This paper presents strong evidence that minimum wage increases lead to a greater prevalence of subminimum wage payment. Using the Current Population Survey, we estimate that increases in measured underpayment following minimum wage increases average between 12 and 17 percent of realized wage gains. Our baseline analyses focus on workers ages 16 to 25, while additional analyses consider workers ages 16 to 65. In addition, we find that firms and workers comply to a far greater degree with minimum wage increases that are forecastable, modest, and regular than with minimum wage increases enacted through new legislation. We also find evidence that states’ enforcement regimes influence the compliance patterns we observe. We interpret these findings as evidence that while minimum wage compliance is the norm, noncompliance is an important, economically nuanced reality in the low-wage labor market.
What everyone thinks of as macro is top-down. Nominal Gross Domestic Product is determined at the top, and it filters down to individuals.
In Scott Sumner’s market monetarism, for example, the Fed has a dial, like the temperature control on an oven, that it can turn in order to keep NGDP on a trend path. When NGDP differs from that trend path, the Fed has messed up.
I think that the Fed’s controls are ineffective. They are more like the steering wheel on a bumper car. If you’ve ever been on a bumper-car ride, you know that as much as you want to avoid getting hit from the side or from behind, you just do not have as much control over the car as you would need.
I think of NGDP as built from the bottom up, not from the top down. Households and businesses create patterns of specialization and trade. That is real output, or real GDP. They make pricing decisions. Once you have prices and real output, you have NGDP.
There is a relatively new macroeconomic statistic, called JOLTS, or Job Openings and Labor Turnover Survey. It shows that each month, about 4.5 million people take new jobs, and about 4.3 million people separate (voluntarily or otherwise) from their previous jobs. These flows are enormous. The payroll employment survey, in contrast, will show a net gain or loss of about 200,000 jobs in a month. That is only 0.2 million.
It is the small net number of job gains or losses that determines the change in real GDP. A huge amount of bottom-up churning (4.5 million new jobs) lies underneath the GDP gain, which comes from the net new jobs (0.2 million).
To buy into the bottom-up view of how NGDP gets built up, you have to discard the assumption that the Fed is in control. Dropping that assumption takes many people out of their comfort zone.
Sorry, but the whole Covid debacle needs to be turned instead into a parable with a moral for the ages, to show how easy it is for a civilized society to be terrorized into believing blatant falsehoods and turn on one another with shocking savagery.
In a recent review of several studies, John Ioannidis and colleagues conclude that the age-stratified survival rate of healthy under 70s infected by Covid-19 before vaccines became available is a staggering 99.905 per cent, and furthermore, under 70s make up 94 per cent of the world’s population or about 7.3bn people. For children and adolescents under 20, the survival rate is 99.9997 per cent.
Experts from Oxford University’s Centre for Evidence Based Medicine used subsequent actual data to back-calculate a survival rate of 99.9992 per cent for under-20s in Britain. Official data from the Office for National Statistics for 1990–2020 show that the age-standardized mortality rate (deaths per 100,000 people) in England and Wales in 2020 was lower in 19 of the previous 30 years. Remember, this is before vaccines.
The doomsday model from Imperial College London’s Neil Ferguson in March 2020 that precipitated lockdowns estimated the survival rate to be twenty times lower.
Policy advisers and governments were willfully blind to the reality that national wealth is an essential enabler of a first-world health infrastructure and services. They covered up their cussedness by vilifying lockdown critics as wanting to prioritize the economy over lives.
No rational public health harm-benefit analysis could justify the lockdown restrictions and mandatory mask and vaccine requirements. Not before 2020, not in 2020–22, not now. Rooted neither in science nor data but in smug self-righteous groupthink and assumptions-driven abstract modeling, the set of coercive restrictions and mandates made a metaphorical bonfire of hard-won and cherished liberties and freedoms.
All the institutions designed to check arbitrary abuses of power failed us miserably, from parliament and the judiciary to human rights machinery, media and professional associations.
It is fascinating to me that anyone can argue intermittent and indefinitely mandatory face coverings don’t constitute a loss of freedom. If mandates are not a loss of freedom, what is?