but the damage has been done in terms of higher rents for those lowest income renters,” he said.? “… General demand for rental housing has increased quite significantly over the past decade. And so that has squeezed the lowest income renters even more as demand for rental housing has been pretty significant. It’s taken quite a while for supply to catch up.”

As rents went up, the number of people without a home also increased. U.S. homelessness, as measured by a single night in January 2023, rose 12% from last year, according to a U.S. Department of Housing and Urban Development report released on Dec. 15.

But as Aurand noted the situation is starting to show signs of improvement.

There has been an increase in privately-owned housing units under construction this year, from 932,000 in January 2023 to 988,000 in November 2023. In 2022, the Biden administration released a plan to increase the housing supply, which included expanding federal financing of loans for affordable multifamily development homes and removing a cap for larger loans to build and rehabilitate certain homes.

But Mari Castaldi, director of state housing policy at the Center for Budget and Policy Priorities, said that it’s up to states and localities to prioritize housing. States have recognized this, with lawmakers introducing more than 2,500 bills related to housing and homelessness this year in 49 states and D.C., Puerto Rico, the Virgin Islands and Guam, according to the National Conference for State Legislatures. This is almost twice the amount of bills the legislatures introduced in 2022. Ninety-three bills specific to rental assistance were introduced in 27 states this year compared to 56 bills in 12 states in 2022. Expect more of the same in the coming year. New Jersey lawmakers introduced an affordable housing “fix” just ahead of Christmas, and New Hampshire legislators have prefiled numerous bills aimed at adding more affordable housing for their session that starts on Jan. 3.

“What we’re seeing is that more and more, given the political dynamics in Washington, D.C., and particularly the debates around the debt ceiling, the prospects for sorely needed expansion of investments in affordable housing resources is uncertain at best,” Castaldi said. “We’re seeing, really out of necessity, and based on the needs in their community, states are starting to step in and try to begin filling those massive gaps.”

Affordable housing solutions across the U.S.

The number of these programs vary greatly from state to state. New York, Minnesota, California, Massachusetts, and Illinois had the most rental housing programs in the U.S., with more than 17 programs, according to an October National Low Income Housing Coalition report, and Oklahoma, Alabama, Idaho, and Montana were among the states with the fewest, with one to seven programs. The organization found zero programs in Arkansas and Wyoming but cautioned that this may simply mean there is no online information about them, not that they absolutely do not exist in these states. The Arkansas Development Finance Authority told States Newsroom that it administers a state Low Income Housing Tax Credit Program similar to the federal program that encourages affordable rental housing development.

Aurand said some states and cities are also finding creative ways to support affordable housing efforts, and Denver, Colorado is one example. The city’s marijuana tax revenue provided $8.7 million for affordable housing assistance this year. One downside of this approach, however, is that it is dependent on those sales, which have been falling.

The funding for these programs comes down to the political will to fund programs as well as funding existing resources to support them, housing advocates said.

“Generally speaking, the states with the largest number of programs tend to be more socially progressive in terms of government programs, so I do think that plays a factor,” Aurand said. “Given that we focus on extremely low income renters, it takes a lot of resources to adequately serve the lowest income population to meet their needs.”

States can also come up with solutions that are more tailored to their particular housing needs. Wiesendanger of MaineHousing explained that although the U.S. Department of Housing and Urban Development’s Low Income Housing Tax Credit program is helpful for addressing rental affordability in Maine, it has its drawbacks. It can be hard for some developers to use the program to build more affordable rental housing, he said.

“It requires a certain amount of scale to work because there’s so many fixed costs in those projects — design fees, legal fees, things of that nature,” he said. “… So in these rural areas where, let’s say, they need 15 units in a town, but these projects really need to be 20, 30, 40, 50 units to work, it’s really hard to make that program work there.”

He said the Maine program also comes with fewer requirements so that less sophisticated developers can use it.

Finding the political will

Minnesota’s approach to affordable rental housing targets many different populations with smaller programs, such as Bridges Rental Assistance, which focuses on people and families where at least one person has a serious mental illness. The program assists them while they wait to get into another housing program, such as Section 8 housing. The Homework Starts with Home program is designed to help children stay in their school through supporting their family’s housing.

Housing advocates in Minnesota would still like to see larger programs, however, to serve the full needs of people in the state. According to Minnesota Housing Partnership’s analysis of 2021 Census data, more than three-quarters of low-income people in the state are spending more than 30% of their income on housing costs, which means they are “cost-burdened.” Fifty-seven percent of Black renters were cost-burdened compared to 45% of white renters. Sixty-three percent of seniors had to spend more than 30% of their income on housing.

Elizabeth Glidden, deputy director of Minnesota Housing Partnership, said she’s seeing more political support for rental assistance in Minnesota than in? other states. She said these conditions may have been influenced by a very large budget surplus, which she said has made it easier to bring more attention to housing. But she added that she has also seen more bipartisan support for affordable housing than in the past.

“Does that mean that we are meeting the need? It doesn’t mean that we are meeting the need. It just means that there has been over time and, across bipartisan lawmakers, you’re seeing more attention that has been spent on meeting housing needs than some other locations around the country,” she said.

The Family Homeless Prevention and Assistance Program, which helps tenants with rent deposits and rent payments, is an example of that shift, since the program once was funded at $20 million for two years to serve the entire state but has been dramatically expanded this year. In March, the Senate voted to provide $50 million for the program, which received bipartisan support, and Minnesota’s Democratic Gov. Tim Walz signed the bill into law later that month.

Jewelean Jackson, 74, has lived in Minneapolis for about 50 years, and is an advocate for changing housing policy in the city. Jackson has received housing assistance that she said was vital to ensuring that she didn’t become unhoused again. Jackson said she has been living in a one-bedroom apartment for the past three years. Before getting the apartment she spent eight years living in shelters or her car, but was able to avoid living in an encampment, she said. She was worried about losing housing again when her rent increased from about $270 a month to almost $500 a month in 2022 but was able to stave off eviction from December 2022 to March 2023 with rental assistance funds.

“Society always all of a sudden discovers that it has this heart when there’s a tragedy,” Jackson said of changes in housing policy that started with the COVID pandemic. “And so as a result of COVID, it has loosened the system’s strings. It has not been as difficult to get in and out of some of the programs and people have been a little bit more sympathetic as a result of COVID. But we’re a far cry from being where we need to be in terms of homelessness in this country, including Minnesota.”

Economists told States Newsroom that they don’t expect consumers to change their spending habits enough to hurt the economy in 2024. (Photo by Justin Sullivan/Getty Images)

Next year is packed with potential shifts in the economy but many economists and investment analysts expect that the country will likely avoid a recession in 2024 even as growth slows in the first half of the year.

States Newsroom talked to economists about their expectations for some key metrics as well as their concerns about what could change their outlook.

The job market will remain strong but not as hot as 2023

The unemployment rate has remained below 4% for nearly two years, with the unemployment rate falling to 3.7% in November. But hiring has cooled off from the start of the year and retail employment dropped by nearly 40,000 jobs in the most recent jobs report, which leaves the question: How stable will the labor market be in 2024?

Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute, a New York-based think tank, said that although there has been a slowdown in the hiring rate, there have not been many layoffs, which bodes well for next year if the Federal Reserve does not “overshoot” in its efforts to slow the economy. The Fed has paused its campaign of raising interest rates, which it began in March 2022, and economists expect the central bank will hold rates steady when it meets Dec. 12-13.

“Imagine the unemployed as a pool of water. Instead of more unemployed people going in, it’s just draining a little less. That’s a different kind of dynamic,” he said. “We normally are used to, in a slow labor market, hires essentially just stop and layoffs increase. Some people pointed out that a lot of the change in employment has happened among younger people. It’s not been a broad-based slowdown in 25 to 54 year-olds.”

Mark Zandi, chief economist of Moody’s Analytics, said he thinks the labor market for 2024 will remain stable and that job growth will be resilient but slow.

“I think 2024 should be an OK year for workers — still plenty of jobs and low unemployment and while wage growth will moderate, it should remain strong enough to outpace inflation,” he said.

According to the Bureau of Labor Statistics in November wages rose 4% over the past year, compared to inflation which has been easing with November’s report showing overall prices rising 3.1% over 12 months, and down from 3.2% in October.

Jesse Rothstein, professor of public policy and economics at the University of California Berkeley, said the strength of the labor market partly depends on how successful the Fed’s interest rate policies are.

“If inflation is coming down and unemployment isn’t going up, and they can continue this tight roadblock, I think we’ll see the economy cooling off a bit and wages continuing to increase, to catch up to the inflation that we saw over the last couple of years, but not dramatically outpace that,” Rothstein said. “ … If they’re not successful, the risk is that they overtighten and tip us over into a recession, but thus far there’s no sign that that’s what’s going on.”

Workers will have the power to keep organizing?

Workers in retail, auto-manufacturing, media, and shipping have made news through their labor organizing this year, particularly during what was dubbed the “hot labor summer,” when thousands of workers went on strike or heated up contract negotiations with threats to strike. The tight labor market and greater profits in some industries gave workers the power to demand better working conditions, higher wages, and contracts that were more inclusive of lower-paid workers, and that’s not expected to change in the coming year.

For workers to lose significant leverage in their fights for safer workplaces and higher wages the unemployment rate would have to rise significantly, Konczal said. Organizers will also still enjoy the advantage of a very pro-union National Labor Relations Board, he said.

“When I think more about the background conditions for which workers can exercise some power, I think the issue is less like 3.9% versus 3.6% unemployment, but whether or not the unemployment rate is in the threes or in the fives or sixes or sevens,” he said. “The labor market as a whole is still going to be a strong input to the resurgent labor campaigns.”

He does have some concerns about whether the service sector is going to face headwinds in its workers’ efforts to organize unions as employment starts to slow for these jobs.

“Then again, if demand remains robust and workers do have an edge, I think they will still have the opportunity to push further,” he added.

The housing market will continue to be a challenge?

Federal Reserve policy changes and pent-up demand for homes will result in an even more competitive housing market in many states, and continuing challenges for people seeking affordable homes and rentals. However, some U.S. housing markets, particularly in the Sun Belt, will see housing prices stabilize. Prices will increase, but less quickly than in the past, as they come down from the unsustainable growth they experienced earlier in the pandemic.

Selma Hepp, chief economist for CoreLogic, said, “This year when mortgage rates were slightly below 6%, we had quite a bit of surge in demand, so that’s telling me there’s quite a bit of pent-up demand out there but people are sitting on the sidelines and waiting out for mortgage rates to fall.”

She said baby boomers and first-time homebuyers are the biggest competitors in the housing market right now. With mortgage rates coming down slightly, first-time homebuyers have a higher share of the recent mortgage application growth, she said. Those buyers leaving the rental market will, in turn, affect rental prices.

Hepp said that while rents will continue to rise in 2024, they won’t shoot up as they have in the past few years and will begin to moderate in price.

“Historically, rents are up on a 3% year over year basis and I think what’s what we’re going to revert back to, the reason being because folks who are priced out of the market for purchase are going to bring in renters or remaining renters because they’re not ready to buy or there isn’t inventory out there,” she said.

Zandi said that he doesn’t think the housing market will become affordable for many of the Americans currently priced out in the next year.

“I think we need to see some modest price declines but that’s going to take some time because all those people who have 3.5% mortgages are going to be very reluctant to move. They’re only going to move when they have to divorce, death, children, or a job change and that could take some time,” he said. “It’s not that I think the worst is at hand in terms of home sales and affordability, but I don’t see the market becoming affordable to most Americans any time soon, certainly not in 2024.”

The Midwest will also continue to see some increased housing demand because of the federal government’s investment in semiconductor manufacturing, Hepp said.

Consumer spending will ‘push the economy forward’

Konczal and Zandi said they aren’t concerned that there will be enough of a significant change in consumer spending to hurt the economy in 2024, and that so far, they are encouraged by what they see. Core prices, which excludes food prices and energy, rose 0.3% in November, up slightly from 0.2% in October, keeping the increase for the year at 4%. But neither Konczal or Zandi see this as cause for alarm.

“In aggregate, there’s still a lot of strong savings and strong spending,” Konczal said. “Obviously for many people, too many people, [savings] and other things are a real concern. But when we’re looking at the economy as a whole, it does seem like the spending is remaining quite strong and financial conditions haven’t deteriorated either. … I think there’s every reason to assume that it will continue, especially if the Fed is willing to take yes for an answer with the fact that they brought down inflation.”

Despite higher housing prices, the financial health of many Americans has improved, Zandi said.

“People are still a lot wealthier than they were before the pandemic hit and in the high-income households, low-income households, folks in the top two-thirds of the distribution of income, still have a lot of extra savings they built up during the pandemic that they appear willing to use when they need to to maintain their purchasing power,” he said. “I think that the consumers are not going to spend with abandon and that’s good because that would be the fodder for inflation and more rate hikes. But I think (they’ll) just do their part and continue to push the economy forward.”

What could go wrong?

Economists said that there is potential for economic gloom, depending on the political outcomes next year. Although the general election is about a year away and the numbers could change significantly between then and now, some polls have shown President Joe Biden and former President Donald Trump running neck-and-neck. The political and social upheaval that close results could bring, could also spell economic turmoil in 2024.

“It feels like it’s going to be very close and therefore the potential for it being contested is very high and there’s no upside to that,” Zandi said. “It’s just a matter of how much downside there will be, how much social unrest and violence there will be. Hopefully we have none … But that’s certainly something to watch for sure. It is a risk to my optimism about the economy in 2024.”

He said that some of these worst-case scenarios could impact the stock and bond markets.

“A close and contested election could result in social unrest that would manifest most quickly and significantly in the stock and bond markets. Given how fragile consumer and business confidence already is, this could upend it, causing consumer spending and business investment to falter, and a recession ensue,” he said.

Rothstein, the Berkeley professor, said a repeat of a candidate refusing to accept their loss, as Trump and his supporters did in 2020, could be a major issue for the country, and although the economy isn’t his first concern when assessing the potential damage, it could pose a “big problem” for financial markets.

In addition to worries about the economic impact of the presidential election, economists are keeping their eye on the risk of a government shutdown. Although it was averted this year with approval of a stopgap spending bill, Congress is staring down deadlines in January and February to work together on spending bills to avoid a shutdown.

“I think a government shutdown is always a threat to the economy,” Rothstein said. “If it’s shut down for more than a couple of days, you end up with huge impacts that ripple through the economy and it may cause a recession. Even if it doesn’t cause a recession, it definitely makes our economy more fragile and poorer. So I think we have to hope that the signs that we’ve avoided a shutdown so far will continue.”

States rely on federal funding for programs that can aid the disabled. Advocates say changes proposed by the U.S. Census Bureau could undercount the number of people with disabilities and decrease the funding each state receives. Here Prosthetist Erik Lindholm adjusts a prosthetic leg for 75-year-old Karl Sowa on Nov. 10, 2021 in Hines, Illinois. (Photo by Scott Olson/Getty ImagSes)

The Census Bureau has proposed a major change to disability questions on its annual American Community Survey that advocates say will reduce the number of people who are counted as disabled by 40%, including millions of women and girls. The change in available data could affect federal funding allocations and the decisions government agencies make about accessible housing, public transit, and civil rights enforcement, they argue.

Catherine Nielsen, executive director of the Nevada Governor’s Council on Developmental Disabilities, said having correct data is vital not only because it helps identify gaps in the system but because it affects federal funding levels.

“Many providers are not reimbursed at 100% for the services they provide,” Nielsen said. “When we take into consideration this cut to the data, we’re essentially saying we have even less people that will qualify for support. If we have less people that qualify, that in turn tells the Feds they have less of a need to support these programs. The snowball effect of such a significant change will be greater than most can even anticipate at this time.”

Although some opponents of the change have said that the ACS disability questions needed revising because the survey currently undercounts the number of disabled people, they say they are worried that the new approach is worse.

Instead of the current yes or no answers to the six disability questions on the survey, respondents will be asked to provide a range of responses on how difficult it is for them to perform certain functions. The Census Bureau is recommending that only people who answer “a lot of difficulty” or “cannot do at all” be considered “disabled” by federal terms, advocates say.

“Part of the issue with what they proposed is they are asking this scale and then excluding every person who says they have some difficulty in terms of these functions. Even if you say you have some difficulty with all of these functions, you would not be included as disabled,” said Kate Gallagher Robbins, senior fellow at the National Partnership for Women & Families. “What does ‘some’ look like? Is that some of the time or some difficulty all of the time? For my own dad, who had a stroke and walks with a cane and a brace, is that difficulty for when he has those mobility aids or absent those mobility aids?”

The Census Bureau has stated that the revised questions will “capture information on functioning in a manner that reflects advances in the measurement of disability and is conceptually consistent with” the World Health Organization’s International Classification of Functioning, Disability, and Health framework. The changes “reflect the continuum of functional abilities” and include a new question that includes psychosocial and cognitive disability and problems with speech, according to the notice for public comment.

Time for comment

When a federal agency proposes rules or changes to a standing process, it typically has a public comment period. The Census Bureau goes through a very long process where it tests the questions. Then it asks for public comment from stakeholders. The deadline for comments on the disability questions as well as other changes to the American Community Survey, which include asking about electric vehicles and changing the household roster questions, is Dec. 19.? Many organizations focused on civil rights issues, including disability advocacy groups, are weighing in.

The Consortium for Constituents with Disabilities, which includes 100 groups, commented that the new approach will likely miss identifying many people with chronic conditions and mental or psychiatric conditions.

The National Partnership for Women & Families, joined by more than 70 groups, including many state entities such as the Alabama Disabilities Advocacy Program, Disability Rights Iowa, and Nevada Governor’s Council on Developmental Disabilities, also has commented. They say that there was not enough consultation with the disabled community and that the changes are overly restrictive, which could affect disaster preparedness responses, emergency allocations for the Low Income Energy Assistance Program (LIEAP), enrollment efforts for Medicaid and funding for State Councils on Developmental Disabilities.

Who will be left out

The National Partnership for Women & Families released an analysis on Dec. 5 that estimated the new questions would leave out 9.6 million women and girls with disabilities. The organization notes that women are more likely to have disabilities related to autoimmune disorders, chronic pain and gastrointestinal disorders.

Robbins said she’s concerned about the effects this will have on people who apply for help paying utility bills or who rely on Medicaid.

“When people go to apply for those [LIEAP] funds, what is going to happen? Are there not going to be enough funds left? Will they do another application?” she said.

States are also going through the process of unwinding a pandemic-related Medicaid policy, which allowed people to stay enrolled in Medicaid without going through a renewal process. People who are no longer eligible for Medicaid or couldn’t finish the renewal process are being disenrolled. Robbins said data excluding many people with disabilities could affect efforts to re-enroll people.

“People are losing their Medicaid and we’re in a situation where we don’t know how to figure out who needs Medicaid and [Children’s Health Insurance Program] and direct our efforts to make sure people don’t lose health insurance,” she said.

Eric Buehlman, deputy executive director for public policy at the National Disability Rights Network, has a disability that includes not having vision from the left side of his face and attention issues, according to the organization’s website. He said the new questions could affect him and other people with disabilities who use public transportation if the data doesn’t show a need for more paratransit programs.

“I’m not supposed to drive, so I use public transportation to go everywhere. But under these [current] questions, I would have checked yes, for a person with a disability as they currently are. But under the way these [new questions] are, I’m not sure I would consider myself to be incapable of doing any of the six questions listed,” he said.

Buehlman said this could hit areas of the country that are more impoverished, which likely have a higher level of people with disabilities, harder than others. The connection between poverty and disabilities have been well documented, including by the Census Bureau. Its Supplemental Poverty Measure shows that in 2019, 21.6% of disabled people were considered poor, compared with just over 10% of people without disabilities. And in 2021, the American Community Survey found that the South had the highest disability rate. Of the five states with the highest poverty rates that year, four were in the South — Kentucky, Louisiana, Mississippi and West Virginia. The fifth was New Mexico.

“All of a sudden this connection between poverty and disability which does exist out there, doesn’t appear like it is (under the new survey). And these are areas of the country that may not have as many resources … It could have a higher negative impact in areas that are already underfunded,” Buehlman said.

Timing of changes particularly bad

The change in the survey questions could also have an impact on civil rights enforcement, said Marissa Ditkowsky, disability economic justice counsel at the National Partnership for Women & Families. Disparate impact claims, which focus on the effect a policy has on a protected class, including people with disabilities, could be affected by a change in data, she said.

“They are literally using math in these disparate impact claims to make these claims,” she said. “When you don’t have the ability to do that, I can’t imagine the [Equal Employment Opportunity Commission], [the U.S. Department of Health and Human Services], all of these agencies that enforce civil rights laws, I can’t imagine it will make their lives any easier.”

Opponents of these changes add that the timing of this new approach is particularly harmful when so many Americans are experiencing disabilities as a result of the COVID-19 pandemic. Long COVID symptoms can include shortness of breath, fatigue, and difficulty thinking and concentrating. In 2021, the Biden administration released guidance on how Long COVID can be a disability under the Americans with Disabilities Act.

Ditkowsky, who herself has Long COVID, said it seems counterintuitive to narrow the definitions for people with disabilities at this time.

“We’ve had one of the biggest mass disabling events in a long time with COVID-19 pandemic,” she said. ” … But the questions don’t necessarily get at a lot of the issues that Long COVID patients or patients with chronic conditions and people with chronic pain experience.”

To comment on the changes to the American Community Survey go to regulations.gov and click on comment.?Deadline to comment is Dec. 19, 2023.

Retailers, worried that shoppers are cutting back their holiday spending this year, are hiring fewer seasonal workers. Shown is the Flatirons Crossing mall on Nov. 26, 2021 in Broomfield, Colorado. (Photo by Michael Ciaglo/Getty Images)

Black Friday shoppers may notice longer lines and fewer retail associates in some of their favorite stores than in past holiday seasons as retailers scale back seasonal hiring over concerns about consumer spending.

JCPenney is hiring 12,000 fewer workers than last year. Macy’s 3,000 fewer. Meanwhile a Walmart executive said the retail giant has been hiring “throughout the year” and plans to serve customers with the workers it has. And Challenger, Gray, and Christmas, which tracks employment trends, reported that so far, this year has had the fewest announcements of large-scale seasonal hiring plans since 2013.

“Hiring is a really good indication of retailers’ sentiment of the expectation of holiday (sales) and when they’re kind of ho-hum about increasing the numbers, that really does demonstrate their number one concern for less than gangbuster sales,” said Marshal Cohen, chief industry analyst at the NPD Group, a market research company.

The careful approach to hiring reflects the mixed messages in the economy. The labor market has remained resilient with an unemployment rate below 4% for the 21st straight month, inflation has fallen and wages have risen. Since 2021, inflation-adjusted consumer spending on retail goods has remained fairly high. But the personal savings rate has fallen since May and credit card delinquency rates are up.

Economists, as well as retailers, have signaled that they are worried about the effects of the return of student loan payments on the health of the economy, since consumer spending represents so much of the U.S.’s economic activity. The Fed’s long campaign to raise interest rates, although paused at the moment, has also affected consumers.

Adrian Mitchell, chief operating officer and chief financial officer at Macy’s Inc., said in the second quarter earnings call in August that Macy’s is thinking about “consumers’ ability to pay debt using their disposable income.”

“This is about credit card balances, this is about student loans, which we know is going to come into focus in the next month or two, auto loans, mortgages,” he said. “So we just believe the customer is coming under pressure because of these new realities that they have to continue to deal with as we get through the back half of this year and move into next year.”

Cohen said retailers are basically trying to protect their margins. “The retailer this year is basically saying we’re going to do what we have to do to get the volume, but we’re also going to protect the margin and what that means is hire and have less than what we need, but we are better off than having more than what we need,” he said. “And that’s the same for merchandise … Instead of chasing one sale by buying more merchandise, I’m better off as a retailer, saying, ‘OK, I’ve sold out. Maybe you should buy something else and this way I don’t have to discount it all that much.’ ”

Sales growth slow but steady

More customers — 79% compared to 74% last year — said that they will either look for cheaper alternatives this holiday shopping season or not make the purchases at all, according to a Nov. 6 McKinsey report. A smaller percentage of customers said they were willing to “splurge” on gifts this year and fewer people plan to shop at traditional stores.

Still, holiday sales are expected to grow, just less than the past three years. The National Retail Federation estimates that retail sales during November and December will increase 3 to 4%, down from a 5.4% increase last year. But what people are buying may be different. “Service spending growth is strong and is growing faster than goods spending,” said the NRF’s Chief Economist Jack Kleinhenz.

The NRF also pointed out that online sales are expected to increase between 7% and 9%, an increase reflected in Amazon’s plans to fill 250,000 positions, 100,000 more than the past two years. UPS plans to hire 100,000 people, as it did in 2022. FedEx would not disclose a specific number.

Retail recovery

Overall, the retail industry appears to be healthy with employment having remained steady since January though softer than last year. Elise Gould, senior economist at the Economic Policy Institute, said, “We have recovered more than the number of jobs that were lost in the pandemic when millions of people lost their jobs.”

Gould said one explanation for the hiring this year may be that employers, particularly in retail, are more likely to keep staff on in this tighter labor market because it has been harder to attract and retain employees.

“It’s possible that employers over the last few months and over the last year are holding on to workers because they don’t want to have that business of trying to find workers when they need them. And so it’s possible that you’re not seeing that same pickup because they’re already staffed up to some extent in some of those jobs,” she said. “… It’s too early to tell really.”

Ford F-150 Lightning underbodies at Fords Rouge Electric Vehicle Center are inspected in Dearborn, Michigan. Black city officials across the country want to see recent union gains extend to electric vehicle plants, and are calling on President Joe Biden to help. (Photo by Sarah Rice/Getty Images)

Local Black elected leaders aligned with racial and economic justice groups want to build on the labor gains made through the United Auto Workers’ six-week strike. The union’s tentative deals with the big three automakers include major wins such as a 25% rise in pay and getting rid of the two-tier worker system.

More than 60 Black political leaders, many of them city council members and mayors and school board members in Washington D.C. and 20 states, including North Carolina, Tennessee, Georgia and Michigan, wrote President Joe Biden this week asking him to use his political power to push for higher standards in the rapidly growing electric vehicle industry. A few weeks ago, GM also agreed to cover electric vehicle battery manufacturing under the contract.

Biden, who spoke in support of the auto workers’ demands and marched in a UAW picket line during the strike, should continue to support changes in the industry, the letter says, by mediating conversations between workers, unions and automakers.

The elected officials say standards of compensation, safety and health for workers should be a priority for those talks. The Biden administration has made investments in electric vehicles a big priority in its economic agenda and has stated that the federal dollars spent on these investments will benefit workers and “expand high-paying manufacturing jobs” and help them “capture the economic benefits of the clean energy transition.” Nearly $1.7 billion in funding from Biden’s Bipartisan Infrastructure Law will be spent on electric buses, and organizers of the letter say they don’t want to see the money spent on plants that don’t provide good jobs for workers.

Advocates say these efforts are needed to protect Black auto workers in the South, where pay is often lower and unions are not as strong. All three major automakers have established or are building electric vehicle manufacturing plants and battery plants in Southern states, with many of the facilities being placed in rural, Black communities.

Erica Smiley, executive director of Jobs With Justice, said the Biden administration has acknowledged that it received the letter but Smiley and others are still waiting on next steps.

“I do think that there is some urgency in this moment for the administration to act, given the upcoming election and not just the presidential election itself but all the congressional elections and down-ballot elections that the Democrats would need to secure the House or even to make a dent,” Smiley said. “Certainly, Black mayors and local elected leaders and school board leaders signing a letter saying, ‘We don’t want to use federal dollars to exploit Southern workers, particularly Southern Black workers, is a powerful message to do that.’”

The majority of Black people live in the Southern U.S., at 56%, according to 2021 American Community Survey data. Bureau of Labor Statistics data shows that in 2022, 17.7% of workers in motor vehicles and motor vehicle equipment manufacturing were Black, and Black workers make up 19% of the Southern automaking region, an Economic Policy Institute’s analysis of 2016-2020 BLS data showed. The letter also stresses the importance of including Black workers in labor gains given the history of their exclusion from many of those gains.

“Moving jobs to the US South to exploit low labor costs built on a history of white supremacy is a pattern we have seen again and again,” the letter read.

Smiley said Democrats should be interested in ensuring that Black voters have enthusiasm to go to the polls and vote in the 2024 election.

“You applaud the victory in Detroit and assume that everything’s all said and done, but meanwhile, (if) they’re choosing between $17 an hour at McDonald’s and $16.50 at a local EV manufacturing place, they’re not going to feel really excited about that. They aren’t going to feel like you did a lot for them,” she said.

Yterenickia “YT” Bell, a member of the city council in Clarkston, Georgia, said she signed the letter because it’s a good opportunity to center the majority of her community, which is 64% Black. She added that Biden’s support can bolster unionization in a region of the country where it is often challenging to unionize.

“Regarding the EV supply chain plans, they don’t automatically unionize all of the plants, so there’s still a process with that and that’s a big fight. He showed up in the picket lines before and he needs to show them that he’s in this with them to get their wages and to have a voice,” Bell said.

Black people also bear the brunt of many of the effects of climate change, advocates say. One 2019 paper found that Black people breathe in 56% more particulate matter, or air pollution, than they are responsible for with personal consumption.

“[Biden] needs to be mindful that a lot of [Black people] in their communities have been disproportionately impacted by climate change and they’re not able to transition from one place to another. We need to be very mindful about how this industry comes into play when we talk about sustainable energy and that he needs to ensure that standards of the current agreement are the norm and not just an exception,” she said.

Learning isn’t just about the curriculum offered. It’s also about students feeling connected to and supported by their institutions. When institutions represent a single cultural identity, students with minority identities can feel excluded and are less likely to thrive. (Getty Images)

Justin Brown, a father of a 2-year-old who lives with his wife in the St. Louis, Missouri area, has $20,000 in student loan debt. Before the pause on loan payments at the start of the pandemic in 2020, he paid $300 a month. But now that Brown has a family, his financial responsibilities have grown — paying for child care, a mortgage for a house he bought in 2022 and car notes, to name a few.

“I have to look at that $300, like where do I carve it from? Because my income is not going to increase in the next month, and maybe in the near future, but here and now it is what it is and my wife’s is what it is,” said Brown, who works in marketing. “I have to now make a sacrifice and the sacrifice is not going to come at the expense of my kid and it’s not going to come at the expense of my marriage. But it will come at the expense of something that I can live without that I otherwise would choose to [spend money on]. It may mean I may eat out two times a month instead of 10 times a month or that I won’t go to the movies ever again.”

Many borrowers, like Brown, are facing similar decisions this month as student loan payments resumed. Nearly 45 million Americans collectively owe more than $1.7 trillion in 2023 and have an average outstanding loan balance of less than $25,000, according to a Federal Reserve report. They pay an average between $200 and $299 monthly, according to the Fed.

Economists say that hundreds of dollars spent on monthly student loan payments is a loss to the economy and could hurt consumer spending, affect workers’ decisions to stay at their current job or look elsewhere, and delay new home purchases or renting a nicer apartment.

