#politics + #economics

A 2019 study in the Quarterly Journal of Economics found that minimum wage increases did not affect the overall number of low-wage jobs in the five years following the wage increase. However, it did find disemployment in 'tradable' sectors, defined as those sectors most reliant on entry-level or low-skilled labor.[78]

A 2018 study published by the University of California agrees with the study in the Quarterly Journal of Economics; it finds that minimum wages actually lead to fewer jobs for low-skilled workers. The article discusses a trade-off for low- to high-skilled workers: when the minimum wage is increased, GDP is more heavily redistributed toward high-academia jobs.[79]

In another study, which shared authors with the above, published in the American Economic Review, found that a large and persistent increase in the minimum wage in Hungary produced some disemployment, with the large majority of additional cost being passed on to consumers. The authors also found that firms began substituting capital for labor over time.[80]

Card and Krueger expanded on this initial article in their 1995 book Myth and Measurement: The New Economics of the Minimum Wage.[82] They argued that the negative employment effects of minimum wage laws are minimal if not non-existent. For example, they look at the 1992 increase in New Jersey's minimum wage, the 1988 rise in California's minimum wage, and the 1990–91 increases in the federal minimum wage. In addition to their own findings, they reanalyzed earlier studies using updated data, generally finding that the earlier negative employment effects did not hold up in the larger datasets.[83] This had major implications on policy, challenging long-held economic views that increasing minimum wage led to deadweight loss.

A 2011 paper reconciled differences between datasets, showing positive employment effects for small restaurants but negative effects for large fast-food chains.[87] A 2014 analysis found that minimum wage reduces employment among teenagers.[88]

A 2017 study in Seattle found that raising the minimum wage to $13 per hour reduced the incomes of low-wage workers because they worked fewer hours as businesses adjusted to higher labor costs.[94] A 2019 study in Arizona suggested that smaller minimum wage increases might lead to slight economic growth without significantly distorting labor markets.[95]

For free-market types, including The Economist, fiddling with wages by fiat sets off alarm bells. In a competitive market anything that artificially raises the price of labour will curb demand for it, and the first to lose their jobs will be the least skilled—the people intervention is supposed to help. That is why Milton Friedman called minimum wages a form of discrimination against the low-skilled; and it is why he saw topping up the incomes of the working poor with public subsidies as a far more sensible means of alleviating poverty.

Scepticism about the merits of minimum wages remains this newspaper’s starting-point. But as income inequality widens and workers’ share of national income shrinks, the case for action to help the low-paid grows. Addressing the problem through subsidies for the working poor is harder in an era of austerity, when there are many other pressing claims on national coffers. Other policy options, such as confiscatory taxes, are unattractive.

Nor is a moderate minimum wage as undesirable as neoclassical purists suggest. Unlike those in textbooks, real labour markets are not perfectly competitive. Since workers who want to change jobs face costs and risks, employers may be able to set pay below its market-clearing rate. A minimum wage, providing it is not set too high, could thus boost pay with no ill effects on jobs.

Empirical evidence supports that argument. In flexible economies a low minimum wage seems to have little, if any, depressing effect on employment. America’s federal minimum wage, at 38% of median income, is one of the rich world’s lowest. Some studies find no harm to employment from federal or state minimum wages, others see a small one, but none finds any serious damage. Britain’s minimum wage, at around 47% of median income, with a lower rate for young people, also does not seem to have pushed many people out of work.

High minimum wages, however, particularly in rigid labour markets, do appear to hit employment. France has the rich world’s highest wage floor, at more than 60% of the median for adults and a far bigger fraction of the typical wage for the young. This helps explain why France also has shockingly high rates of youth unemployment: 26% for 15- to 24-year-olds.

A second lesson is that politicians should give the power to set minimum wages to technocrats. In Britain, the floor is adjusted annually on the advice of economists and statisticians in the Low Pay Commission; it has generally advanced gradually. In America, the federal floor is set by politicians and adjusted irregularly in huge increments. That does no favours to American workers or their employers.

Finally, governments should remember that minimum wages are a palliative. They should not distract attention from more fundamental causes of low wages—such as a lack of education and skills—and the efforts to address them.

Deficits are large by historical standards. The deficit totals $1.9 trillion in fiscal year 2026 and grows to $3.1 trillion in 2036. Relative to the size of the economy, the deficit is 5.8 percent of gross domestic product (GDP) in 2026 and increases to 6.7 percent in 2036. Deficits averaged 3.8 percent of GDP over the last 50 years (see Chapter 1).

Debt held by the public rises from 101 percent of GDP in 2026 to 120 percent in 2036, well above the previous record of 106 percent just after World War II.

