Edward Conard

Top Ten New York Times Bestselling Author

  • “…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 very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “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
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
Upside of Inequality Oxford Unintended Consequences

AI Summary. Firms' wage-setting norms are sticky, rising only from 2.7% to 3.5% even as inflation peaked near 7%, causing real wages for workers who stayed in their jobs to fall systematically. By the time inflation subsided, the median firm's wage rule had converged to ~3%, roughly matching inflation.

Erik Hurst, Christina Patterson, Nela Richardson, and Ye Liv Wang University of Chicago
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ADP microdata from 2016–25 suggest firms set wages according to “wage norms” ~ invariant to inflation. The 2020–21 inflation surge mechanically reduced real wages. By the end of 2025, 34% of incumbent workers’ real wages were lower than in 2020.

Do sticky wage norms systematically reduce real wages during inflation spikes?

Core argument: Firm-level modal wage rules peaked at 3.5% in 2022–2023 against roughly 7% inflation, meaning nominal rigidity systematically eroded real wages for job stayers throughout the inflationary episode.

Roughly 42% of all nominal wage increases below 6% were within 0.01 percentage points of a whole or half number [Figure 6]. Figure 9 plots the employment-weighted average modal wage change across firms (solid line) alongside inflation rate (dashed line) from 2016 through 2025. In the pre-pandemic period, firm-level wage rules were relatively stable at a median of 2.7%, modestly above the rate of inflation. Beginning in 2021, inflation rose sharply, peaking at approximately seven percent in 2022. The average modal wage change also rose, reaching a peak of 3.5% in 2022 and 2023. By 2025, the median firm had a wage rule granting increases of three percent, roughly in line with inflation. The stickiness of firms’ wage rules in the face of inflationary pressure contributed to the systematic fall in real wages for job stayers. Evidence from Belgium [which has strong wage indexation], suggests that declining real wages, rather than inflation itself, helps explain the persistence of depressed consumer sentiment during the 2021–2024 period.

Takeaways by Macro Roundup® AI

  1. Firm-level modal wage rules peaked at 3.5% in 2022–2023 against roughly 7% inflation, meaning nominal rigidity systematically eroded real wages for job stayers throughout the inflationary episode.
  2. The median firm’s modal wage increase converged to 3% by 2025—matching inflation rather than exceeding it—marking a reversal from the pre-pandemic norm of 2.7% modestly above price growth.

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AI Summary. New York City's top 1% captured nearly two-thirds of real income growth between 2019 and 2024, versus under 40% nationally, driven by capital gains, dividends, and business income rather than wages.

Jonathan Siegel and Jason Bram Office of the New York City Comptroller
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Btw 2019 and 2024, pre-tax, pre-transfer real median income in New York City fell 3.2%. The top .1% tax units, ~ households, (mean income ~$24mm) saw real growth of ~25%, whereas the bottom 90% (mean income ~$45,000) fell 0.8%.

Is capital income concentration widening faster in major cities than nationally?

Core argument: Nearly two-thirds of New York City’s real income growth from 2019–2024 accrued to the top 1%, versus under 40% nationally, driven by faster-rising capital gains, dividends, and business income rather than wage divergence.

Between 2019 and 2024, the New York City’s income shares at the top of the distribution rose faster than the nation's, and nearly two-thirds of the real income growth over the period accrued to the top 1%, compared with under 40% nationally. The result also holds when volatile capital gains are excluded. Real median income fell over the period, and real average income for the bottom 90% of tax units was essentially flat. Adjusted for local prices (but not for transfer programs), the purchasing power of income for the lower 90% of New Yorkers is close to one-fifth below that of the bottom 90% nationally. The divergence at the top is predominantly a story of non-wage income. Wage and salary income shows a much milder widening, and occupational wage data that exclude bonuses show base pay growing faster in lower-wage occupations than in higher-wage ones, and within many occupational groups wages are converging rather than growing more unequal.

Takeaways by Macro Roundup® AI

  1. Nearly two-thirds of New York City’s real income growth from 2019–2024 accrued to the top 1%, versus under 40% nationally, driven by faster-rising capital gains, dividends, and business income rather than wage divergence.
  2. The bottom 90% of New York City earners hold purchasing power roughly one-fifth below their national counterparts after adjusting for local prices, even before accounting for transfer programs.

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AI Summary. U.S. workers earn the most Big Macs annually (10,215), but Swiss workers lead on an hourly basis at 7 Big Macs per hour versus the U.S. at 6, reflecting longer American working hours rather than higher hourly wages.