According to a CNBC online poll in January 2022 of 5,162 adults, 81% of borrowers surveyed said they delayed major decisions because of their debt, with 33% deferring a home purchase, 35% setting aside travel plans, and 12% waiting to look for a new job.

“It will be a decline in demand, a decline in overall spending in the economy,” said Mike Konczal, director of macroeconomic analysis at the Roosevelt Institute. “A year ago, people were very worried that there was too much spending in the economy. Now, there’s a little less worry about that and a lot more worry about the real uncertainty that’s going to happen over the next year.”

Konczal said that he sees the resumption of student loan payments as the biggest headwind the economy is facing right now. Less spending in the economy has historically helped trigger a recession, he said. Consumer spending represents two-thirds of economic activity.

Higher education has been associated with higher homeownership rates, but having student debt is associated with lower rates of owning a home, according to findings from a 2017 New York Fed report.

Early in the pandemic with interest rates low and the pause on loan repayments, younger buyers took advantage of the market to buy homes. And while student debt isn’t the biggest roadblock today to home ownership (high mortgage rates are), such purchases will be impacted as potential buyers are faced with student loan repayments, instead of putting that money toward a down payment, according to Selm Hepp, chief economist for CoreLogic.

“If you’re saving that much on a monthly basis over a year, how much of that could help you with the down payment,” Hepp said.

The same holds true for those seeking to upgrade their rentals. “… While we expect to see rent growth go back to the rate that was pre-pandemic, which is like 3% to 4% on a year-over-year basis, which is what we’ve historically seen, that may be subdued because of the student loan payments. So people may not be able to upgrade to that nicer apartment but they’ll just kind of stick it out wherever they are because they now have that student loan [payment],” Hepp said.

Major retailers have already expressed concern over the impact of student loan payments on their businesses. Executives from Macy’s, Walmart, and Target said in August that they were keeping it in mind as a source of financial pressure on consumers.

The Biden administration’s plans last year to cancel up to $20,000 of student loan debt would have helped many borrowers, particularly Black and Latino borrowers. But the U.S. Supreme Court struck down the policy in June. Then in August, the administration announced steps to reduce the financial burden of making payments for some borrowers by basing them on their income and family size and not borrowers’ loan balance.

The Federal Reserve also has recognized the return of student loan payments as it considers future policy. On Sept. 20, Fed Chair Jerome Powell was asked what he thought the looming government shutdown, rising oil prices, and the UAW strike meant for the course of Fed policy.

Describing a “collection of risks,” Powell said “there is a long list and you hit some of them. It’s the strike, it’s the government shutdown, resumption of student loan payments, higher long-term rates, oil price shock. There are a lot of things that you can look at, so what we try to do is assess all of them and handicap all of them. Ultimately though, there’s so much uncertainty around these things.”

Labor market?

Economists point out that research has shown that student debt and debt cancellation affect borrowers’ decisions about the jobs they take or don’t take. When people have their loans discharged, they are more likely to move, which researchers say suggests they are able to pursue opportunities they wouldn’t otherwise have with the student debt. Some research has also shown that debt motivates graduates to favor higher-paying jobs over lower-paid jobs that are more focused on the public interest.

“There is evidence that holding student debt affects people’s choices early in their careers. I found that it affected people’s occupational choices,” said Jesse Rothstein, professor of public policy and economics at the University of California, Berkeley, and co-author of the research on job choices.

Because a college degree doesn’t bring the same accumulation of wealth that it once offered, economists are also concerned that there is little payoff for households constrained by payments. A St. Louis Fed report released in 2019 found a decline in the wealth a college degree brings over the past few decades. Families whose head of the household was born in the 1980s have a weaker college wealth premium, “to the point of statistical insignificance.” The exception is white families where the head of the household has a bachelor’s degree, but even then the wealth enjoyed by those families is much smaller than in older groups.

Lissa Knudsen, a PhD candidate at the University of New Mexico studying health communication, has an 18-year-old who will head to college in a year herself. Knudsen has three streams of income as a freelance journalist, cheesemonger, and a teacher that have helped support her as she makes her way through school, which she said is not really enough for her to live on. She has $230,000 in student loan debt.

Unlike some borrowers, who look for well-paying jobs after graduation, she said that she is worried that if she takes a more lucrative job in her field of study, student debt will swallow up her income anyway.

“I’m afraid that there’s a disincentive for me to try to use my PhD to its fullest potential and to make say $70,000 or $80,000 a year because I think almost all of that would go to student loan payments,” she said. “Versus, if I stay in the lower income bracket, I might be able to have the minimum amount of payment. Then I could hopefully get some of it forgiven in a while. That would be great.”

Policy implications

Bilal Baydoun, director of policy and research at the Groundwork Collaborative, observed that the return of student loan payments will undo some of the positive changes the recovery brought to households that previously felt greater financial precarity. For example, the rise of younger people, many of them millennials, buying homes earlier in the pandemic when interest rates were low and student debt payments were on pause, was a sign of a changing economic tide.

“My fear overall is that the sort of muscle memory of our pre-pandemic plutocracy is starting to redevelop … [Policymakers] want to grow different muscles. We want to grow the muscles that we’ve seen over the last couple of years of major public investment, of labor activity, of rising wages that outpace inflation and this really threatens all of that,” he said.

To address the burden of student debt on the U.S. economy, experts and economists say that the federal government needs to undertake major policy efforts on debt cancellation and overhauling the way higher education is financed.

Baydoun said that debt cancellation, once a fringe policy idea years ago, is “considered one of the most important interventions when it comes to our affordability crisis.”

“I think continuing to find ways to [cancel student debt] is not only great economic policy, it’s also great politics. All of these borrowers through the course of the pandemic, when payments were on hold for three years, they saw very clearly that nothing bad happened as a result of that … In fact, if anything, it was one of the factors that helped supercharge our economic recovery,” he said.

Not all borrowers plan to resume payments on their student loans. Kyle Guzik, a high school art teacher who lives in Richmond, Virginia, has more than $200,000 in student loan debt, most of it from William & Mary, which he attended for graduate school. He spends $1,350 in rent each month and has more than $10,000 in medical debt, which he can’t pay. He said his daily life expenses take up the rest of his budget and that there simply isn’t anything left over.

“The money just disappears. It might seem like a lot at first but it just disappears and [student loan servicers] want whatever the amount is that they want. Alright. It isn’t there to be had,” he said. “ … You can’t get blood from a stone.”

Guzik said his decision is one of financial necessity. But he added that he hopes this refusal will result in policy changes.

“I hope that others in my situation will also think about what is really in their own rational self interest and that, by organizing a debt strike, we will collectively force a change in policy so that housing, healthcare, education, and a dignified retirement are recognized politically in this country as human rights,” he said.

Rothstein said he believes the pressure for policymakers to address student debt is building but that most of it has been around canceling payments rather than redesigning the college finance system.

“We are going to need to redesign the way we pay for college and that will be a major lift before we get to the point where Congress passes something,’’ he said. “ … In the long run, our failure to do that is going to be a drag on educational attainments in this country and on economic growth.”

Editor’s note: Lissa Knudsen has freelanced for Source New Mexico, an affiliate of States Newsroom.

President Joe Biden tours the North American International Auto Show with GM CEO Mary Barra in Detroit on Sept. 14, 2022. (Andrew Roth | Michigan Advance)

The United Auto Workers union’s strike against the Detroit Three for higher wages, more paid time off, and the elimination of tiered workers, which is in its fourth week, has drawn attention to the vast differences in pay between autoworkers and executives at auto manufacturers.

The union has frequently spoken out about the gulf between CEO pay and worker pay to argue that the auto manufacturers can afford to increase wages for autoworkers.

“They’re absolutely rolling in the money. They’re competing for who gets the biggest executive compensation package,” said Shawn Fain, president of the UAW, in a YouTube video about CEO compensation uploaded last week.

In 2022, all three CEOs made above $20 million. General Motors CEO Mary Barra’s compensation is $29 million, the highest of the big three automakers, followed by Stellantis’ Carlo Tevares at $25 million and Ford’s Jim Farley at $21 million.

What’s behind UAW’s argument for higher pay

Fain has also pointed to the 6% pay increases autoworkers received since their 2019 contract compared to the 40% rise in automaker CEO pay to make his argument for the union’s pay demands.

Cindy Schipani, professor of business administration and professor of business law at the University of Michigan, told States Newsroom over email that this 40% rise in CEO pay in the auto sector in the last four years has set up an opportunity for the UAW to call out a lack of fairness as they negotiate.

“The union seems to be arguing an equity issue, especially in light of the sacrifices the workers needed to make in past negotiations,” she said. “Of course, the CEO’s job isn’t comparable to the job of the average worker, but I suspect the UAW may believe it has some leverage. If the company can afford to raise the salary of the top executive at roughly 40% over 4 years, why not also grant the rank and file similar increases.”

Autoworkers who are responsible for motor vehicles and parts manufacturing received an average hourly pay of $28 an hour in September, according to the Bureau of Labor Statistics. But autoworker pay can vary a lot between different tiers of autoworkers. Some autoworkers are temporary or “supplemental” workers, even if they have worked at a plant for many years, and receive a lot less pay. The UAW wants to end the tiered system as part of its contract demands.

“The CEO to average worker pay ratio in the big 3 auto companies appears to be in line with the average ratio across the largest 500 public companies in the U.S., which averages just under 300%,” Schipiani said.

Although overall CEO compensation fell 14.8% in 2022 because of a stock market decline, CEO pay soared 1,209.2% from 1978 to 2022 versus typical workers’ pay, which rose 15.3% during the same period, according to an Economic Policy Institute analysis released in September. The progressive think tank makes the case that the increase in CEO pay is not harmless to the average worker and states that workers in the bottom 90% would have 25% higher wages today if not for the vast differences in wage increases from the 1970s to 2021.

Fain has also emphasized auto manufacturers’ profits as another reason the companies should be able to afford higher wages for UAW members. Although all of the big three automakers suffered losses in annual gross profit from 2019 to 2020, in the long run, the companies’ profits have shot up in the past decade while autoworkers’ wages have fallen. From 2013 to 2022, profit at Ford, Stellantis, and General Motors rose 92%, according to the Economic Policy Institute, a left-leaning think tank.

From 2008 to 2023, average hourly earnings for people working in auto manufacturing sank 19.3% and wages for workers responsible for both auto manufacturing and vehicle parts fell 10%, the EPI analysis showed.

The latest developments in the UAW strike

As the UAW continues to push for higher wages and other benefits, it has shifted its strategy. On Oct. 11, the UAW expanded its strike to Ford’s most profitable plant in Louisville, which employs nearly 9,000 autoworkers.

The union has already gone on strike in several big three auto company plants, including in Michigan, Ohio, Missouri, and Illinois. On the same day, Ford responded to the escalation in a statement in which it called the UAW action at the Kentucky plant “grossly irresponsible.” The auto manufacturers have responded to the demand for a 46% pay increase with offers ranging from a rise in pay of 21% to 23%.

Leading up to and during the course of the strike, UAW leadership has scheduled its major announcements on labor actions for Fridays. But last Friday, Fain did not announce any new strike actions. He said the strike will enter a new phase where the strike could be expanded at any time.

“Moving forward, we will be calling out plants when we need to with little notice. Stay ready, not just Fridays, not just Ford. Together, we’re making history and together, we’re going to stand up and win what we deserve,” he said.

In response, Ford put public pressure on the UAW to deescalate the labor fight. On Monday, Bill Ford, executive chairman of Ford, held a press conference in which he argued that the strike would only aid its competitors at Toyota, Tesla and Honda, and hurt the American automobile industry.

Ford said, “We can stop this now. I call on my great UAW colleagues, some of whom I have known for decades. … We need to come together to bring an end to this acrimonious round of talks.”

How individual workers are faring under the current pay system

While UAW and big three auto manufacturers decide how to move forward at the negotiating table, UAW members like Tenisha Hodges are hoping that they will eventually earn enough money to comfortably support their families.

Hodges, 45, a supplemental worker at the Stellantis’ Jefferson North Assembly Plant in Detroit, said she and her husband, a cook and a stockperson at a supermarket, struggle to support their household on the wages she makes at the plant. She said she started working at the Stellantis plant three years ago because her uncle, who worked for Ford and retired in the late ‘80s, made decent money and she thought that a job as an autoworker would offer her a similar path.

“I expected to have that same type of lifestyle, not to be rich but to be able to provide for just the simple things, and for the corporate company to tell me we don’t have any full-time positions open to roll you over, yet almost three years I have been working full-time hours. The math isn’t adding up,” she said.

Hodges said she has another job as a contractor for Amazon making deliveries so that she can provide for her family, which includes five children from age 16 to 26 who she said all live at home. She works 60 to 70 hours a week at the plant making $17.53 an hour but still works another five hours at Amazon a few days a week to help her household pay for rent and utilities, which she said are particularly large expenses for her family.

Despite the fact that auto-manufacturing work has resulted in carpal tunnel syndrome in both of her hands and achilles tendinitis, Hodges said she is reluctant to leave in case she becomes a full-time worker and receives more pay, and eventually, lighter work.

“I don’t want to leave, because I’ve already spent so much time that if I leave and turn around and we get turned to full-time then that would be even more upsetting,” Hodges said. “What I was working for finally happened and I’m not there to receive it. You’re in between a rock and a hard place.”

Jobs in leisure and hospitality, including restaurant jobs, which saw huge losses in 2020, are filling back in and showed the greatest gains in September. (Photo by Joe Raedle/Getty Images)

Employers continued their hiring streak in September, surprising economists by boosting jobs for workers in restaurants, health care, and government.

The? Bureau of Labor Statistics monthly jobs report, released? Friday, showed a gain of 336,000 jobs. The unemployment rate held steady at 3.8%.

The BLS also revised up the jobs added in July and August from 157,000 jobs to 236,000 jobs and 187,000 jobs to 227,000 jobs.

In remarks Friday morning, President Joe Biden celebrated the higher-than-expected jobs numbers and low unemployment rate, noting, “The unemployment rate has stayed below 4% for 20 months in a row, the longest stretch in 50 years.”

But Biden also sent a message to Republicans, who he accused of threatening that economic progress. Congress averted a government shutdown over the weekend but lawmakers still have to resolve the issue before Nov. 17 to keep the government funded.

“House Republicans shouldn’t put us back into crisis mode again. We have only 40 days for Congress to get back to work … to fund the government, avoid a shutdown, and protect the tremendous gains American workers have made over the past two and a half years,” Biden said.

Where the jobs are

Health care added 41,000 jobs last month, government employment rose by 73,000 jobs, and leisure and hospitality added 96,000 jobs, with the latter two sectors boasting higher jobs numbers than their monthly averages. Within leisure and hospitality, employment in food services and drinking places returned to its February 2020 level.

State governments added 29,000 jobs in education and local governments, excluding education, added 27,000 jobs, which is good news considering how slow these jobs have been to return to pre-pandemic levels, economists said. State and local government employment is down 0.5% compared to its level before the pandemic, Economic Policy Institute analysis of BLS data shows.

Elise Gould, senior economist at the Economic Policy Institute, said the addition of healthcare jobs is not surprising given the aging population and demand for healthcare services. Despite concerns that leisure and hospitality wouldn’t bounce back from the economic harms businesses suffered in 2020, there are signs of a healthier sector in the report.

“Leisure and hospitality in particular is one where we saw the largest job losses and has been steadily sort of filling in that massive hole that happened in the spring of 2020,” Gould said.

Wages outpacing inflation

Although wage growth has slowed, inflation is still falling faster. Average hourly earnings rose by 7 cents in September compared to eight cents from July to August. In the past year, wages increased 4.2%. Gould said that the Fed may look at those numbers and see that it’s not an overheating labor market, which may have an effect on their decisions to pause or raise interest rates.

“We have continued to see inflation falling faster and then this deceleration in wage growth, so living standards are increasing because people are getting real wage increases now over the last few months,” she said.

Kitty Richards, acting executive director of Groundwork Collaborative, a Washington, D.C. think tank, said the growth in federal investments in different industries, such as manufacturing, has spilled over to other parts of the labor market, which is why there is job growth in some of these other sectors.

“These kinds of front line service jobs are places where the strength of the overall economy matters a lot and also where, for many years, we had really terrible wages,” she said. “I think that the wage growth that has been supported overall by these investments in workers and manufacturing and the clean energy transition has driven up wages and spilled over, creating a much more attractive labor market, which is drawing people into the labor force. I think that the specific sectors in this month’s jobs report are more indicative of just a strong economy with growing incomes and wages overall than sort of specific investments.”

There are areas Gould is watching to see whether marginalized groups of workers continue to experience worse labor outcomes. The unemployment rate for Black workers rose to 5.7% from 5.3%. The unemployment rate for workers 16 to 24 years old was 8.4% from 8.6% in August but the general trend since April, when the rate was 6.5%, has been a rise in the unemployment rate.

“I’d like to see those trends reverse as we see the overall unemployment rate staying low for long periods of time. You hope that that would have a greater impact on historically disadvantaged groups and we have seen that for periods of time. The unemployment rate has ticked up for young workers last month and has been for the last couple of months,” she said. “… Those groups often have worse outcomes so I think it’s important to see where there might be trouble. I’m not seeing the trouble yet but I’d certainly like to see those trends reverse.”

Shona Lamond, executive director of the Downtown Children’s Center in St. Louis, Missouri, says she applied for every grant she could find to keep her center open and teachers paid during the pandemic. (Photo by Rebecca Rivas/Missouri Independent)

A huge chunk of pandemic relief funding that kept child care programs afloat for the past few years is set to run out Saturday, and policy advocates say the economic impact will be profound, with the ripple effect hurting labor force participation and consumer spending at a time when the country is still trying to avoid a recession.

Parents struggled to pay for child care and child care centers strained to retain workers well before 2020, but the pandemic accelerated many of the industry’s struggles and without the federal money many would have shut their doors.

Now some of that money is going away. American Rescue Plan Act stabilization funds — $24 billion distributed by states that allowed child care to continue for 9.6 million children — will run out Sept. 30. According to The Century Foundation’s analysis of the impact of the loss of these funds, Arkansas, Montana, Utah, Virginia, Washington, West Virginia, and the District of Columbia can expect the supply of child care programs to be cut by half or more as a result. The end of this funding will cost states $10.6 billion in economic activity according to the TCF report because of the loss in tax and business revenue that results from reduced productivity and staff turnover.

States will have to liquidate another $13.5 billion — provided by the Coronavirus Aid, Relief, and Economic Security (CARES) Act and Coronavirus Response and Relief Supplemental Appropriations Act that funded child care and development block grants?— by the same date. Meanwhile, $15 billion in increased funding for the Child Care Development Block Grant expires in September 2024.

The House passed a legislative package in 2021 which would have expanded the Child Care Development Block Grant to apply to far more families, ensuring they had universal pre-K and reliable child care, as Congress approved relief funds to deal with the immediate problems of families and child care providers. But $400 billion to address longer-term problems in child care did not make it through the Senate.

“We have this temporary funding in this context where we thought when we were at the end of the temporary funding, we’d actually have a system we’d be building. We still need that system. Just because it didn’t happen doesn’t mean it’s not necessary. It just means that politics got in the way,” said Julie Kashen, senior fellow and director for women’s economic justice at The Century Foundation.

Karen Schulman, director of state child care policy at the National Women’s Law Center, said the relief funds that will expire in 2024 also served many purposes to keep child care centers afloat. The American Rescue Plan Act Child Care and Development Block Grant supplemental funds were used for many different purposes.

“They also use a portion of those funds to improve quality, which can be a range of activities, whether professional development or wage supplements for child care providers or training or licensing and health and safety — just a variety of initiatives to help providers,” she said. “That money supplemented the existing child care and development block grant program, which is very important for families, but has always been vastly underfunded.”

Demand for child care, competition for workers

Shona Lamond, executive director of the Downtown Children’s Center in St. Louis, Missouri, said she took advantage of every grant she could find to keep her center open. “The federal [Paycheck Protection Program], the American Rescue Plan Act [funds] … Anything that we qualified for, I applied for, and for the most part we received the grants that I applied for to help us,” she said.

Lamond said the nonprofit has used most of the ARPA money on the center’s biggest expense — teachers’ salaries. It has increased salaries in the past few years to try to keep up with inflation and stay competitive, which has involved an 8% increase over the past three years.

“I think it’s really tough to compete with these other places, these major corporations that have that ability to start paying $17 or $18 an hour …” Lamond said. “I don’t fault people for people who get out of education. We do a really difficult job … It’s stressful. It comes with a lot of responsibility and if you don’t do it right, you could lose your license and your livelihood and they’re getting paid rock bottom wages.”

Lamond said the center is still short-staffed and that two classrooms have been closed for more than a year.

“We’ve been low enrollment pretty much since COVID hit. We’ve never returned to our regular capacity,” she said.

Charles Gascon, senior economist at Federal Reserve Bank of St. Louis, said that because workers at child care centers were also more exposed to COVID-19 and it took time for child care centers to figure out how to adhere to different social distancing requirements and maintain capacity, a lot of workers left.

“The policy standpoint played a role but then the fact that these were not very desirable jobs to have in the middle of a pandemic and the wages really didn’t compensate workers for the added risk they were taking on,” he said.

Gascon said a lot of today’s challenges in child care were the same issues it had in 2019.

“In some cases, it may be a little more exacerbated as older people left the workforce so there are shortages in the sector just like other sectors. The labor market has recovered really quickly so the demand for care is there,” he said. “… Now we can add to that a couple compounding factors: one, the population demographic that is having kids now is larger than the demographic from about 10 years ago, so that means there is likely going to be more people that are demanding these kinds of services. We’ve also seen a shift in where the jobs are at so we see women’s labor force participation rates are higher.”

The lack of affordable child care options is pushing more families to consider informal child care that doesn’t necessarily have an educational component, Lamond said. Other than families reaching out to grandparents and the nextdoor neighbor as well as watching kids as they work remotely, she said she’s seeing people connect through local Facebook groups to find parents who come with good references to watch their kids.

“As long as your kid is safe and being really well cared for and loved, sometimes that’s the best you might be able to do so that you can get to work,” Lamond said.

She said she regularly works with families who have to make hard decisions about whether they take a new job or stay home because they struggle to afford child care.

Katherine Gallagher Robbins, senior fellow at the Partnership for Women and Families, said that the end of the funding is bad news for women’s labor force participation, consumer spending, and for the economy in general. Women ages 25 to 54 have played the biggest role in boosting overall labor force participation in the economic recovery, according to Brookings’ August analysis. But Gallagher Robbins said that it’s still much lower than countries with better caretaking support.

“… It’s very clear that women’s labor force participation will take a hit,” she said.

And, in turn, consumer spending will be affected, she said.

“As the supply of child care decreases, you’ll very likely see an increase in cost that will be borne by families,” Gallagher Robbins said. “This will lead to less disposable income to spend on other essential items. And for some families the balance will tip and a parent may have to leave the labor force altogether which will decrease income in both the short- and long-term. I suspect these effects will be largest for Black and Latinx families with low-incomes for whom child care is already the least affordable.”

She also argues that by expanding the labor supply by offering policies that are more supportive of caregiving, the government could reduce inflation without trying to cool the labor market.

Advocates in Congress, state leaders push for better funding

Legislation introduced in the U.S. Senate this year to address these issues did not pass, but some senators have continued to call for more funding of child care. U.S. Sens. Bernie Sanders (I-VT) and Patty Murray (D-WA) released a report in May to draw attention to the child care funding cliff. Murray reintroduced comprehensive child care legislation in April.

Sen. Tina Smith, D-Minnesota, and co-sponsor of the Expanding Childcare in Rural America Act of 2023, told States Newsroom this summer, “The whole business model for childcare in this country is not working — not for families, not for businesses, and not for providers themselves. Addressing our country’s looming childcare cliff will require significant, federal investments in childcare so that our kids, their parents, and our economy can reach their full potential.”

The Biden administration has also taken steps this year to improve access to child care and stabilize the industry. A Health and Human Services Department proposed rule, announced on July 11, would cap co-payments for child care to 7% of a family’s income, encourage states to take online applications for families trying to access the Child Care Development Block Grant, and pay child care providers participating in those block grants in a timely manner to stabilize child care operations. The rule would also make it clear to states that they should consider siblings of children who already receive subsidies to be eligible for the Child Care Development Block Grant.

On July 19, White House officials met with more than 90 state legislative leaders and child care advocates to discuss how to address the funding needs, according to the White House.

Kashen said New Mexico and Maine are some of the states taking the most advantage of these funds but states need federal help. Maine has provided 7,000 child care workers with $200 stipends but is using state funding to make the stipends permanent. New Mexico allocated $77 million for a program to fund raises for about 16,000 child care workers.

“There are states that are really taking leadership here,” Kashen said. “That said, when you talk to advocates in those states, they will tell you it’s not enough money … This is an emergency and Congress needs to do something and put money in quickly because I think we’re going to keep losing the workforce.”

Activists protesting outside the White House support “Cancel Student Debt” on March 15, 2022 in Washington, D.C. (Photo by Paul Morigi/Getty Images for We The 45 Million)

Complaints about student debt relief scams are increasing as the date approaches for borrowers to restart payment on their student loans after more than a three-year pause.

Consumer protection advocates say that the Biden administration’s student debt relief efforts, the subsequent halting of those policies by the courts, and the restart of student loan payments have bred confusion that allows companies to take advantage of borrowers.

“There is sort of this perfect storm out there that I think is allowing these fraudsters to prey on people,” said Dan Zibel, vice president, chief counsel, and co-founder of Student Defense, a nonprofit focused on student rights.

Zibel said that there has been a lot of policy and legal news on student debt relief for borrowers to absorb in a couple years.

“There is news about repayment plans, news about cancellation, different types of cancellation, whether it’s public service loan forgiveness or fraud-based cancellation, the COVID pause, and then the courts get involved. Debt forgiveness is happening. Debt forgiveness is not happening. There’s new debt forgiveness,” he said. “ … I think that sows confusion for a lot of people.”

And with 44 million owing more than $1.7 trillion — the third highest consumer debt in the U.S. — the appetite for relief is great and makes many easy prey for scammers.

Many of the debt relief scams often start with a telemarketing call where borrowers are promised debt relief if they pay a regular fee. The callers ask for sensitive personal information, and mislead borrowers about being affiliated with the U.S. Department of Education and student loan servicers. Some mention “Biden Loan Forgiveness.”

The number of complaints coming to the FTC about student debt relief scams has steadily risen in the past few months as the restart of student loan payments approaches, from 385 in June to 562 in July and 610 in August. And the FTC and Department of Justice have been cracking down on the scammers. In August, the agencies returned $9 million to people who paid up to $800 in upfront fees to Ameritech Financial, to take part in what they thought was a federal loan assistance program. The scam also led borrowers to believe that their membership fees would help pay their student loan balance. Arete Financial Group, which said it was affiliated with the Department of Education, had a similar scam that convinced people to make upfront payments. The FTC sent $3.3 million to those consumers in June.?

How we got here

The Biden administration has undertaken a number of policy efforts in the past few years to reduce the burden of student loan debt, including a program announced in August 2022 that borrowers who qualified could have up to $20,000 of federal student loans canceled. Twenty-six million people applied or sent enough information to the U.S. Department of Education applying for the relief. However, the U.S. Supreme Court ruled against the plan in June of this year, finding that the administration did not have the authority to cancel the debt. Since then, the administration returned with the SAVE Plan, a new income-driven repayment plan that allows some lower-income borrowers to pay nothing each month and lets some receive early student loan cancellation, among other benefits. Students who have been defrauded by for-profit colleges are also continuing to receive student loan cancellation.

Zibel said that student debt relief scams tend to target borrowers who are the most vulnerable, whether they’re struggling economically or have language barriers that could make people less able to identify fraud.

But anyone could potentially be tricked by these schemes, said Kyra Taylor, staff attorney at the National Consumer Law Center. She said scammers are getting more sophisticated.

“I’ve heard reports from borrowers that scammers spoofed their student loan servicers email. And the only way you could tell that it was a spoof was by rolling your mouse over the links,” she said. “The scammers are so sophisticated and because the student loan system is so complicated, anyone could be vulnerable, especially if you’re getting an email that looks like it’s from your [student loan] servicer on its face. I think it’s getting harder and harder to tell.”

How to spot a scam

Taylor offers some advice to borrowers who may find themselves wondering whether they’re being scammed. For example, she tells borrowers not to provide sensitive information such as a Social Security number to someone they believe is a student loan servicer.

“We’re getting closer to restarting payment and people are expecting that their servicer is going to reach out to them. The servicer could be calling you but if they’re asking for personally identifiable information, I would hang up and call them back just to make sure that you’re talking to the right person,” she said. “The other piece is that it’s very unusual for the Department of Education to call folks. Any time you’re getting a call from someone saying they’re from the Department of Education, I think folks should be more skeptical.”

Mark Kantrowitz, an expert on financial aid and author of “How to Appeal for More College Financial Aid” told States Newsroom in an email that it’s a bad idea to share your financial student aid ID, which is your username and password, with a third party, because they can make changes you may not be aware of and will end up being responsible for. When borrowers log in, the federal student aid website makes it clear that the use of this information by a third party “for purposes of commercial advantage or private financial gain” is prohibited and subject to criminal prosecution, he added.

Taylor and Zibel said there are things the government can do to reduce the damage done by student debt relief scams. Taylor said that if the government automated relief to borrowers, scammers would have fewer opportunities to insert themselves into the process. Zibel said that the government should continue to educate people as return to payment begins on where to find legitimate sources of information on their student loans.

The FTC also offers advice on how to spot scams. The agency says it’s a red flag if someone tries to charge you for debt relief services before they have done anything for you as a borrower. Ari Lazarus, a consumer education specialist at the FTC, explained in an August blog, “ …Nobody but a scammer will ever offer you quick loan forgiveness.” Experts on these scams also remind borrowers that no one has to pay for help with student loan relief and advise borrowers to look at the federal student loan website.

Janet Yuen learned too late that she did not have to pay for help. In 2019, after receiving a phone call from A Better Solution Student Loans, or ABS Student Loans, she agreed to pay the company $33 a month to lower her debt.

Yuen, a social worker in Southern California, told States Newsroom that she quit making payments on her student loans because she thought ABS Student Loans was doing so on her behalf. Yuen said she paid $33 a month from October 2019 to November 2021 to ABS Student Loans and provided the company with the username and password to her student loan website.

She has about $263,600 in student loan debt and is out almost $900 — the money she paid ABS Student Loans that she said would have otherwise been spent on financial needs such as paying medical bills.

Yuen said she has contacted the FTC but the agency could not tell States Newsroom whether it is investigating the company because it does not make investigations public.

There is at least one government investigation into ABS Student Loans through Minnesota Attorney General Keith Ellison’s office. On Sept. 6, Ellison announced that 52 student debt relief companies are suspected of violating state law by not registering before offering debt settlement services and possibly misrepresenting fees and services, including ABS Student Loans. Deputy chief of staff for the attorney general, John Stiles, told States Newsroom that the office has asked ABS Student Loans how many customers it has in the state but the company has not yet responded.

