We’ll just skip right over the Bills/Titans MNF game…

My daughter turns 5 on Sunday. The theme of the party is mermaids and pumpkins which seems fitting. She has these very specific details about what kind of cake she wants to have. The problem is she keeps changing her mind. Hopefully we avoid the dreaded birthday-tantrum-meltdown.

The Long-Lived Cyclicality of the Labor Force Participation Rate.

Labor Force Participation Rate.

The labor market’s issues are well documented but no one seems to know why this is happening. Lack of child care? Early retirements? People sitting at home thanks to generous stimulus programs? Poor data collection overestimating the labor supply and thus, leading to a structural underreporting of participation? Every business seems to be hiring these days at rates well above minimum wage. Where did all the workers go? Long paper but below are the cliff notes.

NB this study controlled for age so the numbers should capture the impact of an aging population on labor force participation. My remarks are in italics.

  • Labor Force Participation Rate (LFPR) is much slower to respond compared to the Unemployment rate. This makes sense to me… it takes a lot for someone to jump in, or out, of the labor market.
  • LFPR is heavily dependent on child-care and education. With daycare and childcare centers having MAJOR staffing issues, it makes sense that more parents are forced to hold-back reentering the labor pool.
  • Post the Global Financial Crisis, the unemployment rate recovered by 2014 but the LFPR was still 3 percentage points below its pre-recession level.
  • Researchers found two possible reasons.
    • Data collection- the difference between “unemployed” and “nonparticipation” is entirely subjective. In other words, people might want to work (and should count as unemployed) but are not actively searching (so make LFPR look poor).
    • “Persistent Non-Market-Work Activities” like taking care of children, earning an education. “Only after the labor market is well on its way to recovery do these types of nonparticipation return to pre-shock levels.”
  • Interestingly, early-retirement does not appear to be a statistically significant driver of people leaving the labor force.

Fig 1

What might surprise me the most is how long this takes. Labor force participation doesn’t really inflect until 6-7 years AFTER the initial economic shock. No two economic shocks are identical (COVID-19 is certainly unique on several levels) but this data suggests that it will take MUCH longer for the labor market to recover. From a macro standpoint- this would set the stage for more inflation as rising wages are not enough to alter the imbalance quickly.
From an individual equity standpoint, this is bad news for companies that are heavily reliant on labor like QSR restaurants. When I was recently in PA for a wedding, almost all of the Dunkin Donuts and Starbucks locations were drive-thru only due to staffing issues. Could pivoting to less-labor intensive lines of business be a new normal? Are there any specific businesses that would benefit?

Josh Allen and 3-D Technology

Josh Allen Embraces Technology to Transform Himself From Loose Cannon to Maybe a 3D MVP

Presented upon request by our resident Josh Allen fanboy, Thomas Lyons…

One of the greatest things to ever happen in Western NY is the rapid, and unprecedented improvement of Josh Allen. In his first two seasons, he ranked in the bottom of the league for completions. Since, Allen has improved dramatically. Last season, he completed 69.2% of his passes. Neither Tom Brady or Peyton Manning has ever done this, much less after two very forgettable seasons. How is it possible for someone to get this good in such a short amount of time?

The answer is a combination of several things –

  • Being surrounded and supported by an amazing coaching staff (can you imagine if it was Adam Gase of the Jets instead of Sean McDermott/Brian Daboll?). Special mention to Jordan Palmer as well.
  • Incredibly loyal, patient, and good-looking fanbase
  • The ability to redesign technique using 3D imaging technology
    • Also, honorable mention to COVID-19 which locked down the world during the offseason. With zero distractions, someone like Josh would be able to focus on perfecting this technique and making it habit.

Chris Hess, the scientist behind the operation, is a former Kansas State long snapper.

  • Using a marker-less 3D Motion Capture system designed by Dari Motion, Hess instructed Allen to throw every route in the passing tree. He also had him squat, lunge and jump — recording all of this at 240 frames per second to specifically measure how well Allen’s arm, body and joints worked in concert. “Because, for each quarterback, the key is finding the most efficient throwing motion for how their body moves and is constructed,’’ Hess says.
  • The next day, he explained it to the quarterback as best he could. In a perfect world, he told Allen, a football is thrown in the following sequence: (1) the pelvis rotating; (2) the pelvis forming a fulcrum for the torso to rotate around; (3) elbow extension; and (4) internal shoulder rotation. The good news, Hess told him, was that if Allen could throw a football in that precise order, his arm speed and accuracy would skyrocket. The bad news was that Allen’s biomechanics were in reverse: he was throwing shoulder first.
  • Hess realized at that moment Josh Allen was intelligent, attentive, self-aware and had a meteoric rise inside of him.

