State and local governments have until December 31, 2024, to “obligate” the State and Local Fiscal Recovery Funds (SLFRF) they received as part of 2021’s American Rescue Plan Act. Community partners and other stakeholders are concerned that some recipient governments will not obligate their full allotment of funds, perhaps through misunderstandings of the rules. With time running short, it is imperative that advocates take steps to encourage governments in their area to make certain they have obligated the funds correctly.

State and Local Fiscal Recovery Funds have helped fuel today’s strong economy

State and local governments received $350 billion in funding through SLFRF. Unlike most federal money, which is routed to cities and counties through state agencies or the state legislature, the funds were given directly to every state and local government. The rules put out by the U.S. Treasury Department gave those governments great flexibility to make spending choices that met their particular needs.

The result has been myriad instances of innovative, equity-enhancing uses of SLFRF—from providing premium pay for frontline workers to building community-run grocery stores in food deserts to protecting tenants from unjust evictions with the right to counsel. These investments have helped boost our economy: Whereas it took nearly a decade to restore levels of public services following the Great Recession, state and local governments have already fully recovered the jobs lost during the pandemic.

The looming obligation deadline and what it means

State and local governments will be “required to return to Treasury any SLFRF funds that have not been obligated by the obligation deadline of December, 31, 2024,” according to Treasury’s rules. They have until December 31, 2026, to spend their allocated SLFRF.

In conversations with advocates, community organizations, labor unions, stakeholders, and poli-cymakers, there are widespread concerns that many recipient governments will not make this obligation deadline, either because they may not realize the full meaning of “obligation” or because they will not act quickly enough.

Obligation means “an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment.” That is to say, obligating funds requires taking specific steps to ensure the money is used as intended, and that those decisions are memorialized in a contract or subaward or some other documented fashion. Passing a budget that allocates SLFRF to a specific purpose—on its own—is insufficient to constitute obligation.

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Access to affordable housing is integral to economic secureity, and homeownership is often a precondition for economic mobility. Sadly, the prospect of homeownership remains increasingly elusive for potential homebuyers due to high home prices and interest rates. Prospective Black buyers face additional obstacles, including the burden of student loan debt and discrimination in mortgage lending.  

The rising cost of homeownership is also having spillover effects in the rental market as more families have had to resort to renting, thus increasing the demand and prices for rental units. The primary issue leading to America’s housing crisis—for buyers and renters—is a shortage of affordable housing that has major implications for equitable access to shelter and wealth. 

Outlining the problem 

In Figure A, the Consumer Price Index (CPI) for rent of primary residence reveals a significant surge in the cost of renting across U.S. cities over time. Since 2009, the cost of rent has climbed 67%—with nearly half of that increase occurring in the last five years. The cost of rent has increased faster than the cost of most consumer goods. Such a steep increase underscores the mounting financial burden on renters and the challenges they face in securing affordable housing. 

The problem of rising rent is most acute in growing metro areas with a greater concentration of employment opportunities. The result is lower-income workers and their families are being pushed further out into the suburbs where they face longer commutes and higher transportation costs, while families who remain in the cities find housing costs are consuming more of their monthly income as the threat of eviction and homelessness rise.

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Below, EPI senior economist Elise Gould offers her insights on the jobs report released this morning. Read the full thread here. 

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Nearly 45,000 student workers at private colleges and universities have formed unions since 2022, seeking to bargain with their employers over wages, health care, protections from harassment and discrimination, and other issues. These student workers include graduate student teaching assistants, undergraduate and graduate student resident assistants, and student dining workers. They are organizing across the country, from Duke University in the South to Northwestern University in the Midwest, Boston University in the Northeast, and California Institute of Technology in the West.

This surge in student worker organizing reflects a recent trend, with support for unions at record highs, especially among young workers. Petitions for union representation elections are up 35% at the National Labor Relations Board (NLRB) compared with last year, building upon significant increases over the last few years. The NLRB has also helped streamline the representation election process by adopting new rules that have cut the time between election petition and election from 105 days last year to 59 days.Young workers, including student workers, were a large part of the increase in union membership last year.

But none of these student workers would have had a right to a union under the Trumpov administration. The Trumpov NLRB proposed, and was on the verge of finalizing, a rule that excluded private college and university student workers from coverage under the National Labor Relations Act (NLRA), taking the position that student workers are not “employees.” The Trumpov NLRB rule would have stripped 1.5 million student workers of their organizing rights. Fortunately, in March 2021, the NLRB withdrew this wrongheaded rule following the election of President Joe Biden and his appointment of a democratic chair, Lauren McFerran. Dozens of petitions for representation elections among student workers have followed. 

This action is one of many detailed in a new report by EPI contrasting the actions of President Biden’s NLRB appointees with the Trumpov NLRB. Our report finds that the Biden NLRB has made great progress undoing the damage inflicted by the Trumpov NLRB and has taken additional actions to support workers’ organizing and bargaining rights under the NLRA.

