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.

Converting and analyzing wage and business data from PDFs

Some wage and business data is electronic but is not analyzable in the format that it is maintained by the employer or company.

For instance,some employers use computerized data systems for recording the start times, lunch periods, and end periods for certain employees.  When reviewing this data in the regular course of business some of these employers review standardized, pre-formatted reports of the time punch data instead of the actual underlying time punches that were made by each individual employee.  Many of these standardized reports are presented in a PDF or other non-analyzable electronic format.

Similarly, some businesses retain certain information, such as itemized copies of purchase orders, only in a PDF or other non-analyzable electronic format.

The task when addressing economic damage issues that rely on this type of non-analyzable electronic information, is to accurately and efficiently translate the data into a format that can analyzed using statistical programs, such as STATA.  In cases with relatively small amounts of data spreadsheet programs such as EXCEL could also be used.

How is this done? Next>>>>

Analyzing business damages arising from the injury of a principal employee or owner

Lost profits arising from the injury of a principal employee or owner require an analysis of the actual and ‘but-for’  revenue of the business entity.  The date(s) the alleged economic damage to the business began and end is an obvious stating point in the business damages analysis.
Generally, there may be multiple dates if the economic damage occurred in stages.  For example, there may be a major impact time period, such as a period of time where principal(s) or the owner were not able to perform any managerial duties at all following a physical injury.  Following the major impact period, the principal(s) or owner may have returned to their duties in a limited capacity or full capacity after some amount of time

Michael Lewis’s Flash Boys eye opening, fast moving account of High Frequency Trading

Michael Lewis’ Flash Boys is a fast moving eye opener for those of us who do not spend our days working  in and around ‘dark money’ pools and the backrooms of Wall Street banks.

The book begins by laying out the major players in the High Frequency Trading (HFT) market place.  These players include Wall Street banks, traders, stock exchanges, computer programmers and those that are related to those industries.

Lewis then, through a very fast moving person-focused narrative,  describes how HFT techniques have hurt the average investor for many years; mostly without the average investor even knowing that they were injured.  He describes how techniques such as stock ‘front-running’ and cross market arbitrage causes the average investor to pay more than they should for the trades that they make,  The amount of injury for the average trade is small; but collectively as Lewis describes, the amounts are extremely large and in the billions of dollars.

The real strength of the book is Lewis’ ability to bring HFT practices and the workings of dark money pools (pools of money where untracked and untraceable stock trades occur) to the forefront and up for discussion.  However, much more research is needed before determining if HFT and dark money pools are in fact good or bad for the working of the economy.   For example, some of the trades such as cross market arbitrage trades which equalize the prices investors pay across different exchanges are arguably good for the working of the stock market and the economy.  The same case could be made for trades that equalize prices across different time periods (even though the time periods are ridiculously small).

In any event, Lewis’ book, as usual, has shined a light on a area that was previously unseen or imagined by most of us.

— DDS

 

 

Business lost profits in a breach of contract termination case

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Background
In this case, the plaintiff, who was a owner of several outside music venues in the Dallas,Texas area, signed a eight year lease with the defendant for a 5 acre premise which included a restaurant.  Upon signing the lease the plaintiff, built a large performance stage for outside music performances. The venue opening received a significant amount of press and the revenues exceeded its’ initial earnings projections.
After four months of operation, the City informed the owners that the premise was not zoned for the music venue and would need to be rezoned.  The landowner initially agreed to assist the plaintiff in the obtaining the necessary permits and the rezoning application. The plaintiff undertook the necessary steps, such as building more parking, improving traffic flow, and improving water drainage around the premise to obtain the necessary permits and to have the property rezoned.
The final stage of the re-zoning required a property easement, or a right-a-way agreement, by the landowner to the City.  At the final stage, the landlord reversed course and stated that they would not grant the easement to the City and ultimately could not support the rezoning efforts.  The plaintiff ultimately were not able to offer live music at the facility.  After several months of non-payment of rent in protest of the alleged contract breach by the landowner, a local court allowed the plaintiff to be evicted from the premise and the music venue closed.
Legal Issues
In this case the plaintiff is suing their landlord for breach of contract.  The plaintiff alleges that the defendant landlord misrepresented the terms of the contract, specifically regarding how the property that they were leasing could be used.  At the heart of the issue, the plaintiff alleges that the defendant represented that they would be able to operate a live music venue restaurant from the location.  The plaintiff alleges that the defendant’s failure to support the permitting and rezoning efforts constituted a breach of contract.
See the next post for an analysis of the business damages…

Employer Labor Hoarding Part I:What is it?

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Labor hoarding is a concept where employers hold onto workers during economic down times even though they don’t necessarily need them. The idea is that the cost of retraining employees is sufficiently high that it is more cost-effective for employers to retain employees even though they are under utilized.

Initially the concept of labor hoarding was used to explain an apparent contradiction in the economic literature.

