How Policy is Failing the American Workforce — ft. Kathryn Anne Edwards

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0:01:34 Today’s number, $46,000.
0:01:37 That’s how much the CEO of Starbucks makes per hour.
0:01:40 And true story, when I have sex with my partner,
0:01:43 I ask that she dress up as a Starbucks employee.
0:01:46 Problem is, she keeps getting my name wrong.
0:01:50 That’s good.
0:01:52 That’s good coffee humor.
0:01:53 Get it?
0:01:54 She yells out the wrong name.
0:01:55 That’s good.
0:01:56 I like it.
0:01:57 You get to my age,
0:01:58 you forget what sex with your partner’s like.
0:02:00 Enjoy it, Ed.
0:02:02 Enjoy it while it lasts.
0:02:06 Listen to me.
0:02:07 Markets are bigger than us.
0:02:09 What you have here is a structural change in the world distribution.
0:02:11 Cash is trash.
0:02:12 Stocks look pretty attractive.
0:02:13 Something’s going to break.
0:02:14 Forget about it.
0:02:17 What do you think of that $46,000 an hour number?
0:02:19 I was staggered by that.
0:02:20 I think they’re getting a deal.
0:02:23 Didn’t he have like a billion dollars when he showed up and said,
0:02:24 hi, I’m from Chipotle?
0:02:26 And everyone went, oh my God, he must be amazing.
0:02:27 Exactly.
0:02:28 Do you go into Starbucks?
0:02:28 Do you like Starbucks?
0:02:31 No, I’ve actually gone to Joe and the Juice here.
0:02:33 I was deciding between Starbucks and Joe and the Juice.
0:02:34 And I went with this.
0:02:39 Because I just don’t enjoy the experience inside the Starbucks store anymore.
0:02:41 It feels like a fast food restaurant.
0:02:41 That’s interesting.
0:02:43 So back to me, I was in Northern Europe.
0:02:47 I was in Oslo or Denmark, one of those Northern European countries where they all seem really
0:02:48 happy.
0:02:51 And, you know, they pay 90% taxes and there’s no homeless people.
0:02:55 And I met these guys.
0:02:57 I was there and I met a friend.
0:02:58 And he said, oh, we’re meeting up with some guys.
0:03:03 And these guys, I thought they were a boy band because we were mobbed when we went out.
0:03:04 Everyone wanted to talk to them.
0:03:06 They’re all these handsome guys in their 30s.
0:03:07 And they were huge celebrities.
0:03:08 I’m like, who are these guys?
0:03:10 And they’re like, oh, they’re the founders of Joe and the Juice.
0:03:16 And I’m like, that is a little, that’s the open AI of Denmark or Norway or something.
0:03:17 That’s right.
0:03:18 That’s right.
0:03:19 And I started going there.
0:03:21 I get the protein buzz, I think.
0:03:22 And I get the tunicato.
0:03:24 Everyone loves those tunicatos.
0:03:27 Where does Ed Elson spend his money?
0:03:29 Like what, what gym are you at?
0:03:31 What restaurants do you eat at?
0:03:34 What is sort of your, what are your go-tos?
0:03:36 I eat in a lot these days, Scott.
0:03:37 I do a lot of cooking.
0:03:39 I cook, I meal prep throughout the week.
0:03:40 You cook?
0:03:42 I do a lot of cooking now.
0:03:43 Oh God, you’re so sexy.
0:03:44 I can’t handle it.
0:03:45 Really upped my game.
0:03:46 Where do you shop for groceries?
0:03:48 Let’s get to know the real Ed Elson.
0:03:51 Where do you shop for your groceries, Ed?
0:03:54 I go to Whole Foods and a lot of people don’t, don’t like that.
0:03:56 Oh, someone’s making too much money.
0:03:57 Memo to self.
0:03:59 I’m one of these maha moms.
0:04:02 I care a lot about seeing that organic label.
0:04:05 I know it’s all bullshit, but I still care about it being organic.
0:04:10 I remember when I decided to change my life in 2000 when my whole world crashed.
0:04:13 And I thought I was living in San Francisco doing internet and I was married.
0:04:15 And I’m like, I don’t like any of these things.
0:04:16 I don’t like tech.
0:04:17 I don’t like San Francisco.
0:04:18 I don’t like being married.
0:04:23 And so I ended all three of those things and moved to New York with no job, didn’t know
0:04:23 anybody.
0:04:26 And I got, finally got invited to a dinner party.
0:04:28 My friends all were like, what happened to Scott?
0:04:31 Like he freaked out and pressed the restart button on his whole life.
0:04:33 He’s going through some sort of crisis.
0:04:38 And a friend of mine said, I know some people, and it was like the first dinner party I was
0:04:39 ever invited to in New York.
0:04:45 And I thought, oh, I’ll show up at Whole Foods and I’ll, because I don’t want to show up empty
0:04:45 handed.
0:04:47 So I went to Whole Foods, bottle of wine.
0:04:53 And I bought the most beautiful red, these bulbous grapes.
0:04:55 I picked out just like a big bunch.
0:04:56 And they were just so beautiful.
0:05:01 And there was like a giant, I don’t know how you call them, batch herd pride school of grapes.
0:05:06 And I walked up and she said, okay, put them here.
0:05:08 And she weighed them and she looks at me and she’s like, she was embarrassed.
0:05:11 She goes, it’s $37 for the grapes.
0:05:16 And at that moment, I had what I thought was one of my best impromptu moments.
0:05:18 I ate one of the grapes and said, how much is it now?
0:05:26 And I’m like, and so I showed up, I showed up with my wine and that was my opener.
0:05:28 I’m like, these are $37 grapes.
0:05:31 These are 30, though it’s all enjoyed.
0:05:32 It’s just cost $37.
0:05:34 I love that.
0:05:34 That’s good.
0:05:35 It’s interesting.
0:05:38 You had that moment where you just hit the reset button.
0:05:43 I wish we had a whole podcast to talk more about that.
0:05:46 Can we get like a quick summary of what happened?
0:05:49 What motivated this life switch up?
0:05:54 Something to do with abandonment of my father, chemical depression,
0:05:58 and mixed with extraordinary amounts of selfishness.
0:06:07 And also like the shitty weather and politically like overly woke San Francisco.
0:06:13 And also, I think I had a wonderful partner, a really good person.
0:06:14 I just didn’t want to be married.
0:06:15 I was too immature.
0:06:16 I didn’t like it.
0:06:19 Do you feel like you became less mature or were you always immature?
0:06:22 What changed?
0:06:24 Oh, no, I was always immature.
0:06:28 But because everyone around me was getting married, I thought that’s just what you were supposed to do.
0:06:31 And I found someone who was amazing.
0:06:37 And so I got married for a right reason or a wrong reason.
0:06:39 But I was very much seduced by New York.
0:06:42 I came back to New York a few times.
0:06:48 I had started a firm called Profit, which, by the way, just got fired from Cracker Barrel for changing their logo.
0:06:50 I was going to say, we’ve got to talk about that.
0:06:52 Anyways, I love that.
0:06:57 So anyways, but I came back to New York a bunch for meetings, getting clients.
0:07:03 And San Francisco, I always thought, which is quite frankly, as a city, a business community, so full of shit.
0:07:19 I was raising money doing internet and e-commerce companies and all these VCs during the day, the most rapacious, like a hardcore, disingenuous, total fucking douchebags I hadn’t ever met in my life.
0:07:23 And then at night they wanted to save, you know, they wanted to, they had fundraisers to save the whales.
0:07:27 I just thought it was such a disingenuous environment.
0:07:28 I didn’t like tech.
0:07:30 I didn’t like the community.
0:07:31 I didn’t like the weather.
0:07:35 And I couldn’t stand how, I don’t like political extremism.
0:07:37 I would never want to live in a deep red state.
0:07:39 I don’t like living in deep blue.
0:07:40 And people say Manhattan is deep blue.
0:07:41 I don’t agree.
0:07:47 Anyway, and then I went back to New York and people work really hard.
0:07:48 They’re very open and honest.
0:07:49 Can we make money together?
0:07:50 No, your idea is stupid.
0:07:51 Scott, we’re not interested.
0:07:53 I didn’t mind that.
0:08:00 In San Francisco, I found it was just constant grin fucking, like constant, like, we need to see another year of renewals, but let’s stay in touch.
0:08:02 We really like this company.
0:08:04 And I’d walk out and there’s no fucking way they’re investing.
0:08:06 Anyways, New York was much more straightforward.
0:08:12 And then at night, every night, they’d go out and party like fucking rock stars with really hot people and great cocktails.
0:08:14 And I’m like, I have found my people.
0:08:17 No mountain biking, no Patagonia.
0:08:21 No, like, you know, solve the unhoused problem.
