Carpe Diem

Wednesday night links

1. September Auto SalesVehicle sales this year of 16.34 million units on a seasonally adjusted, annual rate (SAAR) was the best September sales month since 2006, when 16.42 million units were sold.

2. Restaurant Sales. Driven by stronger same-store sales and customer traffic levels and a more optimistic outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index posted a solid gain in August.

3. More Oil = More Jobs. The three US metro areas with the lowest jobless rates in August: Bismarck, ND (2.2%), Fargo (2.4%) and Midland TX (2.8%).

4. More Oil = Lower Prices. Thanks in part to fracking, “Oil Prices Fall on Growing Supply, Lowest Price in Nearly 2 Years,” and retail gas prices are the lowest in four years for late September.

5. Quotation of the Day. From Thomas Sowell, “I must have heard the word “diversity” proclaimed in ringing tones as a great benefit to society at least a thousand times — and probably closer to a million — without even once hearing a speck of evidence provided, or even suggested as a way to test whether that is true or false.”

6. To Combat Campus Sexual Assault? The University of New Mexico is hosting a “Sex Week,” an event featuring workshops like “How to be a Gentleman AND Get Laid,” “Negotiating A Successful Threesome,” “O-Face Oral” and “BJs and Beyond,” according to this flier distributed on campus.

7. Markets in Everything. a) Want to make sure you and your partner are on the same page before you hook up? There’s an app for that – Good2Go and b) WunWun will offer on-demand delivery of anything to San Francisco users for a flat rate of $10.

8. Who-d a-Thunk It? Federal spending on contracts in the last week of the fiscal year is five times higher than the weekly average? Hey, it’s the annual “use it or lose it” season in Washington.

9. VIDEO. Michelle Fields interviewed Robert F. Kennedy Jr. at the “People’s Climate March” in NYC. The two had a testy exchange and RFK Jr. revealed his climate rage when Michelle suggested his own smartphone, car and carbon footprint makes him a green hypocrite rivaling Al “Bigfoot” Gore. Watch as RFK goes completely loony off the deep end about the Koch Brothers…

Carpe Diem

Location, location, location

flinthome1. Here’s what you can buy in Flint, Michigan for $425,000 (pictured above):

Gorgeous historic home in Flint’s most prestigious neighborhood! Impressive marble Foyer, beautiful hardwood floors throughout, crown molding, paneled Library with french doors. Huge master suite with cozy sitting room. Fabulous formal living and dining rooms. Central air, 3 car garage, lovely secluded patio and hot tub. Six bedrooms, five full bathrooms and one 1/2 bath, 6,550 square feet, on one acre.

Price per square foot: $65

Here’s another home for sale on the same block in Flint for $399,000 with 5 full baths, 2 half baths, 5 bedrooms, 5,414 square feet on one acre.  dccondo2. In contrast, here’s what you can get in Washington, D.C.’s Adams Morgan neighborhood for $425,000 (picture above):

Beautiful 581 square foot, 1 bedroom, 1 bath condo surrounded by everything Adams Morgan has to offer. Renovated kitchen with new appliances, granite counter tops and maple cabinets. Ceramic and glass tile in bath. Beautiful hardwood floors throughout, washer/dryer in unit, tons of storage, wood-burning fireplace, plus off-street parking.

Price per square foot: $731

Related: See a previous “Location, location, location” CD post in 2012 here.

Carpe Diem, Society and Culture

Women earned majority of doctoral degrees in 2013 for 5th straight year, and outnumber men in grad school 137.5 to 100

grad1

grad2grad3The Council of Graduate Schools (CGS) recently released its annual report recently on US graduate school enrollment and degrees for 2013, and here are some of the more interesting findings in this year’s report:

1. For the fifth year in a row, women in 2013 earned a majority of doctoral degrees. Of the 70,920 doctoral degrees awarded in 2013 at US universities (Table 2.25), women earned 34,761 of those degrees and 52.2% of the total, compared to 36,640 degrees awarded to men who earned 47.8% of the total (see top chart above).  The 52.2% female share of doctoral degrees in 2013 was the same as in 2012 and slightly lower than the female share of 52.5% in 2011, but was higher than the 51.9% female share in 2010 and the 50.4% female share in 2009, which was the first year ever that women outnumbered men earning doctoral degrees. Previously, women started earning a majority of associate’s degrees for the first time in 1978, a majority of master’s degrees in 1981, and a majority of bachelor’s degrees in 1982 according to the Department of Education. Therefore, 2009 marked the year when men officially became the “second sex” in higher education by earning a minority of college degrees at all college levels from associate’s degrees up to doctoral degrees.

