Increasing Earnings, Income, and Wealth
Although rising prices dominate the affordability conversation, family incomes, earnings, and wealth play equally important roles. In recent years, incomes have not consistently grown as fast as costs, meaning the affordability of everyday life has waned. Between 2019 and 2024, median household income grew by less than 1 percent after adjusting for inflation. For most families, earnings from a job represent the bulk of their income. Since 2000, the inflation-adjusted median earnings for full-time, year-round workers have shown similarly sluggish growth. And over the past 60 years, wealth has transferred from the middle class to the wealthiest families at a more rapid rate, with the wealthiest families now holding 71 times the wealth of middle-income families. To address the affordability crisis, federal, state, and local policy solutions must include ways to increase earnings, incomes, and access to wealth.
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- Increase minimum wages. Although the federal minimum wage hasn’t increased since 2009, several local jurisdictions across the country have increased their local minimum wage. Local minimum wages are more closely tied to the cost of living in an area than the federal minimum wage, making them a potent tool for increasing affordability. Local policymakers could also index wages to inflation. This year, 14 states (PDF) will reach or exceed a wage floor of $15 per hour, and 13 states and 44 local jurisdictions will make annual cost-of-living adjustments in 2026. Most research since 2010 finds that the impact of minimum wage hikes on job loss are minimal. Policymakers could also codify which workers are covered by the minimum wage so workers remain covered even if federal coverage definitions change.
- Implement and enforce fair scheduling protections. Few of the country’s hourly workers—including food service, construction, and home health care workers—have control over their work schedules. Research has shown that fair scheduling policies reduce workers’ economic uncertainty and increase productivity. These policies also help workers balance job responsibilities with family caregiving, ultimately leading to higher and more consistent earnings. Local policymakers can support workers through legislation that protects them from unpredictable schedules, ensures access to adequate work hours, provides employees with input into when they work, and guarantees adequate rest between shifts.
- Implement wage and labor standards for government contractors. Government contractors pay their workers through public funds, but some of these jobs fail to provide a living wage. Local policymakers can ensure public funds support quality jobs by incentivizing bidders to include job quality in proposals, requiring contractors to address job quality after winning a bid; and including pay-for-performance bonuses dependent on job quality outcomes.
- Create and invest in early life wealth-building programs. Baby bonds and child development accounts provide capital to children that can be used for wealth building activities when they reach adulthood. New federal 530As (Trump Accounts) offer one version of these early life wealth-building programs, but local policymakers can build on this policy by setting up their own programs with automatic enrollment and continuing deposits over time.
- Increase minimum wages. The federal minimum wage hasn’t been increased since 2009, but 23 states have enacted minimum wages at or above $15 per hour. Setting higher state minimum wages can more closely align worker earnings with local costs of living, increasing affordability. Although businesses tend to pass some of these higher labor costs on to consumers, research about the consumer impacts of higher minimum wages is mixed. State and local policymakers could also index wages to inflation. This year, 14 states (PDF) will reach or exceed a wage floor of $15 per hour, and 13 states and 44 local jurisdictions will make annual cost-of-living adjustments in 2026. Most research since 2010 finds that the impact of minimum wage hikes on job loss are minimal.
- Implement and enforce fair scheduling protections. Few of the country’s hourly workers—including food service, construction, and home health care workers—have control over their work schedules. Research has shown that fair scheduling policies reduce workers’ economic uncertainty and increase productivity. These policies also help workers balance job responsibilities with family caregiving, ultimately leading to higher and more consistent earnings. State policymakers can support workers through legislation that protects them from unpredictable schedules, ensures access to adequate work hours, provides employees with input into when they work, and guarantees adequate rest between shifts.
- Implement wage and labor standards for government contractors. Government contractors pay their workers through public funds, but some of these jobs fail to provide a living wage. State policymakers can ensure public funds support quality jobs by incentivizing bidders to include job quality in proposals, requiring contractors to address job quality after winning a bid, and including pay-for-performance bonuses dependent on job quality outcomes.
- Update labor market institutions that build worker power. Given the rise of gig work and independent contractors, basic labor protections fail to cover many common jobs today. State policymakers can expand workers’ right to unionize and experiment with new approaches to ensure all workers can earn fair wages. For example, California has given fast food workers more of a voice through a wage board, which can set wage standards and advise on other working conditions.
- Create and expand state-level Earned Income Tax Credit and Child Tax Credit programs. During the COVID-19 pandemic, federal policymakers temporarily expanded the Child Tax Credit and cut the child poverty rate nearly in half. States can supplement the federal Child Tax Credit and the federal Earned Income Tax Credit with state versions of these tax credits to return more money to the pockets of their residents. Further, states can extend eligibility for their credits to all citizen children or even to all children, a more expansive version of the federal credit, which requires at least one parent on a tax return to have an social security number.
- Improve unemployment insurance programs. Losing a job can be devastating for a household’s finances, and many states are facing excessive strain on their unemployment insurance funds. Although unemployment insurance is a federal program, states have some power over administration and eligibility. For example, states could leverage federal funds to adopt short-time compensation programs, in which employers keep workers on schedules with fewer hours while providing prorated unemployment benefits. States could also allow eligible beneficiaries to claim unemployment benefits for 26 weeks—the former window of eligibility—which has been reduced to as few as 12 weeks in some places.
- Create and enforce paid family and medical leave policies. Nearly a quarter of private-sector workers in the US lack access to paid family leave, meaning they have to take unpaid leave to manage familial responsibilities that require more than a few days away from work, lowering their income. Research shows that access to paid family leave increases mothers’ earnings and helps family caregivers remain in the workforce. The US is an international outlier on paid leave, as many other countries have national paid leave protections. Further, workers who lack access to paid sick or medical leave are significantly more likely to forego needed medical care because of costs. Absent federal policy, state policymakers can implement paid leave laws: 13 states and Washington, DC, have already established mandatory paid family leave systems.
