Mortgage Cramdowns and Monetary Accommodation

There have been programs for mortgage reductions and calls for more.  It strikes me as an unusual position.  Essentially, it is a type of bankruptcy proceeding where the equity holders retain full ownership.  I see the proposal being proposed for homeowners.  I wonder if anyone ever proposes it for commercial contexts?  Where the government intervened with GM to alter the proceedings against the bondholders, it appears to have been for the benefit of the labor unions, not the previous equity holders.

I wonder how markets would differ if that was the norm.  What if bankruptcies triggered haircuts for creditors, but equity holders  retained their ownership?

Debt would be a lot more expensive and a lot more cyclical.  Creative destruction and flexible asset allocation would be hampered.  Banking would be very difficult.

Is the housing context so different from the commercial context that the case for housing cramdowns could be that much better than the case for equity-friendly corporate cramdowns?

I suppose an Austrian critique of monetary policy is that monetary accommodation is exactly this - a haircut for creditors while the equity holders retain control, which hampers creative destruction.  So, maybe the incoherent position would be to support monetary accommodation but not to support housing cramdowns.

But that is my position....Culturally, or pragmatically, we accept that the underlying value of currency is flexible, whereas the legislated alteration of mortgage contracts seems like the undermining of the respect for contracts, an important feature of a civil economy.  I'll admit that this is a somewhat arbitrary distinction.  Both actions involve discretionary public policy with clear winners and losers.  Hmm, cognitive dissonance....

If we are the 100%, then who will be the scapegoat?

On the heals of yesterday's post, I came across this unfortunate post by the usually great Bill McBride, at www.calculatedrisk.com.  In it, he pulls out the old canard that corporations like high unemployment because it pulls down wages.  To concoct this story, you begin with (1) the truism that prices move inversely to excess supply, so that, similar to any good or service, wages tend to stagnate when unemployment is high.  Then, you add (2) the truism that, as with any buyer, a corporation would prefer lower prices over higher prices.  Sprinkle liberally with assumptions of sociopathic levels of self-interest, and a wink-wink about how we all KNOW how THEY are, and Voila, you have (3) corporations love it when you are hurting.

He even manages to point to the very Paul Krugman quote that I originally linked to critically on this topic, at the end of this post.  Of course, he likes Krugman's comments.

Here is a quote McBride has from Kash Mansori:

[T]his opens up an interesting line of reasoning, one that is certainly not new but which this data reminds us of. If a bad labor market means that workers get a smaller share of the productivity they bring to their employers, then the owners of companies will have a strong preference for a weak labor market. Firms don't like recessions, of course -- it's hard to make money when your sales are falling. But companies do enjoy the way that a very slow recovery in the job market can allow them to keep wages down, and thus keep a larger share of the output of their workers for themselves. 

Let's see.  How about this:

If recessions mean that firms don't have enough demand for their products, then consumers will have a strong preference for a weak economy. Consumers don't like recessions, of course -- it's hard to make money when you lose your job. But consumers do enjoy the way that a very slow recovery in GDP can allow them to keep prices down, and thus keep a larger share of the output for themselves.

How about this:

If a supply shock means that consumers have a shortage of products and services to choose from, then workers will have a strong preference for natural disasters. Workers don't like natural disasters, of course -- it's hard to make money when your town is in disarray. But workers do enjoy the way that natural disasters create demand for labor at high wages, and thus they keep a larger share of the output for themselves.

Of course, that last version is sometimes stated favorably!  In fact, replace "natural disasters" with "immigrant roundups" and many people consider it the explicit basis of public policy!

So, I just stated the same argument with the characters changed.  Oddly these three paragraphs garner very different reactions:

1) Exactly!  We need to counteract this terrible preference that corporations have!

2) That's stupid.  Of course consumers don't want the economy to be sour.

3) Exactly!  The destruction is terrible, but at least it will put people to work!

I would like to put a vote in that our reaction to version #2 is the correct reaction to all the versions.

By the way, here are US Total Compensation and US Domestic Corporate Profits, Indexed to the previous peak of profits in 2006 3Q.  First, a close-up since 2006, then a graph all the way back to 1947.

