Warning Signs From the Labor Market — ft. Kathryn Anne Edwards

Kathryn Anne Edwards, PhD economist and Bloomberg News columnist, joins the show to unpack the latest jobs report and what it reveals about the state of the labor market. She shares her take on whether AI poses a real threat to jobs and explains why the effects of tariffs are so tough to time. Kathryn also discusses how the GOP tax bill could reshape the economy, what she believes the federal minimum wage should be, and the policies she thinks could help close the wealth gap. Listen to Kathryn’s podcast, Optimist Economy Take a survey to let us know what you think about the show Subscribe to the Prof G Markets newsletter Order "The Algebra of Wealth" out now Subscribe to No Mercy / No Malice Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 1:01Speaker 03

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends, like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an ultra. Because it's not just a superior-like beer, it's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com/superioraccess to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 1:29Scott Galloway?

  Today's number, 9%. That's the growth rate for sales of non-alcoholic beer worldwide in 2024. Meanwhile, overall beer sales fell 1%. Ed, my journey through alcohol ended up being naked and in Hampton Inn and Googling whether you can get chlamydia from a karaoke mic.

• 1:49Speaker 05

  Listen to me. Markets are bigger than us. What you have here is a structural change in the world's distribution. Cash is trash.

• 1:55Kathryn Anne Edwards?

  Stocks look pretty attractive.

• 1:57Speaker 05

  Something's gonna break. Forget about it.

• 1:59Scott Galloway?

  Think about it. It's actually pretty good.

• 2:02Ed Elson?

  It's not up to you whether it's pretty good. That's for, that's for us to decide.

• 2:05Scott Galloway?

  Oh dude, I'm here for me. I'm here for me.

• 2:09Ed Elson?

  You can't tell the joke and then tell it. That, that was good. That was a good one.

• 2:12Scott Galloway?

  All this virtue signaling about me trying to increase the economic security of young people and provide jobs.

• 2:18Ed Elson?

  Yeah. Role model for young men.

• 2:20Scott Galloway?

  That's all bullshit. This is, I'm just here to be, to make myself laugh. When's the last time you heard the terms chlamydia and karaoke mic in the same sentence?

• 2:31Ed Elson?

  First time for everything.

• 2:32Scott Galloway?

  Oh my gosh. Where are you? Let's go. Oh, how's our, uh, wait, today we launched our daily.

• 2:38Ed Elson?

  Yeah. Daily's going well. We're getting some good responses. It's fun to have you call in from your phone when you're just kind of up doing your random stuff. What I can't wait for is when we get you to call in and you're like out on the town, in the club, partying. And we get your sharp economic analyses from like the basement of Lulu's or something like that. Is that gonna happen?

• 3:00Scott Galloway?

  When I'm in a bathroom with a wide stance doing toe taps in the municipal bathroom of the Minneapolis airport. It's coming. It's coming.

• 3:09Ed Elson?

  It'll get downloads. I know that much.

• 3:11Scott Galloway?

  I was home for some better. I was, I was home in the kitchen after having drank two beers, washing dishes. That's where I was last night. Who am I kidding? I don't wash dishes.

• 3:20Ed Elson?

  I was about to say, yeah, I'm amazed that you wash dishes. Do you cook?

• 3:23Scott Galloway?

  Oh, not at all. I have turned the flame on. You've been to my place in Soho. I've turned the stove on twice and both times were to light a joint. And then I discovered edibles. So the stove hasn't seen any action in about 18 months. No, I'm not a bit. Are you a cook? You, you probably cook, don't you?

• 3:39Ed Elson?

  Yeah, I, I've gotten into it recently.

• 3:42Scott Galloway?

  God, you're so dreamy. You're so dreamy. I can see why Katie Tour is obsessed with you. Have you seen my Detroit rumble, my debate?

• 3:52Ed Elson?

  I did. That was, that was epic.

• 3:55Scott Galloway?

  What were the chances the audience was going to vote for a six year old white guy over a 34 year old black Republican? I went in literally two rounds down.

• 4:20Ed Elson?

  How did it exactly work? I mean, just for context, Scott did this thing called the Detroit Rumble, I believe. This Summit Detroit Rumble, something where he literally put on like a boxing gown, went into a boxing ring topless and from my understanding debated with like boxing gloves on against some other guy.

• 4:44Scott Galloway?

  You forgot the key part. You we got to do the fun. The reason I got talked into is like you can do whatever entry you want. And I didn't know who I was debating because they kind of, you know, they wanted to use my name fine. And then I find out I'm debating Sher Michael Singleton, who's this really thoughtful young man. And he comes in with a drum line from an all black college. I'm like, how am I going to compete with that? So daddy leveled up and daddy daddy splashed a little bit of cash and he got five drag queens to come out. Oh my God, that was so good. And they took my, they took my robe off and they oiled me up. It's all true, except for the last part. And, and then what they do is they ask you, the audience asks a question and you get a minute to answer. Then the other person answers the same question.

• 5:27Scott Galloway?

  And then after eight rounds, the audience votes on who wins and they give you this big heavyweight boxing belt, but I really enjoyed it.

• 5:34Ed Elson?

  What was the outcome of the vote? I know you won, but do you know by how much?

• 5:38Scott Galloway?

  Oh yeah. Ed, I don't like to talk about this kind of thing. I'm just not. Sher Michael did outstanding. I'll just say that he just, he was outstanding. He's a good kid, really good kid.

• 5:49Ed Elson?

  Well, for those who are watching on YouTube, we should throw out the pictures of you standing with that heavyweight belt. It was very, you looked very cool.

• 5:57Scott Galloway?

  It was cool.

• 5:57Ed Elson?

  It would have been cooler if you knocked a guy out physically, but instead it was sort of delivering takes.

• 6:03Scott Galloway?

  You know, I used to box. You know my story about boxing?

• 6:06Ed Elson?

  I know. Yeah, that's why, that's why you've got a crooked nose.

• 6:08Scott Galloway?

  That's exactly right. God, I'm so old. I don't remember my good stories anymore.

