Monthly Archives: February 2015

Why rising wages might be bad news

By Matt O’Brien

Source: Council of Economic Advisers

Source: Council of Economic Advisers

It only took seven years, but the economy is almost back to normal.

Emphasis on the word “almost.” Unemployment, long-term unemployment, and shadow unemployment aren’t, as Fed Chair Janet Yellen told Congress on Tuesday, all the way back to where they were before the crisis, but they’re getting close. Even better, people are feeling a little more confident about quitting their jobs. Put it all together, and wages should start rising more soon, from the anemic 2.2 percent they are now to the 3.5 to 4 percent they should be.

Well, maybe. It depends on how much shadow unemployment is left. That’s everyone who’s not officially “unemployed“—not working, but actively looking for a job—but basically is. That includes people who have part-time gigs but can’t find the full-time ones they want or have given up looking for now, but will start again once things look better. It’s hard to get a handle on how big a problem this is, but one of the better measures is the labor force participation rate. It tells us the percent of people who have or are looking for a job. And it’s not normal. It’s at a 35-year low.

Now a lot of this was inevitable. The participation rate was always going to fall when the Baby Boomers started retiring. The crisis, though, has made it fall even more than that—but just how much is hard to say. The White House, as you can see above, calculates that about half the decline is due to aging, which is in line with other estimates. Another chunk is due to the crisis. And the rest is unexplained. (That’s the blue part of the graph). It could be that people …read more


Where Shake Shack has McDonald’s—and most other fast food chains—beat

By Roberto A. Ferdman

A much-shared experience. (Photo by Ricky Carioti/The Washington Post)

Shake Shack isn’t the largest fast food company in the country, but if the high-end hamburger chain’s social media presence is any indication of its potential, it might very well have the brightest future.

The chain’s competition, restaurants like McDonald’s and Burger King, frequently advertises on television, radio, and elsewhere. But Shake Shack has instead chosen to invest in building an audience on social media platforms like Instagram and Vine, where the country’s youth are disproportionately active. And it appears to be paying off, according to a new report by Goldman Sachs.

Not only has Shake Shack won the brand the goodwill of America’s younger fast food eaters, it has resulted in a cult-like following online that few, if any, other fast food companies can claim.

“[Shake Shack] does essentially no traditional marketing, but has a strong presence on social media, which speaks to its relevance among Millennials,” writes Goldman in its analyst report. “Using both Vine and Instagram as examples, its followers are much larger than what its system sales would suggest.”

Indeed, when you adjust for sales, Shake Shack is in a world of its own on Instagram.

Shake Shack instagram

Shake Shack doesn’t have the largest Instagram following—it has only 155,000 compared to Mcdonald’s nearly 500,000, Taco Bell’s almost 490,000, and KFC’s 250,000. But it has by far the biggest audience compared to its size. McDonald’s, remember, sells more than 300 times what Shake Shack does in burgers, fries, and other fast food fare; and Taco Bell outsells it by more than 20 fold.

The same is true for Vine, where Shake Shack has fewer followers but far more relative to its size.

<img src="" alt="Vine …read more