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.


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