ABS Student Loans’s website includes information that it is not affiliated with a government agency and that borrowers do not have to use a third party to apply for student debt relief under a link to its privacy policy at the bottom of its website. The California-based company did not respond to States Newsroom’s requests for information by time of publication.

A Jeep Grand Cherokee comes off the line at the Stellantis Detroit Assembly Complex-Mack on June 10, 2021 in Detroit, Michigan. (Bill Pugliano/Getty Images)

Economic experts and researchers say that the auto workers strike could have far-reaching economic consequences for businesses and consumers, depending on its duration. In addition to workers’ job losses, consumers could see higher prices for cars and depleted inventory.

The United Auto Workers union, representing about 150,000 auto workers, walked off the job at midnight Thursday after failing to reach a contract deal with the “Big Three” auto manufacturers, Ford, Stellantis, and General Motors. It is the first time in union history that a strike has affected all three automakers, the?Michigan Advance reported.

The union is seeking 32-hour work weeks, a 46% pay increase over four years and improved benefits, including pensions and paid time off, the?Michigan Advance?has reported. Union members also are demanding the right to strike over the closure of plants and the elimination of tiered workers. Tier 2 workers, who are newer, receive less pay and benefits than Tier 1 workers and also work more on electric vehicles that may not be covered by union contracts,?according to?MarketWatch, which some members argue hurts the effectiveness of the union.

The union also wants more security for its members as the auto industry continues to produce more electric vehicles.

“Given the EV transformations currently underway in the auto sector, the UAW will be looking to establish as much security as possible for its members. Top concerns include what labor demand will look like in the new EV landscape and how to ensure that wage gains keep pace with high inflation and record automaker profits,’’ according to a University of Michigan analysis.

Experts say the weight of any work stoppage is dependent upon the numbers of workers who walk off the job, their location and its duration. Meanwhile consumers could see higher prices for materials including steel and auto parts reflected in their car purchases and repairs.

UAW president Shawn Fain has?said?the union and companies are far apart on priorities such as pay increases, with the companies offering half or less than half than of what the union has proposed.

In a statement, Ford said the company “has bargained in good faith in an effort to avoid a strike, which could have wide-ranging consequences for our business and the economy. It also impacts the very 57,000 UAW-Ford workers we are trying to reward with this contract.”

The last auto workers strike was in 2019, when?50,000 GM workers walked off the job?for six weeks. General Motors lost $3.6 billion,?Reuters reported.

The Anderson Economic Group, an economic research and market analysis group, has?estimated?that a 10-day strike by all of the 150,000 union members would total $5 billion in economic losses. If the strike affected only one automaker, the company would lose $325 million and the loss of direct wages would total $341 million. For every 2,000 employees on strike at one location, there could be up to $10 million in lost wages, which would be felt locally, said Tyler Marie Theile, director of public policy and economic analysis at the Anderson Economic Group. The estimate does not factor in strike pay, unemployment benefits, or reputational damage to companies or the union in its assessment of the economic impact of a strike. Auto workers on strike can receive?$500?in union benefits.

The Advance reported picket lines at Ford’s Michigan Assembly, GM’s Wentzville plant in Missouri and Stellantis’ Jeep plant in Toledo, Ohio.

Michigan faces the greatest economic impact. A one or two week strike at Ford could result in the loss of 28,000 jobs,?according to?a University of Michigan estimate. Outside of Michigan, Kentucky, Ohio, Illinois, and Missouri would be affected by a Ford strike. Ohio and Indiana face a potential?Stellantis strike?and Indiana, Missouri, Ohio, New York, Texas, Tennessee, Kansas, and Kentucky, a?General Motors strike.

Theile said Southern plants may see more of an impact than they did in 2019 because of the growth of auto manufacturing and assembly and battery manufacturing in the region if the walkout is lengthy.

“The most important driving factor there is going to be is the number of UAW workers striking. Since in the South, UAW participation and representation is not as dense as it is up in the Midwest, we likely wouldn’t see quite a strong impact, at least early on,” Theile said. “If a strike were to become quite lengthy, many manufacturing and assembly facilities are shut down and 1st and 2nd tier suppliers are shut down, that’s going to start to have a rippling effect through the automotive industry. And facilities that are not on strike and not represented by the UAW will not be fully insulated from the economic impact.”

Ali Bustamante, deputy director of the worker power and economic security program at the Roosevelt Institute, a progressive think tank, said the expansion into Southern states has somewhat “hedged the impact of a strike” because there are both unionized and non-unionized shops.

“By and large, the reason why so much of car manufacturing has moved to the South is because of historically low levels of union density,” Bustamante said. “The political and social conditions make it really difficult to get unions off the ground there as well.”

It’s also challenging to predict how a targeted strike would affect the economy overall when it’s unknown how halted production at some plants would affect work at other plants where workers are not on strike. Fain?said?the union’s targeted approach is meant to “create confusion.”

“It’s a little unclear to me how many locations would potentially operate as normal or as close to normal when other locations, that they may depend on, are shut down and striking. I do think that those targeted strikes are still going to have a really significant impact on the economy,” Theile said.

Bustamante added that the strike would also impact the steel industry and would add to pressures on car prices.

Theile agreed that consumers would feel the effects.

“We have about 20% of the inventory that was on hand in 2019. The current conditions would affect dealers and consumers, possibly much stronger and much sooner,” Theile said.

But Bustamante said the Federal Reserve’s?raising of interest rates?is a far bigger contributor to the problem of car affordability, since rates for car loans have risen in the past year.

Some economists have also argued that the UAW strike is a sign of a strong economy and say that long-term gains in labor organizing will lift up more workers.

“Strong labor markets, fueled by large-scale public investments in the workers who keep our economy going, offer workers agency to stand up for better wages and working conditions and walk off the job when basic labor standards aren’t met,” stated Rakeen Mabud, chief economist at Groundwork Collaborative, a progressive economic advocacy nonprofit.

“ … A workforce that enjoys better working conditions, better pay, and increased worker agency adds up to a stronger economy for all of us.”

Bustamante said that if the UAW wins many of its demands, it will encourage more workers to organize.

“As long as economic conditions hold steady, the [UAW] does have disproportional leverage and again, more leverage than they’ve had in the past 50 years or so,” he said. “It would certainly boost the [labor organizing] waves that we’re already seeing.”

The amount a salaried worker would need to be paid before an employer could avoid paying overtime would rise to $55,068 annually under a proposed rule from the Department of Labor. (Photo by Brandon Bell/Getty Images)

Salaried workers who have been ineligible for overtime pay would benefit from a proposed Biden administration regulation.

The Department of Labor’s new rule would require employers compensate full-time workers in management, administrative, or other professional roles for any overtime worked if they make less than $55,068 annually. Currently, the salary threshold is $35,568. The change is expected to affect 3.6 million workers.

The rule would also provide automatic changes every three years to the salary level to keep up with changes in earnings. U.S. territories that are subject to the federal minimum wage would have these same overtime protections, which rolls back a Trump administration change made in 2019.

“I’ve heard from workers again and again about working long hours, for no extra pay, all while earning low salaries that don’t come anywhere close to compensating them for their sacrifice,” said Acting Secretary of Labor Julie Su in a statement.

The new standard salary level proposed by the agency would be tied to the 35th percentile of weekly earnings of salaried workers in the lowest-wage region of the country. There is voter support for a change in the current regulations. According to a 2022 Data for Progress survey of likely voters, 65% said they either strongly supported or somewhat supported raising the salary threshold for overtime pay.

The rule will go through a public comment period as part of the rulemaking process to give supporters and opponents time to offer feedback. The process can take months, which could mean it won’t be finalized until next year. Labor rights advocates and economists say that people working in retail, restaurants and healthcare would be among the workers most affected by the regulation.

Judy Conti, director of government affairs at the National Employment Law Project, a worker advocacy nonprofit, said many workers who do overtime eligible work are paid just over the current threshold so their companies can avoid paying time-and-a-half. The proposed rule would help address this, she said.

“A lot of these dollar stores call people managers and supervisors and pay them $36,000 a year. Then they claim that they’re overtime exempt and they may do a little managing and they may do a little supervising, but mostly they’re working the cash register or they’re stocking shelves or they’re unloading in the back. They’re not doing work that is considered truly bona fide executive, professional or administrative work,” she said.

Conti added that this rule would provide incentive to employers to manage employee time wisely or hire more workers to handle the workload.

“… There’s [currently] no incentive to really manage that time wisely and see if it should instead be spread to other people,” Conti said.

Erica Groshen, senior economics adviser at the Cornell University School of Industrial and Labor Relations, said the regulation should be fair on employers.

“I think the important thing to realize is that this will affect all of those employers equally,” she said. “It’s not putting some at a disadvantage compared to others. It’s going to change the playing field for everybody. You could argue that it’s going to change the playing field more for employers who were actively trying to take advantage of the erosion of the applicability of the law.”

In terms of the potential effects on the economy, Groshen said there could be some pass through to prices for consumers depending on how competitive the industry.

“To the extent that these companies are quite profitable, then the employers might try to hold on to market share by not increasing prices as much. Their profits might be a bit lower. Right now, nationally profit rates are actually quite high. They’ve been high for a while and rising. This would tend to reduce inequality if it comes out of profits. Otherwise, then the money is going to come from somewhere,” Groshen said.

That may mean that some employers will automate more services such as electronic ordering at restaurants or buying equipment for food preparation, she added.

The Trump administration last changed the salary threshold in 2019 from $23,660, set in 2004, to its current $35,568 salary level, which was significantly lower than the $47,476 level the Obama administration tried to implement in 2016. A federal judge blocked the Obama administration’s effort saying that the threshold was too high and that the administration did not have the authority to make that particular change. Twenty-one states, including Nevada, Arizona, Kentucky and Wisconsin, brought the lawsuit. The states argued that the rule “could deliberately exhaust state budgets” and was unconstitutional. In 2017, the same judge, an Obama appointee, ruled against the regulation again.

Conti said she’s optimistic that the rule is less likely to be blocked this time. She argues that the judge’s reasoning for stopping implementation of the rule lacked “legal or economic support.” Attorneys for law firms specializing in employment and labor law, however, are still anticipating legal action against the rule. Some attorneys suggest that the lack of a Senate-confirmed labor secretary makes the regulation more vulnerable to legal action. Biden nominated Su for labor secretary six months ago.

Many of the same groups that opposed or were critical of the overhaul of overtime regulations during the Obama administration have taken similar positions on the Biden administration’s effort. The U.S. Chamber of Commerce has called on the Department of Labor to “adjust” the rule. It did not release any specifics for what it wants the agency to do, but criticized the department’s proposal to automatically change the salary threshold every few years.

“The Department of Labor’s proposed overtime regulation is the wrong rulemaking at the wrong time,” Marc Freedman, vice president of the U.S. Chamber of Commerce Workplace Policy, said in a statement.?“It represents a more than 50% spike in the salary threshold and will increase costs for small businesses, nonprofits, and other employers at a time when businesses already face persistent workforce shortages that are hindering the economy.”

Industry groups such as the National Restaurant Association and National Association of Manufacturers have been critical of the rule for similar reasons.

Conti said she sees the proposed rule as stimulating for the economy and good for employees as well as employers.

“Adding jobs and getting more money into more people’s hands is good for the economy,” Conti said. “We’ve seen a lot of workers over the past couple of years walking away from jobs when they’re overworked, when they don’t have time for themselves and when they don’t have time for their families. Making sure that workers have moderate work weeks that are 40 hours is good for employers. They’re not going to burn out their employees.”

Experts say the economy added 187,000 jobs in August compared to 157,000 in July. (Getty Images)

The labor market is stable and healthy, economists and policy experts say, although the unemployment rate ticked up in the month of August.

The Bureau of Labor Statistics’ report released Friday showed that unemployment rose to 3.8% in August from 3.5% in July. Meanwhile the economy added 187,000 jobs, above expectations of 170,000 jobs from economists polled by Reuters. In July, 157,000 jobs were added.

Although a rise in the unemployment rate may look foreboding, it’s actually an indication of people looking for work in a more attractive labor market with higher wage growth and employers who may be more willing to offer more job flexibility, said Mike Konczal, a director at the Roosevelt Institute, a progressive think tank. Those factors may have appealed to people who were returning to the labor market after some time away.

“We saw that the unemployment rate went up, basically entirely because the labor force expanded. The labor force is people looking for a job and working. And in particular, among the unemployed, people who are new entrants to the labor market, were the ones who drove it,” Konczal said.

The number of jobs the economy added this month is also cause for confidence in the job market, even if it is slowing down.

“For this stage of recovery where unemployment has been below 4% for well over a year, that level of job growth is pretty remarkable. You would probably only need like 100,000 [jobs added] to keep up with the population growth,” Konczal said.

Wages inched up 0.2% in August compared to 0.4% in July. Overall, wage growth rose 4.3% over the past 12 months. Although wage growth is still strong and higher on a three-month basis than it was before the pandemic, Konczal said it’s lower than a year and a half ago when the Federal Reserve was concerned it would fuel inflation.

The Fed raised the key interest rate in July, making it the highest in more than two decades. It is considering raising it again to continue fighting inflation to bring it down to its target of 2% from its current rate of 3.2%.

Economists and policy experts caution that a rate hike from the Fed could hurt some of the gains workers made during the recovery.

“We should be concerned about the labor market softening too fast given that there’s been a lot of rate hikes,’’ Konczal said. “We know housing is still probably going to slow again.”

Economists and policy advocates also are closely tracking the unemployment rate in the Black community, which fell to a record low of 4.7% in April, before seeing? two consecutive months of increases. It hit a high of 6% in June, and currently stands at 5.3% in the August jobs report.

Before the jobs report on Friday, Katherine Gallagher Robbins, senior fellow at the National Partnership for Women & Families, told States Newsroom in an email: “While the economy is still very good, there are signs – such as the trends in Black women’s employment, as well as the fact that the number of jobs added in July (187,000) was significantly below the average monthly gains for the prior 12 months (312,000) – that indicate a slowing. We have long maintained that rate hikes – which disproportionately impact marginalized workers – are not the right tool for fighting inflation. To me the most recent trends make that even more clear.”

The Bureau of Labor Statistics also revised those 187,000 jobs in July down to 157,000 jobs.

The marginalization and discrimination against Black people in the U.S. economy is one of the reasons that economists look at Black unemployment and other relevant labor data as an indicator of where the economy is headed, economic research has shown. Black workers ages 25 to 54 faced higher unemployment earlier and for a more sustained period than white workers in the Great Recession, according to a 2020 analysis from the Federal Reserve Bank of Dallas.

Konczal said, “The Fed has indicated that it is comfortable with unemployment going up a little bit to fight inflation in different ways. And I think there’s good reason and empirical reason to think Black unemployment might increase first. It is still something to watch with concern.’’

Bilal Baydoun, director of policy and research at Groundwork Collaborative, said the strong labor market has provided more opportunities for labor organizing this year. There have been 251 labor actions from January to Aug. 30, according to Cornell’s strike tracker.

“This is a historic opening for workers not just to make progress against the pandemic economy and the pandemic recovery, but also against the pre-pandemic economy. The rise in labor activity spurred by a tight labor market is very promising,” he said. “And the Fed is threatening to stifle a lot of that progress, which is curious because merely years ago, the very workers that we almost exclusively refer to as essential are proving to be ever expendable in Fed policymaking.”

Keaira Mark, a former call center worker for Maximus, and current Maximus employees Katherine Charles Sasha Tyson, and Deondra Bridges in Washington, D.C., on Friday, Aug. 25, 2023. The women were in Washington to take part in the 60th anniversary of the March on Washington. (Photo by Casey Quinlan/States Newsroom)

Call center workers that help Americans navigate the ACA marketplace and Medicare used this year’s March on Washington to spotlight their demands for more paths to advancement, higher pay, and more breaks between calls.

They’re looking to bring government attention to their cause after previous efforts to get the attention of officials with the Department of Labor and Department of Health and Human Services have not yielded results.

They say that the issues they are facing are connected to racial and gender inequities at Maximus, a Virginia-based private company that contracts with U.S. Health and Human Services as well as other federal agencies. A 2023 report found only 2% of managers with frontline customer service experience were internally promoted.

Sixty-nine percent of frontline workers were Black, Latino or other people of color, while the same demographics composed only 21% of executives and senior managers, according to the report from NAACP, Communication Workers of America and Strategic Organizing Center.

For the 60th anniversary of the historic march for civil rights and economic opportunities for Black Americans, a group of organizations with a diverse set of focuses — racial justice, labor rights, student debt, LGBTQ equality, and voting rights, to name a few — gathered in Washington, D.C., on Saturday.

This march came on the heels of what has been called a “hot labor summer” after everyone from hotel workers to actors have gone on strike, and UPS drivers secured a generous new contract after threatening to strike.

Maximus employees are hoping to achieve their own gains. Katherine Charles, a call center worker from Tampa, Florida, who came to D.C. for the march, said she wants federal officials to investigate the company because of the way it treats workers.

Maximus has made multiple rounds of layoffs this year. In January, 143 workers in Hattiesburg, Mississippi, and more than 100 workers in Bogalusa, Louisiana, were laid off and did not receive severance, according to the Louisiana Illuminator. In May, Maximus laid off more than 700 workers, who received severance packages.

The CWA filed an unfair labor practice complaint in May, accusing the company of using the layoffs and other union-busting tactics as retaliation for organizing. Call Center Workers United held demonstrations after the layoffs, including a May protest outside of the Department of Health and Human Services office in Washington D.C., and a June protest at a Maximus office building in Chester, Virginia.

Victoria Miller, an organizer at the CWA, said it’s been challenging to organize because of all the layoffs this year.

“I don’t believe it is fair for a place where the workforce is majority female, single mothers, to be laid off massively without any notice like they have done before …,” she said. “We have a federal contract, but we are not treated as federal employees.”

Keaira Mark, a former Maximus worker who was laid off in May and lives in Hattiesburg, Mississippi, came to D.C. to march to support the many people she knows who still work there. “Even though I don’t work there, I still have friends who work there. My mom still works there,” she said. “We’re looking to get more exposure and hopefully community support and government support, and put some pressure on Maximus to change.”

Maximus workers also told States Newsroom that they need more time off between calls, because some of the calls they receive can be abusive, and it’s challenging to go right from one like that to the next.

They argue that their employer has enough money to improve working conditions. The business expects to generate $4.875 billion to $4.975 billion in revenue this year, according to Maximus’ August investor presentation. Maximus employs more than 35,000 employees in the U.S. and internationally, and its workers handle 7 million contact center inquiries per month and 43 million calls annually about federal health insurance enrollment.

The NAACP, CWA, and SOC wrote to Department of Labor officials in March bringing attention to a lack of workers of color and women in leadership positions at the company, which brought in 48% of its revenue in fiscal year 2022 from U.S. federal services according to the August presentation. The groups said that Maximus should be investigated for what they say is a noncompliance with laws protecting against discrimination.

Maximus employees have engaged in multiple walkouts to bring attention to calls for improved working conditions. In November, call center workers held walkouts in Mississippi, Virginia, Kentucky, and Louisiana to fight for pay of $25 an hour and more breaks in between their calls. At the time, Maximus said workers received two 15-minute breaks and one half-hour lunch break.

In response to questions about whether Maximus plans to improve working conditions, a spokesperson for the company told States Newsroom in an email, “We are always focused on ways to strengthen benefits for our employees. For example, we improved pay and compensation above the minimum wage and reduced employees’ out-of-pocket health care expenses.”

Maximus said it increased pay and compensation before an executive order finalized the minimum wage increase for federal contractors and said it pays call center employees a starting wage of $16.20.

“In certain geographies, and depending on the time of year, Maximus exceeds that wage,” the spokesperson said.

Disclosure: Casey Quinlan was previously a member of the Washington-Baltimore NewsGuild as a reporter for the American Independent. The NewsGuild is a sector in the Communications Workers of America.

For roughly a decade, advocates, legislators and workers pushed to pass legislation offering better workplace protections for pregnant workers. The Pregnant Workers Fairness Act passed in December and became effective on June 27, 2023. (Photo by Paul Morigi/Getty Images for A Better Balance)

Almost two months after workplace accommodations for pregnant workers became law, the rules surrounding what employers can and cannot do have yet to be finalized — but that doesn’t mean the protections are not in place.

The Equal Employment Opportunity Commission’s proposed regulations are expected to offer more clarity once finalized, but workers can still access their rights under the new Pregnant Workers Fairness Act and employers are still required to understand the law and follow it.

Here’s what you need to know about why workers say the law was needed, what workers’ rights are under the law and employers’ obligations to employees.

Why the law was needed

Other federal laws cover the rights of pregnant workers but advocates have long argued that many of them are too narrow to address the situations pregnant workers face when they seek accommodations. The Americans with Disabilities Act, for instance, does not consider pregnancy to be a disability but pregnancy-related complications, such as preeclampsia, do qualify. Under the ADA, a pregnant worker can’t seek out an accommodation in the hope of preventing dangerous pregnancy-related complications.

The Pregnancy Discrimination Act, passed in 1978, prohibits discrimination against pregnant employees but it’s difficult in practice for workers to receive accommodations under the law, because it requires finding another worker who received accommodations like the ones they’re seeking. This can be a challenging and time-consuming process because workers may not be aware of what kinds of accommodations their coworkers are seeking or may not have access to this information in the way their employer does.

Despite those laws, 23% of mothers said in a survey last year that they had weighed whether or not to leave their job because their workplace lacked reasonable accommodations or they were worried about pregnancy discrimination.

The Pregnant Workers Fairness Act, which passed in December, has been in the works for a decade.?In the intervening years, states began taking their own action. As of April, 30 states — including Alaska, Colorado, Minnesota, and Tennessee — as well as the District of Columbia, and four localities, had similar laws to the Pregnant Workers Fairness Act, some of which may offer stronger protections in certain situations than the PWFA, according to A Better Balance, a worker advocacy nonprofit. Twenty states did not have state protections like these at the time of its state analysis, including Alabama, Missouri, Pennsylvania, Wisconsin, and Michigan. The nonprofit has a comprehensive list of state policies on pregnant workers’ rights.

What are your employee rights?

Congress and federal agencies, employment agencies, labor organizations, private employers with 15 or more workers, and state and local governments with 15 or more workers are subject to the law, according to the EEOC.

While the rules haven’t been finalized, if you think your rights have been violated, you can already take action. On June 27, the EEOC began allowing workers to file charges under the law for violations that occurred on that day or later. Workers need to take this step before they can file a lawsuit against their employer. The law protects employees and job applicants who need accommodations because of pregnancy, childbirth, or conditions related to pregnancy and childbirth. Under the PWFA, pregnant workers should be able to make requests for reasonable accommodations, such as closer parking, uniforms in their size, and additional rest time.

The PWFA is similar in many ways to the Americans with Disabilities Act. It does not require an employer to provide an accommodation if doing so would bring it “undue hardship,” or in other words, it would come at great difficulty or expense to the employer.

But the law is also a bit different than the ADA. Unlike the ADA, where the employee has to be able to do the essential functions of their job or they no longer qualify for accommodations, the PWFA says that workers do not always have to be able to perform an essential function temporarily because of their pregnancy. It is expected that they will be able to resume those duties in the near future.

The EEOC’a proposed rules define the “near future,” or when workers will be able to perform essential functions of their job after being temporarily unable to do so, as generally going up to 40 weeks. This does not mean workers will always have 40 weeks but that needing 40 weeks doesn’t disqualify an employee for the accommodations. The regulations also say that if there are multiple options for effective accommodations, the employer should favor the worker’s preferred accommodation.

Liz Morris, deputy director for the Center for WorkLife Law, said applicants and new employees who want to work remotely because of their pregnancy will also be covered in the PWFA. Applicants can request accommodations during the hiring process itself, such as making modifications to a physical test. If a pregnant applicant anticipates that they will need adjustments from an employer because of their pregnancy, the applicant can agree to a general policy without accommodations and then request them once they are employed.

The EEOC regulations also get into detail about pregnancy-related medical conditions that apply to workers under the PWFA, A Better Balance Vice President Elizabeth Gedmark said.

“…The proposed rule discusses pregnancy-related issues ranging from preterm labor to anxiety and depression while also making clear that limitations can also be ‘modest, minor, and/or episodic,’” she told States Newsroom over email.

Lactation, potential pregnancy, miscarriage, infertility and fertility treatments, and having an abortion are also listed in the regulation. An employee who needs to take leave because of a limitation due to a condition related to pregnancy and childbirth should qualify for that leave under the PWFA, according to the proposed rules. The EEOC gives miscarriage and childbirth as examples of reasons for workers to take different forms of leave. The same definition of “near future” also applies. I

A Better Balance provides sample letters for employees to use when requesting work accommodations related to pregnancy.

What employers need to know

The rules are going through a public comment period through Oct. 10, and Victor Chen, director of communications at the EEOC, told States Newsroom that employers are not required to follow the proposed rules just yet. But he added that the PWFA itself provides direction for employers. He suggested employers read the EEOC’s list of commonly asked questions and listen to its webinar. He said the EEOC “will move as quickly as possible to finalize the regulation” after the comment period closes.

Morris said that although the regulations aren’t set in stone, “If I were an employer, I would certainly follow them for now, as they are an excellent indication of how the law will ultimately be interpreted.”

The rules specify that employers can’t deny work to an applicant or employee because of their need for an accommodation, make a decision for a pregnant worker without any discussion on which accommodation they will receive or force them to go on leave if there is an accommodation they could take to continue working. They also can’t retaliate against workers for advocating for themselves under the law and reporting discrimination nor can they try to stop workers from enjoying their legal protections.

Michael Fallings, the managing partner of Tully Rinckey PLLC’s Austin office, who specializes in federal employment law, said he thinks it will be useful for employers to have more information on how to fairly treat pregnant workers seeking reasonable accommodations.

“I think it could be helpful for employers because I think some employers are in fear of litigation at times and now that you have a law in place that says what you can or cannot do, it provides some basis for the employers,” he said.

Morris said that employers should keep in mind that they need to swiftly provide accommodations and if they can’t, they should think about interim accommodations. The proposed EEOC regulations explain that an “unnecessary delay” could result in a violation of the law.

The future of the law and its regulations

The law’s regulations may be tweaked during the rulemaking process and could be eventually challenged in the courts. The Alliance Defending Freedom, which has been involved in numerous lawsuits challenging abortion rights,? called the proposed regulations “federal overreach.” The ADF, a legal advocacy group, has argued that the administration doesn’t have the legal authority to include abortion in its implementation. Morris said that accommodations related to abortion are reasonable to include because the EEOC has always defined pregnancy, childbirth and related medical conditions in the courts as including abortion.

Organizations that supported or opposed the law will also have the opportunity to suggest changes to the regulations. The U.S. Chamber of Commerce advocated for the passage of the law and will provide a public comment on parts of the rule that could be changed, the group told States Newsroom, but declined to elaborate on what should be revised.

Morris said her organization also plans to submit a public comment on the proposed EEOC regulations. She wants to see some revisions on the issue of medical certification to make it even easier for employees to receive accommodations.

“A shocking number of people don’t receive prenatal care because they don’t have access to it either because of financial barriers or because they live in a remote area where it’s difficult to travel to, to receive prenatal care,” she said.

Food prices overall increased a tad in July over the previous month, but seafood, eggs and milk prices all declined, according to the Department of Labor’s consumer price index. (Photo by Scott Olson/Getty Images)

Vice President Kamala Harris, shown here at an event in June, touted a new Department of Labor rule while in Philadelphia on Tuesday, Aug. 8, 2023. The new rule would improve wages and workplace protections for people working on projects that get federal funding. (Photo by Alex Wong/Getty Images)

Construction workers who work on federal projects are poised to receive better wages and worker protections under a Department of Labor rule touted by Vice President Kamala Harris on Tuesday.

Speaking at a union hall in Philadelphia, Harris praised the Biden administration’s economic agenda and pointed out that the new rule would be the first update in more than 40 years to the Davis-Bacon Act, which requires paying prevailing wages on public works projects. The Reagan administration changed the definition of prevailing wages in 1983.

“Let’s agree these workers deserve our recognition and appreciation and they deserve something more,” Harris said. “They deserve a raise. … Many workers are paid much less than they deserve, much less than the value of their work … in some cases by thousands of dollars a year, and that is wrong and completely unacceptable.”

The final rule transforms how prevailing wages, or the hourly rate of wages paid to workers in a given area, are calculated. It would base wages off of at least 30% of workers instead of 50% of workers in a trade in a certain locality, which the Biden administration said will help ensure workers’ prevailing wages aren’t dragged down by employers who pay low wages.

The regulation also makes it easier for the agency to withhold funds from contractors to ensure workers are paid properly and protects workers from employer retaliation, Biden administration officials have stated.

The rule will be effective in about two months and would affect an estimated 1.2 million workers.

Harris praised the work of union leaders during her speech. She called Sean McGarvey, president of North America’s Building Trades Unions (NABTU), who was present at the speech, “a partner,” and thanked Jimmy Williams, the general president of the International Union of Painters and Allied Trades. After the speech, she planned to tour Interstate 95. In June, part of I-95 collapsed when a gasoline tanker exploded, and the man driving the vehicle died. Harris applauded the swift rebuild of the section, which took only 12 days. The rebuilding effort received federal funding.

Sharita Gruberg, vice president for economic justice at the National Partnership for Women and Families, said that the original formula for wage standards was supposed to make sure that federal contracts are paying workers a competitive wage but the Reagan administration’s changes in the 1980s weakened the rules.

“There’s just been all of these artificial barriers constructed since the ’80s that weaken this really strong rule that’s supposed to protect the local economy and protect workers,” Gruberg said. She added that the idea was “to make sure that these local economies are not subject to a large influx of federal dollars going to construction companies that are paying less than market rate and creating a race to the bottom.”

The administration is prioritizing these changes after it has invested billions in manufacturing facilities and repairing roads through the CHIPS and Science Act and the Infrastructure Investment and Jobs Act. Gruberg said the administration is trying to make the most out of those investments by making these reforms.

“There’s two paths here,” she said. “One, we update these rules and make sure that these investments are reaching their full potential for communities, or we don’t and lose workers a lot of money.”

Progressive think tanks have argued that such changes will make it easier for workers to receive higher pay and better benefits. In its comment on the proposed rule in May 2022, the Economic Policy Institute said research has established that prevailing wage laws increase worker pay, help more workers get pension plans, and improve workers’ health care coverage as well as make the construction industry more equitable for women and workers of color.

The Laborers’ International Union of North America also supports the change and said it will protect many LIUNA members.

“With massive investments in infrastructure through the Bipartisan Infrastructure Law, the CHIPS and Science Act, and the Inflation Reduction Act creating hundreds of thousands of new jobs with prevailing wage rules, construction workers across the nation will benefit from the strengthened wage floor,” LIUNA stated.

There is still opposition to the rule from the Associated Builders and Contractors, a non-union trade group, which has said it will take legal action in response to the rule. The trade association said there’s no timeline yet for when they will bring a lawsuit.

Ben Brubeck, vice president of regulatory, labor, and state affairs at the Associated Builders and Contractors, called the rule a “handout to organized labor on the backs of taxpayers, small businesses and the free market” and said the regulation is “unnecessary, costly and burdensome.”