Outlays are large by historical standards—and growing. They total 23.3 percent of GDP in 2026, exceeding their 50-year average of 21.2 percent. After being adjusted for shifts in the timing of certain payments, outlays remain at about that level through 2028 but then grow steadily, boosted by rising spending on mandatory programs and increasing net interest costs. Outlays in 2036 are 24.4 percent of GDP (see Chapter 3).

the cumulative deficit over the 2026–2035 period is $1.4 trillion (or 6 percent) greater (see Chapter 5). Three major policy developments contribute to those changes: The 2025 reconciliation act (see Appendix A) increased deficits by an estimated $4.7 trillion; higher tariffs reduced deficits by an estimated $3.0 trillion; and administrative actions related to immigration increased deficits by an estimated $0.5 trillion.

The law’s most significant tax changes were those that extended certain provisions of the 2017 tax act (P.L. 115-97) that had expired or were scheduled to expire after 2025. The reconciliation act lowered statutory tax rates and changed the amount of individual income subject to tax, thus reducing individual income tax liabilities for most households and for pass-through businesses (that is, businesses for which income is taxed under the individual income tax system). It also accelerated deductions for business investment and thus reduced effective marginal tax rates on that investment. (The effective marginal tax rate measures the tax burden on returns from a marginal investment—that is, one that is expected to earn just enough, after taxes, to attract investors.) The reconciliation act modified eligibility and financing for Medicaid and the Supplemental Nutrition Assistance Program (SNAP) and altered the terms of federal student loans, reducing federal spending on those programs. It also provided additional funding for defense, homeland security, and immigration-related activities.

The 2025 reconciliation act is estimated to increase total deficits over the 2025–2034 period by $4.2 trillion relative to CBO’s January 2025 baseline projections (see Table A-1).

To account for the effects of the 2025 reconciliation act, CBO increased its estimate of total deficits over the 2025–2034 period by $4.2 trillion relative to the agency’s January 2025 baseline projections (see Table A-1). That amount reflects CBO and JCT’s conventional estimate of the law’s effects on primary deficits (which exclude net outlays for interest) as well as effects of increased net outlays for interest and of budgetary feedback from macroeconomic changes. In total, the reconciliation act increases CBO’s estimate of federal debt as a percentage of GDP in 2034 by 9.0 percentage points, from 117.1 percent of GDP to 126.0 percent.

GDP, broadly speaking, is a measure of the value of an economy. Analyzing the debt in context of GDP makes it easier to track the debt alongside changes in economy and inflation, allowing for comparisons of the debt over time; it can also indicate a country's ability to repay its debt. When debt reaches 100% of a nation's GDP, it indicates that the country owes about as much as its economy generates annually.

The U.S. Dollar Index, which measures the greenback against other major currencies, logged its steepest six-month drop in more than 50 years in the first half of 2025. Though the decline hasn’t deepened, the dollar index is still about 10% lower than the start of Trump’s term.

A strong dollar makes imports cheaper and can help keep inflation in check. A weak one can increase prices on foreign goods but boost American exports.

Trump has suggested a strong dollar puts the U.S. at a disadvantage and that a weak dollar helps American industry. And as with most things with Trump, he’s been blunter in his messaging.

“You make a hell of a lot more money with a weaker dollar,” he said last year, one of a number of public statements showing his preference for seeing the dollar decline.

Trump isn’t alone in seeing benefits of a weaker buck.

In recent months, corporate earnings calls have been peppered with talk of how a weaker dollar has helped companies from Philip Morris to Coca-Cola, with executives pulling out C-suite phrases like “favorable currency impact” to note how the dip brought tailwinds outside the U.S. that added to bottom lines.

Currency values are constantly moving and, while the dollar’s recent fall is notable, it has reached lower levels at points in the presidencies of each of Trump’s predecessors, back through the creation of the Dollar Index in 1973, when Richard Nixon was at the helm.

Kenneth Rogoff, a Harvard University economist and former chief economist at the International Monetary Fund, says while “a lot of policies that Trump is doing are something of a cancer for the dollar,” he believes that it was destined to fall no matter who was in charge.

“The dollar had been on a 15-year bull run,” he said. “I would argue the dollar is still wildly overvalued, and over the next maybe five or six years, it might fall 15%.”

What does that mean for American consumers? Rogoff says commodity prices are likely to rise, particularly with the impact of the Iran war on fuel prices.

“They’re just going to go up,” he says, “no matter what the dollar’s at.”

Total effective tax rates (includes all taxes: federal+state income tax, sales tax, property tax, etc) for the richest Americans declined by 2018 to a level beneath that of the bottom 50% of earners,[18] contributing to wealth inequality. Analysis by economists Emmanuel Saez and Gabriel Zucman.

