Edward Conard

Top Ten New York Times Bestselling Author

  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Wednesday, December 12, 2018

AI Summary. An analysis of median household income by birth cohort and age finds that rising educational attainment accounts for much of the income progress across successive birth cohorts, with some generations' incomes converging at middle age once education is accounted for.

Ernie Tedeschi @ernietedeschi
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Education plays a crucial role in sustaining income growth over time. Without adjusting for education, some generations’ incomes reconverge at middle age.

Does rising educational attainment explain income gains across generations?

Core argument: Ernie Tedeschi's analysis of median household income by birth cohort and age finds that rising educational attainment accounts for much of the income progress observed across successive birth cohorts.

Adjusting for education, Ernie Tedeschi's analysis reveals that rising educational attainment significantly drives income progress across birth cohorts. Without this adjustment, some generations' incomes reconverge at middle age, indicating that education plays a crucial role in sustaining income growth over time. This suggests that policy efforts to enhance educational access and quality could have long-term positive effects on household income trajectories. The data underscores the importance of education as a key factor in economic mobility and highlights potential disparities in income growth among different cohorts if educational advancements are not maintained.

Takeaways by Macro Roundup® AI

  1. Ernie Tedeschi's analysis of median household income by birth cohort and age finds that rising educational attainment accounts for much of the income progress observed across successive birth cohorts.
  2. Without adjusting for education, median household incomes of some birth cohorts reconverge at middle age, according to Tedeschi's analysis.

Ernie Tedeschi adjust the Pew numbers for education and finds that income progress is driven by rising educational attainment, absent that some generations reconverge at middle age

Ernie Tedeschi, "Median Household Income by Birth Cohort and Age (Education-Adjusted)," @ernietedeschi, December 11, 2018, https://twitter.com/ernietedeschi/status/1072701599322128384

AI Summary. Average weekly homework hours for U.S. high-school students rose from 6.8 in 2007 to 7.5 in 2016 while K-8 hours held at 4.7, according to the U.S. Department of Education. Many school districts are now limiting, ungrading, or eliminating homework, citing student wellness and family time, while critics argue this weakens academic reinforcement.

Tawnell Hobbs Wall Street Journal
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US school districts are reducing or eliminating homework to alleviate stress & promote reading & family engagement. Average weekly hours high-school students spent on homework rose from 6.8 in 2007 to 7.5 in 2016

Are school districts cutting homework to prioritize student well-being?

Core argument: U.S. high-school students' average weekly homework hours rose from 6.8 in 2007 to 7.5 in 2016, while K-8 students' hours held at 4.7, according to the U.S. Department of Education.

The average weekly hours high-school students spent on homework rose from 6.8 in 2007 to 7.5 in 2016, while K-8 students' hours remained at 4.7, according to the U.S. Department of Education. In response, many U.S. school districts are reducing or eliminating homework, citing concerns over student wellness and family time. Ridgefield Public Schools in Conn. and Lafayette Parish in La. have implemented policies limiting or not grading homework, aiming to alleviate stress and promote reading and family engagement. Critics argue this may hinder academic reinforcement, as seen in Lafayette where some students skip ungraded homework, impacting math scores. However, proponents like Norfolk Public Schools in Neb. emphasize reducing stress and providing in-school support for struggling students. The shift reflects a broader trend towards balancing academic demands with overall student well-being.

Takeaways by Macro Roundup® AI

  1. U.S. high-school students' average weekly homework hours rose from 6.8 in 2007 to 7.5 in 2016, while K-8 students' hours held at 4.7, according to the U.S. Department of Education.
  2. Many U.S. school districts, including Ridgefield Public Schools in Connecticut and Lafayette Parish in Louisiana, are limiting or not grading homework, citing student wellness, stress, family time, and reading.
  3. Critics argue reduced homework hinders academic reinforcement, pointing to Lafayette Parish, where some students skip ungraded assignments, affecting math scores, while Norfolk Public Schools in Nebraska emphasizes in-school support for struggling students.

"...The average number of hours high-school students spent per week on homework increased from 6.8 in 2007 to 7.5 in 2016, the latest year available from the U.S. Department of Education. The average hours for students in K-8 stayed flat at 4.7 during those years....."

Tawnell Hobbs, "Down With Homework, Say U.S. School Districts," Wall Street Journal, December 12, 2018, https://www.wsj.com/articles/no-homework-its-the-new-thing-in-u-s-schools-11544610600

Down With Homework, Say U.S. School Districts

School districts across the country are banning homework, forbidding it on certain days or just not grading it, in response to parents who complain of overload and some experts who say too much can be detrimental.

