With today’s news that GDP declined in the first quarter of 2025, there are increasing signs that the economy is headed in the wrong direction, with the risks of a recession and higher unemployment on the rise. Working families will face increased challenges in a recession. As always, government policies can do a lot to alleviate its worst impacts. During the COVID-19 recession, the Biden administration’s American Rescue Plan Act (ARPA) helped fuel a fast recovery. The fiscal recovery funds provided to state and local governments were critical to that recovery. Some of those states, cities, and counties did more than just support an economic recovery—they made wise investments that will be help lessen the harms of the next recession in their communities.

While job numbers are still rising, federal layoffs are increasing and uncertainty is growing. The stock market does not measure broader economic health, but the significant market declines since Trump took office indeed reflect broader economic weakness. Trump’s tariffs are not well-designed to support manufacturing growth and have been implemented in a haphazard manner. The Federal Reserve Bank of Atlanta is now forecasting negative 2.4% GDP growth for 2025.

In 2021, as the nation was still reeling from a COVID-19-induced recession, the Biden administration passed the American Rescue Plan Act. ARPA was key to the country’s rapid recovery from the COVID recession and provided greater support for unemployed workers, expanded child tax credits, and investments in healthcare, infrastructure, and food assistance. This policy lifted people out of poverty, put money in the pockets of working families, and kept our economy afloat.

Following recommendations from EPI and many other stakeholders, ARPA designated $350 billion for State and Local Fiscal Recovery Funds (SLFRF) to help governments deal with the economic impacts of the pandemic. SLFRF was part of a deliberate strategy to avoid the policy errors of the Great Recession, when state and local governments’ austerity measures delayed economic recovery and hurt working families. In addition to contributing to a broad recovery across the economy, SLFRF helped fuel a strong recovery in public services. The funds were a vital tool to help rebuild after the devastation of the pandemic.

Many state and local governments aimed beyond just recovery. They used their fiscal recovery funds to build a more resilient public sector and to strengthen protections for working families. As we teeter on the edge of another economic catastrophe, it’s worth highlighting what some state and local governments did that will make their states, cities, and counties better able to weather whatever is coming. The U.S. Treasury Department’s rules for use of fiscal recovery funds gave government great flexibility in how they used them, and many governments took the opportunity to make smart decisions that will serve working families well in the event of a recession.

Strengthening unemployment insurance systems

Any significant increase in unemployment will put a strain on state unemployment insurance (UI) systems. Before the onset of the COVID-19 pandemic, fewer than half of states had modernized their systems to facilitate online UI applications, offer multiple languages, or handle a large influx of applicants. As a result, UI systems were frequently overwhelmed and their errors proliferated during the pandemic.

These problems emphasized the need to improve UI systems, leading many states to invest fiscal recovery funds on improvements. Wisconsin set aside $80.8 million to fund “upgrades to outdated technology” in UI operations. Kansas spent $9.6 million to add “user-friendly” upgrades to their system. Hawaii allocated just over $41 million to move their UI program onto a cloud-based system, increasing the speed with which they can handle “future unanticipated and drastic increases in unemployment.” Arizona allocated $20.1 million to replace its “aged and difficult-to-adapt” UI benefit system. Colorado, Nevada, New Jersey, Vermont, and Virginia are also among the states that invested fiscal recovery funds in UI modernization. Notably, no Southern states except Virginia listed any UI modernization projects in the latest reporting data. This is consistent with the Southern economic development model, which privileges corporations and the wealthy over working families, in part by eroding basic public services.

If and when we see a surge in unemployment, states that improved their UI systems with fiscal recovery funds will be in a far better position to help working families with targeted, timely assistance.

Investing in housing and in protecting working families from eviction

When there is economic distress of any kind, working families face increased housing insecurity, especially renters. While moratoriums prevented over two million evictions during the pandemic, their expiration created great housing insecurity, especially in Black and brown communities.

