Hurricane Sandy and Public Transportation in New York City

Residents of New York City are more dependent on their mass transit system than residents of any other city in the United States.  Hurricane Sandy has caused the subway and other forms of public transportation in New York to come to  a grinding halt.  To understand how much of an impact this has on New York City residents one need only examine data from the American Community Survey (ACS).  According to the ACS the fraction of households that do not have access to a vehicle are:

  • 7.6% of households outside of New York City
  • 77.9% of households in Manhattan
  • 59.1% of households in the Bronx
  • 56.8% of households in Brooklyn
  • 36.8% of households in Queens
  • 15.7% of households in Staten Island

Manhattan residents are ten times more dependent on public transportation than are people who live elsewhere in the U.S.  Residents of the Bronx and Brooklyn are eight times more dependent on mass transit than the typical American.  Until the MTA, bus and subway systems are up and running, residents of New York will be stranded.  Those of us who live elsewhere can only imagine what a huge challenge this presents for people who live and work in New York City.

Note: The ACS considers a household to have access to a vehicle if a passenger car, van and panel or pick-up truck is kept at home and available for members of the household.

The Full-Time Jobs Deficit

Although the economy has recovered from the depths of the recession of 2007-2009, there are 4.25 million fewer payroll employees than there were in September 2007 according to the Bureau of Labor Statistics (BLS).  It is more troubling that there are 6.05 million fewer people working full-time than in September 2007 according to the BLS household survey.  There are over 8 million people working part-time for economic reasons, most of them due to slack work.   The deficit in full-time jobs relative to the pre-recession economy is a symptom of a weak economic recovery.

No group has seen a bigger shift to part-time employment than young adults age 20 to 24.  In the past five years young adults in this age group have seen a 23.3% decrease in full-time employment and a 22.4% increase in part-time employment (relative to population).  The following chart shows that 37.6% of employed adults age 20 to 24 now work part-time.  This is the highest fraction since the BLS began reporting these figures.  Between 1994 and 2007 the share of part-time work increased from 27.4% to 28.4% for this age group.  Since the recession the part-time employment rate has risen dramatically.

The increase in part-time employment relative to full-time employment over the past decade is attributable to many factors including the weak recovery, rising cost of health care benefits, economic uncertainty, and the changing demographics of the U.S. labor force.  One of the main reasons why adults age 20-24 are working part-time in record numbers is that new graduates are struggling to find jobs in their fields.  Thus young workers are settling for part-time work as they wait for the economy to improve so they can pursue their careers.  Fewer full-time jobs results in lower tax revenue, higher deficits and slower household formation.  When new college graduates end up in part-time jobs and move back in with their parents it is bad news for the housing market and construction sector.


For a baby boomer who grew up in the Midwest it is odd that questioning Mitt Romney about how generous he would have been with taxpayer help for General Motors is considered a winning issue for Democrats.  General Motors was the number one company in America for 22 of the first 25 years of the Fortune 500 list of the largest companies in America.  The only three years that General Motors was not number one was in the early 1970’s when gasoline prices spiked and GM ranked second to Exxon.  A Federal bailout of General Motors was as unthinkable in 1980 as it is today to imagine a presidential campaign in 2052 in which candidates argue about how much taxpayer money should have been used to bail out Apple or Google.

General Motors and successful tech firms in Silicon Valley have (or in the case of GM had) an advantage over their competitors based on their size and geographic location.  The important work of Paul Krugman, and others, explained that companies and countries can have an advantage over their rivals based on increasing returns and geographic concentration.  Google, Apple, Facebook and other tech firms in Silicon Valley have an advantage because of the available supply of engineers, software developers and programmers which lowers the cost of hiring and turnover.  For General Motors and other automakers in Michigan and Ohio, the advantage came from a location near parts suppliers and the suppliers of other intermediate goods and raw materials.

