You Are What You Eat

Way back in 1980, the U.S. Federal government released the Dietary Guidelines for Americans, a series of dietary recommendations for Americans aged 2 and over to prevent the risk of chronic diseases and to assist in the maintenance of healthy body weight.  These guidelines include the following three goals:

1.) Balance calories with physical activity to manage weight.

2.) Consume more of certain foods and nutrients such as fruits and vegetables, whole grains, fat-free and low-fat dairy products and seafood.

3.) Consume fewer foods with sodium, saturated fats, trans fats, cholesterol, added sugars and refined grains.

There are different USDA food plans that are designed to meet the requirements of households of different ages, numbers of family members and income levels.

Economic Research Service (ERS) researchers, the body that provides research and economic information from the United States Department of Agriculture, undertook two studies that looked at how much consumers were spending on healthy choices and unhealthy choices as outlined above over the years from 1998 to 2006.  Households recorded their food and beverage purchases of over 60,000 different products into the 23 USDA food plan categories with the beverage group consisting of all soft drinks and fruit drinks, the processed products which include dairy products, soups, frozen or refrigerated dinners and refined and whole grains and fresh or minimally processed products like frozen beans and canned tomatoes.

Now for the graphic showing the results of average at-home household spending on each of the 23 food categories (in blue) compared to the USDA recommended level of spending (in yellow):

Of the 23 categories, you will note that household spending on only one category came close to what the USDA recommends; potatoes.  Spending on refined grains which includes cookies, breads, pasta and non-whole grain crackers consumed 17 percent of household spending on food rather than the 5 percent total recommended by the USDA.  Spending on sugar and candies represented nearly 14 percent of household spending on food rather than the fraction of a percent recommended by the USDA.  On the flip side, spending on whole fruits consumed just over 4 percent of total household food expenditures rather than the 16 percent recommended by the USDA and spending on legumes was less than 0.5 percent compared to the 8 percent recommended by USDA guidelines.

Just in case you thought that there was a relationship between certain socio-economic factors and spending on less than healthy food, according to the data, the quality of diets in American households is not particularly related to economic standing or demographic and geographic differences for that matter.

One of the problems is the growing portion of fast food in American diets over the past three and a half decades as shown here (in purple):

Fast food contribution to total dietary caloric intake has risen from 3.1 percent in the mid-late 1970s to 13.2 percent in the years between 2005 and 2008.

What has all of this led to?

Here is a map showing obesity rates by state in 2012:

Here is a bar graph showing how obesity rates have risen in the United States from 1988 - 1994 to 2005 - 2008 by income level (PIR or poverty income ratio):

Over the period, the prevalence of obesity among men with income at or above 350 percent of the poverty level rose from 18 percent to 32.9 percent, an increase of 83 percent.  The prevalence of obesity among women with incomes at or above 350 percent of the poverty level rose from 18.6 percent to 29 percent.  Interestingly, among low income women with incomes less than 130 percent of the poverty level, obesity rates rose only slightly over the time period, however, the rate rose from a substantial 34.5 percent of women to a stunning 42 percent of women.  As well, the data shows that the obesity rate for all educational levels rose with men with some college education having the highest obesity rates (36.2 percent) and women with less than high school education having the highest obesity rates (42.1 percent).

While the dietary recommendations made by the USDA are not the complete answer to the plague of obesity affecting American society, perhaps keeping in mind that health care costs are ever on the rise will be motivation in itself as a prod to adopt a more healthy overall lifestyle.

The Decline of Entrepreneurship In America

A study by Ian Hathaway and Robert Litan at the Brookings Institute examines the issue of declining entrepreneurship or business dynamism in the United States over the period from 1978 to 2011.

Business dynamism is the process in which businesses are created, expand, contract and fail.  During the process, jobs are both created and destroyed.  Business dynamism is essential for economic growth; unless new businesses are formed and existing businesses expand, economic and job growth will not take place.  Looking back over history, a new business is created nearly every minute and another fails every eighty seconds.  For example, during every quarter in 2012, there were 13.2 million private sector jobs created or destroyed.  Unfortunately, despite all of that business creation and destruction, only 600,000 net new jobs were created in each of the four quarters.  

Two statistical measures can be used to examine the level of business dynamism; the first is firm entry defined as firms that are less than a year old as a share of all firms and the second is job relocation.   

Let's start this posting by looking at how many firms were created and destroyed during the period from 1978 to 2011:

The decline in the number of firm entries after 2006 is quite obvious as is the rise in the number of firm entries.

Over the period between 1978 and 2011, this graph shows that the rate of firm entry has dropped from just under 15 percent in 1978 to around 8 percent in 2011:

Note that the rate of firm exits rose slightly after 2008 and, for the first time in 30 years, the number of firms exiting exceeded the number of firms entering.  In other words, after 2008, the number of business births was exceeded by the number of business deaths.