0:08:23 And don’t man the table, staff it.
0:08:28 I’m like, people were just, I just thought these, these are my people.
0:08:31 And I, I thought I want to move here.
0:08:36 I, at that time also, it, it helps to think you’re going to be rich to be really selfish.
0:08:43 I thought I was going to be rich because it was 99 and I was looking at jets and I thought I was going to be, you know, a billionaire.
0:08:44 Oh, so that coincided.
0:08:48 You get rich, you start looking at jets and then you’re like, okay.
0:08:49 I’m out.
0:08:50 Time to switch up.
0:08:51 Yeah, see above selfish.
0:08:57 Yeah, no, it was definitely like a total lack of character.
0:08:58 I love that.
0:08:59 Karma’s a bitch.
0:09:03 I literally moved to New York and the dot bomb implosion happened.
0:09:11 And, and I was making, I moved to New York during the faculty at NYU where I, my starting salary was $12,000 a year.
0:09:13 And I don’t know why, but I went through this stage.
0:09:15 God, I just love, I’m so glad he asked about me.
0:09:19 I went through this stage where I became a caveman.
0:09:27 I bought a loft with the little money I had and I was working maybe two days a week at, at NYU in the marketing department.
0:09:36 It was an adjunct professor and I would literally only leave the house to eat or try and find someone to have sex with.
0:09:38 Like I, that was it.
0:09:39 I was living like a fucking caveman.
0:09:44 And I read this article that said, I decided to become an island.
0:09:47 I remember saying to my ex, you can have all of our friends.
0:09:49 I don’t, I don’t even want to stay in touch with these people.
0:09:52 I’m like, they’re all yours.
0:09:55 I want the dog, but you can keep all of our friends.
0:09:59 And I moved to New York.
0:10:02 What a guy, what a great guy.
0:10:10 And I remember thinking I lived that way for actually a couple of years and it was a life void of all meaning.
0:10:13 But as far as a life void of all meaning goes, it was pretty good.
0:10:20 And then I remember thinking I’ll be dead at 55 if I continue to live this way.
0:10:25 If I isolate from everybody and everything and just make enough money to go to St.
0:10:30 Bart’s and go on dates and occasionally like buy a nice pair of shoes and have a flat screen TV.
0:10:31 I thought this is all I need.
0:10:32 It sounds pretty miserable.
0:10:34 You didn’t feel miserable.
0:10:34 It sounds.
0:10:35 Oh, no, I liked it.
0:10:36 No, no.
0:10:37 I was comfortable being alone.
0:10:46 But I did do the research and I literally came to the conclusion if I continue to live this way, I will die in my 50s.
0:10:49 You had to read an economic study to justify why he should change.
0:10:55 I remember thinking I kind of like this, like living in New York, I’m an island, no responsibilities.
0:11:00 And then I kind of figured out, OK, I’m going to die very early if I continue to live this way.
0:11:11 So I got much more into work, much more into relationships, started making new friends, met someone much hotter than me that demanded that like I act like a grown man, which was a real bummer.
0:11:16 Anyways, but that was basically my exodus.
0:11:18 Have you ever seen the movie About a Boy?
0:11:19 Oh, one of my favorites.
0:11:20 That’s my favorite movie.
0:11:20 Really?
0:11:21 That’s my favorite movie.
0:11:22 We have that in common.
0:11:25 You have no idea how much that resonated.
0:11:28 That guy decided to be an island and then he realized that life is about relationships.
0:11:29 That’s right.
0:11:30 OK, that’s great.
0:11:31 I’m glad.
0:11:33 That’s my favorite movie of all time.
0:11:33 Wow.
0:11:37 We are finding common ground here, Ed.
0:11:40 I’m the Nicholas Holt to your Hugh Grant.
0:11:42 Enough about me.
0:11:46 Tune in next week for what happened when the Great Financial Recession hit me in New York.
0:11:48 All right.
0:11:52 The life of an incredibly, of a low character, selfish person.
0:11:54 And his rehabilitation.
0:11:58 Well, let’s get to our interview for our guest this week.
0:12:01 We have Catherine Anne Edwards back on the podcast.
0:12:07 She is a PhD economist, economic policy consultant and economist for Bloomberg News.
0:12:09 She is our labor market expert.
0:12:10 Let’s bring her in.
0:12:14 Catherine, thank you very much for joining us again on Prof G Markets.
0:12:16 Well, thank you so much for inviting me back.
0:12:27 So I would like to start with this government shutdown, which, of course, is putting a lot of people out of work right now.
0:12:33 Can you just give us sort of the labor market experts guide to the government shutdown?
0:12:35 What’s happening and what should we be concerned about?
0:12:44 You know, when we look at the U.S. labor market, we’re looking for signs of strength from its cyclicality.
0:12:47 Are we in a good or bad period of expansion or contraction?
0:12:52 And then we look at these real-time measures that could be signs of those weakness.
0:13:01 You know, the government shutting down isn’t happening because, you know, tariffs have hit the economy too hard or households have pulled back on consumer spending.
0:13:05 It’s not showing us some fundamental weakness in terms of how the economy is doing.
0:13:08 But it is going to hurt the labor market.
0:13:16 It’s going to hurt a lot of people who aren’t going to get earnings, who aren’t going to have services fulfilled, whether that’s federal employees or the offices and people that they’re directly serving.
0:13:19 And so that will hurt aspects of the economy.
0:13:27 You know, some people will say it’s just it’s unnecessary pain coming at a time when we could really use with less pain.
0:13:34 But it doesn’t necessarily portend that, you know, a recession is going to come afterwards because of the hit the economy took.
0:13:39 I mean, it is fixable and in some ways reversible, except for the excess cost to taxpayers.
0:13:43 The other implication of these shutdowns is that we’re not getting any data.
0:13:52 This is like possibly the darkest week for data that we’ve seen because, you know, we’re not seeing data from the government right now.
0:13:54 And then it’s also been a quiet week already.
0:13:57 What do you do about that as an economist?
0:14:04 If you’re not getting the data right now, how much of a problem is that, especially if you’re trying to figure out what on earth is going on in the labor market?
0:14:07 It really is going to depend on the length of the shutdown.
0:14:16 So the shutdown started the September jobs report, which we should have gotten, you know, the first Friday of October.
0:14:17 It was already done.
0:14:19 Like the data was collected.
0:14:23 You know, they release it to the White House and the Federal Reserve a day before they release it publicly.
0:14:28 So that the shutdown started on Wednesday and the report was due Thursday morning.
0:14:30 All that data is collected and compiled and completed.
0:14:32 We know what happened in September.
0:14:36 What’s at risk now is data collection for October.
0:14:45 Now, data collection for the employment situation happens right at the completion of the week of the 12th.
0:14:53 So if you looked at a wall calendar, whatever row 12 is on for October or in any month, that’s the row of the reference week.
0:14:56 And so when that week is finished, that’s when we start data collection.
0:15:03 In the 2013 shutdown, they had to basically start collection a week late.
0:15:04 It was a two-week shutdown.
0:15:05 They started a week late.
0:15:07 They came out with a week late jobs report.
0:15:11 But they did a lot of estimates that the data itself wasn’t collected.
0:15:22 So if this is short enough, we kind of got a freebie week because the 12th is a Sunday, which means we have basically an additional week before we are supposed to be starting data collection for the jobs report.
0:15:26 So there’s still a chance that the disruption will be very, very minimal to data collection.
0:15:39 I feel as if, at least when I look at the economic data that’s coming out, the term I think of is dogs watching television, and that is, I know something’s going on, but I don’t know what’s going on.
0:15:42 I see so many mixed signals here.
0:15:52 When someone asks you, what is the state of the U.S. economy right now, how do you summarize what’s going on in the economy?
0:15:53 That is a good question.
0:16:04 And the dogs watching television is a moment that we all feel, however much we know about the economy or not, because I tend to tell people two things.
0:16:11 One is that we are starting to see stagflation, which is itself a pretty confounding state for the U.S. economy.
0:16:16 It’s not normally the case that as the economy slows, prices would increase.
0:16:23 We’re not seeing, no, and then now you have to separate in your mind of like, okay, what is evidence of the economy slowing?
0:16:25 And then what is evidence of prices increasing?
0:16:27 And what are the pressures on the two of them?
0:16:32 We haven’t seen the economy slowing in the GDP report, but we’ve certainly seen it in the job market.
0:16:41 And a job market that has been tepid for the entire year is still not posting good numbers, whatever they were going to put up for the September report.
0:16:47 That should trigger a lot of things on the price side that we’re also not seeing.
0:16:53 So I think where we are right now is waiting to see which way is it going to break.
0:17:02 Is the labor market going to tank before, you know, the tariffs and the price effects go into effect, or are the prices going to climb first?