Many states and localities took action on housing and renter protections. In the first two years of ARPA, more than 4.5 million households accessed mortgage, rent, or utility assistance, and $6 billion was committed to affordable housing. In addition to short-term assistance, some localities, like Johnson County, Iowa, and Detroit, Michigan, used part of their fiscal recovery funds to give tenants facing evictions a free right to counsel—a policy that has been shown to significantly reduce the rate of eviction.

Such protections will be helpful to working families in any future recession. Investments in housing and tenant protection can make a real difference in the long term.

Restoring the public sector

At the start of 2020, state and local government workforces had still not fully recovered from the Great Recession of 2008–2009. State and local governments shed 1.5 million jobs in the first few months of the pandemic. But by the end of 2023, this deficit had been closed thanks to SLFRF spending—and it closed more quickly in states that spent more of their fiscal recovery funds.

Supporting state and local government employees isn’t just good for those employees, it is also important for private sector job growth. And public sector workers are necessary to implement social safety net programs and other measures to help working families in a recession.

Many state and local governments used their fiscal recovery funds for attracting and retaining workers. Some, like the state of Minnesota and Lexington County, South Carolina, provided premium pay to government workers as a retention measure. San Jose, California, was able to begin filling the more than 800 persistent vacancies in city jobs with their recovery funds, and Salt Lake City, Utah, committed $1.5 million to hire unfilled public sector positions. Overall, state and local governments committed over $151 billion in “revenue replacement”—much of which prevented further job cuts in vital public services. These funds provided by ARPA will help mitigate the harms of a potential future recession.

Expanding broadband access

Broadband access, especially in rural parts of the country, provides an important boost to local economies and is associated with reductions in poverty and unemployment and improvements in mental health.

More than $8 billion in fiscal recovery funds were allocated to expand broadband access in states, cities, and counties, on top of $65 billion in the Infrastructure Investment and Jobs Act (IIJA) passed in 2021. These investments will help level the playing field for all communities and help working families better deal with the disruptions and challenges of a future recession.

And more…

State and local governments used their fiscal recovery funds in myriad other ways that will make it easier for working families to weather the next recession:

• St. Paul, Chicago, and New Orleans, Louisiana, helped erase medical debt for residents, as did the state of New Jersey.
• Charleston, West Virginia, built a community grocery store in an underserved Black community to reduce food insecurity.
• The Merrimack Valley Regional Transit Authority in Massachusetts used ARPA money to eliminate all bus fares and expand staffing and equipment to increase the number of buses and routes. Ridership is up 40% since fares were eliminated.
• Colorado created an innovative program to extend unemployment insurance to undocumented workers, ensuring that undocumented low-wage workers and their families will be supported if they lose their job through no fault of their own.
• Boston, Massachusetts, Buffalo, New York, and Chicago, Illinois, used fiscal recovery funds to establish pre-apprenticeship programs to help people in underserved communities gain access to quality infrastructure and climate jobs.

All these investments matter. Working families will certainly struggle if there is an economic downturn. But states, counties, and cities that used their fiscal recovery funds wisely will help blunt the economic pain.

All SLFRF spending data in this piece, unless otherwise cited, is from mandated reports submitted to Treasury by state and local governments, available here.

This Monday marked Workers Memorial Day, an annual international day of remembrance of workers who have died on the job, as well as a day of action to continue the fight for workplace safety. An estimated 140,587 U.S. workers died from hazardous working conditions in 2023, according to a new AFL-CIO report. This amounts to roughly 385 workplace-related deaths a day. While mourning these lives lost, there is also reason to fear this death toll will only rise due to aggressive Trump administration attacks on basic health and safety protections long taken for granted in most U.S. workplaces.

Trump has spent his first 100 days in office waging a war against workers, firing tens of thousands of federal workers, and slashing the wages of hundreds of thousands of workers on federal contracts. He has also issued dozens of executive orders to roll back or review existing regulations, including an order directing agencies—including the Occupational Health and Safety Administration (OSHA)—to eliminate 10 existing protections before enacting any new guidelines.

