Cuts to Medicaid and the Supplemental Nutrition Assistance Program (SNAP, sometimes called food stamps) are inevitable if Congress and President Trump continue down the budget path they have laid out. Despite President Trump’s claim that he is opposed to cutting Medicaid, he enthusiastically endorsed the budget resolution passed by the House of Representatives in February. The Congressional Budget Office has confirmed that achieving the level of spending reductions specified in this resolution would require cuts to Medicaid (and more cuts on top of that). The House FY 2025 budget resolution calls for, among many other things, an extension of the 2017 Tax Cuts and Jobs Act (TCJA) and requires $2 trillion in spending cuts. To pay for this, the budget resolution has asked House committees that oversee both Medicaid and the SNAP to identify hundreds of billions in potential cuts. The anticipated cuts to both Medicaid and SNAP threaten the economic security of millions of working families.

Medicaid provides health coverage to many low-income households, which include disabled residents, pregnant workers earning low wages, and low-income seniors, all of whom would be greatly harmed by cuts to this program. Workers of color and their families are especially vulnerable to cuts to Medicaid due to structural inequities that cause them to be overrepresented among low-income households. Cutting Medicaid and SNAP and extending the tax cuts from the TCJA would redistribute resources from the bottom of the income distribution towards the top. The bottom fifth of households by income would gain just 0.6% in income on average from the TCJA tax cuts and lose 7.4% from the Medicaid cuts (bringing their net loss to 6.8%), whereas the top 1% of households would see a net gain of 3.9% from these cuts.

Federal cuts to Medicaid follow a long history of political battles over publicly provided health coverage, with major implications for communities of color. The Affordable Care Act and its expansion of Medicaid helped reduce the nonelderly Black and Hispanic uninsured rate by more than 10 percentage points between 2010 and 2023. In fact, both Black and Hispanic individuals under the age of 65 recorded their lowest uninsured rate in 2023, at 9.7% and 17.9%, respectively. Still, many red states where much of the labor force is comprised of poorly paid Black and Hispanic workers have been unwilling to expand access to Medicaid. In 2023, after the end of the Medicaid re-enrollment provision that helped families and children remain insured throughout the pandemic, Black and Hispanic individuals were twice as likely as their white peers to lose coverage. Two years later, Black and Hispanic families stand to experience the brunt of the cuts once again.

People of color are more likely to rely on Medicaid for coverage

While non-Hispanic white individuals account for the largest number of Medicaid beneficiaries, Black and Hispanic individuals are more likely to depend on Medicaid for health coverage. In 2023, nearly a third of Black (29.0%) and Hispanic (29.6%) people relied on Medicaid for health insurance (see Figure A below). These figures amount to more than 13 million Black and more than 19 million Hispanic Medicaid recipients who stand to see a reduction in benefits as a result of Republican efforts in Congress to provide tax cuts that will disproportionately favor the most affluent households in the country at the expense of the most economically vulnerable.

Figure A Children and teens stand to be the most affected by cuts to Medicaid

Children and teens of color stand to be most adversely affected by cuts to Medicaid or the Children’s Health Insurance Program (CHIP). While Medicaid provides health coverage to low-income individuals and families, including individuals with disabilities, CHIP provides free or low-cost coverage to a larger universe of children (under the age of 19) in families that can’t afford private health insurance for routine check-ups, dental visits, and a wide range of other essential services. Like Medicaid, CHIP is jointly financed by the federal government and the states that administer it. Funding for CHIP is tied to Medicaid as states can operate CHIP as a program separate from Medicaid, as an expansion from Medicaid, or a combination of both.

More than half of Black and Hispanic children, and teens under the age of 19, rely on Medicaid or CHIP for health care coverage (see Figure B below). These children are more than twice as likely as their white peers to rely on public health insurance. Potential cuts to Medicaid or CHIP will impact the benefits of more than six million Black and more than 10 million Hispanic children and teens. Medicaid cuts are also likely to cost the federal government more in the long run, as a growing body of research shows that Medicaid coverage for children is a powerful investment in the health and productivity of the future workforce.

Figure B What cuts to Medicaid mean for workers and families of color

When policymakers cut programs designed to help low-income workers, those who cannot work, and their families access health care to fund tax breaks that tilt sharply towards the highest-income households, they are showing disregard for the health and well-being of the vulnerable and deference to the rich.

Black and Hispanic workers are more likely to work in jobs that do not provide access to health insurance, more likely to live and work in environments hazardous to their health, and less likely to have the financial resources to improve their health by buying healthful goods and services. These factors together mean that Black and Hispanic workers are more vulnerable to cuts to Medicaid.