A UPS worker on his daily rounds on July 24, 2023, in New York City. UPS workers had threatened to walk off the job on Aug. 1, if UPS didn’t agree to higher wages and better working conditions. The Teamsters union, representing some 340,000 UPS workers, reached a tentative agreement with the nation’s largest package carrier on Tuesday. (Photo by Spencer Platt/Getty Images)

UPS and its workers, represented by the Teamsters, reached a tentative deal on Tuesday to prevent an Aug. 1 strike of 340,000 union members at the package carrier. A work stoppage could have cost the U.S. economy billions by disrupting supply chains and upending distribution to both large and small businesses, hospitals and homes.

Representatives of the UPS Teamsters locals will meet to review the deal on July 31 and members will vote on it between Aug. 3 and Aug. 22.

The five-year contract includes a wage increase to bring part-time workers’ pay to at least $21 an hour immediately and full-time workers to an average top rate of $49 an hour. UPS also agreed to workplace safety protections such as air conditioning in vehicles purchased after January 2024, and to stop the practice of requiring overtime on days off. UPS drivers have been demanding better protections for working in the heat after instances where workers have been hospitalized, and in some cases died, on the job.

Teamsters General President Sean O’Brien said in a statement, “UPS has put $30 billion in new money on the table as a direct result of these negotiations. We’ve changed the game, battling it out day and night to make sure our members won an agreement that pays strong wages, rewards their labor, and doesn’t require a single concession. This contract sets a new standard in the labor movement and raises the bar for all workers.”

Carol Tomé, CEO of UPS, called the deal a “win-win-win agreement.”

President Joe Biden congratulated UPS and the Teamsters on the tentative deal and stated, “While this agreement still awaits final ratification by Teamsters members, today’s announcement moves us closer to a better deal for workers that will also add to our economic momentum.”

A strike could have cost the economy $7 billion, according to an analysis from Anderson Economic Group. A 10-day strike would have cost consumers $4 billion and UPS workers $1.1 billion in lost wages, according to the analysis. In 2021, UPS made up 37% of parcel market share in the United States. UPS announced in April that its first quarter revenue was $22.9 billion and its operating profit was $2.5 billion.

“Workers are all powerful right now, particularly in this sector where it takes roughly twice as many workers to process the same volume of product that goes out in e-commerce as opposed to brick and mortar retail,” said Thomas Goldsby, Haslam chair in logistics at the University of Tennessee.

Goldsby said that he doesn’t see demand for e-commerce going away as so many consumers have become accustomed to receiving their items quickly and efficiently, which requires a lot of labor.

“You think about a big store that would receive a full pallet of product and it might have hundreds or thousands of items on that pallet. Well, e-commerce takes it upstream and says we’re breaking down the pallets in a regional distribution center and it’s going to be a worker in a warehouse that unpacks the box that grabs the items, that repackages, that labels, and ships,” he said. “Then ultimately, it takes people to deliver the item. So it’s much more labor intensive and I just don’t see us moving away from e-commerce, even if growth kind of tempers and tapers off a bit.”

Goldsby, who has closely followed the developments in the UPS-Teamsters negotiations, said he believes it’s likely membership will vote to accept the deal because of the broad gains workers made in the agreement.

“In so many categories — economic, non-economic, wages, benefits, holidays, work conditions, there were gains virtually across the board,” he said.

Kristen Chapman is moving from Tennessee to Virginia so her 15 year-old transgender daughter can continue receiving gender-affirming care. (Photo by John Partipilo/Tennessee Lookout)

Roberto Che Espinoza had been thinking about leaving Tennessee after the 2024 election, but in June they noticed that the state attorney general was seeking medical records on gender-affirming medical care, which Espinoza, a nonbinary transgender man, said included their own records.

“Being on any kind of list … I knew after the release of those records that this is not good,” Espinoza said.

Espinoza had already been alerted to a threatening anti-LGBTQ social media post featuring their photo that they said was shared by Proud Boys, a group the Southern Poverty Law Center designates as a hate group. Their wife, who is queer and has lived in the state for 20 years, became concerned for Espinoza’s safety.

As the political climate in Tennessee continues to worsen for LGBTQ people — and rapidly so — the couple are no longer waiting. Espinoza, an ordained Baptist clergyperson, activist and educator, and wife are leaving Nashville in August for a state on the East Coast.

“We see the toll that it’s taken on our emotional and physical and mental health and we’re terrified,” Espinoza said.

As anti-LGBTQ laws spread across Tennessee and the rest of the country, many LGBTQ people and their families are assessing whether they should move to a state with a more LGBTQ-friendly political climate. These choices can hurt the economic stability of queer people and their loved ones. But research and surveys suggest that the relocations may also harm the state and local economies that lose LGBTQ people — and benefit those that gain them. LGBTQ people and their families shared with States Newsroom that they’re relocating or considering relocating to Colorado, Virginia, California, Michigan, Washington, and Oregon, where they see better legal protections.

Wells Fargo released a report in June on the effect LGBTQ people have on state economies. It found that real state gross product was positively correlated with higher concentrations of LGBTQ people between 2010 and 2019.?This suggests state economies with higher concentrations of LGBTQ people grew faster in this period than they would have without greater proportions of LGBTQ people, authors of the report explained. Researchers suggested that this could be because LGBTQ people tend to be younger and more highly educated than the average American and are more entrepreneurial.

The researchers added: “In our view … the diversity that LGBT individuals bring to a community may help it to achieve ‘economic creativity’ and therefore stronger rates of economic growth.”

Todd Sears, CEO and co-founder of Out Leadership, an LGBTQ business advisory, said he spoke to Wells Fargo economists and said the report aligns with a lot of the research OutLeadership has done.

“It’s one, not surprising. Two, obviously having data to prove it makes the conversation a whole lot easier to have and hopefully more impactful,” he said.

Sears said that for years, economists and sociologists, such as Richard Florida, who wrote “The Rise of the Creative Class,” have said that diversity is linked to economic creativity. Sears said it may take time for states to see evidence of how anti-LGBTQ laws have impacted their economies but that the departure of LGBTQ people and their families will have an effect.

“These states are going to see all these economic consequences and start to say, wait, what do we do? Why did we do this? How did this help our state? … The impact that will have on trans youth who are the most vulnerable youth in our country is significant and it’s unfortunate that they are going to be the ones who really suffer,” he said.

Moving out

At least 70 anti-LGBTQ laws were enacted this year, with 15 of those laws targeting gender-affirming care for transgender youth and seven allowing or requiring the misgendering of trans kids at school, according to the Human Rights Campaign’s May analysis of this legislation. States have also passed anti-LGBTQ bills limiting how LGBTQ people can be mentioned in school curricula and criminalizing some drag performances.

The Movement Advancement Project, which keeps record of anti-LGBTQ policies across the U.S., gave a negative policy tally to 13 states for their anti-LGBTQ policies, most of which were concentrated in the southern U.S. Texas, Florida, Tennessee, Alabama, South Dakota, and Montana belong to this group. ?Kentucky, Ohio, West Virginia, and Indiana had low policy tallies.

Anti-LGBTQ discrimination and violence occur across the country regardless of each state’s policies. Trans people, particularly Black trans women, are also killed in states with less hostile political climates. In July, a Michigan hair salon stated through Facebook that it refuses to serve transgender and nonbinary patrons. The Movement Advancement Project gave Michigan a fair policy tally.

Tennessee, which has a Republican governor and a legislature controlled by Republicans, enacted many anti-LGBTQ bills over the past few years, including bans on trans students playing sports on the team of their gender and on gender-affirming medical care.

A May 2023 Data for Progress survey of more than 1,000 LGBTQ adults in the U.S. showed that 27% of LGBTQ adults have considered leaving their state because of anti-LGBTQ legislation, particularly transgender people at 43%. Eight percent of LGBTQ people aged 18 to 24 said they’d already moved and 9% of LGBTQ people 65 years and older did. In response to Florida’s “Don’t say gay and trans” bill, 56% of LGBTQ parents had considered moving out of the state and 16% already had taken steps to move out of Florida, according to a June 2023 report from the University of California, Los Angeles’ Williams Institute.

Kristen Chapman, a queer artist based in Nashville is planning on leaving Nashville at the end of this month to ensure that her 15 year-old transgender daughter can continue receiving gender-affirming care. Chapman is relocating to Virginia. She said she thinks Nashville will be impacted by the loss of creative labor and health care industry workers.

“I think that the people that are leaving are leaving a hole in the fabric and I’m not sure it’s going to be quite evident at first,” she said. “But all of the people that I know that are moving are deeply engaged in their chosen communities. They’re not people who isolate and they’re also all creative, particularly here in Nashville where the livelihood of the city depends on creative labor.”

John Cooper, the mayor of Nashville, tweeted in 2021 that he was concerned about the “threat” that anti-LGBTQ bills “pose to the community and economy.”

When it comes to her family’s economic stability, Chapman said there are still many unknowns.

“I’m interviewing for jobs right now. I’m in that you jump off a cliff and you hope the net appears kind of situation,” she said.

Relocating for a future

Zofia Zagalsky, a 25 year-old trans woman, is a student at Middle Tennessee State in Murfreesboro. She said she’s considering leaving the state after she finishes her graduate program. She’s not sure where she’d go, but said California, Oregon, Washington, Michigan, and Wisconsin are among the possibilities.

“The dead honest truth is I’ve never wanted to leave Tennessee,” she said. “This is my home. This is where I was born. This is where I’ve learned to live my life. That’s where I was raised. … I love Tennessee.”

But the discrimination against and harassment of LGBTQ people is stressful, she said.

“I hear constantly people wanting to leave, people wanting to get out, because nobody wants to live like that. Nobody wants to age themselves faster because they have to listen to people screaming at them,” she said.

Katie Laird, whose son Noah is transgender, moved some of the family out of Texas to Colorado a year ago for a less hostile political environment. Her husband still has to live in Texas for work, but she is able to do her work as a consultant for nonprofits and civic organizations from Colorado. Dual city living has caused financial strain but she said Noah is thriving there. Laird said that she’s seen more visible representation of LGBTQ people in the workplace.

“The fact that he can have these very visible examples of trans people, queer people, non-binary people in the workforce, whether it’s at the doctor’s office, at the DMV, like him being able to witness everyday people living their everyday lives … even that has helped boost his hope for his future,” she said.

She said Noah, who is 16, has thought about working in health care.

Many LGBTQ people States Newsroom spoke to are confident that states have lost something from their departure. MD Sitzes, communications manager for Equality Ohio, said they and their wife moved to Ohio in 2020 partly to be closer to Sitzes’ mother, whom Sitzes had reconciled with after she forced Sitzes to move out as a teen. Since their mother is a person with paraplegia, it was easier for their young children to see her if they lived nearby, Sitzes said. But the anti-LGBTQ climate in Ohio became too intense for the family to continue living there, they said. Sitzes said that at one point, they were contemplating suicide for the first time since they were in their early 20s. The family moved out of Ohio last year and lived in Portugal for a while before moving to the Bay area. They said that Ohio and other states are losing economically when they encourage homogeneity.

“[Diversity] brings perspective and the loss of that perspective is so damaging for the economy,” Sitzes said. “When people don’t feel safe, they’re not going to move there and then they’re not going to send their kids there … I know that diversity brings creativity. I know that it builds a stronger economy because I’ve lived in those economies and worked in those economies.”

Companies filled 209,000 jobs in June, according to the latest jobs report from the U.S. Department of Labor. (Photo by Spencer Platt/Getty Images)

Although hiring inched down in June, the U.S. labor market is still showing signs of strength, with unemployment falling and earnings continuing to rise, the latest jobs report from the U.S. Department of Labor showed.

The economy added 209,000 jobs as the unemployment rate fell to 3.6% from 3.7% in May.

“In excess of 200,000, you’re easily pulling more workers off the sideline and you’re keeping up with the population growth. It’s strong. It’s not hot but it’s also not cool. I think we’re in a good place right now,” said Elise Gould, senior economist at the Economic Policy Institute.

The employment to population ratio, which the World Bank considers an indicator of how efficiently the economy supplies jobs for people who want to work, was 80.9% for people 25 to 54 years old, the highest it’s been in more than 20 years. Women’s employment to population ratio was 75.3%, exceeding its high before the pandemic of 74.6%.

“That hit another series high,” Gould said of women’s employment to population ratio. “It’s been high for a couple of months and now it’s hit a new high, the highest on record. … That’s back to 1948. I think that’s a really important milestone that’s been reached.”

She added, “Men also did see improvements. They’re narrowing their deficit from [before the] pandemic, but they just haven’t hit it yet.”

Employment in federal, state, and local government shot up by 60,000 in June and by 56,000 in May, which is notable for a sector that has been slow to recover from the pandemic. It has added 63,000 jobs per month on average this year compared to 23,000 each month in 2022. Although this job growth is a positive sign, the government would need to add 161,000 more jobs to meet its February 2020 level.

“I think what’s really important about the public sector especially is that it’s a uniquely good engine for upward mobility, especially for workers who are discriminated against or have a hard time finding jobs in the private sector,” said Dr. Chris Becker, senior economist and associate director of policy and research at Groundwork Collaborative. “ … the public service sector provides really important services. We value these jobs because they’re really useful to society as well.”

Gould said, “The gap that I’ve been most concerned about [in the public sector] is state and local jobs and that’s where most of the gains have happened, not only in June but also in May and in April.”

Wage growth

Average hourly earnings increased by 12 cents to $33.58 and over the past year those earnings rose by 4.4%. Economists say these gains have been particularly important for low-wage workers who have had more leverage in this economy.

Becker said that wages have improved because of policy choices made since the pandemic such as the American Rescue Plan and expanding the child tax credit.

“We really put a lot of money in people’s pockets and this led to a really strong labor market which has led to a lot of job opportunities and that’s really benefited people at the bottom of the income distribution the most,” he said. “Over the last couple years, we’ve seen really strong wage growth, especially for those workers at the bottom.”

Gould said workers have found leverage through switching jobs and getting on a new career path. The pandemic government support made them less desperate to take the first job that was available to them, she said.

“Those are all certainly promising signs. My caveat to that is that it’s been decades of very slow wage growth for those workers, and so it certainly puts a dent in those kinds of losses or that rise in inequality, but the wage levels are still quite low,” she said.

According to a ADP Research Institute and Stanford Digital Economy Lab report, private sector employment shot up by 497,000 jobs in June, which was much higher than median economist expectations from a Bloomberg survey. ADP, a payroll service provider, often has different data than the Bureau of Labor Statistics because its employment information comes from payroll transactions while the BLS data comes from surveys. The June data found that the five highest annual pay changes in the U.S. were in Wyoming at 9.5%, Montana at 9.3%, Oregon at 8.4%, Idaho at 8.1%, and New Mexico at 8%.

Still, economists said the unemployment rate for Black people in June is concerning at 6% from 5.6% in May and 4.7% in April. The April unemployment data marked the first time since the Labor Department began collecting the data that the unemployment rate for Black workers dropped below 5%. The unemployment rate for 16- to 19-year-olds was 11% up from 10.3% in May and 9.2% in April.

“We know that Black workers face rampant discrimination in the labor market,” he said. “We know that they generally are the last hired and first fired and so they’re going to be the ones who are disproportionately going to bear the brunt of whatever policy choices we make to try to slow down this labor market.”

Becker said that he believes that the Federal Reserve’s interest rate increases, which it just decided to pause a few weeks ago, are undoing some of the progress made in narrowing the gap between the unemployment rate for white workers, which was 3.1% in June, and the unemployment rate for Black workers. The Fed has indicated that it may resume raising interest rates this year in its quest to reduce inflation.

“I can’t predict what the Fed will do but the labor market is not hot,” Gould said. “It’s strong, but inflation wasn’t and isn’t coming from the labor market so the Fed should keep pausing. The labor market has been resilient so far to interest rate hikes, but they operate with a long lag so it’s too soon to tell.”

Domino’s Pizza is one of several restaurant chains alleged to have misclassified workers as managers to avoid paying overtime, according to a report from the National Bureau of Economic Research. (Photo by Kevork Djansezian/Getty Images)

About five years ago, most of Minneapolis’ Subway, Little Caesars and McDonald’s franchise restaurants did not comply with city wage standards. Now workers at each of the locations that violated the law receive the required minimum wage and time off when they’re sick.

This is all thanks to a co-enforcement program, where the city’s labor enforcement agency works with community organizations to ensure workers are aware of their rights and have the tools to advocate for themselves. Last year, it reached more than 12,000 workers and provided training on worker rights for more than 400 people. Since the program began in 2018, it has recovered more than $3 million in unpaid wages.

“Pretty consistently, since we started, we have received a disproportionate number of complaints or reports of violation from restaurant workers,” said Brian Walsh, director of labor standards and contract compliance at the Minneapolis Department of Civil Rights, pointing out that the restaurant industry historically has had the majority of its workers at, or barely above, the minimum wage. “… It’s kind of the front lines where some of these municipal labor standards are the rubber hitting the road if you will.”

Wage theft, which can include not paying workers minimum wage, misclassifying workers as independent contractors or as management to avoid paying overtime and taking tips meant for employees, is a $50 billion problem for U.S. workers. It is committed by large corporations, small businesses and even state governments, and it disproportionately affects low income workers, including women and workers of color.

Funds from the American Rescue Plan Act, the federal government’s response to the economic and health ramifications of the COVID-19 pandemic, allowed more states and cities to experiment with using community groups to connect with workers as Minneapolis did, according to a report from the Economic Policy Institute and the Center for Labor and a Just Economy at Harvard Law School. When labor enforcement agencies, which the average worker may not be aware of, work more closely with community organizations that connect with those workers, workers get better results, experts say.

Now that most of the ARPA funds have been appropriated, some policy advocates are pushing for states to continue this work, by making employers, rather than the public, shoulder the burden for the cost of enforcement and for the U.S. Department of Labor to support it through grants, among other funding options.

“If there are workers in a worksite who the employer knows … know their rights and that they’re ready to stand up for themselves, it makes the employer less likely to try to do things intentionally to steal wages so that then becomes like prevention,” said Veronica Mendez Moore, co-director of Centro de Trabajadores Unidos en Lucha (CTUL), a worker-led organization in Minneapolis focusing on racial, gender, and economic justice. “We’ve seen that in multiple instances where? once workers stand up about one thing, the employer sort of shies away from the other.”

Walsh regularly meets with Mendez Moore’s group as well as New Justice Project MN, a Black-led organizing center focusing on economic issues, and ROC Minnesota, a labor advocacy nonprofit to discuss new developments, such as the wage theft trends they see emerging.

He said a closer relationship with these groups has helped strengthen enforcement.

“[There are] roughly 300,000 employees across the entire city and then three investigators,” he said. “That’s a really hard, almost impossible task, to be all places, all the time.”

Walsh said the total amount of ARPA funding allocated for the program is $750,000.

ARPA funds to the rescue

“The American Rescue Plan [Act] funds provided some more opportunities for that experimentation,” said Rachel Deutsch, campaign director at the California Coalition for Worker Power and one of the co-authors of the EPI/Harvard report. “There’s now this question of ‘Are we going to just abandon that infrastructure because we’re acting like COVID has ended or are we going to build on it to create mechanisms that really are needed whether or not we’re in an emergency response moment in order to inform low-wage workers of their rights and inform employers of their obligations?’ ”

The report highlighted efforts in several cities and states.

In 2021, Maine started a program with $1 million in ARPA funds for job training, help accessing unemployment benefits, and worker outreach with the support of community organizations, the AFL-CIO, and a legal aid group, according to the EPI report. In Seattle, the city’s Office of Labor Standards staff have monthly and quarterly meetings with community-based organizations. Chicago, Philadelphia, and San Francisco also have close partnerships with community organizations as do San Diego and Santa Clara counties in California.

In Iowa, the cities of Coralville, North Liberty, and Iowa City and Johnson County allocated $322,000 in ARPA funds over five years to the Center for Worker Justice in Eastern Iowa, which investigates wage theft cases and helps put community pressure on employers to pay their employees, and has assisted workers in recovering lost wages.

The help is needed because Iowa Workforce Development doesn’t have enough staff. Jesse Dougherty, the agency’s marketing and communications officer, told States Newsroom in an email that the Workforce Development Division has four positions to investigate unpaid wages. Two of those positions were vacant for part of the past year, Dougherty said. Overall about 15 to 20 people work on wage or misclassification issues on a regular basis.

Mazahir Salih, who until recently was the executive director at the Center for Worker Justice of Eastern Iowa, told States Newsroom that workers don’t always know how to file a complaint or that there is a labor enforcement entity they could file it with. They come to CWJ through word of mouth, she said. On this particular day, she was coordinating with organizers of a protest aimed at recovering the wages for a former worker at a local Mexican restaurant. He’d learned his employer couldn’t cover his paychecks only after he’d tried to deposit them at his bank.

Sometimes CWJ can work things out with the employer on the phone but if they can’t, then the group sends a letter, and from there it can ramp up community pressure, including protests and a delegation of elected officials.

“If it’s really miscommunication, we can figure it out on that phone call,” Salih said. “But some of them, either they don’t want to talk to us over the phone or they don’t want to give us any information.”

Deutsch said she would like to see more states in the South and Southwest adopt these approaches to enforce labor protections and prevent labor violations. She said that historically, these programs have started in cities with their own wage standards. One barrier could be preemption laws that have been used by state governments to prevent cities from increasing worker pay and protections beyond the state minimum wage. Many of the minimum wage preemption laws are concentrated in southern states.

Community-based organizations also need the proper financial support to dedicate time and resources to working with labor enforcement agencies. Funding issues could be resolved by dedicating revenue streams to labor standards enforcement and making employers pay for the costs through the penalties they pay for violating labor law, according to the report. Deutsch said that if philanthropic funding supports a pilot program and that program is successful, it can also make the case for more public funding of these partnerships. She added that she’s hopeful the Department of Labor will also use its granting power to support these models.

“As a society, we really systematically underfund the agencies that are supposed to enforce our workplace laws,” Deutsch said. “You’ll hear about recent anxieties about shoplifting or whatever and wage theft has always dwarfed retail burglaries and all of those things. It is a crisis and we just don’t fund it as such.”

The scope of the problem

The Fair Labor Standards Act requires workers be paid at least the federal minimum wage and overtime for any hours worked over 40 hours, but it’s a law that is often flouted. Last year, the Wage and Hour Division of the Department of Labor recovered back wages for workers in 13,122 labor violation cases in high-violation and low-wage industries. The industries that saw the largest number of workers affected were food service, construction and retail.

Low-wage workers in the 10 most populous states in the U.S. said they were paid less than the minimum wage, which means they lost $8 billion a year, according to a 2017 study. While a National Employment Law Project in 2019 found that $9.27 billion was stolen from workers who earned less than $13 an hour.
More recently, a January report from the National Bureau of Economic Research found that companies routinely deny workers overtime pay by labeling them managers even though the majority of the work they do is not managerial. Among the companies they singled out were restaurant chains Bojangles, Sonic, Arby’s, and Domino’s as well as businesses such as H&R Block, Spirit Halloween and 84Lumber. The report prompted Democratic U.S. Sens. Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts to send a letter to companies identified in the report asking them to answer questions regarding their overtime practices, as reported by the Washington Post.

Inflation continues to drop but lingering high prices, particularly for groceries, have left consumers grumpy, says one economist. (Photo by Brandon Bell/Getty Images)

Economists have been predicting a recession for months, but the labor market has remained resilient, wage growth is higher than before the pandemic, and inflation continues to drop, now at 4% compared to 9.1% in June of last year. Despite this good news, consumers don’t feel confident about the future, according to the consumer confidence index, which is at a six-month low.

The consumer confidence index fell to 102.3 in May from 103.7 in April. The present situation index, which shows how consumers feel about current conditions in business and labor, dropped to 148.6 from 151.8, and the expectations index inched down to 71.5 from 71.7. According to the Conference Board, an economic research and business membership organization that releases the index, an expectations index below 80 is associated with a recession within the next year.? People aged 55 or older were especially pessimistic about the economy. The next consumer confidence survey results come out on June 27.

“The technical term for the type of economy that we’re in now is weird,” said William Hauk, associate professor of economics at the University of South Carolina. “On the one hand, there’s a lot of very good news. We have a very low unemployment rate, really almost historically low at this point. The job market is doing well. At first, coming out of the pandemic, some people were concerned that the low unemployment rate was driven in part by low labor force participation. But that’s really kind of caught up to where it was in pre-pandemic terms.”

Although inflation is easing up, consumers are still paying more at the store than they’re used to paying in recent history, Hauk said. A lack of affordable housing, the Federal Reserve’s raising of interest rates before the survey ended, and news about bank failures and policymakers’ discussions over the debt ceiling may have all contributed to a gloomier outlook, economic experts said.

“Since the late ’80s to the ’90s, and 2000s, really, up until the last couple of years, we got used to having an inflation somewhere between 0% to 2% a year,” Hauk said. “So 4%, even though that’s certainly better than 8% or 9%, that’s higher than people are used to. I think it makes people feel kind of grumpy when they’re going to the grocery store, filling up their cars with gas and a lot of the other, you know, day-to-day purchases that they make, so I think that’s a big thing that’s dragging down consumer confidence.”

Why does the consumer confidence index matter? Economists and other economic experts say it’s a useful, if imperfect measure because it can provide information about future consumer behavior, which affects the economy. About 70% of the GDP is consumer spending.

“If consumers are nervous, that can mean less spending on the part of households and as a result that would make a recession more likely,” Hauk said.

Anastassia Fedyk, assistant professor at the Haas School of Business at UC Berkeley, said there are pros and cons to looking at the consumer confidence index to understand what it means for the health of the economy.

“The benefit is that this measure is forward-looking: how consumers feel towards future spending. This means that the measure can indeed be helpful in predicting future behavior,” Fedyk said in an email to States Newsroom. “Declines in consumer confidence now can forecast declines in consumer spending in the future. The drawback is that this measure is based on opinions rather than actions, and opinions stated in surveys don’t always perfectly translate into future actions. So consumer confidence is not a perfect forecaster of future consumer spending.”

A preliminary report for the Michigan Consumer Sentiment Index’s June survey found that it was up 7.9% from May’s final report, but noted that it’s still low by historical standards. Retail and food services sales were up 0.3% in May from April and rose 1.6% from May of last year. According to Reuters, economists polled by the outlet predicted a 0.1% fall from the month before. Consumer spending ticked up 0.8% in April.

Lara Rhame, economist and managing director at FS Investments, said consumer sentiment in particular will be important to watch to understand the direction of the economy.

“Our economy wants to grow. It naturally grows and the difference between sluggish growth and a real recession is household sentiment and when it starts to crack or buckle, I think it does get a lot of attention from policymakers,” she said.

Unemployment reached its lowest level in 54 years earlier this year and remains fairly low, at 3.7% in May. Wage growth, which was 3.7% in December of 2019, reached 6.7% in July 2022, though it has since fallen to 6%, according to the Atlanta Fed. But Americans still have? justified economic concerns, economists say. Housing is still expensive for many families. Although single-family rent growth has been slacking off for the past year, rents have risen 26% since February 2020, according to a June 20 analysis from CoreLogic, a business that produces consumer analytics and business intelligence.

In the first quarter of 2023, student loan balances totaled $1.6 trillion, a $9 billion increase from the last quarter, St. Louis Fed data shows. The people carrying that debt will have to make student loan payments again in October after a pause that began in March 2020. Interest on those loans start up in September. Many of the programs people relied on earlier in the pandemic to ease their economic pain, such as emergency SNAP allotments, have been discontinued or are set to end soon.

Rakeen Mabud, the chief economist and managing director of policy and research at Groundwork Collaborative, said the economy is “remarkably strong” right now given the challenges of inflation and the pandemic.

“I also think that it’s important to recognize that the pre-pandemic economy is not good enough,” she said. “… Part of what I think is probably going on is that the crises that we’re facing, the affordability crisis, the crisis of low-quality jobs with low wages and stability — these are crises that have long predated the pandemic.”

She added, “We’ve seen the cost of education, of health care, of child care, of housing, the prices have skyrocketed over the last several decades and wages have not kept pace. I think it’s important when we’re asking why are the vibes so off to really zoom out and think about not just this particular period of remarkable resiliency that we have seen with the labor market in particular, but what is the economy that people really want? People want an economy where they have stability, they have security, and they have ability to make ends meet without a huge amount of stress.”

The Federal Reserve has also raised interest rates since March of 2022. It paused these rate hikes for the first time since then on June 14, but indicated that there may be interest rate increases later this year.

Hauk said that in addition to the bank collapses this year, consumers may be feeling the effects of the Fed’s rate hikes.

“There have been a lot of, you know, sudden, very sharp interest rate hikes by the Fed and that makes credit tighter and that does make it harder to get a loan,” he said. “If you do have a loan, you’re paying higher interest than you were used to. If you’re thinking about going out and buying a car or if you’re looking for a new home or refinancing a mortgage, it’s not very easy anymore. All of these things do dampen consumer confidence as well.”

Fedyk said that for older populations that had particularly low consumer confidence, the debt ceiling talks that occurred before the survey’s cutoff date could have contributed to their point of view.

“Certainly the political discussions regarding the debt ceiling at that time likely had an effect,” she said. “(It) could reflect anxiety about potential cuts to social programs such as Medicare and Social Security.”

Kentucky's unemployment rate in April was 3.7% — a historic low, according to the Bureau of Labor Statistics. (Photo by Joe Raedle/Getty Images)

Across much of the country, the jobs market is as strong as it’s ever been, and Black women, young people and people with disabilities are among the workers benefiting, recent U.S. Bureau of Labor Statistics data show.

Twenty-nine states reported unemployment lower than the nation’s 3.4% rate in April, while 15 states saw record lows, led by South Dakota at 1.9%, followed by Nebraska at 2%, and New Hampshire and North Dakota at 2.1%. Other states that saw their unemployment rates reach levels not seen since the BLS began recording them in 1976, include Alabama, Arkansas, Kentucky, Maryland, Maine, Montana, Ohio, Pennsylvania and Wisconsin in BLS data on state labor markets released on Friday, May 19.

Kentucky‘s unemployment rate was 3.7% — a historic low, according to the BLS.

Mark Vitner, chief economist at Piedmont Crescent Capital in Charlotte, North Carolina, said major metropolitan areas and emerging metropolitan areas in the south have benefited from recent shifts in the labor market. In Florida, the labor market in Miami, Fort Lauderdale, West Palm Beach, Orlando, Tampa and Jacksonville has been growing rapidly, he said.?

“… Huntsville, Alabama, is one of the fastest growing markets and it’s a big tech market in aerospace and in defense. We’ve seen a huge influx from California into Huntsville and Chattanooga, Tennessee, has seen an influx of investment in the automotive industry,” he said. “The Port of Savannah has been the fastest growing port in the country. It’s just fueled enormous growth in the industrial market in Savannah and more broadly in south Georgia. These markets have low unemployment rates and very strong job growth and so that’s what you want to see that mix of.”

Vitner added that the rural areas of states with low unemployment may have a different story to tell.