Above all, Trump has empowered Elon Musk—a billionaire whose own companies are under investigation for dozens of serious health and safety violations—to destroy and disable already understaffed federal agencies that prevent workplace deaths and injuries. The administration’s damaging actions include:

• effectively eliminating the National Institute for Occupational Safety and Health (NIOSH), the sole agency responsible for research that informs OSHA policymaking with evidence-based assessments of injury and fatality risks and actionable guidance for employers to use to improve safety;
• closing down 11 OSHA offices in states with the highest workplace fatality rates;
• eliminating 34 offices of the Mine Safety and Health Administration (MSHA), which protects coal miners from hazards like black lung disease;
• pausing a new rule on silica exposure to prevent coal miner disease and death from silicosis;
• allowing Musk to access sensitive OSHA data that could compromise ongoing investigations of alleged violations (including analysis of hazards that caused fatalities) and increase the risk of retaliation against injured workers and whistleblowers.

OSHA saves thousands of lives each year but is now at risk

This Workers Memorial Day marked the 54th anniversary of the Occupational Safety and Health (OSH) Act taking effect, enshrining into law the basic guarantee that workplaces should be “free from recognized hazards that could cause death or serious physical harm to employees.” OSHA’s existence has since become fundamental to the health and safety of workers across the country.

Since its passage, the OSH Act has saved the lives of more than 712,000 workers and reduced jobsite deaths by almost two-thirds, even as the size of the U.S. workforce has more than doubled.

Even after these decades of progress, far too many workers remain at serious risk of injury, illness, or death today. In addition to the traumatic injuries and occupational diseases that kill approximately 140,000 workers each year, between 5.2 million to 7.8 million workers suffer work-related injuries and illnesses each year. Trump’s moves to eliminate NIOSH while hobbling OSHA and MSHA enforcement capacity will make work even less safe and unavoidably increase these fatality, injury, and illness rates.

Data also make clear that weakening workplace safety standards and enforcement will disproportionately put older workers, workers of color, and immigrant workers at risk: More than 33% of 2023 workplace fatalities occurred among workers aged 55 and older, and 67% of those killed on the job were immigrants. Black and Latino workers are more likely to die on the job, with Latino workers having the highest workplace fatality rate.

Trump is threatening recent progress toward long-overdue standards to prevent deaths from silicosis and extreme heat

In many cases, strengthening OSHA standards could prevent deaths and injuries, but Trump is also blocking implementation or rulemaking on long-sought new standards. Earlier this month, MSHA announced it would pause enforcement of a new silica rule that would have halved allowable levels of exposure to silica dust—an extremely toxic dust that is a major cause of deadly black lung disease among coal miners. The Department of Labor had estimated the new rule would result in nearly 1,100 fewer deaths and 3,750 fewer cases of silica-related illnesses.

The Trump administration is also expected to block a critical new OSHA standard on extreme heat exposure. Last August, following years of worker advocacy and NIOSH research, OSHA proposed a federal heat standard that would ensure both indoor and outdoor workers had access to paid rest breaks, cool water, and time to acclimate to extreme temperatures. This regulation would have protected an estimated 36 million workers and prevented thousands of heat-related injuries and illnesses a year.

If enacted sooner, a federal heat standard might have saved some of the workers who died from extreme heat exposure in 2023, like Salvador Garcia Espitia, a 26-year-old who died during his first day on the job as a temporary farm worker in Belle Glade, Florida. Garcia passed out after laboring for hours in nearly 90-degree heat and never woke up. Garcia’s story is, unfortunately, one of many: A Tampa Bay Times investigation found that over half of heat-related deaths in the state go unreported. Without a federal heat standard, stories like Garcia’s will only become more common as climate change accelerates.

While states have the option to adopt their own heat standards, far too few states have done so. Further underscoring the acute need for a federal standard to cover workers across the country, two of the hottest states in the country—Texas and Florida—have failed to enact state heat standards, and they have even taken the extra step of blocking localities from adopting heat standards.

