Alabama and Stanford Provided the Most Valuable Talent to the NFL in the 2012 Draft

Many NFL teams use the relative valuation of draft selections established by the Dallas Cowboys to evaluate possible trades for “moving up” or “moving down” in the draft.  According to the Cowboys’ chart, the top pick in the draft is worth more than 5 times as much as the first pick in the second round (the 33rd pick) and ten times as much as the first pick in the 3rd round (the 65th selection).  The value of players declines exponentially because there are more substitutes for less skilled players and the NFL imposes a minimum salary schedule.

These values can be used to determine which positions are expected to provide the NFL with the most valuable talent in the just completed 2012 Draft.  The following chart shows that quarterbacks, wide receivers, defensive ends and cornerbacks, despite representing less than one third of a team’s positions, are expected to provide almost half of the value in the draft.  This is a clear indication that the NFL has become a pass first league.

Position Share of Draft Value Share of Players Selected
Quarterback

14.12%

4.35%

Wide Receiver

13.14%

13.04%

Defensive End

10.26%

7.51%

Cornerback

10.17%

11.86%

Defensive Tackle

10.10%

9.88%

Offensive Tackle

8.19%

7.11%

Running Back

7.95%

7.51%

Offensive Guard

6.00%

8.30%

Outside Linebacker

5.83%

9.09%

Safety

5.46%

7.91%

Inside Linebacker

5.02%

3.56%

Tight End

2.20%

4.35%

Offensive Center

0.90%

1.98%

All Other Positions

0.66%

3.56%

The chart also shows that quarterbacks are selected much earlier in the draft (their share of draft value is more than three times their share of players selected) than other positions.  Safeties, inside linebackers, tight ends and centers are selected later, on average, than other positions.

The draft values used by NFL teams also can determine which college teams provided the NFL with the most valuable talent in expected value terms) in the 2012 draft.  Alabama had the most players selected (8 out of 253) and are expected to be the source of almost 10% of the value of the 2012 draft.

Position Share of Draft Value Share of Players Selected
Alabama

9.85%

3.16%

Stanford

7.86%

1.58%

Baylor

5.84%

1.98%

LSU

5.34%

1.98%

South Carolina

4.41%

2.37%

USC

4.12%

1.19%

Oklahoma State

4.11%

1.19%

Illinois

3.62%

1.58%

Notre Dame

3.05%

1.58%

Boise State

2.80%

2.37%

College football players were drafted out of 105 different colleges and universities.  The ten schools listed above accounted for 19% of the players and 51% of the value of the talent in the draft.  Only twenty schools accounted for 32.4% of the players and 71.5% of the value in the draft.

The pattern of players selected in the draft emphasizes the high value that NFL General Managers place on both passing offense and defense.  It is difficult to forecast the value of professional football players based on their performance in college and the NFL combine.  Many of the quarterbacks selected in the 2012 draft will underperform relative to expectations, while others will outperform quarterbacks selected ahead of them.  An NFL  team, such as the Miami Dolphins, is willing to take a big chance in the draft on a quarterback because the right player can elevate a team’s performance and profitability for a decade.

Using the Draft to Determine which Universities Provide the Most Talent to the NFL

The NFL Draft, which begins tonight, is televised monopsony (the market power obtained by being the single buyer of a commodity).  The best college football players are selected by a team that will own their exclusive bargaining rights.  If an agreement is not reached the player can’t return to play college football or play for another NFL team that year.  The draft provides an advantage to teams in negotiations with players who are expected to be superstars.  The draft also reveals the expected relative value of players entering the NFL.  A draft pick is a valuable traded asset because it confers monopsony power to the team that owns the pick.  Higher picks are worth more because they represent the rights to exclusively bargain with the very best players.  If players could negotiate with any team in the NFL, draft picks would be worthless.