• 6:11Ed Elson?

  All right, Ed, what do we have going on today? Let's get into our interview. We're talking with Catherine Anne Edwards. She is a PhD economist, economic policy consultant and columnist for Bloomberg News. Catherine, thank you so much for joining us.

• 6:24Kathryn Anne Edwards?

  Thank you so much for having me.

• 6:28Ed Elson?

  So a lot of your work focuses on labor markets. So that's where I'd like to start. And last week, we got this new jobs report and the headline numbers were pretty good. Non-farm payrolls rose 139,000. That was more than expected. Unemployment rate held pretty steady. Everyone was pretty happy about it, especially Trump, who said that, quote, "America is hot." Give us your takeaways. What are your reactions to this recent jobs data? And what's going on in the labor market right now?

• 7:00Kathryn Anne Edwards?

  We are witnessing in the US labor market a slow slowing of the US economy. It was not a strong report, but it wasn't a weak one. But it had certain nuances below the surface that were concerning. First being that the last two months of job estimates were downwardly revised by about 100,000 jobs. So, you know, we found out last month if we thought that we got 150,000 jobs. Later they said, actually it was closer to 100. And that had happened for the past two months in a row. This, this measure of downward revisions is something that we like to track. So that's problem one. Problem two is that a lot of people left the labor force, which typically happens when they're discouraged and looking for work

• 7:44Kathryn Anne Edwards?

  and can't find one, so they stop looking. We've known for a while that although unemployment has remained low, hiring has also fallen. Meaning that if you, you know, we basically have two labor markets right now, one for job holders and one for job seekers. Many people leaving the labor force en masse is further evidence that job seekers are not finding work and that employers are not expanding their payrolls. The third problem, which has been a problem for a while, is that most of the growth has come from health services. That is not a reflection of the strength of the economy. That is a reflection of how many old people we have and how much healthcare they consume.

• 8:24Ed Elson?

  Those are all great points. I want to ask you about this downward revised number. I didn't realize those numbers. And it reminds me of when the Biden administration was in charge. And we also saw some revised numbers, not necessarily on jobs data, but on data in general. And there was this theory that was going around among Republicans largely saying that they were screwing around with the data. And oh, they look at what they did to the revised numbers. That's the real data. General suspicion of the data that was coming from the government. And now that Trump's in charge, I'm seeing the same thing from the Democrats. The Democrats are saying, we can't trust this administration. The data is lying. They're gonna, they're gonna fluff the data.

• 9:08Ed Elson?

  And those revisions, I'm sure, doesn't help with that. What is your view on, on this? What is your view on government data? Is it accurate? Should we trust it? And why are we seeing these massive swings in these revision numbers?

• 9:23Kathryn Anne Edwards?

  So first, north start of this conversation. The US statistical agencies do not have a champion in either party or in Congress. There are government agencies that are funded via tax dollars to collect and publish information that are used by businesses all around the country, all around the world, to understand and track the US economy. And they have seen their funding frozen for almost a decade. That is the first thing you, it's primary to understand is that we have world-class, really the envy of the world agencies like the Bureau of Labor Statistics. And we have been bleeding them dry for over a decade. The second thing to understand is that statistical estimates are just that. They're estimates.

• 10:06Kathryn Anne Edwards?

  And as testimony to the integrity of those agencies, every time they find more information to update those estimates, they publish them and tell you. And the more we hear about revisions, the more that is reflective of their commitment to integrity as opposed to their lack of accuracy. Because anyone who has a basic understanding of statistics can tell you, it's not a fixed point. Estimates can be revised. Especially if people say, get a survey, tell us what you did on the week of the 12th in May, and they don't send it back until August. And they're like, I'm sorry, this was on my desk for three months. Once the BLS gets that information, they update. I think what's happening under the two administrations, in terms of the tone and tenor, are reflecting

• 10:51Kathryn Anne Edwards?

  very different concerns. On the Republican side, the concern is really that if the economy is doing too well, we can't win on it in the election. And so it was just ad hominem attacks, really, on the statistical agencies. The Democrats are much more worried about the number of senior civil service staff that have been fired at these agencies, particularly related to data integrity. When the Department of Government Efficiency shows up, they want access to data that it's not clear that they're allowed to have access to. And if someone says, I'm not giving it to you, they get fired. Those are the people who are the brain trust of the US statistics. What I would point out is that most people don't understand that you cannot walk off

• 11:32Kathryn Anne Edwards?

  the street, find yourself in front of an administrative data set from the US government, and mess with it. Because you wouldn't understand it. Even if you are a hotshot programmer, you have to learn the world that this data lives in. And the real concern to US data is that we don't have the senior staff to produce it, as opposed to it's being doctored and manipulated with.

• 11:54Ed Elson?

  And do you think that these agencies were a target of Doge cuts? Do you think Doge was going in there and saying, scrap these BLS statisticians? Is that legit?

• 12:04Kathryn Anne Edwards?

  What they're doing more is they're trying to get rid as many senior civil servants as they can, and replace them with political loyalists. There's a move, this was called Schedule, I think it was called Schedule F? It was either FG or H. I'm not so great with all the number of radical policies that are coming out of the administration. But basically, your civil servants are meritocratically hired. That applies to the vast majority of people who work for the federal government. The Trump administration is right now actively trying to replace meritocratic hires with political hires. So the biggest threat to government data is that the person who has a PhD in statistics or economics, who works on the current population survey that produces the unemployment rate, is going to be replaced with whoever the Doge person picks.

• 12:49Ed Elson?

  Like, they'll be replaced with a podcaster who loves Trump, right?

• 12:53Kathryn Anne Edwards?

  Yes, and that is absolutely the objective. And these agencies are under attack. And this goes back to my first point, which is that they don't have a champion in Congress. They've been so well insulated from politics so far that they've never really needed one to the degree they do now. But this is, I mean, Musk and the Doge kids, as the Social Security Acting Administrator called them, the Doge kids. They don't know what they're doing and they want your data. So the statistical agencies are, they're under fire in more ways than probably people realize.

