Wednesday, July 12, 2017

State Budget Issues Make Headlines

There are some good articles out there on state budget issues. We are looking at articles on budget issues in key states like Illinois, Connecticut, Texas, California and New Jersey.

State budgets are in a trouble because tax revenues(and state incomes) have not grown but the demands have. Only the top 1-2% of income earners have seen growth, yet corporations want tax breaks, civil service employees want pensions and the public wants safety and aid for education.

We looked at the State Credit Ratings and some states have great ratings.  But the state fall into two groups. States with low debts and pension obligations because they historically have not done much for their citizens (south, conservative west and conservative mid-west). 

And states that deliver high government benefits (like education) and have good credit ratings. Minnesota seem be the best managed. Massachusetts is also up there.

Overall, it looks like tough times in northeast and liberal Midwest as growth slows. Both areas may have over promised pensions to civil servants and teachers.

In all jurisdictions (except CA and MA) there is huge pressure from White voters not to raise taxes(tea party) as a code for not helping the poor and minorities.. Most articles also indicate that the top 1% (2%-5%) of income earners has done very well. 


The Atlantic: Connecticut Inequality Vol. 1 <= really good. Discusses how finance does not create middle class jobs


Illinois passed it first budget in two years and voted to increase income taxes and sales taxes


New Jersey

New Jersey Passes Budget thanks to Chris Christie's beach antics.


No news in california. The state added money for education and refinanced public pensions.

Friday, June 30, 2017

Black Business and Economics Stories for Week of June 26th, 2017

There are few Black Business stories in the main steam media this month

The chaos causing Trump presidency has sucked all the news-oxygen out of the room.  He makes the lazy news media's job very easy. An very profitable. And he makes the deep, complicated real-life media's jobs irrelevant. The media and Trump are making us dumber all the time.

So (me) how (me) does (it's all about) this (me) affect me ? Basically there is no Black Business news coverage any more. It's like unions, education, pensions, and the homeless. If we don't cover it, maybe the problem will go away.

Some of this is our own fault.  We need to do more original material rather than stealing the work of others. We need to do more long form stories and detailed research projects. So, to fund this new, expanded coverage, we are actively pooling our resources and investing in: Lottery Tickets.


Anyway, here are some of the top Black Business and Economics stories for the month


Johnson Publishing Company, which publishes Ebony and Jet, is closing shop in Chicago. It was sold to an investment company in Texas. JPC recently relocated its staff to Los Angeles.

Crain's Chicago has the story

Desiree Rodgers bailed out in May


CNN covers the Black vs. White wealth gap. Same story; new day. (note: Watch out the CNN website is a gigantic ad-pump with very little in depth content.)


MarketWatch looks at Mellennials. Why black and Latino millennials are struggling more than their white peers.

Chicago Defender has an update on the Black Bank surge at Citizens Trust Bank in Atlanta


The Root does an interesting analysis of police killings and payouts.  It's called "How much is a Black life worth? We calculate it."


We have started watching "Cleveland Hustles" with Bonin Bough on CNBC

The national urban league released the State of Black America 2017 report on May 2017. The report shows a slight overall improvement in many of the indexes. Thanks Obama.


The Federal Reserve Bank of Atlanta named Raphael Bostic as a regional governor. Apologies if this was posted before even though it is a big deal

Tuesday, June 27, 2017

Unemployment stable in May 2017. More than 600,000 people left labor force.

The labor economy in the US is unchanged in May 2017. It has been stable within a narrow band for the past two years. The national unemployment rate dropped to 4.3%. Wages grew by only 4 cents. The number of unemployed was 6.9 millon down 200k from last month and the number of long-term unemployed was recorded at 1.6 million (up 37K from last month). 

However, the unemployment rate dropped for a bad reason: A record 608,000 people left the labor force. Different racial groups left the labor market at different rates: 534,000 Whites left the labor force while only 67,000 Blacks and 82,000 Hispanic/Latinos left.  And 21,000 Asians joined. Of the 608K that left 367,000 were men and 241,000 were women. 

There were gains in healthcare, business services and food services. Employment revisions were down -66K for the prior two months. Hours worked were the same.

Since May 2015, the national unemployment rate has dropped about one percentage point (from 5.5% to 4.3%).  Blacks have made the largest gain during the period as the Black unemployment fell from 10.2% in May 2015 to 7.5% in May 2017.