Krugman’s work explained that firms benefit when they are located near similar producers.  This is true for automakers in Detroit and tech firms in Silicon Valley.  When automakers in Detroit or tech firms in Silicon Valley fail the market test they have done so despite their advantages over competitors in other areas.  The bailout of financial institutions was based on a notion of “too big to fail.”  The systemic risks of allowing a large financial institution to fail were perceived to be too high; there would have been too much collateral damage.  The rationale for bailing out manufacturing firms advantaged by their size and proximity to key suppliers and human capital is much more sketchy.  It establishes a dangerous precedent for future recessions when other large American companies, who faced advantages similar to those enjoyed by GM, will also file for bankruptcy.

George McGovern: Why Presidential Candidates Should Have a Business Background

Nick Gillespie, editor in chief of of, has written an excellent tribute to George McGovern on Bloomberg View.  Gillespie explains McGovern’s libertarian approach to foreign policy interventions but what interested me most was his explanation of McGovern’s evolution on domestic policy, especially regulatory overkill.  After leaving politics Senator McGovern became a small business owner – the proprietor of a Connecticut inn.  In a June 1, 1992 opinion piece for the Wall Street Journal entitled “A Politician’s Dream is a Businessman’s Nightmare” McGovern described how a “severe” recession and government regulations at the federal, state and local levels crippled his small business.  McGovern’s editorial also revealed his belief that a prior background in business is helpful for a presidential candidate:

I also wish that during the years I was in public office, I had had this firsthand experience about the difficulties business people face every day. That knowledge would have made me a better U.S. senator and a more understanding presidential contender.

McGovern explained that politicians with no background in business have a naive view that regulations either impose no costs on businesses or that these costs can easily be shifted to customers or workers.  In the editorial he wrote:

the concept that most often eludes legislators is: `Can we make consumers pay the higher prices for the increased operating costs that accompany public regulation and government reporting requirements with reams of red tape.’  It is a simple concern that is nonetheless often ignored by legislators.

It is also revealing that perhaps the most liberal Democratic presidential candidate in history was hopeful that the Democratic party of 1992 was headed in a different direction – a direction to encourage business formation and capital investment:

Today we are much closer to a general acknowledgment that government must encourage business to expand and grow. Bill Clinton, Paul Tsongas, Bob Kerrey and others have, I believe, changed the debate of our party. We intuitively know that to create job opportunities we need entrepreneurs who will risk their capital against an expected payoff. Too often, however, public policy does not consider whether we are choking off those opportunities.

These words of wisdom from a great American and liberal icon are as important today as when Senator McGovern wrote them 20 years ago.

The Assignment of Bye Weeks in the NFL

There are 10 NFL Teams that had a bye week, or week off, in the first six weeks of the NFL season.  If bye weeks were allocated at random by the NFL one would expect one-half of the teams to have a winning record in their first five games and one-half to have a losing record.  The Chicago Bears are the only team, however, that has a winning record through five games among these teams to receive an early bye week.  The odds of this occurring at random is about one in one hundred.

Another manifestation of this odd outcome is the excessive parity among the 22 teams that did not have a bye week before this weekend.  Eleven of these teams have three wins and three losses.  Again if bye weeks were allocated at random, only about seven of the teams would be expected to have a .500 record.

The pattern observed this year is not apparent in other NFL seasons and is most likely due to the “luck of the draw” or sampling variation.  It does not seem that the NFL deliberately allocates bye weeks early in the season to weaker teams.  If anything, interest in the NFL is likely to grow during the season so it might make more sense to have the weaker teams take their bye weeks later in the season.


Tailored Clothes, Typewriters and Buggy Whips

A news headline today from the Associated Press reported that the company that owns the iconic American tailored clothing brands of Hickey Freeman and Hart Schaffner Marx (HMX Acquisiton Corp) is  is filing for Chapter 11 bankruptcy protection.  As reported by the AP:

The labels Hickey Freeman and Hart Schaffner Marx got their start in 1887 in Chicago and have been worn by presidents including Barack Obama, who wore its suits for his inaugural and election nights.  Their original parent company, Hartmarx, filed for bankruptcy in 2009 and was acquired by British company Emerisque Brands and the North American branch of Indian clothing company SKNL.