The Federal Insurance Contributions Act (FICA /ˈfaɪkə/) is a United States federal payroll (or employment) tax payable by both employees and employers to fund Social Security and Medicare[1]—federal programs that provide benefits for retirees, people with disabilities, and children of deceased workers.

Since 1990, the employee's share of the Social Security portion of the FICA tax has been 6.2% of gross compensation up to a limit that adjusts with inflation.[a][9] The taxation limit in 2020 was $137,700 of gross compensation, resulting in a maximum Social Security tax for 2020 of $8,537.40.[7] This limit, known as the Social Security Wage Base, goes up each year based on average national wages and, in general, at a faster rate than the Consumer Price Index (CPI-U). The employee's share of the Medicare portion of the tax is 1.45% of wages, with no limit on the amount of wages subject to the Medicare portion of the tax.

So personal income tax in the US is ~30% for most of us (ranging from ~10%-37%), compared to Social Security's ~6.2% Medicare is 1.45% (or 12.4% + 2.9% if you count the employer portion). AND only the first ~$137K is taxable so our maximum tax amount to Social Security and Medicare is capped, while normal income tax that politicians can direct to anything from foreign wars to immigration enforcement to redistribution to different states or interest on debt driven by tax breaks to the rich that caused deficits.

An average of 9,000 refugees were admitted monthly between January 2024 to January 2025. From February to December 2025, there were 1,226 total admissions, 1,059 of whom were from South Africa.

It's quite disappointing that these policies - especially the H1B tax, which brings the best and brightest in the world to the US - all target legal immigrants.

I love this report!

This data-driven, impartial report contains historic metrics — how you use them to advocate for the changes you want to see in the country is up to you.

Most spending was on Social Security, national defense, grants to state and local governments, Medicare, and interest on the debt. Spending and revenue were both higher than their pre-pandemic levels, and the federal government ran another deficit as spending outpaced revenue.

Why do we always lump Social Security in with other national spending? Social Security is collected separately from all other tax revenue and goes directly to the Social Security trust fund. That money cannot be put anywhere else. Politicians can't direct Social Security goes into a trust fund and politicians can't change how it's spent, unlike defense spending and other spending. In my view, Social Security should be separate. It's not the government's money to spend, it's money that is given back to the people directly. So comparing national defense, which the government can choose to change the spending levels, reallocate it to other spending priorities, Social Security cannot be because it's a trust fund.

Public schools took in and spent more funds than ever before. It also had mixed impacts on teachers and students. The number of public-school teachers has increased each year since 2020 while the number of students has decreased or stayed the same. Meanwhile, test scores have fallen.

Well we have to do something about that and be drastic about it. However, I don't see how cutting funding alone - the current Republican priority - will help.

Even without adding in Trump’s own $5.5 billion net worth, Forbes estimates that his top advisors are worth $7.5 billion, more than doubling the $3.2 billion combined worth of Trump’s 2019 Cabinet. (By contrast, Biden’s Cabinet of regular Joes was barely worth $110 million combined in 2021.)

Nearly 400 millionaires and billionaires from 24 countries are calling on global leaders to increase taxes on the super-rich, amid growing concern that the wealthiest in society are buying political influence.

“A handful of global oligarchs with extreme wealth have bought up our democracies; taken over our governments; gagged the freedom of our media; placed a stranglehold on technology and innovation; deepened poverty and social exclusion; and accelerated the breakdown of our planet,” it reads. “What we treasure, rich and poor alike, is being eaten away by those intent on growing the gulf between their vast power and everyone else.

“The super-rich are being given complete free rein. It is beyond comprehension that the richest 1% now own three times more than the world’s total public wealth combined.

In just the past week, President Donald Trump has ordered defense companies to halt dividends and stock buybacks, and limited executive compensation to $5 million a year; ordered Fannie Mae and Freddie Mac to buy $200 billion of mortgage-backed securities; ordered an array of energy firms to invest in Venezuelan oil infrastructure, called for a 10 percent cap on credit card interest rates; announced steps to ban institutional purchases of single-family homes; and opened a criminal investigation into Jerome Powell's handling of Federal Reserve building renovations in an attempt to influence monetary policy.

The SNAP shutdown halts roughly $8 billion a month in federal food assistance — money that usually flows straight into grocery stores and helps feed 42 million Americans. Without it, both low-income households and major retailers like Walmart, Aldi and Kroger feel the pinch. Driving the news: Companies and nonprofits are rolling out new programs to keep food flowing — from free grocery credits to multimillion-dollar donations.