2. By field of study, women earning doctoral degrees in 2013 outnumbered men in 7 of the 11 graduate fields tracked by the CGS (see top chart above): Arts and Humanities (52.3% female), Biology (51.3%, and one of the STEM fields), Education (67.7%), Health Sciences (71,7)%, Public Administration (64.2%), Social/Behavioral Studies (61.8%) and Other fields (50.5%). Men still earned a majority of 2013 doctoral degrees in the fields of Business (55% male), Engineering (76.9%), Math and Computer Science (74.2%), and Physical Sciences (65.3%).

3. The middle chart above shows the gender breakdown for master’s degrees awarded in 2013 (from Table 2.24) and the gender disparity in favor of females is significant – women earned 58.4% of all master’s degrees in 2013, which would also mean that women earned 140.4 master’s degrees last year for every 100 degrees earned by men. Like for doctoral degrees, women outnumbered men in the same 7 out of the 11 fields of graduate study and in some of those fields the gender disparity was huge. For example, women earned almost 413 master’s degrees in health sciences for every 100 men, and more than 300 master’s degrees in both education and public administration for every 100 men.

4. The bottom chart above displays total enrollment in 2013 by gender and field for all graduate school programs in the US (certificate, master’s and doctoral degrees from Table 2.13), showing that there is a significant gender gap in favor of women for students attending graduate school. Women represent 57.9% of all graduate students in the US, meaning that there are now 137.5 women enrolled in graduate school for every 100 men. In certain fields like Education (74.5% female), Health Sciences (77.9% female) and Public Administration (75.5%), women outnumber men by a factor of almost three or more. By field of study, women enrolled in graduate school outnumber men in the same 7 out of the 11 graduate fields of study noted above, with females being a minority share of graduate students in only Business (44.6% female), Engineering (23.8% female), Math and Computer Science (29.9% female), and Physical Sciences (36.5% female).

MP: Here’s my prediction – the facts that: a) men are underrepresented in graduate school enrollment overall (100 men were enrolled in 2013 for every 137.5 women), b) men received fewer master’s (40.8% of the total) and doctoral degrees (47.8% of the total) than women in 2013, and c) men were underrepresented in 7 out of 11 graduate fields of study at both the master’s and doctoral levels last year will get no attention at all from feminists, gender activists, women’s centers, the media, universities, and anybody in the higher education industry.

Additionally, there will be no calls for government studies, or increased government funding to address the significant gender disparities in graduate schools, and nobody will refer to the gender graduate school enrollment and degree gaps favoring women as a problem or a “crisis.” Further, neither President Obama nor Congress will address the gender graduate enrollment and degree gaps by invoking the Title IX gender-equity law, like they have threatened to do for the gender gap in some college math and science programs. And there won’t be any executive orders to address the huge gender disparity in graduate schools by creating a White House Council on Boys and Men like the executive order issued by President Obama in 2009 to create the “White House Council on Women and Girls.” Finally, despite their stated commitment to “gender equity,” the hundreds of university women’s centers around the country are unlikely to show any concern about the significant gender inequities in graduate school enrollment and degrees, and universities will not be allocating funding to set up men’s centers on college campuses or providing funding for graduate scholarships for men.

Bottom Line: If there is any attention about gender differences in the CGS annual report, it will likely be about the fact that women are a minority in 4 of the 11 fields of graduate study including engineering and computer science (a gender gap which some consider to be a “national crisis”), with calls for greater awareness of female under-representation in STEM graduate fields of study and careers (except for the STEM field of biology, where women are over-represented). But don’t expect any concern about the fact that men have increasingly become the second sex in higher education.  The concern about gender imbalances will remain extremely selective, and will only focus on cases when women, not men, are underrepresented and in the minority.