A new policy in Ridgefield Public Schools in Ridgefield, Conn., places nightly time limits on homework for most students. It is banned on weekends, school vacations and some other days off for elementary and middle-school students, and isn’t calculated into their overall grades.

Lafayette Parish School System in Louisiana told teachers not to grade homework for grades 2-12 starting this school year. Students in grades K-1 already didn’t receive grades.

The goal of the changes is to give students more time to read, sleep and spend time with family, especially at the elementary level, school administrators say. “Student wellness is becoming a much larger issue,” said Mark Toback, superintendent of Wayne Township Public Schools in Wayne, N.J., which had its first homework-free weekend in October with two more scheduled.

The average number of hours high-school students spent per week on homework increased from 6.8 in 2007 to 7.5 in 2016, the latest year available from the U.S. Department of Education. The average hours for students in K-8 stayed flat at 4.7 during those years.

Homework changes have been met with concern by some teachers, who say it takes away a tool to reinforce the day’s lesson, and parents who feel left out of the academic process.

Kevin Fulton withdrew his daughter from the Cypress-Fairbanks Independent School District in Houston after she spent her fifth-grade year at Yeager Elementary without homework because the school stopped giving it. She now attends a private school.

Down With Homework, Say U.S. School Districts: Extended Excerpt Image 1


“In my house, we’re very hands-on and homework is a way to determine if our child is falling behind,” he said. “I just think it takes parents out of the equation.”

The Cypress-Fairbanks district said Yeager and other schools with no-homework rules can still assign personalized homework to struggling students.

Kauffman Leadership Academy, a public charter school in Cleburne, Texas, with grades 5-12, holds classes from 8 a.m. to 5 p.m. to fit in needed lessons to prevent sending work home. The school opened in 2016 with the intent of having no homework after hearing from parents of prospective students.

“We just heard a lot of parents complaining about how much the homework was eating into their family life,” Superintendent Theresa Kauffman said.

“It’s amazing to be able to go home after a long day at school and not have anything to do, just be able to relax,” Kauffman student Karissa Olsen, 14 years old, said during a snack break that the school gives due to the long day.

Harris Cooper, a professor of psychology and neuroscience at Duke University who has studied homework for over 25 years, found that homework has little impact on elementary students. Junior-high students showed higher achievement when doing homework up to 60 to 90 minutes a night and high-school students up to two hours. There were no additional positive effects after those time frames.

Dr. Cooper said those who go over appropriate limits could become frustrated and lose interest in the subject area. It also could crowd out other activities, such as athletics, music and volunteer work, he said.

The superintendent of Marion County Public Schools, a 43,000-student district in central Florida, told teachers to stop assigning “meaningless homework” for elementary students and instead substitute at least 20 minutes a night of reading, said spokesman Kevin Christian. More students are reading as a result, he said.

Jonathan Cole, a high-school teacher in Lafayette Parish, said some teachers in the district are unhappy with the homework-grading ban. A good number of students skip homework because it isn’t going to be graded, he said.

“We’re seeing some drops in some scores related to math, and that’s a skill that does benefit from some practice,” said Mr. Cole, who is also president of a local educator association.

Even so, parent Laurie Lightfoot supports the new policy. “These kids have so much homework at younger and younger ages. And heaven forbid if they have after-school activities or want to spend time with family,” she said. Her 13-year-old daughter Madison said the change “does relieve a little stress.” Some students who aren’t turning in homework are being urged to do so by teachers, she said.

Kathy Aloisio, Lafayette’s director of elementary schools, said grades should reflect a student’s mastery of a subject, not homework, which some students can get help with at home. “Are we grading what the parents did, or are we grading what the child did?” she said.

Norfolk Public Schools in Nebraska dropped homework for elementary school children last year.

“It was pretty common that elementary students would take home 30 math problems every night, and might have additional homework after that,” said Superintendent Jami Jo Thompson. “It was a lot of stress on the child and the family.”

Dr. Thompson said students who are struggling are getting the help they need in school instead of sending the work home with them to parents, who have been supportive of the homework change.

Now, parents with children at the schools in northeastern Nebraska, which go up to fourth grade, are asked to read with their children and practice math skills.

Thursday, December 13, 2018

AI Summary. Americans are more likely than people in peer countries to surpass their parents' income in absolute terms, but the US is not an outlier in relative earnings mobility, or movement beyond a parent's rank in the income distribution. Because US inequality is higher, absolute gaps between children shrink less by adulthood than elsewhere.

Scott Winship Archbridge Institute
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Americans have a higher likelihood of surpassing their parents’ income, yet they face challenges in moving beyond their parents’ income distribution rank.