The Dallas Cowboys established a relative valuation of draft selections, in order to better evaluate possible trades for “moving up” or “moving down” in the draft.  According to the Cowboys’ chart , the top pick in the draft is worth more than five times as much as the first pick in the second round (the 33rd pick) and ten times as much as the first pick in the 3rd round (the 65th selection).  The value of players declines exponentially because there are more substitutes for less skilled players and the NFL imposes a minimum salary schedule.  The Indianapolis Colts and Washington Redskins expect to earn substantial profit from future superstars Oliver Luck and Robert Griffin III, who will be paid much less than they would earn as free agents, because of the salary cap.  It is this expected future profit from top selections that makes high draft picks so valuable.

The draft valuations established by the Cowboys can be used to determine which universities have supplied the NFL with the most valuable talent since the current seven round draft system began in 1994.  In the charts below the top pick is normalized to have a value of 100.  Each college team/year is evaluated by the sum of the value of the players drafted in that year and the next three years.  For example, the value of a team’s players in 2000 equals the value of players drafted from that university between April 2000 and April 2003.  In other words the player quality indexed is summed across four consecutive recruiting /draft classes.

Miami, USC, Ohio State and Florida State have provided the most valuable talent to the NFL since 1994.  The most valuable group of players on campus at the same time was the University of Miami football team in the fall of 2000 (with the first players drafted in April 2001).  Miami had a total player quality index in excess of 650.

There are substantial differences in the sources of talent by year and major conference.  The following chart shows the parity in talent in the Southeastern Conference, where five different teams have had the most valuable talent since 1994.

Florida State and the University of Miami had the most valuable football talent in the Atlantic Coast Conference until 2005.  Since then there has been parity in talent among the top four teams.

Texas and Oklahoma have been the dominant teams in the Big 12 since 1994.  The quality of the football talent at Oklahoma surpassed Texas in 2007.

The PAC-12 had the most unequal distribution of football talent of any major conference in the past 18 years.  The University of Southern California had dominant player talent relative to the other schools in their conference.

Ohio State has been the dominant team in the Big Ten since 1994, followed by Penn State.  The talent at Notre Dame is far below the talent at other major football powers in the Big Ten.

Major college football programs have provided the NFL with valuable talent for decades.  The universities illustrated in the charts above serve as the “minor league” for professional football.  Many of the players drafted from these universities earned substantial salaries from the NFL.  Many of their teammates, however, helped their universities generate millions of dollars in football revenue, but never played football professionally.

Women, Job Losses, and the Postal Service (Warning this post was based on data that the BLS now considers inaccurate)

This post, originally dated April 24th, is subject to revision once the BLS corrects its data series on the employment of women. See my updated post.

Last year President Obama told NBC’s Ann Curry “a lot of businesses have learned to become a lot more efficient with a lot fewer workers.”  The President gave examples of airport kiosks and ATM machines as technological changes that lowered the demand for certain types of clerical and sales jobs.  The President could have added that many of these jobs were previously held by women and are unlikely to return even after the economy recovers.  That may be one reason why the unemployment rate for women has increased from 7.0% to 8.1%, while it has fallen by 0.3% for men since January 2009.

Although economics textbooks often describe technological change that replaces factory workers (and jobs traditionally held by men)  more recent advances in information technology have reduced the demand for some clerical and sales jobs traditionally held by women.   There may be no better example of this phenomenon than the United States Postal Service where more than one in three women lost their jobs in the past three years.  The number of USPS employees has fallen by 116,500 (15.6%) in the past three years.  Nearly all (more than 96%) of the job losses have been due to a decrease in the number of jobs held by women.  The following chart illustrates the average employment by gender and calendar year, for the past five years, at the USPS.

Women’s employment declined by 112,300 while men’s employment dropped by 4,200 from 2008 to 2011.

The next chart illustrates the fraction of USPS jobs held by women in each of the last five calendar years.

The fraction of USPS jobs held by women peaked in 2007 but has now fallen below one third for the first time since 1980.