To conclude, let me pose a few questions, paraphrasing Walter E. Williams: If America’s diversity worshippers see any female underrepresentation as a problem and possibly even as proof of gender discrimination, what do they propose be done about female overrepresentation in higher education at every level and in 7 out of 11 graduate fields? After all, to be logically consistent, aren’t female overrepresentation and female underrepresentation simply different sides of injustice?

Carpe Diem

Some commentary on campus sexual assault

1. From Margaret Wente’s article “The New Campus Sex Puritans” in the Globe and Mail:

Sixty years ago, sexual behavior among the young caused deep alarm among the puritanical religious right. Today, it causes deep alarm among the puritanical progressive left. Like their forebears, they are doing their best to restrict and regulate it.

This weekend, California Governor Jerry Brown signed a bill that makes universities redefine consensual sex. The new measure is designed to stem a tidal wave of rape on campus that, in fact, does not exist. (Violent crime, including sexual assault, has been in decline for 20 years.) Even so, universities across North America have set up vast new administrative apparatuses to deal with the crisis. Many of them have also expanded the meaning of “sexual violence” to include anything that makes you feel bad.

I don’t have the slightest wish to trivialize rape or sexual assault. It’s campus vigilantes who are doing that. They are also determined to demolish anyone who dispenses perfectly sensible advice, such as counseling female students not to drink themselves into oblivion lest they do something they may later regret.

Will the progressive left have any better luck regulating sexual behavior than the puritanical right did? Somehow, I doubt it. The universities should get back to educating young people and leave sexual assault where it belongs – with the police.

2. From Camile Paglia’s TIME article “The Modern Campus Cannot Comprehend Evil“:

Wildly overblown claims about an epidemic of sexual assaults on American campuses are obscuring the true danger to young women, too often distracted by cellphones or iPods in public places: the ancient sex crime of abduction and murder. Despite hysterical propaganda about our “rape culture,” the majority of campus incidents being carelessly described as sexual assault are not felonious rape (involving force or drugs) but oafish hookup melodramas, arising from mixed signals and imprudence on both sides.

Colleges should stick to academics and stop their infantilizing supervision of students’ dating lives, an authoritarian intrusion that borders on violation of civil liberties. Real crimes should be reported to the police, not to haphazard and ill-trained campus grievance committees.

3. From Jonah Goldberg’s op-ed in the LA TimesWhat ‘War on Women’?“:

Accurate statistics are of limited use because rape and sexual assault have been declining for decades. So the Obama administration and its allied activist groups trot out the claim that there is a rape epidemic victimizing 1 in 5 women on college campuses. This conveniently horrifying number is a classic example of being too terrible to check. If it were true, it would mean that rape would be more prevalent on elite campuses than in many of the most impoverished and crime-ridden communities.

To listen to pretty much anyone in the Democratic Party these days, you’d think these are dark days for women. But by any objective measure, things have been going great for women for a long time, under Republicans and Democrats alike.

Women earn 57% of bachelor’s degrees, 60% of master’s degrees and 52% of doctorates. Single women without kids earn 8% more than single men without children in most cities. Women make up almost half of medical school applicants and nearly 80% of veterinary school enrollees. When you account for hours worked and job choices, pay equity is pretty much here already.

A broad coalition of feminist groups, Democratic Party activists and the journalists who carry water for them refuse to recognize the progress women have made unless it is in the context of how “fragile” these victories are. There’s a vast feminist industrial complex that is addicted to institutionalized panic. On college campuses, feminist and gender studies departments depend almost entirely on a constant drumbeat of crisis-mongering to keep their increasingly irrelevant courses alive.

Sure, women still face challenges. But the system feminists have constructed cannot long survive an outbreak of confidence in the permanence of women’s progress. The last thing the generals need is for the troops to find out that the “war on women” ended a long time ago — and the women won.