The upshot is this: Cuts to Medicaid will make low-income workers, non-workers, and their families poorer and less able to afford health care, especially those who are Black or Hispanic. An economy that works and grows requires all workers and their families to be able to access the health care they need to show up to their jobs, to school, or for their community. Funding tax cuts for the wealthy by weakening the most vulnerable among us is a poor strategy for both the health of the nation and the economy.

Below, EPI senior economist Elise Gould offers her insights on today’s release of the Job Openings and Labor Turnover Survey (JOLTS) for February. Read the full thread here.

 

The topline numbers in the latest #NumbersDay report on Job Openings and Labor Turnover for February showed little changed in February, but we can see the fingerprints of recent policy decisions on the federal workforce. The data show 18,000 laid off federal workers in February.

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— Elise Gould (@elisegould.bsky.social) April 1, 2025 at 9:23 AM

The spike in the layoffs rate for federal workers in February 2025 is the steepest uptick since the laying off of census takers in 2020. The decision of this administration to target the federal workforce is having its intended effect. Unfortunately, this is likely only the tip of the iceberg.

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— Elise Gould (@elisegould.bsky.social) April 1, 2025 at 9:31 AM

Because the federal workforce is only a small share of the overall workforce—and one that has fallen precipitously as a share since the 1950s—the federal layoffs are not showing up in the economy-wide layoff rate.
www.epi.org/blog/doge-is…

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— Elise Gould (@elisegould.bsky.social) April 1, 2025 at 9:42 AM

Overall, the rate of hires, quits, and layoffs were unchanged between January and February. What we are beginning to see in the federal workforce layoffs along with massive spending cuts has yet to hit the data for the private sector. There’s no question it is coming.
#NumbersDay #EconSky

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— Elise Gould (@elisegould.bsky.social) April 1, 2025 at 9:48 AM

Between 2020 and 2024, South Carolina’s job growth meaningfully outpaced job growth nationally. Our recent report analyzes the state’s economic boom in recent years, fueled in part by federal investments in the Bipartisan Infrastructure Law and the Inflation Reduction Act. A key industry in the state is manufacturing, especially tires, auto, and auto parts manufacturing. South Carolina’s political leaders boast that the state leads the nation in the export of tires and completed passenger vehicles.

Even before federal investments spurred the state’s manufacturing growth, lawmakers were using generous economic development subsidies to lure manufacturing to South Carolina. While the state’s approach has created jobs, the quality of those jobs and the overall benefit to South Carolina communities—at substantial public cost—remains dubious.

Chester County, South Carolina, is a prime example. Between 2014 and 2023, growth in manufacturing jobs in Chester County vastly exceeded that of South Carolina as a whole—43.7% compared with 14.3%.1 As a result of successful efforts to attract corporations to Chester County, it is home to more than 50 manufacturers across industrial sectors, including Giti Tire, a Singapore-based tire manufacturing company featured on the Chester County Economic Development website.

Despite the rapid growth in manufacturing in Chester County, its residents, particularly the ones living in the city of Chester, are seeing limited benefits from that growth, despite generous subsidies to manufacturers for locating in Chester County. Giti Tire, for example, received over $35 million from the Coordinating Council for Economic Development’s Rural Infrastructure Fund as well as $12 million in local tax breaks between 2018 and 2022, with at least $4 million more per year expected at least through 2026. The company promised to create 1,700 jobs. Their website indicates they began production in 2017 and surpassed one million tires in 2018. Yet their Chester plant employs between roughly 600 to more than 900 workers, with the most optimistic number being just over one-half of the promised number of jobs.

This highlights one of the many problems with economic development subsidies: They frequently lack any penalties for subsidized companies that fail to meet their promises. Further, many subsidies that go to corporations are not coupled with requirements that local communities benefit. Rather, many subsidies simply divert tax dollars away from investments in local schools, public roads, and health care. This has been particularly problematic in Chester, which faces some of the largest losses of public school funding to tax abatements, losses which have increased in almost every year since 2017 with the exception of 2020 when it remained roughly stable.

Workers and families in Chester recognize that the benefits major corporations receive for locating in their communities go far beyond just subsidies. Chester provides manufacturers with broad access to varied transport options for importing raw materials and exporting finished goods including by railroad, port, and major highway networks. Auto and tire manufacturing particularly benefit from their proximity to other auto and auto parts manufacturers and related supply chains supporting these manufacturers.

Of course, the region’s greatest asset is an available workforce, ready to work if given access to quality jobs. Chester is an area that has long been neglected by state lawmakers and whose residents have been exploited by corporations historically and continue to be exploited today, including by large multinationals like Giti Tire.

