Author: Dwight Steward, Ph.D.

Dr. Steward regularly writes and speaks on topics involving business and individual economic damages, employment audits, and the analysis of payroll and time data in wage and hour investigations. Dr. Steward has also held teaching positions at The University of Texas-Austin in the Department of Economics and in the Red McCombs School of Business, The College of Business at Sam Houston State University, and at The University of Iowa. He has taught numerous courses in statistics, corporate finance, labor economics, business policies, managerial economics, and microeconomics.

NY-NJ-PA MSA experienced the largest increase in job openings of all US MSAs for August

The New York-Northern New Jersey-Long Island MSA (metropolitan statistical area) experienced the largest increase of job openings of all MSAs in the United States for the month of August with 386 new openings.

Month	MSA	Total_Openings	New_Openings
Aug-14	New York-Northern New Jersey-Long Island, NY-NJ-PA	197,135	386

Source: BLS

Top 3 occupations with the most new job openings in California for August

The top three occupations with the most new job openings in California for the month of August were grounds maintenance workers with 3,366 new openings, cashiers with 3,643 new openings, and managers, all other with 3,687 new openings.

August 2014

Month	Occupation	Total_Openings	New_Openings
Aug-14	Grounds maintenance workers	6,868	3,366
Aug-14	Cashiers	9,288	3,643
Aug-14	Managers, all other	9,939	3,687

Source: BLS

Working with large data sets: The new CMS medial records files

The new data files released by the CMS regarding the payments made to U.S. medical doctors by drug and medical device manufacturers contains a treasure trove of information. However, the large size of the data will limit the use and the nuggets that can mined for some.

Using the statistical program STATA, which is generally one of the fastest and most efficient ways to handle large data sets, required an allocation of 6G of RAM memory to just read in the program. STATA is efficient at handling large wage and hour, employment, and business data sets (like ones with many daily prices)

The table below shows what STATA required in terms of memory to be able to read the data:
Current memory allocation

current                                 memory usage
settable          value     description                 (1M = 1024k)
——————————————————————–
set maxvar         5000     max. variables allowed           1.947M
set memory         6144M    max. data space              6,144.000M
set matsize         400     max. RHS vars in models          1.254M
———–
6,147.201M

U.S. and Eagle Ford Shale rig counts rise while Texas’ fall from August to September

The U.S. rig count was 1,931 in September 2014, up from 1,914 in August 2014; Texas rig count was 896 in September 2014, down from 900 in August 2014; The Eagle Ford Shale rig count was 207 in September 2014, up from 203 in August 2014.

Source:Baker Hughes

Examining the distribution of industry payments made to medical doctors

The Center for Medical and Medicaid Services (CMS) new Open Payments database shows the consulting fees, research grants, travel and other reimbursements made to medical industry in 2013

There are 2,619,700 payments in the CMS data made to 356,190 physicians. The average payment made to physicians was $255.22. The median payment was $15.52

Table 1: Summary of Payments – STATA output

The physicians received an average total of $1,877.11 in payments. The median total payment for the 356,190 physicians in the data was $94.15

Table 2: Summary of Payments – STATA output

Below is the STATA code for the results:
count gen
bysort phy: gen hj =_n
bysort physician_p: gen hj =_n
sum hj, det
count if hj==1
sum tot, det
bysort physician_p: egen hj2 = tot(total)
bysort physician_p: egen hj2 = total(total_am)
sum hj2
sum hj2, det
sort physcian_p
sort physician_p
sum hj2 if _n==1, det
sum hj, det
sum hj2 if hj==1, det

California innovation job openings decreased from July 2014 to August 2014

The number of job openings in California for “Innovation Type Jobs” decreased from 25,143 in July 2014 to 24,132 in August 2014. The searcher-to-job opening ratio also decreased from 1.09 to 1.06 in the same span.

Innovation jobs definition: http://www.employstats.com/blog/2014/09/26/1233/

Image source: http://www.bizjournals.com/sacramento/news/2013/09/23/symposium-innovation-ecosystems-jobs-wea.html

Business interruption damages come in many different shapes and sizes

by: Dwight Steward, Ph.D.

Business interruption cases come in many different shapes and sizes. In some business interruption cases the allegation is that the defendants’ actions increased the operating cost of the plaintiff.

For instance and one recent business interruption case the defendant’s drill and on-going construction activity unknowingly interfered with the plaintiffs’ fiber optic lines drilling.