 

Carpe Diem, Economics, Energy and the Environment

Texas oil production in July topped 3M barrels/day for the third month, as Lone State state produced 36% of all US oil

texasThe Energy Information Administration (EIA) released new state crude oil production data yesterday for the month of July, and one of the highlights of that monthly report is that oil output in America’s No. 1 oil-producing state – Texas – continues its phenomenal, eye-popping rise. Here are some details of oil output in “Saudi Texas” for the month of July and the economic impact that production is having on the state’s economy:

1. For the third straight month starting in May, oil drillers in Texas pumped out more than 3 million barrels of crude oil every day (bpd) during the month of July. The 3.102 million bpd in July was the highest daily oil output in the Lone Star State in any single month since at least January 1981, when the EIA started reporting each state’s monthly oil production (see chart above). Texas reached the two million barrel per day oil production milestone in August 2012, and has since added a million more barrels of daily oil production in less than two years to reach the three million barrel milestone in May of this year. Compared to oil production a year ago, Texas posted a 20.4% increase in July marking the 39th straight month starting in May 2011 that the state’s oil output has increased by more than 20% on a year-over-year basis.

2. Remarkably, oil production in the Lone Star State has more than doubled in less than three years, from 1.544 million bpd in September 2011 to 3.102 million bpd in July of this year (see chart above), and that production surge has to be one of the most significant increases in oil output ever recorded in the US over such a short period of time. A 1.56 million bpd increase in oil output in only 34 months in one US state is remarkable, and would have never been possible without the revolutionary drilling techniques that just recently started accessing vast oceans of Texas shale oil in the Eagle Ford Shale and Permian Basin oil fields. As I have reported recently on CD, the Eagle Ford and Permian Basin oil fields in Texas are now producing crude oil at a rate of more than 1 million bpd, joining an elite international group of only ten super-giant oil fields in the world that have reached the one million barrel per day milestone at their peak level of production.

3. The exponential increase in Texas oil output over roughly the last three years has completely reversed the previous, gradual 28-year decline in the state’s conventional oil production that took place from 1981 to 2009 (see arrows in chart) – thanks almost exclusively to the dramatic increases in the state’s output of newly accessible, unconventional shale oil.

4. As recently as mid-2009, Texas was producing less than 20% of America’s domestic crude oil. The recent gusher of unconventional oil being produced in the Eagle Ford Shale and Permian Basin oil fields of Texas, thanks to breakthrough drilling and extraction technologies, has recently pushed the Lone Star State’s share of domestic crude oil all the way up to more than 36% of America’s crude output for the last three months.

5. Oil output has increased so significantly in Texas in recent years that if the state were considered as a separate oil-producing country, Texas would have been the 8th largest oil-producing nation in the world for crude oil output in June (most recent month available for international oil production data) at 3.07 million bpd – just behind No. 7 Iraq’s production of 3.22 million bpd.

6. The dramatic increase in Texas’s oil production is bringing jobs and economic prosperity to the state. For example, over the last 12 months through August, payrolls in the state of Texas increased by 395,200 jobs, which was a 3.52% annual increase in the state’s employment level, almost double the 1.82% increase in total US payrolls over that period. With only 8.4% of the US population, Texas created 16% of the new US payroll jobs over the last 12 months through July.

Every business day over the last year, more than 1,500 new jobs were created in the Lone Star State, and many of those jobs were directly or indirectly related to the state’s booming energy sector, which experienced an 8% increase in payrolls for oil and gas extraction jobs (8,500 new jobs) over the most recent 12-month period through August. Oil and gas companies in Texas hired more than 32 new employees every business day over the last year just for extraction activities, or about 5 new hires every hour!

MP: The significant increase in Texas’s oil production over the last several years is nothing short of phenomenal, and is a direct result of America’s “petropreneurs” who developed game-changing drilling technologies that have now revolutionized the nation’s production of shale oil. Thanks to those revolutionary technologies, Texas is now home to two of only ten super-giant oil fields in the world to ever produce more than 1 million barrels of oil per day – the Eagle Ford and Permian Basin.

For oil output in Texas to increase from 2 million to more than 3 million bpd in less than two years, and increase so dramatically that the state now produces more than 36% of US oil, is undoubtedly one of the most remarkable energy success stories in US history – and it’s just getting started. At the current pace of annual increases of about +20%, Texas oil production will likely surpass 4 million bpd by late summer of next year. With those projected increases in Texas oil output, the state could soon surpass Iraq, Iran and even Canada to move up in the international oil production rankings to become the world’s No. 5 oil producer in 2015.

“Saudi Texas” continues to be the shining star of The Great American Energy Boom.