Trump’s attacks make it urgent for states to strengthen OSHA standards and enforcement

Even prior to new Trump attacks on OSHA, chronic underfunding and understaffing had long limited the agency’s ability to fully enforce the law. Though the Biden administration expanded enforcement efforts, OSHA still employs fewer than 2,000 inspectors to cover a workforce of 161 million workers. This limited staffing means that it would take 185 years for OSHA to inspect every U.S. workplace. Even more so than they did under the first Trump administration, OSHA enforcement rates will likely decline dramatically given office closures and staff cuts.

States have important responsibilities to act in the face of threats to federal OSHA and its enforcement. The OSH Act established the option for states to run their own OSHA programs—as long as they are “at least as effective” as federal OSHA—and 21 states currently operate their own plans. An additional six states maintain OSHA plans covering state and local government employees (who are not otherwise covered by federal OSHA). Some states such as California and Minnesota have gone above the federal floor, adding important additional standards on heat exposure and other hazards. On the other hand, too many state OSHA plans have failed to adopt required new federal standards or to allocate adequate resources to enforcement, leaving worker complaints neglected. All states with their own state plans have room to improve enforcement capacity, and more states have opportunities to pursue strong standards on serious hazards that federal OSHA has not yet addressed, including extreme heat exposure.

In short, Trump’s dismantling of NIOSH, closure of OSHA and MSHA field offices, and pausing of critical new silica and heat standards are all blatant attacks on workers that will result in thousands of preventable deaths, injuries, and illnesses. As Trump’s attacks escalate a growing national workers’ rights crisis, states must take action to shore up their own worker health and safety protections wherever possible, and Congress must step in and heed the calls of unions, affected workers, and advocates calling for the restoration of NIOSH and OSHA capacities.

Republicans in Congress and the Trump administration passed a budget blueprint to pay for tax cuts that overwhelmingly favor rich households at the expense of working people. Communities of color will be disproportionately impacted by these potential cuts. In addition to targeting Medicaid—we highlighted how Medicaid cuts would be especially harmful for people of color and children here—the budget resolution also tees up Congress to slash $230 billion in agricultural spending over the next 10 years. Finding cuts that large will almost certainly require reducing nutrition spending by cutting the country’s largest food assistance program, the Supplemental Nutrition Assistance Program (SNAP), which is run out of the U.S. Department of Agriculture (USDA).

These draconian cuts, along with the troubling momentum to add even more stringent work requirements to benefits like SNAP and Medicaid, will leave economically vulnerable families who depend on these support systems exposed to even more hardship during a time of unprecedented economic mismanagement, chaos, and uncertainty.

SNAP supplements low-income families’ grocery budget to help them access essential and healthy foods. In December 2024, SNAP had more than 42 million participants, with an average monthly benefit per person of approximately $189. Nearly eight in 10 (79%) households participating in SNAP include at least one member who is a child, an elderly adult, or a person with a disability. SNAP benefits help these families avoid hunger and falling deeper into economic insecurity and poverty.  

Cuts to SNAP will disproportionately harm families of color

More than 22 million households participated in SNAP by the end of last year. In between 2019 and 2023, more than one in 10 (11.8%) households participated in the program. While many of these families (43.1%) are non-Hispanic white,1 families of color are more likely to rely on SNAP benefits to supplement their food budget (see Figure A). More than one in five Black, American Indian and Alaska Native (AIAN), and Native Hawaiian and Other Pacific Islander (NHPI) households relied on SNAP to meet their nutritional needs in the 2019–2023 period. These families, along with Hispanic households, are more than twice as likely to participate in SNAP than their non-Hispanic white peers, leaving them particularly vulnerable to SNAP benefits cuts or unhelpful work requirements that make it harder to receive or keep this important source of support.  

Figure A SNAP benefits keep millions of children and people of color out of poverty each year

The country’s largest nutritional assistance program does more than help families put food on the table. SNAP is one of the country’s most effective poverty alleviation programs. In 2023 alone, SNAP kept more than three million people out of poverty, among which nearly two in five (39.3%) were children.

