Wasted wealth – The ongoing foreclosure crisis that never had to happen
The Hill - May 22, 2013, by LeeAnn Hall & Kevin Whalen - In 2008, the Emergency Economic Stabilization Act created the Troubled Asset Relief Program (TARP), which provided $700 billion to the...
The Hill - May 22, 2013, by LeeAnn Hall & Kevin Whalen - In 2008, the Emergency Economic Stabilization Act created the Troubled Asset Relief Program (TARP), which provided $700 billion to the Treasury to address the subprime mortgage crisis and to “maximize assistance for homeowners.” As we know, the majority of that money went to the banks that created the mortgage crisis with high-risk products, and only about 3 percent was designated for homeowners — many of whom are still waiting for their checks.Five years later, the mortgage crisis continues. There are still at least 13.2 million underwater mortgages, a number that is likely much higher when factoring in unreported areas. An estimated 13 percent of underwater borrowers with Fannie Mae and Freddie Mac loans have missed three or more mortgage payments. If even this small proportion of the 13.2 underwater homes goes into foreclosure, Americans stand to lose another $221 billion in wealth.Betty Badro, a homeowner from Glendale, Calif., said it best: “Where is our relief? If I am thrown out of my house, it will be because my bank refused to work with me for a loan modification. The power is in their hands to stop the crisis. Instead, they continue to profit off of our communities. Even though the stress is affecting my health, I’m not going down without a fight.”This financial pain is not evenly distributed around the country. As the new report, Wasted Wealth, authored by the Alliance for a Just Society and released with the Home Defenders League and New Bottom Line, shows: communities of color are disproportionately affected at alarming levels. Communities of color were targeted for subprime and riskier products, and as a result have seen higher rates of foreclosure in their neighborhoods. Data show that people of color tend to hold more of their equity in real estate, adding to the impact the crisis has had on those communities.
Prior to the Great Recession, 35 percent of subprime loans were issued to borrowers who qualified for prime loans, and disproportionately so for black and Latino borrowers. After controlling for credit scores, income and other factors, blacks were 80 percent and Latinos 70 percent more likely than white borrowers to receive subprime loans. As a result, ZIP codes with majority people of color populations saw 16.8 foreclosures per thousand households with an average of $2,198 in lost wealth per household. In sharp contrast, segregated white communities experienced only 10 foreclosures per thousand households and an average wealth loss of $1,257 per household.
The result is a devastating loss of wealth for entire communities from which they may not recover. That is why it is time to act. There is a solution that could save a generation of middle-class homeowners and keep their families on track to live out the American Dream. A strategy of principal reduction would save money for homeowners, boost the economy, and create jobs.Principal reduction — writing down underwater mortgages to current market values — would create significant savings for underwater homeowners. It would also generate new economic activity and create jobs in local economies. Using 2012 data, a principal reduction program could produce average annual savings of $7,710 per underwater homeowner nationwide, boost the U.S. economy to the tune of $101.7 billion and create 1.5 million jobs.It’s time for our elected officials to act. The nomination of a new director at the Federal Housing Finance Agency, Mel Watt, is a step in the right direction and is a hopeful sign that Fannie Mae and Freddie Mac will implement far-reaching homeowner relief. But we are not just going to hope for change. Homeowners from across America representing every community are traveling to Washington, D.C., to demand justice for their families and their futures. As a nation, we committed trillions of tax dollars to bail out big banks so that we could restore the economy — now it’s time for our government to require those banks to provide relief for families and communities devastated by the financial crisis and foreclosure epidemic.
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Watch: pro-DACA activists sneaked into Trump International Hotel for a surprise
Watch: pro-DACA activists sneaked into Trump International Hotel for a surprise
About 30 immigration activists made 5 pm dinner reservations on Wednesday for the restaurant on the first floor of the Trump International Hotel in Washington, DC.
They entered dressed in...
About 30 immigration activists made 5 pm dinner reservations on Wednesday for the restaurant on the first floor of the Trump International Hotel in Washington, DC.
