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This edition was written by Chesapeake Dowdy, Andrew Rosin, Jack Spira, and Louise Sheiner
California raised the minimum wage to $20 per hour in April 2024 for fast food chains with at least 60 locations nationwide. Using a private establishment-level dataset that can identify which chains are covered by the law, Vitor C. Melo of the Archbridge Institute and co-authors compare changes in California with changes in a weighted combination of other states with similar prior trends. They find that the increase in the minimum wage produced a small but statistically insignificant decline in employment at covered fast-food chains overall in California. At the individual-chain level, they find that employment at the 20 largest chains changed little, while the number of establishments operated by smaller chains fell, with fewer openings and more closings relative to other states. Employment at establishments that remained open was roughly unchanged. The authors argue that negative employment effects at large fast-food chains in California may emerge slowly over time.
Comparing the yields of various assets of differing liquidity and safety, Arvind Krishnamurthy and Miguel Fiuza Lima Chumbo of Stanford University find that the convenience yield—the lower return investors are willing to accept in exchange for an asset’s liquidity, safety, and usefulness as collateral—has declined only slightly for short-term safe dollar assets over the past five years. Treasury bills have lost some convenience relative to repo, a form of short-term lending secured by securities, which now carries a small convenience premium over bills. In contrast, the convenience yield on long-term Treasuries has fallen substantially. The decline is much larger when dollar safe assets are compared with safe assets in other currencies. The convenience advantage of dollar assets relative to euro safe assets has nearly disappeared, while their advantage relative to yen and Danish krone assets has also narrowed. The authors also find that Treasurys are being used less as collateral in repo relative to other high-quality securities, while the Treasury collateral that remains has become shorter in maturity. The authors interpret these shifts as evidence that investors view long-term Treasurys as less safe or liquid than they once did, which they suggest may reflect concerns about the U.S. fiscal outlook. Thus, even though the supply of Treasury debt has risen sharply, they argue that the effective supply of dollar assets viewed as both highly safe and liquid may have fallen, helping to explain why the dollar’s convenience advantage has declined much more internationally than domestically.
Using longitudinal data from the NHIS Linked Mortality Files, Anuj Gangopadhyaya of Loyola University Chicago and co-authors find no significant beneficial effect of the Affordable Care Act (ACA) on mortality among previously uninsured individuals. However, when they distinguish between states that adopted the ACA's Medicaid expansion and those that did not, they estimate that the ACA reduced mortality by roughly 30% to 40% among previously uninsured individuals in non-expansion states. These reductions in mortality were concentrated in healthcare-amenable causes of death such as heart disease or diabetes, which suggests that increased insurance coverage is the primary link between the ACA and mortality. In expansion states, the estimated effect of Medicaid expansion offset these mortality reductions, leaving the total effect of the ACA positive. Mortality rates among insured individuals—who by and large should not have been affected by Medicaid expansion—nonetheless fell significantly in expansion states post-2014. These results complicate the findings of previous studies, which generally conclude that Medicaid expansion reduced mortality.
Q: "[Chairman Warsh], a quarter-point rate hike does not reopen the Strait of Hormuz, and so I wonder how you think these smaller rate hikes will be effective when it can’t necessarily address the energy supply side of inflationary pressures."
Warsh - A: "We cannot affect any individual price, whether it be oil prices, whether it be foodstuffs at the grocery store. But what we can do and will do is ensure that any change in relative prices don’t broaden out, don’t have second and third order effects on the economy. That’s what we’re tasked to do and that’s what we will do."
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