“States that have a larger rural population tend to have lower labor force participation and given the stronger overall job growth, it results in some very low unemployment rates without particularly strong nonfarm employment,” Vitner said.

And in some states, the number of people who have lost work has increased. Nevada, which had the highest unemployment rate in the country in 2020, has seen job gains but still had the nation’s highest rate in April, at 5.4%. States like Washington and California, which have seen large layoffs among tech companies, also have seen their job markets slightly worsen.

But the recovery has also lifted up workers often sidelined in worse economic times. Bureau of Labor Statistics data on the demographics of workers and their unemployment rates for April showed that employment among Black women climbed to a 22-year high. Women’s labor force participation is also moving up. It increased by 0.6 percentage point in the past year.?

That growth is affecting women of all ages and education levels, and Black women and Hispanic women have had some of the biggest labor force participation growth, at a 2.2% and 2.1% increase over the same period, according to an analysis from University of Michigan’s Betsey Stevenson, professor of economics, and Benny Docter, a senior policy analyst.?

The unemployment rate for people with disabilities, while still high compared to the overall unemployment rate, is 6.3% compared to 8.3% a year ago. In March, the unemployment rate for people aged 16 to 24, who are already benefiting from pre-pandemic labor market conditions, marked a 70-year low at 7.5%, according to the Economic Policy Institute. In April, it dipped further for that age group, to 6.5%.?

“What happens when the economy is strong is that you can bring marginalized groups of workers off of the sidelines because employers are more open to different folks essentially,” said Katherine Gallagher Robbins, senior fellow at the National Partnership for Women & Families. “Part of the consequence of this strong labor market is that you’re seeing low unemployment rates for Black workers, and in particular Black women and for disabled workers. The rates for disabled workers have been both in terms of unemployment, but also in terms of participation, really strong compared to what we have seen in years gone by.”?

Gallagher Robbins added that Gen Z workers came into a very strong labor market which bodes better for them than previous generations, but it also means they have more to lose if the economy falters soon.

“They’re hopefully in a position of setting themselves up for lifelong higher earnings and yet they will be amongst the first to go. They tend to work in industries where there’s more churn,” she said, such as retail and hospitality.

Many industries are also showing fast job growth right now, Docter said, and growth has been largest in education and healthcare.

“[Private sector education and health services] had been the strongest job grower through the time between the last recession and 2020 and it got knocked pretty far off course in a way that was pretty atypical. Since then, we’ve seen really steady, really impressive growth most months (in those areas)? and I expect that we still will for a while,” he said. “… It’s nowhere near its pre-pandemic trajectory, so there’d be over 700,000 more jobs in that industry today than there are. And so there’s a lot of space there to grow if you look at the numbers this month. … There’s nothing really to say that those industries are going to falter any time soon.”

The labor market is still leaning toward greater power for workers as well, which has been positive for labor organizers, Gallagher Robbins said. Americans’ approval of labor unions has increased from 64% before the pandemic to 71% in 2022.

“[Worker bargaining] is on the rise and not accidentally. … Not everything has been successful but those [organizing efforts] coming to the fore now, I think are no coincidence,” she said. “That is also something that is interacting and intersecting with the economy of the moment and if we shift back towards a place where workers have less bargaining power, I think that that’s gonna have an impact on the ability to organize.”?

Vitner said the retirement of Baby Boomers provides many workers with greater labor power than they previously enjoyed.?

“Workers clearly have more negotiating power today. One of the things that’s in their favor is that we have a rising tide of Baby Boomers that are leaving the workforce. And that makes for a very tight labor market and certain industries have even greater challenges because their workforce skews a bit older,” he said. “ … Younger workers have a bit more negotiating power but they have a brighter outlook. They’re entering the workforce at a time where there’s going to be opportunities to advance relatively quickly.”

Inflation has made it more difficult for many workers to enjoy these gains but that could be changing. Although inflation is still far above the Federal Reserve’s 2% target, inflation is moderating, and wages are now outpacing inflation, at a 6.1% increase in median weekly earnings for January, February, and March compared to a year before. During the same period, there was a 5.8% rise in consumer prices. In April, average hourly earnings rose by 4.4% over the past 12 months.

Supporters of House Bill 367 say losing food assistance would encourage able-bodied adults to get a job. Opponents say the bill would harm local economies, increase administrative burdens on school lunch programs and disqualify people for having even small savings. (Photo by Justin Sullivan/Getty Images)

Congressional Republicans’ efforts to slash federal spending by tying work requirements to Medicaid and SNAP would have far-reaching consequences for people with mental health issues, chronic health problems, and some people with disabilities if enacted, policy experts on anti-poverty programs say.

They say the work requirements as laid out by House Speaker Kevin McCarthy’s “Limit, Save, Grow Act of 2023” — the Republican plan to raise the country’s debt ceiling —? would be devastating for many Americans and hard for states to implement, especially in the thick of the pandemic public health emergency ending. The bill narrowly passed the House in April, 217 to 211 with four Republicans joining Democrats in voting against it. If a deal isn’t reached, the U.S. will default on its debt as early as June 1.?

Democrats have pushed back on the work requirements, but McCarthy has said they are non-negotiable. Reports that Biden is showing some flexibility on the issue have upset some Democrats. The House Freedom Caucus has also pushed for McCarthy to stop the discussions with the White House until the Senate passes the bill.

Ten million Medicaid expansion enrollees are at risk under the bill, according to the Center for Budget and Policy Priorities. The Health and Human Services Department estimated that 21 million people are vulnerable to the work reporting requirements. The Congressional Budget Office found that 1.5 million people would lose coverage and 600,000 would become uninsured. It’s possible that the CBO could be underestimating how many people would lose their coverage, some experts say. Although the requirements apply to every state, the CBPP explained in its analysis of the bill that “it would heavily impact people covered by the Affordable Care Act (ACA) Medicaid expansion.”

“People with mental health issues, people with substance use disorders, people with chronic health conditions and even forms of disability could be encompassed within the expansion population and would need to navigate an entirely new system that’s really not well-specified in the bill to get an exemption and we know that that sets up a massive coverage loss potential,” Allison Orris, senior fellow at the Center for Budget and Policy Priorities, told States Newsroom.

The bill includes work-reporting requirements for Medicaid that are even more severe than a 2018 Arkansas law that has since been blocked by the courts, said Edwin Park, a research professor at the Georgetown University McCourt School of Public Policy. Unlike other work requirement proposals, the bill would not exempt people during their pregnancy and into their postpartum period and there isn’t an automatic exemption for people receiving Supplemental Security Income because they have a disability or Social Security Disability Insurance. It would undercut gains made by Medicaid expansion because even people eligible could lose coverage because of the complexity of the “red tape” they would be forced to navigate, Park said. The unwinding of pandemic policies adds to the potential complications.

“You have all the coverage losses where some people are going to be inappropriately disenrolled, particularly for procedural reasons. They won’t return in the mail. They never got their renewal packet. … And then you have on top of that, this onerous work-reporting requirement with red tape and because states are so overwhelmed with unwinding over the next year or so, it’s hard to see how they could implement a work-reporting requirement that implements the exemptions,” he said.

Park added that House Republicans who characterize this provision of the bill, which requires recipients to work 80 hours per month, do community service or be involved in an employment program, as only affecting able-bodied adults without children is inaccurate.

“… Based on how this proposal has been designed, you know, it’s not targeted to that group at all,” he said.

He explained, “We know that many people who are disabled who are receiving disability benefits do work to a limited extent and they aren’t necessarily unfit for employment. There’s limits on how much they can work to maintain their benefits. But federal policy, up to this point, has been encouraging those with disabilities to work to increase their employment hours while being able to maintain their health coverage.”

Expanding SNAP work requirements

The SNAP work requirements are equally concerning to advocates. Currently 18- to 49-year-olds without children at home can only receive benefits for three months in any three-year-period unless they prove they’ve worked a 20-hour week. Under McCarthy’s bill, those work requirements would be expanded to include people up to age 55.?

Craig Gundersen, an economics professor at Baylor University whose research focuses on food insecurity and food assistance, said it may look like that the work requirements are successful because cases will fall, but the reality will be different.

“What’s going to happen is if you impose work requirements you’re going to have an increase in food insecurity in our country,” he said.

He said the bill’s provision on SNAP doesn’t make sense.?

“SNAP doesn’t discourage work. So why would you want to impose work requirements? The second thing is that SNAP is an anti-hunger program full stop,” he said. “That’s what it was designed to do. If that’s its main goal, why would we ever want to say to people that you have to work to get these benefits.”

Nine-hundred thousand people in the U.S. aged 50 to 55 are at risk of losing SNAP, according to CBPP.

The SNAP restrictions also make it harder for states to provide support for SNAP recipients dealing with unique circumstances that would exempt them from the three-month time limit to receive benefits. The number of exemptions states can use are currently tied to their caseloads and if they aren’t used, states can roll them over into the next year. McCarthy’s bill wouldn’t let states carry over unused exemptions.?

??Temporary Assistance for Needy Families (TANF) would also be affected by the stricter work requirements in the House debt ceiling legislation. Families subject to work requirements — 540,000 families — could potentially lose their cash benefits, the CBPP estimated, worsening child poverty.

Housing assistance, student loan forgiveness targeted

In addition to these effects on anti-poverty programs, many other services and benefits in housing and education would likely suffer from the huge cuts proposed in the bill. The CBPP’s analysis of this bill shows average cuts of 13% in 2024 even if cuts were evenly spread across discretionary programs.

The legislation would also kill Biden’s student loan forgiveness plans regardless of the outcome in the courts and nix student loan repayment plans that were designed to be more affordable for people with student debt. It would “likely eliminate Pell Grants altogether for 80,000 students,” according to the Department of Education.

“Here you are cutting one of the premier programs that serves low-income students who are trying to access this level of education, who have long been marginalized in the labor market,” said Katherine Gallagher Robbins, senior fellow at the National Partnership for Women & Families. “And what you’re saying to them is, ‘Oh, hey, by the way, we’re not even going to give you the support that will pay dividends for years to come in your own earnings.”

Department of Housing and Urban Development Secretary Marcia Fudge has estimated that nearly 1 million people could lose housing assistance and that nearly 120,000 people may be cut off from homelessness services.

“Stable housing is such an essential part of any family’s economic security,” Gallagher Robbins said. “ … The cuts that they’re talking about here …, you’re going to end up eliminating almost 300,000 families’ support for their housing. Not all of those families will end up being unhoused, but some of them will. It creates this downward spiral that is very challenging to recover from, especially as other benefits are cut …”

The ending of the pandemic public health emergency has already resulted in the loss of financial support for some families, and now with these potential cuts, the people who benefited most from the recovery would be hurt the most from this bill, Gallagher Robbins said.?

“We’re already seeing things like less access to school lunch, less access to the child tax credit,” she said. “So families are already struggling with what that looks like and that has been mitigated to an extent, obviously not fully, by the current strength of the economy. Everything is up for grabs here, basically, in terms of harming families who are already absorbing this most recent kind of cut in support.”

Workers demonstrate in Miami Springs, Florida, in September 2020, in support of continued federal unemployment benefits in the pandemic economy. Economists say that direct support to workers helped spur the country’s economic recovery. (Photo by Joe Raedle/Getty Images)

The public health emergency declaration ended on Thursday, and with it some of the policies that helped the U.S. recover from the many of the economic effects of the coronavirus pandemic. Although COVID-19 is still a public health threat, the national economic crisis it created has subsided with the U.S. economy back to its pre-pandemic growth rate.

Economists say that the federal response to mass unemployment and business closures, through legislation that includes the CARES Act, Families First Coronavirus Response Act, American Rescue Plan Act, and other policies, helped fast-track the recovery. But the lasting effects of the pandemic on the labor force and how well prepared policy makers are to handle a potential recession or another pandemic is unclear.

“I think that this recovery was tremendous compared to any recovery in recent history because of the scale of the investments that were made by policymakers,” said Elise Gould, senior economist at the Economic Policy Institute, pointing to the child tax credit as one example that helped fuel the strong recovery. “So I think the incredible bounceback that we saw in employment and wage growth was driven directly from, in large part, to the kinds of investments that policymakers made in things like shoring up the unemployment insurance system, making that stronger, making it a better safety net for many workers.”

Lessons learned from federal investments

The policies that helped the economy recover from the effects of the pandemic could have reached more vulnerable people, however, and some sectors, like healthcare, are still suffering because of it. There are also many potential long-term effects that economists don’t yet understand, such as how Long COVID is going to affect the workforce or whether more remote work is here to stay and how that will influence the economy. They added that the lessons learned from the federal government’s reaction to the pandemic could prepare us for a recession or another pandemic.

Lindsay Owens, executive director of the Groundwork Collaborative, said lawmakers should take a similar approach in the future and focus on direct support to workers.

“Workers are the backbone of the economy,” she said. “If our workers are home sick, we’re going to have to kick into high gear on the safety net again and the good news is we know how to do that, with student loans, the eviction moratorium, unemployment insurance, extended unemployment insurance for freelancers, child tax credits, and so on.”

Still, the business stimulus in particular could have been better targeted, said Connel Fullenkamp, economist and professor of the practice in economics at Duke University. The Small Business Administration’s inspector general, found that at least 70,0000 of the Paycheck Protection Program’s loans were fraudulent. Other loans went to businesses that possibly could have survived the economic fallout without assistance.

“I think what we’re finding out now is that it was a little too easy for a lot of unscrupulous players to grab a piece of that pie,” he said. “Some of that’s being clawed back, of course, but a lot of it is just going to be lost and up in the wrong pockets. … It’s really hard to do targeted stimulus to anybody and especially for business. If Biden actually gets his proposal across to increase funding to the IRS, they and other government agencies could do a much better job of simply tracking taxpayers and businesses in order to do things like more targeted stimulus stimulus payments.”

States used funds from the American Rescue Plan Act of 2021 for eviction prevention, food programs, mental health services, and wiping people’s medical debt, but also spent the monies on building more prisons and offsetting tax cuts. More of it could have also been spent on modernizing unemployment insurance, economists said.

Lauren Bauer, fellow in economic studies at the Brookings Institution, said states could have done more to improve the administration of their programs as they received this huge influx of federal funding.

“The support for state and local governments was very, very generous in part because in the Great Recession, the lack of generosity to state governments really slowed the recovery. But because revenues didn’t actually fall that much, they were made more than whole,” Bauer said. “And so because of that, asking them to do some investment in administration of these social insurance programs seems like a pretty reasonable way to have them take responsibility for the role that they play in both protecting households but also getting money down to the ground so that it can be spent to stimulate a recovery.”

What the pandemic has meant for workers

The effects of COVID on the workforce, and certain sectors and industries in particular, are still developing, but economists say healthcare, education, child care, and public sector workers have all been seriously impacted. Fullenkamp said that it can be hard to disentangle labor market changes that happened because of expected generational shifts versus workers leaving the labor force because of the pandemic.

“I think one of the things that we can say for sure is that the pandemic accelerated the Baby Boomer retirement and brought a lot of retirements forward that would have otherwise played out over many, many years, much more slowly,” he said. “… I think we’re seeing that great resignation is more of a temporary phenomenon. We’re seeing people being drawn back into the labor market for a number of reasons. One is simply that the wages are going up finally and also that people did run out of stimulus money and prices are going up and that is going to pull some people back into the labor market.”

Low pay for “frontline” or “essential” workers needs to be addressed before the next pandemic, some economists said.

Gould said pay for public sector jobs such as those in healthcare and education, need to improve if we’re going to prepare for future economic challenges.

“We’ve seen this tremendous bounceback in private sector employment. Public sector employment, particularly state and local jobs, are still down. We have seen slow progress over the last few months but they’re still down a significant amount,” she said. “… I would have hoped that more of that [stimulus] money would have been used to help shore up that employment when the services that are being provided are in health care and education.”

Child care is also a huge issue, said Owens, of Groundwork.

“Between December 2019 and March 2021, about 9,000 child care centers closed,” she said. “The shortage of child care workers is gonna have to be addressed and that only gets addressed by making those jobs better. You’re going to have to pay child care workers more. … We will be weaker going into the next pandemic because we haven’t solved this for child care.”

The question of how COVID-19 illnesses will affect the labor force is still being researched and will take time to understand, economists say. Sixteen million working-age people have Long COVID, a 2022 Brookings Institution report found.

“I think it’s going to take a bit for someone to really carefully figure out how Long COVID and the changing health status of people and generally people’s feelings about public health and their own health are changing the labor force,” Bauer said.

Looking ahead to the next crisis

Is the U.S. prepared for the next pandemic or next recession? We’re better prepared for remote work and unemployment insurance isn’t going to hold people back from joining the labor force, some economists say. Policymakers have also demonstrated that they can mobilize quickly on vaccine rollouts.

“The very generous unemployment insurance didn’t really seem to hold people back from trying to get a job when jobs are available, which is a pretty big lesson for how to use the unemployment insurance system in the next recession to sustain consumption without preventing a labor market recovery,” Bauer said.

It’s still unclear what the effects of increased remote work will have on the economy overall, but some research has shown that the savings in time commuting to work can benefit employers because 40% of that time has been used to get more work done. However some employers have pushed back on remote work. An EY-Parthenon report released this month said that worker productivity fell 2.7% in the first quarter. Gregory Daco, chief economist at EY-Parthenon told Yahoo News that remote work could be a factor but that job churn may also be responsible. But in any case, businesses are better prepared for a sudden shutdown of offices than they once were.

“Businesses kind of figured out work from home pretty fast and were able to maintain, you know, decent levels of productivity in the workforce. We obviously won’t be kind of starting that process over from scratch if we have to send people home again,” Owens said.

Bauer added that more workplace flexibility could be better for keeping women in the workforce. Early in the pandemic, 9 million men lost jobs, but 11.5 million women did, and some women decided to take on child care and leave their jobs as it became more difficult to receive support outside the home.

She said a “no-brainer” in every recession is making sure that unemployment insurance and SNAP, and Medicaid are working swiftly and covering as many people as they can.

The pandemic has also exposed the problems in our supply chain, which have to be addressed before the next big economic vulnerability.

“A big part of the economy that we experienced really beginning in 2021 was because of our broken supply chain,” Owens said. “…We don’t have a spare semiconductor, a spare COVID test, a spare frozen pizza. … That left us really vulnerable to shortages and we have got to build resilience in our supply chain.”

The pandemic also showed us that for the next major health threat, the federal government is capable of moving quickly and should do so again, Owens added.

“The vaccine got done relatively fast and it’s worth remembering that there was massive federal incentive and investment in that, and that allowed it to lift off,” she said. “In the next pandemic, I would do all of that again.”

Gas prices are starting to level off after jumping more than 20 cents a gallon earlier this month. (Photo by Joe Raedle/Getty Images)

Higher temperatures. Higher gas prices.?

Drivers across the country have seen that seasonal given play out in recent weeks. The national average for a gallon of regular gas is $3.64 on April 26, up 21 cents over the previous month, according to AAA.?

The good news is that gas is 49 cents below where it was on April 26 of last year, and more than a dollar below last year’s high of $5.02 a gallon, which it reached in June. And right now, economists aren’t expecting prices to surge this summer, though some slight increases are still expected.

“I do expect prices to move higher through the year but nothing dramatic …,” said John LaForge, head of global real asset strategy at Wells Fargo Investment Institute. “As far as 2023, there really isn’t much to do. We’re heading into the driving season … I don’t expect to see gasoline move up by a dollar. I think it’ll be 10 cents, 20 cents. It’s not going to be any fun. I don’t think we’re gonna get this big, big move. In the end, the answer really is conservation and just don’t drive as much.”

Of course, gasoline prices differ widely from state to state, with consumers paying an average $4.70 a gallon for regular in Arizona and an average $3.23 in Louisiana on April 26.

So why the fluctuation from one state to the other? One month to another and even year over year??

Here is a look at the factors that play into prices.

Summertime blues

Due to environmental regulations, gas stations are changing gasoline to a summer blend, which has lower vapor pressure (making it cleaner) but costs more because it requires more refining. It could range from five cents more to 20 cents more depending on the region of the country you’re buying gas in, said Andrew Gross, spokesperson for AAA.?

“In some places [the switch] already happened and in other places, like in the Northeast, it continues,” he said. “Retailers have until the end of May where they’re able to keep selling the winter blend because they’re allowed to sell what’s still in their tank essentially.”

And some New England states and California have stricter regulations than the EPA, making their gas pricier still.

Other circumstances influencing gas prices include what the market will bear at that particular gas station, proximity to refineries, and hurricane season lasting longer than it used to, which can disrupt refineries, Gross said.

And yes, we’re driving more in the summer and demand is a big factor, though not the biggest.

The big driver: Oil

The price of gasoline you pay at your local station is greatly influenced by the price of crude oil. According to the U.S. Energy Information Administration (EIA) April report, the price of crude oil makes up 57% of the retail price of gasoline, followed by refining, taxes and distribution and marketing.?

OPEC producers’ announcement earlier this month that they would be cutting oil production by 1.2 million barrels a day pushed the price of crude oil over $80 a barrel. Russia and Saudi Arabia are making the highest cuts in production at 500,000 barrels per day, starting in May. The United Arab Emirates, Kuwait, Iraq, Kazakhstan, Algeria, Oman, and Gabon are also reducing production.?

“The oil market is just like the stock market. It’s very headline driven and any kind of bad news will make it freak out and that’s what it did,” said Andrew Gross, spokesperson for AAA. “The price of oil immediately shot up to like $85 a barrel (after the OPEC announcement). Well, since then, it’s really had a hard time keeping its nose above $80. If it stays north of $80, that puts a lot of upward pressure on the price of gasoline. If it drops below $80, a lot of that pressure is removed.”?

This week the price dropped to $76.73 a barrel.?

OPEC reductions also drove up the price of oil last year, leading to a high of $123 a barrel. But other factors also weighed on the price at the pump, including the start of the war in Ukraine, a decrease in production of domestic oil during the pandemic and a surge in demand from a nation ready to get back to business after COVID restrictions eased. And while the war is ongoing, production both globally and domestically is expected to reach new records, according to the EIA.

Let’s not forget profits

Oil companies reported record profits in 2022, partly buoyed by Russia’s invasion of Ukraine:

• Exxon Mobil: $56 billion
• Shell: $40 billion
• Total Energies: $36.2 billion
• Chevron: $35.5 billion
• BP: $28 billion
• ConocoPhillips: $18.7 billion

In October, President Joe Biden said he would work with Congress to force companies to “stop war profiteering, meet their responsibilities to this country, give the American people a break and still do very well.” He suggested a higher tax on their excess profits and other possible restrictions, options that were not expected to go anywhere in the Republican-led House.?

Instead of a windfall tax on profits, Biden’s budget calls for increasing the tax on stock buybacks from 1% to 4%, a move aimed in part at oil companies that had reported on earnings calls that they would buy back shares of their own stocks rather than invest in more production.??

However, U.S. Sen. Sheldon Whitehouse (D-RI) did reintroduce a bill in February that would carry out a per barrel quarterly tax of oil companies that produce or import 300,000 barrels of oil a day or more and would allow taxpayers to receive rebates of hundreds of dollars. U.S. Rep. Ro Khanna (D-CA) introduced the bill in the House.?

Can the U.S. do anything else to keep prices down?

Biden took action in 2022 to lower high gas prices by selling 180 million barrels of oil from the Strategic Petroleum Reserve, a move that received criticism from Republicans.

“After June, the prices began to drift lower. The administration helped out with tapping the Strategic Petroleum Reserve, which really played a key, a key role in that,” Gross said. “It could stop that trend of higher prices. Now can you say that it helped lower prices by 20 cents or 10? We will never be able to tell what it did but we know that it sort of stopped the momentum.”

It’s unlikely the Biden administration would take that measure again. The Strategic Petroleum Reserve is at its lowest level in decades.?

But right now it’s not expected to be needed. The EIA originally estimated that gas prices would increase to a national average of $3.53 a gallon in April and forecast prices at $3.45 a gallon through August. But it hedged as well, saying: “Additional OPEC production cuts, refinery outages, or changes in underlying economic conditions could all contribute to changes in gasoline supply or demand and, therefore, change the gasoline retail price outlook.”

Higher domestic production will help. The U.S. produced 12,462,000 barrels of crude oil a day in January, a 9.6% increase over the year prior.?

If demand changed, prices could also level off, but a lot would need to shift in the economy for that to happen, said Kevin L. Kliesen, an economist at the Federal Reserve Bank of St. Louis. Kliesen spoke to States Newsroom on April 19, before the Federal Open Market Committee’s media blackout period. Kliesen said demand could change significantly if the economy slows, but until the tight labor market changes, he expects to see some increase in gas prices this summer.?

“ …The unemployment rate is 3.5% so as long as the labor market continues to be quite well, that’s going to hold up consumer spending and incomes,” he said. “That’s going to tend to increase the demand for energy and things like that, so people should expect a modest upward drift in gasoline prices.”

This story has been updated to clarify that the U.S. produced 12,462,000 barrels of crude oil a day in January, a 9.6% increase over the year prior.?

Allowing employees with long COVID to have flexible hours and work from home are just two ways companies can help accommodate workers with long COVID. (Getty Images)

Three years after the start of the pandemic, millions of working age people still suffer from long COVID-19 and some lawmakers and advocates, including people with long COVID, say not enough is being done to protect their well-being and ensure they can continue to be employed.

Proposed federal legislation, better workplace accommodations, and more federal funding could make a difference, advocates say. The mitigation of COVID spread would also serve to prevent more people from getting long COVID or worsening the health of those who already experience it.

Long COVID has a wide variety of symptoms, including fatigue, dizziness, rapid heart rate, and brain fog, and for some people those symptoms can come and go. The challenges in receiving a diagnosis, due to the similarity in other medical conditions and other barriers, can make it hard to document their illness for employers.

“There’s a lack of consistency in how long COVID is defined and diagnosed and that can directly impact whether accommodations are provided because employers often are not sure how to proceed,” said Tracie DeFreitas, director of training, services, and outreach for the Job Accommodation Network (JAN), a consulting service for employers funded by the U.S. Labor Department. “… People may have a wide variety of symptoms that could come from other medical conditions and health care providers are sort of excluding other types of medical conditions first.”

DeFreitas said JAN’s practical guidance is for employers not to get stuck in determining whether someone’s long COVID is a disability through a diagnosis, since federal agencies including the Department of Health and Human Services and the Equal Employment Opportunity Commission have made it clear that it can be disability. Employers should instead focus on making accommodations for workers, she said.

With roughly 16 million people of working age reported to have some symptoms of long COVID, economists say there are long-term implications for the U.S. economy if workplace needs are not addressed.

The total cost of long COVID to the U.S. economy is a fluid figure. Last year, a Harvard University economist upped his initial estimate by roughly a trillion dollars to $3.7 trillion, with $997 billion of that amount being from lost earnings. In addition, studies have found that people with long COVID work 50% fewer hours and earn on average 18% less over the course of a year because of their illness.?

Meanwhile, a January report from the New York State Insurance Fund analyzing its compensation claims found that? 31% of claimants were experiencing long COVID or had had long COVID. The data, according to the report, highlighted an “underappreciated reason for the many unfilled jobs and the declining labor participation rate since the emergence of the pandemic.”

Those lost earnings, of course, can lead to reduced household spending, while the decline in labor participation caused many employers to raise wages, which has helped to fuel inflation.

Katie Brach, with the Brookings Institution, makes the case for more policy initiatives and workplace accommodations to enable long COVID sufferers to increase work hours, writing “long COVID is already a meaningful drag on U.S. economic performance and household financial health. And absent intervention, the situation is likely to worsen.”

Don’t abandon pandemic accommodations

Shelby Seier runs her own consulting practice in Omaha, Nebraska, All Kinds Accessibility Consulting, where she advises employers on how to provide accommodations, including for people with long COVID. Seier, who is disabled and chronically ill, has had firsthand experience with long COVID after getting COVID-19 last year.

“On a personal level, it was very mentally debilitating to have to rearrange my plans and just consistently wake up and not be able to do the things I wanted to do,” she said. “It’s a very heartbreaking experience and totally isolating, and it is emotionally compounding where if you have several days in a row of just not being able to stay on top of emails, which was a task that I could do prior, it just feels awful.”

Seier, who said she has suffered from post-viral illnesses since she was a teenager, said that running her own business allowed her to build accommodations for her own needs. Her experience informs her work with clients; showing them how to make the accommodations that previous workplaces did not provide her.?

“A lot of my work is convincing people not to abandon all of the great accommodations that they so easily, or perhaps not easily, implemented early in the pandemic, like flexible work schedules, virtual options, and reducing the amount of labor that your team does,” she said.

Seier added that disability awareness and inclusion training can be a crucial step for employers to prevent poor communication and ableism in the workplace.

“The team needs to know how to communicate with a person who has fluctuating abilities and there needs to be capacity-building about learning to understand an onset of acute illness,” she said. “Without those crucial educational components, I often see that resentment builds within an organization, if a team member can no longer do what they were previously able to do.”

Bryon Bass, senior vice president workforce absence and disability practice leader at Sedgwick, a global business solutions business, said it is likely that many people with long COVID will meet the requirements under the ADA, where a mental or physical impairment prevents participation in one or more major life activities, including work. Restructuring someone’s job through flexible work hours would be one way to accommodate someone with long COVID.

Some employers can provide intermittent leave as an ADA accommodation when workers with long COVID say they feel sick and need time off, according to a guide from JAN and the Employer Assistance and Resource Network on Disability and Inclusion. If an employee is no longer qualified for their current position, employers could also train them for a different one so that they can remain employed at the company. A March 9 webinar from Bass, DeFreitas, and other accommodation experts, included solutions for addressing memory deficits, such as providing written instructions, using voice recorders, creating the minutes of meetings and training, and making flowcharts to show the steps for a particular task. But most of all, many experts on accommodations say to go straight to the source, the worker, and ask what they need help with and what could work best for them.

In addition to JAN’s services for employers and guidance on long COVID as a disability, the Department of Health and Human Services created a guide in August on services and support for the long-term impacts of COVID-19, which also provides information for employers. In April, the department released a comprehensive fact sheet on defining Long COVID, workplace interventions, and research on Long COVID.?

Federal legislation proposed

The Biden administration also proposed $130 million for Long COVID programs in fiscal year 2024 and $130 million for diagnosing and treating long Covid in fiscal year 2025 in his budget request.?

Some lawmakers are intent on providing more resources and guidance to workers with long COVID as well as their employers. U.S. Sen. Tim Kaine, a Virginia Democrat, reintroduced the Comprehensive Access to Resources and Education (CARE) for Long COVID Act in March with Sens. Tammy Duckworth (D-IL) and Ed Markey (D-MA). Kaine has long COVID himself and said during his reintroduction of the bill that his symptoms included intense nerve tingling for three years.

Kaine’s bill, which hasn’t made progress in the Senate since it was reintroduced, would authorize $30 million to be spent for each of the fiscal years from 2024 to 2026 to create and disseminate information about long COVID to employers on the rights of people with disabilities as well as educational materials for school administrators, school nurses, and other school staff on support services and students’ rights. It would also support long COVID research, interagency coordination to educate the public, and “recommendations to streamline the process of applying for benefits through the Social Security Administration.” The bill creates a grant program to support partnerships that help people with long COVID find health care services and legal assistance.?