The Big Story(s)

The big story is the smooth running of the economy. Thanks to Obama,Yellen and a host of others, plus the natural gas boom, the economy is in great shape. Unemployment is low. Wage inflation is low. We are are in a long-term growth pattern with a rate of about 2% growth for the next 2-3 years.

The second big story is the lack of wage pressure in the economy. Lack of wage growth fuels inequality in our society.  We see no sign of "full employment."

Missing wage inflation is linked to two trends: hidden unemployment and decreased worker bargaining power. Lack of power has led to workers expectations being "whipped" by corporations. Labor has stopped asking for higher wages and feels lucky to have a job (healthcare is a bonus). Employers think the same way and do not feel an pressure to compete for workers based on wages.
The recession of 2007 finalized a huge, on-going reset in employer and employee relations.  We are seeing the end result. 

The third big story is how well the country runs with little guidance. Its true; we have many large, long-term problems that are being ignored. Since the economy running great, we can afford to do so. Large problems such as poverty, jobs, wages, inequality, a shrinking middle class, entitlement costs and healthcare costs can be pushed further down the road.

Finally, the other big story, of course, is the ongoing chaos in Washington. The confusion of the past six months has yielded little action.   We are a progressive blog. We think nothing good can come from the Trump administration however we are getting used to him. We are worried they will get their act together and do some real damage to progressive causes. Thank goodness our economy and our system of government are mostly self correcting. 

The Black Unemployment Rate

The Black unemployment rate dropped to 7.5% from 8.6% last month as 46,000 more people reported to work. The unemployment rate for Black men, 20 and order, was 6.5% while Black women in the same age group were unemployed at a rate of 7.0%.  Black men participate in the labor market at a 68% rate while the participation rate for Black women is 63%. Black teenage unemployment was calculated at 27%. 

The chart below shows the Black unemployment rate and the LFP rate but smoothed out by using a 4 month moving average. 

As is our custom, we calculate the real Black unemployment rate. It was determined to be 11.6% in May. Both the Black unemployment rate and the US U-6 rate declined during the period.   U-6 is the broadest measure of unemployment. U-6 is basically anyone who wants to work and has looked for a job in the past 12 months plus part time people who want full time work.

Business Establishment Payroll Changes

Again, Non Farm Payrolls added 138,000 workers in May 2017. Government employment saw a slight reduction.

There usual categories led the job growth: business services, healthcare and hospitality. A lot of important categories were down.  Construction added 11,000 jobs. 

Just a reminder that the United States is a service economy.    Only 19% of new jobs produce goods (15% if you include government as a service).

Hourly wages for all employees increased by by $0.04 cent in May to $26.22.  Hourly wages are up about 2.5% (1.2% when adjusted for inflation) in the past year. Hourly wages for non-supervisory employees rose by 3 Cents.

The average growth in wages has been below 1% after inflation between 2006 to 2016.

March NFP jobs were revised down from 79K to 50K (-29K). April was revised downward from 211,000 to 174,000 (-37,000). 

ADP reported 253,000 non farm payroll jobs were created.  The jobs were split among small businesses (+83K), medium sized businesses (+113K) and large businesses (+57K).  According to ADP goods producing business increased jobs by +48K while services hired 205K workers. Manufacturing lost 8K jobs.

Paychex small business jobs index was flat at 100.34; a completely neutral value. It's down -0.25% for the year.

Monday, June 26, 2017

Seattle Minimum Wage Study shows 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 cutting back on employees hours. Washington State is one of four states to collect data on employment hours as well as employment levels.  The detailed data is required for this type of study.  

Overall, the study found a net loss of income for low wage workers. The workers lost earnings because they worked less hours but at higher pay. The first hike is had no effect on employment levels in Seattle.  

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.  

However, 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 "accidentally" 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


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.



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


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.


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.


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


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."


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.


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.


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.


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

Emergency rooms over charge the poor.


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.


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


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.


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


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


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.


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


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).


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.


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.


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.


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


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.


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.


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

Bloomberg falling labor share


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..."


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.


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.


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.


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


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.

Saturday, May 6, 2017

What we are reading this week - May 6th, 2017 - A lot !!!

The biggest story this week was Obama's $400,000 sellout to Wall Street firm Cantor Fitzgerald and A&E Networks.

MSNBC has the basic story

So does NY Post which reported he got $400,000 from A&E networks.


The Atlantic has a story on the decline of Black Businesses. 

