Edward Conard

Top Ten New York Times Bestselling Author

  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…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 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 must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…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
  • “…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 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
  • “…challenges misconceptions that distort our economic debates.” - Arthur Brooks, President of the American Enterprise Institute
Upside of Inequality Oxford Unintended Consequences

Macro Roundup


Thursday, February 13, 2020

AI Summary. Wage growth in low-wage industries has outpaced that in higher-paying sectors, raising disposable income for households most likely to spend and supporting consumption. Household debt as a share of GDP has continued to decline, and the inflation-adjusted effective minimum wage has risen about 33% over the past decade.

Economist Staff The Economist
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Wage growth in low-wage industries has outpaced higher-paying sectors over the past two years, supporting economic expansion. Rising pay for low earners has increased disposable income, bolstering consumption.

Are faster wage gains for low earners sustaining the economic expansion?

Core argument: Wage growth in low-wage industries has outpaced that in higher-paying sectors, raising disposable income for those most likely to spend and bolstering consumption through soft patches.

Over the past two years, wage growth in low-wage industries has outpaced that in higher-paying sectors, significantly contributing to economic expansion. Rising pay for low earners has increased disposable income for those most likely to spend, bolstering consumption and helping the economy navigate soft patches. Concurrently, household debt as a share of GDP has continued to decline, enhancing economic resilience against credit fluctuations and interest rate hikes. The effective minimum wage, adjusted for inflation, has risen by about 33% over the past decade, further supporting low-income workers. This wage growth has provided a buffer against economic downturns, making the expansion more sustainable and less vulnerable to external shocks.

Takeaways by Macro Roundup® AI

  1. Wage growth in low-wage industries has outpaced that in higher-paying sectors, raising disposable income for those most likely to spend and bolstering consumption through soft patches.
  2. The effective minimum wage, adjusted for inflation, has risen about 33% over the past decade, supporting low-income workers' pay.
  3. Household debt as a share of GDP has continued to decline, strengthening the economy's resilience to credit fluctuations and interest rate increases.

Chart fromThe Economistslowing faster low wage growth (using AHE) over the past two years. They also suggest that the uptick in wages for low skilled workers has made the expansion more sustainable.

"...From 2014 to 2018 pay in low-wage industries grew about as quickly as that in other parts of the economy, according to a Analysis by economists at Indeed Hiring Lab, a labour-market research group. And over the past two years wage growth at the bottom has been substantially faster than that in better-paying industries (see chart).Rising pay for low earners has put more cash in the hands of those most likely to spend, supporting consumption and helping the economy weather a soft patch.At the same time household debt, which plunged immediately after the global financial crisis, has continued to fall as a share of gdp over the past few years. Lower debt levels have in turn contributed to a more durable expansion—one that is less likely to be choked off by changing credit conditions or higher borrowing costs stemming from interest-rate increases, like those imposed by the Fed from 2015 to 2018....Ernie Tedeschi, an economist at Evercore isi, a research firm, found in 2019 that the average person working at the minimum wage actually earns close to $12 per hour. This effective wage, once adjusted for inflation, has jumped by roughly a third over the past ten years...."

Economist Staff, "Wage gains for low earners have helped sustain America’s economic expansion,"The Economist, February 15, 2020, https://www.economist.com/finance-and-economics/2020/02/15/wage-gains-for-low-earners-have-helped-sustain-americas-economic-expansion

AI Summary. The top 1% of Americans own 56% of US equities, up from 46% in 1990, controlling $21.4tn in public stock and private company stakes. Over three decades the wealthiest households acquired a net $1.2tn in company stakes while the rest of the population sold more than $1tn.

Robin Wigglesworth Financial Times
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The top 1% of Americans now own 56% of US equities, up from 46% in 1990, highlighting a significant concentration of wealth.

How has the top 1% come to own most US equities?

Core argument: The top 1% of Americans own 56% of US equities, up from 46% in 1990, and control $21.4tn in equity value spanning both public stock and private company ownership.