Carpe Diem, Economics, Energy and the Environment

Another energy milestone: ‘Saudi America’ was the world’s largest petroleum producer in June for the 20th straight month

saudiThe Energy Information Administration (EIA) released new data this week on international energy production for the month of June, and here are some highlights of that update:

1. For the 20th month in a row starting in November 2012, “Saudi America” took the top spot again in June as the No. 1 petroleum producer in the world. Also, for the 20th straight month, total petroleum production (crude oil and other petroleum products like natural gas plant liquids, leased condensate, and refined petroleum products) in the US during the month of June at 14.03 million barrels per day (bpd) exceeded petroleum production in No. 2 Saudi Arabia (11.61 million bpd), see chart above.

2. During the 2004-2008 period before America’s shale oil and gas boom started, Saudi Arabia routinely produced 2–3 million more barrels of petroleum products per day than the US (see blue arrow in chart). But since America’s shale revolution started around 2009 when America’s “petropreneurs” starting accessing oceans of shale oil and gas with revolutionary drilling and extraction technologies, there has been a surge of nearly 63% in the supply of petroleum produced in the US, and America surpassed Saudi Arabia at the end of 2012 to become the world’s No. 1 petroleum producer. In June, production of US petroleum products (14.03 million bpd) exceeded Saudi Arabia’s output (11.61 million bpd) by more than 2.4 million bpd (see red arrow in chart), which is the biggest difference in favor of the US during the 20 year history of international production data from the EIA (see chart).

Bottom Line: The EIA data on international petroleum production through June provides more evidence that America’s shale energy revolution is taking the US from “resource scarcity” to a new era of “resource abundance.” The US now consistently produces more “total oil supply” than Saudi Arabia (by more than 2.4M bpd in June) and has led the world in petroleum production for 20 straight months. This energy bonanza in the US — described as the “energy equivalent of the Berlin Wall coming down” — would have been largely unthinkable even six years ago. But then thanks to revolutionary drilling techniques developed by American “petropreneurs,” vast oceans of shale oil and gas have been accessed across the country, making the US the world’s No. 1 petroleum producer for 20 months running.

Carpe Diem

When we consider all US CEOs and all US workers, the ‘CEO-to-worker pay ratio’ falls from 331:1 to below 4:1

ceo

minwageHere are some questionable statistics about CEO pay that we learn about from the AFL-CIO’s Executive Paywatch webpage:

1. In 2013 the CEO-to-worker pay ratio was 331:1 and the CEO-to-minimum-wage-worker pay ratio was 774:1. America is supposed to be the land of opportunity, a country where hard work and playing by the rules would provide working families a middle-class standard of living. But in recent decades, corporate CEOs have been taking a greater share of the economic pie while wages have stagnated and unemployment remains high.

2. Highly paid CEOs of low-wage employers are fueling this growing economic inequality. In 2013, CEOs of the S&P 500 Index companies received, on average, $11.7 million in total compensation, according to the AFL-CIO’s analysis of available data from 350 companies.

3. It doesn’t have to be this way. Politicians should raise the minimum wage. Corporations should pay their employees a living wage. And workers should have a collective voice on the job to demand their fair share.

MP: As I pointed out in a post earlier today on CD, this frequently cited AFL-CIO analysis of CEO pay is an example of “statistical bait-and-switch.” Or call it a “statistical canard” or a “statistical fallacy.” Here’s why:

The AFL-CIO is comparing: a) the average salary of a small sample (350) of the highest paid US CEOs, out of a total CEO population in 2013 of 248,760 CEOs, according to BLS data here, and b) the average worker pay for production and nonsupervisory workers, which represents about 97 million workers out of a total of 146 million employees nationwide. In other words, the AFL-CIO’s reported “CEO-to-worker pay ratio” of 331:1 is calculated by ignoring 99.9% of all US CEOs and 34% of all US workers. A more accurate description would be to call it a ratio of the pay for 350 of the highest-paid US CEOs to the pay of only 66% of the American labor force, or a ratio of an unrepresentative, infinitesimally small, and statistically insignificant group of CEOs to only two-thirds of American workers. It’s a completely bogus and meaningless comparison.

