Friday, February 16, 2018

Top Black Business and Economic Stories for Jan Feb 2018

Top Stories

The US African American unemployment rate recorded an all time low of 6.8 percent in December, 2017. The rate was the lowest ever recorded by the Bureau of Labor Statistics. However, the rate jumped back to 7.7 in January (when the author was laid off from his current job).

The current employment press release plus additional historical releases are available here:

President Trump and Jay-Z feuded publicly over the Black unemployment rate.

The low unemployment rate is also a distraction from another important issue: Basically the new jobs created really stink! The jobs feature low pay, poor working conditions, few benefits, no training and no promotional path. So, who cares how many bad jobs we create; give us some good jobs!

As of Feb.14th, VP Mike Pence is stilling claiming the Black unemployment rate is at a record low despite a spike up to 7.7%. 

The mistake illustrates two points: One, the Black unemployment rate is volatile and moves around a lot.  Two, the current presidential administration is incredibly uninformed and naive about economics, Black unemployment or the stock market. Facts just don’t seem to matter.

Finally, Brookings has a more detailed piece on the same issue. Black Unemployment at Record Low.

Reveal has a big, important story on continuing mortgage loan discrimination (redlining) in cities against Blacks

and another story about  specific banks who are discriminating in mortgage lending

Associated Press also has the story in an easier to read form

General News

Entrepreneur magazine has a slide show of 7 female black entrepreneurs.

Interesting entrepreneurs in the article include:

Arlan Hamilton – Back Stage Capital
Tracy Reese – Tracey Reese Designs
Jessica O. Matthews -- Uncharted power – power from movement including toys and soccer balls

Janice Bryant Howroyd seems to be the media’s favorite Black entrepreneur of the month during February. She is pretty much everywhere.
Several publications have profiles of Janice Bryant Howroyd, who is founder and chief executive of ACT-1 group, a personnel services company. The company has done well as large corporations down-size and outsource Human Resource functions.

Another story about lack of diversity in tech. Article speculates on diversity increasing revenue by $400 Billion. A little bit of a stretch. 

The week of Feb. 11th to Feb. 18th, 2018 is also Black restaurant week

National Public Radio also has a story

Jessie Jackson is calling for southern corporations in Tennessee, Arkansas and Mississippi to increase Black hiring and support of Black Business. The Memphis Commercial Appeal has the story.

Politics and Policies

The partisan creation of election districts (gerrymandering) has polarized the political process.

Research Papers

Here is an old but important link to “Diversity in High Tech,” May 2016, US EEOC

Executive Summary

Full report

Interesting / Other

T-shirts with famous Black people as colleges and universities. We like university of Baldwin.

The “Buy the Block” website aims to get Blacks to invest in real estate.

And finally, deeper reads

Go back and read the Reveal story on mortgage discrimination right now!!!

Monday, February 5, 2018

Hispanic/Latino Unemployment Rate also Hits Record Low

The Hispanic or Latino unemployment rate in the United States also hit a record low of 4.8% during June 2017 and November 2017. The recent record high was in August 2009 when the rate hit 13.0%.

There are large difference between Hispanic male and female labor participation rates. About 80% of Hispanic men 20 and older work while only 58% of Hispanic females work. The male unemployment rate for Hispanic men is 4.3% while the female rate is 4.5%.

Friday, January 26, 2018

Decreased competition to blame for flat wages: Both Monopoly and Monopsony contribute to the problem

We are finally getting some good research on why wages have not grow in the US for 45 Years.  The answer is decreased competition and corporate over-consolidation.  When companies have monopoly and monopsony power they raise prices and lower the cost of inputs. Labor is a key input.

Monopoly is a market with a limited number of sellers. Monopolists charge higher prices because they face little selling competition. Monopsony is a limited number of buyers. The pay lower buying prices because of limited buying competition.

Once again, it's corporate concentration, greed and power. Yes, we were just as surprised as you.  Corporations are using monopoly and monopsony power to drive up prices and pay low wage to increase their profits. Who knew?

Bloomberg has a good write up of the issue. The Bloomberg article refers to a paper, from Simcha Barkai at the London School of Business. He examines the declining returns to labor, also known as the labor share of income in the economy.  The paper also finds a declining return of income for capital as well.  So where does this "missing" money go? To profits.  Corporate profits are again at record levels.