Here is a graph showing the trend in job reallocation, a measure of churning in the labor market, from 1978 to 2011:

In 2011, job reallocation hit a record low, down from 36 percent in 1978 to 26 percent in 2011.

The authors then go on to look at whether there is a geographic component to the drop in business dynamism over the three plus decades.  Looking at the data for 50 states and 366 metropolitan areas, the authors found that current firm entry rates were lower in every state and all but one metropolitan area compared to three decades ago.  Here are the five states with the biggest declines in firm entry over the period:

Alaska - minus 60.9 percent

Vermont - minus 58.6 percent

New Mexico - minus 57.5 percent

Wyoming - minus 57 percent

Oregon - minus 55.7 percent

As well, job reallocation rates were lower in every state and all but a dozen metropolitan areas compared to three decades ago.  In all states and metropolitan areas, exit rates were more or less consistent across the three decade period.  The data shows that the decline in business dynamism or entrepreneurship is pervasive right across the nation.

What does all of this mean?

1.) Nationwide, there has been a decrease in entrepreneurship that has affected all 50 states and nearly all of America's largest metropolitan areas.

2.) The decline in business creation has not been isolated to a particular sector of the economy.

3.) Older and larger businesses are doing far better than younger and smaller businesses.

4.) Businesses and individuals are more risk adverse, preferring to hold on to cash rather than using it to start new businesses.

5.) Workers are less likely to switch jobs.

The decline in entrepreneurship in the United States may, in part, be responsible for the sluggish job market recovery since the end of the Great Recession.  Historically, new businesses have created millions of net new jobs for America's workers and without their contribution, the U.S. economy is far slower to recover from an economic downturn.

The Amazon Factor and America's Changing Retail Environment

In recent months, several of America's largest retailers and their Canadian subsidiaries have cut the number of employees working in their brick and mortar stores and closed thousands of locations.  While retail jobs are among the lowest paying occupations in the United States, according to the Bureau of Labor Statistics, approximately 9.7 million workers or 7.3 percent of total employed workers in the United States work in retail in some capacity, as either cashiers, counter clerks or retail supervisors.  With the long decline in the number of manufacturing jobs (in blue) in the United States, a sector that has seen 5.2 million jobs evaporate over the past 14 years,  retail jobs (in red) are filling at least part of a very significant job gap as shown on this graph:

Unfortunately, the wages for retail jobs are much lower than those for manufacturing jobs as shown on this graph:

As I noted in the first paragraph, even poorly paying retail jobs are becoming scarcer, thanks in part to a combination of two factors, one of which is weak consumer spending.  The other reason that bricks and mortar retailers are suffering is the advent of online retailing.  As 2014 passes, with the recent announcements of retrenchment in the retail sector, I suspect that these two factors will work in harmony, resulting in the layoffs of tens of thousands of retail workers. 

Let's start by looking at Walmart, the world's largest retailer.  Walmart employs 2.2 million workers  in its 10,773 global store network.  It employs 1.3 million Americans in its 4205 U.S. Walmart and 633 Sam's Club locations.  To put the 1.3 million number into context, total employment in the United States is 132.589 million.  This means that Walmart employs roughly 1 in every 100 workers in the United States!  In 2013, Walmart's full year net sales rose by 4.95 percent to $466.114 billion with net income of $16.999 billion.  If we take the number of employees and divide it into annual net sales, Walmart sells $211,870 for each person that it employs.

Now, let's switch gears and look at another large retailer that has a different focus.  The world's largest online retailer is Amazon.    Amazon is a prime example of the replacement of humans with automation, particularly the use of robots in their warehouses as shown on this video:

  

In case you've forgotten, KIVA is a wholly-owned subsidiary of Amazon.com.  There is no doubt that this is pretty cool technology and that it does increase efficiency, however, it does replace human workers.

Now, let's look at a few statistics.  According to Amazon, the company employs more than 88,400 people around the world.  In the fourth quarter of 2013, Amazon's net sales were $25.59 billion, up by 22 percent over the same period one year earlier.  In total, for the full year 2013, net sales increased 22 percent to $74.45 billion.  Net income for the full year was $274 million.  If we take the number of employees and divide it into annual net sales, Amazon sells $842,190 worth of goods for each person that it employs.  This is just under four times the per employee net sales that Walmart has.  In other words, if Amazon were to hire at the same per employee net sales rate as Walmart, it would employ an additional 263,000 workers.

While Amazon has a very successful business model, there is no doubt that Amazon's use of automation and their online-only presence has led the company to hire far fewer workers than a normal bricks and mortar retailer.  Don't get me wrong, I'm not saying that there is anything particularly wrong with this, but my suspicion is that the "Amazon Effect" is starting to ripple through the retail sector, most recently with Best Buy, Radio Shack and Staples announcing the  closer of hundreds of stores and the loss of tens of thousands of jobs in a retail sector that they share with Amazon.  Perhaps that explains in part why the growth in retail sector jobs has been less than half the historical level over the past decade when the average growth rate fell to an average of 0.17 percent over the past decade when compared to the historical pre-2004 average of 2.5 percent as shown on this graph:

Perhaps this also partially explains wage stagnation in the retail sector which have only increased by 11.2 percent since 2007.  After all, when demand is low, prices for labor remain low as well.

