New Year, New State Wage Floors and U.S. Tax Brackets: Eco Pulse
The new year is fast approaching, and it’s going to bring big changes to some U.S. paychecks.
That’s the focus of the first two items in this week’s research roundup. The lead blurb summarizes a rundown of state-by-state minimum wage changes coming in 2018, and the second looks at what bank research teams are saying about the growth effects of the tax bill. We also link to a handy breakdown of what the legislation could mean for different consumer groups and businesses.
18 States Will Increase Their Minimum Wages on January 1
Available on the Economic Policy Institute webpage
Published Dec. 21, 2017
Starting in 2018, 18 states will increase their minimum wage. EPI says that will provide over $5 billion in additional wages to 4.5 million workers, with increases ranging from $0.35 in Michigan to $1.00 in Maine. This is a trend to watch, because minimum wage increases can help boost average earnings data at the margin. And since low-income earners have a high propensity to consume – translated from econo-speak, they spend more of each dollar they earn – high floors can also matter for consumer spending. More on that here.
Lower taxes, faster economy?
US Daily: A Slightly Bigger Fiscal Boost, and US Outlook Report: Tax Reform Reaches the Finish Line
Published Dec. 21, 2017 and Dec. 22, 2017
Available to Goldman Sachs research subscribers and Bank of the West subscribers
Congress and President Donald Trump have passed and signed a tax package, so now it’s time to game out what that means economically. Goldman Sachs expects the plan to boost growth by 0.3 percentage point in both 2018 and in 2019. They also expect Congress to lift caps on discretionary fiscal spending, and greater government outlays will lift the growth boost to 0.6 percentage point next year and 0.4 percentage point in 2019. Still, “with more fiscal stimulus comes larger deficits,” they write. They expect the deficit to rise to 3.7 percent of GDP in fiscal year 2018 and 5.5 percent by 2021.
Scott Anderson over at Bank of the West also weighs in, saying that “macroeconomic gains from those tax cuts and reforms will largely accrue to corporations and wealthier households.” While personal income taxes will also go down, in many cases those changes expire and will have less of a lasting impact. He estimates a boost to real GDP growth in 2018 and 2019 of around 0.3 percentage points.
For more on exactly what’s in the bill, check out our coverage here.
Drug Overdose Deaths in the United States, 1999–2016
Published December 2017
Available on the CDC website
In 2016, there were more than 63,600 drug overdose deaths in the United States, and the age-adjusted rate of drug overdose deaths (19.8 per 100,000) came in 21 percent higher than the rate in 2015 (16.3). This crushing cost of the opioid epidemic matters humanly, but also economically because it impacts workforce size and readiness. The chart below, pulled from the Centers for Disease Control and Prevention report, shows drug overdose death rates by age group over time.
Bank of England quiz
The Bank Underground Christmas Quiz 2017
Published Dec. 18, 2017
Available on the Bank of England blog
On a much lighter note, if you make a habit of reading this column, you’re probably a bit of a wonk – which means that you may well enjoy this nerdy quiz from the Bank of England. It advertises itself as the “only central bank themed festive quiz on the planet,” and we won’t argue. Bonus: the test offers key talking points sure to make you the life of any holiday party, from the deadweight loss of gift cards to seasonal Solow residuals.