After the damaged lines were discovered by the plaintiff, the plaintiff spent a number of months fixing and creating new fiber optic lines. In addition to the out-of-pocket expense associated with the with the punctured fiber-optic lines, the plaintiffs also allege that they also incurred a correlated expense of having to use some of their existing employees to help mitigate the damage.

For instance, the plaintiff indicated that the mitigation of the damage caused by the defendant caused them to require substantial overtime hours from its employees to reestablish the lines and to maintain their service. The plaintiff after about eight months was able to get back up to speed and back to where there were prior to the incident.

In this case the alleged out-of-pocket expenses were relatively easy to determine. The company had to purchase more fiber optic and faced of the increased cost associated with installing those lines.

However the plaintiff also alleged that they experienced increased operating expenses, especially in terms of employee expenses.

Increased employee operating expenses is not always as straightforward to calculate. In this instance, employer did not necessarily hire more employees. Instead, the employer used their existing employees at a higher level, required overtime, and shifted employees from one job or project to another. In these types of instances the employee expenses associated with the disruption is not so clear.

One way to determine damages in this case is to look at up is to use financial ratios. Financial ratios such as the employee expense to revenue ratio determine show how the company employs its employees.

For instance, a high employee expense ratio to revenue indicates that the company uses a lot of employees relevant relative to their revenue. A company with a high expense to revenue ratio is a relatively labor intensive company. Conversely, a company with a relatively low expense to revenue ratio is a relatively less employee intensive employer or company.

In a business interruption case, one approach is to look at the changes in these ratios both before and after the incident. Changes in these ratios can indicate the impact of the alleged actions. For instance the employee expense to revenue ratio could change dramatically following the alleged incident.

Other useful financial expense ratios include the full-time employee equivalent (FTE) ratios. FTE ratios are ratios that show how many full-time employees the company typically utilizes. FTE measures take into account the part time work, overtime, and the different compensation structures that the company may utilize in its business.

Texas innovation job openings decreased from July 2014 to August 2014

The number of job openings in Texas for “Innovation Type Jobs” decreased from 13,218 in July 2014 to 12,762 in August 2014. The searcher-to-job opening ratio also decreased from 0.97 to 0.94 in the same span.

Innovation jobs definition: http://www.employstats.com/blog/2014/09/26/1233/

Source: BLS

Image source: http://www.americas.gecapital.com/insight-and-ideas/capital-perspectives/innovation-secrets-of-steve-jobs

Veteran’s wait time at VA hospital: A summary of our findings

Summary of our preliminary research of VA hospital wait times

VA hospital wait times have become an important issue in the U.S. as more and more Vets re-enter civilian life. In our study, which we co-author with Economics Professor, Dr. Peter Claeys of Universitat de Barcelona, we found the following preliminary results:

Overall, across established and new patients, VA wait times are actually not that out of line with other types of hospitals

The really long wait times for established and new patients are concentrated at a few hospitals

The major problem is getting enrolled

VA staffing levels matters

In our upcoming posts we will expand on each of these points and make our data and program files available to interested researchers.

What is the value of the contract? Calculating the value of a partially executed business contract

In this case, the charging party, the plaintiff, alleges that that the defendant unlawfully suspended a work contract. The plaintiffs had a $10.5 million, 3 year contract with the defendant to install and maintain machinery at a pipe manufacturing facility.

The plaintiff alleges that after the defendant unlawfully solicited and hired its key employee to come and work for the defendant, the defendant then terminated the contract. The plaintiff further alleges that the defendant used the former employees of the plaintiff, and the confidential knowledge that they possessed, to complete the install and maintenance of the multimillion dollar pipe making machinery. The plaintiffs financial records indicated that had performed about 1/3 of the work spelled out in the business contract.

In this instance, the value of the remaining portion of the contract is calculated under two different ‘but-for’ contract breach scenarios. The but-for scenario calculates the profits that the plaintiff would have received but-for the defendant’s alleged breach of contract.

In the first but-for scenario, the profit from the remaining portion of the business contract is calculated as the lost profit from the remaining items of spelled out in the contract. The lost profit is determined by calculating the estimated revenue from the remaining items and subtracting the expected incremental cost associated with the performance of the contract.

In the second but-for scenario, the after-incremental expense profits are calculated based on the items that were actually installed by the vendors that the defendant utilized following the termination of the contract with the plaintiff.