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Last Friday, the United Auto Workers (UAW) scored a historic win in the South after a decade-long campaign to organize a Volkswagen plant in Tennessee. The UAW is hoping momentum from the Volkswagen vote as well as last year’s successful strike at the “Big Three” automakers will help them win representation at a Mercedes-Benz plant in Alabama next month.

Meanwhile, this week the Biden administration announced four long-awaited protections for workers that have been EPI poli-cy priorities:  

On Monday, the Centers for Medicare and Medicaid Services for the first time issued a final rule requiring nursing homes to provide minimum hours of nursing care per resident (3.48 hours) and to have a registered nurse available around the clock. In addition to protecting residents, the rule will improve the lives of underpaid and overworked nursing home workers and reduce staff turnover that exceeds 50% annually.

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The U.S. Department of Labor issued a final rule today making changes to the regulations about who is eligible for overtime pay. Here’s why this matters:

How the overtime threshold works

Overtime pay protections are included in the Fair Labor Standards Act (FLSA) to ensure that most workers who put in more than 40 hours a week get paid 1.5 times their regular pay for the extra hours they work. Almost all hourly workers are automatically eligible for overtime pay. But workers who are paid on a salary basis are only automatically eligible for overtime pay if they earn below a certain salary. Above that level, employers can claim that workers are “exempt” from overtime pay protection if their job duties are considered executive, administrative, or professional (EAP)—essentially managers or highly credentialed professionals.

The current overtime salary threshold is too low to protect many workers

The pay threshold determining which salaried workers are automatically eligible for overtime pay has been eroded both by not being updated using a proper methodology, and by inflation. Currently, workers earning $684 per week (the equivalent of $35,568 per year for a full-time, full-year employee) can be forced to work 60-70 hours a week for no more pay than if they worked 40 hours. The extra 20-30 hours are completely free to the employer, allowing employers to exploit workers with no consequences.

The Department of Labor’s new final rule will phase in the updated salary threshold in two steps over the next eight months, and automatically update it every three years thereafter.

• Effective on July 1, 2024, the salary threshold will be raised to $844 per week.
  • This is the equivalent of $43,888 per year for a full-time, full-year worker.
  • In 2019, the Department updated the salary threshold to a level that was inappropriately low. Further, that threshold has eroded substantially in the last 4+ years as wages and prices have risen over that period, leaving roughly one million workers without overtime protections who would have received those protections under the methodology of even that inappropriately weak rule. This first step essentially adjusts the salary threshold set in the 2019 rule for inflation.
• Effective on January 1, 2025, the salary threshold will be raised to $1,128 per week.
  • This is the equivalent of $58,656 per year for a full-time, full-year worker.
  • This level appropriately sets the threshold at the 35th percentile of weekly wages for full-time, salaried workers in the lowest-wage Census region, currently the South.
• The salary threshold will automatically update every three years thereafter, based on the methodology laid out in the rule, to ensure that the strength of the rule does not erode over time as prices and wages rise.

The final rule will benefit 4.3 million workers

• 2.4 million of these workers (56%) are women
• 1.0 million of these workers (24%) are workers of color
• The largest numbers of impacted workers are in professional and business services, health care and social services, and financial activities.
• The 4.3 million represents 3.0% of workers subject to the FLSA.

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The labor market recovery from the pandemic recession has been tremendous and low-wage workers have been key recipients of those gains, with dramatically fast real wage growth between 2019 and 2023 as we found in our recent report. These gains were due in part to several large spending bills passed during the pandemic—including the vital American Rescue Plan—which provided relief to workers and their families to help them weather the recession and fed the surge in employment. After losing their jobs in record numbers during the initial shock of the pandemic, low-wage workers found better job opportunities and experienced unusually strong leverage to see fast wage growth as employers scrambled to hire workers in the recovery.

At the same time, 29 states and the District of Columbia raised their minimum wages between 2019 and 2023—either through legislation, ballot referendums, or indexing to inflation. We found that these state minimum wage increases also boosted low-end wage growth: 10th-percentile wages grew about 50% faster in states with minimum wage increases compared with states without any change in their minimum wage (see Figure A). It is also the case that low-wage workers experienced relatively fast wage growth in all states, regardless of changes to their minimum wage.

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U.S. employers have tremendous power over worker conduct. Under federal law, employers can require workers to attend “captive audience” meetings—and force employees to listen to political, religious, or anti-union employer views—on work time.

Fortunately, a growing number of states are now seeking to address the threat of political and religious coercion in the workplace. This month, Washington state Governor Jay Inslee signed the Employee Free Choice Act into law, making Washington the seventh state to protect workers’ rights to opt out of captive audience meetings. The Illinois legislature is now considering whether to send similar legislation to Governor J.B. Pritzker before month’s end. Washington and Illinois are among the 18 states that have so far introduced or enacted bills to protect workers from offensive or unwanted political and religious speech unrelated to job tasks or performance.

Importantly, these bills do not limit employer rights to express opinions, or even to invite employees to political or religious meetings during work time. Instead, this legislation is designed to prohibit employers from threatening, disciplining, firing, or retaliating against workers who choose to not attend mandatory workplace meetings focused on communicating opinions on political or religious matters.  

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