The economic contradiction was that during economic expansions employers would not necessarily hire more people. Also it was observed that employers were not necessarily releasing employees when downturns occurred.

This observation also led to a apparent contradiction in the labor economic literature.

According to labor economic literature the average productivity of labor should increase during slowdowns and recessions. The fall of average productivity theoretically, would occur because firms would reduce their labor force during recessions and employees essentially would do more with less during economic contractions.

So for example, delivery workers would be assigned to additional routes during a contraction and instead of having two people cover two routes, the routes would be consolidated so that only one person would be needed.

Since the production level is the same (or least falling at a slower rate than the decline in workers) and the number of workers declines, the average productivity of labor would increase. Alternatively the marginal productivity of labor would increase since fewer workers are needed. (Recall, that there is a inverse relationship between the marginal productivity of labor and the number of workers.)

So what does the current economic literature say about labor hoarding?

The Economics of Offshore Wind Power @awea

A recent study ‘Offshore Wind Market and Economic’ looks at the economics of the wind market in the U.S. A few of the highlights from the report.:

  • There are approximately four gigawatts (GW) of offshore wind installations worldwide. Nearly all of
    this activity has centered on northwestern Europe, which has led the industry’s development since 1999, but China is gaining market position.
  • Thirty-three announced offshore wind projects lay in varying stages of development in the U.S.,
    primarily along the Atlantic Coast.
  • Much of the expertise gained in the oil and gas sector has been leveraged in the offshore wind sector.  Early turbine installation vessels were jack-up barges repurposed from the oil and gas sector.
  • U.S. offshore wind development faces significant challenges: (1) the relatively high cost of offshore
    wind energy; (2) a lack of infrastructure such as transmission and purpose-built ports and vessels;
    and (3) uncertain and lengthy regulatory processes
  • The development of an offshore wind industry in the U.S. will depend on the evolution of other
    sectors in the economy. Factors within the power sector such as the capacity or price of competing
    power generation technologies will affect the demand for offshore wind. Factors within industries that compete with offshore wind for resources (e.g., oil and gas, construction, and manufacturing) will affect the price of offshore wind power

Affordable Care Act changes high risk health insurance coverage in Texas

Like many states, up until the passage of the Affordable Care Act, Texas maintained a separate insurance pool for high risk individuals who could not obtain insurance from another source.

In Texas, that pool was known as the Texas Health Insurance Pool.  The Texas Health Insurance Pool insured individuals, such as those with pre-existing conditions, who could not obtain insurance from other sources.   As would be expected, the premiums, which reflect the higher health risk of the insured, offered by the Texas Health Insurance Pool were significantly higher than the rates offered by non-high risk insurance companies.

The Affordable Care Act and the Health Exchanges have changed high risk health insurance in Texas.  The Texas Health Insurance Pool no longer offers insurance policies and refers those individuals to health.gov for enrollment in the Federal Insurance Market system.

So how do the rates compare?  The rates under the Affordable Care Act are generally lower than the rates offered by the old Texas Health Insurance Pool.  For instance, consider a 53 year old, male smoker who had pre-existing health issues.  If this person were to select a gold level plan under the Affordable Health Care Act, which does not take the pre-existing conditions into account, they could expect to pay about $850 a month.  The same person would have paid about $1,500 a month under the old Texas Health Insurance Pool.

#bitcoin talk (and action) is trending last couple of days

Texas oil boom continues as Australian oil and gas exploration successfully drills in Eagle Ford area

According to a company press release, New Standard Energy Limited announced that it reached target depth at its second well in the Eagle Ford shale the Peeler Ranch-6H well.

The company stated that the they completed the wells within expected time and budget forecasts.  According to the company, the two wells were drilled in parallel lateral lengths, targeting the same Eagle Ford hydrocarbon bearing zone to maximize production and minimize associated drilling, hydraulic fracturing and production tie-in costs.

The company will shift operational focus to fracture stimulation in April.
The company anticipates stimulating both wells together using the
“zipper frac” method.  The zipper frac method alternates fracture stages between the two wells, and causes an incremental increase in fracture interaction, leading to better recovery.

More on zipper frac method:

Total U.S. employment levels nearly at pre-recession level; expected to reach by mid summer.

U.S. employment almost at pre-recession levels

Total U.S. employment is nearly at it’s pre-recession level.  Right at the beginning of the recession total non-farm U.S. employment, which includes about 80% of all workers, was a little over 138,000,000.  Right now total non-farm U.S. employment is a little under 138,000,000.

Generally, non-farm employment is subject to fluctuations such as seasonal changes in weather, major holidays, and the opening and closing of schools.   However, at the current rate of growth, U.S. employment can be expected to reach pre-recession levels by mid summer.

For more see:

(1) Bureau of Labor Statistics. “Employment, Hours, and Earnings from the Establishment Survey.” BLS Handbook of Methods; last date modified July 10, 2013; http://www.bls.gov/opub/hom/.