How does US economic mobility compare with peer countries?

Core argument: Americans are more likely to surpass their parents' income, yet face greater difficulty moving beyond their parents' rank in the income distribution.

Americans have a higher likelihood of surpassing their parents' income, yet they face challenges in moving beyond their parents' income distribution rank. The US is not an outlier in relative earnings mobility compared to international counterparts, but absolute mobility patterns reduce childhood inequalities less than in other countries. This is due to higher levels and growth of inequality in the US, where absolute inequalities between children diminish less by adulthood. Relative mobility measures align more closely with conceptions of opportunity, and as research methods improve, cross-national differences may appear smaller.

Takeaways by Macro Roundup® AI

  1. Americans are more likely to surpass their parents' income, yet face greater difficulty moving beyond their parents' rank in the income distribution.
  2. The US is not an outlier in relative earnings mobility compared with other countries, but its absolute mobility patterns reduce childhood inequalities less, as absolute gaps between children diminish less by adulthood amid higher levels and growth of inequality.
  3. Relative mobility measures align more closely with conceptions of opportunity, and as research methods improve, cross-national differences in mobility may appear smaller.

new Winship note looks at cross country mobility finds that there no basis for strong assertions that relative earnings mobility is higher outside the US US mobility is in line with our international comps. Americans have a greater chance of exceeding their parents’ income than the usual suspects (Chetty et al.) suggest, but they have a lower chance of transcending their parents’ rank in the income distribution

"....Focusing on earnings, the US is not an outlier in terms of relative mobility, even if absolute mobility patterns tend to reduce childhood inequalities less here than in other countries (as indicated by IGEs).* This is an important distinction, because commentators and researchers often claim to be concerned about relative mobility—transcending initial position or rank— even as they point to IGEs, which summarize absolute mobility patterns. IGEs look higher, and so “mobility” lower, when grown children have more contemporary inequality versus the cross-sectional inequality their parents experienced. But the fact that the income gap between the upper middle class and the poor has grown says nothing about whether it has become harder for a poor child to become an upper-middle-class adult....relative mobility measures accord better with most conceptions of opportunity than do absolute mobility measures (including the IGE). (Relative mobility measures also have practical advantages over absolute mobility measures, as discussed in that section.).... The evidence indicates the US holds its own when it comes to relative earnings mobility, whether looking at sons or daughters. It also tells us that when parental family income is the basis for assessing mobility, relative mobility looks lower in the US than elsewhere. And, reflecting the higher levels and growth of inequality in the US, absolute inequalities between children tend to diminish less in the US by adulthood than they do in other countries, whether looking at earnings or family income. As the relative mobility literature continues to grow more sophisticated, it would not be surprising to see more studies using parental income that find smaller cross-national differences, following the trajectory of the relative earnings mobility research. And even research estimating IGEs is likely to continue finding higher elasticities than the less-methodologically sound studies of the past, as has happened in the US as methods have improved....."

Scott Winship, "Economic Mobility in American A State of the Art Primer Part 2: The United States in Comparative Perspective," Archbridge Institute, December 2018, https://www.archbridgeinstitute.org/wp-content/uploads/2018/12/Archbridge-Economic-Mobility-primer-part2-US-in-perspective.pdf

*international elasticity

AI Summary. A shortage of U.S. blue collar workers, driven by a shrinking supply of manual and low-pay service labor as the workforce becomes more educated and less willing to take such jobs, is raising wages for those positions and narrowing wage inequality. Retiring baby boomers and stigma around light industrial work leave physically demanding jobs hard to fill.

Rich Miller Bloomberg
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The US labor market is shifting due to a shortage of blue collar workers, driven by a shrinking supply of manual & low-pay service workers as the labor force becomes more educated & less willing to take on such jobs @RichMiller

Is a blue collar worker shortage raising wages and narrowing inequality?

Core argument: A shortage of U.S. blue collar workers is raising wages for manual and low-pay service jobs and narrowing wage inequality, as the labor force becomes more educated and less willing to take such positions.

The U.S. labor market is experiencing a significant shift due to a shortage of blue collar workers, driven by a shrinking supply of manual and low-pay service workers as the labor force becomes more educated and less willing to take on such jobs. This shortage is boosting wages for blue collar positions and narrowing wage inequality, while also drawing more women into these roles. The challenge is exacerbated as baby boomers retire, leaving manufacturers and companies with physically demanding jobs struggling to fill positions. Younger workers are increasingly pursuing educational alternatives or avoiding these jobs due to the stigma associated with light industrial work. This trend highlights a critical need for policy adjustments to address the evolving labor market dynamics.