The poverty reduction success of SNAP also helps bridge racial and ethnic disparities. More than two-thirds of the individuals that SNAP helped lift out of poverty in 2023 were people of color (see Figure B below). More than two million people of color, including over 800,000 Black and over 900,000 Hispanic people, avoided poverty thanks to the support provided by SNAP.  

Figure B

In addition to helping low-income families cover their grocery bills, SNAP helps connect families with other sources of support. For example, SNAP helps families and children in need qualify for additional support via the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) and the National School Lunch Program (NSLP). While WIC supports pregnant women, infants, and children under the age of five who face nutritional risks, NSLP provides reduced-cost or free lunches to low-income children in public and non-profit private schools.

As in the case of SNAP, the support of both WIC and NSLP extends beyond nutritional assistance. Both programs combined helped lift more than one million people out of poverty in 2023, with people of color accounting for more than three-quarters (77.3%) of these individuals. Republican attacks on the USDA budget will restrict access to these life-saving resources at home and in school.

Families and children of color need expanded SNAP benefits—not cuts—to avoid rising food insecurity

Republicans in Congress and the Trump administration are looking to slash spending on nutritional assistance and to restrict access to benefits despite rising food insecurity since 2021. In 2023, the latest year for which estimates are available, 18 million households (13.5%) were unable to afford enough food to meet the needs of all their members at some point that year. This latest figure is higher than the 10.0% of families that experienced similar hardship in 2021. Hidden in these overall statistics is the disproportionate impact of food insecurity borne by families of color.

In 2023, more than one in five Black (23.3%) and Hispanic (21.9%) households experienced food insecurity (see Figure C). These families were twice as likely as their non-Hispanic white peers (9.9%) to experience food insecurity that year. Food insecurity reached a low point for Black and Hispanic households in 2019, but these families have struggled to hold on to the periods of progress since 2001, given the impact of the Great Recession, the COVID-19 pandemic, and the rising food prices caused by the pandemic. Figure C

We see similar outcomes for the subset of households with children. While households of color with children have experienced a significant reduction in food insecurity since the height of the Great Recession, much of this progress has eroded. For Hispanic households with children, the prevalence of food insecurity has nearly doubled, rising from the low of 7.8% in 2019 to 14.0% in 2023 (see Figure D). While the rise in food insecurity has been a little more muted for Black households with children since 2015, both Black and Hispanic households with children remained more than twice as likely to experience food insecurity as their non-Hispanic peers in 2023.

Figure D Even more families will need SNAP because of Trump’s economic mismanagement

It is clear that SNAP and other nutritional assistance programs under the USDA help families and children avoid poverty and food insecurity. SNAP benefits, for example, reduce the likelihood of being food insecure by about 30%. The positive link between improved food security and SNAP applies across different types of households, including those with children. SNAP is also particularly responsive to changing economic conditions. Because SNAP benefits are means-tested, the program supports even more individuals and households in need during economic downturns; an increase in the unemployment rate of 1 percentage point, for example, is associated with an additional two to three million additional participants in the program.

Because SNAP spending rises as private activity slows during recessions, the program is a particularly effective “automatic stabilizer,” keeping recessions shorter and less severe than they would otherwise be. Each additional dollar in SNAP benefits disbursed during periods of overall economic slack, for example, increases overall spending in the economy by $1.54. During an economic contraction, every $1 billion spent on SNAP generates more than 10,000 jobs.

If Republicans in Congress and President Trump were serious about lifting millions of people out of poverty, helping people address the cost of living and reduce food insecurity, and helping our economy rebound from crises, they would strengthen SNAP and other social safety net programs—not gut them. Cutting SNAP benefits or tightening the rules to discourage more people from accessing them will only expose more families to food insecurity. These concerns are especially relevant as the prospects of slower economic growth and higher food prices rise in the face of chaotic and harmful policies ushered by the Trump administration. The social safety net offered by programs like SNAP is essential to mitigating the economic pain that looms ahead.