The author suggests the reason for surging profits is decreased competition and monopolization. A link to the paper can be found here at "Declining Labor and Capital."

Slate has similar article and link to a NBER paper which finds that employers are using monopsony powers to hold down wages. Monopsony is the condition of a market with too few buyers.

Tuesday, January 23, 2018

EEOC quietly cancels gender pay data collection in August 2017

On August 29, 2017, the Equal Employment Opportunity Commission, quietly canceled the planned data collection from US business for pay by gender. You can read the announcement here:

EEOC cancels pay data collection

The EEOC was planning to collect data on pay and hours worked in addition to the current mandate of employees by race, sex, ethnicity and job category. The additional data to be collect was pay by salary bands. The information is a relatively simple addition to the current data.  Many HR departments already perform the same analysis internally.

The data would have provided a view of how widely women are paid less than men.

The move to cancel the Obama era regulation was widely expected. Industry groups lobbied heavily against the proposal during review phase calling it burdensome.

Proponents, including this blog, argued the data was needed to measure the gender pay gap.

Some HR consultants already started preparing for the change last year. A quick look at a presentation by HR consulting company: Gerstco shows the power of collecting the data.

The company has a great presentation on the change which can be viewed here.

The data would have allowed HR professionals to create reports and graphics such as the one of page 28 of the presentation which shows which job categories have pay equity and which do not. Green categories have gender pay equality while the red do not. Absolutely brilliant.

Monday, January 22, 2018

Mo'nique calls for Boycott of Netflix over Gender and Racial Pay Differences

The comedian, Mo'Nique, (Real name Monique Hicks)  posted a video on Instagram accusing Netflix of gender bias and racial bias. She claimed she was paid $500,000 for her show while Amy Schumer was paid $11 million.

While we believe the bias is true, it's true, this type of accusation is very hard to prove. Also an entertainers appeal is linked to biases in the larger world not just the entertainment industry.

Obviously Chris Rock, Dave Chappelle and Amy Schumer are bigger than Mo'Nique. But how much bigger ?? And how about Wynda Sykes ?  What is a fair amount these artists should be paid?

You would want to regress the artist Pay, Sex, Race and Age against studio earnings or some measure of popularity. You might want to check over time and at different career points.  Definitely worth a quality economic research paper for someone.

Tuesday, January 16, 2018

Black Unemployment Rate Drops to Historic Low: 6.8%

The Black unemployment rate dropped to a record low of 6.8% as reported in December 2017.  The rate was the lowest recorded by the Bureau of Labor Statistics. The Black Unemployment data series goes back to 1972.  The previous low was 7.0% in April 2000.  The high was recorded in 1983 when the rate hit 21.2%.  The Black unemployment rate has averaged 12.0%. over the 47 years the data series has been collected,  

Also of interest is the Black / White unemployment ratio. It also dropped to one of it's lowest reported values: 1.66 or 166%.  Historically, the ratio between Black and White Employment rates has been about 2 to 1. Some economists believe the ratio is a proxy for discrimination in the labor market against Black people.

That's the good news.  The bad news is that the Black Labor Force participation rate is a 62.1% or only 62 percent of Black workers participate in the civilian labor market.  The rest are choosing not to work:  They are retired, disabled, incarcerated or working outside the formal economy.

Monday, November 13, 2017

October Jobs Report: Jobs rebound in October; Wages drop one cent.

Note: The Evil Black Economist is  demphasizing the monthly labor market report. The labor economy is close to full-employment a the current wage.  It is likely to remain there for the forcible future. Instead,  the fundamental problem in the US economy is now wages and inequality not employment. 

October Jobs Report

The labor economy in the US is added 251,000 jobs in October 2017 as the unemployment rate dropped to 4.1% . It has been stable within a narrow band for the past two years. Wages dropped by -0.01 cents in October. The number of unemployed was 6.5 millon down 281k from last month and the number of long-term unemployed was recorded at 1.621 million.

However, the unemployment rate dropped because a record 765,000 people left the labor force. Different racial groups left the labor market at different rates: -662,000 Whites left the labor force while only -88,000 Blacks and -310,000 Hispanic/Latinos left.  And 21,000 Asians joined. Of the 765K that left 367,000 were men and 241,000 were women.