0:17:06 And that will give us some direction of like, what is the dominant force on the economy?
0:17:12 But I think some of the confusion comes from, one, we’re really looking at the effects of uncertainty first and foremost.
0:17:16 And two, it could break in one of two directions, if not both.
0:17:20 And so it’s not just that the data isn’t clear.
0:17:23 It’s that it’s being pulled in two different directions.
0:17:27 And so it’s kind of hanging out in the middle, switching a little bit between them.
0:17:34 So what I think the economy doing is suffering under terrible economic policy and a lot of uncertainty that is spooking a lot of people.
0:17:42 Does that mean it’s, you know, what it means for young people, what it means for the market, what it means for price indices, what it means for Fed funds of the future?
0:17:51 Like, I think that’s the almost the easiest, easier question to answer, because the economy itself is kind of on a few different precipices.
0:17:58 We also saw this ADP jobs report last week, which found that the private, it only measures the private sector.
0:18:03 And this sort of plays into this discussion we’re having about what data do you look at?
0:18:05 We don’t have the government data right now.
0:18:06 So we turn to the ADP.
0:18:12 It told us that the private sector shed 32,000 jobs in September, which was a pretty notable decline.
0:18:17 But it also said that annual pay was up four and a half percent.
0:18:18 There are a few questions here.
0:18:20 One, what do you make of the data?
0:18:24 And then two, you know, do we trust the ADP?
0:18:30 I know that there is some debate among economists that it’s actually that reliable.
0:18:37 Well, I don’t really know about the nuances of why or why it isn’t that reliable, but your reactions to that report we saw last week.
0:18:46 Oh, well, I was not thrilled to see a negative number because, you know, as much as we like to say that economics is a science, there’s so much mood.
0:18:56 And if you spook people, especially people who sit on corporate boards, who see a downturn coming, you know, they’re going to be in line to be the first to do layoffs.
0:19:07 And so any negative number, you know, you followed by a government downturn, it’s just it’s not going to instill confidence in the economy for the rest of the year.
0:19:09 And that’s that’s what I saw.
0:19:15 Now, the accuracy of the ADP report, I mean, I think you just have to take it on face value.
0:19:25 You have to understand for any piece of data you get, it’s going to come with a pretty closed border around it of where you can take it as an implication versus where you shouldn’t apply it anymore.
0:19:30 And like, what is the border of information or border of implications that come from this ADP number?
0:19:37 I don’t tend to watch the two in tandem, I guess is another way of saying where I’m not like, well, here’s what ADP says and then here’s what BLS says.
0:19:40 I just take them as separate measures, measuring different things.
0:19:51 What I found almost more worrying was the wage growth because wage growth should happen when the economy is strong and there’s lots of people getting jobs and they’re bidding.
0:20:00 You know, we think the primary mechanism for wage increases in the United States is getting an outside offer or moving to an offer with higher pay.
0:20:09 Wages going up when hiring isn’t is suggesting that there’s almost like a culling of the workforce so that the lower paid stagnant jobs aren’t there anymore.
0:20:18 So one way to remember this was in the pandemic, we saw one of the largest increases in wages we’ve ever seen in the U.S. because so many low wage workers were fired.
0:20:32 So if the private sector is reporting high wage gains, that could be a composition effect of they’re missing a lot of entry-level people or they’re not replacing people who leave, you know, when they leave for whatever reason.
0:20:37 So high wage growth with low job growth is not good.
0:20:44 When I saw that headline, when I saw that data, my mind immediately went to what the tech companies are doing.
0:20:49 And that is very similar to what you just described, where you have this amazing new technology called AI.
0:20:58 They are offering several tens, in some cases, hundreds of millions of dollars to the top AI scientists and AI researchers in the world.
0:21:01 They’re turbocharging their business with AI.
0:21:04 They’re making a lot more money with AI if you’re someone like Meta.
0:21:08 And at the same time, they’re laying people off in record numbers.
0:21:21 And something we’ve discussed on the show before is, you know, this idea, layoffs, it used to be, at least in the world of finance and the world of tech, layoffs used to be sort of a negative forward-looking indicator.
0:21:22 It’s like, oh, what went wrong?
0:21:24 They’re laying people off.
0:21:34 But it seems that with AI, we’ve switched into a different mode where actually, if you’re laying people off, that is a bullish signal because it shows that you don’t need all these people to run your business.
0:21:36 You can get robots and AI to do it.
0:21:41 And it means you have more money left over to pay for the top, top talent.
0:21:43 I look at the ADP report.
0:21:45 It tells me a similar story.
0:21:50 I know that AI isn’t the whole economy, but they seem to be at least rhyming here.
0:21:55 Do you think that that is perhaps what is going on in the economy at large?
0:22:00 Or they’ve spent so much money on AI, they don’t have leftover for payroll.
0:22:04 There’s only so much money a company can spend in a year.
0:22:09 And so if they’re tripling down on an AI investment, that money has to come from somewhere.
0:22:13 And we know the economy is not giving them money hand over fist.
0:22:18 So they’re making a calculated choice about where to invest and they’re choosing.
0:22:21 I mean, I see it in some ways of they’re choosing robots over people.
0:22:36 You know, your point on this report, you know, it really makes me want the BLS employment situation where we can look at, you know, the full scope of industries and how each industry is evolving.
0:22:38 You know, information has been flat for about a year.
0:22:49 So I would want to see kind of the drops that ADP would suggest concentrated in the industries that you’re talking about and be able to really hone in on it.
0:22:54 Because, you know, AI wouldn’t explain like sluggish retail.
0:23:02 For all the talk about the tech sector, it’s actually split up in terms of their actual industry.
0:23:08 As in some of them can be in professional business services, some of them are in information, some of them are in retail trade.
0:23:14 And, you know, we think of tech separately from how the Bureau of Labor Statistics would define them.
0:23:22 The question I’ve gotten most over the past two months is, is there a good private sector replacement for the Bureau of Labor Statistics data?
0:23:24 And the answer is unequivocally not.
0:23:40 And you kind of hear it in conversations like this where, man, if it really is 32,000 jobs lost, I want to know to the most detail possible which sector was driving that versus, if it’s professional or business services, you know, versus health.
0:23:55 We’ve been thinking about this question of alternative sources a lot recently because of the shutdown and also because of just this general defunding and antagonism towards agencies like the BLS.
0:23:57 I mean, we saw the firing of the BLS chief.
0:24:01 We see the political attacks on these data collection services.
0:24:03 And so we have been thinking the same thing.
0:24:07 Do we need to start moving towards alternative sources of data?
0:24:08 And that’s what we’ve been looking at.
0:24:17 I mean, the other week, we had a whole discussion about the economy that was tied to sales of Hamburger Helper as a sort of indication of where is the economy going.
0:24:25 Apollo just released this actually, I think, quite brilliant report that collected all of these different sources of alternative data.
0:24:29 They looked at the amount of times that people are going to visit the Statue of Liberty.
0:24:32 They look at, you know, Las Vegas room nights.
0:24:34 They had all of these different things.
0:24:39 And I was sort of thinking, OK, maybe this is the new direction in terms of economic data collection.
0:24:41 This is what we should do about the economy now.
0:24:46 Sounds like you think, no, we need to double down on BLS.
0:24:48 We need more funding in the government.
0:24:53 We need better data collection services from the federal government.
0:24:54 Yes, 100%.
0:25:00 Well, and it’s worth noting that so many of these alternative sources are built on BLS data.
0:25:13 I mean, even the ADP report, if you read the last report, they had lots of notes about how the BLS data benchmark revision affected their model because their model is in part trained on and meant to mimic what they think is happening in the BLS.
0:25:24 And so to find a truly divorced from public data alternative measure that does not either validate their strength of their data using the BLS is truly hard to come by.
0:25:30 This is in some ways happening in 10 different arenas right now.
0:25:42 We had a part of our economy or of our public policy that had been made weak from neglect that wasn’t batting 1,000 and then was attacked by the Trump administration.
0:25:45 And we’re left to wonder what happens next.
0:25:48 And it’s almost, you know, the answer had been there for 20 years.
0:25:55 But we’re being pushed, we’re kind of pushing our, you know, holding pattern to the limit.
0:26:06 Like you can’t function in a $30 trillion economy with the data that you need to manage it if you are starving your statistical agencies for funds, which we’ve been doing for the past 15 years.
0:26:10 Firing the BLS commissioner, halting government data collection.
0:26:14 We are pushing over the edge something that was already deeply problematic.
0:26:22 So we can, you know, see this as a, well, you know, we should have done the right thing 20 years ago, but it doesn’t matter when you get to the party as long as you brought a bottle of wine.
0:26:25 Like let’s go, you know, fix the BLS now.