The top 1% of Americans now own 56% of US equities, up from 46% in 1990, highlighting a significant concentration of wealth. Over the past three decades, the wealthiest households have acquired a net $1.2tn in company stakes, while the rest of the population has divested over $1tn. This shift underscores the increasing economic power of the richest Americans, who now control $21.4tn in equity value, including both public stock and private company ownership. The trend reflects broader economic disparities and raises questions about the implications for corporate governance and economic policy. As the wealthiest continue to consolidate their influence over corporate America, the gap between the top 1% and the rest of the population widens, posing challenges for equitable economic growth and financial stability.

Takeaways by Macro Roundup® AI

  1. The top 1% of Americans own 56% of US equities, up from 46% in 1990, and control $21.4tn in equity value spanning both public stock and private company ownership.
  2. Over three decades, the wealthiest US households acquired a net $1.2tn in company stakes while the rest of the population divested more than $1tn.

FT reports on new GS research that finds top one percent of Americans now own over half (56%) of US equities (by value) in 1990 that number was 46%

"...The wealthiest US households are strengthening their grip over corporate America. The richest 1 per cent of Americans now account for more than half the value of equities owned by US households, according to Goldman Sachs. Since 1990, the wealthiest have bought a net $1.2tn in company stakes, while the rest of the population has sold more than $1tn. Three decades ago, ownership was also lopsided, but the top percentage point of Americans by wealth only controlled 46 per cent of all US equities held by households. By the end of September 2019, that proportion had hit a record 56 per cent, amounting to $21.4tn, according to the investment bank’s calculations. That includes bothpublic stock and ownership stakes in private companies…”

How Americas 1 came to dominate equity ownership: Extended Excerpt Image 1


Robin Wigglesworth, "How America’s 1% came to dominate equity ownership,"Financial Times, February 10, 2020, https://www.ft.com/content/2501e154-4789-11ea-aeb3-955839e06441

Wednesday, February 19, 2020

AI Summary. Federal Reserve Bank of New York data show unemployment among recent college graduates aged 22-27 at 3.9%, 0.3 percentage points above the overall rate, with the wage gap between high school graduates and lower-earning college graduates the smallest in 15 years. Over 40% of recent graduates work in jobs not requiring a degree.

Alexandre Tanzi and Katia Dmitrieva Bloomberg
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The college employment premium has vanished, with 40% of recent grads in roles not requiring a degree & 12.5% earning $25,000 or less annually. @AlexandreTanzi @KatiaDmitrieva

Are recent college graduates losing their employment and wage advantage?

Core argument: Unemployment among recent U.S. college graduates aged 22–27 reached 3.9% in December, 0.3 percentage points above the overall rate, according to Federal Reserve Bank of New York data indicating the college employment premium has vanished.

Recent data from the FRBNY [Federal Reserve Bank of New York] indicates that the college employment premium has vanished, as unemployment among recent college graduates aged 22-27 reached 3.9% in December, 0.3 percentage points higher than the overall rate. The wage gap between high school graduates and the lower-earning half of college graduates is now the smallest in 15 years. Over 40% of recent grads are employed in roles not requiring a degree, with about 12.5% earning $25,000 or less annually. This trend is exacerbated by a saturated job market for degree-holders and rising demand for skilled trades, such as electricians and plumbers. Despite a robust job market, many college graduates struggle with student debt, contributing to the $1.6tn national student debt burden. The economic implications are significant, as these trends may influence future educational and labor market policies.

Takeaways by Macro Roundup® AI

  1. Unemployment among recent U.S. college graduates aged 22–27 reached 3.9% in December, 0.3 percentage points above the overall rate, according to Federal Reserve Bank of New York data indicating the college employment premium has vanished.
  2. The wage gap between high school graduates and the lower-earning half of college graduates is the smallest in 15 years, with over 40% of recent graduates in jobs not requiring a degree and about 12.5% earning $25,000 or less a year.
  3. A saturated job market for degree-holders and rising demand for skilled trades such as electricians and plumbers accompany a $1.6tn national student debt burden weighing on college graduates.

