“Shaken Not Stirred”, Employment Observations and Taxes

Categories: Commentary, Uncategorized |

March 31, 2014

This week I span far and wide looking at everything from Earthquake data to the more commonly referenced Employment Data.  I also take a look at State level Tax Receipts for the end of 2013 and reference you to a blog post (at the end of the commentary) regarding the availability of financial data in the muni space.  I start this week with a look to, what I consider, the absurd – the decision to allow Northwestern University football players the right to unionize.

Collegiate Football Unions

There are so many fun points to jab at on this one but I’ll only take a few.  In case you missed it, last week the National Labor Relations Board (NLRB) ruled that football players at Northwestern can unionize.  The NLRB concluded college football players are not student-athletes but employees because they spend more time with their sport than classes.  Is that for all football players (are they “dumb jocks” or smarter than the rest of the student body)?  What about student-partiers – you know, those “students” that spend more time partying than in class or studying – can they unionize as well?  What happens to those football scholarships – should they be eliminated so the players can get paid – to heck with the education aspect.  How many become professional?  Which is more beneficial, the paycheck or education?

While I am certain this decision will be appealed to the full NLRB and, if upheld, to the Federal Courts, a decision like this, if left to stand, can impact the outstanding debt of schools that generate revenue from sports.  Think of every college sport we see on television from the major networks to local cable channels, think gate receipts, jerseys, etc.  – the  impact on revenues and spending for schools with  revenues being harder to build and expenses (potentially) going up to “sign” contracts for players. While, in my view, the true outcome will not be decided for a couple of years, this is certainly worth keeping an eye on for the income aspect (or spending) as well as to learn if your alma mater will lose a player to another school in their junior year because they were offered a better contract!


With this past weekend’s earthquake and aftershocks in California, one of our clients reached out over the weekend to inquire about Earthquake Risk and the prevalence of quakes.  Below are two visual depictions of this data.  The left-hand side shows Earthquake Risk as reported by the US Geological Survey while the right-hand map shows FEMA-declared earthquake disasters since 1965.  As the media reported this weekend, there is a greater than 90% chance that southern California will experience a major quake sometime in the next 30 years.  The good news is that building codes are so much better than they had been.  The Risk map certainly highlights this prediction.


DIVER Analytics, Map Module; USGS Earthquake Hazard Program

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DIVER Analytics, Map Module; FEMA

Employment Picture Before the First Friday

This week we get the First Friday employment report.  Expectations are for the addition of 195,000 jobs and a tick down in the Unemployment Rate to about 6.6%.  While folks await that figure, I thought I would provide some detailed data from the State level for the month of February.  This data, from the BLS, is a tad more comprehensive than the baseline survey (despite some other publication touting how meaningful the First Friday report is – check out the survey basis).  Let’s start with Job Growth over the past year.  The good news is that, other than a handful of States (NJ, Kentucky, Tennessee, Alabama, Mississippi and Puerto Rico), there has been Job Growth in most of the US (despite the weather – the excuse used when folks don’t think data is strong enough).  I encourage our readers and subscribers to look closely at this data along with the income data we highlighted last week.  Job Growth is critical but it needs to be accompanied by wage growth.

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DIVER Analytics, Map Module; BLS

In addition to Job Growth, I also like to explore the changes in the Labor Force and the number of Employed people.  As I am often accused of seeing the glass half empty, I offer this half full observation – using the Analytics Filter module, I found that 30 States have seen an increase in their Labor Force and the Number of Employed people (for those half-empty folks – that is 20 States that don’t meet the criteria).  As with Job Growth, I encourage you to look at income data in conjunction with this data.

Tax Receipts – What You Expected?

Last week, the US Census Bureau reported on Taxes Collected by the States for the fourth quarter of 2013.  While we see fairly broad Job Growth across the US and, admittedly, the Tax Collection data lags about a quarter, the year on year growth in Tax Collections was not as broad as the Job Growth data might suggest (if one were to assume Job Growth would lead to wage growth).  While some of this disparity may be discounted due to differing State tax rates (or no State income tax), the results show that even high-tax States such as NY that have seen Job Growth saw a decline in tax receipts.  Check that income data.  Only Kentucky saw a decline in Tax Receipts and negative Job Growth.

States with a Decline in Tax Receipts 4Q 2013
New Hampshire
New Mexico
New York
Rhode Island

Not for nothing but I think it is worth paying close attention to the earnings results of public companies as the first quarter comes to a close.  While equity focused people will listen for the bottom line earnings, I suggest you focus on what companies are doing with their dollars – hoarding, returning to investors or investing in the future.  While some may suggest returning dollars to investors is great, I tend to agree with Larry Fink of Blackrock, investing for the future is what is critical to true job and income growth.  Absent job and income growth, rest assured tax receipts cannot grow absent tax rate increases.

Blog Worth Reading

Last week, a friend referred me to a blog post by Alisha Green of the Sunlight Foundation.  The blog post makes an excellent point regarding the availably and usefulness of financial data in the municipal market.  This is a point I have raised in the past and was and is a driver of why we created the DIVER platform and database – given stale and difficult to access and use financial data, focus on economic and demographic data – drivers of tax-roles, receipts and spending.  Here is the link to Alisha’s post.  http://sunlightfoundation.com/blog/2014/03/26/using-federal-levers-to-open-municipal-financial-data/

Coming Soon and Road Warriors

Keep your eyes out this week for the March Geo Scores and a press release highlighting two awesome new additions to the DIVER by Lumesis team (hint – they are both referenced in the following paragraph).

The DIVER by Lumesis team continues their road trips.  This week, you can find Tim, Pete Newman (our newest addition) and Dalia at the SIFMA conference in Orlando while I will be with Debra at the Ascendant Compliance conference in Savannah.  Next week, the team will hit NYC and Dallas.

Have a great week,


Michael Craft, CFA, Managing Director, Credit
Lumesis, Inc.


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