But's really a story about market concentration and power squeezing out small businesses: Black, White and poor.

We have long supported limits on market power and concentration which would allow room for small businesses to flourish.


The National Urban League released it's State of Black America Report.

SOBA 2017

The NUL has created an equity index showing how far behind Blacks are as compared to Whites. This year they fully report on the Black/White and Hispanic/White differences.


Peter Temin from MIT has a new book on inequality and racism. It's called The Vanishing Middle Class: Prejudice and Power in a Dual Economy.

He argues we have a dual economy but only the rich and powerful have the ability to make changes.

The introduction is all over the internet. Here.

The Atlantic has a write up.

If you are interested in inequality, check out almost anything by Tony Atkinson.

15 Proposals to reduce inequality


Crain's New York has a list of minority businesses. It has only 19 names. Jokes on us.

Crain's New York


Jobs are heading to Mexico again on

US companies are resuming their outsourcing and offshoring after a brief pause. Absent a real policy or regulation, labor intensive jobs will continue to move to Mexico, China and other low wage countries.


American Airlines decided give it's workers a pay raise. Wall Street smacked down the stock. Not much we can do but "whine" about shareholder value.

Here is the story by Matthew Yglesais in Vox 

Here is Joe Nocera on Bloomberg View

The Evil Black Economist Blog believes you can never soften or beat Shareholder Value Principal. Instead we should give stakes in the company to Employees and other interest groups and reserve places on corporate boards for the same stakeholders.


Apple has $250 Billion in cash. Vox reports. $250 billion in cash is about 1/80th of the 18 Billion dollar US economy.

We also have a long piece on the Evil Black Economist called "Apple is an investment bank that makes iPhones"

Forbes also has a story on Apple and their PR effort around job creation.

Apple may be getting scared.  It released a website announcing how many jobs it creates. Apple Job Creation.


Here is a key study constantly used in economic discussions.  It is a great reference in an argument or when trying to prove a point.

Pew Reseach -- American Middle Class is losing ground


Research Papers

Andreas Ferrara believes world war 2 White causalities led to Black worker skill upgrades and improved income, integration and political participation.

Why are there so many Subway and Dunkin Donuts franchises everywhere ?

Have you ever wondered why there are so many Subway, 7-11 and Dunkin Donuts franchises ? Where did they all come from so fast ? And why are so many owners from South Asia or the Middle East ?

It turns out 7-11, Subway and Dunkin Donuts believe in a high density store model.  Because there so many food and retail choices, the risk of cannibalizing sales from a different store of the same franchise is low. There can be multiple Subways and 7-11s on the same block in some cities. Second, the corporate strategy has been to sell franchises. All three chains have a limited number of corporate owned stores. They simplified and perfected the franchise model.  Third, they keep start up fees low.  Subway, for example, has a franchise fee of only $15,000. 

In an interesting twist in the US, Subway, Dunkin and 7-11 franchises appeal to members of the growing South Asia and Middle Eastern communities.  These communities face a difficult time finding employment, so many immigrants look to immigrant owned franchise owners who provide employment.  Many are willing to work 60-80 hours per week.

The franchise model also matches perfectly with the economic aspirations of South Asia immigrants who have extra cash to invest. If you are here on a temporary work visas like H1-B, you want make good use of your extra money and time since it may be limited.   So a franchise is a good investment. Franchises are bought and sold within the immigrant networks when the owner returns to his home country.


Now, it looks like Subway and Dunkin have reached market saturation.  Any new store will take sales from and existing. Many stores are marginally profitable. And occasional a store will close. 


Entrepreneur magazine says a Subway franchise costs $120,000 in startup costs such as construction and equipment leasing. And you only need about $30,000 in liquid assets plus $80,000 in net worth. The current franchise fee is $15,000

Starting a Dunkin cost $225K plus $125K in liquid asset.  The net worth requirement is $250K. The franchise fee is $40,000.

All very low compared to MacDonalds which requires $1,000,000 in startup costs and $500K in liquid assets.

The founder, Fred Deluca, gave an interview to Inc. magazine where he admitted one of the chains key goals was to have a large number of franchises

Thursday, May 4, 2017

Apple is really an investment bank that makes iPhones. Apple has $255 billion in cash

The original idea for this story comes from "Vox Apple has $250 billion in cash." (Hat tip)

$250 billion in cash is about 1/80th of the 18 Billion dollar US economy.

