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Christina Romer, Prof. of Economics at the University of California, Berkeley, was chairwoman of the Council of Economic Advisors under U.S. president Obama. Here she discusses the different aspects of the debate on raising the minimum wage. Romer says the negative effects on unemployment are small. The impact on consumer spending is also limited. The anti-poverty effects are real for raising the minimum wage from the current $7.25 an hour, says Romer, as over half the families earning a minimum wage make less than $40,000 an hour. President Obama called for raising the minimum wage to $9 an hour in 2013. Studies show 13 million U.S. workers earning less than $9 an hour. Raising the incomes of these families by about $3500 an year under the president's proposal gives workers badly needed income to cope with rising cost of gas, food and other basic necessities. The effects on consumer spending are small, estimated at between $10 to $20 billion. Its main virtue is keeping the principle of fairness and maintaining social cohesion at a time of increaing inequality. Romer says there is competition for workers which makes it possible for workers at the lower end to get a fair wage, but does not account for the effect of high unemployment which takes pressure off raising the minimum wage in the market economy. Another benefit for countries of keeping a fair minimum wage is that other actions can be taken to improve competitiveness for business and manufacturing and reducing the deficit and be seen in a positive context of overall improvement. This is part of the case made in Europe for boosting the mnimum wage as austerity measures are taking place....

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Some startling statistics on U.S. wages and incomes and the increase of part-time workers, by the publisher of U.S. News and World Report, Mortimer Zuckerman. He cites the Pew Research Center reports that show one third of Americans identifying themeselves as lower class or lower middle class compared to one quarter before 2008. This affects social mobility with the increasing gaps in incomes, education and social behaviour acting to reinforce each other and leading to even lower future mobility. Industries that are showing growth are in low wage occupations. The Bureau of Labor Statistics shows growth in future in industries noted for low wage part time work- health care, social assistance and retail, with some jobs lacking minimum wage and overtime protections. Revealing in this respect is that in the last 2 years fully 43% of net employment growth is in the 1.7 million jobs added in low wage work in food service, retail and employment services industries. The number of Americans working full time declined by 5.9 million since Sept 2007, part time workers increased by 2.6 million. The effects of higher part time workers and job recovery predominantly in lower wage industries is likely to affect consumer spending and slow growth....

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US president Biden's 2024 Budget places great emphasis on aid to workers and families in the US and shores up the Medicare hospital-insurance trust fund. He will do this by raising taxes on the wages, investment gains and self-employment income of people making more than $400,000 a year. Additional savings come from increasing the drugs on which Medicare can negotiate prices from 20 to 50 drugs.  Childcare- families making less than $200,000 a year will get subsidized child health care, the lowest income families paying nothing. Housing- Building and preserving 2 million housing units. Series of tax credits to make buying homes more affordable. College education- Reducing the cost of going to education with $12 billion allocated for this. Offering tution free community college. Family and Medical Leave- Federal paid family and medical leave program. Retirees- a $2000 cap on out of pocket cost of prescription drugs for retirees. Reduced taxes for under $400,000 income households- This would be done without increasing the deficits to extend the tax reduction from the 2017 tax cuts to households making less than $400,000 a year.     ...

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President Trump tells Mexico to either slow the increasing flow of migrants from Guatemala or face higher tariffs on Mexico's exports to the U.S. For the first time in recent decades Trump uses tariffs as a tool of diplomacy to reverse policies of countries with which it is in an unfavorable position. For the first time Trump uses negotiations to convey America's position that when it comes to some issues such as migration or trade because of the slippage in America's middle class incomes the U.S. should be considered as the same as a developing country. So that no preference should be given to other countries to the detriment of people in the U.S. when it comes to jobs, incomes, and funding for social services. Mexico a developing country could no longer insist that Guatemalans should not find a home in Mexico just because it was a developing country, if its policies supported the flow of migrants from Guatemala to the U.S. as in the case of Mexican president Lopez Obrador.   ...

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Higher oil prices help the U.S. oil industry which is on track to be larger than the oil industry of Russia, now that prices exceed $70 a barrel. Yet another $10 or $15 increase in oil prices could lead to reducing economic growth. Efforts by OPEC to cut production and coordination with Russia has taken most of the excess supply out of the global oil markets, and the economic growth in U.S. and Europe has increased demand.

Analysts say the higher oil prices will negate the benefits from tax cuts for low income families.

