Do Firms Have an Incentive to Comply with the US Federal Minimum Wage?

A thread 🧵, w/ results from my updated WP (with newly-FOIA-ed data on liquidated damages and hot good violations, for all the enforcement nerds out there).

docs.iza.org/dp16882.pdf
First - what does the law (FLSA) stipulate? Firms violating the fed minimum wage are liable to pay:
1/back wages
2/up to an equal amount in liquidated damages
3/civil monetary penalty (up to $2,014/worker/week) if violation was willful/repeat.
& can also be criminally prosecuted.

How to tackle regional economic inequality in the UK?

With @edballs and @DanTurnerSY, some ideas in a new working paper.

TLDR: (1) STEM skills, (2) better transport for non-London cities, (3) boosts to public-funded R&D outside the South.

🧵below...

hks.harvard.edu/centers/mrcbg/… First, the problem. Over the last 4 decades, the economy of London & the South East – already richer - pulled further away from the rest of the country. The story of the UK economy is a tale of two places: rich, dynamic, fast-growing London/SE, and the rest.

How to avoid paying overtime? Make your Front Desk Clerk a "Director of First Impressions".

Cohen, @umitgurun & @NB_Ozel have a compelling new @nberpubs WP suggesting that mamy firms give fake managerial job titles to avoid paying overtime. (1) Why? The FLSA allow firms to be exempt from paying employees overtime wages if the employee is a “manager” and receives a salary above a $455/week.

And - indeed - we see a big jump in the share of salaried positions which are ostensibly "managers" just above that threshold. (2)

South Korea's fertility rate once again breaks (its own) world record low.

Last month, @KarenDynan, @jacobkirkegaard and I put out a @PIIE working paper on gender dynamics in the South Korean labor market, which we argue are strongly linked to what's going on with fertility. 🧵

https://twitter.com/AlecStapp/status/1562384749498343424

A few stats to kick us off. South Korea has:
- Lowest fertility rate in the world
- One of the largest gender employment gaps in the OECD
- Highest gender wage gap in the OECD
- Most highly educated young women in the OECD
(2/N)

**How socioeconomically diverse is the economics profession?**

New @PIIE working paper by @SchultzzyRun & myself, building on some stats I showed in an (unexpectedly viral!) Twitter thread in November.

10 Key Facts - and some discussion - below:

piie.com/publications/w… Fact 1: Economics is one of the least socioeconomically diverse academic disciplines. It has the lowest share of PhD recipients who are first-generation college graduates (no parent with a BA or higher).

(data throughout is from NSF SED: census of all US PhD recipients).

We know that economics has a gender and racial diversity problem. Socioeconomic background is less often discussed.

@SchultzzyRun and I use the Survey of Earned Doctorates - a census of all PhDs from US institutions - to study the socioeconomic background of econ PhDs

(1/N) To proxy for socioeconomic background, we use the highest level of parental education.

In this preliminary work, we're focusing just on US-born individuals (30% of US econ PhDs) since parental education means diff't things for SES across diff't countries. (2/N)

Low-wage employers don't seem to call back union supporters at lower rates in this new resume audit study by @natewilmers and @nicokreis.

(resumes submitted to >500 entry-level high-school graduate jobs in Chicago, Oct 2019-Oct 2020, name coded to sound like a White man).

https://twitter.com/WorkRiseNetwork/status/1457782657576701960

The null effect doesn't seem to be coming from employers failing to perceive the union signal: it was pretty obvious in both the resume and cover letter, and MTurkers confirmed the salience of it in a check the authors ran.

Thought of the day: Every member of the Harvard community should be ashamed by the fact that we openly practice affirmative action for rich white people in college admissions.

(Thread based on Arcidiacono, Kinsler & Ransom's forthcoming JOLE paper)

🧵
public.econ.duke.edu/~psarcidi/lega…

https://twitter.com/annastansbury/status/1379916780982792194

(1) 14% of the admitted Harvard class are legacies. That's 1 in 7! For a typical white applicant (legacies are 70% white), the chance of admission is *FIVE TIMES* higher if you are a legacy. 41% of legacies in the class of 2019 came from top 1% income households.

Finland in 1991 gave workers the right to elect representatives for 20% of the seats on the board/management body.

No negative effects for these firms, small positive effects. Seemed to "facilitate information sharing and cooperation rather than shifting power or rents to labor"

https://twitter.com/simon_jaeger/status/1360632147028148224

This is another must-read paper from @simon_jaeger and @Schoefer_B on shared governance!! You should definitely read the paper, including section 8 where the authors discuss implications.

