Friday, April 18, 2014

Friday Dump: OR Unemployment, Common Core, Long-Term Unemployment Insurance...and Soccer

Okay, so it has been another one of those weeks - just when it seems the weather has slipped winter's grasp and it's all smooth sailing ahead, my household is beset with illness.  Keeping up with the day-to-day has been a monumental task.  So much so that I haven't been able to pick even the lowest hanging fruit.  But today is Friday, recovery is almost complete, and I can do a quick recap of all the stuff I would have blogged about had I had time...

1) Oregons' job  picture improved again in March.  The state added a very healthy 7,500 jobs and the unemployment rate essentially heal steady at 6.9%.  This last part is actually good news because a steady unemployment rate in the face of strong job growth means folks are coming back to the job market after dropping out.

2) A note on the Common Core standards which are now coming under attack in many localities, including Portland.  I have many concerns about how standardized testing and such common standards impact curriculum but I will say, as an empirical researcher, that I do like the notion at least of a set of national standards.  Why?  Because these will provide real metrics to state policymakers and voters that I expect will show how poorly Oregon is doing relative to other states.  I expect this because I believe that things like shorter school years and larger class sizes are bad for learning - there is enough evidence to be convincing.  But it is one thing to say that other research points to a causal link and to have real comparators.  I think this will lead to more investment in K-12 education in Oregon, which is a good thing.

3) The Long-Term Unemployment Insurance extension that is stalled in the Congress casts a spotlight on the persistent problem of the long-term unemployed in the US.  Josh Lehner at the Oregon Office of Economic Analysis has a nice discussion of the problem with colorful graphs.  

4) Finally, soccer.  The MLS announced its latest expansion franchise: Atlanta.  To those of us old enough to remember when MLS started, this seems like a sad regression.  An NFL owner with a big new stadium looking for more programming brings in MLS to play in a too big stadium on plastic.  See: Kraft and the Revolution.  On the other hand, apparently TV ratings are up significantly for the beginning of the season, so perhaps some momentum is building in that area and an Atlanta-based team will certainly help with the overall TV footprint.

Phew!  Hopefully some more regular blogging next week.

Wednesday, April 16, 2014

Vote for Joe!

Who says economists are not intriguing?  Apparently they are according to The Oregonian, which is running a poll and the quarterfinal match up is Monica Wehby versus local economist Joe Cortright.  Joe cites, as evidence in his favor, his new comic book.  

Let's rally together econ-o-nerds, vote for JOE!

Tuesday, April 8, 2014

Social Progress Index

From The Economist:

I like this quite a lot.  The Economist describes:
Importantly, the indicators do not look at inputs (like spending on education) but only outputs (like literacy). And they hew to social, health and environmental factors, not economic ones—making it unique compared with other indices measuring well-being from the OECD, UN Development Programme and others.

Yet when the SPI is compared with GDP per person, its usefulness shines. Countries situated above the curve do better in terms of social inclusiveness than their economic strength might dictate, while countries below the curve perform worse. "There is a view that economic development and social progress go hand in hand. That's true on average, but not in particular," says Michael Porter, a professor at Harvard Business School who worked on the study. (Matthew Bishop, The Economist's US Business Editor, also served on the advisory board.) Hence, Costa Rica and Iran have similar GDP per person, but exhibit massive social differences. Likewise, Brazil and Kuwait rank about the same in terms of social progress, even though the Gulf country has four times the GDP per person.
This ins't entirely right.  The SPI looks at plenty of inputs as well as outputs.  The details of the Social Progress Index are here.  For example, if the goal is education, the measure looks at literacy but also school enrollments - which is arguably an input.  But it is still a nice, more comprehensive measure of social progress and makes the point that simply looking at GDP per capita misses the entire story (though I will say that the correlation is still quite high and thus GDP per capita is a useful starting point).

It also looks at 'opportunity' which is a bit of a development buzzword and is something that the UNDP has been pushing especially hard.  Included in opportunity are things like 'tolerance and inclusion' which dings more socially conservative societies hard.  

Anyway, here is a nice toy to play with:


Thursday, April 3, 2014

Picture of the Day: Jobs

Via the Wall Street Journal:

Note: these are absolute numbers, so though the red life shows the number at the peak (in early '08), the number of folks entering the labor market between now and then is not represented.  If it were it would be a bit endogenous - in a healthy economy more folks enter the labor force while recessions cause drop outs and delays to entry.  Just something to keep in mind.