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The U.S. Senate voted 51 to 49 on a Democratic party measure for further reductions in 2012 Social Security payroll taxes for workers and employers, including a surtax on incomes over $1 million. A measure supported by the Republican party to pay for the payroll tax cut by reducing the Federal payrolls was defeated, with half the Republicans voting against it. Democrats hope to use this issue to show Republicans favor the rich over the middle class, as the payroll tax cut benefits most Americans. Polls show Americans by a large majority see Republican policies favoring the rich. A New York Times/CBS poll in October showed 7 of 10 Americans feel this way. Pollster Geoff Garin says the income inequality issue is beginning to override other issues including antigovernment feeling. This is one way in which the Occupy Wall Street Movement's slogan of "the 99 percent" has resonated with U.S. public opinion. The Democratic party sees this as an opportunity to define the campaign issues for 2012, with Republicans running for reelection cautious about being seen this way....

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Food costs for eating at home have actually come down by half since 1960. Charts on the US Department of Agriculture site (USDA) show US food costs for family budgets at 13% of personal disposable income for eating at home in the Kennedy years the 1960's. This has come down by half to 5.7% in 2024. In that period eating at restaurants and outside has doubled to 5.7% of personal disposable income. When people complain about food inflation this is an important factor, eating outside also leads to less control of intake and right nutrition, consequently leads to poorer health outcomes, and a growing share of health expenditures in America's national budget. It hits both the family budget and the national budget and then comes back to hit health outcomes.

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Britain faces the most acute housing crisis in living history says Angela Rayner, Secretary of Housing. The shortage of homes- 4 million. Private rents have jumped, eroding living standards and creating homelessness. Rayner has introduced a plan to build 370,000 homes a year. This is the first time in decades that this problem is being tackled on this scale, after Tories neglected to do much to address this problem. A similar situation of rising rents exists in the US putting 25% of apartment renters into a situation where over 50% of the household income goes to apartment rental. US president Biden has called for price increases for home rental to be limited to 5%, and Harris has plans for the government to help families where the rental exceeds 30% of household income.

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About 15% of Americans are below the official poverty line of $23,492 for family of four. In 1975 3.7% of Americans were in deep poverty, defined as being 50% below the offical poverty line. In 2012 the Census Bureau Population Survey shows 6.6% of Americans in deep poverty, close to doubling the percentage of people in deep poverty. States in the southern U.S. and midwest have some of the largest increase in deep poverty- Georgia's going from 5.3% in 2000 to 8.8% in 2012. Mississippi and Indiana show similiar increases. And in D.C. with high income levels the deep poverty rate is at 10.4%, affluent communities have high deep poverty rates in their midst, higher than rates in 2009.

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Household debt levels declined in the U.S. to 108% in 2014 for ratio of total debt to disposable income, returning to levels in 2003, according to the U.S. Federal Reserve. The level reached a high of 130% for the U.S. in 2007. The reached a level exceeding 150% in Canada for 2014, which combined with decline in oil revenues with lower oil prices puts additional stress on the Canadian economy. In Japan the level has declined to 125% in 2014. France is close to the U.S. level, up significantly since 2003. Germany's ratio declined significantly to about 90% in 2014. In the U.S. consumer credit levels were up 2.3% in the 3rd quarter as credit for consumer purchases such as autos and appliances increased. Credit for home mortgages increased only slightly by 0.1%, as demand for new homes remained sluggish and banks imposed stricter standards following the mortgage crisis. U.S. households continued to pay down mortgage and credit card debt.

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US economic growth was 2.8% in the second quarter 2024 with broad based growth in consumer spending, business investment and government infrastructure spending, Commerce Department shows. Inflation and consumer prices went down from 3.4% in the first quarter 2024 to 2.6%. This is a good sign for the economy's resilience. Yet housing costs are high and families are struggling with high cost of rentals. This applies to moderate and low income families who are struggling. Consumers have kept on spending because unemployment is low  buyers face lower inflation, and wage growth is higher than inflation. For the second quarter of 2024 after tax income adjusted for inflation was 1%.