• 13:23Scott Galloway?

  Nice to meet you, Catherine. So I just had Professor Suzy Welch on, talking about purpose. And one of the things she dropped was she thinks that the first, that the analysts and associates at investment banks and consulting firms, who traditionally have been huge employers for my students at a business school, that literally, her viewpoint is those jobs are just going away. I'm curious, have you seen any signs of how AI is impacting employment?

• 13:52Kathryn Anne Edwards?

  I don't think we have a story. We've seen signs, but we are, I say, collecting the dots rather than connecting them at this point. Because AI is so new and the vast majority of people, vast majority of companies, don't know how to use the technology effectively. So probably the most concrete we've seen is that the data programmers have seen some layoffs. Even that data is not really interpretable as just AI, because there was also a spurt of hiring of programmers, you know, kind of during the heyday of the pandemic, low interest rates, tech companies are expanding like mad. So we have a sense of which jobs would be at risk,

• 14:36Kathryn Anne Edwards?

  but haven't seen, you know, like hundreds of thousands of people lose their job.

• 14:42Kathryn Anne Edwards?

  Technology is generally greeted with a lot of fear and skepticism. And I think what I try to point out when it comes to AI is to remember that that technology has been eradicating jobs longer than you were born. And they've been doing it really well. And we don't have typists anymore. We don't have secretaries. We don't have computers, which used to be a largely female occupation of women who did math because you weren't as fast at it. We lose jobs to technology all the time. This is how our economy goes forward. I think the big threat that comes from AI is, one, its potential to concentrate wealth in the hands of a few people.

• 15:25Kathryn Anne Edwards?

  And, two, that the US worker is in a position of relative lack of power. And that what makes technology really scary is, especially the one that's the advent right now, is that the US worker is underpaid, has little protection, doesn't have great benefits. And so this is a really easy fall guy for broader symptoms of our labor market and how people are paid and compensated. It's great to throw the AI boogeyman right in front of their face and say, this is what you should actually be afraid of, and not another corporate tax cut and a change to the estate tax and the minimum wage not being raised in 15 years.

• 15:58Scott Galloway?

  I'm sorry, you think that a greater fear is a concentration of wealth at the hands of AI versus those things?

• 16:03Kathryn Anne Edwards?

  We've had changes into how the accumulation of profits at corporations are given back to society through workers versus through stock buybacks. So what I worry about with AI is that it's a potentially incredibly remunerative development at a point when the US economy has never been so economically unequal. And we don't really have a lot of mechanisms or institutions in place to say, if there's going to be a new mass generation of wealth, we think a lot of people are going to get it. None of those, kind of like none of those. None of those building blocks are really there right now. So if there is going to be a spurt of wealth generated from copyrighted technology,

• 16:46Kathryn Anne Edwards?

  from data mining, it's not going to go to your average worker. That's not a rule. That's a function of how our society and economy are currently operating. It doesn't have to be that way. So I'm more worried about that aspect of it. People are very bad at predicting how technology will be adopted. They're pretty bad at predicting who will be affected by it. The future is notoriously hard to predict and it presents a better fall guy than enemy. You would be less worried about AI taking your job if we had a reasonable personal savings rate in the US and a decent unemployment system.

• 17:28Ed Elson?

  We'll be right back after the break. If you're enjoying the show so far and you haven't subscribed, be sure to give Prof Two Markets a follow wherever you get your podcasts.

• 17:45Speaker 00

  Are your ad campaigns lighting up the dashboard? But not the pipeline? That's bull spend and marketers are calling it out in. Dashboard Confessions.

• 17:54Speaker 01

  My boss asked for results, so I opened my dashboard for the only positive sounding metric I had: impressions.

• 18:02Speaker 00

  Cut the bull spend. See revenue, not just reach. LinkedIn delivers the highest return on ad spend of major ad networks. Advertise on LinkedIn. Spend $250 on your first campaign and get a $250 credit. Go to LinkedIn.com/campaign. Terms and conditions apply.

• 18:46Speaker 03

  This episode is brought to you by Michelob Ultra. Good times mean competitions between you and your friends. Like seeing who can throw some pigskin the farthest or rush the field the fastest. Winner gets an ultra because it's not just a superior like beer. It's also giving fans superior access to their favorite sporting events. Superior is worth playing for. Visit michelobultra.com slash superior access to enter. Enjoy responsibly. Copyright 2026 Anheuser Busch InBev Michelob Ultra Beer, St. Louis, Missouri.

• 19:21Ed Elson?

  We're back with Prof you markets.

• 19:23Scott Galloway?

  So I have been, and I think Ed as well, have been surprised at how resilient the economy has given what we perceive is really a rational economic policy and the threats of AI. And, you know, what we would perceive as threats to our constitution, breakdown of these economic alliances that have served us really well, attack on academic institutions that have shown to have economic advantage in terms of development of IP. And yet the sober analysis is that if you didn't know all of this was going on, I'm not sure you would know what's going on. The markets, what, two, three percent off an all time high. The unemployment picture is, I mean, as you said, there's cause for concern, but it

• 20:07Scott Galloway?

  wasn't a bad report. Consumer confidence, people are spending, people are going to, you know, they're going to Whole Foods, they're, they're buying their stuff off of Amazon, taking vacations. Is this because the economic policies that Trump's proposing that the markets don't dislike as much as we thought they would? Is it that there's a lag in the economy and that this is coming down the pike? That there's a general lag from the numbers we're reporting? What do you, what do you think is going on here?

• 20:37Kathryn Anne Edwards?

  Probably the simplest way to understand it is that Trump has more bark than bite. The policy that he's announced, were they truly pursued to the extent that he has advertised, would have deeply deleterious consequences on the economy. You want to deport people, you're reducing the size of the workforce. That shrinks the economy. You want to fire federal workers and shrink US government spending? That's a massive part of our economy, that will shrink it. You want to pursue tariffs that opens yourself up for retaliation? That will shrink the economy. But he's more PR campaign than he is policy. And all of these things are being announced in a way that we know that they're bad. But he also walks back from them, or they're not truly pursued to their full agreement. We are not deporting 5 million people.