The US March jobs report is out tomorrow morning.

Friday, March 28, 2014

Cash and Crime

Sitting here in my office at the World Bank, I came across two little tidbits as I did my quick morning scan of the news and economics articles on the internets.

First, there is this Oregonian article which describes the problem that marijuana businesses face because they are legitimate in the eyes of the State of Washington but not in the eyes of the Feds - meaning banks will not deal with them.  So, it is essentially an all-cash business.  Those involved in the trade worry that this will lead to more crime.

Are their fears justified?

Yes, says this paper by a group of criminologists and economists, who study the changeover from welfare checks to an electronic benefit card in Missouri (it was rolled out at different times for different counties providing a bit of a natural experiment setting) and find that the card was responsible in an almost 10% decrease in crime.

Ok, back to work.

Thursday, March 27, 2014

Fred Thompson: My Last Post on Minimum Wages (I Hope)

 Fred Thompson carries the water this week as I am in Washington, DC giving a talk and working at the World Bank.  

Why do folks get so worked up over the minimum wage? The best evidence shows that the net effects of increasing minimum wages are trivial (the figure on the right plots strength of results on the vertical axis and effect size on the horizontal axis). As Madeline Zavodny put it, the issue appears to be a “maximal conflict over minimal effects.”

Moreover, it is clear that state adoptions of minimums higher than the national standard are not due to differences in economic conditions: wage growth, the cost of living, income inequality, a high proportion of minimum-wage earners in the workforce, etc. That these things should matter seems intuitively plausible. For example, a recent article in Governing magazine categorically states that state minimum-wage increases are driven primarily by growth in the relative cost of living, especially where gentrification and amenity-based tourism amplify inequalities of income and wealth. But, when such claims are subjected to rigorous empirical testing no relationships are found. Minimum wage increases are apparently not driven by absolute or relative economic hardship or, absent interaction with political variables, economic conditions generally.

What, then, explains interstate variations in minimum wages? The best research on this issue done to date fingers politics. My colleagues, Kawika Pierson, and Tim Johnson, and I have replicated much of this research. Our analysis confirms most earlier findings: that minimums higher than the national standard predict subsequent state minimum-wage hikes, that timing matters, and that states, which enact minimum-wage hikes, are almost invariably under Democratic Party control (although not all states that are controlled by Democrats have higher minimums and neither the size of Democratic majorities nor shifts from Republican to Democratic control appear to be correlated with increases in state minimum wages.)

We have extended this line of investigation in three directions. First, we show that a disproportionate number of minimum-wage hikes are enacted during the even-numbered years between presidential elections (so-called mid-term election years). This variable turns out to be significantly more powerful than the number of years since the last boost (federal and/or state), the main timing-related mechanism considered in earlier studies. Second, simple partisan control matters more than ideology. Earlier studies looked at partisan control or ideology, but not both. And, third, after accounting for the election cycle and partisan control, state minimums are found to vary inversely with their cost to in-state consumers, either because states adopting them have few minimum wage workers or because of tax exporting (i.e., shifting the burden of the minimum wage to out-of-state consumers). Most economists believe that if a jurisdiction can export taxes, it will. But our attention to this factor was, in fact, triggered by the SeaTac initiative, which raised the minimum wage “for the airport’s hospitality and transportation workers.”  

We used mixture models with state minimums as our response variable and year fixed-effects and the interaction between Democratic control of the state legislature and low-wage or export employment as a percent of total employment as our predictor variables. Our interaction terms are consistently positive and significant. The interaction terms also dominate any effect that Democratic control (either as a percent or a dummy) or legislative ideology shows on its own. Interestingly, specifications featuring the interaction between Democratic control of the state legislature and export employment consistently outperform those featuring the interaction between Democratic control and low-wage employment. The interaction models involving ideology also work quite well, but are dominated by the interaction of a naive Democratic control dummy (1 when Democrats control the legislature) and the jobs measures. Stated statistically, there are good reasons to think that legislative ideology scores are measuring demand for minimum wages ‘with error’ in this setting, and concluding, therefore, that the real issue is party brand.

