The Southern economic development model has failed to create shared prosperity in the region, according to a new Economic Policy Institute report. In fact, this model was deliberately designed to do the opposite—to extract the labor of Black and brown Southerners as cheaply as possible. This report examines the racist roots of the model and provides the necessary context to challenge the enduring racial hierarchy in the South.

The Southern economic development model is characterized by low wages, a regressive tax system, few regulations on businesses, few labor protections, a weak safety net, and vicious opposition to unions. For example, the report explains:

• Twenty states still use the federal minimum wage of $7.25, and half of these states are in the South.
• Many Southerners—particularly Black and brown Southerners—have trouble accessing unemployment insurance and other benefits, which are often inadequate. Southern states have some of the lowest levels of cash assistance for families with children.
• Policymakers have also worked to limit Southerners’ rights to unionize and bargain collectively since unions make it hard to keep wages low and benefits stingy.

The report is part of a series, “Rooted in racism and economic exploitation,” that takes a deep dive into the failed Southern economic development model. The first report provided a summary of key economic trends in the South. Future reports released soon will further examine the broader economy across the South and analyze job quality.

“From low wages to unfair tax policies to a weak safety net, the Southern economic development model ensures that businesses continue to have access to cheap Black labor even after the abolition of slavery. We need an economic strategy that reverses the impact of 150 years of racist, anti-worker policymaking in the South, including by raising wages, making taxation fair, strengthening the safety net, and protecting workers’ right to unionize,” said report author Chandra Childers, who is a senior policy and economic analyst for EPI’s Economic Analysis and Research Network.