• 21:20Kathryn Anne Edwards?

  We are picking people off of a Home Depot in LA and then sending Marines there because it is about the attention rather than the efficacy of the policy itself. I mean, truly, what is working in the economy's biggest favor right now is that he's a pretty ineffective policymaker. He's an incredible TV salesman. And that is why the economy is not showing weakness, because these policies have had a lot of bluster, but not a lot of bite. Now, were he to pursue them fully? Were he to actually commit to a policy and follow it, you know, it would start racking up really quickly. We'd start to see declines in the labor force. We'd start to see massive shortages. We'd see a reduction in government spending over the course of the Department of Government Efficiency activities, as opposed to an increase.

• 22:03Kathryn Anne Edwards?

  The most of these policies, they truly don't have an effect yet. They're terrible, but they're also not in full practice. I do think the tax bill will have interesting consequences, but they also won't be in the short term. It might be a small boost. In the long term, it's a big loss. But yeah, that's how I would tell people. So what we are seeing is not the effect of his policies in place and operating to the full extent that they've been advertised. What we are seeing is the effect of uncertainty. And uncertainty is all about idling. I'm not going to move much in either direction until I know which way the wind is blowing. So I'm not going to hire that many people. I'm not going to fire that many people.

• 22:48Kathryn Anne Edwards?

  I'm not going to make massive investments, but I'm not going to pull back from the ones that I have. I'm just waiting in place to understand what the world's going to look like. And that has been the economy, really, since September.

• 22:58Ed Elson?

  The way I've thought about it recently is...

• 23:03Ed Elson?

  The tariffs are gonna have an effect, but just not now. And I take your point that he's pulling back on a lot of this. But I think, or at least what I'm seeing on TV and in the news that I think people are missing is the very simple fact that if you raise a tariff, it takes ninety to one hundred and eighty days to get those tariffed items to reprice and then be sold to the consumer. Which means we're not going to see any effects until three to six months from now, or at least three to six months from April. So that's one part of it that I believe, I think inflation's coming. I just think it's gonna come later. I think it's gonna come in the fall. But I'd be interested to get your view, and let me know if you disagree with that. And but I'd be interested to get your view on when does, when does the tariff impact

• 23:48Ed Elson?

  show up in the job market? Like, to what extent is the job market a forward or backward looking indicator? What is the timing? Does, will the data show up in the job market before the prices rise, or if the prices rise? When does it show up?

• 24:05Kathryn Anne Edwards?

  It's a great question, and I don't think anybody knows the answer because we've never been here before.

• 24:08Ed Elson?

  Okay.

• 24:09Kathryn Anne Edwards?

  And so it's, it's a lot of guesswork. And of course, we're also still guessing what the tariffs will be. So if you think of a ninety day lag on prices, which I think is really reasonable, right? We know businesses have just gone through a massive inflation spike. They don't want to do it again. They're going to try and position themselves to, it's like what we saw in the first quarter GDP where there was so much inventory because people were trying to buy as many products as possible before Liberation Day and the massive tariffs came. I think that they're gonna try to shield their customers and they'll have a lag. So you exactly agree with you there. But for the, the rest, I mean, we've, we've never been in a position to be a, in a, part

• 24:50Kathryn Anne Edwards?

  of the integrated global economy and actively attacking it. So how the job market? Internalizes that, and whether it becomes a leader or a lagger of those effects, I mean, that really comes down to businesses' bottom line and how they treat their payroll. For the past two years, they have treated their payroll as essentially a precious investment. It was hard to hire a couple of years ago. People spent a lot of time looking for workers. They don't want to lose people and then be in the same spot to be in a tough hiring position again. So it comes down to whether or not employers will be quick to fire or not. We've seen a change in that behavior. Typically, the US is like, is that a bad economy? Go, go, go.

• 25:35Kathryn Anne Edwards?

  And we lay off so much faster than other countries. We haven't seen that over the past few years. It's hard to say if that represents a true shift in behavior from US firms, given the tight labor market that they experienced coming out of the pandemic, or if it's just waiting for more information before they move. So we don't have an answer. My guess is that this kind of, not necessarily goodwill, but the reluctance to lay off workers will come to a screeching and coordinated halt, meaning that once you see firms start to lay off, other firms will see that as cover and act similarly. And especially if there's pressure to say like, well, they're doing 5% layoffs to make sure we make it through this. Why aren't you?

• 26:20Kathryn Anne Edwards?

  I think, and the concern there is that, I mean, layoffs are, that's just the match thrown on the kerosene. It doesn't take that much of layoffs to push up the unemployment rate really quickly. And most people think a recession is when it's hard to find a job, but really, a recession is when lots of people get laid off. But really, a recession is when it's hard to find a job because there are so many people in unemployment. And so the start of the recession is dumping a bunch of people into unemployment. That just takes three months of elevated layoffs.

• 26:51Ed Elson?

  Some data that I found really interesting from the the jobs report. One, it's super interesting what you say about what's happening in healthcare where that's basically what's leading the report and what it really tells us is that America is just very old and sick, which is not great. But the other thing that I found really interesting is that employment for young people with college degrees is at its lowest level in years. And this is some other data from LinkedIn, which is that entry level hiring is down 23% compared to March 2020. If you're a recent grad and you're part of Gen Z, that's my generation, your unemployment rate right now is 1% higher than the rest of the working population. So what is going on with

• 27:35Ed Elson?

  the job market for young people and for entry level workers? Why is it so tough for a young person with a college degree? That's who's getting hurt right now. Why is it so hard for them right now?

• 27:46Kathryn Anne Edwards?

  The unemployment rate of young people is always higher than the unemployment rate of older people. And that the less experience you have, the harder it can be to be hired. And so it's, this is, this is a natural, not natural, because that sounds like I expect you to not have a job. This is a typical relationship between the unemployment rates. Young people, even if they have a college degree, have higher unemployment rates.