We have long believed that Americans over consume.  Over consumption includes buying luxury items or super sizing your meal.  It also includes buying products with features we like but may never use.

Another form of over consumption is buying products with status appeal such as foreign cars, soft leather goods(SLG) and handbags, or Apple iPhones. Thorstein Veblen first noticed that some goods are more valued because they have higher prices. He created the term "Conspicuous Consumption."


Apple has become the most profitable company on earth by tapping into the market for conspicuous consumption. They are king of the affordable luxury market. Today, we are going to look at how rich Apple actually is. And how Apple resembles an investment bank more than a high-tech company.  

Apple has yearly sales of about $200 Billion of which 67% are sales of iPhones.  Apple also has a huge amount of cash on hand.

Based on the Apple 10-Q from April 2017, Apple has

Cash                                $15 Billion
Short Term Securities     $52 Billion
Long Term Securities     $190 Billion

Or about $255 billion in cash.  Just cash, not assets, CASH!!!

They have net income from sales of about $40 billion a year and spend about $10 billion on R&D.

They continue to earn huge amounts of investment income on the marketable securities ($12 billion mark up) this quarter. And roll over the cash ($99 Billion in securities purchases this quarter) into new marketable securities. The biggest holdings are US Treasury Securities($53B) and Corporate Securities ($157B). The biggest use of the money(about $30 Billion a year) is for share repuchases. 

They also have $84 Billion in debt at ridiculously low interest rates.  Most of the bond rates are between 1.00% and 2.00% along with one special set of long term debt ($24 Billion) at 0.28%.  Yes, that 28 basis points.  Not only is Apple loaded with cash, they are using other peoples money to make even more money.

Apple looks like an investment bank that just happens to make iPhones.

Tuesday, May 2, 2017

Obama's Disappointing Sellout to Wall Street for $400K

The Evil Black Economist Blog is disappointed that Barak Obama will take $400,000 for making a speech to a Wall Street firm. We all feel hurt and betrayed. Obama, the first Black president, is a role model.  He should have displayed stronger morals and principles. He should have more class.

In the past, Mr. Obama has given speeches during his campaign supporting progressive economic causes.  He has spoken out again against income inequality, wall street greed, and money in politics. He liked to portray himself as a community organizer; a man of the people.

Now, he is trampling on his legacy.  His presidential legacy. The move make him look like a money grubbing suck up. Valarie Jarret would have known better.

The Obama's did not need the money. He and Michelle just signed a $65 million dollar book deal.  He has been hanging out on the private island of Billionaire Richard Branson. He has penty of offers to speak. But it's the speed and size of the sellout that has everyone worried.

He couldn't find a good charity or liberal group to talk to ? It had to be a Wall street firm ? It makes you wonder if his values and beliefs were an act. Does he really stand for anything ?

Lets hope he releases the text of the speech and donates the money.

Cantor Fitzgerald. Cantor is a wall street financial services firm that specializes in financial trading.


Wednesday, April 26, 2017

Trump tax proposal is a huge give away to the rich - Test your pundit skills here

Bad News

So, Trumps tax proposal, which is a really a one page memo of bullet points, is a good test for any of us want-to-be progressive pundits. It is definitely not a tax plan. It contains no details, costs, analysis or review of effects on the debt.

All of us pundits in training should be able to explain and rip apart Trumps tax proposal in about 30 seconds. Please write your version of why Trumps tax plan is bad for the average US citizen and the country.

Then compare to our list

Here is ou list...

1. Gives huge amounts of money to rich people. Reduces tax rate to $15% for some pass through business like Trump's real estate companies. 
2. May cause an asset / stock market bubble driving up real estate prices.
3. Rewards investment income and rents at the expensive of wages.
4. Increases inequality. Does almost nothing for middle class and truly nothing for the poor.
5. Cuts government revenue for crucial programs including state and local programs. Eliminates state and local tax deductions. 
6. The tax proposal also drops the corporate tax rate to 15%. It is also a huge give away to corporations who have been holding tax money overseas and avoiding and minimizing taxes for years.
7. Eliminate the Alternative Minimum Tax (which trump pays).
8. And scariest of all, it may eliminate the deduction for employer sponsored healthcare, financial wrecking our current healthcare system


It increases the national debt by giving money for consumption rather than investment (ie, yachts and shoes rather than research, colleges and roads). Note: The author believes that below a certain ratio of debt-to-GDP, debt incurred for investments can have an overall positive effect on the economy.