They entered dressed in suits, wearing ties and khakis. They snuck two bullhorns and 30 noisemakers in briefcases, as well as dozens of pamphlets and a banner reading, “Immigrants are #HereToStay.”
Read the full article here.
Central Banks Wage War on Markets: Bill Bonner Says They Will Lose; Fed Up Yet?
Central Banks Wage War on Markets: Bill Bonner Says They Will Lose; Fed Up Yet?
This article is published in collaboration with Scutify, where you can find real-time markets and stock commentary from Robert Marcin, Cody Willard and others. Download the Scutify iOS App, the...
This article is published in collaboration with Scutify, where you can find real-time markets and stock commentary from Robert Marcin, Cody Willard and others. Download the Scutify iOS App, the Scutify Android App or visit Scutify.com.
Daily Reckoning founder Bill Bonner thinks central banks are waging war on the markets. He also believes they will lose.
I wholeheartedly agree with Bonner's rationale. Let's tune in.
This is a guest post courtesy of Bill Bonner and the Daily Reckoning.
Why the Feds Will Lose Their War on the Markets
The markets continue to dawdle. Not much conviction in either direction.
We've already looked at the War on Poverty, the War on Drugs and the War on Terror.
So let's move on...using our new lens to look at another of the feds' fake wars.
Dirty War
No war was ever officially declared against the markets.
But for four decades the feds conducted covert operations...a dirty war in which they've tried to mislead, obstruct, and suppress market forces.
They used fake money, fake savings, and fake interest rates to confuse investors, businesses, and consumers.
They didn't say so directly, but their purpose was to give out false signals so that people would change their behaviour.
'Demand' was too weak, they said. What to do about it?
They flooded the system with phony savings (credit).
Price signals were distorted. Credit limits seemed to disappear. Debt limits were eased.
Then, in 2008, the war turned hot...with the feds actively and overtly holding down interest rates to push up stock and bond prices.
In response to the crisis they caused - by encouraging too much debt in the housing sector - they claimed that the 'free market' had failed.
They were just responding to the 'emergency', they said.
Soon, everybody got in on the act - expressing an opinion about how high (or low) interest rates should be.
Force and fraud
Believe it or not, an activist group called 'Fed Up' argues that raising rates is...you guessed it...racist!
Institutional Investor magazine reports that a group funded by 32-year-old Facebook cofounder Dustin Moskovitz is lobbying against rate increases on the grounds that higher rates are bad for US workers. From the website:
'The truth about the economy is obvious to most of us: not enough jobs, not enough hours, and not enough pay - particularly in communities of color and among young workers.
'Some members of the Federal Reserve think that the economy has recovered. They want to raise interest rates to slow down job growth and prevent wages from rising faster. That's a terrible idea.
'We stand with millions of workers and their families in calling on the Federal Reserve to adopt pro-worker policies for the rest of us. The Fed can keep interest rates low, give the economy a fair chance to recover, and prioritize full employment and rising wages.'
What? Who are these people? Do they have tails? Horns?
They're right about one thing: When the Fed tries to control the economy, it is politics, not markets, at work.
Markets work by persuasion and voluntary exchange. Politics works on force and fraud. Fed Up is a political organisation trying to influence how the force and fraud is applied.
But let's look at the feds' War on Markets through our now-familiar scope.
Victory is impossible
First, is this a war the feds can win?
No. Of course not.
Markets can be suppressed, delayed, and denied...but never eliminated.
Markets do not stop working just because you try to bend, distort, and even outlaw them. Victory is impossible.
The market for drugs does not stop just because the feds make them illegal. Instead, they reprice illegal drugs, taking into account the increased cost of doing business.
Nor does poverty disappear just because the feds make war on it.
'The poor will always be with you,' said Jesus, wisely.
Wealth and poverty are relative; there will always be some rich and some poor. Passing laws will not change that.
And 'terrorism'?
Those who do not have access to conventional armies always resort to unorthodox attacks.
