The US economy is positioned at a critical moment for workers. The recovery from the pandemic recession to date has been strong by traditional measures, providing steady job growth and rising real wages. But growing policy uncertainty, combined with disruptive social and economic forces such as the diffusion of artificial intelligence, add to longstanding threats to workers’ economic security. In this brief, we synthesize evidence on the labor market dynamics and policy choices that have eroded worker security, and discuss directions for research and policy that could better protect, support, and empower workers.

Why This Matters

The pandemic recovery brought job growth and wage increases that stood out in part because they contrasted with workers’ experience over the previous several decades, during which wages for the typical worker grew only sporadically. Over the same period, labor market trends such as the rise in alternative forms of employment and the fall in union coverage further weakened the position of workers. Labor market and economic policy can secure better outcomes for workers, but to do so will require policy reform.

Key Takeaways

Research points to at least three dimensions along which economic and labor market policy have fallen short for workers in recent decades, and where both policy attention and new research might focus.

• Worker protections. Workers lack a full measure of security in part because labor protections, such as the minimum wage, and safety and health regulations, have failed to keep pace with modern labor markets. When these protections are updated and extended, they improve worker outcomes.
• Worker supports. Current social insurance programs, such as unemployment insurance, fail to adequately protect workers from job loss and earnings loss. As a result, even workers with good jobs are vulnerable to labor market risks that existing worker supports do not fully cover.
• Worker power. Finally, many workers lack power in relation to their employers, which has meant accepting lower wages, less job security, and diminished agency and autonomy in the workplace. When policies fail to balance power at work in labor markets, workers are left less secure.

To provide workers meaningful economic security—including protections, supports, and power—we must update our policy infrastructure to reflect the realities of modern labor markets and the insights of current research. This will require new research to test innovative approaches and address critical open questions.