Output, Employment and Unemployment: Some Updated and Some New Results

In a previous post, Laurent Ferrara, Valérie Mignon, and I examined the nonlinear relationship between employment and output (based on J.Macro (2014)). Using the most recent data, the level of (establishment) employment now matches the output level. Figure 1 shows the actual level, and the predicted level from a nonlinear error correction model.

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Pompeii on SF Bay?

Will a minimum wage increase induce an apocalyptic conflagration of small businesses and low wage employment? Here’s one prediction:

This is not the time to force businesses to raise prices by laying-off employees in order to stay in business.
What good is raising the minimum wage if prices go up? What good is raising the minimum wage if there are no jobs available?
Businesses will be forced to raise prices in order to absorb a 26% pay increase. Restaurants will be especially hard hit.

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Fed moves the markets

As widely expected, at Wednesday’s FOMC meeting the Federal Reserve dropped its statement that “the Committee judges that it can be patient in beginning to normalize the stance of monetary policy”, the magic formula that many observers had thought would open the way for a hike in interest rates at the Fed’s June meeting. But the yield on a 10-year U.S. Treasury bond dropped 10 basis points immediately following the FOMC release.
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“Wisconsin job creation rank falls to 38th in U.S.”

That’s the title of an article by John Schmid and Kevin Crowe in the Milwaukee Journal Sentinel today, based upon just-released state level data on the Quarterly Census of Employment and Wages (QCEW):

Wisconsin gained 27,491 private-sector jobs in the 12 months from September 2013 through September 2014, a 1.16% increase that ties Wisconsin with Vermont and Iowa at a rank of 38th among the 50 states in the pace of job creation during that period.

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