Economist Staff The Economist
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The Economist’s venerable Big Mac Index is indicative of significantly higher after-tax, PPP-adjusted wages for American workers than for their French and German counterparts.

Does working longer hours mask stagnant American wage growth?

Core argument: American workers earn the equivalent of 10,215 Big Macs annually, topping global McWage rankings, but longer working hours reduce U.S. hourly purchasing power to six Big Macs per hour, behind Switzerland’s seven.

On an annual basis, America continues to top our McWages rankings. The average American worker earns enough to buy 10,215 Big Macs a year; Switzerland and Australia are in second and third place, respectively. But American working hours are supersized, too. On an hourly basis, Switzerland comes out on top: the average worker there earns the equivalent of seven Big Macs an hour, compared with America’s six. Australia ranks third, at five burgers for every hour worked.

Takeaways by Macro Roundup® AI

  1. American workers earn the equivalent of 10,215 Big Macs annually, topping global McWage rankings, but longer working hours reduce U.S. hourly purchasing power to six Big Macs per hour, behind Switzerland’s seven.
  2. Switzerland leads all nations in hourly McWage purchasing power at seven Big Macs per hour, with Australia third at five, demonstrating that top annual earnings and top hourly compensation do not always coincide.

Related Articles:

  • The Big Mac Index At 40 — Global currency misalignments are at their widest since the mid-1990s, driven by post-2021 U.S. inflation, an undervalued Chinese currency, and a weakening Japanese yen that has made consumer goods cheaper in Japan than in China.
  • Why Do Americans No Longer Work So Much More Than Non-Americans? — The gap in hours worked between Americans and non-Americans has narrowed by half since the 1990s, driven by declining U.S. work hours as expanded government health benefits reduced the need to work, while rising wages and lower barriers to employment increased hours worked in other advanced economies.
  • Ed Conard Debates Furman On “The Expected Value of Risk Taking” — I debate @JasonFurman—Pres. Obama’s Chair of the Council of Economic Advisors—at Harvard over the effect of tax increases on the expected value of innovative…

AI Summary. Corporate profit margins have expanded ~250 basis points over the past year, approaching all-time highs, as 23% profit growth far outpaced 8% growth in corporate value added. Labor's share of income is hitting new lows, confirming that margin expansion—not faster economic growth—is the primary driver of record profit levels.

Abiel Reinhart J.P. Morgan
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US corporate profit margins rose ~250bp y/y in Q2 and are approaching an all-time high. Reinhart notes that tech and communications services drove ~58% of recent S&P 500 profit growth, even as the sectors have been “steadily losing employment since late 2022.”

Are record corporate profits driven by growth or margin expansion?

Core argument: Corporate profit margins expanded nearly 250 bps over the past year and are approaching all-time highs, as domestic profit growth of 23% dwarfed the 8% rise in corporate value added, compressing labor’s share of income to record lows.

Nominal pre-tax corporate profits in the national income and product accounts (NIPA) were very robust in both 2Q (41% [annual rate]) and over the last year (23%). Excluding post-recession spikes, we haven’t seen a year this strong since the mid-2000s. Higher margins [were] the key driver [of profit growth], as 23% y/y domestic profit growth was far in excess of the 8% increase in corporate value added. Profit margins (pre-tax profits divided by value added) increased close to 250bp over the last year, and are approaching all-time highs, whereas the labor share is hitting new lows.

Takeaways by Macro Roundup® AI

  1. Corporate profit margins expanded nearly 250 bps over the past year and are approaching all-time highs, as domestic profit growth of 23% dwarfed the 8% rise in corporate value added, compressing labor’s share of income to record lows.

Related Articles:

  • US Corporate Profits Surge To Record As Worker Payouts Wilt — U.S. corporate pre-tax profits reached an annualized $4.8tn, or 18% of national income—the highest share since the post-WWII era—while workers' wages and benefits fell to 60% of national income, the lowest since the 1950s.
  • Are US Corporate Profit Margins Too High? — In Q1 2026, US after-tax non-financial margins were estimated at 7.6%, just short of the post-1949 high of 8.2% in Q2 of 2021. Tan Kai Xian argues US corporate…
  • The Record Divide Between Corporate Profits and Worker Pay — Labor's share of national income has fallen to 51%—its lowest recorded level—while corporate profits have reached 12.1% of national income, their highest share since 1950. Inflation-adjusted hourly wages have risen 3% since 2019, while inflation-adjusted corporate profits have risen 50% over the same period.