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U.S. president Trump's 2017 budget is an effort to reshape spending priorities by the Republican party. Apart from Medicare and Social Security all other entitlement programs from the days of Lyndon Johnson's Great Society are subject to cuts. Deep cuts to Medicaid and food stamps, including introducing work requirements. The philosophy behind it is that compassion will now be measured not by how large these programs are but by how much the government can get people "off these programs and back in charge of their lives,"  according to Budget Director Mulvaney.  The cuts are $616 billion to Medicaid and Children's Health programs, $193 billion in cuts to Food Stamps, $143 billion in student loans, $72 billion in disability programs. The overhaul of the Affordable Health Care Act is part of this change. The reallocation would put more money into infrastructure for $200 billion, and in tax cuts, $19 billion in a parental leave program and $29 billion for veterans programs, plus added spending on the military. William Hoagland of the Bipartisan Policy Center, a Republican who worked on budget issues says it will be politically difficult as the cuts to lower income groups come with tax cuts for small businesses and higher income individuals.  Beyond the policy priorities there is an area where both Republicans and Democrats are skeptical of the budget. This is how it impacts the U.S. debt. Under Congressional Budget Office estimates the U.S. debt as a percentage of GDP which rose to about 75% after the Great Recession starting in 2008, is projected to grow to about 85%. In sharp contrast the Trump administration estimates of the Office of Management and Budget are for it to drop to 65% based on rosier estimates of 2% inflation, 3% growth for the decade ahead. Experts say this is unlikely once the Fed raises interest rates and the unemployment rate currently at 4.4% leads to rising inflation, undercutting growth which has remained below 2% for a long period. These concerns are also voiced by Hilsenrath in the WSJ based on the experience of other countries such a Britain that cut corporate taxes without seeing an uptick in economic growth. ...

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Wealth for top 7% of U.S. households averaged $3.2 million in 2011, compared to $133,817 for the other 93% of the population. Third quarter 2013 household net worth is 615% of after tax income, up from 570% in 2012. The uneven distribution of household wealth and the gains from the stock market recovery going disproportionately to wealthier investors, does not provide strong enough underpinnings for robust consumer spending.

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Galston focusses attention on the major problem facing democracies in Europe and the U.S.- that of providing decent paying jobs and improved economic prospects for lower and middle income households. He cites the surveys from the Pew Research Report and the U.S Bureau of Labor Statistics showing how middle income households median net income remains stuck at levels of 1997, and lower income households at levels of 1996. The median net worth of American households adjusted for inflation presents an alarming picture of being at $96,000 in 1983 and $98,000 in 2013 for middle income families, and being at the level of $12,000 for lower income families the level of 1975. Most of the new jobs as much as 95% are being created in the low wage service sector and the BLS statistics show the future looking much the same- with huge numbers of low wage jobs, fewer decent manufacturing jobs because of automation and jobs shifts to low cost locations overseas, remaining manufacturing jobs in the U.S shrinking by another 800,000 to 7% of the workforce by 2025. The result is the alarming rise of populist politicians like Trump in the U.S., Le Pen in France , and populist politicians in Hungary and Poland. Cultural liberals in the Democratic Party and the Republican establishment are both threatened by the rise of cultural illiberalism, xenophobia, and nationalism, as economic anxiety increases, and fears of terrorism and immigrants add to this anxiety. Progressive tendencies in the Republican party since the days of Theodore Roosevelt and of professional elites in the Democratic Party could become endangered if no serious effort is made to come up with solutions to the problems these trends present. The disconnect between the concerns of the working and middle class and the professional elites as the gap widens and the social compact in America and Europe breaks apart, means a new mindset will be required in America and Europe to deal with this. ...

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For the approaching US midterm elections president Biden seeks to draw a sharp contrast with Republican Senator Rick Scott's Plan which he says would worsen inflation and increase taxes on working class families. Mr. Scott's plan is for sunset on all federal legislation and president Biden says this would include Medicare and Social Security. Mr. Scott also wants all Americans to pay some income tax to have skin in the game. At this time about half of all Americans pay no taxes says Mr. Scott. Former US president Trump continues to lead the Republican party in 2022  yet he faces a very different Democratic party under president Biden. Mr. Biden's focus is on his $2 trillion plan for Workers and Families, rebuilding American manufacturing and renewing supply chains, unlike Hillary Clinton whose lacked such a focus. Leading to Mr. Trump's appeal with working class families and disdain for traditional Republican policies that secured him the presidency in 2018 by defeating Hillary Clinton. The changes with president Biden's focus on workers and families are happening also in the European Union. Scholz and the Greens in Germany, Macron in France with potentially Melenchon as prime minister, and similar changes in Denmark and other EU countries suggest that there is a renewed focus on infrastructure, rebuilding manufacturing and supply chain renewal, rebuilding incomes and lives of workers and families, in Europe and the US. ...