The Death Penalty and the United States

With the bungling of an execution in Oklahoma, the death penalty was, once again, headline news across the United States and much of the rest of the world.  While the issue of capital punishment is particularly divisive, I wanted to take a brief look at the issue from Amnesty International's latest annual report on the death penalty around the world.

During 2013, 778 confirmed executions took place in 22 countries, an increase of 14 percent compared to the previous year.  This data excludes the number of executions that took place China since the death penalty in that nation is considered a state secret, although it is estimated that thousands of executions took place in China during 2013, more than the world's combined total.  According to Dui Hua, it is estimated that 3000 executions took place in China during 2012.  As well, the number of executions that took place in North Korea is unknown.

Excluding China, here are the top ten nations in order of executions carried out in 2013:

Iran - 369 executions

Iraq - 169 executions

Saudi Arabia - 79 executions,

United States - 39 executions

Somalia - 34 executions

Sudan - 21 executions

Yemen - 13 executions

Japan - 8 executions

Viet Nam - 7 executions

Taiwan - 6 executions

It's interesting to see that the United States is in the company of Iran, Iraq and Saudi Arabia, nations well known for their use of capital punishment for crimes of various types.  These four nations are responsible for 656 executions or 84 percent of the total executions that took place outside of China and North Korea.

Around the world, at least 23,392 people were living under a sentence of death.  During 2013 alone, at least 1925 people were sentenced to death in 57 different countries, an increase from 1722 in 2012.  Here is a list of the top 10 nations by issuance of new death sentences in 2013:

Pakistan - 226 death sentences

Bangladesh - 220 death sentences,

Afghanistan - 174 death sentences

Viet Nam - 148 death sentences

Nigeria - 141 death sentences

Somalia - 117 death sentences

Egypt - 109 death sentences

Iran - 91 death sentences

United States - 80 death sentences

Malaysia - 76 death sentences

In this case, it is interesting to note how many of these nations are Islamic; while we are quite critical of the imposition of Sharia law, it is interesting to see that six out of ten of the top ten "death sentence imposers" are Muslim nations.

The United States is the only nation in the 56 member Organization for Security and Co-operation in Europe to have carried out executions.  It is also the only country to have carried out executions in both North and South America.  Among the G-8 nations, only the United States and Japan carried out executions.  While the number of executions in the United States is still fairly high by international standards, it is down from 43 in 2012.  

In the U.S., eighteen states have now abolished the death penalty.  Here is a list of the top three states that contributed to 2013's total of 39 executions:

Texas - 16 executions with 9 new death sentences imposed

Florida - 7 executions with 15 new death sentences imposed

Oklahoma - 6 executions with 1 new death sentence imposed

In total, in the United States, there are 3108 people on death row including 731 in California, 412 in Florida and 298 in Texas.  Interestingly, during 2013, there were three posthumous exonerations.

Here are two interesting graphs, the first showing the annual number of executions in the United States from 1930 to 2010 and the second showing the annual number of death sentences (black) and the annual number of executions (in grey):

The Bureau of Justice Statistics found that only 15 percent of people sentenced to death between 1973 and 2009 had been executed by the end of 2009 with the total number of prisoners facing a death sentence between 1973 and 2009 hitting 8115 as shown on this chart:

  

A 2012 study edited by Daniel Nagin and John Pepper entitled "Deterrence and the Death Penalty" found that the large number of studies that had been completed over the 35 year period since the Supreme Court Gregg v. Georgia in 1976 that ended the moratorium on executions, have not conclusively determined whether or not the death penalty acts as a deterrent, pushing down homicide rates.  As shown on this graph, while homicide rates have fallen since the 1970s and 1980s, the drop ended in the late 1990s:

The difficulty measuring the impact of capital punishment on homicide rates is complicated by other factors including changes to the criminal justice system and police effectiveness.  For example, here is a graph showing the homicide rate for Texas, California and New York between 1974 and 2009:

In each of these three states, the homicide rate patterns track closely, however, each state has a different approach to capital punishment.  In both Texas and California, large number of people have been sentenced to death (1040 in Texas, 927 in California), however, Texas executed 447 people compared to only 13 in California.  New York's approach was far different with only 10 people being sentenced to death between 1973 and 2009 and no executions, yet, its homicide pattern follows that of Texas and California.

Obviously, any discussion of the use of the death penalty is fraught with emotion.  What I see as most compelling is the fact that the United States finds itself in the company of China, Saudi Arabia, Iran and Iraq when it comes to actually imposing death for criminals, countries that aren't particularly well known for their regard for human rights.