That's what American colonists did when they launched their war against the British in 1775.
It's what the Jews did when they launched their 'insurgency' against the British in Palestine in 1939.
And it's what the Maquis did during the occupation of France by the Nazis during the Second World War.
Terror won't stop any time soon. Nor will markets cease to function.
Bubbles, bankruptcies, and misery
Second, does the enemy gain strength from the 'war' against it?
Well, yes and no.
Markets work perfectly well whether you make war on them or not. Governments can put any price on anything they want. But only markets can tell you what they are worth.
Just look at what happened in the Soviet Union. Or China, pre-1979. Or Venezuela.
Who bought anything from China when the communists were setting prices?
Who goes to Venezuela to do his shopping today?
We visited Russia soon after the Soviet Union was disbanded. Markets were just opening up. But after 70 years of price fixing, there was almost nothing to buy. Almost everything that was being sold had been pilfered from the army. We bought a pair of boots for $1.00. We still have them. The soles are so stiff they barely bend.
There are really only two types of economies - command economies and market economies. The latter work for everyone - but you never know who the real winners will be. The former work only for the commanders. Then, when they have stolen everything there was to steal, markets reassert themselves.
Economies are price-discovering, information-generating learning systems. On the world market, every economy has access to the same resources, more or less. It's what you do with them that counts.
Dictating prices is like teaching students that Japan won the Second World War...or saying that two plus two equals five...or rounding off Pi to three just to make it easier to remember.
But the more fake information you give out, the more valuable real information becomes.
A war the feds will ultimately lose
Third, did it create a new, corrupt Deep State industry? And fourth, do the combatants on both sides gain as the public loses?
Not exactly.
This is different from other 'wars' announced by the Deep State. This is how the insiders fund their other wars...and how they shift trillions of dollars from the public to themselves.
The War on Markets distorted almost all industries and corrupted the entire economy.
As reported here many times, suppressed interest rates alone probably cost savers as much as $10 trillion since 2008. Goosing up asset prices probably shifted another $10 trillion or so to the people who own them (typically, the elite).
As in all of these fake wars, the casus belli is phony.
Markets do not hurt people; they help them. Price signals, set by markets, are essential. Otherwise, you don't know whether you're adding wealth or subtracting it.
Trying to suppress free markets or abolish them always leads to confusion, bubbles, bankruptcies, and misery. Economies weaken; people grow poorer.
Since 2008, wages have been stagnant or falling for most people...GDP growth has declined and is now probably negative...productivity growth has declined more than any time in the last 40 years...world trade levels are back to 2009 levels...and the bounce-back from the Great Recession was the weakest on record.
For now, the war serves its real purpose: to increase the power and wealth of the Deep State insiders.
But it is a war that the feds will ultimately lose.
Trying to suppress markets is like putting a giant cork in the mouth of a volcano. It doesn't stop the eruption; it just makes it more violent.
Regards,
Bill Bonner,
For The Daily Reckoning, Australia
End Bonner - Mish Start - Fed Up
Let's start with three truths by Bonner.
By Scutify
Source
Chair Yellen’s Troubling Comments on African American Unemployment
In her testimony before the House on Wednesday, Federal Reserve Chair Janet Yellen downplayed what the Fed can do to address the outsized unemployment among African Americans. Responding to a...
In her testimony before the House on Wednesday, Federal Reserve Chair Janet Yellen downplayed what the Fed can do to address the outsized unemployment among African Americans. Responding to a question about racial inequality in the job market, Yellen said “there really isn’t anything directly that the Federal Reserve can do to affect the structure of unemployment across groups . . . there’s nothing we can do about any particular group.” Connie Razza, director of strategic research at the Center for Popular Democracy, issued the following statement on behalf of the Fed Up Coalition:
“Chair Yellen’s response is troubling. With African Americans still mired in our own Great Recession, we should be hearing a positive vision from the Fed on how to foster full employment. While the economy is complex and the Federal Reserve’s tools are limited, there is plenty the Fed can do to improve the labor market for Black workers and to reduce racial inequality in the job market.
