Monday, June 26, 2017

Seattle Minimum Wage Study show net loss of income for low wage workers as hours are cut


Researchers at the University of Washington have released a detailed study of the second round of Seattle minimum wage hikes. They determined that the second hike from $11.00 to $13.00 dollars may have led to employers to cut back on employees hours. Washington State is one of 4 states to collect hours as well as employment levels allowing this type of study. 

The study found a net loss of income for low wage workers. The workers lost earnings because the cut back in hours was greater than the gain in income from increased pay. The first hike is acknowledged to have had no employment effect. 

Here is the link to the study...

University of Washington Seattle Minimum Wage Study at the National Bureau of Economic Research. If google the title "MINIMUM WAGE INCREASES, WAGES, AND LOW-WAGE EMPLOYMENT: EVIDENCE FROM SEATTLE" you can find a PDF version.

The study found that for Seattle restaurant workers, the recent increase in the local minimum wage from $11.00 to $13.00 reduced hours by 9% and increased wages by 3%. The result was a net loss of $125 dollars per month for low skilled restaurant workers. However, the number of restaurant employees remained stable. 

This was especially interesting because it used state wage hour study appears to be quite good compared to past minimum wage vs. employment studies.  However, overall unemployment was stable.  



There are some problems with the study.

1) They used stand alone restaurants only. They excluded multi-location chain restaurants. 
2) About 70 percent of workers in Seattle already make $13.00 and hour or more.  The study shows an employment increase in workers making above $19.00. 
3) The study was limited to Seattle. Seattle is a boom town with few comparable cities. Separating out the Seattle effect (great economy, lots of rich people) from the minimum wage effect may be close to impossible. Seattle has a 3.2 % unemployment rate. 


Interestingly, the study may have determined is the equilibrium or trade off point between employment and wages for Seattle for low wage restaurant workers. We have to wait for the results from other jurisdictions that have raised the minimum wage. The results also support minimum wage increases in jurisdictions below the equilibrium. Workers and governments are leaving money on the table. 

Researchers also found that employers shifted to more experienced workers. Many first time workers may find their first job opportunity will decrease. We will have to wait and see the results of the next increase.

Since, the study is so important, there are lots of articles on the topic. 

Washington Post

538

Here are some over the top headlines

Study: Seattle's minimum wage increase goes horribly wrong

The Center for Wage and Employment Dynamics found no such reduction on jobs in the Seattle restaurant industry. Berkley's Institute for Research on Labor and Employment has a traditional study on the same period using US census data.

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Notes:

The Federal government is cutting the funding for the US Census including expanded data collection on the labor market.

Lastly, We would like to add that the US is the only western democracy where there is a active and vociferous debate about increasing the minimum wage. The UK, France and Germany have all created, where it did not exist, or increased the current minimum wage with much less rancor and debate. In addition, most countries invest in Active Labor Market policies to help the unemployed re-enter the labor market and to help low-wage workers find better paying jobs. 

We are completely confused about the popular demand in the US that people work but our unwillingness to pay them a fair wage.  

Wednesday, June 14, 2017

"Stop sports Arenas Subsidies" bill introduced by Booker (D-NJ) and Langford(R-OK) in Senate


Two Senators have introduced legislation to stop federal government subsidies from support sports arenas. 

Two senators, Corey Booker, D-NJ and Frank Langford, R-OK want to stop sports team giveaways.They have introduced Senate Bill SB. 1342

Wealthy team owners don’t need federal tax breaks to build new stadiums, U.S. Senator Cory Booker said in support of the measure.

ESPN had the original, breaking coverage.

Here is the Brookings Report covering the waste of taxpayer subsidies going to billionaires.  

Another article from Vice Sports has lots of links on the issue.

To show how hard it is to get rid of these subsidies. Check out this story on Sen. Moynihan, who introduced legislation in 1996 to stop similar subsidies. The bill was S.1880.

And NPR in 2011 also had a good summary of the issues.

