Krueger recounts his study with David Card comparing fast-food employment in New Jersey and Pennsylvania after New Jersey raised its minimum wage. Contrary to their expectation, restaurants exposed to the increase did not grow more slowly, and subsequent studies using other data reached similar conclusions at historically modest wage levels.

The researchers initially expected slower restaurant growth
New Jersey restaurants grew at least as much as comparison restaurants
Within-state evidence pointed in the same direction
Later research broadly replicated the employment finding

“And in fact we saw the opposite.”
Alan Krueger · 16:08

“minimum wage increases do not have an adverse effect on employment.”
Alan Krueger · 16:55

#minimum wage#employment#natural experiment#david card

Myth Buster34:51

Why Claims of Political BLS Manipulation Don't Hold Up

Krueger rejects accusations that administrations secretly dictate employment figures. With only the commissioner politically appointed, career economists and statisticians produce the data, while methodological changes follow deliberate and transparent processes rather than election calendars.

Only one BLS employee is a presidential appointee
Career staff produce the employment statistics
Methodological changes receive deliberate review
Imperfect measurement is not evidence of political fabrication

“No serious person doubts the credibility of the Bureau of Labor Statistics.”
Alan Krueger · 36:11

“But it would not make a change in the middle of an election.”
Alan Krueger · 37:30

#bls#credibility#politics#data

Hot Take· 2

Hot Take18:45

Why Krueger Was Skeptical of Secular Stagnation

Krueger acknowledges that the financial crisis caused lasting damage but rejects the assumption that weak growth must persist for decades. He places substantial confidence in entrepreneurship, innovation, immigration, and pent-up demand as forces capable of renewing expansion.

Financial crises can leave lasting economic effects
Long-run stagnation is not inevitable
Entrepreneurial ingenuity can create new growth engines
Immigration and pent-up demand have historically supported expansion

“I'm skeptical of of that view.”
Alan Krueger · 18:45

“I put a lot of confidence in the ingenuity of American entrepreneurs.”
Alan Krueger · 19:00

#growth#secular stagnation#innovation#entrepreneurship

Hot Take43:25

How Fiscal Austerity Held Back the Recovery

Krueger faults Congress for arbitrary sequestration cuts and insufficient investment in research, infrastructure, and education. He contrasts the United States with more austere Europe while noting that state and local layoffs accelerated after temporary federal support expired.

Sequestration cut discretionary spending arbitrarily
Public investment could have supported recovery
State and local layoffs rose after stimulus support ended
Different US fiscal and monetary policies helped outperform Europe

“I think Congress made a major mistake with the sequester.”
Alan Krueger · 43:25

“I certainly take that as pretty strong evidence that the US is doing better because we pursued a different fiscal policy and a different monetary…”
Alan Krueger · 44:10

#austerity#stimulus#recovery#fiscal policy

Explainer· 4

Explainer07:43

How the BLS Produces America's Monthly Employment Data

Krueger explains that the unemployment rate and establishment payroll figures come from separate, large-scale surveys administered by career civil servants. The agency continuously collects, cleans, analyzes, and releases data while maintaining substantial independence from political leadership.

The Current Population Survey produces the unemployment rate
Nearly 400,000 establishments are surveyed monthly
Career civil servants perform the operational work
The BLS earned credibility through consistent professional practice

“Nearly four hundred thousand establishments are interviewed on a monthly basis.”
Alan Krueger · 08:09

“on an ongoing basis, it collects, analysis and releases those data every month.”
Alan Krueger · 08:19

#bls#employment#statistics#surveys

Explainer11:18

Why Employers Voluntarily Raise Their Wage Floors

Walmart, McDonald's, and other employers were raising entry-level pay as the labor market tightened. Krueger argues that wages reflect social factors as well as market forces, with higher pay potentially improving morale, productivity, and retention.

A tightening labor market increases pressure to raise wages
Large employers can impose internal wage floors
Worker morale influences labor-market outcomes
Higher wages may reduce turnover and improve productivity

“The invisible hand doesn't always work perfectly.”
Alan Krueger · 11:23

“worker morale is important.”
Alan Krueger · 12:02

#wages#labor#productivity#retention

Explainer23:37

Why Falling Labor-Force Participation Wasn't Just Recession Slack

Krueger attributes much of the participation-rate decline to an aging workforce, the earlier peak in women's participation, and long-term unemployed people leaving the labor force. A small recent increase could reflect younger people returning from school, but he regards stabilization as a more defensible conclusion.

Baby-boomer retirement lowers aggregate participation
Women's participation peaked around 2000
The decline among women was broad-based
Short-term increases may be statistical noise

“it's the natural evolution of the job market that they exit the labor force, and that's what's been taking place.”
Alan Krueger · 23:55

“I think at best we could say labor force participation is stabilized.”
Alan Krueger · 25:48

#demographics#participation#retirement#women

Explainer26:42

How a Shrinking Middle Class Weakens the Economy

Krueger argues that middle-class contraction harms both economic demand and social cohesion. Middle-income households spend more of their earnings than very high-income households, while a broad middle also gives citizens stronger common interests.