Currently, the tax plan would add $3 Trillion to $7 Trillion to the debt.  It also assumes a growth rate of 3%. The US GDP growth rate is 0.7% in first quarter of 2017.

Tax proposal was rushed to meet 100 days deadline

The tax plan is little more than an outline or an opening move in a negotiation. But, it was put together by two of the more competent members of the Presidents staff:  Gary D. Cohn and Steven Mnuchin.

While it initially looked like the administrations was getting it's act together, this grab bag taxes proposal, shows how disorganized they are.

Version 3

Monday, April 24, 2017

What we're reading today April 24th, 2017

We checked in with Dr. Boyce Watkins here on your tube. Dr. Watkins gives a lot of informative talks on YouTube.

Boyce Watkins web page

Dr. Watkins mission is to spread financial literacy among Black people.
His Black Wealth Boot Camp has a full personal finance curriculum.


Demos.Org has a interesting story on the Black-White wealth gap.  The look a some of the common proposals to close the wealth gap and explain why they won't work.

The asset value of Whiteness


Bloomberg has a piece on the large number of retail bankruptcies. The Bureau of Labor Statistics reported that about 600,000 retail works have lost their jobs in the past year.

Retailers are going Bankrupt at a record pace.


The National Association of Black Journalists and National Association of Broadcasters have put together a toolkit for "Reporting on Race"

Reporting on Race Toolkit

It is a little sad that in 2017 local news broadcasters have to be instructed on how to handle reporting stories when race is involved.  You know there a problem when they break out the "Toolkit." Yikes!

National Association of Black Journalist Statement


Peter Temin from MIT has a new book out called "The Vanishing Middle Class" which also discusses race as well as economics.

Read the intro here.

Corporations used racism to destroy the middle class and turn us into a developing nation.


More charts on the vanishing middle class from Bill Moyers. You can always use one more chart.


Black businesses in Philadelphia have launched Buy Black Campaign and card.

The card is called iBuyBlack.

On here.


The Congressional Black Caucus issued a report on things to improve in the US for Black Americans. The report is called "A lot to lose"


Tuesday, April 4, 2017

What we're reading today April 4th, 2017

Today we are reading the blistering critique of Donald Trumps presidency in the LA Times: The Problem with Trump.

While the pain of the LA times editorial board maybe real, the opinions have the feel of a publicity stunt.


WAPO has a story on increasing mortality among whites. The story also covers the narrowing happiness gap between Whites and Blacks. 


New CH-53K helicopter will cost $26 billion over the life of the contract.

What we're reading April 3rd, 2017

Going to try something new today, what we are reading.

The New York Times has tough article on Uber using human psychology and behavioral economics to pressure drivers. Here.

The National Science Foundation publish statistics on science and engineering education and employment at the National Center for Science and Engineering Statistics.

They also publish data on Women, Minorities and People with Disabilities in an annual report  called Women, Minorities, and Persons with Disabilities in Science and Engineering.

Neel Kashkari dissented against the recent Federal Reserve interest rate hike.  Hear why at

Sunday, April 2, 2017

The "Cost of Segregation" in Chicago

The Metropolitan Planning Council of Chicago, a non-profit dedicated to improving the Chicago Metropolitan Area, and the Urban Institute released a report in March 2017, describing the "Cost of Segregation" in Chicagoland.

The summary news release is here.

Here are the links to the report and website.

Highlights from reducing segregation include...

  • Black incomes would rise about $3000 dollars or $4.4 Billion. The GDP of the Chicago region would rise by $8.0 Billion.

  • The homicide rate would drop by 30%.

  • An additional 83,000 people would graduate college adding an additional $90 Billion in lifetime income.

"Lower Ed": an expose' of For-Profit Education which preys on women, minorities and the poor

Author Dr. Tressie McMillian Cottom has written a new book called Lower Ed which details some of the failures of the for-profit education industry.  Ms. Cottom worked in the industry and now studies for-profit education at Virginia Common Wealth University.

For-profit colleges and universities are know for high costs, federal student loan and grant abuse and low graduation rates. Their marketing campaigns target Black, female and poor students through personal relationships and one-to-one marketing. Until they sign up. Then students are loaded down with debt and poor job prospects.

Dr. Cottom gave a detailed talk at the Economic Policy Institute that covers much of the content of her book.