And let's be clear about what these three gentlemen above are declaring: that corporations (the BLUE line) secretly like extended economic dislocations because it gives them an advantage in bidding down labor compensation (the RED line).  Without further comment, here are the graphs of Wall Street's "Dirty Little Secret":

 

 

Well, OK, I will make one further comment, because I realized that this is another example in a running theme here at IW that interpretation trumps everything.  Here is the article at "A Wealth of Common Sense" that triggered Bill's rumination.  The article discusses how times of economic distress are good times to invest with risk.  But, there is nothing in that article about corporations gaining at the expense of labor.  The closing paragraph is:

Yet it’s still true that expectations matter with forward looking markets. This is why the best time to invest is when assets are beaten down in price with low future expectations as opposed to those times of sky high expectations and large price increases.

This was an article about sentiment and contrarian mentality.  If anything, the article runs along with the point I have been making - we're all in this together - capital recovers when labor recovers.  Yet for Bill McBride, the article reinforced the exact opposite viewpoint - that corporations recover at your expense.

You know those little toys you can get where you can only read a secret code if you place a little red plastic lens over it that filters out some of the colors?  In complex matters, most of the time we don't need the little plastic lenses - and I'm talking about all of us here, even though it's going to take someone else to point my filters out to me.  That's the thing about filters.

We are the 100%

This chart is kind of messy, but it basically outlines a problem with a lot of commentary I see on the economy.

This compares growth in commercial loans, the unemployment rate (inverted), inflation adjusted wage growth, and inflation adjusted short term interest rates.  This is a mixture of quantities and prices and it's also a mixture of labor and capital.  And, they all basically move together....

The economy is overwhelmingly more complementary than competitive.  When more labor is utilized, more capital is utilized.  When the price of labor rises, the price of capital rises.

So, analysis that says that rising wages will lead to inflation or that rising wages means labor has more bargaining power is flat out wrong.  Unemployment is falling because frictions in the marketplace are being worked out.  Wages are rising because those reduced frictions mean the pie is getting bigger.  More workers, more loans, higher wages, higher returns - these are all products of an economy functioning well.  This is a tidal chart, and all the boats are being lifted together.

Analysis that says rising interest rates is usually the result of a tightening Fed, tamping demand for credit, is flat out wrong.  Rates rise because the economy is functioning better.  The Fed is usually only able to raise the Fed Funds target because the improved economic context is expanding investment and returns.

Policy and punditry that focuses on good guys and bad guys, pitting labor against capital, takings and givings, can be satisfying, and it seems so right.  But, it only seems right because our brains evolved in a Malthusian context.  I know so many people who recognize the value of the human ability for acceptance and empathy toward diverse and wide-ranging cultures and lifestyles, but when it comes to economics they turn into a bunch of feces throwers.  Sometimes these monkey-minds we all are saddled with will just see what they are going to see.  I don't know if we can ever get safely beyond these predilections.  Whether it's with military adventures or social and economic planning, we are suckers for leaders who want to "get tough" with somebody, to our own detriment.

I dream of a world where we all imagine those we want to get tough with, and we vote instead for generosity and trust, where capitalists and central bankers see rising wages and feel hopeful, where workers see high corporate profits and feel a swell of good cheer.

Here's an even messier version of the graph, with the YOY change in public equities added (the orange line).  The main difference is that equities, being a flexible and residual measure of ownership, are a leading indicator...a sort of canary in the coal mine.  If you're ever in a coal mine, and the foreman says it's time to "get tough" on the canary, you probably don't want to stick around to see how it turns out.

Labor Force Participation for "Prime Age Workers"

Bill McBride has a great piece on labor force participation for "prime age workers".  This is referring to workers 25-54 years old.  There is some tradition in using this indicator.  But, the fact of the matter is that LFP rates for 25-29 and 45-54 year old workers is lower than it is for 30-44 year old workers.  All the lowest participation age groups within this set are unusually populated right now.  The decline in prime age worker LFP is still capturing a lot of demographic factors.  Breaking LFP out in 5 year baskets, all of these age groups generally follow long term trends, except for the 25-29 year old male category, which has an unusual decline of about 2% over the past decade.  So, we can debate what is happening with 20-somethings, but this just isn't a story about 41 year olds.  The thing is, the data to clarify this error is readily available.  There is no excuse for making this mistake.

I think generally what is going on here is that the "prime age workers" category is a source of data that is seemingly credible but is currently providing a false signal for LFP pessimism.  Frankly, I think an article using "prime working age" to make pessimistic points about LFP mostly just informs the reader of two things.  (1) The author has a preconception that LFP has been especially bad and that the unemployment rate understates problems in the labor economy, and (2) the author hasn't taken some very basic disciplined steps to check their preconception.