1. White households account for 43.1% of SNAP participating households. The share of white families participating in SNAP relative to the population of white families in the United States is 7.9%, as shown in Figure A.

As the Trump administration pursues a deeply chaotic policy agenda, key labor market data haven’t yet revealed strong signs of economic weakness, but other sources indicate growing recessionary pressures. Consumer expectations are more pessimistic about inflation and unemployment, manufacturing and construction activity are declining, the stock market has fallen and remains volatile, and GDP forecasts look grim. These “softer” measures could take time to reflect in the official jobs data, particularly at the national level. This week’s data releases—including the Job Openings and Labor Turnover Survey (JOLTS) tomorrow, unemployment insurance claims on Thursday, and the jobs report on Friday—should provide more clarity.

Soft indicators reveal economic weakness

By “soft” indicators, we primarily mean data sources that rely on consumer or business sentiment rather than outcomes. For example, a “soft” measure of consumer strength would be consumer sentiment surveys asking them about their confidence levels, but a “hard” measure of consumer strength would be their actual spending. Other “soft” measures include forecasts that make projections based on past historical relationships. So far, it is these soft indicators that have deteriorated noticeably while most hard indicators have not yet strongly signaled a recession.

The latest New York Federal Reserve survey shows that consumers have more pessimistic expectations about inflation, their households’ financial situation, and particularly unemployment: The probability that unemployment will be higher one year from now hit its highest expected level since the pandemic recession in 2020. The University of Michigan’s consumer confidence surveys also show a worsening of expectations over the next year regarding unemployment and inflation.

In their Manufacturing Business Outlook, the Federal Reserve Bank of Philadelphia reported a deterioration in general activity, new orders, and current shipments in April. This weakness showing up first in the manufacturing sector is ironic given that the Trump administration’s tariff policies are often defended on the grounds that they will help U.S. manufacturing. The Census Bureau’s data on monthly new residential construction also show some softening in the housing market, particularly for single-family housing starts.

Further, the stock market losses have wiped out any gains from the last year, and measures of stock market volatility remain high—reflecting a lack of confidence in the current economic and policy landscape. The Atlanta Federal Reserve’s GDPNow model estimates a 2.5% decline in real GDP for the first quarter of 2025.

Key labor market indicators could begin to show trouble brewing

This economic turmoil has not yet been reflected in top-line labor market data—though they have shown some weakness in federal employment. This week’s releases of JOLTS, UI claims, and the jobs report could begin to indicate widespread economic distress.

The delay in data reporting could be one of the reasons we haven’t seen a pronounced deterioration in this labor market data. The latest JOLTS data are from February, which showed very little change, but the fingerprints of recent policy decisions are visible for the federal workforce. Figure A shows a significant spike in federal layoffs, hitting 22,000 in February. Tomorrow’s JOLTS release will likely show continued weakness among federal workers in March that may begin to be visible in the overall data.

Figure A

The latest jobs report provided data for mid-March and has shown a net loss of 15,000 federal jobs since January. However, this number may have been kept low because many federal workers were put on administrative leave, and those workers remain officially on federal payrolls. I’ll be surprised if more of the widely reported cuts to the federal workforce and federal contractors aren’t visible in the next jobs report on Friday.

The most updated read on the labor market comes from the unemployment insurance (UI) programs. The Department of Labor aggregates state reports of how many workers filed for initial UI claims each week, and how many people received UI benefits for regular state programs and separately for federal employment. The latest data show higher initial and continued UI claims for federal workers than this time last year, consistent with the spike in layoffs from JOLTS and the drop in employment in the payroll data.

The UI claims data also show a spike in regular continued UI claims (not including federal) in D.C. Figure B shows that national UI claims grew 4.7% over the year but grew a whopping 98.3% over the year for D.C. residents, likely reflecting job losses among federal contractors and related sectors.

Figure B

While the fingerprints of recent policy decisions are clearly showing up in the soft data, it may take time for it to hit the overall labor market measures, at least at the national level. Unless there is a dramatic shift in the current policy agenda, we will likely start to see measured weakness in upcoming labor market data in the coming months.

