Monday, August 31, 2015

Most Profitable Private US Businesses Ranked By Profit Margins

From Sageworks, Data Releases, "The Most Profitable Industries in the US:"
Sageworks today released its annual ranking of the most profitable industries in the U.S. Accounting firms, real estate lessors, and auto equipment leasing were at the top of the list. Companies operating in these three industries are seeing average net profit margins greater than 15 percent, or more than double the private-company average. Also well-represented on the list are companies in the professional services sector and industries related to renting/leasing and health care. A separate ranking of the most profitable small business industries is also included in this report. This list focuses on businesses with less than $5 million in annual revenue.

The analysis in this report is based on private-company financial statements filed over the 12 months ended August 27th, 2015. and uses net profit margin as the metric by which each industry is ranked. Net profit margin has been adjusted to exclude taxes and include owner compensation in excess of their market-rate salaries -- adjustments commonly made to private-company financials in order to provide a more accurate picture of the companies’ operational performance.

The Most Profitable Industries In The U.S.
Source: Sageworks
With a few exceptions (warehousing, support activities for mining), the list of most profitable small business industries very closely mirrors the overall ranking. The full small business list, which focuses on companies with less than $5 million in annual revenue, is included below.

The Most Profitable Small Biz Industries In The U.S.
Source: Sageworks

Thursday, August 27, 2015

Is The SEC Violating Public Company Commercial Free Speech Rights By Regulating Interim Operating Results Disclosure?

My posted comment to The Wall Street Journal, "Let Tim Cook Speak (About Business): Apple’s CEO becomes a target of regulatory action for reminding investors that the real world exists." by Holman W Jenkins, Jr:
When the SEC was created in the 1930s, our free speech rights were more limited and government was allowed to enact laws restricting free speech. It is really only since the 1960s that our current view of expansive free speech was approved by the US Supreme Court.

In 1976, the US Supreme Court said commercial speech has first amendment protection and in 1980, the court set out a four part test when commercial speech can be regulated.

A first amendment challenge to laws and SEC rules limiting public companies from disclosing material information about their current operating results, which are necessary for the real-time accurate pricing of publicly traded securities, would give the US Supreme Court a chance to balance the rights of investors to have current and timely information to price securities against the government's right to delay disclosure for market regulatory reasons. A court could easily find that the SEC has overreached and its disclosure prohibitions are too broad.

Tuesday, August 25, 2015

Cities Passing Higher Minimum Wage Are Exempting Unions From Requirement: Allowing Unions, But Not Non-Unionized Businesses, To Negotiate A Lower Starting Wage For New Members

From The Wall Street Journal, "More Minimum-Wage Backfires: Wal-Mart earnings dip, while unions win wage-law exemptions." in Opinion:
The campaign for higher minimum wages continues to inflict damage on business employees and owners. About the only ones not feeling the pain are the labor unions that back this movement. Meanwhile, in a growing number of U.S. jurisdictions, unions are succeeding in exempting themselves from the laws they seek to impose on everyone else.
But don’t expect pity from the leaders of organized labor, who are busy making sure they don’t have to play by the rules they’re demanding for everyone else. Cities including Chicago, Milwaukee, San Francisco and San Jose have exempted union contracts from laws mandating higher minimum wages.

Union chiefs say the laws unduly limit their flexibility to negotiate labor contracts, which are governed by federal law. And perhaps they don’t care what the wage is so long as they can collect dues. Or maybe they want the ability to give higher wages to longtime union members while dictating lower pay for new members. Flexibility on wages could also be a useful tool to persuade management to accept a unionized workforce, with a demand for higher pay coming later. But why shouldn’t workers who choose not to join a union enjoy the same freedom?

Saturday, August 22, 2015

Comparison Of Federal Reserve GDP Projections Versus Actual GDP: GDP Bonds Anyone?

From The Wall Street Journal, Opinion, "A Fine Fed Mess: Are financial assets falling to match the slowing real economy?"
Federal Reserve GDP Forecast Compared To Actual GDP
Source: The Wall Street Journal

Market-Based Solutions
There are market-based solutions that would improve the forecasts of GDP, that do not involve model building or a dependency on a particular school of economics. Event-based financial instruments where the amount of the payout is directly and computationally dependent on observable economic indicators, observable prices or observable outcomes, such as election outcomes in the Iowa Electronic Markets, inflation forecasts of US Treasury TIPS and other prediction-based actively traded instruments are more accurate than model-based forecasts.