Sports and wellness are an enormous market. Right now, this type of technology is mostly utilized by professional sports teams that obviously have the money to afford this. After all, these athletes are multi-million dollar assets. If a prospective baseball pitcher’s technique makes him more injury-prone, management would want to know this information before signing him to a contract. As this technology gets cheaper and eventually trickles down to the rest of us, I see it serving two roles: 1) injury prevention and 2) technique perfection (like in the case of Allen). These Dari Motion systems are already being installed in some orthopedic offices. None of the companies are public yet but it’s an interesting space to watch.

Government Spending Always Works Out

Excerpt from 1491: New Revelations of the Americas Before Columbus by Charles C. Mann

I highly recommend this book, 1491: New Revelations of the Americas Before Columbus especially for any history buffs. It fundamentally changed not only my understanding of pre-colonial Americas but also how “History” as a subject is rife with its own biases. Native Americans are often portrayed as living in perfect harmony with nature (whatever that means). While different from European society, Native American societies were highly sophisticated and sought to bend and mold nature to their own benefit.

Native Americans systematically used large-scale fires to transform the American landscape in the centuries before European dominance of the continent:

“Adriaen van der Donck was a Dutch lawyer who in 1641 transplanted himself to the Hudson River Valley. … He spent a lot of time with the Haudenosaunee [tribe], whose insistence on personal liberty fascinated him. … Every fall, he remembered, the Haudenosaunee set fire to ‘the woods, plains, and meadows’ to ‘thin out and clear the woods of all dead substances and grass, which grow better the ensuing spring.’ At first the wildfire had scared him, but over time van der Donck had come to relish the spectacle of the yearly burning. ‘Such a fire is a splendid sight when one sails on the [Hudson and Mohawk] rivers at night while the forest is ablaze on both banks’ he recalled. With the forest burning to the right and the left, the colonists’ boats passed through a channel of fire their passengers as goggle-eyed at the blaze as children at a video arcade. ‘Fire and flames are seen everywhere and on all sides…a delightful scene to look on from afar.’ …

“[From] Hudson’s Bay to the Rio Grande, the Haudenosaunee and almost every other Indian group shaped their environment, at least in part by fire. … For more than ten thousand years most North American ecosystems have been dominated by fire. …

“Fire is a dominating factor in many if not most terrestrial landscapes. It has two main sources: lightning and Homo sapiens. In North America lightning fire is most common in the western mountains. Elsewhere though Indians controlled it — at least until contact and in many places long after. In the Northeast Indians always carried a deerskin pouch full of flints Thomas Morton reported in 1637 which they used ‘to set fire of the country in all places where they come.’ The flints ignited torches, which were as important to the hunt as bows and arrows. Deer in the Northeast; alligators in the Everglades; buffalo in the prairies; grasshoppers in the Great Basin; rabbits in California; moose in Alaska: all were pursued by fire. Native Americans made big rings of flame Thomas Jefferson wrote ‘by firing the leaves fallen on the ground which gradually forcing animals to the center they there slaughter them with arrows darts and other missiles.’ Not that Indians always used fire for strictly utilitarian purposes. At nightfall tribes in the Rocky Mountains entertained the explorers Meriwether Lewis and William Clark by applying torches to sap-dripping fir trees which then exploded like Roman candles. …

“Indian fire had its greatest impact in the middle of the continent, which Native Americans transformed into a prodigious game farm. … Native Americans burned the Great Plains and Midwest prairies so much and so often that they increased their extent; in all probability a substantial portion of the giant grassland celebrated by cowboys was established and maintained by the people who arrived there first. ‘When Lewis and Clark headed west from [St. Louis]’ wrote ethologist Dale Lott ‘they were exploring not a wilderness but a vast pasture managed by and for Native Americans.’

“In 1792, the surveyor Peter Fidler examined the plains of southern Alberta systematically the first European to do so. Riding with several groups of Indians in high fire season he spent days on end in a scorched land. ‘Grass all burnt this day’ he reported on November 12. ‘Not a single pine to be seen three days past.’ A day later: ‘All burnt ground this Day.’ A day later: ‘The grass nearly burnt all along this Day except near the Lake.’ A month later: ‘The Grass is now burning [with] very great fury.’ … ‘ ‘These fires burning off the old grass,’ he observed ‘in the ensuing Spring; Summer makes excellent, fine sweet feed for the Horses and Buffalo .’ … Captain John Palliser traveling through the same lands as Fidler six decades later lamented the Indians’ ‘disastrous habit of setting the prairie on fire for the most trivial and worse than useless reasons.’ …

“Carrying their flints and torches Native Americans were living in balance with Nature — but they had their thumbs on the scale. Shaped for their comfort and convenience the American landscape had come to fit their lives like comfortable clothing. It was a highly successful and stable system if ‘stable’ is the appropriate word for a regime that involves routinely enshrouding miles of countryside in smoke and ash.”

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