• 28:07Ed Elson?

  But it's the highest in years.

• 28:09Kathryn Anne Edwards?

  It's the highest in years. So the like positive spin on this that I would be remiss if I didn't bring up is that the unemployment rate being higher amongst young people does have good interpretations. Like in your first five years out of college, you should go find a bunch of different jobs. You should figure out what you like. You should constantly be searching. If something doesn't fit, like, we consider it to be a really beneficial intense period of learning about the labor market that's associated with a lot of job jumps, as well as a lot of wage growth. And so if you are looking for a job more, more often, you will have a higher unemployment rate. And so there's a, there's an argument here of like, you know, it's not all bad. But of course, younger people with less experience are the, are, will have the hardest time in a recession getting hired.

• 28:56Kathryn Anne Edwards?

  And what we are seeing is really these two labor markets that I told you about, the labor market for people with a job and the labor market for people who want one. The labor market for people who want one looks much more like a recession. And you would not expect the unemployment rate to be so low overall. So, all of that said, as prefaced, one of the most interesting studies in the Great Recession about unemployment and job search was that this group of economists looked at job postings and the educational requirements and experience requirements for them. And they looked at how that varied for the same job based on the unemployment rate. And it goes exactly how you would expect in a really unfortunate way for young people,

• 29:39Kathryn Anne Edwards?

  which is that when the unemployment rate is high and a lot of people are looking for jobs, a job that two years ago required a college degree and no experience would require a master's with five. And you would see these jumps in what you needed in an entry-level job as the unemployment rate got up. I think what we're seeing now is a version of that without the unemployment rate going up, that there are a lot of people looking for jobs, the hiring rate is low, and so you're seeing just this bar being higher, even though the unemployment rate is still low. It's a historically, it is a historically odd labor market for unemployment and hiring to be de-linked than their typical patterns.

• 30:22Kathryn Anne Edwards?

  I can say for Gen Z'ers like yourself, I am deeply empathetic. Having graduated from college in 2007 and looking for a job in 2008 and 2009, it's a really harrowing, awful experience to feel like the labor market is telling you through every application you send out the door that you don't hear anything back, that you're not good enough.

• 30:43Ed Elson?

  Even the best students, I mean, these MBA students at Stanford and Harvard, no one can find a job right now. I've seen it in the data, and then I also have friends who go to these schools, and they literally can't find a job. It's unbelievable to me.

• 30:55Kathryn Anne Edwards?

  It's unbelievable, and I think that because the rest of the economy is not experiencing it, it's really easy to minimize other people's experience because it's not yours. And unemployment in particular is... Something that America has been, I think, verges on cruelly unempathetic. Like, it's easier for me, as a person with a job, to say, if you can't find one, it's because of your own personal failing. Like, you're not working hard enough, you're not searching hard enough, you weren't a hard worker to begin with, or maybe your degree was no good. Because if you were a hard worker who searched really well for a job, who put yourself out there, who has a good degree, and you can't find one, that means I'm at risk, too.

• 31:38Kathryn Anne Edwards?

  And there's this degree of self-preservation that people bring to the labor market, that if they admit really good, hard-working people can be out of luck, it means they could, too. And so it's easier, instead, to say, people who aren't doing well simply aren't as good as me, because the consequences of them being just as good are pretty scary. And so I would say to the Gen Z'ers who can't find a job, you would be right in being suspicious that there's a lack of empathy for your position, and that it's a lot easier to just, like, blame you for being on TikTok than it is to understand that you are representing a fundamental weakness in the US labor market right now.

• 32:17Scott Galloway?

  What is your, kind of, just, your prediction or sober take on the impact on the economy of the GOP tax bill?

• 32:24Kathryn Anne Edwards?

  Not a lot good there. That's my technical, technical assessment.

• 32:30Kathryn Anne Edwards?

  Oh, man, the tax bill.

• 32:33Kathryn Anne Edwards?

  The Committee for a Responsible Federal Budget, which is a nonpartisan think-tank in DC that advocates for just better fiscal policy, less deficits, they did a study looking at the increase in the US debt since 2001. And it's a particularly important year to understand this, because in 2001, the Congressional Budget Office predicted that within the decade, the US debt would be zero, based on the trajectory it was on. Well, obviously, we didn't get there. And what they have found is that in the 23 years since then, 37% of the increase in the federal debt comes from tax cuts.

• 33:14Kathryn Anne Edwards?

  That's a pretty large number for what I would struggle to point to as having a single clear accomplishment. It's been over $7 trillion that have been spent over four massive tax legislations since 2001, 2001, 2003, 2012, and 2017. What part of our economy can you say we wouldn't have without a tax cut? Other than the debt, I don't know what you would be pointing to. Tax cuts are diffuse policy. They're not very effective. They're more political policy than they are economic ones. So when I look at this bill, which is basically, it's not doubling down, or tripling down, or quadrupling down. It is quintupling down on a policy that has already cost us a fortune.

• 33:55Kathryn Anne Edwards?

  I think that this is a willful refusal to have a champion of the US economy in Congress. I mean, what is $4 trillion going to get you that the first seven didn't?

• 34:07Ed Elson?

  That number, you said 31% of our deficit is a result of tax cuts. Is that what you said?

• 34:14Kathryn Anne Edwards?

  It's, I believe, 37%.

• 34:17Ed Elson?

  Okay, 37%. Do people in Congress know that, do you think? I mean, you're saying willful ignorance, as maybe you're saying that they do know that. But is that something that they understand when they decide to, as you say, quintuple down on cutting taxes? Do you think that they understand the relationship between tax cuts and deficits? Or do they just assume that it doesn't really have an effect and that tax cuts just mean we grow?

• 34:43Kathryn Anne Edwards?