As improper as this is, we marvel at the fact that we can explain 40-50+ percent of the variance in state minimum wages net of fixed effects. This seems like a lot of explanatory power given that we are considering only partisan control, the jobs mix, and the election cycle. At the same time, we do not see how these results can be reconciled with the notion that minimum-wage battles are really about the policy’s material consequences. The variables included in our models are simply too feckless for that interpretation to be taken seriously.

Instead, they suggest that the primary function of proposed minimum-wage hikes is rallying the party faithful to fight mid-term elections and that when Democrats actually control legislatures they must often put up or shut up, whether they really want to or not. In other words, the minimum wage, like banning assault-weapons or abstinence-only sex education, is basically a political football, an otherwise largely inconsequential object, given symbolic importance by interparty rivalry.

Of course, minimum wage hikes are also symbolically important as expressions of public concern for low-wage workers. Nevertheless, this legitimate justification is difficult to reconcile with the fact the issue tends to reappear on the legislative agenda every fourth year even in states where the minimum wage is high and indexed for inflation.

Tuesday, March 18, 2014

Oregon's February Unemployment Falls to 6.9%

Oregon's February unemployment dropped below 7% for the first time since August 2008 on the addition of 2,900 jobs.  The February unemployment rate was 6.9%.  The drop in the unemployment rate occurred despite healthy growth in the labor force (which is what would would expect and like to see in a recovery).  Big gainers were in construction and manufacturing.  All of this bodes well for a healthy Spring and Summer.

Friday, March 14, 2014

Picture of the Day: Moving to Oregon

Here is a graphic of inbound and outbound goods relocations from Atlas Van Lines. Lots of folks moving to Oregon.  In general this picture immediately struck me as showing the movement to jobs, especially the North Dakota and Montana bits (Oregon too, in terms of growth rates).

But maybe for Oregon it is just the good beer...

Thursday, March 13, 2014

Soccernomics Redux: MLS is Starting to Make its Mark

This is an interesting (albeit a bit small and too low rez) graphic by Riley Champine, apparently of the U of O, as shown on the Washington Post site.  It shows how, in a number of ways, how the MLS has grown and is becoming a real major league.  Though it fails to mention the biggest challenge MLS faces: TV ratings.

Looking at the map is it any wonder why the MLS is keen to add franchises in Orlando, Miami and Atlanta?

Tuesday, March 11, 2014

Soccernomics: The Kids Love the Soccer

A new study show that kids 12-17 are avidly interested in Major League Soccer as much as Major League Baseball. What is most interesting to me in this study is how, in the last few years, baseball has really fallen off while MLS has picked up.  Given youth participation rates in soccer and the sudden expansion of European football on US television, it is not surprising that MLS has caught the wave.  Plus the level of play int he MLS has steadily improved over the life of the league and while it is still far below the big European leagues it is no longer panful to watch as it was ten years ago.    

And pity the poor NHL: I love hockey but it never made sense to me the sudden rise of the NHL and its expansion into warm winter cities.  I figured it would all unravel, and so it has.  But it is still very viable due to the economics of arenas and the additional programming the sport offers.   For a while that is what NFL owners thought about MLS - which was a disaster.  Seattle is the only place where MLS has worked in an NFL stadium and even there, the quality of the games on that horrible artificial surface is going to be a problem moving forward.

But looking at this is seems like bets made recently by young entrepreneurs like Merritt Paulson look pretty good, eh?  These kiddos don't have a lot of money to spend, but they are growing up fast...

Thursday, March 6, 2014

Picture of the Day: No Progress on Productivity

From the Wall Street Journal comes this graph which illustrates the point I made when I talked about the January Oregon jobs report: there just has not been a big driver of growth - some big productivity enhancement that could really help speed our recovery.  You could argue that the gains in 2009 and 2010 were from firms squeezing the most out of workers in response to slack demand but the gains since then are dismal.

Wednesday, March 5, 2014

The Ukraine Crisis and the Mind of an Economist

Like many which very little knowledge of the region, I have found the crisis in Ukraine confusing.  The 'economics' angle has focus on natural gas and the benefit of the military sea port in Sevastopol.  But, as an economist, this does not tell mew that much.  Yes, contestable resources are important, but modern economics is all about the effect of incentives on behavior and I have found the coverage of the crisis distinctly lacking in its analysis of the incentives on Putin to pursue his current strategy.