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Bradsher, Tankersley and Cohen say in this NYT report- US industrial policy under president Biden corrects the failures of the past. Chinese experts in Hong Kong say the US and Europe deindustrialized their economies with pursuing of policies called "neo-liberal" but basically Reagan era policies that Democratic presidents Clinton-Obama imitated. As they deindustrialized it created disaffection among the struggling lower and middle income classes making $35,000-$106,000 that were big losers in the process, creating threats to democracy as financial and tech, plus pharmaceutical sectors took control of the economy. China's success comes from three decades of mastering the ways of practicing industrial policy that it can support private companies with low cost land, additional subsidies that reduce the cost of production and provide a buffer to absorb losses so that it could dominate key industries. Policies where textbooks and economists trained in the US failed utterly and completely leading to dangers to US democracy that we see as opportunities for good paying jobs in manufacturing disappeared for middle and lower income households from 1980 to 2020. These economists trained in the US always said see lower cost Chinese made goods means lower and middle income people pay less, never saying that this means all opportunities for better paying jobs in manufacturing will be lost for these classes in society. The tech and financial sectors had close ties to the new arrangement that turned manufacturing over to China from the Reagan era to the Obama and Trump era. Apple and Tesla and many industries benefitted from manufacturing mostly outsourced to China. ...

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China's farms are becoming larger as more farmers rent out their land and live on the resulting income. This shift is leading to the development of larger firms that use modern equipment requiring less labor. Typical is a farmer who decided to live in retirement after renting out his land for about $500, income on which he lives comfortably in a well manicured courtyard home in the village.  These farmers do not want to join their children who now live in the cities. As one farmer says "fallen leaves go back to their roots."  China's agriculture is not dominated by large commercial farms as it is in the U.S. This process is now beginning in China as more farmers prefer to rent out their land and live off the resulting income, resulting in larger farms and automated operations as in the U.S.  and Europe. Farmers now feel more confident about land rights to rent out their land. China first went through the communes under Mao, followed by return of land in small plots to farmers in the 90's. The changes today start a new phase which will change the look of Chinese agriculture. ...

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This view from the Editorial Board comes as Republicans in Congress geared up for a legislative victory decided to ignore the expert opinion of the Joint Committee on Taxation and polls showing a majority of Americans disapprove of the tax law. It says a "corrosive partisanship" that is affecting the nation has led to this decision. Not an informed consensus necessary to make real and lasting changes to the tax laws that increase growth without disrupting hard won gains in social cohesion after World War II.  Republicans pushed through a trillion and half dollars in tax cuts in the law that reduces the corporate tax rate to 21% from 35%, and cut taxes in 2019 by 51 times ($51,400) for the top 1% of incomes compared to ($1000) for middle class families earning less than $100,000 (Tax Policy Center). The Joint Committee on Taxation estimates it will add $1 trillion to the U.S. deficit as only $500 billion is expected in increase in government revenues over a decade from additional economic growth. This is supported by evidence from countries such as Britain that implemented this type of corporate tax cut without generating much economic growth, says Greg Ip in the Wall Street Journal. The "victory" then comes at a high cost says the Washington Post- in years to come programs to help the growing lower middle class and working class will be subject to cuts and taxes will have to rise to balance budgets.   ...

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O'Malley, Sanders, and Clinton emphasize the issue of wages, income disparities, rising inequality, and a shrinking middle class in the first Democratic debate of the U.S. 2016 presidential election. Clinton points out that "at the center of my campaign is how we're going to raise wages." Sanders says that "the middle class of this country for the last 40 years has been disappearing." Clinton points out her opposition to the Trans Pacific Partnership trade agreement because it does not help raise American wages. Clinton calls herself a progressive, but "a progressive who gets things done," and a moderate when it comes to getting things done. Sanders points to the "deep injustice, an economic injustice that threatens to tear our country apart, and it will not solve itself." Sanders points to the wealth concentration in the U.S. "with the top one tenth of 1 percent owning about as much as the bottom 90 percent, and 57% of all new income going to the top 1 percent." Clinton comes to Sanders defense on the issue saying "it's our job to rein in the excesses of capitalism so that it doesn't run amok and doesn't cause the kind of inequities we're seeing in our economic system."...

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China's total public debt was 95% of GDP in 2022, Japan's was 62% in 1991. It's population aging faster than Japan's with population declining in 2022, Japan's declining in 2008 twenty years after its bubble burst. China's per capita income at $12,850 in 2022, compared to Japan's at $29,000 in 1991. China is facing more difficult headwinds than Japan in many ways. There is also higher tension in trade relations with US and EU limiting export growth. There is also the policy stance of the Communist Party that sees rural areas left behind with about 35% people in rural areas and Xi is slowing growth to reduce disparities and housing construction led speculative growth. In Japan urbanization was 77% in 1991, compared to 65% in China today. 