0:26:37 And for what it’s worth, prior BLS commissioners, you know, they have in the American Statistical Society and the Society of Federal Statisticians, which actually is an acronym that’s like six different words and I’ll never remember them.
0:26:44 But they have a plan for basically what I joke is the one big, beautiful BLS, where it’s like statistics 3.0.
0:26:49 We know exactly what to do to the statistical agencies to make modernization efforts.
0:26:50 They know what to do.
0:26:52 They need the money and the authority.
0:27:11 So I, but I think this is happening on so many levels of like how we’re talking about data collection is how maybe someone at, you know, the National Weather Service or NOAA is talking about their models that they haven’t been paid to improve or, you know, various government agencies and they’re, everybody’s been starved for investment for a while.
0:27:19 And then when they inevitably get something wrong, everyone turns around and says that it was politically biased and it’s like, okay, well, just look at the last 20 years.
0:27:20 They haven’t been getting any funding.
0:27:25 I mean, it’s ridiculous to me, but this to me seems to be the playbook.
0:27:32 You basically starve these agencies of funding and then you say the reason that you’re messing up isn’t because you don’t have the money and the technology that everyone else has.
0:27:35 It’s because you’re politically motivated or you’re biased in some sort of way.
0:27:37 It drives me insane, as you can tell.
0:27:41 Well, yeah, it’s convenient and obvious and just a touch lazy.
0:27:50 It’s hard to do good work and so it’s easy to attack it, but that doesn’t mean that we should stop or stop advocating or stop relying on the BLS.
0:28:00 I mean, I love the blossoming of alternative data is great because no single piece of data is ever going to be complete.
0:28:07 The unemployment rate is never going to describe how most Americans feel about the economy or how they feel in the labor market.
0:28:10 So the more data we have, the more we learn and the more we can act on it.
0:28:19 But attacking certain data might kind of de facto lead to the privileging of others when truly we need all of it.
0:28:23 We’ll be right back.
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0:31:23 We’re back with Profity Markets.
0:31:27 So we talk a lot about the struggles of young men on this program.
0:31:31 And you’ve written about the rise of, am I saying this correctly, NEETS?
0:31:31 NEETS.
0:31:32 NEETS, yeah.
0:31:36 And that stands for not in education, employment, or training.
0:31:42 Talk a little bit about what your takeaways are from this growing demographic.
0:31:45 There’s a lot of worry about NEETS globally.
0:31:51 People who are truly not participating in primary economic activities.
0:31:53 What are they doing with their time?
0:31:54 How are they getting income?
0:31:59 Why aren’t they being incorporated into the labor market or the training market or the higher
0:32:00 education system?
0:32:09 And there’s data that suggests that the young NEETS, say under 30, are up all over the world.
0:32:15 And that’s very alarming, especially when you have the backdrop, like, you know, the conversations
0:32:16 we’re having about boys and men.
0:32:24 So what I try to make clear is there are three reasons why we have NEETS, and it almost never
0:32:28 changes, even though they can look a little different.
0:32:32 So they either can’t find a job or they can’t take a job.
0:32:36 And that’s because the labor market is bad, they are disabled, or they are caregiving.
0:32:43 And a weak labor market, disability and caregiving, you can look at a 20-year-old NEET or you can
0:32:46 look at a 60-year-old NEET, and they would have one of those three reasons.
0:32:49 Now, the makeup of that reason can change.
0:32:54 Disability amongst an older person is going to look different than disability amongst a
0:33:00 25-year-old, whereas the rates of, say, addiction and substance use disorders tend to be much higher
0:33:04 amongst younger populations, whereas a physical impairment is higher amongst older populations.
0:33:09 But it’s still basically a different flavor of the same problem, which is you are not physically
0:33:10 able to work.
0:33:11 Same with caregiving.
0:33:16 You could be caregiving for, you know, a partner, a parent, or a child, and as someone
0:33:21 ages, the likelihood of who that is changes, but it’s still that they’ve got to take care
0:33:24 of somebody and they can’t take a job, or the labor market is bad.
0:33:30 What type of person background tends to over-index amongst the NEETs?
0:33:39 And if you could offer any solutions or public policy solutions, what would you suggest?
0:33:45 The NEETs tend to be, in America at least, much more black than white, much more female
0:33:50 than male, and much more rural than urban, and come from low-income families as opposed to
0:33:51 high-income families.
0:33:55 You know, 70% of NEETs don’t have more than a high school degree.
0:34:02 So that means they are truly just missing labor market opportunities, or they face discrimination
0:34:03 in the labor market.
0:34:08 So one thing I bring up that I think is often, if I were to critique the boys and men
0:34:11 conversation in the U.S., one thing I think that doesn’t come up enough is the criminal
0:34:13 justice system and felony records clearing.
0:34:21 And the unemployment rate of people who are returned citizens, who have served their time,
0:34:27 and are no longer incarcerated, is, I would hazard a guess, if we measured it appropriately,
0:34:30 will always be the highest unemployment rate in the U.S.
0:34:34 Because discrimination against people who have a felony degree is so high.
0:34:41 And in some ways, our society is producing NEETs because we are producing so many felons,
0:34:45 because we have a criminal justice system in desperate need of reform.
0:34:51 And if you were to ask me, what is the thing you could do to help men the most in the U.S.,
0:34:55 I would point to criminal justice reform because they’re disproportionately affected by the criminal
0:34:56 justice system.
0:35:00 You know, the other thing I would point to is addiction.
0:35:06 You know, it is very sad, but substance use disorders are much higher amongst men than they
0:35:07 are amongst women.
0:35:11 And that creates a large, you know, a portion of disability amongst men that women don’t share.
0:35:17 So being able to do things like expand Medicaid, the single largest provider of substance use
0:35:23 disorder treatment in the United States, as opposed to cut it, would be ways to help a population
0:35:24 that is on the edge.
0:35:29 But my take on the NEETs has long been, we know where they come from.
0:35:31 The question is why we don’t help them.
0:35:39 So I’m just doing the steel man for more conservatives or more conservative ideology.
0:35:44 Is some of it the NEETs, would you have a reduction in NEETs, quite frankly, if the incentives were
0:35:49 changed and that is there were fewer social programs or, I mean, I’ve oftentimes, I hear
0:35:51 about NEETs and I think, well, how are they eating?
0:35:55 And is it because they’re living off of their parents and have their parents’ Netflix and
0:35:57 phone and living in mom’s basement?
0:36:02 Or is it because social, in some instances, and I don’t think this is true, but I’ll put it
0:36:05 out there, that sometimes it’s just not worth it to go to work.
0:36:07 No, you trap more flies with honey.
0:36:14 The U.S. has tried to put work requirements or on various social programs for the past 30
0:36:17 years and the evidence is very conclusive.
0:36:22 It really doesn’t increase work because a work requirement doesn’t change or alter a barrier
0:36:23 to work.
0:36:27 And if I can’t find childcare, it doesn’t matter if you take away food stamps, I still won’t
0:36:28 find childcare.
0:36:33 So if I, if my grandma is sick and someone has to take care of her, I’m on food stamps.
0:36:36 But if you take it away from me, like someone still has to take care of her.
0:36:43 And as we’ve gone through, I would say, eras of work requirements being added to social programs,
0:36:46 we have not seen labor force participation increase.
0:36:47 Yeah.
0:36:52 So if there were some kind of massive effects from adding a work requirement to a program,
0:36:56 you know, you should be able to see it pretty quickly.
0:37:00 And you, you’re just, you’re not seeing it in their labor force participation.
0:37:01 You’re not seeing it in their earnings.
0:37:07 Well, at the same time, you know, the evidence around, you know, making the labor market more
0:37:13 amenable to people who can’t necessarily work full time, those returns are there and obvious.
0:37:18 So one thing I point out to people is that Americans love to think that we’re hard workers.
0:37:22 We’re a country that values work, but we have lower work rates than almost all of Europe.
0:37:27 And it’s in part because we’re so mean to people who can’t take a full time job as is.
0:37:34 And there was a, I talk a lot about child care and how much child care would help labor force
0:37:34 participation.
0:37:36 Like forget helping children.
0:37:41 If you have a place where children under five can go for free, their moms will work more.
0:37:43 The only G7 nation that doesn’t offer it, right?
0:37:50 But, but in, in past studies of women’s labor force participation in Europe, they’ve found that
0:37:54 actually the bigger factor for getting women to work is having the right to part-time jobs.
0:38:01 And if you followed the, the head of Citibank, one of the few financial institutions that has not
0:38:05 required five days a week return to office for all their employees, she has said publicly,
0:38:09 if I had had to work five days a week with kids under five, I wouldn’t have been able to keep my job.
0:38:13 That’s something that we actually can see in broad data in European countries that
0:38:16 the U S is missing workers.