Saturday, June 10, 2017

Some programs at the University of Phoenix have a 11% job placement rate for $60K tuition


The University of Phoenix looks like a scam

We were recently reviewing entrepreneurship programs at colleges in the US. We came across a program at the University of Phoenix which grants a Bachelor of Science in Business with a concentration in small business and entrepreneurship.  The program costs almost $60,000 and has an 11% job placement rate.

Gainful employment statement.
Another link.


The Gainful Employment Statement is the result rules created by the Obama administration in 2015 because of low performing for-profit schools.


Thursday, June 8, 2017

LeBron-O-nomics


The value of LeBron to the city of Cleveland is making head line news.  The owner of Quicken Arena in downtown Cleveland has asked for a $180 subsidy from the city and county to renovate the area. We want to look more closely at the economic impact Lebron and the Q Arena have on the city of Cleveland.

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Cleveland.Com discusses the value of LeBron's return in 2015.  The estimate was $500 million in the story. However, the article covers reason why that figure might not be reliable. Basically, very little new revenue is generated in northeast Ohio from outside the region, instead the money simply flows from other spending in the region like movies and restaurants. (Hey, I am going to skip Starbucks this week to see LeBron).

An older article from 2010 tracks the details of "How much is LeBron worth to northeast Ohio?" They breakdown LeBron value to the local businesses, City, Region and the Cavaliers.

The authors also call LeBron "priceless" in the story. The statement captures how difficult it is for a city to strike a fair deal with owners regarding arenas and superstars.  There is always an implied threat they will move away. And you can't negotiate with a monopoly.

We do want to note: There is some value in bringing together a diverse set of fans including those from the suburbs to downtown Cleveland. Also, LeBron and the Cavaliers enhance the image of the city of Cleveland nationally and internationally.

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A new paper from American Enterprise Institute economists attempts to quantify the effect.
The paper called "Taking My Talents to South Beach (and Back)" looks at the natural experiment of LeBron James leaving Cleveland in 2010, moving to Miami (winning two championships) and then returning to Cleveland in 2014.

The researchers found that LeBron James increased the number of restaurants and bars by about 13% and employment by 24% in the local area.  The effect is most notable with in a one mile radius of the arena. There is was no effect past seven mile away

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In related but separate news, one of the key papers in the sports subsidy field, "Do Economists Reach a Conclusion on Subsidiesfor Sports Franchises, Stadiums, and Mega-Events?" by Dennis Coates and Brad R. Humphreys, summarizes the opinions of economists related to supports subsidies.

Here is another link.

A majority of economists surveyed at the American Economics Association convention find no benefit to sports subsidies.  There is no market failure requiring a subsidies, instead the subsidies enrich monopoly owners. Basically subsidies are a waste of money and team owners are playing off cities against each other.

Here is a great quote from the paper...

"We have seen that economists in general, as represented by Whaples’s survey (2006), oppose sports subsidies. Economists reach the nearly unanimous conclusion that “tangible” economic benefits generated by professional sports facilities and franchises are very small; clearly far smaller than stadium advocates suggest and smaller than the size of the subsidies. The fact that sports subsidies continue to be granted, despite the overwhelming preponderance of evidence that no tangible economic benefits are generated by these heavily subsidized professional sports facilities, remains a puzzle."

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Brookings Institute has the often quoted article from 1997, Sports, Jobs, & Taxes: Are New Stadiums Worth the Cost? by Noll and Zimbalist which discusses tactics cities can fight back against sports subsidies. Not a lot can be done but have active citizens and politicians can force monopoly sports owners to cut a better deal.

FANG and Google content sites

When we got up this morning, we did the usual.  We handled out business(we made coffee, people!) and used Google search to see what was going on. Google had a small ad at the bottom of the screen promoting an internal web site. Google sites are known to have some great content, so we clicked and got:



The sites are loaded with images and discussions. Lots of details and suggestions for further research. Just great, engaging material.

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Then we thought about it for second.  FANG - Facebook, Amazon, NetFlix and Google - earn most of their profits from the content, creation, and products of others. The create almost zero, original content. Google let's you find other peoples web pages and watch youtube videos. Netflix lets you watch movies created by others. Amazon sell other peoples stuff. And Facebook, the worst of all, is 100% user created. FB has nothing original.  