There were gains in healthcare, business services and food services. Since October 2015, the national unemployment rate has dropped about one percentage point (from 5.5% to 4.1%).  Blacks have made the largest gain during the period as the Black unemployment fell from 10.2% in October 2015 to 7.5% in October 2017.

Black Labor Force Participation Rate set to pass White Rate in next two years

On an interesting economic note, the Black labor force participation rate is going to pass the White and US average participation rate in the next year or two. Whites are dropping out of the labor force at record numbers. 

The chart below looks at participation rates by race.

Black Unemployment Rate

The calculated Black U-6 rate, the widest measure of unemployment. 

Ratio of Black Unemployment to White Unemployment Remained Close to the Average

Economists look at the ratio of Black Unemployment to White Unemployment as a good proxy for discrimination in the employment market. The long term Black unemployment rate has remained at about 1.8 times the White unemployment rate for 20 years.

Friday, November 10, 2017

Economic Challenges in the Black Community: Nice Summary

The Joint Economic Committee of the US Congress issued a report in April, 2015 on the Economic Challenges in the Black Community.  It looked at three areas: Unemployment, Wealth and Poverty. Black people are still far below Whites by many economic measures.

So little has changed that the report could have been written yesterday.

Tuesday, November 7, 2017

Off Shore Tax Avoiders in the Spot Light

Paradise Papers

The International Consortium of Investigative Journalists has released a collection of articles on global tax avoiders called the "Paradise Papers." They look at strategies corporations like Apple, very rich people like Wilbur Ross or public figures like the Queen of England use to minimize their taxes.

The OCED estimate that tax avoidance costs governments around the world up to $240 Billion dollars a year.

The exposure of the super-rich tax avoiders is a good way to build support for cracking down on these tax cheaters. All of us honest taxpayers have subsidized these tax avoiders for too long. Mixed into the money from these tax avoiders is money from drug dealers, kleptocrats, greedy corporations, and oligarchics. It is passed through shell companies and hidden by legal foreign and domestic secrecy laws.

People are realizing how much damage this missing tax revenue does to the real economy.

1) Tax avoiders cheat all of us. They make us all pay more for education, cops, schools, roads, military and social programs.
2) The show there is no need for a corporate tax cut as proposed by the Trump administration and the US republicans. Nor should there be a lower rate on the repatriation of foreign profits. If anything, a tax cut will force other jurisdictions to lower their own taxes.
3) States and nations have to work together to stop tax rate shopping by companies
4) The US and the UK are the biggest sponsors of tax avoidance.

Tax avoidance issues previously arose in 2015 when Google, Apple and Starbucks reported close to zero taxes on more than $200 billion in income. The EU is in court seeking to force Ireland to collect back taxes from Apple.

The US also practices tax avoidance. Delaware is the largest US tax haven

Delaware generates about a quarter of it's $4 billion dollar budget from business fees. Last year they earn $976 million in fees, while letting companies avoid much larger tax bills.

Monday, November 6, 2017

Social Trust: Why the common good is so hard to achieve

Selfishness in the United States

A while back I was looking at the research on selfishness in the US. We all believe that people in the US have become more selfish over time as their economic opportunities have declined.

There was a lot of the research, but it was on individual selfish decision making not the larger effect on society. It's the kind of stuff that get a researcher academic tenure, but keeps policy makers and the public in the dark.

The best I could do was a Pew Research Survey from 2015 that said 68% of Americans believed their fellow countrymen were selfish.   Or another Pew study about how much people: "Trust their neighbors." There is some good news: a lot of research says people are naturally inclined to help one another and not be selfish.

But trying to research and measure selfishness for a whole group or population was much more difficult.  There was no selfishness index. Enter "Social Trust."

Social Trust

It turns out I was using the wrong term. Selfishness is the individual behavior; Social Trust is the collective behavior. Social trust is a great predictor of a country's economic performance; it's more accurate than skill level. It is as important as capital investment.

It's also associated with non-financial measures of happiness and well-being. Pew Research has a survey from 2007, which documents the basics of social trust.

So does a UK Goverment website. The Behavioral Insights Team has a discussion from November, 2015 on social trust.

If you are interested in how other countries score, you can check the World Values Survey.

Blog Archive