0:38:18 It’s missing a lot of part-time workers.
0:38:23 So take that person with a disability who has to go to the doctor every week or has to go to some
0:38:24 version of physical therapy.
0:38:29 They can’t work 40 hours, but they can work 30, but they’re not allowed to.
0:38:33 I’m just curious, all of this, and then I’ll flip it back to that.
0:38:36 Have you seen, Catherine, have you seen a series on Netflix called The Maid?
0:38:38 Oh, I read the book.
0:38:39 Oh, that’s such a pretentious thing to say.
0:38:40 I’m so sorry.
0:38:43 But I think The Maid is based on a book, right?
0:38:44 It’s a memoir.
0:38:45 I don’t read books.
0:38:46 I just watch Netflix.
0:38:47 So I don’t know.
0:38:49 This is where we meet.
0:38:54 But so many of the issues you’re talking about, Ed, you don’t know this because you’re probably
0:38:59 watching TikTok all day, but a lot of the issues we’re talking about come to life.
0:39:03 And that’s why I think art is just so important.
0:39:09 But a lot of the issues you’re bringing up in a fairly sober, anodyne way come to life in
0:39:09 this series.
0:39:13 I think it’s really powerful and it makes you really feel for this, what you’d call
0:39:14 needs.
0:39:15 Anyways, back to you, Ed.
0:39:20 In terms of some solutions to this, it sounds like you think free and universal child care
0:39:21 would be a huge help.
0:39:25 Is there anything else that you think would solve this issue?
0:39:29 Some of them are very, very low budget.
0:39:33 Something like universal access to paid sick leave.
0:39:38 In certain cities where they’ve done this, they’ve studied the earnings of workers who
0:39:40 are brought under sick leave protection.
0:39:48 And they find as much as a $3,000 a year difference in the amount of annual earnings of, say, women
0:39:52 without a college degree who have a child when she has access to sick leave.
0:39:54 Now, she’s not taking $3,000 worth of sick days.
0:39:59 She’s basically having stability in employment that if she calls in sick, she doesn’t lose
0:40:01 earnings or her job.
0:40:04 Because you can still be fired in the U.S. for calling in sick.
0:40:10 So if you happen to be the caretaker of the most sick population in the U.S., aka a kid
0:40:15 under five who gets on average eight colds a year, you’ve basically introduced unstable
0:40:22 earnings into a household simply because her earnings are now dependent on the health of
0:40:22 her kid.
0:40:28 So when you take that out of the equation and you add protection for workers who call in
0:40:33 sick and even compensation for workers who call in sick, she earned $3,000 more a year
0:40:35 because her earnings were more stable.
0:40:38 $3,000 a year is more than the child tax credit currently.
0:40:41 There’s about 30 million workers in the U.S. who don’t have access to paid sick leave.
0:40:43 That is an easy change.
0:40:47 That could make a huge difference for people who are affected by it.
0:40:53 But we don’t really think of not having a sick day as being a source of employment instability.
0:40:56 But it absolutely is.
0:41:01 So basic labor regulations to make it easier for people to maintain employment in the wake of
0:41:05 lives that we lead, no paid family and medical leave.
0:41:11 You could take the bold decision to do things like establish the right to work part-time or
0:41:13 have flexible work arrangements.
0:41:16 You could absolutely make that part of our labor law.
0:41:19 It’s labor law in a lot of countries that would be considered our peers.
0:41:25 And then you can make the big social investments like child care, a cash allowance for children.
0:41:27 You could expand Medicaid.
0:41:31 You could do lots of things.
0:41:32 And we’ve done none of them.
0:41:34 I think I said this last time I was here.
0:41:35 Remember, we’ve done almost none of them.
0:41:37 So there’s just like sky’s the limit.
0:41:40 There’s so much we can do.
0:41:46 It’s interesting because so much of this revolves around child care, which I think is, I mean,
0:41:49 makes sense when you just think it through logically.
0:41:54 Of course, that’s a big reason that we’re seeing these discrepancies in terms of employment.
0:41:59 What are your thoughts on the trad wife trend?
0:42:04 This is the cultural trend that has gained a lot of steam recently.
0:42:09 This idea that, you know, women should go back to taking up the traditional role of staying
0:42:15 at home and being the homekeeper, taking care of the children, making the meals, et cetera.
0:42:20 I feel as if this is a big piece of what we’re discussing here.
0:42:24 What are your thoughts on that whole cultural trend that I believe has gotten a lot more popular
0:42:24 recently?
0:42:29 Women who are supposed to stay at home, they make an awful lot of money from social media.
0:42:35 I wrote a column about this, I think it was maybe a year and a half ago, that trad wives
0:42:40 are the new multi-level marketing, and they show us essentially a fundamental weakness in our labor
0:42:47 market, which is that high-quality part-time work for women doesn’t exist, and that women want to
0:42:52 earn money for their families, but they can’t take a nine-to-five job, or they don’t want to take a
0:42:57 nine-to-five job because they don’t want to miss after school or, you know, things on the weekends.
0:43:03 And so they, we have basically, you know, eliminated from our labor market the idea that you could work
0:43:08 in a job that pays a decent amount of money and still be part-time. For us, part-time means low-wage
0:43:18 shift sector, which isn’t worth a mom’s time. So the, you know, the Mary Kay and Tupperware and all the
0:43:24 multi-level marketing, LuLaRoe, I don’t know if you, Scott, if you’re a documentary person, that was
0:43:30 a Hulu documentary on the LuLaRoe craze. It’s just a lot of moms who want to earn more money from their
0:43:34 family, but still want to have the agency to have control over their family life.
0:43:37 It’s what gave rise to eBay in the 90s.
0:43:43 Yeah, or Etsy now. I mean, moms want to earn money. They know that money helps with raising children.
0:43:47 They know it helps give opportunities for children that lack of money won’t get, and we just close the
0:43:52 doors. And so it’s almost like the whack-a-mole. The labor market can be a privilege from a lot of
0:43:56 people’s perspective. So if you close it down, they’re just going to pop up somewhere else. And
0:44:00 I mean, I see Trad Wives as just a very remunerative way of selling something.
0:44:02 And the Maha movement.
0:44:06 Yeah, you’re selling culture. You’re selling ideas. You’re not selling patterned tights or,
0:44:11 you know, cosmetics anymore, but you’re still selling something as a hustle to bring in money for
0:44:17 your family. And so I don’t put—I think I have been told that I can be quite dismissive of the
0:44:22 Trad Wives movement because I see the economics of it and maybe not the culture behind it.
0:44:27 People will live their lives. People will make choices. They’ll make choices for their family,
0:44:31 and then some people will make money off of that. And I just see them as two separate things.
0:44:37 I am so glad you say that. The economics are the part of the conversation that people just decide to
0:44:43 willingly ignore. And it is so funny, that paradox of these—you’ve got all these Trad Wives on social
0:44:48 media who are sort of saying, oh, I don’t work. I stay at home. I cook and I take care of the kids.
0:44:54 Meanwhile, they are working because they’re posting it. They’re filming it. They’re doing their brand
0:45:00 collaborations. They’re making money off of doing it. So I’m sorry, you’re pretending that you’re not
0:45:05 working. I’m watching your video in real time. You’re making money off of me watching this. You are
0:45:06 working as we speak.
0:45:10 So the new Mary Kay. I mean, it’s great. And they’re making a lot of money, and good for them.
0:45:19 Like, they’ve figured out a way to be like a one-woman Tupperware. I can’t begrudge them earning
0:45:28 money when I don’t think that they—I don’t think that would exist to any degree that we see it now if
0:45:36 we had a high-paid part-time labor market. And it’s just—it’s absolutely missing. And this is how you see it show up.
0:45:41 And it’s also just this myth, because it’s like the reason—I mean, a lot of people would stay at home and chill
0:45:47 and relax and hang out with their dogs and their kids if they wanted to. But we are pretending as if there’s this
0:45:52 other thing that doesn’t exist, which is we need to make enough money to pay the bills. And the reality is a lot of these
0:45:57 men don’t make enough money for the woman to just—for the wife to just stay at home
0:46:03 and take care of the children. You need to figure out new sources of income. That is where we’re headed
0:46:07 right now. I wish that were more prevalent in the cultural conversation.
0:46:11 What’s interesting is I write for Bloomberg, right? So, I mean, you can imagine, like, the Bloomberg
0:46:16 Terminal and Bloomberg people who can actually afford the subscription to Bloomberg News, right? We’re
0:46:22 talking a very select set of people. And yet the most popular column, bar none, that I have ever written
0:46:28 in my years for writing for Bloomberg is Mary Rich. That’s the Republican plan for families.
