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This edition was written by Tristan Loa, Andrew Rosin, Jack Spira, and Louise Sheiner.
Using Census and BLS survey data on work schedules from 1973 to 2023, Jeff Biddle of Notre Dame and Daniel S. Hamermesh of the University of Texas document a 50-year decline in the share of the labor force working at night. For instance, the share of workers on the job between 11 p.m. and midnight fell by a quarter over the last half-century, from 15% to 11%. The authors argue that these trends are largely driven by rising real incomes—which in turn reflect notable increases in educational attainment and average worker age over the same period—and the resulting ability to avoid dispreferred work schedules. Changes in labor demand are shown to play little role overall, except in the retail industry, where extended operating hours and the growth of big-box stores and supply chains have led to greater labor productivity at night. Finally, the authors find that the growth of telework during and since the COVID-19 pandemic has also contributed to a larger share of daytime workers, with workers using the schedule flexibility of telework to concentrate their work into prime daytime hours.
Catastrophe risk models – which play a central role in the underwriting of homeowners insurance – often project significantly different loss cost estimates even when drawing on the same data, reflecting differences in modeling approaches and assumptions. Erik Heitfield of the Federal Reserve Board examines the output of the seven hurricane risk models approved by Florida regulators for 560 ZIP codes and finds that areas with greater dispersion in cost estimates have higher homeowners’ insurance premiums. He suggests that dispersion among loss projections can lead to higher premiums either because insurers are averse to ambiguity or because they cherry-pick the most pessimistic models to justify bigger rate hikes. A 10% reduction in model dispersion, he finds, would lower premiums by $50 to $90 a year. “Our findings provide quantitative evidence of the social returns to investments in better catastrophe risk models,” he concludes. “Reducing epistemic uncertainty in loss modeling can be expected to reduce insurance premiums and narrow insurance protection gaps.”
Traditional stock-market valuation ratios for U.S. corporations—such as the ratio of market value to earnings—have been elevated relative to historical norms for roughly the past 30 years. While this pattern is often attributed to declining discount rates or rising capital intensity, Andrew Atkeson of the University of California, Los Angeles, and Jonathan Heathcote and Fabrizio Perri of the Federal Reserve Bank of Minneapolis argue that it can be explained by the decline in the share of corporate value-added paid to labor alongside weak growth in corporate investment. As labor’s share falls, a larger fraction of corporate output accrues to shareholders as free cash flow—earnings minus investment. At the same time, investment and the measured capital stock have remained broadly stable relative to corporate output, causing the ratio of stock market value to measured capital to surge. The authors point to several factors that may have contributed to this pattern, including mismeasured investment—particularly in intangible assets, the growing use of equity-based compensation, shifts in income classification at subchapter S-corporations from labor to capital income, and increased monopoly power that has allowed firms to earn higher rents.
“If you look at the incoming data since the last meeting, [there is] clear improvement in the outlook for growth. The data have come in and sentiment, the beige book, everything [coming] in suggesting that this year starts off on...a solid footing for growth. Inflation performed about as expected. And...some of the labor market data came in suggesting evidence of stabilization. So it’s overall a stronger forecast,” says Jerome Powell, Chair of the Federal Reserve.
“After the three recent rate cuts, we’re well-positioned to address the risks that we face on both sides of our dual mandate, and we’ll continue to make our decisions meeting by meeting based on the incoming data [and] the implications...for the outlook and the balance of risks. The economy’s growing at a solid pace, the unemployment rate has been broadly stable, and inflation remains somewhat elevated.
“I think the upside risks to inflation and the downside risks have probably both diminished a bit. So we’ll be looking at that. It’s about how you weigh the risks to the two goals and...quantify them. And so there are different views on the committee and we'll find our way forward as the data evolve.”
Call for papers
We are seeking proposals for papers on the municipal bond market and state and local fiscal policy to be considered for the Municipal Finance Conference to be held in-person Tuesday, July 21, 2026 and Wednesday, July 22, 2026 in Washington, D.C.
About the Hutchins Center on Fiscal and Monetary Policy at Brookings