AI Summary. New-car dealerships, alcohol distributors, and construction contractors represent distinct tiers of revenue concentration, with dealerships showing the highest share of locations clearing $5m+ (~60%), followed by alcohol distributors (~26%), and contractors (~4%).

Owen Zidar and Eric Zwick The Everywhere Millionaire
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Owen Zidar and Eric Zwick estimate that as of 2021, 4,075 American auto dealers, 479 beverage distributors, and 6,418 contractors generated at least $25mm in annual revenue

Core argument: Of 21,622 new-car dealerships, 13,826 locations clear $5M annually and 4,114 exceed $25M, making auto retail one of the highest-density industries for mid-market revenue concentration.

There are 21,622 new-car dealerships with employees, according to the Census’s County Business Patterns. We estimate that more than half of them take in at least $5 million a year; in the Dun & Bradstreet business records, 13,826 dealer locations clear $5 million and 4,114 clear $25 million. There are 4,742 beer, wine, and spirits wholesalers with employees, according to the Census’s County Business Patterns. We estimate that about a quarter of them take in at least $5 million a year; in the Dun & Bradstreet business records, 1,232 distributor locations clear $5 million and 491 clear $25 million. There are 780,257 construction businesses with employees, according to the Census’s County Business Patterns—building, heavy civil, and specialty trade contractors. Anyone with a truck and a license can enter. We estimate that only about 4% of them take in at least $5 million a year. In the Dun & Bradstreet business records, 33,752 contractor locations clear $5 million and 6,525 clear $25 million.

Takeaways by Macro Roundup® AI

  1. Of 21,622 new-car dealerships, 13,826 locations clear $5M annually and 4,114 exceed $25M, making auto retail one of the highest-density industries for mid-market revenue concentration.
  2. Beer, wine, and spirits wholesaling delivers outsized revenue per location: 491 of 4,742 distributor sites clear $25M, a ~10% hit rate reflecting the sector’s structural consolidation and volume economics.
  3. Construction’s low barriers to entry suppress revenue scale: only ~4% of 780,257 contractor businesses clear $5M annually, versus more than half of new-car dealerships at the same threshold.

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AI Summary. Over 53mn Chinese workers are employed in food delivery and ridesharing, with flexible and gig work projected to reach 320mn workers, reflecting weak aggregate demand that reduces worker bargaining power and forces acceptance of underemployment.

Thomas Hale and William Langley Financial Times
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There are ~320mm “flexible workers” in China including ~53mm food delivery or rideshare drivers whose ranks have grown by ~10mm in the last two years. Flexible work is serving as a “shock absorber” in the face of broad-based labor market weakness.

Does weak demand push workers into lower-paying gig jobs?

Core argument: Flexible employment in China is on track to reach 320mn workers in 2025, up from 280mn the prior year—a 14% rise that reflects broad labour market weakness rather than platform-driven opportunity.

Flexible employment, an official term that is vaguely defined, implies a broader scope than gig work. It stood at 200mm in 2021 [including] part-time work and self-employment as well as “new forms of employment.” More than 53mm people as of 2025 work as food delivery or ridesharing drivers in China, up 10mm in two years, estimates the China New Employment Forms Research Center. [They] estimate that flexible employment will hit 320mm this year, up from 280mm last year. Andrew Batson, China research director at Gavekal, suggests flexible employment and gig work are “more of a symptom of broad-based labour market weakness in China than a totally independent development…Because aggregate demand is low, the bargaining power of workers is weaker, and they have to accept more underemployment and less favourable working conditions."

Takeaways by Macro Roundup® AI

  1. Flexible employment in China is on track to reach 320mn workers in 2025, up from 280mn the prior year—a 14% rise that reflects broad labour market weakness rather than platform-driven opportunity.
  2. Over 53mn Chinese workers are employed as food delivery or ridesharing drivers as of 2025, a figure that has grown by 10mn in two years, driven by weak aggregate demand forcing workers into underemployment.