Bloomberg reports on some recent moves in the FRBNY Labor Market for Recent College GraduatesSeries. Currently the overall UI rate and the UI rate for recent college graduates is at par (see chart), and the wage premium continues to narrow btw high school graduates and the 25thpercentile of college graduates (second chart).

In Hot U.S. Jobs Market, Half of College Grads Are Missing Out: Extended Excerpt Image 1


"....But in recent years,while high-school graduates have seen a sharp pickup in earnings, the lower-earning half of college graduates haven’t -- and the gap between them is now the smallest in 15 years…. Unemployment among Americans aged between 22 and 27 who recently earned a Bachelor’s degree or higher was 3.9% in December -- about 0.3 percentage point above the rate for all workers….. More than four in 10 recent graduates are working in jobs that don’t usually require a college degree, the New York Fed says. And roughly one in eight is working in a field where typical pay is around $25,000 a year or less..."

Alexandre Tanzi and Katia Dmitrieva, "In Hot U.S. Jobs Market, Half of College Grads Are Missing Out,"Bloomberg, February 14, 2020, https://www.bloomberg.com/news/articles/2020-02-14/in-hot-u-s-jobs-market-half-of-college-grads-are-missing-out
In Hot U.S. Jobs Market, Half of College Grads Are Missing Out

Millions of Americans are seeing little return from their expensive college degrees -- even in today’s hot jobs market.

For the first time in decades, recent college graduates are more likely to be out of work than the population as a whole, according to the New York Federal Reserve. And for the lower-earning half of college grads, the wage premium is shrinking fast.

In Hot U.S. Jobs Market, Half of College Grads Are Missing Out: Extended Excerpt Image 2


Unemployment among Americans aged between 22 and 27 who recently earned a Bachelor’s degree or higher was 3.9% in December -- about 0.3 percentage point above the rate for all workers.

It’s another worrying sign for a generation that borrowed record amounts of money to get through higher education, as the cost of tuition soared. America’s $1.6 trillion in student debt is weighing on the economy and spurring politicians to offer fixes that range from targeted aid to across-the-board forgiveness.

The strong job market should be helping graduates to pay what they owe -- and at the top end of the wage scale, it is. But in recent years, while high-school graduates have seen a sharp pickup in earnings, the lower-earning half of college graduates haven’t -- and the gap between them is now the smallest in 15 years.

In Hot U.S. Jobs Market, Half of College Grads Are Missing Out: Extended Excerpt Image 3


More than four in 10 recent graduates are working in jobs that don’t usually require a college degree, the New York Fed says. And roughly one in eight is working in a field where typical pay is around $25,000 a year or less.

The economy is creating a lot of jobs like that -- and it’s expected to create even more. In the occupations that are forecast to grow fastest over the next decade, according to the Bureau of Labor Statistics -- from home care to restaurant cooks -- typical salaries range from $24,000 to $26,500.

In Hot U.S. Jobs Market, Half of College Grads Are Missing Out: Extended Excerpt Image 4


Part of the problem is that the jobs market is saturated with degree-holders, while tight labor conditions have ramped up demand for a different kind of skills -- bringing benefits to electricians and plumbers, for example.

Those workers still have plenty of ground to make up. Pay for Americans who only have high-school qualifications has been in long-term decline -- and even after the gains of recent years, they earn less than they did in 1990.

In Hot U.S. Jobs Market, Half of College Grads Are Missing Out: Extended Excerpt Image 5


Meanwhile, better-off college graduates have been the big winners over the past 30 years -- even if their gains have flattened out lately. But the bottom half of college grads have been losers in both the short and the long run.

That’s likely the group that is having the most trouble paying back the money they borrowed to go to college -- and they might be engaged in that struggle all through their working lives. Already, 5% of student debt is held by seniors, and the figure has been steadily rising.