The American Rescue Plan Act (ARPA) of 2021 created a $350 billion state and local fund to help fight the pandemic and support the economic recovery. Sadly, there is still over $150 billion unspent and it is badly needed to boost public sector employment and the care economy.
ARPA dollars earmarked as part of the National and Local Financial Recovery Fund (SLFRF) have fueled transformative investments across the country, but more needs to be done now.
As 2023 begins, state and local governments must prioritize spending relief money on three critical areas critical to the well-being of children and families:
- Reconstruction of the public sector
- Expanded access to paid leave
- Strengthening our care systems by increasing access to quality child and elderly care, and supporting the workers who perform this work.
ARPA was designed to support state and local governments over several years. SLFRF dollars (designated for specific uses) do not need to be committed until the end of 2024, and they do not need to be spent until the end of 2026. As of October 2022, states and the District of Columbia have spent only $74.5 billion of the $195.9 billion appropriated (38.1%), and local governments have spent The largest is just $26.5 billion out of $99.8 billion (26.6%), according to data released by the US Treasury Department.
As the map below shows, the ten states with the least money absorption spent less than 7.5% of their allocation. It is not clear why these countries do not use the money to great effect. All ten states have Republican governors and Republican-controlled legislatures.
Moreover, since most recipients didn’t receive their full allocation of SLFRF funding until late spring, much of the money—more than $96 billion for states and $60 billion for local governments—wasn’t committed until October 2022. The federal government made the right decision. To give state and local governments great latitude in how these funds are used offers state and local policymakers an enormous opportunity to improve their communities — if they use the funds in thoughtful ways.
restore the public sector
While private sector employment has surpassed pre-pandemic levels, public sector employment remains well below February 2020 levels. In December, the number of workers in the public sector was 452,000 fewer than it was before The pandemic, and state and local governments in particular had 2.3% fewer workers than before compared to the pandemic. Fully half of these losses occur in K-12 public education. Not only is thriving public schools essential to the long-term well-being of children and communities, but it is also a case in which parents cannot easily return to the workforce if safe and nurturing schools are not available.
It should also be remembered that state and local governments have not fully recovered from the Great Recession of 2008-2009. Public sector employment remained below pre-recession levels during the 2000s as policymakers invested in public services. Returning to the status quo before the pandemic is not enough – we need policymakers to rebuild the public sector so that it can perform its vital roles in public health, safety, education and more.
The shortage of state and local government jobs is due in large part to insufficient wages paid to public sector workers. Fully one-third of state and local government employees earn less than $20 an hour, and 15% earn less than $15 an hour. Black and Latino employees are especially likely to be underpaid in the public sector, which also employs a disproportionate proportion of female workers. These workers need a raise, and state and local governments will need to help increase wages for their workers. Meanwhile, the penalty for paying a teacher has reached a new high: Teachers now earn 23.5% less than their college-educated, non-teaching counterparts.
We’ve already seen SLFRF dollars being used to support public sector workers. For example, San Jose, California, has been able to begin filling more than 800 city job vacancies. Salt Lake City has pledged $1.5 million to fill public sector job vacancies. All in all, state and local governments have spent $51 billion on “revenue replacement” — much of it preventing further job cuts in critical public services.
Despite this spending, 44 of the 50 states are still below pre-pandemic levels for state employees. They all sit on big SLFRF dollars that can and should be used to increase public sector wages and fill job vacancies.
States and cities have ample allocations of the State and Local Local Recovery Fund (SLFRF) that can be used to employ public sector workers: Share of state, local and fund-issued allocations spent and change in state and local government employment, February 2020 – November 2022
|state||Spent a share of state appropriations||share of domestic spending||Relative Change in State Government Jobs, February 2020 – November 2022||Relative change in employment in local government, February 2020 – November 2022|
NB: State and local allocation data as of October 2022.
Support working families and children with investments in paid leave and care infrastructure
The pandemic has proven the value of paid sick and family leave. Paid leave provisions in the CARES Act of 2020 helped flatten the curve during the first wave of infections, and cities with paid sick leave have higher rates of coronavirus vaccination, especially among vulnerable communities. While 77% of private sector workers have some amount of paid sick time, that share drops to 55% of the bottom quartile of paid workers, and only 38% of the bottom 10%.
This is particularly concerning because low-wage workers are 3.5 times more likely to miss work due to COVID symptoms than workers who earn $100,000 or more. Families with incomes of less than $25,000 are the least likely to receive a COVID vaccination, but they are bone He likely would like a vaccine, with many worried about absenteeism from work due to the side effects of COVID.
Low-wage workers and their families are also disproportionately affected by disinvestment in care work. More than twice as many workers were absent from work due to childcare problems in November 2022 than there were in February 2020. Only 76% of childcare service jobs lost during the pandemic have been recovered. The same applies to nursing care work and residential care facilities. Despite some improvement in 2022, there are nearly 300,000 fewer employees at those facilities, an industry where black women make up more than 22% of workers despite only being 6.5% of the total workforce.
Again, workers’ wages are a major cause of this shortage, and it’s worth noting that these are occupations where women and black and brown workers make up a disproportionate share of the workforce. Looking at home child care workers and home health workers, for example, women make up more than 80% of home health aides, and more than 97% of home child care workers. Black and Hispanic workers account for less than 30% of the total workforce, but they account for 40% of in-home child care providers and more than 50% of agencies’ home health care aides.
In all of these occupations, the average hourly wage is at least $7 less than that of all other workers. For long-term residential care workers, average hourly wages are about $5 less than others, while Black, Hispanic, and Native American workers earn nearly $2 less per hour than white workers.
As EPI’s Josh Bivens points out, investing in child care and long-term care not only improves the lives of those in care, it also makes it easier for workers to return to the workplace, which boosts productivity. The same applies to paid time off policies. Enabling employees to better balance work and family responsibilities will benefit both workers and employers.
It is unlikely that federal policymakers will enact significant new paid leave policies in 2023, and we cannot expect significant new federal investments in childcare, local health care, or residential long-term care. State and local governments can and should use the Household Care Trust Fund dollars to bridge the gap, providing needed support to working families and children.
While the SLFRF does not provide a continuous revenue stream, expanding the supply of care workers through increased investment now has significant downstream effects, including increasing women’s participation in the workforce and improving the quality of care. It will also pay for itself in the long run by increasing tax revenues.
State and local governments, which spent much of the Great Recession dealing with the consequences of austerity policies that destroyed public services, may be very reluctant to spend the still plentiful SLFRF funds. However, there is no better time than the present. Today’s needs require action. State and local governments have more than $150 billion left to spend, and there is no better benefit than spending the money on transformative investments that can restore the public sector and deliver vital help to low-wage workers and their families.
The reports included data on all recipient local governments that have received more than $10 million in the Refugee Care Trust Fund. There is no aggregated public data available for local government units that received less than $10 million.
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