  I'm not sure. Because there's a lot of performance to Congress. And even in relatively low-stakes settings, there would still be a lot of performance that goes into being a member of Congress and how much they support something because they need to make a political show of it versus an actual understanding. I've testified in front of Congress about debt and tax cuts on two occasions. And in front of the House Ways and Means Committee last spring, I was the lone Democratic witness on a hearing about whether or not they should renew the Tax Cut and Jobs Acts, basically whether or not they should pursue this big, beautiful bill. And I pointed out to them over and over again that their own Congressional Research Service

• 35:27Kathryn Anne Edwards?

  had said rather declaratively, "These cuts did not improve the economy."

• 35:32Kathryn Anne Edwards?

  They did not increase wages. They can have a small effect the year they go into effect, but they, or the year that they are enacted. But the long-term effect is that they increased debt and borrowing and raised interest rates, and they're quite expensive. And they don't have the economic bang for the buck. And what I got back was like, I might as well have been at Juilliard. Like, just like the performances of response of like, how dare you? Like, you know, the Democratic Witness, you know? It was, it was laughable to the extent that it was obvious that like, there was a plague acting going on. But people have told them unequivocally in hearings, they, that they, that this has not increased the size of the economy.

• 36:12Kathryn Anne Edwards?

  Their own research service has told them this, a tax cut will not boost the economy. It did not do the things you said it was going to do. So they have the information. I, I don't know if it's, if willful ignorance were not inside their head. And they have a job where they publicly and privately are two very different people. So it's hard for me to say where personally they land on this. I, as, as not just an economist and someone who has been called on to testify in front of Congress to bring some expertise, I think just as a voting citizen, it would, this is the single largest investment the US has ever made.

• 36:55Kathryn Anne Edwards?

  It's $7 trillion over 20 years to lowering our tax bill. It has certainly increased the debt. You know, how much runway do these tax cuts need? Stay with us.

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• 38:51Ed Elson?

  We're back with Prof you markets.

• 38:53Scott Galloway?

  Just curious, we're big fans, actually I don't know if Ed's a big fan, I'm a big fan, of raising minimum wage to 25 bucks an hour, that if it kept pace with productivity and inflation, it'd be about 23 bucks. All the data says that there is income inequality, it's really struggled, that young people aren't doing as well as their parents. And I see unions as, and I'm curious, what you think, I see unions as on the whole being pretty ineffective and a failed construct, and that there should be one union, the federal government, and we should have federal legislation that increases minimum wage to 25 bucks an hour. And then there's a lot of fear, what I think is fear mongering on the other side, saying that that would take the markets down, small businesses would go out of business, it would

• 39:36Scott Galloway?

  expedite a movement towards automation to replace human capital. In sum, minimum wage 25, federally mandated minimum wage of 25 bucks an hour. What are your thoughts as an economist?

• 39:47Kathryn Anne Edwards?

  It would have been kept pace with productivity, but would be historically high among minimum wages because the minimum wage, even in its heyday, wasn't as high as. Twenty-three. So if you look at the minimum wage, if it had, like, its relationship to, say, median wages, its relationship to, say, average wages, that would suggest a minimum wage somewhere between fourteen and eighteen dollars an hour right now. If you look at, say, the pre-two-thousand relationship of the minimum wage to the rest of the wage distribution. The productivity piece, it gives me pause because productivity can reflect, I mean, it reflects productivity, but it can

• 40:27Kathryn Anne Edwards?

  move in certain ways. I think keeping wages, if inequality is your concern, then keeping wages pegged to relative other people's wages would be closer to your mark of keep it pegged so that it's a share of the median or a share of the average, and so that it's, the middle is growing with the bottom, moving with the top. That's, that's my preference, and I think around eighteen is where that would tell you to land, probably fourteen to eighteen, depending on which relative measure you wanted to use. Even that, it would be a doubling. But, again, it's kind of like AI, as we talked about earlier, you know, there's just a lot

• 41:07Kathryn Anne Edwards?

  of really good boogeyman, and economic policy and analysis is just as much, as much about identifying narratives as it is about actual analytic consequences. And the narrative around the minimum wage, I mean, y'all, we have a thirty trillion dollar economy, but if people made more than seven twenty-five an hour, it would all go away. Right? It is, it sounds ridiculous when you say it out loud, but,

• 41:32Kathryn Anne Edwards?

  yeah, the, the boogeyman from regulating the low-wage labor market is, I think people,

• 41:41Kathryn Anne Edwards?

  I think that this big, beautiful bill is unintentionally educating Americans of just how low wages so many workers have. If you are working in the low-wage labor market, meaning you make about seventeen dollars an hour or less, and you have two kids, you are eligible for Medicaid in every expansion state. So the idea that we need to have work requirements is almost offensive because we have a policy that allows for wages to be so low and then are almost affronted at the idea that people would work and be eligible for a public benefit when we haven't raised the minimum wage in 15 years. So I think that there is some, kind of going back to the prior question, I think there

• 42:22Kathryn Anne Edwards?

  is some education happening for a lot of Americans of just how many people are on Medicaid, just how many people would lose it, and just how many people are in the low-wage labor market. I want the minimum wage to be higher, but I think it has to be part of a new Fair Labor Standards Act that does much more than raise people's wages. We need better labor law enforcement, we need universal access to paid sick days, we need to have Brace for Impact, a law that you have to give people a pay stub. So as Congress is enacting more work requirements, helpful to remember that no employer in the US is legally compelled by the federal government to give people a pay stub. The worker has to prove to the federal government that they're working, but the employer doesn't have to prove to the worker what they did. That's remarkable to me.

• 43:05Kathryn Anne Edwards?

  But I think it's part of a broader problem of how we have neglected the low-wage labor market, and that's more than just peg it to productivity. That's conceptualizing how we treat workers at the bottom, regulating their shifts, regulating their time off, making sure we have paid sick days, and kind of moving more comprehensively to low-wage work.

• 43:24Ed Elson?

  It sounds like a lot of that would make living standards better, which is important. But a lot of the concerns that you highlight here is, and that we're very concerned about on this podcast, is just the rising inequality that we're seeing and what that does to a country when you have this level of such vast wealth inequality that is becoming more and more obvious to all of us every day, and people are getting more and more upset. And I feel like, you know, you can do what you can to increase living standards, but it doesn't really solve that issue of this gigantic gap in America. What you really need is to get people's hands on wealth. They need to start owning assets.