Which is why I found this op-ed piece in The New York Times so illuminating. I cannot speak to the veracity of the analysis, but at least it speaks my language: what are the incentives that Putin is responding to.  It may have inaccuracies but the discussion of incentives makes a lot if sense to me:

Mr. Putin’s aim is not a de jure separation of Crimea from the rest of Ukraine. That would be legally problematic and disadvantageous to Moscow in terms of its future influence over Ukrainian politics. The purpose of Russia’s incursion was to obtain the greatest possible autonomy for Crimea while still retaining formal Ukrainian jurisdiction over the peninsula.

A referendum on March 30 is likely to result in a vote for further autonomy, and it would provide Crimea with such broad freedoms that it would become a de facto Russian protectorate. Moscow would then aim to keep the Russian Black Sea fleet in Crimea indefinitely, and remove any limits on its operations, size and replenishment. 
That’s because Russia has a strong interest in nominally retaining Crimea as part of Ukraine. From the disintegration of the Soviet Union onward, Crimea, with its traditionally separatist leanings, was always a destabilizing factor. It served as a direct avenue of Russian pressure on Ukraine, and also guaranteed almost a million “pro-Russian” votes in Ukrainian elections, ensuring the dominance of the pro-Russian eastern half of the country over the nationalist western half.

Ahh ... realpolitik

Tuesday, March 4, 2014

Oregon January Unemployment Fell to 7% on 1K New Jobs

It is slow but it is steady - Oregon's climb out of the deep pit that was the Great Recession continues albeit at a snail's pace.  While job growth was only 1,000 in the black (on a seasonally adjusted basis), the private sector actually added 2,500 while government shed 1,500 jobs.  So we are still talking pretty healthy private sector job growth though clearly not as robust as we would like to see.

Years ago when I was predicting the fall out of the recession, I mentioned that there was no clearly identifiable driver of growth for the future.  This seems even clearer in retrospect: what we are seeing is the unraveling of the economic troubles wrapped up in housing and banking, but no great new productivity enhancing technology like the IT revolution (or innovations in credit markets...heh, heh).

So, while this is good news rather than bad, it is not great.  And in saying this I am consciously repeating a refrain made many, many times in the recent past.  But sometimes slow and steady is a good thing and this is one of those times.

Friday, February 28, 2014

Why Study Economics? Part 37: Big Business Needs You!

Yet another article on why an economics major is awesome!  This time from the Wall Street Journal [HT: Marc Hellman].  Why? Well corporations are waking up to the value of the economist's skill in analyzing data and, in a world of big data, are beginning to respond by hiring economists in droves. 

From the article:
With more data available than ever before and markets increasingly unpredictable, U.S. companies—from manufacturers to banks and pharmaceutical companies—are expanding their corporate economist staffs. The number of private-sector economists surged 57% to 8,680 in 2012 from 5,510 in 2009, according to the Bureau of Labor Statistics. In 2012, Wells Fargo & Co. had one economist in its corporate economics department. Now, it has six. 

"A lot of companies have programmers who are able to process big data," said Tom Beers, executive director of the National Association for Business Economics in Washington, a professional organization with about 2,400 members. "But to find a causality between two things and draw a conclusion really takes somebody with an economics background."
So, what are you waiting for?  Oregon State has an awesome major with four options (including managerial for those interested in business economics) as well as an on-line major that you can do entirely in your underwear! Awesome!  (I just took my boys to the Lego Movie so excuse all the 'awesome's...)

Wednesday, February 26, 2014

Fred Thompson: The CBO Report and the Minimum Wage II

Fred Thompson checks in again with the second of a two-part post on the minimum wage. Part I was posted yesterday.


One big difference between the CBO report and how the CEA spins it is that CBO emphasizes that a minimum-wage hike has costs. To put it another way, the minimum wage is like a tax on low-wage work; as is generally the case, when you tax something you get less of it, but as with any other tax, some folks are also left with less money in their pockets. Figure 2 (in my previous post) shows that the costs to those who purchase low-wage work, either directly as employers (through reduced profits) or indirectly as consumers (by paying higher prices for the stuff made using low-wage labor), is A+B or .5*(16.5 million +17 million)*(2000*$2.50) or $83.75 billion. The net loss is therefore B+D. In other words, the losers lose more than the winners gain, $8.75 billion more, which, as the CBO emphasizes, is in this context a fairly small number (about what it would cost to buy 40 F-35s).