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U.S. household net worth has surged a Fed quarterly report shows. But the winners are not the same people who lost out in the Great Recession. Home prices in Las Vegas, Pheonix and Miami are still well below - over 25%- than when they were at their peak before the recession, according to Case-Shiller price index. It is in cities such as San Francisco, Dallas, Denver and Charlotte that prices have surged. As for stock investments this is concentrated among the higher income and wealthier households. Core Logic shows the number of people underwater of 12 million at the peak, and this has declined to 3 million. Overall the trend is positive when combined with the Census report showing strong gain of median income of 5.2% in 2015, and shows Obama policies working in the right direction. Though it has taken time, still leaves many people behind in parts of the country, and for demographic groups such as older people who lost jobs in the recession.

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Cecilia Wang of Taiwanese parents with student visas in the 1970's calls it an 128 year American tradition, but is it really the case that it was one individual case for Chinese immigrant Wang Kim in 1998 case before the US Supreme Court where it made sense for the Court to let Wang Kim stay, just as it makes sense for someone in the country for over 10 years to stay in Britain. Birthright citizenship is something else entirely and history shows that forget birthright citizenship for Asians- for most of the 19th century and over half of the twentieth century till the 1960's American public and Congress opposed any form of immigration from Asia. It was only under John F. Kennedy who was Irish, had served in the Pacific in Asia, that the idea of giving Asians citizenship was given credibility and acceptance with the American public and in the US Congress.  Without JFK and LBJ this opening for Asian immigrants coming legally in large numbers for education would never have happened, not under Nixon-Ford-Reagan-Bush. And the modernization of Asia, of Japan, China, now India could not have happened without knowledge of new technologies in American universities gathered by these visitors who were also allowed to work and stay legally. For this reason common sense is a more valuable way to approach this. Misuse and misrepresentation would only create the feeling that Asian Americans- who have integrated into the fabric of America and whose sons and daughters have benefitted the most from the gracious invitation of JFK and LBJ- who are mostly highly educated and can draw on the best economic opportunities the Nation has to offer, want to see their own interests only, and not the Nation as a whole as it struggles to bring a improvement in the lives of the have-nots in today's society, the less educated, the low income workers often immigrants from Latin American countries, those struggling to make ends meet in this economy. ...

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Tyler Owen points out that the innovations that made areal difference in the standards of living and incomes of people in America came in the earlier decades of the 20th century. From 1947 to 1973, this pattern continued with the doubling of inflation adjusted median incomes in the USA. From 1973 to 2004, it rose 22%. Over the last decade it actually declined. The impact of automobiles, airplanes, anitbiotics and new household appliances was huge in the prosperity and incomes of the American people. The personal computer and the internet do not offer the same potential for improvement in incomes and standards of living. At the same time as society ages in the US and healthcare dollars are measured as part of GNP, the increasing GDP from such dollars does not reflect an improvement in the health care people receive.

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The second wave of the coronavirus is bigger than the first with the U.S. exceeding 100,000 cases a day for many days in November and hospitalizations doubling to 93,000 from the beginning to the end of November. There is also the fatigue with the virus for healthcare workers and the people, and loss of income for workers leading to income and food insecurity. In this situation a second stimulus to help people and businesses is a urgent priority for Congress. A group of bipartisan senators have put together  $908 billion stimulus plan to get through the Congress by December 11. This is a compromise between the two parties. Supporting the bill are Cassidy, Romney, and Collins for Republicans and Manchin, Warner, Cassidy for Democrats. It would provide- 1. $300 a week in federal unemployment benefits for 4 months. 2. $160 billion for state and local governments. 3. Temporary moratorium on coronavirus related lawsutis. 4. Additional funding for small business, schools, health care, transit, student loans. There is growing agitation among influential senators against the leadership in both parties of McConnell and Schumer, with the sense that the leadership has failed to recognize how critical the issue of emergency relief is for tens of millions of Americans. This is its only hope for passage with the bickering of the leadership on both sides. ...

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Bank of Japan negative interest policies for two decades was a kind of experiment and a failed one, says this report in WSJ. It caused a form of financial repression where households were made to subsidize companies. Households lost net interest income in the period 2000-2020 in the amount of trillions of yen, says Deputy Governor Himino of BOJ, as interest on household savings was so low or negligible. A similar situation hurt savers and retired people in the US. With inflation at 2% Japan is ending its period of negative interest rates, a welcome change that will benefit tens of millions of people with household savings giving a return, including the 45 million retired people one third of the population who depend on savings income.