• 44:09Ed Elson?

  So I'm wondering, as an economist, what do you see as the long-term solutions? We'll take living standards as something that is important, but what are some other things that we should be doing? What should be in that big, beautiful bill?

• 44:24Kathryn Anne Edwards?

  Oh, my God, the Catherine Edwards Big Beautiful Bill? Oh, it's actually beautiful.

• 44:31Kathryn Anne Edwards?

  This, you know, I host a podcast called Optimist Economy, where we always try to make people feel better about the US economy. Could not have started at a worse time, in March, March 2025.

• 44:41Ed Elson?

  Love it.

• 44:42Kathryn Anne Edwards?

  But we, you know, one thing that I stress again and again is to remember just how little we've tried. What has the federal government done to try and reduce wealth inequality? They lowered taxes on the wealthiest people. So haven't really tried much. And I, I think these problems feel insurmountable until you remember that we have done, made almost no attempt to redress them. And that were we to make an attempt, were we to go follow the evidence to the best practices for our economy and for our society, we have a wealth of really good ideas and really good policy waiting for us. I've long been a champion that we should have a higher estate tax.

• 45:22Ed Elson?

  Me too. Big, big time.

• 45:24Kathryn Anne Edwards?

  Yeah, we should have the estate tax where it was, you know, 20 years ago. And believe it or not, we still had an economy and wealth up until the estate tax being at the rate it was. And that the estate tax revenue should be dedicated into a children's trust fund. So that if you die with excess wealth, it just gets reinvested to children. And it doesn't necessarily go to your children. It goes to things like a child tax credit. It goes to things like universal childcare, universal school meals, that we give all children a better start and that you are going to pass down dynastic wealth to your heirs, but we're just gonna like, put our thumb on the scale for every man's kid and not just yours. It's plenty of money to do it. And all of those things, paid, you know, universal meals, child, universal childcare,

• 46:08Kathryn Anne Edwards?

  you know, paid family leave, all of them would tilt to helping the lower and bottom of our economy be more successful, especially their children. We don't invest in them. So, I mean, your, your point about wealth building, you know, Congress never sat down and designed the 401K. They changed part of the tax code, you know, entrepreneurial policy gurus at private companies realized that it actually created a tax preferred savings account. And IRS said, okay, and we got the 401K in the early 80s. It has always been about which companies voluntarily decide to give it to which employees that they feel are fit. So can we really have a problem, like a truly insurmountable problem of building asset and

• 46:50Kathryn Anne Edwards?

  wealth in the US if we've left it for 45 years to be gate-kept by employers? No, we could have a universal IRA. We could have a universal 401K. The latest is the 401KIDS, which everyone gets an IRA when they're born, or a 401K when they're born. All of these would absolutely disrupt the type of wealth inequality that we're seeing in a truly American way by giving rich kids less of a head start. So I think I'm with you. This is the level of inequality that we're seeing in wages, in income, and in wealth, which accumulate as we step through what you earn hourly, annually, and how you convert that into assets.

• 47:31Kathryn Anne Edwards?

  We've never seen inequality like this, really just compared with right before the stock market crash of the Great Depression. But rest assured, we have a lot of things we can do.

• 47:43Ed Elson?

  Amen. Final question. Catherine, what are you bullish on right now? And it could be a stock, it could be a sector, a cultural trend, anything. What are you bullish on right now and why?

• 47:53Kathryn Anne Edwards?

  I am bullish on how unpopular this big, beautiful bill is amongst constituents. It is, this is night and day, y'all. In 2000, George W. Bush won the election on the promise of tax cuts that he had followed through in 2001 and 2003. And you are now seeing such a shift in the US electorate that they are mad that this tax bill is going through, to the point that Republicans have gag orders on not taking calls from their constituents. And they're not holding town halls, or they're screening the questions, because they're doing something deeply unpopular. And that has its own level of frustration to see your elected members of Congress responding

• 48:37Kathryn Anne Edwards?

  to a constituency of one as opposed to a constituency of you. But I am very buoyed by the fact that people don't want this bill. They don't want 10 million people kicked off of Medicaid or food stamps. They don't want another tax cut that they know they don't benefit from. Congress is a toddler kind of stamping its feet and, you know, putting its hand over its ears and saying, well, I'm going to have my sixth bowl of ice cream anyway. I don't care if I throw up. But maybe this is a backhanded insult of like, I would never look for hope from the action of the 535 clowns serving Congress. I take action from the people who, you know, are around you upset about this bill. And I don't think we would have had the same reaction 25 years ago.

• 49:22Kathryn Anne Edwards?

  I think we have evolved and I take a lot of hope from that.

• 49:25Ed Elson?

  Catherine Ann Edwards is a PhD economist and economic policy consultant. Her research focuses on the intersection of labor markets and public policy, including unemployment and unemployment insurance. She has testified three times in front of Congress about economic policy. She writes a weekly column on the economy for Bloomberg and she is the co-host of the Optimist Economy podcast. Catherine, this was great. Thanks for joining us.

• 49:47Scott Galloway?

  Thank you, Catherine. That was great.

• 49:48Kathryn Anne Edwards?

  Thank you all so much for having me.

• 49:59Ed Elson?

  Scott, what did you make of that?

• 50:01Scott Galloway?

  I thought it was inspiring. I don't, she just strikes me as pretty even-handed and I liked what she said about productivity and kind of fact-checking me on, on the fact I learned that the minimum wage, the best way to peg it, if you want to just do incremental quality, would be to compare it to other wage levels. So I thought it was, I thought it was really good. I thought it was much better than the typical joy bag of donuts, blowhard on a book tour guest we get.

• 50:28Scott Galloway?

  What did you think, Ed?

• 50:30Ed Elson?

  Who are you subtweeting?

• 50:32Scott Galloway?

  What did you think?

• 50:33Ed Elson?