Takeaways by Macro Roundup® AI

  1. A shortage of U.S. blue collar workers is raising wages for manual and low-pay service jobs and narrowing wage inequality, as the labor force becomes more educated and less willing to take such positions.
  2. Baby boomer retirements are deepening the shortfall, leaving manufacturers and companies with physically demanding jobs struggling to fill positions while younger workers pursue educational alternatives or avoid light industrial work because of its stigma.
  3. The blue collar labor shortage is drawing more women into manual and low-pay service roles.

Not sure if educational attainment is the best proxy here

"...A surprise shortage of blue collar workers is changing the contours of the U.S. labor market, boosting their pay, narrowing wage inequality and drawing more women into those jobs. The shortfall is being driven by a shrinking supply of manual and low-pay service workers as the labor force becomes more educated and less willing to take on such jobs, according to a new Conference Board study.....“The acute shortage of talent in the blue collar space is very, very pronounced,” said Peter Quigley, executive vice president at Kelly Services Inc., a staffing company with branches in all 50 U.S. states. Manufacturers and other companies with physically demanding jobs are finding it tough to fill those positions when baby boomers retire. “It’s harder and harder to attract younger people into those jobs, either because they’re pursuing education alternatives or the stigma associated with light industrial work,” Quigley said....."

Rich Miller, "Blue Collar Worker Shortage Turns U.S. Labor Market on Its Head,"Bloomberg, December 13, 2018, https://www.bloomberg.com/news/articles/2018-12-13/blue-collar-worker-shortage-turns-u-s-labor-market-on-its-head

AI Summary. A Louisiana audit found that 82% of a random sample of 100 Medicaid recipients were ineligible for the benefits they received, with 10% reporting annual incomes above the state's median household income. The audit attributed the problem to underreported income under enrollment rules that allow people to join Medicaid without income verification.

Robert Doar Wall Street Journal
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A recent audit in Louisiana revealed that 82% of a random sample of 100 Medicaid recipients were ineligible for the benefits they received, highlighting significant flaws in the means-tested welfare system.

Do enrollment rules without income verification let ineligible recipients receive Medicaid?

Core argument: A Louisiana audit found 82% of a random sample of 100 Medicaid recipients were ineligible for the benefits they received.

A recent audit in Louisiana revealed that 82% of a random sample of 100 Medicaid recipients were ineligible for the benefits they received, highlighting significant flaws in the means-tested welfare system. The primary issue identified was the underreporting of income, facilitated by enrollment rules that permit individuals to join Medicaid without income verification. Notably, 10% of the sampled recipients had annual incomes exceeding the state's median household income, underscoring the inefficacy of current verification processes. This data suggests systemic vulnerabilities in welfare programs, potentially leading to substantial fiscal inefficiencies and misallocation of resources. The findings call for a reassessment of eligibility verification mechanisms to ensure that welfare benefits are accurately targeted to those in genuine need, thereby optimizing public expenditure and enhancing program integrity.

Takeaways by Macro Roundup® AI

  1. A Louisiana audit found 82% of a random sample of 100 Medicaid recipients were ineligible for the benefits they received.
  2. The Louisiana audit identified underreporting of income as the primary issue, facilitated by enrollment rules that permit individuals to join Medicaid without income verification.
  3. Among the 100 Medicaid recipients sampled in Louisiana, 10% had annual incomes exceeding the state's median household income.

"...The report came from Louisiana’s legislative auditor, Daryl G. Purpera, who selected100 Medicaid recipients at random and found that 82 of them shouldn’t have qualified for all the benefits they received.Most were underreporting income, taking advantage of enrollment rules that allow people to join Medicaid without any verification. Ten of the randomly selected Medicaid recipients even had annual incomes above the state’s median household income...."

Robert Doar, "‘Means Tested’ Welfare Means Nothing in Practice,"Wall Street Journal, December 12, 2018, https://www.wsj.com/articles/means-tested-welfare-means-nothing-in-practice-11544573570

AI Summary. Median education-adjusted household income for households headed by Millennials reached $69,000, exceeding nearly every other year on record, including the roughly $67,600 earned by similarly aged households at the prior peak. Yet real average full-time earnings of Millennial male household heads matched those of Generation X men and were more than 10% below Baby Boomer men at comparable ages.

Ernie Tedeschi @ernietedeschi
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Millennial households saw median adjusted income of $69,000 in 2017, surpassing nearly every year on record except 2000. However, individual earnings for Millennial men are comparable to Gen X in 1998 & 10% lower than Boomers in 1978.

Do higher household incomes hide stagnant individual male earnings across generations?