Besides, it is in the nature of transfer programs, no matter how they are financed to take in more than they hand out. Economists call this difference ‘the leaky-bucket ratio.” According to the CBO, the minimum wage’s leaky-bucket ratio is nearly as good as the Earned Income Tax Credit’s – it’s associated with greater allocative inefficiency, but is also relatively less costly to administer. It only costs the losers about $1.10-$1.15 to transfer a dollar to a low-wage worker via the minimum wage.

Nevertheless, the CBO also reminds us that less than 20 percent of low-wage workers are from poor (below the federal poverty line) households, which means that if what we are concerned about is how much it costs us to transfer a dollar to a poor family (rather than to a low-wage worker) via the minimum wage, the leaky-bucket ratio is not nine percent but more like 80 or 90 percent, which is distinctly inferior to the EITC.

The CBO also emphasizes that who bears the burden of the minimum wage matters in two distinctly different ways: its effect on the demand for low-wage workers (negative) and its effect on aggregate demand (positive). In both instances, how much depends on whether its burden is shifted back to the owners of the enterprises that hire minimum wage workers (lower profits) or forward to consumers (higher product prices). This is important to an assessment of the employment effect of a minimum-wage hike, because if most of the tax is shifted forward to consumers, the effect will be small; at the same time, consumption taxes tend to be pretty regressive, if minimum wage hikes are entirely shifted forward to consumers in higher prices, the pockets of the families from whom the cash is taken won’t on average be very much deeper than those to whom it is given.
In contrast, business owners tend to have much deeper pockets than the families of minimum-wage workers. If minimum wage hikes come out of profits, they would have the net effect of transferring cash to folks with a much higher propensity to spend it, thus significantly increasing aggregate demand. Unfortunately, they would also result in a lot of low-wage job losses.

The CBO’s analysis finds that about ¾ of the cost of a minimum wage hike will be shifted forward to consumers in the form of higher prices and about ¼ back to profits, which is how they come to the conclusion that the low-wage job losses from a big jump in the minimum wage will be relatively small. At the same time, this finding is also consistent with the conclusion the distributional burden of a minimum-wage hike will be approximately proportional to income, which is significantly but not hugely different from the distribution of households supplying low-wage workers (see the CEA’s point 2 above, for the magnitudes at issue). Hence, the CBO concludes that boosting the minimum wage tends to increase aggregate demand, but only slightly.

The one kicker goes to the minimum wage’s effect on labor supply and how subsequent minimum wage jobs will be rationed. This could actually go either way: higher wages lead to lower turnover, reducing the amount employers must spend recruiting and training new employees. Paying workers more can also improve motivation, morale, focus, and health, all of which can make workers more productive. In addition, business owners can adjust in ways other than reducing low employment – for example, the CEA mentions accepting lower profits, although replacing low-wage workers with capital or higher skilled workers seems more likely, and would be easy to do if a higher minimum wage induced more higher-skilled workers to seek minimum wage jobs.

Finally, the CBO report looks at the effects of a higher minimum wage on the wages of folks who are already earning more than the proposed minimum wage. Many of those folks can expect to see their wages bumped up. The question is, how much? The study referenced by the CEA simply assumed that the gain to above-the-proposed-minimum-wage workers would be equal to the gain accruing to those below the proposed minimum wage. In contrast, the CBO used the variation in state minimum wages – half of America’s workers live in states where the minimum wage is equal to the federal minimum, $7.25; a fourth live in states where it’s $8.01 or higher; and a fourth live in states where it’s somewhere in the middle – to suss out the size of the effect on those above the proposed federal $10.10 level. It concluded that the effect would be about half of the difference between the proposed level and the state’s current minimum, or about $30 billion altogether.

The CBO report is a great illustration of how state policies serve as laboratories of public policy. Nearly every finding in the report is based upon quantitative comparative analysis of how effects vary as a consequence of different minimums across states and over time. As an economist, with an intellectual interest in this issue, I cannot help but wish that Washington State would soon adopt a $15 per hour minimum wage. I’d really like to see what would happen. As a citizen of Oregon, I’d prefer to learn from someone else’s experience.

Tuesday, February 25, 2014

Fred Thompson: The CBO Report and the Minimum Wage I

Fred Thompson checks in again with a two-part post on the minimum wage.  Part II will post tomorrow.


