Wednesday, January 29, 2014

My encounter with a "Snow Roller". You won't believe what happened next.

I live just north of Columbus, Ohio.  We had a unique weather event the night before last that produced a "Snow Roller". These are "natural" snowballs of various sizes that were formed with just the right conditions, temperature and wind.  I have never seen them before and apparently they are a rare occurrence.   A large soccer complex I live near has hundreds of them.  They have a very unique "swirl" pattern to them in the center.

Here is my daughter holding one just to give you a idea of the scale and scope of one.

Here is me holding one AND wearing it as a hat.  The kid in me required I do this.

It is difficult to see but this is the soccer field that is covered with them.  It is amazing to see these.  Glad I got the opportunity.  :)

Incentives: How much the Long Term unemployed used to earn when they worked and how much they now receive in cash benefits. This is difficult but numbers don't lie (or do they?)

I used this graph in a prior posting to ask why are the bulk of the long term unemployed in industries that have been employing the MOST people since the official end of the recession in June of 2009 (except manufacturing and construction)

I was curious as to what might be lost wages from work were and how much in cash (unemployment compensation) and near cash (SNAP, or "food stamps" benefits).

I used BLS data (see that below) for the average weekly wages, which I inserted in the graphic for the appropriate job category.

I used the national average for unemployment compensation and SNAP Benefits. Note there will be differences State by State in terms of unemployment compensation amounts--some higher, some lower.

The total in cash and near cash benefits an eligible unemployed worker is eligible for is $832.00 per week.
That is combing the two benefits and assuming for SNAP benefits a family of 4. So, the total could be more or less depending on the number of family members.

Compare the total in eligible weekly benefits to the total in average weekly earnings in each job category.

I believe economists would look at this and see---Incentive(s).

I am neutral on this. What do you think?

Source: NPR
Note: Here is where I found the average weekly wages. I used Dec 2013 weekly wage.
Source: BLS

Tuesday, January 28, 2014

The President spoke of the Long Term unemployed in the SOTU address but did he tell you what these people used to do for work? No? Ok, I will here...

What particular part of the economy did the currently Long Term Unemployed separate from when they lost their job?

I have to tell you I am VERY shocked by this. I assumed they would be part of an industry segment that was lagging in new job creation so there would be little opportunity to find work doing what they did before.

I would have expected Manufacturing and Construction to have much higher rates of long term unemployed as these industries have been disproportionately negatively impacted by the recession and are still lagging.
Source: NPR
The Top 3 and the 4th one are areas where job growth has been notably strong since the US officially exited the recession in June of 2010.

These job categories, except for "Professional and Business Services"(for the most part) are predominantly lower wage, lower skilled positions.

How do these people with no significant long term skills (just being honest) get absorbed back into the economy in a meaningful way?

What possible SPECIFIC policies can target these folks for gainful employment?

I am guessing the Minimum Wage will be mentioned as well.

So, we have lots of low skilled, low wage workers (don't look at me, look at the graph) on long term unemployment and the solution is to increase the cost of hiring these people (if they can get hired)?

Help me out with this, please...

Monday, January 27, 2014

Video (with sound inserted) of San Francisco 4 Days before the earthquake of 1906. So many historical, sociological, economic, and cultural observations one can glean from this.

Here is a great video that is chocked full of learning possibilities.  It is actual video footage taken 4 days before the 1906 Earthquake that leveled San Francisco.  Of course it did not originally have sound BUT someone edited it and insert sounds that would be typical of the activity taking place.

So cool. Not to be missed!!

You MUST watch to the end when they insert photos of the SAME street in the aftermath of the quake. Chilling.
Source: Gizmodo

My take on the Big Mac Index---the Big Mac Inflation Index. Am I onto something???

The Economist is out with its latest update on the Big Mac Index.  It is a playful illustration of the exchange rates and Purchasing Power Parity given just one commodity--McDonald's Big Mac.  Find out more about it HERE.

When I looked at the historical data available with the index I noticed in some countries the price of a Big Mac had changed quite a bit.

So I took the posted prices in the countries own currency from January 2012 (3rd column) and January 2014 (2nd column) and calculated the percent change in price of Big Mac (4th column).

The numbers are in descending order, from highest to lowest change in price.

I highlighted in RED the countries where the percentage price change was higher than the world wide average change in price of 9.28%.

Here is an assignment for you.  Check a few of the countries ACTUAL inflation rates and see how they correlate to the change in prices of Big Macs.   Maybe we have discovered a new fun measure of inflation---The Big Mac Inflation Index.  Just  send me some royalties. That's all I ask for.  :)

Sunday, January 26, 2014

I compare the cost of a cook-out in 2013 with one in 1968 at average hourly wages and minimum wages for the two time periods. You won't believe the results!

I came across this grocery store advertisement from 1968 and decided to use it for a lesson on purchasing power. It is nice to have actual prices from a primary source.

In the red square I isolate the meat products.  Let's assume we are stocking up for a killer cook-out!

To simplify assume we will purchase 5 pounds of each meat (a 20 pound turkey is the exception AND I won't buy oysters as they are not a meat).

Now I shop...I buy all the other items and put them in my "market basket" and pay for them. You are going to have to take my word that I did the math correctly OR feel free to double check me.

Total:  $61.95 in nominal dollars in 1968.

Source HERE
According to the Bureau of Labor Statistics and its measure of the Consumer Price Index, the broad category of meat has increased in price by 6.3 times.

That means to purchase the same meat items today would cost about ($61.95 X 6.3) $390.00.

In 1968 the average hourly wage for a production worker in December 1968 was $3.11.

That means it took that worker 19.9 hours at $3.11 (pre-tax) to earn enough to purchase the market basket.

In December 2013 the average hourly wage for a production worker was $20.35.

That means it took a 19.16 hours at $20.35 (pre-tax) to earn enough to purchase the market basket.

Conclusion?  I suppose we can say that in terms of the purchase of meat for a cook-out, the purchasing power of a worker earning the average wage in 1968 and in 2013 was roughly the same.

How about applying the same analysis to the respective minimum wages?

In 1968 the minimum wage was $1.60. It would take a minimum wage worker 38.72 hours to earn enough for the meat.

In 2013 the minimum wage is $7.25.  It would take a minimum wage worker 53.79 hours to earn enough.

WOW!  That is pretty dramatic.  At least in terms of purchasing power, the minimum wage worker in 1968 was better off than his or her counterpart in 2013.

Maybe that is why I remember having so many more cook outs in the neighborhood when I was a young lad (born in 1960).

Note: Here are the price index information for 1968 and 2013 that I used.  I divided 237.576 by 37.8 to get the 6.3 times increase in the price of meats.

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