The information technology revolution, and the recession, did not just lower demand for post office employees; over the past three years employment at bookstores fell by more than 30% and in the courier and messenger industry by almost 9%.

The dramatic change at the United States Postal Service since 2009 is but one example of how advances in information technology can permanently reduce the demand for some clerical and sales positions traditionally held by women.  Although polls indicate that President Obama enjoys a comfortable lead over Mitt Romney among women that may well depend on what happens to the gender gap in job creation between now and November.  As more Americans use the internet to communicate, shop, gather information, and find entertainment it is likely that employment will continue to decline at many retailers and service providers even if the economy strengthens.

Parity and Order Statistics: Why Tiger Woods May Not Break Jack Nicklaus’ Record in Majors

When Ben Curtis won the Valero Texas Open on Sunday he became the 17th different winner in the first 18 PGA tournaments this season.  In addition there have been 14 different winners of the past 14 major tournaments in professional golf.  The only other time, in professional golf history, with similarity parity among the world’s best golfers was when 15 different golfers won 15 major tournaments between Nick Price’s PGA Championship in 1994 and Lee Janzen’s U.S. Open victory in 1998.  There are more top young golfers capable of winning major tournaments than at any time in golf history, and this will lower Tiger Woods’ chances of setting the record for most major championship victories.

Tiger Woods won 14 of the 50 major tournaments he entered between 1997 and 2009.  No one in the history of golf had a similar run, winning 28% of majors entered.  In order to win each major tournament Tiger had to shoot a lower score than the best score among the rest of the field.  The best score among a group of golfers is an extreme value or order statistic.

About 25% of the variation in golf scores in a major championship is attributable to the golf course and the day’s playing conditions.  After removing the common component of his residual score Tiger Woods, in his prime, had a standard deviation of 6.5 shots per major tournament.  Tiger’s 28% win percentage is equivalent to playing against six rival golfers who are each expected to score four shots worse than Tiger, on average.

Can Tiger tie or break Jack Nicklaus’ record of 18 major championships?  If so, how long will that take?  If Tiger returns to previous form, and maintains a one shot per round lead over the six top rivals who have a chance to beat him, he would break the record in late 2016.  But Tiger’s top rivals are better than they were a decade ago and there are more of them.

If Tiger faces twice as many top rivals his win rate falls by 35%.  If his edge over his rivals is cut in half, so that his advantage is two strokes per four rounds, his win rate falls by more than 25%.  If both occur he will win 56% less often or about one major championship every two years.  The last scenario is the most likely and means that even if Tiger returns to his old form, the large field of top young golfers he now faces will delay his 19th major championship victory for at least another decade.

 

Falling Unemployment and a Shrinking Labor Force

The unemployment rate fell in every state but New York in the past year based on seasonally adjusted data. In 19 states the unemployment rate fell by one point or more.  The largest declines were in Alabama and Michigan, where the unemployment rate fell by two percentage points over twelve months.

Some of these apparent improvements in labor market conditions are exaggerated by declining labor force participation.  If a state’s unemployment rate falls because discouraged workers stop looking for work and drop out of the labor force or because people leave the state, the economic news is mixed.  In 13 of the 19 states with the biggest drop in their unemployment rate the labor force also declined.  In two states, Alabama and Arizona, all of the unemployment reduction was attributed to a shrinking labor force, and in Nevada more than 90 percent of the reduction in unemployment is due to a shrinking labor force.

Men’s Pay is More Unequal than Women’s Pay

The latest BLS data from the Current Population Survey again shows that full-time pay is more unequal among men than women.  A common measure of inequality is the ratio of full-time earnings of a worker just included in the top 10% of the pay distribution to the earnings of a worker just in the bottom 10% of full-time workers.  Using this ratio to measure inequality, the BLS data show that:

  • Inequality is higher for more educated workers
  • Inequality is higher for men than women

In the first quarter of 2012, the ratio of top 10% earnings to bottom 10% earnings was:

  • 4.52 for men and 3.68 for women with a graduate degree
  • 4.59 for men and 3.94 for women with a bachelor’s degree
  • 3.78 for men and 3.30 for women with a high school diploma

New Jobless Claims Continue to Signal Labor Market Problems

There have been 15 weeks of new jobless claims reports released in 2012.  The average number of new unemployment insurance claims has been 392,200 per week (not seasonally adjusted).  Between 2004 and 2006, a period of modest annual employment growth of 1.7% or 2.24 million per year, the average number of new jobless claims was 328,800 per week.  Weekly jobless claims are substantially (19%) higher than they were in 2004-2006, when the economy was creating about 187,000 net new jobs per month.

New jobless claims are filed by people who have lost their jobs, so it is difficult to imagine a scenario in which new jobless claims could be much higher than they are now, given the current state of the labor market.  Data from the BLS JOLTS survey indicate that in the six months between September 2011 and February 2012, about 420,600 workers were laid off (or discharged) from their job each week, on average.  This means that in 2012 new jobless claims have been about 93.2% of layoffs per week, on average.  Between 2004 and 2006 new jobless claims were about 78% of layoffs, on average, per week.  We know that the labor market is struggling when almost everyone who loses their job files for unemployment insurance.

Income is Earned, not Taken or Captured

In Striking It Richer, award-winning economist Emmanuel Saez writes about the fraction of income gains “captured” by the top 1% of income earners.   Annie Lowrey‘s interesting profile of Saez and Thomas Piketty states that their research “shows that the top earners in the United States have taken a bigger and bigger share of overall income.”  The words “captured” and “taken” are misleading because income earners don’t confiscate the income or assets of others, nor can they coerce consumers to buy their products or services.

A simple substitution of one word can change the interpretation of an entire article.  The statement that top earners have contributed a bigger and bigger share of overall income in the past few decades is less politically-charged.  Saez, a MacArthur “genius” award winner, knows that earned income is a measure of what someone contributes to the economy, and not resources that have been “taken” or “captured.”  By writing about income gains that are “captured”, he encourages the mistaken point of view that the U.S. economy is zero-sum.

In a free market economy one’s income is approximately equal to the dollar value of his/her marginal contribution to output.  Marginal values tend to be higher for commodities and factors of production that are scarce, like diamonds or highly skilled workers, and lower for more abundant commodities and factors, such as water or unskilled labor.

It is troubling that there has been little growth over the past few decades in the marginal value of the labor services of less skilled workers.  This is the result of technological change and increased competition in a global economy.  Saez and Piketty advocate more income redistribution and higher penalties (marginal tax rates) on the most successful income earners.  If the best policy advice that these prize-winning economists can offer to help struggling low wage workers is a large increase in the marginal tax rate for saving, investment and capital accumulation, it’s time for some new ideas.

Don’t Raise the Minimum Wage

The editors at Bloomberg View have called for an increase in the minimum wage.  Last week James Galbraith  repeated his proposal to raise the minimum wage to $12 per hour.  A large increase in the federally mandated wage would be devastating to less skilled and inexperienced workers.  Galbraith and the editors at Bloomberg View would like to see higher wages and incomes for workers at the bottom of the income distribution.  Merely requiring less educated and inexperienced workers to be more expensive makes a bad situation worse.  These workers would benefit instead from education and training that would make them more valuable to employers.

The nearly 40% increase in the minimum wage between 2007 and 2009, combined with the deep recession of 2008-2009, destroyed many jobs for younger workers.  The following chart compares the change in the percentage of the population that is employed, by age group, before and after the recession and minimum wage increases of 2007-2009.  Teen age workers had the biggest decline in employment relative to population, followed by workers age 20 to 24.  Fewer workers age 25 and above are directly impacted by the federal minimum wage of $7.25 per hour, and these workers were impacted less by the recession.

Galbraith’s proposal to raise the minimum wage to $12, or Senator Tom Harkin’s (D-Iowa), proposal to raise the federal minimum wage to $9.80 per hour by 2014, will make it much more difficult for new labor force entrants to find jobs.