This Blog has, over time, paid a lot of attention to the minimum wage, arguably more attention than the issue deserves, given that the effects of changing it are small, mostly invisible or somewhat benign. Of course, as the owner of Oregon Economics, Patrick Emerson, observes, the issue is of special interest to Oregonians. The Pacific Northwest already has the highest state minimums in the land and Washington’s Governor Jay Inslee and Oregon’s Labor Commissioner Brad Avakian are calling for further increases. Then too, there’s the SeaTac initiative, which raised the minimum wage to $15 an hour for the airport’s hospitality and transportation workers, and Mayor Ed Murray's push to extend the $15 minimum to Seattle.

Ds often try to push the issue onto the national legislative agenda in midterm election years. President Obama kicked off this year’s campaign in his State of the Union message, when he called for “a fair wage of at least $10.10 an hour.” Minimum wages are popular with voters and many Ds and their constituents really want to see them increased. The looming election, with its focus on legislative races, greatly boosts the likelihood of enacting an increase. Besides, the minimum wage is an effective wedge issue, distinguishing Ds from Rs. Politically, this is a win-win issue for Ds.

Figure 1: US Minimum Wage History

Consequently, you can expect to hear plenty from both Ds and Rs about a report recently issued by the nonpartisan Congressional Budget Office (CBO). It found that a national minimum-wage hike would bump up earnings for 16.5 million people and cost 500,000 low-wage workers their jobs. In other words, a minimum-wage hike will help a lot of low-wage workers and hurt a few.

This is how the President’s Council of Economic Advisers (CEA) spins the report:

1. CBO finds that raising the minimum wage to $10.10 per hour would directly benefit 16.5 million workers.

2. CBO finds that raising the minimum wage would increase income for millions of middle-class families, on net, even after accounting for its estimates of job losses. Middle class families earning less than six times the poverty line (i.e., $150,000 for a family of four in 2016) would see an aggregate increase of $19 billion in additional wages, with more than 90 percent of that increase going to families earning less than three times the Federal poverty line (i.e., $75,000 for a family of four in 2016).

3. CBO finds that this wage increase would help the economy, injecting about $150 billion into the economy each year. (Note, this is not exactly what CBO said. The $150 million dollar figure comes from another study entirely, one which makes some pretty bizarre assumptions. What the CBO said is that raising the minimum wage will probably increase aggregate demand slightly “because the families that experience increases in income tend to raise their consumption more than the families that experience decreases in income tend to reduce their consumption” and only in the near term.)

4. CBO also found that raising the minimum wage would lift 900,000 people out of poverty and that only 12 percent of the workers likely to benefit from a minimum-wage increase are teenagers.

The CEA then goes on to pooh-pooh the CBO’s claims that a minimum-wage hike would probably cost about 500 thousand low-wage jobs, based primarily on a poll of eminent economists showing 80 percent of them think that boosting the minimum wage is a good idea. The CEA simply dismisses the evidence that minimum wage hikes increase welfare dependence or that less-educated single mothers are the folks most likely to be hurt by a minimum wage increase.

So, what does the CBO report actually say, aside from agreeing that a minimum-wage hike is on balance an OK idea? To answer that question I will show some simple analysis and a few numbers. (Note, I’m simplifying the CBO’s analysis a lot, by ignoring states with minimums higher than the national standard, lumping the folks earning more than their state’s current minimum wage but less than the proposed new minimum in with those now earning minimum wages, adjusting start and end points to produce approximately the same sums as the CBO, and assuming the supply of low-wage labor is fixed – doesn’t vary with the wage offered. The supply assumption is clearly counterfactual, but it makes for the strongest possible case for the minimum wage.) My take on the CBO report is depicted in Figure 2.

Figure 2: Effect of a Minimum-Wage Hike from $7.50 to $10

The CBO reports (I’ll get to how they got there in my next post) that the demand for low-wage labor is quite inelastic (doesn’t vary very much when the minimum wage goes up). This conclusion is reflected in Figure 2 by the line labeled ‘D,’ which shows that increasing the minimum wage by a third (from $7.50 to $10) reduces low wage employment by about 3 percent (from 17 million to 16.5 million). In this case, the net gain to low-wage-workers would be area labeled A less the area D, or 16.5 million*(2,000*$2.50) less .5 million (2000*$7.50), which is, $75 billion (here I’ve used 2,000 hours a year as an estimate of full-time work).