In 2025, the federal minimum wage is officially a “poverty wage.” The annual earnings of a single adult working full-time, year-round at $7.25 an hour now fall below the poverty threshold of $15,650 (established by the Department of Health and Human Services guidelines). The limitations of how the federal government calculates poverty understate how far the minimum wage is from economic security for workers and their families. 

Set at an adequate level, the minimum wage is one of the strongest policy tools for improving the economic security of low-wage workers, and an effective tool at lowering poverty. Yet instead of addressing this massive hole in our economy’s social safety net by working to raise the minimum wage, congressional Republicans are pushing policies like imposing work requirements on safety net programs and cutting Medicaid. Supporters of these proposals characterize them as tools to incentivize work and protect the dignity of work, but these policies fail to account for the nature of low-wage work in our economy. Instead, they stand to deepen hardship for low-income workers with no economic upside for working people or the larger economy.

The minimum wage and the federal poverty line

When the minimum wage was created as part of the Fair Labor Standards Act in 1938, the policy was intended to protect the nation from “the evils and dangers resulting from wages too low to buy the bare necessities of life.”1 The federal wage floor is clearly not fulfilling this objective anymore because of a historically long period of inaction by Congress. The last time Congress increased the federal minimum wage was in July 2009, meaning that as prices have risen over the last 15 years, the value of the minimum wage has fallen by 30%. Figure A shows how annual earnings for a full-time minimum wage worker fall short of the poverty line for a household of any size.

Figure A

This comparison severely understates the economic vulnerability of these workers and their families. This is because the federal poverty guidelines—which are used at the federal, state, and local level to determine eligibility for public programs like Medicaid and SNAP—are informed by the Census Bureau’s official poverty measure (OPM), a reductionist measure of poverty. The OPM relies solely on a multiple of the current cost of the minimum food diet from 1963 to calculate the poverty line and identify the poor. The Census also publishes a more expansive measure of poverty known as the supplemental poverty measure (SPM), which accounts for the cost of a broader basket of items including food, clothing, shelter, utilities, internet and telephone, but this latter measure does not inform the poverty line used to determine eligibility for public programs.

As Figure B demonstrates, the share of workers in poverty is significantly higher when we rely on the SPM instead. By this measure, more than 10 million workers (7.0%) between the ages of 18 and 64 failed to earn enough to avoid economic deprivation in 2023, the latest year for which these statistics are available, whereas the OPM captured only 4.5% of all workers.

Figure B

The discrepancy between the federal minimum wage and the real experience of workers throughout the country has led 30 states and Washington, D.C., to increase their minimum wage above the federal level. In the 20 states still using the federal minimum, 11.8 million workers earn less than $17 per hour, more than 1 in 5 workers in those states. Those states are disproportionately located in the South. The stagnation of the federal minimum wage allows Southern policymakers to maintain low wages in their economies. Southern workers have lower earnings even when adjusting for cost-of-living differences between regions. In part due to wage-suppressing policies like a low-minimum wage, Southern workers experience greater poverty than those in other regions.

Increasing the minimum wage boosts earnings and reduces poverty

The federal minimum wage is a powerful tool in fighting poverty in the U.S. The best economic research has consistently shown that increasing the minimum wage lifts earnings for low-wage workers, with little to no impact on employment. Research shows that increasing the minimum wage decreases poverty by increasing the incomes of low-income families, even accounting for decreases in public benefits as families earn more from higher wages. In analysis of legislation introduced in 2021 to gradually increase the federal minimum wage to $15 an hour, EPI concluded that the policy would lift between 1.8 to 3.7 million individuals out of poverty, including up to 1.3 million children. 

Despite persistent opposition from the business lobby and obstruction from conservative policymakers, raising the minimum wage remains popular among the public, and some legislators keep raising the call for federal action on this issue. Recently, members of Congress led by Sen. Bernie Sanders (I-Vt.) and Rep. Bobby Scott (D-Va.) once again reintroduced the Raise the Wage Act, which would gradually increase the federal minimum wage to $17 an hour. This would raise wages for more than 22.2 million workers, 4.2 million of whom live in households below the poverty line.