“Millions of Americans have had to step back from work or school due to Long COVID. This hurts families, communities, and our economy as a whole,” Kaine said to States Newsroom in an email. “… I’ve heard from many Virginians who have been sidelined from work by their debilitating Long COVID symptoms about the barriers they face seeking accommodations in the workplace, in schools, and applying for Social Security disability benefits. Barriers applying for benefits include long applications, difficulties accessing in-person appointments, a lack of clear-cut eligibility criteria, long appeals times, and an overly complex system.”

When asked how Seier pushes back when employers question the immediate costs involved in providing accommodations, she said employers can’t afford not to focus on them, as well as on measures preventing the spread of COVID, such as improving air quality.?

“‘I want you to do the mental math of thinking about how much it costs to hire someone to replace anyone on your team,’ and just helping them understand that a post-COVID illness can happen to anyone at any time after infection … I also let them know that aging is often the experience of the onset of disability, so if you’re investing in accommodations now you’re going to allow people to stay with you for a longer period.”

Seier added that she doesn’t believe the government is doing enough to address Long COVID or the spread of COVID-19 in general. She said she’d like to see more resources spent on making schools, workplaces, and places of public accommodation safer, such as improving ventilation systems.

“I would like the government to do anything more than the bare minimum that they’re doing right now and I think ‘bare minimum’ is generous. I think we are witnessing the complete abandonment of the disability community at an alarming and inexcusable rate from all levels of government and elected leadership.”

Economists warn that home construction loans could be affected by credit tightening at small and midsize banks. That, in turn, could cause home prices to rise as low inventory remains a problem. (Getty Images)

Home prices are cooling off and mortgage rates fell last week, but the fallout from recent bank closures could continue to make it hard for some Americans to buy homes, economists say.?

Mortgage rates fell to 6.32% for a 30-year fixed rate mortgage, Freddie Mac data released on Thursday shows. Last fall, the 30-year fixed rate mortgage climbed to 7.08% — the first time in 20 years that rates rose above 7%.?

Lower mortgage rates appear to have given home sales a boost in January and February, due to “pent-up buyer demand,” said Selma Hepp, chief economist at CoreLogic, which provides property, financial, and business intelligence.?

Last week, the CoreLogic S&P Case-Shiller Index showed a 3.8% year-over-year rise in home prices in January falling from a 5.6% bump in December. There have been nine straight months of slowing annual home price growth and this is the lowest annual increase since before the winter of 2019, according to Hepp’s analysis.

But regional banks, which saw depositors leave for bigger banks after the collapse of Silicon Valley Bank last month, are now tightening credit. The result, according to a report from Fannie Mae, could be fewer residential construction loans and jumbo mortgages as many originate from small and mid-sized banks. Less supply will keep prices high and all of that will likely affect spring home-buying, Hepp said.

“If we had more inventory, we wouldn’t have the rate of appreciation that we had during the pandemic and, and the rate wouldn’t impact people to the extent that it does because home prices wouldn’t be as high,” she said.

Hepp is also watching the Federal Reserve’s action on interest rates. Many economists believe the Fed could stop raising rates after one more cycle. That would be good for mortgage rates but not every buyer will benefit, Hepp said.

“There’s two sides of this coin,” she said. “One is that we may see a more favorable mortgage rate during the spring home-buying season and into summer, but on the flip side, there may be some concern around the lack of mortgage lending,” Hepp said. “The mortgage lending that does end up occurring would be to very prime borrowers that have very strong credit, large down payments, and things like that.”?

Lawrence Yun, chief economist at the National Association of Realtors, said he is concerned about how commercial lending would be affected by the banking crisis. Commercial real estate has already been affected by the pandemic and continuing remote work.?

“Where someone wants to buy an office space or someone has a restaurant and they need to refinance their building, all this commercial real estate will come under stress just because it will be much more difficult to obtain those loans and community banks are trying to conserve as much cash as possible, not lend that out,” he said.

But that doesn’t mean that commercial real estate couldn’t end up affecting home-buying all the same, Yun added.

“Weakness in commercial real estate could hinder job growth. Job creation indirectly impacts home-buying in a sense that there is a [lesser] job creation, and that means it’s creating fewer potential home-buyers down the line,” he said.

Hepp said that the Fed may not be particularly concerned with the housing market right now, since it is rebalancing, with the possibility of “maybe over-shooting on a downside.” But credit availability will likely remain a concern, and there are things the Fed could do to address it.

“To whatever extent that there is liquidity in the market or there may not end up being liquidity in the market, I think that’s the point at which the Federal Reserve may end up utilizing some of the tools that they did at the onset of the pandemic,” she said. “In particular, I’m thinking about mortgage-backed securities.”

At the beginning of the pandemic, the Federal Reserve made large purchases of mortgage-backed securities and took several other steps to keep the flow of credit going. Any policies that would improve the inventory and affordability of housing would also be helpful to the housing market right now, she said

Ironworker apprentice Natalie Bell displays her Rosie the Riveter tattoo that she describes as a symbol of strength March 22 at the Iron Workers 172 Training Center in Columbus, Ohio. (Photo by Graham Stokes for States Newsroom)

Natalie Bell was thinking about a career in art after college when a welding class and a delivery of four pizzas changed her career trajectory.?

“I was taking a delivery out to a construction site and I met an ironworker who I was taking the delivery to,” said Bell, who lives in Columbus, Ohio. “I asked him, I said, ‘Hey, are you looking for apprentices? I don’t want to do college anymore, but I’m a welder.’ He said, ‘Yeah,’ and he gave me the number to the ironworkers union.”

Bell, now 23, said she was worried at first about being accepted.

“I took my interview and I was so scared because I was like, ‘They’re not going to accept me. I’m a woman trying to do construction.’ I didn’t know how things worked at all,” she said.

Bell, who entered the industry in 2019, said working in construction has its challenges but the money provides her with a decent lifestyle and good health insurance.?

“I live very comfortably … I’m going to Iceland in July just because I can,” she said. “I can go do that. I can take a vacation every year. I don’t have to worry about medical bills because I have phenomenal insurance.”

The Biden administration is counting on more women like Bell seeing the value of jobs in the construction industry. Over the next decade, the administration wants to add a million more women in construction jobs to aid in infrastructure projects across the country, including its effort to increase semiconductor manufacturing. The success of that effort will depend on the federal policies now being put in place and changes to an industry that’s not known for being welcoming to women.?

According to Bureau of Labor Statistics data, 1.2 million women were employed in construction in 2020, and a University of Michigan analysis of the data found that women have gained jobs “at three times their share of the industry,” since the beginning of the pandemic.

Women were slowly but surely entering more male-dominated occupations before the pandemic, said Betsey Stevenson, an economist and professor of public policy and economics at the University of Michigan who did the analysis with Benny Docter, a senior data and policy analyst at the university. Women lost jobs in education and in the service industry during the pandemic and as they returned to work many shifted to new occupations that reflect changing market conditions, according to their analysis.

“I think that the important takeaway is that women can be an important source of labor for the construction industry,” Stevenson said in an email. “While child care is important for women, it is equally important to note that construction as an industry risks losing more male workers due to childcare conflicts. The childcare requirements in the CHIPS Act is there to help ensure a sufficient workforce is able to take on the work that is being funded.”

The CHIPS and Science Act, signed into law by President Joe Biden last year, aims to increase the country’s production of chips which are seen as essential for the military and for the economy because of their use in autos and all manner of electronics. The bill provides roughly $40 billion to build or expand plants, and already Intel is building a megaproject near Columbus, Ohio. But to receive federal subsidies the law requires companies to ensure that the workers they hire, including construction workers building the plants, have access to affordable and high-quality child care.?

Finding affordable, quality child care is an issue for many parents, but it can be even more of a struggle for construction workers because daycares typically open after they are already supposed to be at work. That can be particularly hard on single parents. Grecia Palomar, a 29-year-old single mother of two in Little Canada, Minnesota, spent seven years hanging drywall at Reshetar Systems, a commercial drywall and carpentry business, before leaving to become a drywall instructor for Finishing Trades Institute of the Upper Midwest. Palomar said she was only able to manage when her children were younger because her employer allowed her to arrive later and work later.?

Palomar said that even though she had grown up around job sites because her father worked in construction, she hadn’t considered it as a potential career until she moved back to Minnesota from Illinois with two young children to support. With one child in need of occupational and speech therapies, Palomar said she needed to make more than the $8 an hour she had earned as a preschool teacher. Her father suggested construction. She made $13 an hour when she started in the industry, and now makes $40 an hour.

Who is turning to construction careers?

The Bureau of Labor Statistics survey doesn’t explain the employment background of women newly entering construction, but several people working in the construction industry said they have seen women coming from what are considered service jobs.?

Mary Ann Naylor, communications and marketing director for Oregon Tradeswomen, an apprenticeship-readiness program in Portland, said that the women seeking out the program often come from retail, hospitality, restaurants and childcare, which often pays low wages and offers few benefits. She added that since the pandemic, she has seen more unemployed people and people leaving healthcare jobs to look into the skilled construction trades.

Some of the advantages of construction that appeal to new workers are paid training and lack of student debt. Joy Merryman, a plumber and pipefitter who lives in Pickerington, Ohio, and works in Columbus, said she enjoys knowing that her labor will benefit the community, including her work on recreation centers. And she’s so happy with her career choice that she now does outreach — planning events, job fairs and school visits — for the Central Ohio Women in the Trades.

John Burcaw, director of academic education and CEO of the Finishing Trades Institute of the Upper Midwest in Little Canada, Minnesota, said he’s seen workers come from similar employment backgrounds as Naylor mentioned. He said that there are also more opportunities for people starting a career in construction to possibly become project managers, estimators, entrepreneurs, educators, or labor leaders than when he began doing this work 33 years ago.

Harassment still a problem

But there are still challenges with both recruitment and retainment of women in construction.?

Women’s experiences often depend on the kind of support they have inside and outside the job, such as unions, women’s trade groups and foremen who push back against gender-based discrimination.?

In addition to the child care needs, work sites can still be rife with sexual harassment. All of the women working construction interviewed by States Newsroom said they have faced some kind of sexual harassment on the job, whether it was inappropriate comments on their appearance, nonconsensual touching, or “jokes that go too far.”?

Bell, the welder, said she has walked off jobs and once filed a complaint over sexual harassment, but has also had experiences where she has talked for foremen and had problems taken care of.

“I’ve been touched on the job site without consent. I’ve been yelled at in my face. I’ve been told I don’t belong there. I’ve been belittled, and I’m a minority so I’ve been made fun of or talked down to in that sense,” Palomar said. “But I had an awesome contractor who always had my back and if I didn’t feel safe somewhere, I could just call them and they would be there for me and I think that helped me get through that. Without their support and their trust and my union backing me up, I don’t think I would have been able to have the patience and the determination to stay there because it is overwhelming.”

Merryman, 37, who has worked in construction for 10 years in Ohio, said having supportive people around you helps, and that it’s easy to understand why women without that advantage end up leaving construction.?

“I think a big part of the issue with retaining people is you start to feel very alienated, you feel very alone and you question yourself,” she said. “Am I crazy for being grossed out by what that dude just said to me? Am I crazy for not wanting to have to listen to what he thinks about my body while I’m at work?”

There are educational efforts to make the workplace more welcoming to women, Burcaw said. The Finishing Trades Institute of the Upper Midwest is starting a program in the fall that advises men on how to be good allies to women in construction when they face gender-based harassment and discrimination.

Addressing the federal government’s ambitious goal to add one million more women in construction jobs at a Tradeswomen Build Nations conference last fall, Commerce Secretary Gina Raimondo said she had heard from women about the challenges they faced on sites. She then added, “Women don’t want to deal with the BS. They just want to do their jobs.”

Sharita Gruberg, vice president for economic justice at the National Partnership for Women and Families, said there will need to be sufficient monitoring and enforcement from the Office of Federal Contract Compliance Programs and Equal Employment Opportunity Commission to ensure that underrepresented workers aren’t being pushed out of jobs due to sexual harassment and discrimination.?

“Because of these other barriers, it is in all of our interests to make sure that these investments are supporting good jobs, safe jobs, because we’re just not going to have the workforce that we need to translate these investments into successful outcomes without also prioritizing equal opportunity enforcement and making sure that women are safe and in these roles,” Gruberg said.

This month, the Department of Labor also announced it was launching an initiative “to promote equal opportunity by federal contractors in the construction trades on large federally funded projects.” The Office of Federal Contract Compliance Programs is going to work with the General Services Administration and the Department of Transportation to make sure contractors and subcontractors receive no-cost help to improve recruitment and hiring practices to ensure more women and other underrepresented workers are able to join the construction industry.

The initiative is connected to the OFCCP’s Mega Construction Project Program that rewards projects expected to last for one year and make a positive economic difference in communities. Gruberg said some of the construction work on semiconductor facilities and highways and transportation could qualify.

“One exciting thing about the Mega projects are that there are 16 affirmative action steps that are part of these projects to really make sure that on the front end, companies are supported in how they can comply with the equal opportunity requirements of these investments,” Gruberg said. “So making sure that they are increasing representation of qualified workers from underrepresented groups in the construction trades, which includes women.”

First Republic received $30 billion in deposits from 11 large banks, including J.P. Morgan Chase, Citigroup and Bank of America. (Photo by Justin Sullivan/Getty Images)

Financial regulators, policymakers, and bank executives spent last week trying to abate fears that a banking crisis will spread across the U.S. financial system.?

On Friday, President Joe Biden released a statement calling on Congress to take action to make it easier for regulators to hold senior bank executives accountable for their mismanagement.?

“It should be easier for regulators to claw back compensation from executives, to impose civil penalties, and to ban executives from working in the banking industry again,” the president said. On Monday, after the collapse of Silicon Valley Bank and takeover of Signature Bank by New York regulators, Biden had reassured Americans their money was safe and said “the management of these banks will be fired.”

On Thursday, senators pressed Treasury Secretary Janet Yellen on future responses to bank collapses. Yellen assured them that “our banking system is sound” but also made it clear that deposits of all sizes would only be covered if “failure to protect uninsured depositors would create systemic risk and significant economic and financial consequences.”

Over the weekend, regulators announced additional funding to help banks meet their obligations. The Bank Term Funding Program provides banks loans for up to one year by offering assets as collateral to “safeguard deposits and ensure the ongoing provision of money and credit to the economy.” Yellen approved the use of up to $25 billion as a backstop for the fund. Banks have borrowed $11.9 billion so far, the Federal Reserve said on Thursday.?

When the mid-sized San Francisco-based First Republic Bank signaled it was in trouble this week as depositors began to flee, Yellen worked on a plan with Jamie Dimon, JP Morgan Chase’s chairman and CEO, to stabilize it. On Friday, 11 large banks provided an influx of cash — $30 billion. On Thursday,the Swiss National Bank said it would provide billions in liquidity if needed to support Credit Suisse, a global investment bank based in Switzerland that has had numerous financial issues over the past few months.?

No reason to panic

Economists say that there is still no reason for most Americans to panic over recent bank runs because the banking system is more stable than it was during the financial crisis over a decade ago. But the current crises could still have effects on the economy as the Federal Reserve decides whether to hike rates again to reduce inflation and federal regulators consider how to move forward with banking policy.?

The Federal Deposit Insurance Corporation (FDIC) has historically insured up to $250,000 of deposits when a bank fails and economists say consumers should be careful if they have a bank deposit over that limit.?

Matthew Rognlie, assistant professor of economics at Northwestern University, said Americans who have more than $250,000 should spread that money between a few banks.?

People also may be concerned about the damage of the banking crisis to their 401(k), since in most cases, they would not be protected, but if you have a failing investment in a bank stock, you shouldn’t sell at the bottom of the market either, said Galina Hale, professor of economics at University of California Santa Cruz.?

“So if you hold stocks of the banks, yes, there is a little bit of market decline because of their concerns and there’s not too much information about the health of an average bank. What I would say to people who are holding bank stocks is wait and see,” she said.

Although it is hard for people to watch the value deteriorate, the value is going to recover because there isn’t a “fundamental problem in the economy that would justify a prolonged decline of the stock market at the moment,” Hale added.

How SVB different from most banks

The panic over the stability of the banking system and the federal government stepping in to try to prevent damage to the economy may understandably remind people of the 2008 financial crisis, and the resulting shutdown of hundreds of banks, but there are a lot of differences to keep in mind, Hale and Rognlie said.?

“A financial crisis is more likely when there is a risk that banks have suffered serious losses. This was certainly true in 2008, when the real estate sector (accounting for by far the largest share of borrowing in the financial sector) was collapsing, and many risky mortgages had been issued. I don’t see anything comparable this time around,” Rognlie stated in an email.

In this case, Silicon Valley Bank had billions in unrealized losses, or an asset losing value but hadn’t been sold yet, on bonds, and many of its assets were in U.S. government bonds with long-term maturities. Because customers, most of whom were not insured, began to take their money out of the bank, the bank had to sell its securities portfolio at a loss, which led to a bank run and actual losses. First Republic, which also catered to wealthy clients, was running into similar problems. But the majority of banks don’t have the same liquidity risk and benefit from what is called a deposit franchise, which makes it easier for banks to take on interest rate risk. And large banks have benefitted from depositors looking for a safer place to put their funds.

Rognlie said that Silicon Valley Bank and similar banks are different from most banks, which have more stable deposits.

“Most importantly, if a financial crisis became a threat, then interest rates would fall, and Treasuries and [mortgage-backed securities] would rise in price … So under current circumstances, a financial crisis is to some extent a self-correcting problem,” he added.

Policymakers are calling for more regulation of the banking industry in the aftermath of recent bank failures, especially since the rollback of some of the 2010 banking reforms that they say could have helped avert the current crisis. But consumers should be somewhat assured by the fact that the regulatory environment is still far better than it was in 2008, Hale said.

“We did not have that regulation that is now requiring banks, especially large banks, to have a lot of capital. We have regulations that require large banks to have a lot of liquidity, so even a run on a large bank — they should be able to survive. I don’t see a repetition of the Lehman crisis and things like that,” she said.

But that doesn’t mean that there aren’t risks to the economy right now. Hale said the downside of the federal government stepping in and covering all depositors is the risk that people will assume that this intervention will occur in the future.?

“It can create a moral hazard … Suppose I’m running a small business and I have more than $250,000 to put in a bank deposit and I’m not going to worry too much about that insurance limit because I’m going to say, ‘Well in the past the government gave money to everybody, not just the insured deposits, so I’m not going to waste time and make them complicated. I’m just going to put in half a million dollars.’ But that might not happen in this picture, right?” she said.

Rognlie said that he is still concerned about another important factor in the economy’s health — the Federal Reserve’s decisions on how much to raise interest rates. Since March 2022, the Fed has continued to raise the federal funds rate to bring down inflation and indicated during its last announcement on its decision to raise rates that it will continue to do so in the near future. The banking crisis has called into question whether the Fed will continue to raise rates as high as they have been or if they will raise rates at all when they meet next week.

“To the extent I’m worried about anything, it’s that this will add uncertainty to the Fed’s anti-inflation drive,” Rognlie said. “A week and a half ago, the Fed was planning to rapidly raise rates, and the most likely macro outcome was a moderate slowdown (perhaps a mild recession) in the economy in order to reduce inflation.?

“Now, the Fed is going to be more cautious in raising rates — at least in the short term — because of concerns about the financial sector. I wonder if the Fed will not raise rates enough now and then change course abruptly in a few months if it becomes clear that inflation is not yet slowing down enough.”

Government financial institutions joined forces to bail out Silicon Valley Bank's account holders after the bank’s collapse last week. The collapse of SVB and Signature Bank in New York could cause the Federal Reserve to slow down its interest rate hikes. (Photo by Alex Wong/Getty Images)

After the largest U.S. bank failure in more than a decade, regional bank stocks plunged on Monday as the federal government — with the 2007-2008 financial crisis still a fresh memory for many — rushed to reassure Americans that the U.S. banking system was stable.

President Joe Biden?told?Americans that the risks taken on by failed banks will not be a burden on taxpayers, that management will be fired and held accountable, and that depositors’ money will be safe even above the $250,000 federally insured limit — but not investors’ funds.

Biden and U.S. Sens. Elizabeth Warren (D-MA.) and Bernie Sanders (I-VT.) blamed the bank failures in part on the 2018 law signed by President Donald Trump that rolled back regulations for smaller and medium-sized banks that had been put in place under the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act.?

Those rules were put in place after the 2008 financial crisis that saw the failure of investment banks Lehman Brothers and Bear Stearns and Washington Mutual Bank, the first of more than 300 banks to close from 2008-2010.

The new crisis started last week when Silicon Valley Bank, the 16th largest bank in the U.S. and a key financial institution for the tech sector, collapsed on Friday after a run on the bank. Federal banking regulators took over the bank and, on Sunday, New York regulators closed Signature Bank, which served cryptocurrency clients. Treasury Secretary Janet Yellen announced that the FDIC would cover depositors for both banks.?

Ted Rossman, senior industry analyst at Bankrate.com, said there is a big difference between the collapse of Silicon Valley Bank and Signature Bank and what happened in 2008.

“I think a big distinction is what caused this issue because back then it was much more exotic, like derivatives and credit default swaps, and exotic mortgages,” he explained. “Silicon Valley Bank was more of a true bank run where a lot of depositors wanted their money all at once. And why did they want their money all at once? There were rumors spreading that the bank was in trouble and the bank was in trouble because of higher rates and mismanagement of their risk because all these underlying bonds had lost a lot of money because of higher rates and, rates rise and prices fall.”

Aaron Klein, senior fellow in economic studies at the Brookings Institution, agreed that the leeway Silicon Valley Bank was given led to its troubles. He told States Newsroom in an email statement that he hopes that Congress pays attention to what he calls the “highly problematic structure” of regional Fed banks.

“SVB was allowed by the Federal Reserve, their primary regulator, to build up a massive position on mortgage-backed securities with little to no hedging for interest rates,” he wrote. “At the same time, SVB relied on uninsured bank deposits at a mammoth level far out of line with other banks. SVB is not a Main Street bank and never was. Most banks of that size ($200B) have 1,000 branches. SVB had 16. SVB’s assets quadrupled in 4 years with explosive growth that ought to raise flags,” he wrote.?

Rossman said there may be more bank failures or rumors of bank failures, but that doesn’t mean that the average consumer will be affected right now.

“We see today a lot of community or regional mid-sized banks are under some pressure. It does seem that there’s more pain to come here in some corners, a lot of it tracking back to higher interest rates and some of the unintended consequences there, but from a depositor perspective, I wouldn’t worry about losing money, especially within that $250,000 threshold,” he said.

The Federal Deposit Insurance Corporation insures bank deposits up to $250,000.

“The FDIC is funded by member dues, so basically the banks pay into the system, and that’s the fund that’s being used to make depositors whole at Silicon Valley Bank and Signature Bank,” Rossman added. “And if the fund were to run out, the FDIC could impose additional fees on banks.”

One result of the banks’ collapse could be a little loosening of the Federal Reserve’s position on interest rate increases.

“The odds of a 50-basis-point hike from the Fed at its next meeting have pretty much come off the table, said Rossman, senior industry analyst at Bankrate.com. “ … Now, it seems like a quarter point is most likely, although there’s actually a decent chance that there may not be a hike at all at the next meeting next week.”

Goldman Sachs economists said on Sunday that they don’t expect any rate hike when the Fed meets, which was a change from their prediction of a 25-basis-point hike before the bank failures.?

Sheila Bair, former chair of the FDIC when Washington Mutual collapsed, said that if the Fed chose to pause its interest rate hikes, the decision would have a “settling effect” on the markets.

Correction: A previous version of this story misstated the amount of funds that would be covered by the federal government for Silicon Valley Bank and Signature Bank depositors.

Fewer businesses hiring would actually be seen as a good thing for inflation right now. (Photo by Spencer Platt/Getty Images)

Federal Reserve Chairman Jerome Powell said this week that interest rate increases could be higher and come faster if Friday’s unemployment data shows the nation’s labor market isn’t cooling off. Stock indexes fell after his comments. That’s been a familiar pattern over the past year as the federal bank has tried to combat inflation.?

A hot jobs market — when people who want work can find it — would seem to signal a healthy economy, so why the concern over a positive jobs report?

It’s not that the Fed is “anti-worker,” said Joseph Gagnon, senior fellow at the Peterson Institute for International Economics and former visiting associate director for the division of monetary affairs for the Federal Reserve Board.?

“If we could sustain 3% or 3.5% unemployment, a record low, the Fed would be delighted if we could stay there and inflation would come back down and everything would be fine,” he said. “ … The worry is that the economy is just overheating, that too much spending is going on for what the economy can produce. And we see that in the labor market. It’s not only the labor market that the Fed looks at, but it’s the labor market that probably has the clearest signs of it, the ones that are easiest to interpret. … It covers every worker who’s doing anything economic, who is producing anything in the whole economy.”

Federal Reserve members also will be looking at consumer price data, due on March 14, at their next meeting on March 21-22. The Consumer Price Index, an indicator for inflation, rose 6.4% in the past year, according to the January report, which was the smallest yearly increase since Oct. 21, but still higher than a Bloomberg survey of economists forecasted, according to The New York Times. That followed the January jobs report, on Feb. 3, which showed an unemployment rate of 3.4% — the lowest it had ever been since May 1969.

Andrew Korz, director of investment research for FS Investments, predicted the data was “running too hot for the Fed’s liking,” and Powell’s comments this week indicate Korz was correct.

“The latest economic data have come in stronger than expected, which suggests that the ultimate level of interest rates is likely to be higher than previously anticipated,” Powell told the Senate Banking Committee on Tuesday. “If the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes.”

The Fed’s target rate for inflation is 2%, and the Fed has repeatedly said that it won’t stop raising rates until it meets its goals.?

“The Fed has really two things that it is trying to control and sometimes they can work against each other or in opposing directions,” said Lara Rhame, chief U.S. economist and managing director for investment research for FS Investments. “One of them being inflation and keeping inflation low and the other one being, they call it full employment but you know a healthy level of employment and right now they see both of these objectives and they’re weighing which one is more important to tackle and which one is further off course, and by far and away, inflation has been over the last year and a half, very far away from their targets — way too high.”

The stock market has responded strongly to the labor market data in part because of the importance of those numbers to the Fed when it makes decisions about interest rates. After the January jobs report showed that the labor market was continuing to add more jobs than economists previously expected and that unemployment remained low, the Dow Jones Industrial Average fell 0.38%, the S&P 500 dropped 1.04%, and the Nasdaq Composite slumped 1.59%. The stock market responded positively to a December jobs report with a low unemployment rate of 3.46% that also showed slower wage growth than what economists anticipated.?

How the market reacts to the jobs report largely depends on what it thinks the news of the report is, said Gagnon of the Peterson Institute.

“If the jobs report comes in very strong, sometimes the stock market doesn’t like it because it worries that the Fed is going to have to tighten,” he said. “ … If everybody knows the economy is strong but they think the Fed doesn’t know it and then the jobs report is news to the Fed, and the Fed is going to have to tighten, that makes sense. On the other hand, if? nobody knew the economy was strong and the job market report tells you that it’s strong and that was news to you, that should be good for stock prices because it means there’s more sales and activity and profits.”

People are right to be concerned about the potential impact on the economy if the Fed continues to raise rates, Gagnon continued. Although the Fed has said it hopes for a “soft landing” for the economy as it continues to raise rates, it has sparked fears of a possible recession.?

“If you just look at history, it doesn’t make you very optimistic,” he said. “The Fed has rarely caused a soft landing and held inflation in check, let alone pushed it back down without a recession. … To some extent, the Fed made mistakes in the past, and they might have raised rates too much, right? But also to some extent they made opposite mistakes, and they raised rates and they didn’t get inflation all the way back, and so it ratcheted up each cycle and it went higher.”

Gagnon said that he thinks there is a 30% to 35% chance of a recession as a result of the Fed raising rates too much.

Rhame, with FS Investments, said it’s important to keep in mind that despite layoffs at some large companies, the overall trend is that companies are still talking about trying to find workers and needing to pay them more to hire them.?

“We had several negative quarters of growth at the beginning of 2022 and a lot of people wondered why we weren’t calling that a recession,” she said. “And it’s because we didn’t have job losses during that period. In fact we were adding millions of jobs over those quarters because we were still in that recovery phase of the pandemic and still getting folks back to work. I often talk to people who say job losses cause a recession. Job losses are the recession. … So folks should look out for job losses, which we have not seen yet.”

Throughout the pandemic, families have turned to food banks for help. Harvesters, a private food bank, saw the amount of food distributed increase from 54 million pounds in 2019 to 65 million in 2020. In this picture, food is distributed at a drive-in in Kansas City, Kansas. (Photo courtesy of Harvesters — The Community Food Network)

Forty million people in the U.S. are having difficulty affording household expenses, and a little more than 25 million people say they sometimes or often do not have enough to eat, according to the U.S. Census Bureau’s most recent Household Pulse survey data.

The survey is designed to collect data on household experiences during the pandemic as well as its economic recovery. The U.S. Census Bureau, working with other federal agencies to produce the data, started the surveys in April 2020.

The most recent survey, which was taken Feb. 1 to Feb. 13, also showed that 16% of those surveyed said it was very likely that they would be evicted in the next two months and 23.7% said it was somewhat likely. That’s up slightly from December, when 14.3% said it was very likely they’d be evicted in that time frame and 28% said it was somewhat likely.

The data reflects that Americans are continuing to struggle with inflation, a struggle made worse for some by the disappearance of pandemic relief across the country. Although inflation is moderating, it’s still high. The Consumer Price Index, released on Feb, 14, showed that the price of meats, poultry, fish and eggs rose 0.7% over the month and eggs rose 8.5% over the same time period. The Federal Reserve continues to raise rates in an effort to bring down inflation, which it said “remains elevated.”

In the meantime, much of the pandemic relief funds have been allocated, with 87% of American Rescue Plan Act funds being appropriated already by December. The unwinding of pandemic Medicaid coverage will likely leave millions of people without coverage. Early in the pandemic, Congress provided a temporary increase in benefits for recipients of SNAP, the federal nutrition assistance program, but that ends March 1. When that happens, the average person will get about $90 less in SNAP benefits a month, according to the Center for Budget and Policy Priorities.

SNAP emergency benefits expiring soon

As SNAP’s emergency benefits go away, the effects may eventually show up in Pulse data, said Lauren Bauer, a fellow in economic studies at Brookings Institution and associate director of the Hamilton Project.

The current Pulse data shows that since expanded COVID-19 unemployment benefits ended in the fall of 2021, fewer people are relying on unemployment insurance to buy food. When asked how they had paid for food in the past seven days, 13 million said they used SNAP benefits compared to 1.8 million who said they used unemployment insurance benefits. That’s up from 12.7 million who relied on SNAP in January and 12.1 million in December. In the survey from Feb. 17 to March 1, 2021 — before expanded unemployment benefits ended — 11.9 million people used unemployment benefits to buy food and 10.8 million used SNAP benefits.