0:46:34 You know, because it’s not as if Republicans in lieu of, like, if we think women should stay home,
0:46:40 well, then you’re in favor of universal cash welfare that every kid and mom gets money so that if they
0:46:46 can’t afford to stay home, you’re going to make them stay home. That doesn’t exist. If you think women
0:46:49 should go out and work, you should have child care. That doesn’t exist. And so if you take all of the
0:46:54 policies that Republicans oppose off the table, the only one left for women is to marry rich.
0:47:00 And I don’t know why. I don’t know if maybe that was, like, the column header maybe looked like a
0:47:06 how-to, and that’s why so many finance bros clicked on it. But it was very popular, and I got a lot of
0:47:15 feedback of people feeling like they were trapped. You know, when you put in these expectations that
0:47:23 this is what you have to do, and you impose that structure on a family, and you impose that structure
0:47:28 on an economy, and you follow it up, I mean, we, what I think I missed in that column, and I have
0:47:33 some, like, big column regrets, I think what I missed in that column, and I wish I had said, is that is
0:47:38 American public policy right now. It’s not that it’s the Republican plan. That is the law of the land.
0:47:42 You need to marry rich, because we are not going to offer you any type of alternative.
0:47:51 And I think I could have swung harder, and I didn’t, to make that point. And I, if we didn’t
0:47:57 want to put so much on just find a high-income breadwinner that will take care of you, and we’re
0:48:01 going to do nothing else, there’s so much that we can do. But to kind of go back to this cultural
0:48:08 conversation, I see it as, you know, it’s always a two-way street in terms of causality. You’re just
0:48:13 looking at the width of the lanes. I think, in part, one of the reasons why we’re seeing this,
0:48:19 like, flourishing of women should stay home, and we should have trad wife culture, and, like, the men
0:48:25 should go out and work. I’ve heard more in the past six months that the reason why men don’t make
0:48:29 enough money is because women are working. And I was pretty sure that we settled that, like, back in
0:48:35 the 80s. And I now have women DM me on Instagram to say, can you tell me what to say to my husband,
0:48:41 because he says it’s women’s fault that men don’t earn enough money? That’s a sidebar. But I see it
0:48:47 coming as, like, a defense mechanism because the policy world of Mary Rich and Nothing Else is on the
0:48:52 government’s tab is under severe attack because child care is so expensive, because child care is
0:48:56 unreliable, because families are buckling under the weight of inflation, and they need more money, and
0:49:01 they need some type of service for the government to step in. Market failure meets families on six
0:49:06 different fronts on any given day because we have problems in health insurance, we have problems in
0:49:11 housing, we have problems in transportation, we have problems in elder care and child care. And the government
0:49:17 is basically trying to defend a really small piece of real estate that is ultimately unpopular. And so I kind of
0:49:23 see this, like, flourishing of cultural arguments for women staying home almost as being, like, a last gasp of,
0:49:29 like, no, no, no. Us not solving any problems is better because this is the way we want it. And I see it as
0:49:35 almost like a transparent, like, okay, nice try. You’re going to have to have, we’re going to have
0:49:41 to have some type of paid family leave situation in 2025. And I think I see the cultural arguments that
0:49:47 way, too. So I’m not just, not just that women earn money off of tradwifing, but that pushing the
0:49:52 tradwife agenda is a way, is a get-out-of-jail-free card for your government’s lack of investment in the
0:49:52 family.
0:49:58 I think the reason that that article went viral or was so popular is, one, it was provocative. But I think,
0:50:07 two, you are telling the hard truth. And it is the truth that the direction of our policy is, for women at least,
0:50:12 you should marry rich. And I think this is part of the subtext of all these conversations that I feel like people
0:50:20 seem to forget is, part of the design of the marry rich agenda is a dependency on the man. That’s part
0:50:27 of the setup there. If the only way that you get to participate in the economy is through establishing
0:50:35 some sort of a dependency on the man’s ability to go out and earn an income and make enough money for
0:50:43 the family, then you are disenfranchising the woman’s ability to be free and independent and make her own
0:50:48 choices. And I think these are kind of these issues that we litigated years and years and years ago,
0:50:53 like the suffragette movement. I thought we sort of tackled all of that. But it does seem we’re kind of
0:51:02 slowly and quietly and surreptitiously going back to that conversation. And this, to me,
0:51:08 seems to be the part that a lot of men, that we don’t want to acknowledge, is actually, if we have
0:51:14 that again, we’re going to have a lot more power in our relationships and also in the world at large,
0:51:17 and women are going to have less power for themselves. At least that’s my view.
0:51:23 I mean, I would push back and say that the idea of marry rich being a policy does a disservice to men
0:51:29 as well. And the expectation of success, the definition of success and what it means to be,
0:51:34 you know, what men’s job is, gets a lot more incumbent on things out of their control.
0:51:42 And it’s a recipe for failure and inadequacy if there’s only one, I mean, for both genders,
0:51:47 right? It’s a recipe for failure and inadequacy if you only have one version of success,
0:51:50 one version of what you’re supposed to do, and that is what gets peddled.
0:51:56 I think the problems for women are pretty obvious because it’s economic empowerment that we’re
0:52:00 leaving on the table because we don’t get to work as a higher rates or we don’t get to earn as much
0:52:05 money or we have to pull back. But I think that there’s just as much disempowerment on the men’s
0:52:10 side. It just doesn’t show up in the same way. And in some ways, the women’s disempowerment is easier
0:52:16 to measure because we can look at things like earnings. But I don’t think that these types of
0:52:22 cultural expectations do either gender any favor. And that really, I mean, the way that I see the
0:52:28 economy as being its truly strongest is supporting people where they are and not making people come to
0:52:34 them. I heard about this a lot in terms of fertility because fertility rates are declining in the U.S.
0:52:38 And there’s lots of questions of, you know, if the U.S. population starts to decline, our economy
0:52:45 gets a lot harder to manage. But that’s, if people want fewer kids, genuinely want fewer kids, it is
0:52:51 not, we should not hinge our economic fate on convincing them otherwise. Like our economy is
0:52:57 strong when it meets the preferences of the people inside it, whatever they are, as opposed to having
0:53:05 people perform to keep the economy propped up. And I see that as a fundamental source of weakness that
0:53:11 we try to get people to alter their lives so much just to meet the economy when really the economy,
0:53:16 when we have so much money and so much policymaking and so much sophistication and the ability to do so
0:53:21 much, we should meet people where they are. We being the proverbial economy.
0:53:24 I want to know what’s going on in Scott’s head right now.
0:53:31 Yeah, but just in terms of meeting people’s preferences, which I really like, my sense is
0:53:37 that, I mean, there’s a lot of factors here. As women become more educated, birth rates go down.
0:53:42 So in some ways, it’s a sign of a healthy economy or a healthy democracy. At the same time,
0:53:46 I wonder if a lot of people, 60% of 30-year-olds used to have one kid in the house, now it’s 27%.
0:53:54 And I wonder if it’s less a case of preferences and more a case of a lack of options, that people,
0:53:59 younger people are having trouble finding partners because they have fewer third places. And also,
0:54:02 they just do the math and think, I don’t have the money to have kids.
0:54:09 Two things. One is that part of the reason why we have a falling birth rate is because we have very
0:54:15 successfully reduced teen pregnancy. And so it’s a good, like, this is a good fall. Like,
0:54:20 we wanted to go down because teen pregnancy had all kinds of deleterious consequences and wasn’t
0:54:26 necessarily a reflection of agency so much as ignorance about birth control. So that’s one
0:54:31 reason for the fall and fertility. You know, you can think of fertility as being a function of
0:54:37 preferences or constraints. Either I don’t want another kid or I can’t afford it. Or there’s
0:54:45 something or it’s my, like, physically I can’t get pregnant again. Or there’s some type of barrier to
0:54:52 me having a kid. Public policy can do nothing about preferences. If a woman says, I don’t want another
0:54:57 kid, government is not changing her mind. And a lot of European countries have given us a lot of
0:55:01 evidence of all the weird ways that you could try to convince a woman to have a kid. And she’ll be like,
0:55:06 and the answer is still no. Like, it doesn’t change preferences. Policy does change constraints.
0:55:11 If you can’t afford childcare, if you don’t have good health insurance, if you don’t have paid family
0:55:15 leave, if you don’t have good public schools, and so you decided you’re going to have one kid and send
0:55:18 them to private school, whereas you would have had three kids and send them to public school,
0:55:24 the constraints can change, but not the preferences. What’s amazing about the U.S. is that we have
0:55:31 pretty high fertility preferences relative to Europe. We have the highest share of unmet fertility, of women
0:55:36 are not having the number of children they want because they cite these constraints. And so I think
0:55:42 it’s a, I know I said you can’t, like, the economy needs to meet people where they are. And I think
0:55:47 fertility is an example where you can see it in both directions, where, like, if people want fewer kids, the
0:55:51 economy needs to evolve to that. But if people want kids that they’re not having because they can’t
0:55:55 afford it, the economy needs to meet them where they are, too. We’re failing both.