The tailored clothing industry in America employs slightly more people than the extinct typewriter and buggy whip industries.  Jobs in the manufacture of men’s and boy’s clothing have been either outsourced or replaced by mechanization.  Employment in men’s and boy’s clothing has declined from 459,000 in 1965 to 234,000 in 1990 to 29,000 today.  The US lost 93.7% of the jobs in the manufacture of men’s clothing at a time when total employment in the economy increased by 120%.

The US doesn’t produce (or consume) the same goods as it did a generation ago.  The US economy must continually transform itself, because of competition in a global economy and the mechanization of production, to generate enough economic growth to create jobs.  The changes required to keep up with foreign competitors will be the result of innovation, risk-taking, and investment in human capital.

President Obama was probably correct when he admitted in this week’s debate that some manufacturing jobs are gone from the US for good.  Outsourcing of these jobs makes economic sense if foreign competitors are more efficient and pass on their lower costs to US customers.  However, outsourcing of jobs is harmful for the US economy if it occurs because of stifling taxes and regulatory burdens.

Earnings Inequality: Higher for Men and More Educated Workers

The latest data from the Current Population Survey for the third quarter of 2012  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 the pay distribution.  Using this earnings ratio to measure inequality, the data show that:

  • Inequality is higher for more educated workers than for less educated workers
  • Inequality is higher for men than for women
  • Inequality is slighter higher in 2012 than it was in 2002

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

  • 4.57 for men and 3.69 for women with a graduate degree
  • 4.79 for men and 3.88 for women with a bachelor’s degree
  • 3.78 for men and 3.54 for women with some college
  • 3.77 for men and 3.36 for women with a high school diploma
  • 3.31 for men and 2.58 for women with less than a high school diploma

This measure of inequality in earnings is about 19% higher for men than for women.  Earnings inequality, measured this way, is 8.7% higher than in 2002 for men and 7.5% higher than in 2002 for women.

Losing Ground to Great Britain

It is hard to admit it, but Great Britain is doing a much better job at creating jobs than the U.S.  That has not always been the case, but it’s been true for the past decade.  What’s even worse is that we are falling further and further behind our British friends.  The United States economy is still the largest in the world, but we are no longer the preeminent job creator in the developed world.  While it is understandable that our job growth is slower than in China and parts of the developing world, there is no reason why employment in the U.S. should be falling relative to employment in Great Britain.

The latest employment figures were just released by the UK’s Office for National Statistics.  About 71.3% of adults age 16 to 64 were employed in Great Britain, in the three-month period from June to August.  That represents a one percentage point increase from the ratio in June to August 2011 (70.3%).  Moreover, this means that the employment to population ratio, the preferred measure of labor force activity by most labor economists, is almost 4 percentage points higher in Great Britain than in the United States for adults age 16-64.

The following chart shows the employment to population ratio for adults in the United States than Great Britain from 1984 to 2011.  The employment rate in the U.S. was higher than in Britain in 17 of 18 years from 1984 to 2001.  In a typical year 1.7% more adults were employed in the U.S. relative to Great Britain.  Since 2001 the Brits have been working more.  For 10 straight years the fraction of adults working in the U.S. has been lower than in Great Britain, and the gap is getting wider.

Changes over the past year have only widened the gap in employment rates between the two countries.  The employment rate increased by a full percentage point in Britain but by only half as much in the U.S.  Both rates are lower than they were prior to the recession but the U.S. employment rate is 4.1 percentage points lower while the British employment rate is only 1.6 percentage points lower than in 2005.  The employment rate of 71.3% in Great Britain and 67.4% in the United States means that 4 percent fewer adults are working in the U.S. than in Great Britain.  This translates into 8 million fewer jobs in the U.S. than if our policies led to employment rates more comparable to the U.K.