The middle class has been under sustained pressure
Middle-income households have a higher propensity to spend
Concentration of income can weaken aggregate demand
A broad middle supports shared national interests

“The middle class has been under a lot of pressure, and we've seen the middle class shrink.”
Alan Krueger · 26:42

“our country works better when we have a broad middle with a common interest.”
Alan Krueger · 27:02

#middle class#inequality#demand#income

Story· 1

Story49:45

The Auto Bailout Worked Better Than Its Designers Expected

Krueger describes the post-bailout recovery of US automakers as remarkable and cites a study coauthored with Austan Goolsbee. Pent-up demand, restructuring, and improved vehicles helped the industry return strongly after the crisis.

US auto sales rebounded toward 17 million vehicles
Pent-up demand contributed to the recovery
American manufacturers improved their products
The bailout's results exceeded policymakers' expectations

“the adorable good sector has made a remarkable recovery.”
Alan Krueger · 49:45

“it has been far more successful than we expected.”
Alan Krueger · 51:39

#auto industry#bailout#manufacturing#recovery

Q&A· 1

Q&A58:54

Why Nationalizing Major US Banks Could Have Deepened the Panic

Responding to a receivership counterfactual, Krueger argues that taking over Citigroup and other major banks would have required enormous public recapitalization and years of government control. Wiping out one bank's investors could also have triggered selling and runs across other institutions.

Large-bank receivership could last five years or more
Government recapitalization would expose taxpayers to major losses
Wiping out one bank's shareholders could spread panic
The chosen bailout was presented as the least bad risky option

“we would have seen a run on other banks and it would have the problem much worse.”
Alan Krueger · 1:00:53

“So it's it was a choice amongst risky strategies.”
Alan Krueger · 1:03:06

#banking crisis#tarp#receivership#contagion

Takeaway· 4

Takeaway27:51

The Education Earnings Gap Exceeded the Top-One-Percent Shift

Krueger contrasts two inequality calculations. Redistributing the top one percent's income gains would add about $7,000 to the average family's annual income, while the widening earnings difference between college- and high-school-headed households was about $23,000.

Top-end income concentration is only one source of inequality
Education-related earnings differences widened dramatically
The cited education gap was more than three times the redistribution estimate
Specific technical and vocational skills also command a premium

“that would raise the average families income by about seven thousand dollars a year.”
Alan Krueger · 28:03

“the difference in the earnings since nineteen seventy nine has increased by twenty three thousand dollars, over three times as much.”
Alan Krueger · 28:17

#inequality#education#skills#earnings

Takeaway1:03:43

Krueger's Two Criticisms of the Federal Reserve

Krueger says the Fed should have tightened mortgage-lending standards before the crisis and maintained quantitative easing more continuously during the recovery. He rejects the idea that policy rates should have stopped at one percent merely to make conditions appear normal.

The Fed had authority to strengthen lending standards
Minimal down payments amplified homeowner vulnerability
The Fed ended an earlier phase of quantitative easing too soon
A Taylor-rule rationale pointed toward rates below zero

“I think the FED could have done more to prevent the crisis.”
Alan Krueger · 1:03:43

“I think they took the photo off the gas a little bit too soon.”
Alan Krueger · 1:05:43

#federal reserve#mortgages#quantitative easing#financial crisis

Takeaway1:07:15

An Aging Workforce Will Force Businesses to Redesign Work

Krueger identifies slower working-age population growth, reduced immigration, and lower participation as major business-model pressures. Employers may need more flexible work arrangements to attract and retain workers as demographic constraints intensify.

Working-age population growth is slowing
Immigration reform could expand labor supply
Women's participation has stopped providing its former growth boost
Flexible work can help employers attract scarce workers

“demographic shifts are having a tremendous effect on the US.”
Alan Krueger · 1:07:15

“How can they make work more flexible? So they can attract more workers.”
Alan Krueger · 1:07:55

#demographics#immigration#flexible work#workforce

Takeaway1:08:35

Why Economics Needs More History and Intellectual Diversity

Krueger says economists often cling too tightly to existing beliefs and update too slowly when evidence changes. He argues that economic history should be part of the discipline's core because past crises contain patterns essential to understanding modern manias, panics, and crashes.

Economics lacks sufficient diversity of views
People can resist updating beliefs despite contrary evidence
Graduate economics underemphasizes economic history
Past financial crises illuminate recurring modern patterns

“I think people cling very tightly to their views and maybe that human nature, people are slow to update, to change their mind in spite…”
Alan Krueger · 1:08:38

“I'd like to see economic history become a part of the core and economics.”
Alan Krueger · 1:09:20

#economics#history#evidence#financial crises

Frameworks in this episode

Efficiency-Equity Policy Framework

Labor-Market Signal Stack

Insights & moments

⚡Myth Buster· 2

The Border Study That Changed Minimum-Wage Research