  I thought she nailed it. I love what she said about the, what those tax cuts do to our deficits. I feel like no one really understands that, that if you want to fix this deficit thing, you got to raise revenue in the form of tax revenue. And no, I don't get why people don't have this nailed down in their heads. I mean, yeah, we need to get the spending under control. Let's do that, but also let's fix. Figure out how to raise revenue with taxes. So why are we going after more tax cuts? And why are we gutting the IRS? Which is going to make it even more difficult to get money, to get tax dollars from the richest. Like, this is the big problem. And I love that she just puts the number on it. Thirty seven percent of the deficit. It's all attributable to tax cuts.

• 51:16Scott Galloway?

  I love the way she simplified it, that this strategy isn't working. We've been pursuing the strategy of tax cuts for several decades and it, and it isn't working. And I also like, and we've said, I've often said that the illusion of complexity inhibits progress. That the incumbents will say things like, oh, you know, it's globalization and agility of companies. And they always might come into quality and a bunch of forces that supposedly we can't locate or are impossible to kill, right? And what she's saying is, no, if we were serious about income inequality, the government really hasn't proposed anything serious to try and address income inequality. So I like the simplicity of what she said, the common sense of what she said. And I love that line.

• 51:58Scott Galloway?

  We've been pursuing a strategy of tax cuts for several decades and it hasn't worked.

• 52:02Ed Elson?

  One thing I would have liked some more concrete advice on or perspective on from her was this Gen Z unemployment problem, the fact that young college grads can't find jobs right now. And you mentioned this possibility that a lot of this has to do with AI. I think I agree with that. She seemed to be a little hesitant or think that we don't have enough data to support that, which I'm sure she's right, but I feel like we can, we can go with conjecture at this point. What would be your advice? Or what would be your reaction to the fact that employment for young people with college degrees is hitting its lowest level in years right now?

• 52:45Scott Galloway?

  I mean, you're talking to someone who, when I graduated from business school in 1992, forty percent of my class had a job. So the majority of us at graduate, we'd gone to a quote unquote elite business school and the majority of us didn't have jobs on graduation day. And so it's all relative. What the kids are going through now, and I don't mean to diminish their problems, but when you're talking about college grads and MBA grads, I think what a lot of it is, it's not that they can't find a job, they can't find a job they're willing to take because the expectations have just grown so, grown so dramatically. I mean, the average compensation, I think at NYU Stern is $212,000. So my sense is if a, if a kid wants to go, if a kid writes a letter and says, I just

• 53:29Scott Galloway?

  want to do work and research and I'm a great data analyst. My guess is they write that letter to a dozen people to get a lot of interviews and get a job offer. But I, I don't believe they can't get jobs. I just, I don't think they're willing to take the jobs that are available. And the, I think there's an absence of $212,000 a year jobs at Salesforce being product managers. And I hope that snakes back to universities who have to spend some of their endowment or start expecting more from faculty, a third of which should be put on an ice floe, to offer greater value such that they don't encourage kids to continue to borrow a ton of money from a nice lady in a pantsuit with a big logo over her head saying it's always, it always pays off to invest in your education.

• 54:11Ed Elson?

  Or measure the employment rate of those colleges. The colleges should be on the hook for a low employment rate. If you graduate at that time, you can't find a job. That's the kid's fault, maybe, maybe it's the market's fault, but you could also argue maybe it's the college's fault too.

• 54:25Scott Galloway?

  That's a great point. And I would advocate for, in terms of legislation, I would advocate for, it's really simple. Put universities on the hook for 10, 30, 50% of that student debt. And they're going to start saying, oh, we need to have a conversation. And that is, we're worried you're not going to be able to pay back your loans with a degree in art history. Now, so should you be thinking about making sure you have enough accounting courses? Or do we need to lower tuition such that we don't need to lend so much money? But basically, the people who get let off the hook here are the business schools, are the, are the undergraduate institutions and the business schools themselves that don't

• 55:08Scott Galloway?

  have, they can just dole out money like it's, you know, like it's going out of style and they, but they're not on the hook for it if it doesn't get paid back. And also, one piece of this bill that I actually like is they're suggesting that the profits on endowments of universities with over, I think, a billion dollar endowment goes from 1.4% to 21%. And then a bunch of elite universities have bound together and said, well, what if we agree to spend at least 5% of our endowment every year? And I like that. That's the market saying, look, stop hoarding wealth and start spending your huge endowments on financial aid, expansion of freshman classes, investing in the community. So that is one, like, that is the silver lining that is barely visible from this

• 55:54Scott Galloway?

  this shit show of a cloud called the GOP tax bill.

• 55:57Ed Elson?

  By the way, when I went to Princeton reunions a couple of weeks ago, and they had the sign in, and you get your wristband to go into the into the university, they had all these flyers in the tent when you sign in with these big, bright letters on the flyer saying, we need your help, we need your help. The government is trying to raise the tax on our net investment income on our endowment. And it was like the biggest, it was the biggest message of the day that you need to, you need to help end this, you need to stop this. Meanwhile, you got all this actually bad stuff going on. And this is the, this is the one thing that Princeton gets very upset and all up in arms about, which I just thought that was

• 56:39Ed Elson?

  quite funny, that that was, that was their first message as you come back to Princeton.

• 56:43Scott Galloway?

  And it's interesting. And I went to my reunion and it was so uncomfortable because there were two women there that I had fucked. And I thought, oh, last time I'm coming to a family reunion.

• 56:54Ed Elson?

  That's good. That's good. Let's bring back on The Economist. Ah, productivity, minimum wage. Love it.

• 57:06Ed Elson?

  This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Mia Salvario is our research lead. Isabella Kinsel is our research associate. Dan Shalane is our intern. Drew Burrows is our technical director. And Catherine Dillon is our executive producer. Thank you for listening to Prof G Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow and join us for Fresh take on markets on Monday.

• 57:36Ed Elson?

  You held me in kind reunion. As the water.

• 57:53Ed Elson?

  And the dark skies. And la la la la.