I don't mean to be too harsh.  This is an example of how difficult analysis of the economy is.  We are all engaged in a battle against our own self-dealing misconceptions and lack of understanding.  If we're lucky, we might occasionally find a window into the chaos that gives us a slightly less misinformed viewpoint.


from Sober Look

In fact, here is an excellent post pointing to my possible ignorance, from soberlook, that makes a strong case that the US labor force participation has a real problem that isn't just about aging demographics.  Here are a couple graphs from the article.  The Canadian comparison is very compelling, although the case there does not look like it's a cyclical issue.  Canada has been on a different trend than the US for nearly 20 years.  I suspect that this points to our disability program that locks people into dependence.  Nearly 9 million, or almost 4%, of adult Americans are on disability.  Canada doesn't even have a national level program, from what I can tell.

This could be pulling the labor force participation levels down for 50-65 year olds in the US in a way that makes demographics much more of a dampener here than it is in Canada, without appearing in the age group data as a significant deviation from trend.

Here are comparisons of male labor force participation that I found at Fred.  Much of the gap appears to be coming from the older age group that is most heavily affected by disability programs in the US.  Participation is actually growing in this group, but not as sharply as in Canada.



from Sober Look

Another graph from their post appears to show a sharp change in trend concurrent with the recession among workers with less than a high school diploma, but the level of participation is significantly higher than it was anytime before about 2004.  This data only goes back to 1992.  It begins at about 41-42%, declines slightly, then begins climbing in the mid-1990's, until the recession.  I wonder if these trends relate to Welfare reforms during the Clinton presidency and recent changes in Federal social policy that may have added frictions in low wage and marginal labor markets.

The change in trend among less than high school workers is sharp enough that there is probably some policy or cyclical issue at work, but this could be similar to the disability issue, in that this is a category deceptively influenced by baby boomer demographics.  Here is a graph of educational attainment over time from this article.  This category is skewed toward older workers, so this is not a measurement that we would expect to be stable over time.  This peak in LFP for this category could mostly be a product of a mass of "less than high school" workers reaching ages that peaked in typical LFP in the 2000's.  Actually, thinking about it, this is probably much more of a factor than policy issues.  Less than high school education level is fairly stable at around 11% for all age groups under 65 years.  But, for 65+, it's about 19%.  So, as there is generally an age-related decline in aggregate LFP, this group should have been seeing more of a demographic decline, since there is an especially large number of these workers who are now over 65.  I'm surprised that LFP in this group didn't begin declining earlier.  And, I would expect the demographic factor to be largely baked in at this point.  If this is simply demographics, we should see this group's LFP stabilize.

I still think a careful look suggests structural issues over cyclical ones, although even if the issue among the less than high school workers is structural, the structural and cyclical issues are intertwined.



April 2014 JOLTS

JOLTS were reported Tuesday, and Job Openings jumped in April, putting the Beveridge Curve in territory that would have signaled full employment 10 years ago.  This is great news.  I think it signals that the employment strength we have been seeing in the last couple of months is not a statistical aberration, and it gives me more confidence that we will see more employment gains over the next couple of months.

One caveat, though, is that the 2000's vintage Beveridge Curve was not typical.  The JOLTS data doesn't go back any farther than that, so it's hard to find versions of the relationship tying into older data.  Here is one that I've found from the Federal Reserve Bank of San Francisco.  The relationship in the 1970's and 1980's would target us at 8% unemployment or more with April's Job Openings level.

We all like to push our own policy preferences onto these statistical canvasses, and I'd like to do that as much as the next guy.  But, the 70's and 80's had their own, minor, baby boomer generation that was hitting retirement, and I wonder if the rightward shift has to do with behavioral tendencies of an older work force that tends to be unemployed less, but for longer durations, than younger workers.  Maybe a 3.1% Job Openings rate corresponds to a 6.3% unemployment rate in the current demographic context.

On the other hand, the difference between where the Beveridge Curve is now and where it was 10 years ago is roughly equal to the unusual number of very long duration unemployed, which is probably a combined product of demographics, EUI, and the recession.  The shape of the distribution of unemployment durations would suggest that the Beveridge Curve has more room to shift back to the left.  We are, after all, still to the right of all historical Beveridge Curve locations outside of that 15 year period in the 1970's & 1980's.