0:56:01 Stay with us.
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0:59:00 Did you lock the front door?
0:59:00 Check.
0:59:01 Closed the garage door?
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0:59:05 Installed window sensors, smoke sensors, and HD cameras with night vision?
0:59:06 No.
0:59:10 And you set up credit card transaction alerts, a secure VPN for a private connection,
0:59:12 and continuous monitoring for our personal info on the dark web?
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0:59:32 We’re back with ProfG Markets.
0:59:40 So recently, there’s been so much information or so much about these ICE raids.
0:59:46 I would just love for you to just touch on what likely is the outcome.
0:59:48 It’s striking.
0:59:53 The raids themselves, as far as I can tell, we’re talking about a rounding error in terms of the actual
0:59:54 numbers of people.
1:00:01 But the chill is dramatically changing people’s desire to be in America or their self-deporting,
1:00:02 if you will.
1:00:07 Any sort of top-line thoughts on the impact on the labor market of these ICE raids and the
1:00:09 chill it’s kind of sending across the labor markets?
1:00:13 I don’t think there’s a single group of people misunderstood more in the U.S. than immigrants.
1:00:20 Most Americans would likely be shocked to learn that 75% of immigrants in the United States
1:00:23 are either citizens or lawful permanent residents.
1:00:27 I mean, people, the federal government has said to 75% of immigrants in the U.S.,
1:00:29 you are entitled to be here for the rest of your life,
1:00:31 with all the rights of citizens if you are not one.
1:00:39 You know, the quarter of immigrants that are either temporary or do not have permission,
1:00:41 they work at incredibly high rates.
1:00:49 And their presence here is almost perfectly predicted by the strength of the economy more
1:00:49 than anything else.
1:00:58 So I was explaining to a journalist the other day that the population of unauthorized immigrants
1:01:00 in the United States peaked in 2007.
1:01:02 That was almost 20 years ago.
1:01:07 And we are putting more and more resources after what is essentially a stable population,
1:01:10 manufacturing a crisis where there’s not one.
1:01:13 It peaked in 2007 because that’s when the economy peaked.
1:01:16 And they fell afterwards.
1:01:24 So I like to table set just to make clear that there are economic forces that draw people
1:01:30 to the United States and we don’t recognize them.
1:01:34 We don’t, it’s not just that we don’t recognize that they’re in our economy or that,
1:01:37 but that it’s our economy that draws people here.
1:01:44 And that the most successful, you know, deportation policy was the worst recession we’ve had since
1:01:45 the Great Depression.
1:01:48 And that got more people to leave the country than anything else your government could have
1:01:49 possibly done.
1:01:53 Just crash the economy for three years if you really don’t want undocumented immigrants here.
1:01:57 Because that was the largest decline in the unauthorized immigrant population we have ever
1:01:58 seen.
1:02:04 So I say that not to be cruel, but to understand what is a credit to the economy as opposed to
1:02:08 policymaking or how tough someone is or how many ICE agents there are.
1:02:09 Like, I mean, you’re throwing cash into the air.
1:02:12 If there are jobs, people will come.
1:02:15 And that is what the data has shown through 10 different administrations.
1:02:23 But as far as the chilling effect, I think this is, in some ways, goes back to the Bureau of
1:02:24 Labor Statistics and the parallels there.
1:02:28 I mean, we should have had immigration reform 25 years ago.
1:02:34 And we have been limping along in this two-faced, are they welcome?
1:02:35 Are they not welcome?
1:02:36 Are we going to deport them?
1:02:39 Are we going to let them become lawful permanent residents?
1:02:44 In the meantime, you have roughly 10 million people in the United States who are citizens
1:02:45 in all but name.
1:02:47 They pay taxes to the federal government.
1:02:49 They pay taxes into Social Security.
1:02:51 They buy houses with ITINs.
1:02:54 Bank accounts, phone contracts, rent contracts.
1:02:56 I mean, you know, they own property.
1:02:58 They pay property taxes into the school system.
1:03:02 And they’re doing all of this because the thought was that when citizenship came, they
1:03:06 would prove that they had been good citizens, that they called the police when they saw a
1:03:07 crime.
1:03:12 And so the—I don’t even think it’s the chilling effect of people coming into the country.
1:03:17 I think it’s the denigration of 10 million people that risk so much more than most Americans
1:03:17 understand.
1:03:23 Like, do you want 10 million people in the country who will never call 9-1-1, who truly stop
1:03:24 paying taxes?
1:03:28 It’s the amount that Social Security benefits off of them is also pretty high for all the
1:03:31 claims that undocumented citizens are taking public programs.
1:03:35 I mean, they’re a windfall from Social Security’s perspective because Social Security knows that
1:03:39 they’re not legitimate taxpayers, but it does not send the money back.
1:03:45 So I think we’re risking so much more, but kind of like the BLS, we weren’t in a good spot
1:03:46 before.
1:03:53 We had been limping along through, you know, weak administrative policy in a completely inactive
1:03:57 Congress that had never said firmly, here is what America thinks about immigrants in the
1:03:57 21st century.
1:04:10 And the cruelty, the inhumanity, and the sheer size of this policy—I don’t—I’m not—I’m
1:04:14 not naive, but I do think Americans will not like how ugly this gets.
1:04:18 I think you’re already saying it, but I just want to ask a question around this, because
1:04:24 you said something I thought was really striking, that it’s the most misunderstood group of laborers
1:04:26 or the labor force.
1:04:29 And I want to put forward a thesis and just have you respond to it.
1:04:35 My sense is that globally, there’s never been a more flexible, profitable workforce in undocumented
1:04:41 workers in the United States, that they essentially come in when there’s jobs, take jobs domestic
1:04:46 workers don’t want at a lower rate, work really hard, and then if those jobs dry up, they don’t
1:04:50 stick around for unemployment insurance or Social Security or turn to crime.
1:04:51 They actually commit crime.
1:04:57 They pay their taxes, yet tax our social services less, and they’re the most flexible, profitable
1:05:01 labor force in history.
1:05:06 Well, I think you’ve just hit the head on why we’ve not had policy on them for 25, 30
1:05:06 years.
1:05:07 And we’ve ignored them.
1:05:14 We’ve like, wink, wink, come on in and wipe grandma’s ass and serve me my food and build
1:05:14 my house.
1:05:17 And gather my food, harvest my food.
1:05:25 You know, I appreciate that this is an issue in which libertarians and big government progressives
1:05:31 agree that the amount of money being spent on deportation by this administration is $170 billion.
1:05:36 Y’all, that’s more than we spend on childcare or school lunch in a year.
1:05:37 That’s a great stat.
1:05:42 The amount of money we’re investing into this population is coming down to somewhere, I mean,
1:05:46 depending on how you do it, because the money was actually kind of hard to understand in terms
1:05:46 of how they were spending it.
1:05:49 They have four years to spend around $170 billion.
1:05:54 You just spread that over the 10 to 12 million people you’re talking about, you’re spending
1:05:59 almost half in terms of a per cap cost, per undocumented immigrant.
1:06:02 It’s rivaling what the federal government spends on children in a year.
1:06:06 I mean, it’s not close, but we don’t spend that much on kids.
1:06:07 So kids, we spend $7,000 to $9,000.
1:06:11 I mean, undocumented immigrants with this level of enforcement, depending on what you put into
1:06:17 the calculation, when you’re looking at $4,000 a pop that we’re putting into getting rid
1:06:20 of people who have work rates close to 85%.
1:06:31 There’s a lot to unmask here, but I think your point is hitting on something that we should
1:06:35 say out loud, is that the people who profit most for undocumented immigrants are their employers.
1:06:42 And you are seeing them go to the Trump administration begging for exceptions of like, do not raid
1:06:44 this place or do not raid this industry.
1:06:50 And I have always found that the most deleterious consequence of undocumented immigrants in the
1:06:54 United States is that they erode labor law enforcement.
1:07:01 And they enable employers who willingly and knowingly violate labor law by giving them people
1:07:02 to hire.
1:07:06 And then people will say, you know, Americans won’t take these jobs.
1:07:08 I think they’d take them and report them very quickly.
1:07:10 Like, where is my paycheck?
1:07:11 Where is my break?
1:07:14 Why are you paying me this little?
1:07:16 I work in California.
1:07:18 I should be earning sick days on the farm now.
1:07:23 So I’ve always thought that the biggest enablers, the people who really hold kind of the key to
1:07:29 understanding undocumented immigrants are the exploitative employers, you know, who don’t want
1:07:31 to employ people in a way that follows labor law.
1:07:33 And I don’t think it’s about immigration law.
