Wednesday, June 27, 2012

Government drug discoveries account for 9% to 21% of New Drugs

Some one asked me to research an interesting question. What percent of drugs originated at government labs ?

The answer, depending on how you measure, is between 9-21%. Here is an article in the New England Journal of Medicine discussing the success of government funded drug research. The report uses a broader definition of public sector research that includes universities and non-profit hospitals. Here.

Here is a summary of the article in the LA Times. Here.

In related news, the NIH announced a new center to work more closely with drug companies to develop new compounds. The NY Times has a piece here.

Here is the web site of the organization, the National Center for Advancing Translational Sciences. NCATS is Here.

When you look at the success of the US drug industry, you have to acknowledge that the money invested by the government in basic research was well spent.

Saturday, June 23, 2012

Low pay at Apple Stores

Why does Apple pay it's retail employee's so little ?

Well, obviously, because it can. But the real answer is way more complex. And very little can be done to raise the pay in the short term except for a "shaming" article in the NYT.

The real answer is that corporations have changed how they develop talent. They no longer develop internal people who grow up with the company but instead purchase talent on the open market.

So the 21st century corporation is a silo's of experts: HR, product design, engineering, accounting and retail store operations. They only work together when forced to, for example design, manufacturing engineering and cost accounting. Marketing would jump in later at a typical company. Apple had design and marketing embodied in Steve Jobs. Apple is a "product" company and retail operations are important but secondary. Their stores could look like a cell phone store and they would sell the product.

Large, US corporations no longer develop expertise in-house. They have found it too expensive. Especially in areas like HR or retail operations. Instead they have hired experts from the outside. Sure the executives claim Apple values but they did not grow up there.

So apple brought in an expert from the gap, or best buy, or Verizon to run retail. And they were devoted to the bottom line of their area, not the company as a whole. We all know that labor costs are a large piece of the bottom line. HR and retail operations were look at their own internal bottom line at the cost of the companies reputation.

You think Apple would wise up after bad press for poorly treated overseas manufacturing workers at Foxconn, for the designed in "California tag," and for record CEO pay. Now we find out they are underpaying their retail workers.

We are in a new era of large scale corporate dominance of politics and the media leave only guilt and shame as a way of increasing wages.

Sunday, June 17, 2012

Number of Employed Whites Drops Dramatically During Recession

Five million less whites are in the workforce

I was working on a longer term project on data from the Equal Employment Opportunity Commission. The EEOC is the only source for private employment data by race. The idea is to measure how under-represented blacks and Hispanics are in different fields. If you are going to measure a difference then you need a standard. So the benchmark I chose was the percentage of whites, blacks and Hispanics employed in the general economy. For example: in May 2012 approximately 75% of the workforce was white, 14% were Hispanic and 11% of workers were black. So we would think that 75% of managers are white, 14% Hispanic and 11% are black.

While building the standard, I realized that during the recession, white employment had dropped by close to 5 million workers from the beginning of the recession. The actual drop during the recession was 6.2 million workers but has since recovered to closer to 5 million. Definitely time for some quick charts.

This chart shows the total number of employed people during the recession. You can see about 5 million whites have left the workforce. Black and Hispanic employment is starting to rebound.

This is a chart of the percent composition by race of the work force since 2007. The end of year "bumps" is the chart come when the census bureau adjusts the population totals.

For some perspective, here are the longer term trends since 1980. While the work force has grown, the largest percentage of new employees comes from the black and Hispanic populations.

The chart below show the big historic drop in white workers.

Here is the long term percentage of work force compositions.

Note: Since Hispanics can be of any race they can be double counted in the black / white statistics. So we typically compute the total white + black + Hispanic employment (which is more than 100%) then divide each groups individual employment amount by the total employment which reduces or "normalizes" the totals.

Saturday, June 2, 2012

May jobs report: Only 69K new jobs. New Normal.

The new normal: 69,000 net new jobs; Black rate up to 13.6%. National rate increased to 8.2%

Jobs report shows 69,000 net new jobs created in May. This is statistically near the new standard rate of 100,000 but below the 12 month average of 150,000. Economists and commentators said the low figure was due to low demand domestically and internationally.

On June 1st, 2012, the BLS announced the US economy created only 69,000 net new jobs in May. The jobs number is a large drop from the 12 month average of 150,000 since June 2011. We also got negative revisions of the March and April jobs reports. March was reduced by -11,000 to 142,000 new jobs and April was reduced by -38,000 to 77,000 new positions. The slow jobs growth is linked to weak demand both domestically and internationally. The US GDP growth rate was reported at 1.9% on May 31st, 2012.

The BLS Jobs report has become the one economic statistic everyone watches. The press headline coverage was "poor" with some reports calling the report "dismal","gloomy" and a "train wreck". However, coverage of the details was quite good. The Romney immediately attacked the president on jobs. He called the report “devastating.” However he appeared a little overzealous and gleeful at the bad news. The administration called for additional stimulus from congress. A more likely scenario is stimulus activity by the Federal Reserve.

Economists had expecting 100K to 150K new jobs, however the actual number can vary by plus or minus 100,000 jobs. The Dow Jones equity index lost about 274 index points on the announcement but recovered early next week based on expected Fed intervention.

As always, employment figures must be considered over several months. Some of the changes are due to random statistical variation. The average work week declined by 0.1 hours to 34.4 and average hourly wages were stagnant at $23.41. (I don’t even know why I bother to write stagnant, wages adjusted for inflation, have not changed in more than 30 years. See chart below).

Average Weekly Earning from Jan 1979 to May 2012

There was a little good news in the report: the household survey said the number of people who self reported they were working increased by 422,000. An additional 622,000 people came back into the labor market which pushed the unemployment rate up.
The national labor force participation rate increased 0.2% to 63.8%.

Black Unemployment

The black unemployment rate rose to 13.6%. The black labor force participation rate was 61.3 (68.1% for black men over 20 and 62.1% for black women over 20). The black teenage unemployment was reported at 36%. The white unemployment rate stayed at 7.4% and the Hispanic rate jumped up to 11.0%.

Employment Stats

The long-term unemployed (27 weeks or more) rose to 5.4 million people which represents 43% of the unemployed. The “work part-time, wants full-time” number was 8.1 million. These people are considered underemployed. The same monthly number of people: 2.4 million were marginally attached to the labor pool. They want work but have not looked in over four weeks. And there were 830K discouraged workers (part of marginally attached) who are not looking because they believe there is no job for them.

Non-Farm Payrolls

As stated earlier, only 69,000 jobs were added to the US economy in May. The private sector added 82,000 jobs (vs. adjusted 77,000 last month) and government employment dropped again by -13K. Job growth was concentrated in durable goods manufacturing, trade and transportation and healthcare. The losers were construction (-28K).

Now let’s look at some of the key areas of the economy. Manufacturing added 12,000 spots; Construction lost -28,000 jobs; Business services was flat at -1K jobs and healthcare added 46,000 new positions.

Average work week shrank 0.1 hours to 34.4 hours and wages added 2 cent in May.

ADP reported an increase in private payrolls of 133,000 positions.

Monster Employment Index moved up to 147 in May from 146 in April. Hiring was up 1% compared to same month last year.

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