A US Treasury GDP bond of different maturities, where payouts are computationally dependent on actual reported GDP of different time periods, would allow for the computation of future expected (forward) GDP growth rates. These forward growth rates, if they behave like other prediction market-based forecasts, will have greater accuracy than any model based forecast, including a Federal Reserve model.

One has to wonder why the Federal Reserve has not promoted the idea of a market-based, GDP dependent, financial instrument to improve the accuracy of its GDP forecast and to allow for computation of expected GDP growth rates for many different future time periods. Is it a fear of immediate accountability and feedback? The ability of investors to read real-time, market-based forecasts of the future of the US economy from a GDP-based bond would provide a level of oversight, feedback and accountability to the Federal Reserve's actions and judgments to improve future GDP growth that the Federal Reserve is not used to having.

Friday, August 21, 2015

Multiple Job Holding Rates By State: Map

From Bureau of Labor Statistics, Monthly Labor Review, "Multiple jobholding in states in 2014: Multiple-jobholding rates at the state and regional levels vary considerably from the national average." by Susan Campolongo:
In 2014, the multiple-jobholding rate (the percentage of individuals who hold more than one job) in individual states varied considerably from the national average of 4.9 percent, a rate that has been unchanged since 2010. (See figure 1 and table 1.) In all, 22 states had multiple-jobholding rates significantly higher than the national average, 11 states had significantly lower rates, and 17 states and the District of Columbia had rates that were not significantly different from the U.S. average.

Source: Bureau of Labor Statistics

[Table 1 omitted.]

Multiple-jobholding rates tended to vary by region. As in past years, northern states generally had higher rates than southern states. All states in the West North Central Census division and all but one of the states in the New England division had multiple-jobholding rates significantly higher than the U.S. average. Seven of the eleven states with multiple-jobholding rates significantly below the national average were located in the South region. [Footnotes and tables omitted.]

Sunday, August 16, 2015

Clinical Trial Registration Law Prevents Cherry Picking Medical Results: Lowered Reported Positive Treatment Effects From 57 Percent To 8 Percent: Raises Question Of Accuracy of Medical Treatment Studies Prior To The Year 2000

From Nature, Research Highlights, "Registered clinical trials make positive findings vanish: A study showing a fall in positive trial results after the roll-out of attracted much attention on social media." by Chris Woolston:
A 1997 US law mandated the registry’s creation, requiring researchers from 2000 to record their trial methods and outcome measures before collecting data. The study found that in a sample of 55 large trials testing heart-disease treatments, 57% of those published before 2000 reported positive effects from the treatments. But that figure plunged to just 8% in studies that were conducted after 2000. Study author Veronica Irvin, a health scientist at Oregon State University in Corvallis, says this suggests that registering clinical studies is leading to more rigorous research. Writing on his NeuroLogica Blog, neurologist Steven Novella of Yale University in New Haven, Connecticut, called the study “encouraging” but also “a bit frightening” because it casts doubt on previous positive results.
Irvin says that by having to state their methods and measurements before starting their trial, researchers cannot then cherry-pick data to find an effect once the study is over. “It’s more difficult for investigators to selectively report some outcomes and exclude others,” she says.

Thursday, August 13, 2015

More Than Twice As Many Viewers Watched The First Republican Presidential Debate As The 2008 Obama Clinton Debate

From The Wall Street Journal, "Donald Trump, the Kingmaker: Trump has enabled the next U.S. president. But it won’t be him." by Daniel Henninger:
But Mr. Trump just did something unique in presidential politics: He delivered 24 million prospective voters to the Republican Party in its Aug. 6 primary debate on Fox News. It is a mind-boggling number.

In 2008, wunderkind Barack Obama debated Hillary Clinton—favored then as now—and 10.7 million watched, less than half Thursday’s audience. The earlier, happy-hour GOP debate Thursday had six million viewers.