To be fair, Amazon has opened distribution centers and Netflix has created some original content. 

What these companies have in common is that they are "natural" monopolies created by the internet.  They distribute the hard work of others for a fee, while making enormous profits.

Some of our richest and most successful companies, effectively "steal" content from people and then charge for accessing that content.  This hustle sends society the wrong message about how to be successful. People are no longer interested in putting in the hard work.  Instead, they are looking for a "get-rich quick" scheme like Facebook where they can skim off a little from the top.  That's the message these big companies are sending. 

We seem to be rewarding the wrong people in this process. We have created a business culture where there is little long-term innovation, rather everyone is looking for a quick payday. 

We have to find a way to reward our real innovators and our artists rather than IT people who move electrons around. 

Friday, June 2, 2017

Interesting Stories for June 2nd, 2017- What we are reading

This site has a list of eleven Black Business Directories and apps. Eleven Buy Black Mobile Apps are featured here. From the Black Economic Development web-site.

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CityLab from the Atlantic Magazine discusses "The 100 year old penalty for being Black". The article looks at a paper describing "What would the US look like, if Black economic progress since 1880 occurred level as Whites." The paper also supports Black repartions in a wide set of areas.

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Vox has a story of uninsured minorities being over charged at the hospital emergency room.

Emergency rooms over charge the poor.

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Bloomberg has a great story on the US being unable to execute infrastructure projects. "The US has forgotten how to do Infrastructure,"  The story looks at over-priced infrastructure projects and how they undermine public support.  It's all about productivity.

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Japan housing construction workers are more productive than US workers: FT Alphaville.  The blog says we don't need more workers just higher productivity.

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A piece in VOX by Brian Resnick discusses research showing that people who are "science curious" are more willing to listen to opposing points of view.

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Women are still lagging in pay for some STEM jobs according to Bloomberg

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Quartz has a story about white collar unemployment.  The trend may be due to corporations no longer providing employee training. The Quartz story on white collar unemployment is here.




Saturday, May 20, 2017

UNH Study shows Rich/Poor gap in school extracurricular activities


Extra Curricular Activities by Income by Sarah Leonard

Research Brief

AP Story

Every now and then we see a piece of interesting original research.  A Ph.D. student at the University of New Hampshire looked at how kids spend their extracurricular time. She found that poor kids work at about half the rate of rich kids.  And rich kids participate in all after school activities at a 50% higher rate.  Poor kids are more likely to join sports teams while rich kids join clubs.

The study uses data from the 2012 National Survey of Children’s Health.

The research also found that the highest income group was twice as likely(33%) to work than the lowest income group(17%).

Other findings include: low-income youth spend more time using electronics and watching TV.

Achievement Gap

The Rich/Poor achievement gap has long troubled educational advocates. While lots of studies look at the teachers and courses, or parents and home background, extracurricular activities have not been as closely looked examined.

Thursday, May 18, 2017

May 18th, 2017 Grab bag of top stories and the reading list


Urban League releases the state of Black America

SOBA

The report contains comparison with Whites and Hispanics.  The wealth gap is always shocking, but it just measure continued widespread discrimination in the housing market along with residential segregation.

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One of our favorite editorials of all time.  The Dalai Lama discusses the fear of being unneeded.  This is the first time we are say must read.

Dalai Lama: The fear of being unneeded

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Corporations pay 21.2% effective tax rate

The Institute for Taxation and Economic Policy has a detailed report on the effective corporate tax rate being 21.2%

Highlights include GE, International Paper and PG&E paid NO taxes over the 8-year study period. And 25 of the most profitable companies used tax breaks of $277 Billion (about half of all corporate tax breaks).

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By the way, we love ITEP. They are the number one resource in tax policy.  If you know economic and follow politics then ITEP covers the place where the two meet: Tax Policy.  For the past 40 years our tax policy has largely been shaped by corporations and their lobbyists.  Now as the economy has cratered for the middle class; we are all asking why? ITEP has part of the answer: poor tax policy.

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Apple has a new web site touting it's job creation in the US. Apparently in response to the Trump pressure.

Apple's PR job page is here.