Core argument: Median education-adjusted household income for Millennial-headed households reached $69,000 in 2017, exceeding nearly every other year on record except around 2000, when similar-aged households earned $67,600 in inflation-adjusted dollars.

In 2017, the median adjusted income for households headed by Millennials was $69,000, surpassing nearly every other year on record except around 2000, when similar-aged households earned $67,600 in inflation-adjusted dollars. Despite this, the real average full-time labor earnings of a Millennial male household head in 2014 were comparable to those of a Generation X male in 1998 and over 10% lower than a Baby Boomer male in 1978. This data highlights a complex economic landscape where Millennials achieve higher household incomes yet face stagnation in individual earnings compared to previous generations, suggesting shifts in household dynamics and economic pressures.

Takeaways by Macro Roundup® AI

  1. Median education-adjusted household income for Millennial-headed households reached $69,000 in 2017, exceeding nearly every other year on record except around 2000, when similar-aged households earned $67,600 in inflation-adjusted dollars.
  2. Real average full-time labor earnings of a Millennial male household head in 2014 were comparable to those of a Generation X male in 1998 and more than 10% below a Baby Boomer male in 1978.

Federal Reserve Board, Pew, and Ernie Tedeschi adjusted Pew for education

Christopher Kurz, Geng Li, and Daniel Vine, "Are Millennials Different?," Federal Reserve, December 2018, https://www.federalreserve.gov/econres/feds/files/2018080pap.pdf

Ernie Tedeschi, "Median Household Income by Birth Cohort and Age (Education-Adjusted)," @ernietedeschi, December 11, 2018, https://twitter.com/ernietedeschi/status/1072701599322128384

"....The median adjusted income in a household headed by a Millennial was $69,000 in 2017. That is a higher figure than for nearly every other year on record, apart from around 2000, when households headed by people ages 22 to 37 earned about the same amount - $67,600 in inflation-adjusted dollars. (A recent study by the Federal Reserve, which also looked at Millennials’ income, used a different methodology and data source.)..."

Richard Fry, "Young adult households are earning more than most older Americans did at the same age," Pew Research Center, December 11, 2018, http://www.pewresearch.org/fact-tank/2018/12/11/young-adult-households-are-earning-more-than-most-older-americans-did-at-the-same-age/

Pew:

“the real average full-time labor earnings of a millennial male household head in 2014 were about the same as those for a comparable male Generation X household head in 1998 and over 10 percent lower than those for a comparable male baby boomer household head in 1978....”

AI Summary. Millennials' average real income, measured in 2016 dollars, has not kept pace with that of Gen X or Baby Boomers at comparable life stages. Despite higher educational attainment, Millennials faced a labor market with fewer high-paying job opportunities as well as rising housing and education costs.

Christopher Kurz, Geng Li and Daniel Vine Federal Reserve Board
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Millennials’ average real income has not kept pace with Gen X or Baby Boomers at similar life stages, partly due to the Great Recession and slower wage growth.

Have Millennial incomes kept pace with earlier generations at similar ages?

Core argument: Millennials' average real income, measured in 2016 dollars, has not kept pace with that of Gen X or Baby Boomers at comparable life stages.

Millennials have experienced distinct economic challenges compared to previous generations, as evidenced by their average real income trends. Data shows that Millennials' average real income, adjusted to 2016 dollars, has not kept pace with that of Gen X or Baby Boomers at similar life stages. This disparity is partly due to the economic conditions they faced, including the Great Recession and slower wage growth. Despite higher educational attainment, Millennials have encountered a labor market with fewer high-paying job opportunities, impacting their overall income trajectory. Additionally, rising costs in housing and education have further strained their financial stability. These factors suggest that Millennials' economic experiences are indeed different, with potential long-term implications for consumption patterns, savings rates, and economic mobility. Understanding these generational income dynamics is crucial for policymakers aiming to address economic inequality and foster sustainable growth.

Takeaways by Macro Roundup® AI

  1. Millennials' average real income, measured in 2016 dollars, has not kept pace with that of Gen X or Baby Boomers at comparable life stages.
  2. The Great Recession, slower wage growth, and a labor market with fewer high-paying jobs despite Millennials' higher educational attainment are cited as partial explanations for the income gap.
  3. Rising housing and education costs have further strained Millennials' financial stability, with potential long-term implications for consumption patterns, savings rates, and economic mobility.

Updated chart to include medians. Changed title to reflect the topline number is an average. Added footnote to explain brackets.

Christopher Kurz, Geng Li and Daniel Vine, “Are Millennials Different?” Federal Reserve Board 2018, https://www.federalreserve.gov/econres/feds/files/2018080pap.pdf