The top chart above shows a more statistically valid comparison of CEO pay to average worker in the US pay by considering: a) the average annual pay of all US CEOs in every year from 2002 to 2013 (data here) and b) the average annual pay of all US workers in a comprehensive, national BLS dataset that includes workers in 22 major occupational groups, 94 minor occupational groups, 458 broad occupations, and 821 detailed occupations (132.6 million workers for 2013). Based on those data, the average CEO earned $178,400 last year, the average worker earned $46,440, and the “CEO-to-worker pay ratio” was 3.84:1, and that’s a LOT different from the AFL-CIO’s ratio of 331:1 by a factor of more than 86 times! Call it a “statistical falsehood-to-truth ratio” of 86:1 for the AFL-CIO’s exaggerated, bogus ratio. The chart also shows that the real CEO-to-worker pay ratio has not been increasing as is frequently reported, but instead has been remarkably constant over the last 12 years, averaging 3.8:1 in a tight range between a maximum of 3.89:1 in 2004 and a minimum of 3.69:1 in both 2005 and 2006. The ratio of 3.84:1 in the most recent year (2013) was actually slightly lower than the ratios in 2004 (3.89:1) and in all years between 2009 and 2012.

Likewise, the bottom chart displays a more statistically valid comparison of average CEO pay to the annual pay of a full-time minimum wage worker. In 2013, a full-time minimum wage worker earned $14,500, and therefore the CEO-to-minimum-wage-worker pay ratio was only 12.3:1 compared to the grossly inflated 774:1 ratio reported by the AFL-CIO. That’s a “statistical falsehood-to-truth ratio” of 63:1 for the AFL-CIO’s exaggerated ratio. Because of the recent increases in the minimum wage between 2007-2009, the CEO-to-minimum-wage-worker pay ratio in recent years has been lower than the most recent 12-year average of 12.76:1.

Bottom Line: Do a Google search of the phrase “CEO to worker pay” and you’ll find 150,000 links to reports and articles that almost exclusively compare the salaries of a very small, statistically insignificant group of S&P500 or Fortune 500 CEOs to average worker pay. I’m suggesting that those comparisons are statistically invalid and meaningless. A comprehensive and statistically valid comparison of the average pay of all US CEOs to the average pay of all US workers reveals a much different story than the frequently reported narrative of a 300:1 (or higher) and rising CEO-to-worker pay ratio in the US. The reality is that the annual salary of the average US CEO pay is less than four times the annual pay of the average worker, and that ratio has been remarkably stable for more than a decade. 

Carpe Diem

What do Uber and school choice have in common?

Quite a lot, as James Courtovich explains in today’s Wall Street Journal – they are both examples of pro-consumer, innovative, disruptive, superior and cheaper alternatives to entrenched, bureaucratic, unionized, and anti-consumer/student, status quo monopoly providers. In words, both Uber and school choice provide better, low-cost alternatives to transportation and education monopolies that “produce bad products at high prices.”  Here’s a slice:

When President Lyndon Johnson announced the creation of the Transportation Department 48 years ago this month, he said that one of the agency’s goals would be to “bring new technology to every mode of transportation.” Nearly half a century later, Uber is doing just that, allowing customers to order and pay for trips on their smartphone. Satisfied passengers, drivers and investors are singing Uber’s tagline: Choice is a Beautiful Thing.

But choice threatens entrenched interests like cabdrivers, who are deploying intimidation tactics and red tape to protect their turf. An Uber driver I rode with recently in Miami told me that he’d received two $1,000 tickets in as many days for picking up passengers at the airport.

“You’re changing the way cities work,” Uber CEO and founder Travis Kalanick explained at a tech conference in May, “and that’s fundamentally a third rail.” Uber announced in June that it had raised an additional $1.2 billion in financing, bringing the company’s valuation to an astounding $17 billion. Mr. Kalanick’s deft maneuvering around political and bureaucratic roadblocks reflects the confidence of a man who knows where he’s going and knows he has the right of way.

He reminds me of legendary financier Ted Forstmann, with whom I worked, along with Wal-Mart‘s John Walton, to provide $200 million in private scholarships to inner-city children. When we began the project in 1998, teachers, union leaders and their political benefactors said choice was a threat, much as cabdrivers say now. The 1.3 million parents who applied for the scholarships illustrated the tremendous demand for alternatives.