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Before Piketty, there was Tony Atkinson, who worked long and hard in inequality.

15 Proposals to Reduce Inequality

Unfortunately, most of the proposals require government action, which is better suited for Europe and the United States.

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The Pew Research Trust article on the declining middle class. This is one of the seminal articles on the decline of the middle class in the US.  The article is constantly referenced in economic ciricles

Pew Research Middle Class

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The single best reference on immigration. We use the report all the time !!!

National Academies of Science -- Report on Economic and Fiscal Consequences of Immigration

Rarely does one report settle an economic debate.  This report does; and on controversial topic. The report is hefty at over 500 pages.  It has tons of research and data. And the report passes the common sense test with flying colors.

Basically, the winners in the immigration process are immigrants themselves, corporations and people who employ immigrants.  The losers are competitors of immigrants: non-recent immigrants, Blacks, Hispanics and poor people along with state and local government who provide benefits. Over the very long term immigration has a net positive benefit.

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Companies have defunded their training programs leading to high unemployment among older workers.

You can read the story in Quartz: Secret surge of white collar unemployment

The US is notorious for lack of active labor market polices(ALMP). We are close to last among the OCED.

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Another labor share of GDP is crap article. We do like Bloomberg.

Bloomberg falling labor share

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Still reading Peter Temin's book on inequality.  He, at least, bring race into the picture.

Atlantic article











Apple's job creation public relations page

Apple Jobs

Apple Job Creation Website

Apple has a website that lists how many jobs it creates in each state in the US.  It looks like a pretty clumsy response to President Trump.  The site actually show how little,  Apple and high tech companies, contribute to the labor and wage economy.

Apple is the worlds richest company that is not a bank.  Apple has $256 Billion in Cash and marketable securities.

In it's October 2016 Annual Report(10-K), Apple claims to employ 116,000 full time equivalents. So is that a million people working 8 1/2 hours a week or 78,000 professionals working 60 hours a week? The point is, Apple is completely vague.


2011 Employees

"As of September 24, 2011, the Company had approximately 60,400 full-time equivalent employees and an additional 2,900 full-time equivalent temporary employees and contractors."

"As of September 24, 2011, the Retail segment had approximately 36,000 full-time equivalent employees..."

2012

As of September 29, 2012, the Company had approximately 72,800 full-time equivalent employees and an additional 3,300 full-time equivalent temporary employees and contractors. Approximately 42,400 of the total full-time equivalent employees worked in the Company’s Retail segment.

2013

As of September 28, 2013, the Company had approximately 80,300 full-time equivalent employees and an additional 4,100 full-time equivalent temporary employees and contractors. Approximately 42,800 of the total full-time equivalent employees worked in the Company’s Retail segment.

2014

As of September 27, 2014, the Company had approximately 92,600 full-time equivalent employees and an additional 4,400 full-time equivalent temporary employees and contractors. Approximately 46,200 of the total full-time equivalent employees worked in the Company’s Retail segment.

2015

As of September 26, 2015, the Company had approximately 110,000 full-time equivalent employees.

2016

Apple report 116,000. So job growth is slowing and the build out of retail is over.

So, in 2015, Apple, sensing it had an issue, changed how it reported it's employee headcount.

However, we can still make a pretty good guess of the number of retail and professional employee based on past reporting.

For 2011, we can compute by subtraction, there are 24,400 professionals and the ratio of retail to professional is 60% retail to 40% professional.

Apple's public relations job page claim two million direct and indirect jobs.  But it uses very broad measure that includes anyone writing apps for Apple platform. May they should include only apps that made more than $10,000 dollars or worse apps that were profitable.

Thursday, May 11, 2017

PBS Newshour: How corporations avoid taxes by shifting profits overseas



The PBS Newshour has a good, clear story about how big US corporations are avoiding US taxes. Corporations have an estimated 2.6 Trillion dollars in overseas profits.

PBS Newshour reports on corporate tax scams.

Corporations are depriving the government of needed tax revenue for infrastructure, education, healthcare and public services(for example: roads, schools, hospitals and police). And when corporations pay less, we the people all pay more.

It is certainly not fair, but it is legal.





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