For decades, lawmakers in South Carolina have embraced an economic development strategy common in the South, centered on disempowering workers and communities, keeping wages and benefits low, and limiting worker protections. South Carolina is one of just five states in the country that does not have a state minimum wage.2 It is one of two-dozen states with a so-called right-to-work law, which guarantees neither workers’ rights nor a job. Instead, these laws make it more difficult for workers to build and sustain a union, one of the most effective avenues for workers to collectively demand a living wage, safe workplaces, and basic benefits such as health insurance and paid sick days.

As we illustrate in our recent report, these policies and the state’s history of strong opposition to multiracial worker solidarity have left South Carolina with the lowest union coverage rate of any state in 2023, and the third lowest rate in 2024.

These factors are compounded by a range of labor market disadvantages faced by Chester residents. Table 1 shows both Chester County (35.8% Black) and the city of Chester (64.3%) are disproportionately Black compared with their counterparts nationally (12%) or statewide (25.1%). Just 8.4% of those in Chester County and 10.5% of those in the city of Chester hold a bachelor’s degree, roughly half the national (21.3%) or state-wide (19.4%) rate. Chester residents are also about twice as like to fall below the poverty line—19.3% of Chester County, 25% of the city of Chester, compared with 12.4% of Americans nationally and 14.2% of all South Carolinians.

Table 1

The higher poverty rates shown in Table 1 reflect to some degree low median wages. Median earnings in Chester County ($44,908) and the city of Chester ($38,687) are just 74.7% and 64.4%, respectively, of the earnings of workers nationally ($60,096).

Workers in the Giti plant report that instead of hiring the promised number of workers, the company forces them to work mandatory overtime, in unsafe working conditions, and segregated by gender. Occupational sex segregation is a key factor in women’s lower pay relative to their male counterparts, and earnings data for manufacturing workers in Chester are consistent with this finding. The data show that in the city of Chester, women are paid just 57.1 cents for every dollar paid to male workers. Nationally, women in manufacturing are paid 77.5 cents for each dollar paid to men.

Investments in South Carolina need to benefit South Carolina communities. Lawmakers should not be raiding public funds for schools, roads, and hospitals to give subsidies to large corporations, and businesses being welcomed into communities like Chester should be creating good jobs for local residents. In Chester, and across the state, workers are coming together to demand higher wages and better working conditions, and they are supported by their communities, faith leaders, and unions. Employers and lawmakers should listen.

1. Author’s calculation of Bureau of Labor Statistics Quarterly Census of Employment and Wages (QCEW) data.

2. In states that lack a state minimum wage, as in South Carolina, the federal minimum wage of $7.25 per hour applies.

Workers of color make up more than 40% of the U.S. labor force, and that share is growing as more of the white non-Hispanic population reaches retirement age and recent immigration trends help sustain the growth of our labor force and economy. Over the last five years, workers of color—who identify as Black, Hispanic, Asian American and Pacific Islander (AAPI), and American Indian and Alaska Native (AIAN)—made significant gains in employment and earnings. This was a direct result of the Biden-Harris administration’s commitment to full employment during the post-pandemic recovery and the Federal Reserve’s successful navigation of a soft landing. But Trump’s anti-worker, anti-immigrant policy actions could soon erase this progress.

The broad-based nature of the labor market recovery is most evident when examining the employment-to-population (EPOP) ratio of prime-age workers between the ages of 25 and 54. Unlike the unemployment rate, the EPOP ratio is not influenced by changes in labor force participation since it captures the share of workers during a given period that have a job. The prime-age EPOP ratio is also less influenced by college attendance and the aging of the population when compared with the employment rate of all workers. As shown in Figure A, the employment rate of prime-age Black, Hispanic, AAPI, and AIAN workers hit record highs within the past few years. For example, the share of prime-age Black workers with a job reached a historic peak of 77.7% in 2023.

Figure A

The rapid and sustained labor market recovery also helped deliver stronger wage growth for workers of color (see Figure B). Black workers experienced the fastest wage growth of any group between 2019 and 2024. In fact, Black and Hispanic real wages grew more than three times faster over the last five years than the four decades prior, on an annualized basis. Much of this is explained by low-wage workers (who are disproportionately workers of color) experiencing strong wage growth since 2019, as the tight labor market with low unemployment compelled employers to expand their hiring networks and compete for workers by offering higher wages. 

Figure B

These historic gains should be protected and continued through a policy regime centered on low unemployment and pro-worker, pro-equity policies. Instead, all of these things are now under threat. Since taking office, President Trump has signed several executive orders centered on deporting migrants, including taking actions that will make it harder for migrants to legally work and support their families in the United States. He also signed orders ending critical diversity, equity, inclusion, and accessibility programs within the federal government, which were dedicated to promoting goals of racial and gender equity within the economy and beyond.