Economists and pundits in Great Britain have complained that fiscal austerity has reduced growth in their output and employment.  Whether or not these criticisms are valid, Americans would be happy to have the same record of job creation over the past four years as the British.  The decline in our employment rate in the past four years is troubling.  The employment rates illustrated above exclude individuals age 65 and above, so this is NOT due to the aging of the baby boom.[1]  It should not be too much to expect the employment rate in the U.S. to equal the rate in Britain, and that would mean eight million more jobs.  Eight million more jobs would solve a lot of problems in this country concerning the deficit, poverty and the long-term unemployed.  The government does not create jobs but tax and regulatory policy can get in the way.  Let’s hope that the presidential candidate who wins in November can work with the Congress to reverse the course we are on so that the U.S. can once again reclaim its position as the biggest job creator in the developed world.

[1] If one compares overall employment rates across countries it should be noted that there are actually a higher fraction of adults age 65 and above in Great Britain than in the U.S.

Measured Properly, Bears Kicker Robbie Gould is Most Accurate Kicker in NFL History

The National Football League ranks kickers in terms of their field goal accuracy.  All field goal attempts are not equally difficult, however.  An attempt from 52 yards is much less likely to be successful than an attempt from 22 yards.  Fortunately the NFL also maintains records on field goal attempts and successes from distances of 10-19 yards, 20-29 yards, 30-39 yards, 40-49 yards and 50-59 yards.  Using these data it is possible to calculate a measure of field goal accuracy that adjusts for differences in the lengths of the field goals attempted by each kicker.  I have computed these rates for the 12 most accurate kickers of all time and then re-ranked them in terms of “adjusted accuracy”.  The kicker that benefits the most by such an adjustment is the Bears’ Robbie Gould.  Using this preferred measure of field goal accuracy it is clear that Robbie Gould is the best kicker in NFL history.

On average, top kickers attempt roughly equal numbers of field goals from 20-29, 30-39 and 40-49 yard distances (about 30% from each group), 2% from inside the 20 yard line and 8% from 50 yards or beyond.  Gould’s adjusted accuracy moves him above Nate Kaeding and Mike Vanderjagt because the Bears have been less successful than other top teams at getting into the Red Zone since he has been on the team.  Only 26.4% of Gould’s field goals were attempted from inside the 30 yard line compared to 32.0% for Vanderjagt and 36.7% for Kaeding.   The ineffectiveness of the Bears’ offenses over the years means that Gould has attempted more lengthy field goals than his peers.  Gould has NEVER missed a field goal from inside the 30 yard line in his NFL career (now in its 8th season).   Had Gould been able to attempt field goals more similar in length to his peers, he would be considered the most accurate kicker in NFL history.

Oddly, 7 weeks into the 2012 season, Gould and Rob Bironas of the Titans have both attempted 231 field goals and made 199 of them.  Bironas’ adjusted accuracy is 1.2% lower than Gould’s because Bironas has attempted easier field goals than Gould.  Bears fans should petition the NFL to change the way in which field goal accuracy is computed.  Quarterbacks are rated based on completion percentages, yards and other measures of passing proficiency.  There is no reason why NFL kickers should only be evaluated by their completion percentages.