Galbraith’s CNN op-ed, as well as his article in Foreign Policy, credits Ron Unz  of the American Conservative with the proposal for a $12 minimum wage.  Unz supports a policy that would reduce demand for immigrant labor, slow immigration from Mexico and Central America, and benefit conservative political candidates.  This is a cynical reason for supporting a federal mandate that will destroy jobs for the most economically vulnerable workers.  It mirrors the arguments in support of a federal minimum wage in the 1930’s made by Senators from higher wage Northern states.  Ron Unz knows that a $12 minimum wage will reduce the employment of Latinos just as Senators from New England knew that the FLSA would reduce employment in Southern factories.

It is understandable that politicians might support a minimum wage that reduces demand for less skilled workers but benefits their constituents and supporters.  It is more puzzling that Bloomberg View and economist James Galbraith support a policy that destroys job opportunities for workers still suffering from the 2008-2009 recession.

Facts about Women’s Job Losses

The Romney Presidential campaign has correctly observed that men’s job losses tended to occur earlier in the 2008-2009 recession while women have lost more jobs than men since January 2009. The employment of women in the private sector fell by about 252,000 from January/February 2009 to January/February 2012 (BLS establishment survey). There are, however, substantial differences in the magnitude of job losses and gains by industry. For example, women’s employment in the health care industry increased by almost one half million and by 224,000 in temporary help agencies. In all other private sector industries women’s employment fell by 975,000 over the past three years.

Private Sector Job Losses Highest in Retail Trade

The following table presents information on selected private sector industries where women’s employment has fallen disproportionately over the past three years.

Selected Private Sector Industries with Substantial Declines in Women’s Employment January/February 2009 to January/February 2012

Industry

Employment Change

% Change in Employment

Retail Trade

-260,000

-3.51%

Telecommunications

-87,000

-23.1%

Publishing

-56,000

-14.5%

Real Estate

-48,000

-6.45%

Apparel Manufacturing

-22,000

-18.1%

Air Transportation

-16,000

-8.76%

Some of the jobs lost by women in the past three years, such as those in real estate, retail trade and air transportation are likely to return as the economy recovers. The steep percentage declines in employment in industries adversely affected by international trade and technological change are less likely to be reversed in an economic recovery.

Going Postal

The BLS data also indicates that women’s employment in the public sector declined by about 448,000 over the past three years. The following table shows that while there were small declines in state government and a modest increase in most of the federal sector, women’s employment at the U.S. Postal Service dropped sharply, by almost 35%, in just three years. Over 96% of the jobs lost at the USPS were held by women; while almost 35% of all women at the USPS lost their jobs the employment of men fell by less than 1% in the past three years.

Declines in Women’s Employment in the Public Sector

January/February 2009 to January/February 2012

Industry

Employment Change

% Change in Employment

U.S. Postal Service

-109,000

-34.9%

All Other Federal Government

+51,000

+5.46%

State Government

-12,000

-0.43%

Local Government Education

-204,000

-3.33%

Other Local Government

-174,000

-5.68%

Much of the decline in public sector employment has been at the local government level. Women’s employment in public education fell by about 204,000 over three years, but this was a smaller percentage decline than in the rest of local government.

Conclusion

Women have lost more jobs than men over the past three years despite the fact that almost 80% of health care workers are women and almost half a million health care jobs for women were added over the past three years. Women have lost over 200,000 jobs in public education, but job cuts in local government have been larger (in percentage terms) outside of education where the majority of workers are men. In the past three years women have lost jobs disproportionately in retail trade, where men’s employment increased by a quarter million, and in telecommunications, publishing and real estate. The biggest gender gap in job losses, by far, is at the U.S. Postal Service where over 96% of job losses were suffered by women.

Technical Note: Employment figures compare the average of seasonally unadjusted data in January and February 2012 to the corresponding average in January and February of 2009.

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