Here are graphs of the trends in Openings, Quits and Hires, and the long term levels of all the JOLTS categories (below).  I would have been ecstatic if we had seen a rise in Quits along with this rise in Openings, but still, trends remain positive.

Also, here is a graph of employment flows, through May.  These kind of tell a similar story to the other indicators.  Flows into and out of Employment and Unemployment are roughly back at a level that would normally correspond to full recoveries.  But flows into and out of the Labor Force remain high.  Again, this points to a labor market mostly functioning at recovery levels, but with a large pool of marginally attached workers.  I see lots of narratives about this group that are really more about the narrative authors than they are about the group itself.  I suspect that all those narratives and more exist here, so if we take everyone's expectations and throw them in a blender, we'll get a decent picture of what to expect.  I think there is some upward drift in the Labor Force flows over the past 20 years, having to do with the demographics I discussed above, so I suspect that unemployment will continue to retain an extra 0.2-.03% of marginal workers, even in full recovery, but most of this group will slowly re-enter the workforce.

I think this is reinforced by the Quits data.  It has not shifted like the Openings data has, in relation to unemployment.  I felt like it pointed to a slightly overstated unemployment rate a few months ago, but with the recent decline in the unemployment rate, the Quits/Unemployment rates seem to be in line with previous levels.  This suggests that current workers see the current groups of unemployed workers as potential competitors, which, to me, argues against the narrative that the unusual group of very long term unemployed is a product of a skills mismatch.  If that was the case, workers would be quitting as if unemployment was at 5%.

Whatever the factors are that are keeping unemployment over 6%, it looks to me like the nuts and bolts of this economy are ready to finish the labor recovery this year.

Interest Rates in Late 2014

Could we see another summer bump in interest rates?

Here is a simple version of a Taylor Rule rate, which is now at 2%.  I realize that the Taylor Rule is not necessarily applicable in the current climate.  And, I would even argue that the Taylor Rule overestimated the natural rate by about 2% in the 2000's and could be overestimating the natural rate by up to 3% to 4% now.  This would have to be the case for the current yield curve to be reasonable, because the Taylor Rule rate would be somewhere near 4% by the time the market expects the Fed to raise rates.  I'm not sure that that is the case.  One sign regarding this issue will be how inflation behaves over the next year.  Seasonally adjusted, month-over-month inflation, while noisy, is showing an increase.

Weekly updates on loans and leases in bank credit also remain strong.  The three charts below all have a $500 billion scale over 4 years to show the relative performance of Commercial & Industrial Loans, Real Estate Loans, and Consumer Loans.  Real estate is, by far, the largest absolute pool of bank credit, so the capacity for real estate loans to add to credit growth is substantial.  So far this year, consumer and industrial credit has been growing at an annualized rate of more than 5%, which is about the lowest level of growth we would expect to see in a sustained recovery period, and that has mostly been due to growth in Commercial and Industrial Loans of more than 10%.  The real estate credit market will be an area to watch.  I expect to see a sharp recovery.

These factors kind of multiply on themselves.  If home prices continue to rise, household net worth will improve, fewer homeowners will be underwater, and the rise in price itself will feed more housing demand.  Mortgage costs are very low compared to rent, so this should be a multiplicative mechanism for some time.  Similarly, rising inflation might signal that monetary policy has become loose at the current levels of interest rates and excess reserves.  This will be a signal that both (1) the Fed will raise rates earlier than we expected, and (2) the natural rate is closer to the Taylor Rule rate than we thought it was, suggesting that rates will need to rise faster and farther than we thought.

On a month-over-month basis, inflation has now shown 2%+ level growth for two months.  The May readings will be very interesting.

We could very easily be sitting here in September 2014 with inflation at 2.25% unemployment at 5.8%, and bank credit growing at 10% per year.  That would trigger a sharp change in attitudes toward interest rates.  I think that is the position to have exposure to right now.

Corporate spreads have recently fallen to ranges that typically coincide with rising rates.  Here is a graph comparing various spreads with the level they were at in June 2004 when the Fed Funds rate began to rise.  And another graph focused on more recent movements.  I think we should take these as a signal of the state of credit markets.  Continued spread compression along with expanding credit would suggest strong supply and demand in credit markets.