“…What part of the safety net is still providing families with a material amount of income given all of the stuff that has gone away? And right now SNAP is the main program that’s doing that. Everything else is coming out of income, borrowing, spending down savings, etc.” Bauer explained.

Families of four at 200% of the poverty line are an example of who has the most to lose when emergency SNAP benefits go away, Bauer said.

“It’s families who normally, via the formula, would lose 30 cents for every dollar as you tick higher and higher up the income distribution who are going to see the biggest hit. Those are typically low-income workers,” she said.

In addition to these benefits drying up, Republican state lawmakers are targeting food stamps in a number of ways, such as adding stricter work requirements and limiting the food that qualifies. In Congress, House Republicans are using this year’s farm bill to restart a discussion on SNAP’s work requirements and waivers that exempt some recipients from certain SNAP rules.

Economic pain in the South

Southern states showed higher rates of financial stress in surveys collected in February, January, and December. Pulse data shows that in February, food scarcity rates were highest in Kentucky, Mississippi and Louisiana, and in January, they were highest in Mississippi, Louisiana and Florida. Mississippi, Kentucky, and Texas were the highest in December. Difficulty paying for usual household expenses was highest in Mississippi, Alabama and Louisiana in February, followed by West Virginia and Kentucky, and in January, people in Louisiana, Mississippi and Florida said they struggled most with these expenses.

“In general, a lot of these measures of benefit generosity are lower in the South of the U.S. and it would make sense that at the expiration of the federal expansion, they’re reverting to a less generous state,” said Alex Bell, a postdoctoral scholar at the University of California’s California Policy Lab.

Michael Leachman, senior vice president for state fiscal policy at the Center on Budget and Policy Priorities, said a lack of Medicaid expansion in many Southern states and stricter eligibility requirements for benefits may help to explain some of the data. With more pandemic aid ending, Americans all over the country will feel the pain of losing those resources, he said.

“The other provisions that were put in place during the height of the pandemic made a huge difference in terms of child poverty and other forms of hardship that people are experiencing,” he said. “… About 90% of [state ARPA funds] has already been allocated, and it’s made a huge difference in the lives of people who were particularly harmed, but with it winding down, even though the job market is relatively strong, the effects of the pandemic are lingering in all sorts of ways.”

The enormous number of deaths from COVID-19 — which hit Black Americans particularly hard — erased two decades of progress in narrowing racial disparities in health outcomes. Above, nurses don personal protection before caring for a patient thought to be infected with COVID-19. (Photo by Win McNamee/Getty Images)

Donald Lloyd, CEO and president of St. Claire HealthCare in Morehead, has spent more than a year dealing with higher costs for food and medical supplies for his regional hospital. Now he’s trying to prepare for another financial hit — the loss of Medicaid reimbursements for treating people in rural Appalachia.

“We are all being forced to try to eke out a sustainable margin because of those (inflation) factors,” he said. “And then with the potential loss of reimbursement for those who did qualify, that’s just going to add an additional layer of burden upon rural institutions.”?

Lloyd is referring to the unwinding of a policy that began in 2020 as a response to the public health emergency created by COVID-19. The ??Families First Coronavirus Response Act required states to allow Medicaid recipients to stay enrolled even if their eligibility changed. But that requirement ends on April 1, and with states once again able to remove people from the program, health care officials across the country are worried about how the loss of those Medicaid reimbursements will affect the financial health of their hospitals.?

The loss of the federal revenue is expected to be particularly hard on rural hospitals that operate in areas with higher poverty rates and serve an older population and people with lower incomes — all factors that contribute to the financial pressure on hospitals, health care officials said. Rural hospitals were already closing at a rapid rate before the pandemic — more than 150 closed between 2005 and 2019, according to the Center for Healthcare Quality and Payment Reform. Without the federal money to prop them up, the Center estimates that 200 rural hospitals across the country are at risk of closing within the next two to three years.?

A report released in January from George Washington University found that up to 2.5 million patients of community health centers, which treat both underserved rural and urban communities, could lose coverage as a result of eligibility redeterminations, costing the health centers somewhere from $1.5 billion to $2.5 billion in revenue. The Kaiser Family Foundation estimates that between 5 million and 14 million people will lose their coverage, and that two-thirds could be uninsured for several months up to a year.

Carrie Cochran-McClain, chief policy officer at the National Rural Health Association, a nonprofit focused on education and advocacy on rural health issues, said the financial impact will be twofold.

“It’s the loss of reimbursement for services, but then also a potential increase in the number of patients that are going to be uninsured who delayed care because they lose their coverage and they’re coming in when they have a more severe situation,” she said.?

Simple mistakes in paperwork could result in many people losing Medicaid even though they’re still eligible for it, said Leighton Ku, professor and director of the center for health policy research at the Milken Institute School of Public Health at George Washington University. Ku said states can help by making the renewal process easier, and pointed out that people who can’t get Medicaid can find insurance at subsidized rates through the Affordable Care Act markets, and benefit from expanded premium subsidies through 2025 because of the Inflation Reduction Act. Still, there will be problems, he said.

“We still expect there’s going to be some increase in the number of uninsured people in the U.S. over the next year, no matter how hard we try, so hospitals and community health centers are going to have some rough times ahead,” Ku said.

Toni Lawson, vice president of governmental relations at the Idaho Hospital Association, said that the state department of health and welfare is sending out letters to tens of thousands of people alerting them to the change and their options. Still, she’s concerned about the effect of so many people losing coverage. Idaho has estimated that 150,000 people could be vulnerable to losing Medicaid, according to Idaho Capital Sun.

“We see a large percentage of our rural hospitals with a negative operating margin right now,” Lawson said. “We need to be particularly careful in making policy decisions that impact them negatively that maybe five years ago it would have been like, okay, this is a hit to your reimbursement, but you’ll survive. That same decision today could affect whether they stay open or close, she said.

Lloyd said he expects fewer than 3,000 people would lose coverage in the communities that St. Claire serves, which could cost the hospital about $5 million in Medicaid revenue.

The hospital is preparing for the decrease by slowing down its capital investments even though it needs to replace operating room tables and to repair and do maintenance on a wing built in the 1960s, he said. St. Claire is also looking at “reprioritizing a number of strategic growth projects,” Lloyd added, such as accommodating robotic surgery.

Family Health Centers in Louisville plans to cut back on the low-cost or free medical, dental, behavioral health and pharmacy services it has been offering to uninsured patients because of the expected revenue dip, according to the Louisville Courier-Journal. Hospitals also have announced other budget cuts, including layoffs, citing the end of pandemic payments.?

Help from Medicaid expansion

The COVID-19 pandemic both helped and hurt rural hospitals.

“In rural communities, the majority of their revenue comes from outpatient-like business and it comes from doing outpatient surgeries and imaging and visits,” said Steve Lawler, president and CEO of the North Carolina Healthcare Association. “When you shut those things down to protect your hospital assets to take care of COVID patients, it has a significant financial impact and that has carried on through the current economic conditions where the cost of goods and services and talent for hospitals is up 30% but revenue is only up 2%.”

During the pandemic, billions in federal money from the Paycheck Protection Program, Provider Relief Funds and the American Rescue Plan Act helped keep rural hospitals afloat even as they dealt with revenue losses and higher costs for everything from protective gear to salaries.?

“COVID sort of interrupted the long-term trend of unprofitability and closure of rural hospitals,” said George Pink, deputy director of the NC Rural Health Research Program at the University of North Carolina. “But that funding is now over.”?

Health care experts say policy changes, including more states expanding access to Medicaid, is needed to keep rural hospitals viable.?

Eleven states, including Alabama, Georgia, Florida, Kansas, Tennessee and Wisconsin, still haven’t expanded Medicaid coverage through the Affordable Care Act, and rural hospitals in those states are at a particular disadvantage, health care officials said. Researchers have agreed. A January 2018 research article found that Medicaid expansion was associated with better financial performance for hospitals and lower likelihoods of closure. This was particularly true for rural markets and counties that had many uninsured adults before states adopted expansion.?

In North Carolina, where the legislature is currently considering a bill to expand Medicaid, 11 hospitals have closed since 2006, and ECU Health, which provides medical care to 29 counties, is shutting down five clinics in the coming weeks, mostly due to financial pressure, the Greenville Daily Reflector reported in January.

Brian Floyd, ECU Health chief operating officer and president of ECU Health Medical Center, told States Newsroom, “We’ve reached the point of operating loss that we are then at a place where we have to decide what’s the best way to ration out our resources and had to make some tough decisions about whether or not we close some clinics. … This is the story when you don’t have expansion of Medicaid. This is what happens. Poor rural communities start to lose access to their health care.”

Lawler added that Medicaid expansion in North Carolina would help people manage chronic health issues instead of waiting for their health to reach a crisis point that requires hospitalization and expensive care. His organization supports House Bill 76, the bill to expand Medicaid that passed the state House on Thursday. If negotiations with the state Senate result in passage, Gov. Roy Cooper is expected to sign the measure, benefiting 600,000 North Carolinians.

Lawler said that there may finally be enough political will for the state to join the rest of the nation in expanding Medicaid.?

“It makes so much sense if we’re going to make the state healthier and help address the behavioral health crisis and, and the substance abuse crisis in North Carolina,” he said “It creates new jobs, so it grows economies. It’s going to help rural communities stabilize their hospitals and health care safety net.”

Lloyd, the St. Claire HealthCare CEO, said that there’s no doubt that Medicaid expansion makes a difference for hospitals. Before coming to St. Claire, he was president and CEO at CHRISTUS Health Southwest Louisiana. Louisiana expanded Medicaid in 2016 and Kentucky in 2014.?

“There was greater access to care and a greater sustainability to the hospitals post-expansion, both in Louisiana and here in Kentucky. We’ve just been very fortunate in the commonwealth that we’ve had a Medicaid expansion longer than some of the other states that were kind of slow to expand,” he said. “… It’s just a matter of economics and even though in some states the gap between the actual cost of care and the Medicaid reimbursement is very significant, at least it does offset some of the expense of operations.”

Will a new hospital designation help?

A new payment model that became effective in January could offer support to some rural health care facilities but health care officials caution that it is not the answer for all rural hospitals.?

Under the change, hospitals that agree to a new rural emergency hospital designation would receive more Medicare reimbursements and a monthly facility payment. The hospitals would have emergency rooms, clinics and outpatient care, but patients couldn’t stay for more than 24 hours. The hospitals also can’t have more than 50 beds and must meet other eligibility requirements.

Kansas, Michigan, Nebraska and South Dakota have already enacted laws establishing licensing rules for Rural Emergency Hospitals.?

“In (rural hospitals) in areas with a large number of residents who are 65 plus and qualify for Medicare, this model would help those hospitals and perhaps help offset any losses due the formerly Medicaid patients becoming uninsured,” said Richard Lindrooth, professor in the department of health systems, management, and policy at the Colorado School of Public Health at the University of Colorado.

Pink, with the NC Rural Health Research Program, said the new model isn’t a “panacea for rural health.”

“It really is directed at small rural hospitals that are at imminent risk of closure. It’s not designed to be a replacement for a rural hospital that’s breaking even or getting by in their community. … We’re not going to see 1,000 rural emergency hospitals in the country anytime soon. It’s a much smaller number of hospitals that this might be of interest to,” he said.

Floyd said ECU Health is studying whether this designation would be a good fit in some cases.

“There are trade-offs in that there is a higher payment plan per patient but you have to meet the conditions of 24 hours a day. We have to look at the market and say if it were only 24 hours, what does that do to that community? Do we have access elsewhere … for them to be?” he said.

Lloyd said it’s possible that a hospital in the area of Kentucky that St. Claire HealthCare serves could convert to the new designation, which would have implications for his health care system.

“Obviously we would handle the inpatient admissions for those institutions and so it would increase our capacity, but we’re prepared to do so if necessary,” he said.

Four minors were employed by Packers Sanitation Services at the JBS meat processing plant in Greeley, Colorado, according to a Department of Labor investigation. The site was one of 13 plants in eight states where the food sanitation company illegally employed children. (Photo by Chet Strange/Getty Images)

A company responsible for cleaning meatpacking plants across the country has paid $1.5 million in civil penalties for making children as young as 13 work in dangerous conditions.

The fine, announced Friday by the U.S. Department of Labor, followed an investigation by the agency into Packers Sanitation Services Inc., at 13 plants in eight states, including Arkansas, Colorado, Indiana, Kansas, Minnesota, Nebraska and Tennessee. At three meatpacking plants — in Nebraska, Kansas and Minnesota — Packers Sanitation employed more than 20 children.

The department said children, ranging from 13 to 17 years-old, spent overnight shifts cleaning equipment such as head splitters, back saws and brisket saws, and were exposed to dangerous chemicals such as ammonia. The risks inside meatpacking plants also include diseases from exposure to feces and blood, according to the Occupational Safety and Health Administration. Three children out of at least 102 kids sustained injuries while working for Packers Sanitation Services, which is based in Kieler, Wisconsin.?

Michael Lazzeri, wage and hour regional administrator for the department, said that the food sanitation business ignored flags from its own system that the workers were minors.

“When the Wage and Hour Division arrived with warrants, the adults — who had recruited, hired and supervised these children — tried to derail our efforts to investigate their employment practices,” Lazzeri said in a press release.?

The department’s Wage and Hour division started investigating these issues in August of 2022. In November, the department filed a complaint in the U.S. District Court of Nebraska. The agency’s investigation found that children were working at plants in Gibbon, Grand Island and Omaha. Packers Sanitation Services was fined $408,726 for employing 27 minors at the JBS Foods plant in Grand Island.?

Packers was also fined $333,036 for employing children at JBS plant in Worthington, Minnesota, and $393,588 for having children work at a Cargill plant in Dodge City, Kansas.

The $1.5 million total represents a fine of $15,138 for each child employed — the maximum civil money penalty allowed by federal law.??

In December, the company agreed to comply with labor law and hire a third party specialist to provide child labor compliance training and monitor facilities for three years, among other requirements, as part of the U.S. District Court of Nebraska’s consent order and judgment.

The number of children working in violation of child labor laws has been on the increase since 2018, with the exception of 2021 during the pandemic, according to Department of Labor data. Last year, there were 835 child labor violation cases involving 3,876 children.?

The increase in cases comes as some states are considering loosening child labor protections.?

An Iowa bill would provide exceptions to state law prohibiting minors aged 14 to 17 from working in more dangerous industries, such as roofing, mining and meatpacking, as long as the state Workforce Development and Department of Education allowed it as part of a “work-based learning or a school or employer-administered, work-related program,” reported the Des Moines Register. It also lets minors under 16 drive themselves to work in some circumstances and let children under 16 work longer hours. An Iowa Senate subcommittee recommended passage of the bill on Feb. 9.?

Another bill, in Minnesota, removes a prohibition on 16 and 17 year-olds from working in construction. In Ohio, lawmakers are proposing that minors be allowed to work longer hours.

The Biden administration wants Congress to get rid of “junk fees,” including those paid to select an airline seat in advance. The practice means parents often pay large amounts to sit with their children. (Photo by Bill Pugliano/Getty Images)

President Joe Biden devoted 19 sentences of his State of the Union speech to “junk fees,” which includes credit card late fees, service fees for concert tickets and airplane seating preferences that he said strain families’ budgets. Biden did not mention the numerous and opaque fees faced by prisoners and their families every day. But several think tanks and advocacy organizations want the federal government to tackle them.?

The groups sent a letter on Feb. 8 to the Federal Trade Commission to let the agency know that prisoners and their families also need financial relief. The FTC announced in October that it was considering a rule to end many of the “unnecessary, unavoidable, or surprise charges,” which the agency said are cost-free to companies and target consumers who have no way to avoid them.?

The Prison Policy Initiative, a criminal justice policy think tank, and the National Consumer Law Center, along with 27 other organizations, including the Center for Responsible Lending, and Southern Poverty Law Center, signed the letter. It explained that incarcerated people are often hit with fees for phone calls and messaging services, electronic monitoring and post-arrest diversion programs.?

Prepaid debit cards given to people leaving a correctional facility with money they earned in prison or received from family also include a range of fees, including for balance inquiries and for not using the correct bank for a transaction — despite card companies rarely providing lists of banks, according to the Prison Policy Initiative

“These excessive fees bear all of the hallmarks of an unfair act or practice under the Commission’s enforcement authority,”? the organizations wrote. “They cause substantial harm because they constitute high sums for people least able to afford them. They cannot reasonably be avoided because consumers are captive to private companies awarded exclusive contracts.”?

These companies also benefit from monopoly contracts and provide little to no added value for consumers, the groups added.?

Their language reflects that used by Biden during his State of the Union speech when he pushed for the passage of the Junk Fee Prevention Act. The administration has been targeting junk fees since last year. In September, Biden called on federal agencies to address the issue of hidden fees or junk fees, an issue he said should help relieve families’ budgets.?

“Look, junk fees may not matter to the very wealthy, but they matter to most other folks in homes like the one I grew up in, like many of you did. They add up to hundreds of dollars a month. They make it harder for you to pay your bills or afford that family trip,” he said in his speech.

The president told Congress to focus on regulating consumers’ entertainment ticket fees, airline fees, phone, internet, and television fees for switching providers, and resort fees and destination fees that hotel guests only see at the end of their reservation proces

Several agencies have already taken steps to alleviate the fees, including:

• In October, the Department of Transportation proposed a rule to require airlines to clearly disclose fees, including fees for family members to sit with young children, when the consumer sees schedule and fare information.?
• Over the summer, the department encouraged airlines not to charge parents for seating their child next to them during a flight.?
• The Consumer Financial Protection Bureau proposed a rule this month to lower late fees from credit card companies.

The Federal Communications Commission has rules going into effect in 2024 to adopt labels that consumers can check out early in the process of shopping for broadband providers so that they can comparison shop for a better price.

A proposed limit on credit card late fees could eventually help consumers burdened by credit card debt and inflation. (Photo by Joe Raedle/Getty Images)

As Americans continue to struggle with high credit card rates, the Consumer Financial Protection Bureau has proposed a rule to help lessen some of their financial burden — in the form of lower late fees.?

The new rule would limit late fees to $8. Currently credit card companies can charge as high as $41 — penalties that the CFPB’s director, Rohit Chopra, said are charged for “no purpose beyond padding the credit card companies’ profits.”?

The CFPB rule amends regulations that implemented the Credit Card Accountability Responsibility and Disclosure Act of 2009, and addresses a loophole that provided a loose standard that said late fees must be “reasonable and proportional.”

The proposed rule would require credit card companies to prove they need to charge a higher late fee to cover costs, and cap those fees at 25% of the minimum payment. Current regulations let credit card companies charge as much as 100% of the minimum payment owed. The rule would also get rid of the automatic inflation adjustment for the amount companies could charge in late fees.

According to the CFPB, an independent financial watchdog within the Federal Reserve, credit card companies bring in about $12 billion in late fees annually. The rule could shrink that by as much as $9 billion each year.?

“The rule brings to the forefront the reality that credit card late fees are designed to be excessive to create incentives for consumer behavior. They are not in proportion to the cost to the lender,” said Aaron Klein, senior fellow in economic studies at Brookings.?

The rule does not need Congressional approval, but Klein doesn’t expect it to go into effect and be felt by consumers until next year because of the lengthy process rules undergo, which includes a public comment period. It’s also possible that the banking industry will take legal action to fight the rule, which could delay it from going into effect.??

The Consumer Banks Association’s president and CEO, Lindsey Johnson, has already responded by accusing the CFPB of “seeking to advance a political agenda” and said the rule will harm credit card holders.

The agency proposes the rule as credit card debt has ballooned in the U.S. It rose by 18.5% in the past year, shooting up to $930.6 billion, a record amount, according to a fourth quarter report from TransUnion, a consumer credit reporting agency.?

Bankrate said the average credit card rate is 19.95% as of Feb. 1, which is the highest since the financial services company began tracking them in 1985. Credit card balances had the largest year-over-year increase in more than two decades at 15%, according to the New York Fed’s third quarter report on household debt and credit.?

Some of that debt can be tied to the Federal Reserve’s decision to repeatedly raise interest rates to fight inflation over the past year. The latest increase of 0.25%, announced last week, follows a 0.50% hike in December and previous four rate hikes of 0.75%.

“These Fed rate hikes basically just get passed through to cardholders … if the Fed moves rates higher by half a point or three quarters of a point or whatever it is, your rate should move higher by that same amount typically within a statement cycle or two,” said Ted Rossman, senior credit cards analyst at Bankrate.

The CFPB March 2022 report on late fees found that the average late fee was $31 and that repeat late fees were $36 on average. Alabama, Louisiana, and Mississippi had the highest average late fees per account.

“In 2019 credit card accounts held by consumers living in the United States’ poorest neighborhoods paid twice as much on average in total late fees than those in the richest areas,” the report explained.

“The law differentiates between fees and interest but for consumers it’s money out of pocket. These [late fees] are a large source of cost to consumers on the margin … People facing greater economic difficulty and hardship pay more in fees,” Klein said.

He added, “For folks who are living paycheck to paycheck, and sometimes that paycheck comes a day or two after the credit card bill is due, these late fees really add up and put a much greater squeeze on those living on the razor’s edge.”

Many states allocated their first rounds of federal COVID relief funds to replace revenue lost and keep essential services running, but others used the money for programs that were not aimed at alleviating the effects of the pandemic. (Photo by Spencer Platt/Getty Images)

As states plan how they’ll spend the $25 billion remaining in federal COVID relief funds, some also are facing criticism and renewed scrutiny over how they allocated money already received from the American Rescue Plan Act.

Of the $198 billion authorized by Congress in 2021, $173 billion already has been appropriated by states, the District of Columbia and Puerto Rico. Much of the money went — as it was intended — to deal with the COVID-19 public health emergency, including social programs benefiting low-income communities, grants to help small businesses stay open and pay for essential workers. But civil rights groups and think tanks focused on economic and tax policy have pointed out that the money has gone to build prisons, offset tax cuts, and fund initiatives completely counter to improving public health, such as Arizona’s $163 million program to give grants to schools that didn’t have mask mandates.

The American Civil Liberties Union in a letter earlier this month requested that the Treasury Department investigate the misuse of ARPA funds. The Institute of Taxation and Economic Policy has criticized tax cuts that it says are squandering revenue built up in part by the federal relief funds. And the GOP-controlled House Committee on Oversight and Accountability on Wednesday held the first of what its chair, Rep. James Comer (R-KY), says will be many hearings examining how federal pandemic relief dollars were spent.?

The Center on Budget and Policy Priorities, a nonpartisan research institute, has analyzed the ARPA fund appropriations since 2021, and in a January report says that many have used the funds “constructively” toward economic recovery but it also suggests that states need to use the remaining funds to help the people most affected by the pandemic and prevent long-term damage to health, education, and social services in states.

According to the CBPP’s data, capital construction made up 21% of the allocations — the largest share for all states — through December, with some states like Montana allocating 79% of their funds to capital construction projects. And while many state projects were for broadband and water and sewer infrastructure, some of the spending was unrelated to “an equitable recovery,” according to CBPP policy analyst Iris Hinh, author of the report.

In 2021, Alabama allocated $400 million, almost 20% of its funds, toward the construction of two new prisons. In Arizona, $4.2 million in recovery funds was designated to fund offices for Department of Corrections staff. In its January letter to the Treasury Department, the ACLU urged the Deputy Inspector General to investigate the use of ARPA funds for jail and prison expansions saying such construction “does not mitigate the effects of the COVID-19 pandemic and does not fall under any of the eligible uses of ARPA funds.”

Twenty-three percent of Florida’s funds were allocated to highway construction, according to the CBPP. Colorado, Louisiana and North Dakota also spent a large proportion of their funds on transportation construction.?

Hinh noted in the report that “while spending on highways may help produce a stronger recovery, it is often poorly targeted to the communities that need help the most.”?

Revenue replacement and unemployment assistance?

Another big chunk of the relief funds — 13% across the nation — has gone toward replacing revenue losses from the pandemic, as allowed under the federal guidelines. The CBPP argues that although it makes sense to ensure that services that existed before the pandemic continue, states should use more of the funds to target inequities made worse by the pandemic, such as food becoming even less affordable for many families. In Wyoming, 58.8% of appropriations of these funds went toward revenue replacement, followed by New York at 57.2% of appropriations and Pennsylvania at 56.8%.

States allocated $23 billion to unemployment insurance trust funds, but only a small portion of that, $929 million, went toward upgrading unemployment insurance and improving access through IT changes and other advancements. The rest went toward rebuilding those trust funds after jobless claims increased due to the pandemic-related closures of businesses.?

Nevada, for instance, which had borrowed from the federal government to pay unemployment claims during the pandemic used ARPA funds to pay off its loan rather than raise the unemployment tax paid by employers, according to the Nevada Current.

But Nevada is also using ARPA funds to modernize and streamline its system which buckled under the influx of claims during 2020, according to the Current. Colorado, Delaware, New Jersey, South Dakota, Tennessee, Virginia and Washington are also planning to use ARPA funds to update their systems.?

Hinh said that states that are only choosing to rebuild their trust funds are missing out on opportunities to expand access and should instead raise the unemployment taxes paid by businesses.

Tax cuts

One of the more contentious uses of the ARPA funds has been to offset tax cuts. Since the law was intended to be a stimulus, it included a mandate: States could not cut taxes and then use federal funds to counteract the cuts.

In 2021, 21 state attorneys general, all Republicans, brought legal challenges against that part of the law. In January, the Supreme Court declined to hear Missouri’s case on the issue after a federal district court said the state didn’t have legal standing and the Court of Appeals for the 8th Circuit agreed. In a case involving 13 states, including West Virginia, Iowa, Arkansas and Florida, the Court of Appeals for the 11th Circuit ruled in January that the provision was unconstitutional because there wasn’t clear notice for how to comply with the law.

At least 24 states are considering income tax cuts during their current legislative sessions, including Arkansas, Montana and Utah. Kentucky Republicans are trying to pass another cut in the personal income tax after the income tax rate already fell this year. In Kansas, North Dakota and Ohio, lawmakers are proposing flat tax rates, and political leaders in Arkansas, Indiana, Louisiana and West Virginia have pushed for getting rid of personal income taxes altogether, according to the Institute on Taxation and Economic Policy. The flat tax proposal in Kansas would slash the budget by $1.5 billion.

These tax policy changes will hurt the people most affected by the pandemic and weaken the impact of the recovery funds, said Hinh and Aidan Davis, state policy director with the Institute on Taxation and and Economic Policy.

“It’s during good times in the economy when states are flush with cash that they feel that they are most able to justify and to push for deep tax cuts,” Davis said. “I do think that they feel that they’ve been able to use that almost as a cover for something that they wanted to do year after year and they continue to push for year after year, but (they’re) not talking about what the long-term implications are, because you’re looking at a one time surplus.”

She added, “It really is a missed opportunity on a lot of fronts because with the legislation under ARPA, the state aid did a lot of good, but it could have done a lot more had much of it not been squandered on tax cuts in the state.”?

Hinh said that in the long term, states can either build off of the benefits of the recovery funds or suffer long-term consequences from cutting taxes.

“From the Great Recession, there were tax cuts that states implemented and I think, in many cases, that they still haven’t recovered from, and that impacts your education systems, your healthcare, and things that are really critical to the well-being of families and communities,” she said.?

“While things like infrastructure improvements are great and needed, and water, sewer, and broadband, it’s also important to think about the long-term consequences, and that can’t be cutting taxes. It needs to be continuously building off of these funds and the programs and services they’ve been providing to people because the pandemic will have very lasting impacts and there are so many opportunities, still, with these funds.”

More state lawmakers are introducing bills to keep their state governments from doing business with financial institutions that take environmental, social or corporate governance into consideration when making investment decisions. Critics say these bills are designed to boost fossil fuel companies and will end up costing taxpayers. (Photo by Joe Raedle/Getty Images)

Republican state policymakers’ efforts to boost fossil fuels by prohibiting their governments from doing business with companies that take sustainability into consideration has the potential to cost states millions, according to a study released Thursday.

Researchers looked specifically at the possible effects on Florida, Kentucky, Louisiana, Missouri, Oklahoma and West Virginia if they passed Texas-like legislation limiting investment options on municipal bonds and found it could cost them between $264 million and $708 million in additional interest payments. The study noted that the states had not passed such broad legislation.

The six states are among two dozen that last year issued proposed or passed legislation prohibiting state government entities from doing business with financial firms that take environmental, social and corporate governance (ESG) into consideration when making investment decisions as anti-ESG efforts spread?from state treasurers and attorneys general to governors and lawmakers. Republican policymakers refer to ESG as the “boycotting” of energy companies and argue that the investment funds are following a liberal agenda that hurts jobs.

The study by Econsult Solutions of Philadelphia was commissioned by the Sunrise Project for two groups focused on environmental policy, As You Sow, and Ceres Accelerator for Sustainable Capital Markets. It expands on a Wharton School of Business study released in July that focused on the cost to Texas after anti-ESG laws restricting business with banks that have policies against fossil fuels and firearms took effect there in 2021.

Steven Rothstein, managing director of Ceres Accelerator, calls the anti-ESG bills and changes to state pension funds “short-sighted” and “political.” He argues that these approaches will only hurt taxpayers.

“In the long run, we’re worried that those taxpayers and pension holders will actually get hurt with higher risk and low return,” he said.

With Texas leading the way as the first state to enact anti-ESG laws, the study’s authors assumed passage of similar laws and the same bond market restrictions in the six states they chose to examine. They used data on municipal bond transactions from January 2017 to April 2022 and looked at changes in Texas bonds “that occurred during the last 12 months of the period which corresponded to the implementation of the new laws.” The six were chosen because they had had more debate about anti-ESG bills and administrative action on ESG issues.

The Wharton study found that Texas paid higher interest rates because of less competition after major banks were forced from the state. Similarly, the Econsult study found that interest costs for its six states could balloon if they underwent Texas-like changes that influenced municipal bonds in addition to state actions.

In Florida, the costs would range from $97 million to $361 million.

In Kentucky, the costs would be between $26 million and $70 million.

For Louisiana, the cost would fall between $51 million and $131 million.

In West Virginia, the interest costs would be anywhere from $9 million to $29 million.

In Missouri, taxpayers would see an increase in interest of $32 to $68 million.

Oklahoma would have $49 million in additional costs.

“That is a burden on every taxpayer — every teacher, every elder citizen in those states,” Rothstein said. “That obviously doesn’t help anyone. It’s just higher interest costs, and that is because of having less bankers being able to bid for that work. That is one of the risks. And in addition, they’re also not going to be considering climate risk.”

Rothstein added that after the pandemic reminded people of how interconnected the supply chain is, it would be ill-advised to rule out considering climate risk, in addition to other ESG factors, and that ESG factors are only one set of considerations investors make among many.

Kentucky and West Virginia have now enacted bills restricting various government agencies and boards from doing business with financial institutions that “boycott” fossil fuels although neither are as broad as the Texas legislation.

Citing a law passed by the Kentucky legislature last year, state Treasurer Allison Ball on Jan. 3 released a list of 11 financial companies that she says are “engaged in energy company boycotts.”?