Dr. Cottom was also featured on NPR.

And in The Atlantic, where her piece covers the conditions of economic inequality that led to the rise for-profit industry.


We have to acknowledge that for-profit schools are filling a gap in our education system and society. Stagnant wages are creating high demand for education just as most states cut back on education funding and private colleges and universities choose to serve the rich. The for-profit schools stepped into this space.

The real issue is that private and state universities have abandoned their role in providing opportunity to low-income students and intelligent students from bad schools. The for-profit industry is just filling a need.


The Obama administration was aware of these issues. It implemented the "Gainful Employment Rule" requiring reporting of student debt-to-income ratios.  It is expected that the Trump administration will rescind the rules.

Thursday, March 30, 2017

Broke. ESPN films profiles players who have made bad financial decisions

Broke is a quick hit piece about financial mistakes that professional athletes make when investing. Not very enlightening but kind of fun in a jealous, crabs-in-a-barrel kind of way. A little painful.

On You tube

Webpage from ESPN

Direct quote from the film web site...

"Film Summary

According to a 2009 Sports Illustrated article, 60 percent of former NBA players are broke within five years of retirement. By the time they have been retired for two years, 78% of former NFL players have gone bankrupt or are under financial stress.

Sucked into bad investments, stalked by freeloaders, saddled with medical problems, and naturally prone to showing off, many pro athletes get shocked by harsh economic realities after years of living the high life.

Drawing surprisingly vulnerable confessions from retired stars like Keith McCants, Bernie Kosar and Andre Rison, as well as Marvin Miller, the former executive director of the MLB Players Association, this fascinating documentary digs into the psychology of men whose competitive nature can carry them to victory on the field and ruin off it."

Wednesday, March 29, 2017

Does raising the minimum wage kill jobs?

One of the longest running battles in economics is whether raising the minimum wage destroys jobs.

In fact, we have an on-going argument with a good friend of this blog.  The argument is over the effect of raising the minimum wage.  We fully support the "fight for $15", "$10.10", $9.00 or any raise. While our friend is worried over the job loses when wages rise.

The minimum wage was last increased in July of 2009.  It was increased from $5.15 in 2007 to $7.25 in 2009 under president George W. Bush. The raise was attached to small business tax cuts.

The minimum wage is also a good indicator of hard right turn congress has taken in the past 30 years. The minimum wage is now an ideological issue for conservatives. Raising the minimum wage is a non-starter in the current, conservative congress.

Most of the states with the Federal Minimum Wage or below(Georgia) are "Red" - Republican voting states.

There used to be a broad consensus for minimum wage hikes by both Democrats and Republicans with steady increases posted during the 70s, 80s, and 90s (except for Reagan). Back then there were many more White males earning minimum wage in a wide variety of jobs.

Now the image of a minimum wage worker is a surly, Black women asking: "If you want fries with that ?"


Fact: Most studies find no or very small job loss when the minimum wage is raised.

Fact: A majority of states(29) have a higher minimum wage than the federal minimum wage.

The definitive study on the effect of raising the minimum wage was done by John Schmidt in 2013 for the Center for Economic and Policy Research.  He look at a meta sample of all other minimum wage studies available.  Basically, here took all the data points in 64 studies and then grouped them into one giant study (n=1,492).

The report also discusses the offsetting reason why job loses are small.


Finally there are some more recent reports on raising the minimum wage

Here is another good research report that says that raising the minimum wage has a small negative effect on employment. They set the rate of job losses (elasticity) at -0.1. A 10% increase in wages will causes a 1% drop in employment.

Almost all economist accept there will be some job loses if we raise the minimum wage.  The real question is: What is the size of the loss ?  Who does it affect ? and will the additional income effects offset the job loses ? 

At the Evil Black Economist, we lean toward the more optimistic prediction.  The increase in income for low-wage workers will lead to a general increase in demand. The new demand will create low-wage jobs that will offset any low-wage job loses.


The Congressional Budget Office writes clearly about the effect on page 10. 

" If employment increased under either option, in CBO’s judgment, it would probably be because increased demand for goods and services (resulting from the shift of income from higher-income to lower-income people) had boosted economic activity and generated more jobs than were lost as a direct
result of the increase in the cost of hiring low-wage workers. "


In summary, the small(if any) job loss is worth huge increase in wages for existing low-wage and hear low-wage workers though out society. 

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