Both Mr. Kalanick and Forstmann were demonized by defenders of the status quo. But when entrenched interests win, everyone loses.

Innovation unlocks the value in idle cars, rooms, tools and hands—and opens a channel for billions of dollars of capital to spur economic growth and create new jobs. “Money is like blood; it must flow,” said Deepak Chopra, doctor and two-time Barack Obama backer. What’s true for blood and capital is true for transportation. Washington is always focused merely on passing bills for more government spending on infrastructure. But this Beltway bickering takes place far away from where the rubber really hits the road, on the highways and back streets.

What is needed are not simply new legislation and regulation; what is needed is new thinking, new leadership and a new collaborative relationship among union representatives, policy makers and business. At stake is not just our failing infrastructure, and failing schools, it’s the country’s ability to compete successfully on a global scale. We should all hope Mr. Kalanick and others like him succeed.

Carpe Diem

Krugman and the frequent statistical fallacy of comparing the salaries of several hundred CEOs to pay of all 132M workers

krugmanPaul Krugman recently accepted a position at an income inequality institute at the City University of New York (CUNY). According to a public records request (first reported by Gawker), Krugman will be paid $25,000 per month ($225,000 for a nine-month appointment) and will not have to teach any classes during his first year as a “Distinguished Scholar in the Graduate Center’s Luxembourg Income Study Center.” Starting in his second year, Professor Krugman will teach one graduate seminar per year. Krugman will be paid about twice the annual salary of the average full professor at CUNY of $116,364 (most recent contract data here, see chart above). Krugman will also earn in 9 months about 26% more than the average annual US CEO salary of $178,400.

I make these comparisons because of Krugman’s comments in his most recent NY Times op-ed “Our Invisible Rich“:

In fact, most Americans have no idea just how unequal our society has become. The latest piece of evidence to that effect is a survey asking people in various countries how much they thought top executives of major companies make relative to unskilled workers. In the United States the median respondent believed that chief executives make about 30 times as much as their employees, which was roughly true in the 1960s — but since then the gap has soared, so that today chief executives earn something like 300 times as much as ordinary workers.

So Americans have no idea how much the Masters of the Universe are paid, a finding very much in line with evidence that Americans vastly underestimate the concentration of wealth at the top.

MP: As I have pointed out before on CD, the average CEO in America made only $178,400 in 2013, which is less than four times the annual salary of $46,440 earned by the “ordinary worker” last year. The CEO-to-ordinary worker pay ratio of 300 times that is so frequently cited by the media, AFL-CIO, progressives and even economists like Krugman is a statistical fallacy. The comparison is between all 132 million US workers to a very small handful of the several hundred highest paid CEOs in the S&P500 or the Fortune 500, out of almost a quarter-million CEOs nationwide. As I’ve explained before:

We can get a more accurate and complete picture of CEO compensation in the US by looking at wage data released recently by the Bureau of Labor Statistics in its annual report on Occupational Employment and Wages for 2013. In 2013, the BLS reports that the average pay for America’s 248,760 chief executives was only $178,400. The multi-million dollar salaries of the CEOs of a sample of only several hundred S&P500 firms that are so frequently reported as reflecting “CEO pay” in the US represent only one out of about every 1,000 firms in the country (or 1/10 of 1%) that have a CEO at the head. The larger sample of almost a quarter-million CEOs reported by the BLS gives us a much better understanding of “average CEO compensation” compared to the pay of the average US worker.

For the larger sample of CEOs reported by the BLS, their average pay last year was $178,400 compared to the average pay of all workers of $46,440, reflecting a “CEO-to-worker pay ratio” of less than 4-to-1. That’s nowhere close to the pay ratio of 331-to-1 ratio reported recently by the AFL-CIO using the 350 highest-paid CEOs in the country, which is similar to the 300-to-1 ratio that Paul Krugman claims.

Isn’t it a little hypocritical and statistically misleading for a professor who makes 26% more than the average CEO and twice as much as the average professor at CUNY to be constantly lecturing us about income inequality and complaining about excessive CEO pay by comparing the highest paid 1/10 of 1% of US CEOs to the average of pay of all 132 million American workers?