By contrast, Republican policies will make it harder for workers to escape poverty

While the minimum wage has been left to wither, Republican budget proposals in 2025 will either erode other elements of the social safety net or make them much harder to access. Republicans seek to cut Medicaid and ratchet up work requirements on both Medicaid and SNAP.2 This will harm low-income workers and their families, as these social programs help improve the living standards of millions of workers who don’t earn enough to avoid economic hardship. In 2023 alone, social programs that rely on the poverty guidelines kept more than 7 million individuals out of poverty.3 

Republicans have framed cutting benefits and expanding work requirements as a way to encourage people to work. The justification for these proposals is that generous Medicaid and SNAP benefits should be pared back because they encourage recipients to depend on government assistance instead of working. This seems to overlook the fact that two-thirds of non-elderly Medicaid enrollees and more than 85% of working-age adults who receive SNAP do work.

This conservative philosophy is an old idea that is deeply wedded to racist stereotypes about Black families being users of welfare programs. However, evaluating these proposals on their economic merits shows that they will increase hardship for low-wage Americans without creating economic benefit. Medicaid cuts at the levels proposed by Republicans would reduce incomes of low-wage families significantly, including a 7.4% reduction in income for families in the bottom 20% of the income distribution. Medicaid is also a vital investment in low-income children, who grow up healthier and with better education and income outcomes because of the Medicaid support they receive. Research suggests that Medicaid pays for itself through this investment in poor children. Cutting Medicaid will likely reduce these children’s educational achievement and wages earned over their lifetimes.

Similarly, research shows that adding work requirements to benefit programs is a punitive choice with no upside. Studies of work requirements on Medicaid and SNAP find little to no increase in employment outcomes in places where the policies have been implemented. What these policies do achieve is to make it harder for individuals to access the benefits they are eligible for.

A reason why work requirements are ineffective is that they do not account for the precarious nature of low-wage work. Unpredictable scheduling practices are pervasive in low-wage jobs, including cancelled shifts and short notice changes to shift schedules. Low-wage workers also frequently change jobs in an effort to find better-paying work. The scheduling unpredictability and level of turnover in many low-wage jobs can make it difficult for workers to fulfill the consistent work-hour requirements needed to satisfy work requirement policies. Work requirements effectively act as cuts to existing beneficiaries and limit new participants who have little control over the labor market conditions associated with low-wage work.

Conclusion

The minimum wage is a powerful tool for increasing the economic security of low-wage workers. Yet Republican lawmakers have repeatedly denied increases in the federal minimum wage and are now pursuing a tax and budget plan that would cut Medicaid and limit access to safety net programs to finance tax cuts for the richest Americans. If it goes into effect, the combination of tax cuts and Medicaid cuts would effectively lower incomes for workers in the bottom 40% of the income distribution while boosting incomes for the top 1%. These cuts are also likely to harm people and children of color, who are disproportionately more likely to rely on Medicaid. 

If lawmakers were serious about lifting families out of poverty and enabling them to fully participate in the labor force, they would be enacting policies to raise wages and expand access to good-paying jobs. By keeping wages low and making it more challenging to access benefits, lawmakers are seeking to deprive low-income households of the resources they need to thrive.

1. S.Rep. No. 884 (75th Cong., 1st Sess.), p. 4

2. Supplemental Nutrition Assistance Program (SNAP, formerly known as the food stamp program) is a crucial safety net program providing benefits so that low-income people in the United States can purchase food. SNAP has work requirements for most beneficiaries ages 16–59 who are able to work. In addition, there are more stringent work requirements for able-bodied adults without dependents (ABAWDs).

3. These individuals lived in households that qualified for SNAP benefits, housing subsidies, free or reduced-priced school meals, or cash assistance from the Temporary Assistance for Needy Families (TANF) program.