A few brief thoughts on what I take away on this regarding shared governance reforms:

I think about this statistic every morning.

24 MILLION US adults "sometimes" or "often" didn't have enough to eat over the last week.

80% of these report that the reason is that they *couldn't afford to buy more food*

(according to @uscensusbureau Household Pulse Survey)

1/ More than 1 in 6 Black non-Hispanic adults and Hispanic adults report being in households where there is not enough to eat.

Of all adults in households going hungry, 42% are White non-Hispanic, 28% are Hispanic/Latino, and 20% are Black.

2/

Thank you to @tylercowen for writing up our paper on @MargRev!

Tyler makes a number of thoughtful critiques. @LHSummers and I respond to a few of these here:

[1/N]

(with more detailed responses to Tyler's Qs, & other Qs, at this link: scholar.harvard.edu/stansbury/decl…)

https://twitter.com/MargRev/status/1265547171572695046

Q: Is this to do with wage getting closer to MPL?

A: Quite plausible that employers becoming more ruthless and increased use of monitoring technology led to pay being pushed down– closer to MPL in perf comp labor market (but may be below MPL in monopsonistic labor market) [2/N]

In our paper, @LHSummers and I argue that the *decline in worker power* is behind many of the major trends that have shaped the American economy in recent decades [1/N]

(WP out w/ @nberpubs and presented at @BrookingsEcon Spring 2020 BPEA. Ungated link scholar.harvard.edu/stansbury/rese…)

https://twitter.com/nberpubs/status/1265361517580558342

We argue that the decline in worker power in the U.S. economy can explain:

(1) the entirety of the decline in the labor share,
(2) much of the increase in corporate valuations, profitability, & measured markups,
(3) a large share of the fall in the NAIRU

[2/N]

What do we know about occupational mobility in the US?
As you may know, there isn’t very good existing data on it.

So @gregorschub, @Bledi_Taska & I construct new occupational mobility data, using an amazing new data set of 16 million U.S. resumes from @Burning_Glass. [1/N] Resumes are snapshots of workers’ career histories. Assigning occupation codes to jobs, we can calculate transition probabilities from each occ to each other occ, from one year to the next.

We use this data to document 6 facts about occupational mobility. [2/N]

📢 New WP! Monopsony and Outside Options 📢
(@gregorschub, me, & @Bledi_Taska)

How much do workers' outside job options matter for wages?

This is important to understand the degree of imperfect competition & role of employer concentration in labor markets [1/N] Paper available at:

SSRN: papers.ssrn.com/sol3/papers.cf…

Direct download: scholar.harvard.edu/files/stansbur…

[2/N]

Today in @washingtonpost, @LHSummers and I respond to @MarcoRubio's report on American Investment in the 21st Century.

The short version: we think Sen. Rubio is raising a really important issue - but we disagree with the diagnosis.

A thread (1/18)

washingtonpost.com/opinions/2019/… So what's this all about? The Rubio report highlighted a very striking recent trend: the decline in investment & rise in savings by U.S. private companies. We should be concerned: investment is central to productivity growth and therefore to wage growth. (2/18)

“Productivity and pay: is the link broken?” In the book launched on Weds @PIIE #LowProductivityLaunch, @LHSummers and I investigate whether US productivity growth benefits typical workers. Since I wasn't on Twitter when we first wrote it, here's a thread:

piie.com/publications/w… When people ask “has pay kept up with productivity” they may be asking one of 3 questions:
(1) Has the pay of workers on average kept up with productivity?
(2) Has the pay of the “typical” worker kept up with productivity?
(3) If productivity growth rises, does pay rise? 2/

@Joe_Parisi @ezraklein The point of the piece is to explain how recent economic research built a case that higher taxes on the rich could be optimal. Every discussion of optimal tax (/optimal anything), from every economist, includes value judgments, because you have to decide what you mean by optimal. @Joe_Parisi @ezraklein The economic research on optimal tax cited in the piece, by Piketty, Saez, Diamond, Stantcheva, Zucman and others, explicitly lay out the cases in which high top tax rates can be optimal. A big part of this research is demonstrating under what assumptions the efficiency costs..

18 women have reported sexual harassment by Prof Jorge Dominguez over 3+ decades. Harvard gov grad students today reiterated their call for an external review of the institutional policies, practices, and cultures that allowed harassment to occur 1/13

https://twitter.com/sophie_e_hill/status/1100796545325182982

An external review is standard good practice for an institution when there have been pervasive internal failures, particularly if they may indicate some systemic or cultural issue. Why? Here are a few reasons: 2/13