- Improve college access and affordability. College tuition and fees have climbed in recent years, while more and more employers have sought out workers with college degrees. These two trends have meant Americans have taken out larger student debt burdens, which millions have trouble repaying. State policymakers can help improve college affordability by providing scholarships and lowering tuition at community colleges.
- Invest in workforce development programs. States can invest in alternative pathways into the workforce, such as apprenticeships, which can save young people from student debt burdens and provide a return on investment for employers.
- Help residents manage debt burdens. To prevent and alleviate debt burdens, state policymakers can regulate Buy Now, Pay Later products and debt relief and credit repair scams, offer financial coaching to residents through financial empowerment programs, and, in some cases, forgive or erase debt burdens.
- Auto-enroll eligible participants in 530As (Trump Accounts) and make them progressive. Trump Accounts, enacted as part of the One Big Beautiful Bill Act, offer a path to build wealth for the next generation. Seeded with $1,000, these tax-advantaged accounts will be given to all children born in the US between 2025 and 2028, with the holders able to use the money for a home, education, or small business development once they turn 18. Although these accounts can expand wealth-building opportunities, their current design—opt-in and without progressive deposits—could ultimately limit participation from the low-income families who need them most.
- Raise the federal minimum wage. Congress has not increased the federal minimum wage since 2009, despite the fact that 62 percent of Americans support a $15 minimum wage. Without increases, the real value of the minimum wage has been eroded. Using the Analysis of Transfers, Taxes, and Income Security model, Urban research finds that a higher federal minimum wage in 2022 could have increased average earnings for affected workers by $5,600 a year and lifted 7.6 million people out of poverty. Further, removing the tipped minimum wage and setting higher minimum wages for specific workers such as home health aides would help increase wages for millions of workers and reduce turnover in essential industries.
- Enact and enforce a national fair scheduling law. The Schedules That Work Act, proposed in 2015, has become the basis for local and state scheduling ordinances in the intervening years. The bill proposed to give workers the right to request modifications to work hours, locations, schedule fluctuations, and the timing of schedule and assignment changes. It also required employers to engage in good faith processes to address worker requests. Although the federal bill has not been enacted, state and local versions of similar laws have shown that fair scheduling policies reduce workers’ economic uncertainty and increase productivity.
- Expand the Earned Income Tax Credit and Child Tax Credit. During the COVID-19 pandemic, policymakers temporarily expanded the Child Tax Credit to up to $3,600 per child under age 6 and $3,000 for children ages 6 to 17 and included parents earning little to no income. As a, the child poverty rate was nearly cut in half. Ample research supports that permanently expanding the Child Tax Credit and the Earned Income Tax Credit for people without childrenwould increase Americans’ economic security. Further, Urban research shows that increased cash assistance can have long-term benefits for children in families that receive assistance, such as higher levels of educational attainment and higher earnings as an adult. To reduce the error rate of claims, Treasury could require auditors to look for a correct claimant in the same or another home, or the department could reconsider its tests of a qualifying child.
- Increase the Supplemental Security Income (SSI) asset limit. When a beneficiary’s assets exceed $2,000 (or $3,000 for a couple), federal statute eliminates that beneficiary’s eligibility for SSI. This threshold is not indexed for inflation and has not been increased for many decades, preventing beneficiaries from building a large enough financial reserve to manage emergencies. When a beneficiary exceeds the limits their benefit is terminated, often retroactively, resulting in large overpayments that must be repaid. Our evidence finds that Congress could improve financial stability for disabled and elderly people by increasing the cap, allowing SSI recipients to save more money. This policy option has bipartisan and bicameral support in Congress and support from financial leaders. Outside of a change in law, the Social Security Administration can waive the need to repay overpayments when a beneficiary’s assets rise above the limit and expedite benefit reinstatement when assets drop below the threshold.
- Ease tariffs to improve the economy. New tariffs are raising the cost of consumption goods—especially manufactured products. The Tax Policy Center and Urban Institute project that, as of February 22, 2026, average after-tax incomes will decrease by $1,230 and housing construction costs will rise. Further, the unpredictability of tariff policy means businesses have little ability to plan, leading them to raise prices, reduce spending, and scale back on hiring. Federal policymakers can reduce the damage caused by tariffs by limiting them to short-term, targeted responses to anticompetitive policies of other trading partners.
- Make labor markets more competitive. Imperfect competition in labor markets has driven wages down, preventing people from earning a fair income. To ensure workers can receive fair pay, federal policymakers can ban noncompete clauses, which affect 1 in 5 workers in the US.
- Update labor standards to include gig and contract workers. With the rise of gig work and independent contractors, basic labor protections fail to cover many common jobs today. Federal policymakers can expand workplace protections to more workers, such as by including independent contractors in minimum wage and paid time off protections.
- Create and enforce a national paid family and medical leave policy. Nearly a quarter of private-sector workers in the US lack access to paid family and medical leave, meaning they have to take unpaid leave to manage familial responsibilities requiring more than a few days out of work, lowering their income. Research shows that access to paid leave increases mothers’ earnings and helps family caregivers remain in the workforce. In fact, the US is in the minority on paid leave internationally, as many other countries have national paid leave protections. Further, workers who lack access to paid sick or medical leave are significantly more likely to forego needed medical care because of costs. Federal policymakers can implement a national paid leave policy to ensure workers can maintain income while they take time away from work.