Tuesday, August 11, 2015

White House Occupational Licensing Report: Since 1950s, A Five-Fold Increase In Jobs That Require A License

About one-quarter of US workers need a license to do their jobs, a five-fold increase since the 1950s.

White House Occupational Licensing Report

From the Executive Summary of the White House report:
Executive Summary
Over the past several decades, the share of U.S. workers holding an occupational license has grown sharply. When designed and implemented carefully, licensing can offer important health and safety protections to consumers, as well as benefits to workers. However, the current licensing regime in the United States also creates substantial costs, and often the requirements for obtaining a license are not in sync with the skills needed for the job. There is evidence that licensing requirements raise the price of goods and services, restrict employment opportunities, and make it more difficult for workers to take their skills across State lines. Too often, policymakers do not carefully weigh these costs and benefits when making decisions about whether or how to regulate a profession through licensing. In some cases, alternative forms of occupational regulation, such as State certification, may offer a better balance between consumer protections and flexibility for workers.

Monday, August 10, 2015

The Non-Profit Sector Share Of The US Economy Is As Large As The Information Technology Sector

From Tax Foundation, "Revenue Figures for Charitable Organizations Are at an All-Time High" by Scott Greenberg:
Charitable Organization Revenues 1985-2012
Source: Tax Foundation

Contrary to what you might expect, charitable organizations do not make the bulk of their revenues through donations. In 2012, only 21.3% of revenue for 501(c)3 organizations came from contributions, gifts, and grants. Instead, charitable organizations in the United States are largely funded by "program service revenue" – such as the tuition received by non-profit universities, or the medical bills collected by non-profit hospitals.

The non-profit sector represents a substantial share of the United States economy, totaling $887.3 billion and accounting for 5.4% of GDP (about the same size as the information technology industry.) It is also one of the most rapidly growing parts of the economy, with overall employment increasing by 17% between 2000 and 2010, significantly faster than private business job growth. Now, the recent IRS figures confirm that charitable organizations are receiving higher revenues than ever.

Friday, August 7, 2015

Concerns About A Substantial Increase In Poverty Rates Among Minorities From EPA's New Carbon Emission Reduction Rules

From The Washington Times, "Obama’s Clean Power Plan faces opposition from black, Hispanic leaders" by Ben Wolfgang:
The White House’s carbon emissions regulations have opened a major rift between President Obama and some black and Hispanic leaders who fear the climate change policies will drive up poverty in low-income areas, kill jobs and raise electricity rates for families that can least afford it.
"I’m very concerned that poor people will always pay the price for people who happen to have a vision. … That goes for the EPA, for anyone who isn’t concerned about poor people. The electricity bill is going to skyrocket for poor people," said Charles Steele Jr., CEO of the Southern Christian Leadership Conference and, aside from the carbon regulations, a staunch supporter of Mr. Obama.
In June, for example, National Black Chamber of Commerce President and CEO Harry Alford testified before a Senate panel and said the Clean Power Plan will devastate minority communities.

“The Clean Power Plan would increase black poverty by 23 percent, Hispanic poverty by 26 percent, result in cumulative job losses of 7 million for blacks, nearly 12 million for Hispanics in 2035, and decrease black and Hispanic median household income by $455 to $550, respectively, in 2035,” he told the Senate Environment and Public Works Committee, citing a study commissioned by the Black Chamber.

Wednesday, August 5, 2015

2015 Trustee Report On Medicare

Medicare Trustee Report 2015

Ongoing Teacher Training Does Not Improve Teaching Performance

From The Wall Street Journal, "Study Questions Value of Teacher Development: Report from nonprofit group suggests rethinking ways to boost skills of teachers" by Leslie Brody:
TNTP, a Brooklyn-based organization that trains educators and promotes stringent evaluations, analyzed several years of data from three school districts. It found the districts spent an average of $18,000 per teacher yearly on professional development, including coaching in the classroom, formal feedback, vendor contracts for training and staff time.

Despite that investment, the report found that only three out of 10 teachers in these districts saw their practice improve substantially over two or three years, and two out of 10 teachers saw their performance decline.
The report found that no particular approach to professional development consistently helped teachers get better. When individual teachers improved, their success didn’t appear to be linked to systemic efforts by the districts. [Emphasis added.]