PS.  Don't misunderstand me.  I am not arguing that the Fed is too loose and needs to tighten.  I am saying that we have been in a context where monetary policy has been too tight, even with rates were near zero and the Fed expanding its balance sheet.  But, if this economy continues to recover, there could be a bit of a tipping point where increasing inflation and expanding bank balance sheets mean that the Fed would need to follow rates up in order to prevent inflationary developments.  I would still want the Fed to be fairly accommodative, but the interest rate is a moving target, and the time for a 2% interest rate target that is somewhat accommodative may come sooner than it now seems like it might.  We should hope for this outcome.

May 2014 Employment Review

I had wondered if this month would confirm a strong employment trend, which would have corresponded to a range of 5.9%-6.3%.  Or, this month could suggest that trends are continuing along the long term pace and last month was a statistical aberration, which would have corresponded to a range of 6.1%-6.5%.  The month came in at 6.3%, and it looks like a combination of the two.  There was some statistical reversion compared to last month, but with some hopeful signals.

The first graphs here are from flows data.  These are pretty noisy numbers, so it is tough to see much change from month to month.  All of these flows reverted back from last month's strong movements, which was expected.  The trends are all moving in the right direction, but last month's improved unemployment numbers were partly from unusual movements.

The next graph is the comparison of insured unemployment and total unemployment.  There was some snap-back this month.  This will bounce around from month to month, as all of these indicators do, but last month's drop in unemployment was much closer to the trend in this relationship than this month's pause.  This points to more potential for falling unemployment in the coming months.

The remaining graphs are related to unemployment by duration of unemployment.  This data shows strong confirmation of less persistent unemployment coinciding with the end of EUI.  First, regarding this month's unemployment, the total number of unemployed workers remained about the same as last month.  But, note that this comes from an increase in very short term unemployment and a decrease in long term unemployment.

Both initial and continued claims on unemployment insurance have been declining recently, so this increase in short term unemployment is probably either (1) the result of a surge in quits (which we won't be able to confirm until JOLTS data for May is released in July), or (2) the result of a statistical aberration in the May numbers, overstating unemployment.  Both of these would be reasons for bullishness on employment.

This improvement in unemployment churn is evident in the % of long term unemployed exiting unemployment, which surged this month to more than 38%.

The next graph is the unemployment by duration graph, again, but in line graph form.  This helps to see the shape of unemployment over time, and the change in unemployment durations as we have left EUI.  I was originally wrong about exactly how this would play out, because I didn't fully account for the fact that many of the very long term unemployed have timed out of even EUI.  So, there is a group of very long term unemployed that is slowly shrinking, by about 0.05% of the labor force per month.  They are not effected by EUI.  By the end of 2013, for unemployment durations under about 75 weeks, the labor market was fairly normalized, but EUI and the existence of marginally attached workers and very long term unemployed workers were continuing to push unemployment durations higher.  The end of EUI increased the exit rate from unemployment for workers across durations.  This is visible in this line graph.  The decline in very long term unemployment has continued to decline at a stable pace.  But the big change in the past 8 months has been the additional decline in 5-26 week unemployment (which also pulled down the "over 26" category at a stronger pace).

This has probably mostly played out at the lower durations.  As these cohorts age, the longer duration categories will inherit smaller cohorts because of these higher exit rates, so that, over time, long duration unemployment will decrease as a result of employment trends that are already established today.  Generally, long duration unemployment in the near future can be roughly estimated by the relative behavior of the shorter durations.  Next is a graph comparing actual long term unemployment to the unemployment predicted by shorter durations.  Here we can see how there was unusual employment behavior specific to "over 26 week" durations.

The next graph shows the difference between the forecasted long term duration unemployment and the actual long term unemployment.  I consider this to be a rough approximation of the number of very long unemployed workers.

May's continuation of these trends continues to suggest that, excluding the very long term unemployed, the unemployment rate is down to about 5.3%.  A 5.5%-5.7% unemployment rate by the end of 2014 still seems reasonable.  Compared to today's 6.3% rate, in broad terms, it looks to me like about 0.1% will come out of 15-26 week durations, about 0.2%-0.4% will come from the natural continuing decline in "over 26 weeks" as the higher exit rates of recent cohorts continue to move through the durations over time, and about 0.3% will come from the continued decline in very long term unemployed (shown in the last graph).

Optimistic Take on Unemployment

Here is an optimistic take on unemployment from Jeff Stibel at the Harvard Business Review.  (HT: Tyler Cowen)  He forecasts an unemployment rate of 5% by July 2015.  His reason is that small business expansion has been very laggardly in this cycle, and is just now entering the acceleration phase that we would normally see earlier.