Related Articles:

  • China’s Youth Unemployment Rate Edges Down In May As Economic Strains Persist — China's youth unemployment rate (ages 16–24, excluding students) fell to 15.6% in May but remains above the 14.9% recorded a year earlier. A record 12.7m graduates entering the labor market this summer is expected to tighten conditions further.
  • Chinese Student High-Flyers Set Sights On Police and Military Academies — Top-scoring Chinese students are increasingly choosing police and military academies over elite universities, with admission scores for some programmes reaching 650+/750 — placing them within 3 points of the country's most prestigious university. Public-sector job security is driving high achievers toward state institutions, with military academy entrants ranking on average
  • China Says Hostile Foreign Forces Are Driving Its Youth to Slack Off — Youth unemployment and disillusionment in China have driven millions of young people to reject work and ambition entirely. The Chinese government attributes this trend to foreign ideological influence rather than domestic economic conditions such as scarce well-paying jobs.

AI Summary. Spending and wage growth have largely converged across income groups, with lower- and middle-income households posting after-tax wage growth of 5.2% and 4.2% year-over-year, narrowing a previously wide gap — though the top 5% of earners continue to outpace all others.

David Michael Tinsley, Joe Wadford, Liz Everett Krisberg, Vanessa Cook, et al. Bank of America
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Over the last two years, after-tax wage growth for the top 5% has outpaced the rest of the distribution. BofA internal data show after-tax wage growth for the lowest income tercile has surpassed that of the top 5% for the first time since December 2024.

Are lower-income households finally catching up in wage growth?

Core argument: The K-shaped spending and wage growth divide has largely closed since May, with income cohorts converging by July—except the top 5% of earners, who continue to outpace all other groups.

We have discussed the “K-shaped” divide between higher- and lower-income households’ spending and wage growth. But since May, our data has shown a significant narrowing in this gap. As of July, spending and wage growth have largely converged across income cohorts, with the exception of the top 5% of earners, who continue to outpace the rest. A similar dynamic was evident in discretionary spending. In our view, one factor behind the narrowing spending growth gap is stronger after-tax wage growth. For lower- and middle-income households, after-tax wage growth rose to 5.2% YoY and 4.2% YoY, respectively, in July.

Takeaways by Macro Roundup® AI

  1. The K-shaped spending and wage growth divide has largely closed since May, with income cohorts converging by July—except the top 5% of earners, who continue to outpace all other groups.
  2. After-tax wage growth for lower-income households reached 5.2% YoY in July versus 4.2% for middle-income households, with stronger after-tax gains identified as a primary driver of narrowing discretionary spending gaps across cohorts.

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  • K-Shaped Economy? — Using internal Stripe payment data, Tedeschi finds that spending growth of households in low-income zip codes has outpaced that of households in high-income…
  • The Record Divide Between Corporate Profits and Worker Pay — Labor's share of national income has fallen to 51%—its lowest recorded level—while corporate profits have reached 12.1% of national income, their highest share since 1950. Inflation-adjusted hourly wages have risen 3% since 2019, while inflation-adjusted corporate profits have risen 50% over the same period.

AI Summary. Guaranteed income transfers reduce total household earnings by more than the transfer amount, as other household members—particularly partners—work fewer hours and are less likely to advance in their jobs.

Elizabeth Rhodes, David Broockman, Eva Vivalt, Patrick Krause, et al. National Bureau of Economic Research
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In a randomized guaranteed-income experiment, giving one adult a transfer of $1,000/month for two years cut the other household members’ income by ~$1,700/year. Partners worked less and advanced less at work, while schooling and training among others rose.

Does guaranteed income reduce household work effort beyond the transfer amount?

Core argument: Guaranteed income transfers narrowed the gap between participant income and total household income by approximately $1,700 per year, a reduction driven by lower earnings among other household members rather than collective income gains.

Figure 4 summarizes treatment effects on the standardized family-level indices. The transfers’ effects reshaped the income and employment of other household members. The gap between participant income and total household income fell by about $1,700 per year (s.e. $800). The decline appears to reflect lower earnings among other household members. Effects on employment outcomes are consistent with this interpretation. Partner promotions and transitions to better jobs decrease significantly, but these effects are very small in magnitude. Partner hours and employment show more meaningful declines but are not significant in the unconditional analysis. Several other measures provide supporting evidence of negative effects on labor supply. Net transfers—the value given [to extended family] minus the value received—increased by roughly $135 per year. Estimates for household stability, decision-making, and the division of labor cluster near zero.

Takeaways by Macro Roundup® AI

  1. Guaranteed income transfers narrowed the gap between participant income and total household income by approximately $1,700 per year, a reduction driven by lower earnings among other household members rather than collective income gains.
  2. Guaranteed income transfers reduced partner labor supply, with statistically significant declines in promotions and job transitions, though effect sizes were small.
  3. partner hours and employment showed larger but statistically insignificant declines.

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