Adjusted Rank Kicker Adjusted Accuracy Unadjusted Rank
1 Robbie Gould 86.96% 3
2 Nate Kaeding 86.86% 1
3 Mike Vanderjagt 86.67% 2
4 Shayne Graham 85.84% 4
5 Rob Bironas 85.76% 5
6 Connor Barth 85.08% 6
7 Garrett Hartley 84.14% 8
8 Ryan Longwell 83.76% 12

Pay College Football Players Rather Than Spending Millions on College Coaches

Elite college football coaches are the biggest beneficiaries of the NCAA’s prohibition of salaries or stipends for college football players.  College football is a big business generating billions of dollars per year in television revenue.  The way to build a better college football program is not to buy better players, because that is prohibited.  The way to become a college football power is to attract one of the best coaches who will assemble a highly paid staff and use millions of dollars in resources to recruit players by offering them non-wage benefits.  Top coaches are incredibly expensive because they can deliver the best players.  It is time for college presidents to face the truth, eliminate the coach as middleman and pay college football players directly.

Nick Saban, coach of the top-ranked Alabama Crimson Tide, is the highest paid coach in college football earning over $5 million per year.  He also lives and works in Tuscaloosa, Alabama where housing costs $92 per square foot.  In other words, Saban’s annual pre-tax salary is enough to purchase 57,609 square feet of housing every year making him the highest paid coach in college football.  Based on the median size of a new home in the U.S., Saban’s salary would purchase 26.56 new homes per year or a new home every two weeks.

The table below shows the salaries of the coaches of the top 25 ranked teams in the country going into this weekend.  The average coach of a ranked team earns enough (before taxes) each year to buy 11.85 per year.  Using this metric the lowest paid coach in this group is Stanford’s David Shaw whose pre-tax salary would just be enough to purchase one home per year in Palo Alto.  Measured relative to housing costs Saban’s salary is 26 times higher than Shaw’s.

Coach School Relative Salary(# homes/yr) Rank
Nick Saban Alabama Crimson Tide 26.56 1
Bob Stoops Oklahoma Sooners 24.77 13
Brian Kelly Notre Dame Fighting Irish 20.64 7
Mark Richt Georgia Bulldogs 20.37 14
Will Muschamp Florida Gators 16.62 4
Les Miles LSU Tigers 16.35 9
Steve Spurrier South Carolina Gamecocks 13.56 3
Jimbo Fisher Florida State Seminoles 12.35 12
Dan Mullen Mississippi State Bulldogs 12.23 19
Urban Meyer Ohio State Buckeyes 11.60 8
Chris Kelly Oregon Ducks 11.44 2
Kevin Sumlin Texas A&M Aggies 11.27 22
Charlie Strong Louisville Cardinals 11.07 18
Bill Snyder Kansas State Wildcats 11.01 6
Lane Kiffin USC Trojans 10.87 11
Chris Peterson Boise State Broncos 9.81 24
Dabo Swinney Clemson Tigers 9.32 16
Mack Brown Texas Longhorns 9.10 15
Brady Hoke Michigan Wolverines 8.35 25
Butch Jones Cincinnati Bearcats 7.83 21
Dana Holgerson West Virginia Mountaineers 6.90 5
Mike Riley Oregon State Beavers 5.50 10
Kyle Flood Rutgers Scarlet Knights 4.02 20
Sonny Dykes Louisiana Tech Bulldogs 3.75 23
David Shaw Stanford Cardinal 1.03 17

75 college football coaches earn at least one million dollars per year because of lucrative TV contracts for their schools.  As noted above, the NCAA prohibition on payments or stipends to players means that competition for players and recruits inflates coaches’ salaries.  College presidents would rather pay high salaries to coaches than allow direct payments to players.  Nick Saban, Bob Stoops, Brian Kelly and other top coaches earn economic rents because of the restrictions on payments to players.  Rival programs could compete more effectively with Alabama, Oklahoma and Notre Dame if they could pay recruits.  This type of direct competition for recruits would drive up salaries of college athletes and drive down the salaries of college coaches.  College presidents should be honest with the public, admit that college football is a big business, and stop funneling the revenue generated by players to college football coaches.  Pay the players directly.  It is more efficient than paying millions of dollars per year to coaches and recruiters.

Note: Housing prices in college towns are from the Wall Street Journal and Trulia.  Coaches’ salaries are from Coaches’ Hot Seat.

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