BEAT THE HEAT
The political survival of trickle-down economics depends on maintaining the fiction that it's plausible to believe that tax cuts, deregulation, and low wages are good for people. But last week, the trickle-down boosters at the American Enterprise Institute lost their discipline, writing in response to another month of robust job growth that “ The labor market and consumer demand remain too strong [[link removed]] .” Clearly bemoaning the fact people have jobs and are spending money goes couple steps beyond saying the quiet part out loud — it’s turning a vow of silence into a shouting contest .
What’s truly revealing about this misstep is the fact that the position expressed here isn’t really all that usual. Simply replace concern about the job market being “ too strong ” with a concern about it being “ overheated ” or “ extremely tight, ” and it’s the same thing that we’ve all been reading as straightforward economic commentary for many months. But regardless of how much anyone exercises their thesaurus before complaining about the strength of the labor market, this perspective gets the economy backward: more people with more jobs spending more money is the goal, not a weakness . And yet if you directly object to the idea that jobs are good like AEI did, you may have a minor PR crisis on your hands — but if you cloak it in the rhetoric of hotness or tightness, you’re just another Very Thoughtful Observer.
Make it make sense.
Three Numbers [[link removed]]
41% [[link removed]] is how much the University of Michigan consumer confidence index [[link removed]] increased from a year ago. Lower gas prices, a strong job market, and new public investments are boosting optimism about the direction of the economy.
$12 [[link removed]] of tax revenue is returned to the US Treasury [[link removed]] for every additional $1 the IRS spends on auditing the tax returns of the highest-paid taxpayers . Auditing the rich results in significant back payments of taxes, as well as dramatically improved compliance in future years.
60.7% [[link removed]] of student loans [[link removed]] outstanding in 2020 had a higher principal balance than when first issued . The student loan payment pause established during the pandemic expires at the end of August.
A Chart [[link removed]]
A new chart from economist Arin Dube offers a new perspective on how to reconcile strongly positive consumer spending figures with fairly negative public sentiment about the economy . As Dube shows, real inflation-adjusted wages for the overwhelming majority of workers (the 80% categorized as “production/nonsupervisory workers”) have rebounded and returned to the pre-pandemic trend — thus, the strong consumer spending driving strong economic growth. However, once you add in the remaining higher-paid 20% who have a disproportionate impact on the public discourse, the wage numbers for “all workers” remain quite a bit below trend — thus the bad vibes. For the first time in generations, wage inequality is on a sustained downward trend , and processing that remarkable change of direction is confounding our standard reading of the data.
Chart showing real average wages for all workers vs. production/non-supervisory workers (private sector) [[link removed]]
Blowing up the Groupchat [[link removed]]
For all the anguish about the potential for AI to replace the humans who do high-paying creative jobs, little has been written about t he humans engaged in the low-paid drudgery of training and supporting AI models . A recent epic feature from The Verge [[link removed]] is the antidote, detailing the obscure and tedious work being done by millions of people in Nairobi, India, the Philippines, the US, and around the world that lays the foundations for AI models: repetitive tasks including labeling pictures of pedestrians, identifying the emotions expressed by people ordering Domino’s pizza , and even following an extremely-detailed 43-page manual on how to label items which are clothing that can be worn by humans, and which are not. It’s all a bit like being a professional completer of “Are You a Human?” Captchas — and about as frustrating as that sounds. But so far at least, AI isn’t eliminating jobs, it’s creating them . The question is what the economy looks like when billionaire CEOs pay people $2 an hour to do their dirty work… and that’s an economic question we already know the answer to.
What did you think? Choose a reaction:
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