1:07:35 I think it’s about labor law.
1:07:43 And not for nothing, $170 billion for deportation kind of eats alive the just over $2 billion we
1:07:47 put for all of labor law enforcement in the United States.
1:07:50 It tells you what our priorities are or are not.
1:07:53 I just want to repeat the stat because I thought it was so striking.
1:08:01 You’re saying we’re spending more on the efforts to expel undocumented workers than we’re spending
1:08:02 on child care?
1:08:06 Yeah, that’s because the U.S. spends very little on child care.
1:08:11 Yeah, I’ll pull up this statistic for you so I don’t get it wrong.
1:08:17 So Congress appropriated in the one big beautiful bill, and I have said that I think this is
1:08:23 the ugliest part of this beautiful, beautiful piece of legislation, $170 billion for almost
1:08:25 all of it dedicated to immigration enforcement.
1:08:31 Some of that is going to go to increasing the annual budget of ICE and the Customs Bureau
1:08:37 and parts of the DHS and the Coast Guard, and some of it is a one-time, like, here’s $50 billion
1:08:42 to build residential facilities where we detain people before we deport them.
1:08:50 So in comparison, the U.S. spends the Child Care Development Fund, which is the entirety
1:08:55 of federal spending to help people afford child care, is $12 billion a year.
1:09:03 The National School Lunch Program, which is the federal portion of helping poor kids buy
1:09:06 lunch and breakfast, that’s $17 billion a year.
1:09:11 So we’re spending 10 times more on deportations than we are on lunch for kids.
1:09:13 Well, I mean, it’s hard because we don’t know.
1:09:16 The $170 billion, a lot of it was given a four-year time frame.
1:09:23 So even if you plussed up the Child Care Development Fund and say, well, it’s roughly $50 billion
1:09:25 over a four-year period.
1:09:31 So it’s $50 billion over four years for Child Care Development Fund versus $170 billion over
1:09:32 four years for deportation.
1:09:35 This amount of money is frightening to me.
1:09:40 Because it passed in reconciliation, it doesn’t have the same level of oversight as a lot of other
1:09:42 government apportionment, and we don’t know how it’ll be spent.
1:09:48 But the sassy thing I would say that’s probably more like dinner party talk than economic conclusion
1:09:50 is you get what you pay for.
1:09:53 So you don’t want to pay for child care.
1:09:55 You don’t want to pay for kids to have meals.
1:10:00 You’re not going to have women working to the same degree, and you’re not going to have the
1:10:05 same—you know, you’re building inequality into children, and you’re not going to have
1:10:06 as high a fertility.
1:10:12 So by all means, spend that money on 10 million people who are not citizens and focus on them.
1:10:14 But you—you know, it’s not free.
1:10:16 I want to wrap us up here.
1:10:26 Just finally get your thoughts on youth unemployment, which is at 11 percent, which is a lot higher
1:10:28 than the rest of America.
1:10:30 We’re also seeing this kind of around the world.
1:10:34 I think China’s at somewhere around 15, 16 percent youth unemployment.
1:10:40 Just any thoughts on what we’re seeing among young people right now in terms of unemployment,
1:10:46 and perhaps any advice or any thoughts that you would give to a young person who’s worried
1:10:46 about this?
1:10:51 For benchmarking comparison, the unemployment rate that we’re seeing amongst young workers
1:10:58 now, both, you know, with and without a college degree, is what we saw for the roughly four
1:11:04 years coming out of the Great Recession, which was—there was about a half-decade period in which
1:11:09 the unemployment rate for young people hung out at incredibly high rates.
1:11:13 And this was the millennials basically kind of graduating into weak-in-week labor markets.
1:11:20 So right now we’re seeing it almost on the front end, where they’re—because they have
1:11:25 less skills and experience, not to say that they’re unskilled, but because they, you know,
1:11:31 they don’t have the resume of someone 10 years older, they have become their own bellwether
1:11:32 of labor market weakness.
1:11:37 And it’s not a good position to be in, to be an indicator that the labor market is going
1:11:39 south when you are a person in the world who would like a job.
1:11:42 But that is what I make of these unemployment rates.
1:11:48 And for what it’s worth, you know, the unemployment rate for high school graduates is higher than
1:11:49 the unemployment rate for college graduates.
1:11:56 So it’s not like—like it can’t just be AI or tech companies, because the unemployment rate
1:12:01 for people who don’t have a college degree is still much higher than the unemployment rate
1:12:02 for people who do have a college degree.
1:12:05 So I think each labor market has its own stressor.
1:12:11 But the—you know, sometimes the most obvious reason is the biggest one, which is the labor
1:12:12 market is going south.
1:12:20 What I will say is, you know, two young workers, I tell them not to give up.
1:12:27 And I tell them that they have a very long time to recover.
1:12:31 And historically, they do.
1:12:36 Now, they might not have—as the earnings that they would have if they had graduated when the
1:12:37 unemployment rate was 3 percent.
1:12:42 They might not have the same career trajectory, but they have a long time and little penalty
1:12:44 as they enter the labor market.
1:12:50 In contrast, if you lose your job when you’re 55, you—you may never work again.
1:12:54 And I would never say to a 20-year-old, if you don’t get a job in the next year, you’ll
1:12:55 never work again.
1:12:59 But I—if a 60-year-old or a 55-year-old lost their job, I would have to say, reasonably,
1:13:01 it does not look good for you.
1:13:06 Because you’re old, you’re expensive, you cost a lot of money, and they’re willing to replace
1:13:07 you with someone younger.
1:13:10 So it’s—it’s a kind of a bewitching aspect of the labor market is that it can be punishing
1:13:11 on both sides.
1:13:13 I just want to say, I feel triggered.
1:13:15 I know you’re talking about me.
1:13:16 It’s pretty obvious.
1:13:18 Catherine, it’s pretty obvious.
1:13:25 My podcast co-host is 55, and whenever I bring this up, she’s like, why do you have to say
1:13:25 55?
1:13:29 It occurred to me right as I said it, I was like, oh, I don’t know.
1:13:31 I don’t know how old Scott is.
1:13:31 I’m so sorry.
1:13:32 Oh, my God.
1:13:33 This is it.
1:13:34 This is my last stop.
1:13:35 It’s because you look 30.
1:13:36 That’s why she said it.
1:13:41 It’s me on a couch watching K-pop Demon Hunters for the rest of my life.
1:13:44 It’s hard to think you actually have watched that.
1:13:48 I do as I listen to the new Taylor Swift album, two of my favorite things.
1:13:50 Both those things are lies, Catherine.
1:13:51 I’m sorry.
1:13:52 Go ahead.
1:13:55 I try to embed personal intacts on people’s ages whenever I can.
1:13:58 It’s so hard for young workers.
1:13:59 I think they can recover.
1:14:04 It’s you have to give yourself space to mourn what you’re not going to get.
1:14:07 You’re not going to get a strong labor market in the next three months.
1:14:09 So that’s out of your control and you have to mourn it.
1:14:16 What I will say is that a lot of the difficulties facing young workers as they look for jobs is a policy choice.
1:14:21 You know, we could regulate the job market and the labor market for job seekers.
1:14:26 We could do things like you have to notify someone legally if they did not get a job.
1:14:33 You have to respond to an application within, you know, no more than 30 days of some type of indicator.
1:14:36 If you interview someone, you have to pay them for their time.
1:14:40 We could easily regulate the job search process.
1:14:43 And I think in the age of AI, we ought to.
1:14:50 And so I would also stress to young people that, you know, remember this and then call your member of Congress and say,
1:14:53 why don’t you have any labor protections for workers who are still looking?
1:14:58 Because that is a policy choice and it’s one that we can change if we want to.
1:15:01 Catherine Anne Edwards is a PhD economist and economic policy consultant.
1:15:04 Her research focuses on the intersection of labor markets and public policy,
1:15:07 including unemployment and unemployment insurance, recessions and recoveries,
1:15:12 women’s labor supply, poverty alleviation, retirement security and social security.
1:15:16 She has testified three times in front of Congress about economic policy.
1:15:19 She writes a weekly column on the economy for Bloomberg.
1:15:23 And she is the host of the Optimist Economy podcast.
1:15:24 Catherine, we really appreciate your time.
1:15:25 Thanks, Catherine.
1:15:27 Thanks you all so much for having me back.
1:15:34 This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer.
1:15:38 Our research team is Dan Shalon, Isabella Kinsel, Chris Nodonik, and Mia Silverio.
1:15:42 Drew Burrows is our technical director and Catherine Dillon is our executive producer.
1:15:45 Thank you for listening to Prof G Markets from Prof G Media.
1:15:50 If you liked what you heard, give us a follow and join us for a fresh take on markets on Monday.
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1:16:25 In love, love, love, love