This recession was marked by an overall decline in small businesses (typically we see small business starts accelerate), decrease in mean employment size of small businesses, and a lack of turnover for the most tenured employees. All of this led to high unemployment rates. Optimism indexes show a similar trend: bigger businesses have gained in optimism at a faster pace than their smaller counterparts, contrary to past recoveries.Contrast these trends with what has happened historically and it is clear that these anomalies are critical; any projection that relies too heavily on historical patterns is likely to be imprecise when the historical account materially differs from present events.
Moreover, the trends we’ve seen since the beginning of the recession are beginning to shift. Our data is finally showing that the smallest of businesses are growing  more optimistic about their prospects, which will eventually lead to the increased hiring that typically comes at the start of a recovery. If the trend holds, it means that the typical post-recession jobs growth will be inverted during the current economic recovery. Thus, we should begin to see an acceleration in new jobs and rapidly decreasing unemployment.

There are a large number of factors that could be in play here.  One factor could be the influence of real estate equity in small business and start up funding.  Possibly the delayed recovery of housing and of small business employment are related.

In any case, the thesis appears to be built on some of the uncontroversially peculiar trends in this cycle.  I would add that the commenters on the article have created an almost museum-quality demonstration of all the biases and "mood affiliation" positions that can create a profitable tradable position if they are held universally enough.

May 2014 Employment

It's hard to know what kind of movement we will see in the unemployment rate this month, after such a sharp decline last month from 6.7% down to 6.3%.  Unemployment insurance claims continue to signal optimism.  Here are the weekly figures in initial and continued claims:

The second graph is my comparison of continued claims to the unemployment rate.  As with last month, there are two trends working in the favor of good news.  One is that continued claims have been declining dramatically, which should coincide over time with a general decline in unemployment.  The other trend is the convergence we should expect to see between the actual unemployment rate and the unemployment rate we have historically seen relative to the insured unemployment rate.

Of course, there is a lot of noise, month to month, with all of these indicators, but the trends look positive.  I believe that the divergence from historical unemployment levels was related to the generous level of Emergency Unemployment Insurance (EUI), which ended at the end of 2013.

The new level of continued claims would correspond to an unemployment rate of 6.1% without any additional convergence to the historical unemployment level. (edit: this estimated May level is the last point on the blue series in the graph.)  If the end of EUI is creating a new trend with a more steeply declining unemployment rate, then this month could see another gap down, with an expected range of, say, 5.9% to 6.3%.  The decline in continued claims may be a result of generally faster unemployment exit rates across unemployment durations, related to the end of EUI.  If that is the case, then we should expect there to be a convergence to historical trends along with the decline in UI, since there should also be an increase in unemployment exit rates for unemployment of durations slightly over 26 weeks, in addition to the decline in unemployed workers who are still eligible for regular UI.  So far, however, there appears to be a population of very long term unemployed whose exit rates remain very slow and, lacking a change in their own trend of employment behavior, will slow some of the convergence to historical levels until well into 2015.

If I am wrong about this new trend, and last month was mostly a noise event, we might be looking at an expected range of more like 6.1% to 6.5% in May.

Another Look at Minimum Wage Labor Force

The other day, I looked at this relationship.

In that post I looked at the annual change in the number of minimum wage workers compared to the annual change in the relative minimum wage:

I also looked at the historical levels of minimum wage employment to historical relative minimum wage levels, compared to the EPI estimates:

In this post, I thought I would compare the scatterplot of annual changes to the trendline that would be implied by the EPI estimate:

Also, I have extended the linear trend of the EPI estimate to the minimum wage levels that were in place back to 1979 (about $11.90 in current dollars, as a proportion of average wages):

It simply seems implausible to me that this relationship has shifted to this degree.  Assuming no job losses and a linear behavior (which is probably conservative compared to EPI's accelerating curvilinear trend), at a minimum wage of $11.90, the EPI trend would imply that 20% of the labor force is currently working at that wage level or less.

Just to clarify, the notion that MW causes some job loss only proposes that some portion of this huge difference is due to job loss.

The notion that MW causes no job loss would depend on this entire shift being due to an exogenous shift in wage distribution.  It would have to depend on an average increase in minimum wage workers as the MW increased that is incrementally steeper than it has ever been in any single annual data point in the last 35 years, including the most recent MW increases.