The list includes?BlackRock, Inc., Citigroup Inc., JPMorgan Chase & Co., BNP Paribas SA, Climate First Bank, Dankse Bank A/S, HSBC PLC, , Nordea Bank ABP, Schroders PLC, Svenska Handelsbanken AB, and Swedbank AB.

According to the release from Ball’s office, any arm of state government, including boards and departments, that makes more than $1 million in investments, deposit, or transactions ?each year must notify Ball of holdings with financial institutions on her list and notify the companies. “Within 90 days of the financial institutions receipt of notice, the financial institution must cease boycotting energy companies in order to avoid divestment,” says Ball’s release.

“When companies boycott fossil fuels, they intentionally choke off the lifeblood of capital to Kentucky’s signature industries,” ?Ball said. “Traditional energy sources fuel our Kentucky economy, provide much needed jobs, and warm our homes. Kentucky must not allow our signature industries to be irreparably damaged based upon the ideological whims of a select few.”

In Missouri, state Sen. Mike Moon, R-Ash Grove, has already filed anti-ESG legislation this session, similar to a bill he filed last year that restricted “public bodies” from contracting with businesses that used “ESG scoring.” It is one of three Senate bills aimed at what state officials have labeled “woke” investments. Last year, the state’s then Treasurer, Scott Fitzpatrick, pulled $500 million in pension funds from BlackRock, the world’s largest asset manager, saying the company had shown it would “prioritize the advancing a woke political agenda” over clients.

Michael Berg, political director of the Missouri chapter of Sierra Club, told States Newsroom he sees these efforts as a way for the fossil fuel industry to “buy time” and get in the way of any progress to address climate change.

“This is a national organized campaign being pushed by the Republican Party politicians, and conservative dark money groups controlled by billionaires and fossil fuel interests,” he said. Berg pointed to the influence of the State Financial Officers Foundation, a Kansas nonprofit that has been influential in the policy push against ESG.

According to at New York Times investigation, the group coordinated with the Heartland Institute, Heritage Foundation, and American Petroleum Institute to push anti-ESG policy approaches since January 2021.

“They (lawmakers) say they don’t like BlackRock looking at anything besides immediate returns, but we have to see whether or not they’re actually costing Missouri pensioners because of political decisions under the guise of opposing political decisions,” Berg said.

Advocates, legislators, and pregnant workers rallied in support of the Pregnant Workers Fairness Act on Dec. 1, 2022 in Washington, D.C. The amendment was included in the federal spending bill signed by President Joe Biden at the end of the year. (Photo by Paul Morigi/Getty Images for A Better Balance)

The $1.7 trillion federal spending bill President Joe Biden signed last month ushers in expanded protections for workers who are pregnant or nursing.

Proponents of the Pregnant Workers Fairness Act and the PUMP for Nursing Mothers Act — both included as amendments to the spending bill — say the measures clarify rights for these workers, who weren’t properly covered under existing laws.

Sens. Bob Casey (D-PA) and Bill Cassidy (R-LA) co-sponsored the measure strengthening pregnant workers’ rights. The law, which goes into effect in June, requires a business with 15 or more employees to make reasonable accommodations for pregnant workers unless doing so puts an undue hardship on the employer. That means a pregnant worker can’t automatically be denied additional bathroom breaks, be required to lift heavy items or be denied the opportunity to sit while working or other such accommodations. And it means an employer can’t discriminate against a pregnant job applicant who needs such accommodations.?

Supporters of the amendment said that neither the existing Pregnancy Discrimination Act (an amendment to the Civil Rights Act) nor the Americans with Disabilities Act provided the accommodations that pregnant workers needed for a healthy pregnancy. Because those measures didn’t offer enough protections, 30 states enacted their own laws for pregnant workers, according to Bloomberg Law.

The Supreme Court’s standard for assessing pregnant workers’ rights and their needs for accommodations made the bill necessary, said Dina Bakst, co-founder of A Better Balance, a nonprofit focused on litigation, legislative advocacy and education on labor issues.?

Bakst, in testimony to Congress in favor of the bill, said the Court’s 2015 decision in Young v. UPS “laid out an overly complicated, burdensome standard requiring pregnant workers to jump through legal hoops and prove discrimination” to get accommodations. The court held that pregnant workers could only have the same accommodations as workers who were limited by injury or disability.

Bakst also testified that a 2019 report by her organization found that as a result of the court’s decision, pregnant workers lost 29 out of 43 pregnancy accommodation cases in lower courts. Elizabeth Gedmark, vice president of A Better Balance, told States Newsroom, said that doesn’t capture the number of workers who never made it to court because of the stress and financial issues related to taking legal action.?

“You shouldn’t have to look around and find another coworker or jump through all these hoops or prove that you are disabled under the ADA,” she said. “You should just simply be able to have that reasonable accommodation when you need it, especially to prevent problems and health issues before they even start.”

As recently as August, the United States Court of Appeals for the Seventh Circuit decided that Wal-Mart did not violate the law when it said pregnant workers were not included in a policy at a distribution center in Wisconsin that allowed workers injured on the job to be assigned work that would not aggravate their injuries, Bloomberg reported. The court said Wal-Mart did not need to provide any justification for why the policy was limited to only those workers, the argument made by the Equal Employment Opportunity Commission which brought the suit on behalf of female workers.

Jocelyn Frye, president of the National Partnership for Women & Families said the passage of the Pregnant Workers Fairness Act was a win for gender and racial equity. She added, “For far too long, pregnant workers have gone without the critical protections many people need to maintain a healthy pregnancy: protections like the ability to take bathroom breaks during a shift, sit down while working a cash register, or pause to take a drink of water to stay hydrated.”

The legislation, which passed with bipartisan support, was also endorsed by the U.S. Chamber of Commerce, Retail Industry Leaders Association, Society for Human Resource Management and National Retail Federation.

Vania Leveille, senior legislative counsel at the ACLU also celebrated the passage of the PUMP Act for Nursing Mothers, sponsored by U.S. Sens. Jeff Merkley (D-OR) and Lisa Murkowski (R-AK), which was also included in the spending bill.?

The measure was needed, advocates said, because the Affordable Care Act, which required workers be given break time to pump breast milk and the privacy to do so, did not cover employees considered exempt from overtime. That left out 9 million women workers of childbearing age, according to a report released in 2019 from the Center for WorkLife Law, out of the University of California.

The PUMP for Nursing Mothers Act is supposed to fill those coverage gaps, according to the ACLU and Center for WorkLife Law. It also extends the time breastfeeding parents can benefit from these accommodations from one year to two years.?

“The PUMP for Nursing Mothers Act is so transformational because it expands the coverage of federal laws that provide break time, and space that is not in the bathroom and has to be hygienic for breastfeeding workers,” Gedmark said.

Businesses must provide the time and space for pumping immediately, but the ability to bring a complaint against an employer and take legal action doesn’t begin until April. Businesses with fewer than 50 employees can avoid the requirement if doing so would create an undue hardship.

Transportation workers are treated differently under the PUMP Act, with bus drivers for long-distance bus companies and some railroad workers having a three-year delay in the bill applying to them. There is also an exemption for air carriers and a difference in how the law affects some railroad workers. Employers do not have to provide breaks for railroad workers in train crews if it would be too expensive for the employer and if it created unsafe conditions for another rail worker who has the right of way, the amendment’s language explains.

Correction: The original story incorrectly stated which businesses must comply with the PUMP Act. The new law applies to all businesses, but those with fewer than 50 employees can avoid the requirement if doing so creates an undue hardship.

Laura Pierre joins with others to protest in support of a $15 an hour minimum wage in Fort Lauderdale, Florida, in 2015. The state's minimum wage will increase to $12 an hour in September 2023, and then increase by $1 per year until reaching $15 an hour in 2026. (Joe Raedle/Getty Images)

Of the 20 states, including Kentucky, that have failed to raise the minimum wage above the federal $7.25 an hour standard, 16 have more than 12% of their children living in poverty, according to a States Newsroom analysis of wage and poverty data. Anti-poverty advocates say that’s a sign that there’s an urgent need for lawmakers to increase the federal minimum wage and do more to help struggling families.

Congress had the opportunity to achieve the latter by expanding the child tax credit before the end of the year, but lawmakers did not arrive at a deal with Republicans to include it in the omnibus spending package. The expansion, which was part of the American Rescue Plan, provided as much as $3,600 in monthly installments to qualifying families and is credited with lifting 3.7 million children out of poverty at least temporarily.

Raising the minimum wage would not lead to as fast or drastic an improvement, but a 2019 Congressional Budget Office analysis found that increasing the amount to $15 an hour would lift more than 500,000 children from poverty. And the Economic Policy Institute estimated in 2021, that if Congress passed a $15 minimum wage increase by 2025, up to 3.7 million people wouldn’t have to live in poverty — 1.3 million of those being children.

Ben Zipperer, an economist at the Economic Policy Institute, said there is a strong connection between the minimum wage and poverty.

“It’s not a 1-1 connection, but there is a pretty strong connection,” said Zipperer, whose expertise is on the minimum wage, inequality, and low-wage labor markets. “The main determinants of poverty in this country are whether you work and how much you work, so whether you have a job during the year and how many hours a week or weeks per year you work at that job. … And then the third (determinant) is how much you were paid for an hour of work at your job. If you’re getting paid relatively low wages, the minimum wage affects that.”?

Congress last raised the minimum wage in 2009, but 30 states now require employers pay more than the federal standard, according to the National Conference of State Legislatures. Numerous municipalities have also passed living wage laws for city or county workers.

Twenty-seven states, including New Jersey, Florida, California and Missouri, will raise their state’s minimum wage in 2023, after passing legislation or voter-approved ballot measures that gradually increase the state minimum wage over several years or tie it to inflation. Washington ($15.74), California ($15.50) and Massachusetts ($15) will have some of the highest state minimum wages in 2023, although the high cost of living in those states mitigates the effect on poverty rates.

In Missouri, where the minimum wage will be $12 next year, a 2018 analysis from the Economic Policy Institute found that Proposition B, the ballot measure that is responsible for raising the wage, would increase wages for 677,000 people in Missouri.?

States where legislatures have not raised the minimum above the federal $7.25 an hour include Kentucky, Mississippi, Louisiana, Georgia, Oklahoma, Tennessee, North Carolina and South Carolina. All have child poverty rates of 20% or higher, according to U.S. Census data analyzed by 24/7 Wall Street, a financial news site. Mississippi has the highest child poverty rate in the United States, at 27.6%, with Louisiana following at 26.3%.

Kentucky has the nation’s sixth highest child poverty rate; 22.2% of Kentucky’s children live in poverty. The median family income for households with children in Kentucky is $65,096, the 10th lowest in the nation, according to 24/7 Wall Street’s analysis.

Zipperer said that many of these low minimum wage states are concentrated in the Southern United States for a reason. He pointed to the political deals lawmakers made to leave Black workers out of 1930s labor rights gains, which were done for the benefit of Southern Democrats.

“That legacy of racism plagued the initial years of the national minimum wage and labor law generally in the United States, and while it was somewhat improved and overcome through the civil rights movement, you see the parallel to that now where you have a lot of places in the South that don’t have minimum wages and or have very low minimum wages, and so they follow the federal standard which Congress has refused to raise over the past 13 years,” he said.

He added, “That kind of decline in the cost-of-living adjusted value of the minimum wage disproportionately harms the people who are paid the lowest wages in the U.S. economy and because of our sexist and racist labor market, that is women and people of color.”

In Louisiana, for instance, 64% of women of color earn less than $15 an hour, while 58% of Black workers and 50% of Hispanic workers also earn less than $15 an hour, according to Oxfam America’s analysis of U.S. Census data.?

The results of that disparity can be seen in an analysis of data on Lousianans’ standard of living done by Talk Poverty, a project of the Center for American Progress. It found:

• 19% of people in Louisiana had incomes below the poverty line in 2019.
• 20% of working age women and 29% of Black Lousianans in 2019 lived below the poverty line.?
• Louisiana ranked 42nd in the nation in high school graduation rates and 45th in higher education attainment during the 2017-2018 school year.?
• In 2018, 20% of young people aged 18 to 24 without high school degrees were not in school or working.
• From 2017 to 2019, 15.3% of Louisiana households were food insecure.

Peter Robins-Brown, executive director of Louisiana Progress, said several factors contribute to the number of Louisianans living in poverty. Louisiana hasn’t prioritized putting funding into programs that would provide economic relief, has focused its tax reform on benefits for the wealthy and for businesses, and has a particularly unjust criminal justice system that punishes the poor, he said.?

“Social services in Louisiana are largely underfunded, making it easier for generational poverty to continue,” Robins-Brown said.

The state also favors landlords’ rights over tenants rights and people living in the southern parts of the state that experience the most severe weather disasters have to live with high premiums for homeowners insurance, which further contribute to economic inequality, Robins-Brown explained.

Although Louisiana Gov. John Bel Edwards is a Democrat, and has expressed support for raising the minimum wage, both chambers of the Louisiana Legislature are controlled by Republicans. Louisiana, like Kentucky, is one of 24 states without a process for citizens to offer ballot initiatives and voter referendums.

“Both the House and Senate committees that deal with labor issues are low-priority for Republicans and Democrats because industry interests usually predetermine the outcomes in those committees,” Robins-Brown said.?

For these reasons, Robins-Brown says Louisianans are depending on the federal government to take action to raise the minimum wage. He said his organization supported expanding the child tax credit because it was been a powerful tool in reducing child poverty.

Congress last failed to increase the minimum wage in 2021, when it was proposed as part of a larger pandemic relief package. Fifty Senate Republicans and seven Senate Democrats voted against raising the minimum wage to $15 by 2025. The exclusion of the expansion of the child tax credit in Congress’ omnibus bill is one more lost chance to reduce child poverty.

“The child tax credit enormously reduced poverty during the recent expansion of that program and unfortunately that was temporary,” Zipperer said. “But I think that’s a very clear demonstration that we actually have, to some degree, the capacity to eliminate a lot of poverty in this country. All it takes is overcoming the political opposition to do that.”

Natural disasters on both ends of Kentucky have increased the demand for affordable housing and rents. Delilah Jenkins, 6, runs home after getting off the bus last month at Camp Graves in Graves County where she lives with her family in transitional housing after being displaced by the December 2021 tornado. (Julia Rendleman for Kentucky Lantern)

Voters in Colorado approved a statewide affordable housing initiative in November; while voters in nine cities across the country OK’d measures to finance the construction of affordable housing, preserve existing rental properties and support renters. But as housing costs soar, analysts and advocates say more needs to be done and argue that federal action is needed.?

Robert Silverman, a professor at the department of urban and regional planning at the University at Buffalo, said the affordable housing crisis we’re seeing today has been many years in the making.?

“It’s a structural problem with the housing market, where housing prices keep going up, costs of construction have increased, and incomes haven’t necessarily kept up with that part of the market,” he said. “It’s been something that’s been brewing for a couple of decades now. And the policy response, although there has been some, hasn’t been large enough to really wrap its arms around the entire problem.”

Higher building costs, a shrinking supply of low-cost rental units and more people with higher incomes choosing to rent rather than buy are driving the increase in higher-priced rentals and corresponding decline in low-cost units, according to a 2020 report from the Joint Center for Housing Studies of Harvard University.

Over the past five years, rent increased on average 5.8% year-over-year but saw the steepest increase — 14% — from 2021 to 2022, according to Credit Karma’s analysis of rental data. Meanwhile, the Census Bureau’s five-year survey shows that 40% of renters put 30% of their income toward housing. Higher home prices — the median sales price for a home in the third quarter was 10.6% higher than a year ago — and high interest rates are also combining to keep people from buying a home.?

In response, voters across the country showed their concern about the lack of affordable housing by saying yes to millions of dollars in housing bonds and grants to address the issue. Among the measures passed:

• Colorado voters passed Prop 123, which will allow 0.1% of the state income tax rate to go toward a number of grants and programs to increase affordable housing, assist unhoused people or prevent eviction, and provide rental assistance, among other provisions.?
• In Buncombe County, N. C., voters agreed to a $40 million bond for affordable housing. While voters in Charlotte approved a $50 million bond package for the city’s housing trust fund to provide financing for affordable housing projects. Charlotte needs 32,000 affordable housing units, according to the city government’s website.
• Palm Beach, Fla., voters approved a $200 million bond to build 20,000 new units of both discounted and market-rate units by 2032.
• A $50 million affordable housing bond intended to create 2,000 units was approved in Kansas City Missouri. It will focus on housing that would cost between $550 and $750 in rent each month.
• Columbus, Ohio, voters OK’d $200 million to go toward the building of more affordable rentals, efforts to house and assist the homeless and the preservation of existing affordable housing, as well as funds to make homeownership more affordable in the area.

“These bond issues are one way to address [affordable housing], but they’re also a political indication of the degree to which voters recognize there’s a problem that has to be solved,” said David Dworkin, president and CEO of the National Housing Conference. “When we look at the broad range of proposals that have been approved, I think we also can see a signal that people get it. There’s a problem. And we’re going to have to pay to help fix it and it’s not going to fix itself now.”

Carlie Boos, executive director of the Affordable Housing Alliance of Central Ohio, said that inflation has created an “immediate need” for the affordable housing bonds. People are overcrowding their apartments to cover rent and the length of stay in homeless shelters is getting longer as families have nowhere to go, Boos said.

“The way that inflation is pinching everybody’s budget is making construction and building for housing demand harder and harder to do. So there’s an immediate need,” she said.

IMPACT Community Action, an anti-poverty organization based in Columbus, told an ABC affiliate that there were 2,000 evictions filed in September for Franklin County. The annual point-in-time count for Columbus and Franklin County’s unhoused population in January, 2022, was 1,912 people, with 342 people completely without shelter. Community Shelter Board, the? nonprofit that organized the count, cautioned that the numbers did not paint a full picture because the Omicron surge made counting more difficult.

The preservation of affordability in housing is also key to tackling the crisis, Boos said.

“We know that there’s maintenance issues and rehabilitation issues and there’s properties that are affordable naturally, but it’s because they’re substandard naturally,” she said. “We don’t want people to have substandard housing because it’s the only thing they can afford.”

But Columbus residents won’t feel the effects of the bond measure overnight, she said, which is why she said state leaders should use pandemic relief funds from the American Recovery Plan Act to support the housing infrastructure in Ohio.

The Coalition on Homelessness and Housing in Ohio has called on Ohio Gov. Mike DeWine and the Ohio General Assembly to support spending $308 million in American Recovery Plan Act funds to build more affordable housing and improve current housing, among other housing efforts.

Moving into homelessness?

Andy Paul, one of the founders for Asheville for All, a group that advocates for “housing abundance” in Asheville, the county seat of Buncombe County, said the affordable housing problems facing the city are similar to many areas of the country. Paul said that tourism and retirees have created more housing demand, and that Asheville’s expected population growth necessitates building more homes. He said he hopes that affordable housing bonds can help meet some of that need in the coming years. Buncombe County’s residents are expected to increase by 80,000 people by 2045, according to two firms, the French Broad River Metropolitan Planning Organization and Woode & Poole Economics.

The annual count of unhoused people in Buncombe County in 2022 was 637 people, a rise of 21% over last year’s count. The majority of unhoused people — 57.8% — became homeless while living in Asheville.?

“We don’t blame people for wanting to move here. The solution is to just solve the problem. But that does create pressure,” Paul said. “And it means people can bid up land value. They can bid up home prices. And so it absolutely causes displacement of people that maybe grew up in Asheville.”

Peter LiFari, executive director at Maiker Housing Partners, a public housing authority in Adams County, Colorado, said that Congress often treats housing an “afterthought,” by keeping funding for housing affordability low. According to a 2021 report co-authored by LiFari and Evelyn Lim, from Common Sense Institute, an organization that provides research on Colorado’s economy, the state has to provide 54,190 new housing units each year over a five-year period to make up for lack of building during the Great Recession and to address future housing needs.

LiFari said he is “bullish on” Prop 123, which moves money from a general fund to a fund dedicated to affordable housing and allows local governments the right to opt in. But he added there will be challenges. If not enough governments enroll, there is some possibility that state lawmakers could direct the funds elsewhere. Local governments have until Nov. 1, 2023, to opt in so that their projects can benefit from the fund. By December 2026, the state’s housing division will begin to analyze whether local governments have met their growth targets.

How the federal government could help

Dworkin, with the National Housing Conference, says that there is much more governments can do to address the affordable housing crisis.? Localities could reduce regulatory barriers, like zoning restrictions, that make it harder to build high-density housing. But he added that Congress also needs to act.

He pointed to a Nov. 28 letter from a bipartisan group of more than 50 members of Congress to House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy that stressed the need to once again boost the Low Income Housing Tax Credit. The credits, which the federal government issues to states, are then awarded to developers of affordable rental housing to be used for financing. In 2018, Congress boosted the tax credits by 12.5% but that increase expired in 2021.?

The letter also advocated for lowering the test of funding a development with 50% private activity bonds to 25%, which would allow states to fund more projects. Both strategies would make it easier to increase the affordable housing stock.?

Members of Congress have been focused on coming to an agreement on various tax issues before the end of the year, including bringing back certain business tax breaks and expanding the child tax credit, but it’s unclear if the issue will be settled by the time the new Congress begins.

Silverman, with the University at Buffalo, said the Housing Choice Voucher Program, also known as the Section 8 program, also could be much larger to meet more people’s affordable housing needs.

“Half of the households that are eligible for vouchers aren’t even on the waiting list. And so there’s a lot of demand for housing subsidies for renters nationally out there and just expanding those programs would do a lot to meet some of the affordable housing needs that are already out there,” he said.?

HUD programs addressing affordable housing issues have only had incremental increases over the years that just don’t keep up housing demand, he said.

The Biden administration announced a Housing Supply Action Plan in May, including a call for Congress to provide billions in HUD grants to increase affordable housing units, pressing states and localities to use American Rescue Plan Funds to build more housing, and leaving federal properties to affordable housing developers for reuse. In November, several White House officials, including Domestic Policy Advisor Susan Rice, National Economic Council Director Brian Deese, and American Rescue Plan Coordinator Gene Sperling had a meeting with advocates and experts in housing policy to talk about rental affordability and tenants rights.

Dworkin, who attended the meeting, said, “I think the White House is very focused on identifying bipartisan opportunities to make progress on this issue.”

LiFari said policymakers at all levels of government need to prioritize this issue immediately.

“The housing shortage now, the homelessness crisis, is acute. It’s horrible. It’s a humanitarian crisis,” he said.

The cost of holiday baking will be higher this year as prices for eggs are up 49.1% over last year, according to the Consumer Price Index. (Photo by Brandon Bell/Getty Images)

Shoppers hoping for a little relief at the grocery store for their holiday meals will be disappointed by the Consumer Price Index released Tuesday. The CPI shows inflation cooling but food prices — particularly for some holiday staples — remain high.

The CPI increased 0.1% in November, which was lower than some economists expected. Over the last 12 months, it rose 7.1%. Food went up 0.5% last month after an increase of 0.6% in October. The food index climbed 10.6% over last year.

“The headline inflation numbers are encouraging for the general economy but consumers are not being relieved at the grocery store,” said David Ortega, associate professor at the department of agricultural food and resource economics at Michigan State University. “We’re looking at November being the ninth consecutive month of double-digit grocery price inflation. Grocery prices are still 12% higher than they were a year ago.”

In August, the cost of food shot up 11.4% over last year, which is a level not seen since May 1979, according to Marketwatch’s analysis of government data.

“The good news is that food price increases and grocery price increases peaked in August,” Ortega added, “They’re just slowly starting to come down. We’re headed in the right direction but consumers are still not feeling relief at the store and that’s because inflation captures the rate of price increases over time, so just because the inflation rate starts to calm down a bit doesn’t mean that things are getting cheaper. They’re just not rising in price as quickly.”

Supply chain disruptions, the conflict in Ukraine, climate change, the deadliest bird flu in U.S. history, transportation costs, and increased consumer spending on food, are all drivers of higher food prices, Ortega explained.

“We have supply chain disruptions and they’re starting to ease from the pandemic. But then we have the conflict in Ukraine that led to a surge in commodity prices earlier this year. Those have come down significantly, but it takes time for that to be fully realized at the grocery store.”

Climate change has also affected agricultural output, he said, which has meant less food out in the market and increased prices. Ortega said that although it’s hard to say when food prices will begin to come down, he expects that it could happen in the next six months or so. The International Monetary Fund released a report in October that said Federal Reserve interest rate increases will put “downward pressure on prices through the end of next year.”

Donna McCallister, assistant professor at the department of agricultural and applied economics at Texas Tech University, said prices always increase this time of year, compounding the problem for many Americans this month. According to Bankrate’s Nov. 23 analysis of the cost of holiday essentials, six of 10 of the most inflated prices were for food, including turkey, bakery items, eggs, flour and prepared mixes.

Consumers preparing a Christmas ham, buying a frozen pie, or making sugar cookies for a party this month will find significantly higher prices than last year. Ham is up 7.8% year over year, frozen and refrigerated bakery products are up 19.4%, and eggs are up 49.1%, the CPI. shows.

“A lot of that has to do with increased cost of production and transportation, but also increased demand for these things like butter, where people go out and buy things like eggs, butter, and flour for their cooking, so there’s also a demand story here as well,” Ortega said.

McCallister suggests cutting down on food waste by going to stores more frequently for specific meals, buying some items in bulk, or switching from name brand to store brand to save money this holiday season.

Medicare recipients who take insulin will be the first to benefit from the drug pricing provisions in the Inflation Reduction Act. Additional drug costs will start to decrease in 2026. (Photo by Getty Images)

Starting next month, a $35 cap on insulin prices will go into effect for millions of Medicare recipients. The lower pricing is one of the first of several policy measures Americans will see in the coming months and years under the Inflation Reduction Act signed into law in August.

The bill also requires pharmaceutical companies to pay Medicare rebates for drugs where prices surpass inflation for Medicare Part D and mandates that the government negotiate drug prices on some prescription drugs for people who have Medicare — the first time Medicare has been given that power. While it’s unclear how many people will ultimately benefit from the various changes, 49 million people are enrolled in Medicare Part D plans, according to the Kaiser Family Foundation.?

The Medicare Part D rebates began in October. That same month, Medicare also began paying more for some biosimilar drugs to create more competition, lower the cost and improve access to those drugs for consumers. Biosimilars are drugs that are very similar to an existing drug, and have an average sales price that isn’t higher than the other drug.?

The insulin cap that goes into effect next month benefits Medicare Part D recipients, who also no longer have to meet a deductible on their insulin. A $35 monthly cap on insulin for recipients who use insulin pumps and are covered under Medicare Part B’s durable medical equipment benefit goes into effect July 1,?according to?the Centers for Medicare and Medicaid Services.

Richard Frank, senior fellow in economic studies and director of the University of Southern California-Brookings Schaeffer Initiative on Health Policy, said there are a couple reasons that the law reduces the cost for insulin before other measures.

“The whole history of health reform in this country is that you really want to try to frontload real benefits to real people. And insulin, because of the relative technical simplicity, is a great place for that right away. You give sick people who really need the help, and where there’s been a lot of crazy cost-sharing for patients, earlier, so the benefits of the legislation start to become apparent pretty quickly,” he said.

Medicare patients spent $1 billion on insulin in 2020, according to Kaiser Family Foundation, and an estimated 16.5% of people with diabetes rationed their insulin in the past year, which can be extremely harmful to their health, according to an Annals of Internal Medicine article published in October.

But the Health and Human Services Department’s process for negotiating drug prices will take much longer. This process will apply to certain types of drugs, including biologics, or drugs that come from biological sources like sugars or proteins that don’t have generic or biosimilar competitors, or brand-name drugs where the company holds the patent, known as single-source drugs. Here’s the timeline:

• In September, Centers for Medicare and Medicaid Services will list the 10 Part D drugs whose negotiated prices will take effect in 2026. Negotiations begin in October and end in August 2024, according to Kaiser Family Foundation’s timeline.?
• Another round of negotiations for 15 Part D drugs starts in February 2025 and ends November 2025, with prices to take effect in 2027.
• The negotiation process for 15 Part D or Part B drugs starts in 2026 and prices will go into effect in 2028.
• In 2027, 20 Part D or Part B drugs will be announced and in 2029, those prices will hit consumers.?
• In 2028, 20 more Part D and Part B drugs would be chosen to be fully implemented in 2030.
• The last round of 20 Part B and D drugs prices would be seen in 2031.

“The bill is designed to have Medicare negotiate for the drugs that have the highest aggregate spending, so it really does give you the most bang for the buck,” said Emily Gee, vice president and coordinator for health policy at the Center for American Progress.?

The price changes should start to have a real impact on Americans in 2026. “They’ll get roughly a 30% haircut on that deductible portion of their drug in a lot of cases. Most people would notice that,” Frank said.?

According to an analysis of the impact of the Inflation Reduction Act from the Center for American Progress, an elderly middle class couple living in Pittsburgh, where one person is diabetic and takes insulin, could save $575 on insulin each year starting next year, and as much as $2,430 each year for their household — because of the $2,000 limit on annual out-of-pocket costs — beginning in 2025.

How will pharma respond?

A U.S. Department of Health and Human Services report released in September showed drug companies increased prices for several drugs by more than 500% between 2016 and 2022, and some experts worry that pharmaceutical companies could find loopholes in the new law.

Juliette Cubanski, deputy director for the program on Medicare policy at the Kaiser Family Foundation, said there may not be very much drug companies can do to stop from being selected for the first negotiation process at this point. But in general, they could try to put up barriers to implementation, such as raising legal challenges against the law. Cubanski said one other response could be higher launch prices for new drugs.?

“That’s just one of those side effects from this legislation that we can’t really control in this country because we don’t have any sort of organized approach to setting the price of drugs the way that other countries do,” Cubanski said. “The Inflation Reduction Act provisions are expected to be helpful at constraining the growth in drug prices for existing drugs, but doesn’t have any provisions in it to limit the level at which drug prices are set for new drugs coming to market.”

The government can only negotiate for drugs that have been on the market for a certain number of years – nine years for small molecule drugs, typically pills, including some cancer treatments, and 13 for biologics, which use living cells and are difficult and more expensive to manufacture.

“I think there is an effort by pharmaceutical companies to bring innovative products to the market because there is, I think, a recognition among the pharmaceutical industry that that is where they have kind of the upper hand in prices and price negotiations — when we’re talking about drugs that are truly unique and innovative and don’t have competitor products,” Cubanski said.

She added that the possibilities of how drug companies could respond are largely unknowable at this point, however, because there is still so much to be done on the policy level.?

They could also try to take their financial burden to the private insurance market or use citizen petitions to try to halt generic drugs from being approved by the FDA, at least for a while, NBC News reported.?

Gee said she sees those messages about cost-shifting or raising launch prices as a scare tactic from pharmaceutical companies and said there isn’t really anything holding them back from raising prices now.

“But there’s very little discipline for them now because the market is so concentrated,” she said. “If they could raise their price another $10, why wouldn’t they do that now? It’s hard to see why they would be leaving money on the table today.”

This story was updated at 1:48 p.m. Dec. 7 to correctly reflect that the monthly cap for insulin does not go toward pumps.