Further, President Trump has stifled the Equal Employment Opportunity Commission (EEOC) by illegally firing Commissioners Charlotte Burrows and Jocelyn Samuels, who were appointed by President Biden and confirmed by the Senate. As an independent agency, EEOC commissioners are intended to be insulated from presidential interference once nominated and confirmed. These illegal firings have prevented the EEOC from reaching a quorum to hear cases and fulfill its mission to enforce federal laws that prohibit employment discrimination and harassment.

Beyond these executive actions, the Trump administration has engineered an economic climate of chaos by announcing (and seemingly walking back) a temporary freeze of federal assistance and broad-based tariffs against trading partners.

But it’s not just Trump who poses a threat. Republicans in Congress are considering plans to gut the social safety net, including Medicaid, a move that would make economically vulnerable families pay for tax cuts for the wealthy. These efforts are likely to severely limit our capacity to recover quickly from the next economic crisis as well as exacerbate the persistently high levels of poverty that disproportionately burden families and children of color.

These policies don’t just threaten the historic gains for workers of color over the last five years. All workers and their families are now forced to contend with heightened uncertainty and chaos that put their employment and broader economic security at risk. As attacks on public-sector employment continue, and the prospects of a self-inflicted recession rise, it’s likely workers of color will once again be among the first to contend with setbacks, reversing the forward movement of the last five years.

In a move that starkly exposes just how disingenuous the Trump administration’s pro-worker rhetoric really is, President Trump rescinded the Biden administration’s executive order that increased the minimum wage for workers on federal contracts. The Biden-era rule implementing that executive order raised the minimum wage for workers on federal contractors to $15 an hour in 2022 and indexed it to inflation going forward. As of January 1, it was $17.75 an hour.

Trump rescinded this order two weeks ago and I’ve been struck by the lack of attention it has received. This action is not just a bureaucratic adjustment—it is a direct assault on the livelihoods of hundreds of thousands of workers.

When the Biden-era rule was being developed, we estimated that it would give a raise to nearly 400,000 low-wage federal contractors. Who are these workers? They are janitors who clean government buildings, food service workers on military bases, cashiers in gift shops in national parks, and security guards protecting federal property—everyday people trying to make rent, buy groceries, and support their families. A minimum wage of $17.75 an hour translates into annual earnings of less than $37,000 for a full-time worker. The Trump administration is acting to ensure they get even less.

The Trump Department of Labor (DOL) will need to go through the rulemaking process to actually overturn the higher minimum wage for federal contractors—just rescinding the executive order doesn’t overturn the rule that was put in place to implement it. Until that happens, the minimum wage for federal contractors is still technically $17.75. However, Trump’s DOL has publicly announced they will no longer be enforcing the higher minimum wage. In other words, there won’t be any consequences for not complying, inviting employers to cheat their workers.

It is not clear how low the Trump administration will ultimately set the minimum wage for federal contractors. If they revert the federal contractor minimum wage to what it was before the Biden-era rule, it would drop to $13.30 an hour. That would mean a 25% pay cut for a full-time federal contractor earning the minimum wage—a loss of over $9,000 a year.

The most drastic move the administration could take would be to eliminate the higher minimum wage for federal contractors entirely, which is well within the realm of possibility given that Trump has argued that a nationwide minimum wage “wouldn’t work” because of regional price differences.

If the Trump administration does end up eliminating the higher minimum wage for federal contractors, then federal contractors—unless they are in a state with a higher state minimum wage—will be subject to the disgracefully low national minimum wage of $7.25 per hour, which has not increased since 2009. Reverting to the national minimum wage of $7.25 would mean a nearly 60% pay cut for a full-time federal contractor making the minimum wage—a loss of roughly $22,000 a year. (It’s worth noting that all workers—not just federal contractors—need a higher minimum wage, but the president only has the authority to raise wages for federal contractors. It would require action from Congress to raise the minimum wage for all workers.)

For those who might believe that paying the lowest-wage federal contractors less could be a good-faith attempt at boosting government “efficiency,” think again. Rescinding this rule is much more likely to boost the profits of large government contractors—because they can pay workers less—rather than reduce the costs of government contracts.

To distract from his policies that actively harm workers for the sake of boosting the profits of their employers, Trump has floated gimmicky ideas like eliminating taxes on tips. Let’s be clear, “no tax on tips” isn’t a gift to workers, it’s a smokescreen that would benefit employers of tipped workers and harm more workers than it helps. If he really wanted to help tipped workers, he would push to end the subminimum wage for tipped workers and raise the minimum wage. Instead, he’s cutting minimum wages where he can—for federal contractors. But that’s Trump’s playbook: use pro-worker rhetoric while taking concrete steps to undermine workers’ rights and wages. Taking raises away from hundreds of thousands of low-wage workers while peddling a tax-break gimmick is just the latest example of his billionaire-first agenda.