“Today, the unemployment rate for African Americans is 9.5 percent – higher than it ever was for whites during the worst months of the Great Recession. Black America is still in the middle of a Great Recession. Chair Yellen must consider the many places in our country where Black unemployment is double pre-recession levels before putting the brakes on recovery.
“When Chair Yellen and other Fed officials talk about raising interest rates in 2015, they are talking about intentionally slowing down the economy and job growth, which would make it harder for most Americans, and particularly Black workers, to find good paying jobs. The direct consequences of the Fed’s projected interest rate hikes would harm millions of workers.
“Instead, the Fed could continue to push toward a tight labor market, in which the number of people looking for work more closely matches the number of jobs available. A full-employment economy, as we saw in the late 1990s, shrinks racial inequity and will bring particular benefits to Black workers, who are disproportionately unemployed, underemployed, underpaid, and endure more difficult scheduling circumstances in the workplace.
“In particular, a tight labor market reduces the practicability of discriminating. High unemployment rates facilitate racial discrimination because there are too many qualified job candidates for every job, so employers can arbitrarily limit their labor pool with unnecessary educational requirements, irrelevant credit or background checks, or straightforward discrimination. A tight labor market makes it much harder for employers to succumb to conscious and unconscious biases and instead hire workers who are qualified. The Federal Reserve must not raise interest rates until a tighter labor market has been achieved.
“Inflation is below the Fed’s already-low two percent target. Unemployment and underemployment are too high, while wages are still too low. There is no reason to raise interest rates in 2015. Doing so would cause tremendous harm to the aspirations and lives of tens of millions of working families, and would disproportionately harm African Americans.”
To schedule interviews with Connie Razza, send an email to press@populardemocracy.org.
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The Center for Popular Democracy promotes equity, opportunity, and a dynamic democracy in partnership with innovative base-building organizations, organizing networks and alliances, and progressive unions across the country. CPD builds the strength and capacity of democratic organizations to envision and advance a pro-worker, pro-immigrant, racial justice agenda.
Philly passes Fair Workweek law, raises minimum wage
According to figures provided by the Washington, D.C.-based Center for Popular Democracy, 58 percent of Hispanic workers, and 55 percent of black workers “have no say” in their work schedules. In...
According to figures provided by the Washington, D.C.-based Center for Popular Democracy, 58 percent of Hispanic workers, and 55 percent of black workers “have no say” in their work schedules. In addition, 41 percent of “early career adults” receive their schedules “one week or less in advance."
Read the full article here.
Why Rising Police Budgets Aren’t Making Cities Safer
Minneapolis, the city where Philando Castile was killed by a police officer while being profiled and stopped in his car for the 49th time, spends 36 percent of its general fund budget on policing...
Minneapolis, the city where Philando Castile was killed by a police officer while being profiled and stopped in his car for the 49th time, spends 36 percent of its general fund budget on policing.
Read the full article here.
Fox Host Falsely Claims New York's Municipal ID Program Will Give Undocumented Immigrants Voting Rights
Fox Host Falsely Claims New York's Municipal ID Program Will Give Undocumented Immigrants Voting Rights
Media Matters - September 19, 2014, by Cal Colgan - Fox News co-host Steve Doocy claimed New York City's new law allowing municipal identifications to all city residents will allow...
Media Matters - September 19, 2014, by Cal Colgan - Fox News co-host Steve Doocy claimed New York City's new law allowing municipal identifications to all city residents will allow undocumented immigrants to vote in state and local elections. But New York City's election law clearly stipulates that only U.S. citizens can vote, and experts explain that the municipal IDs provide much-needed services the city's residents.
New York City Mayor Announces Municipal IDs Will Give Free One-Year Access To New York Cultural InstitutionsNew York City Mayor Bill De Blasio Announces Municipal ID Will Give Free One-Year Access To City's Cultural Institutions. On September 19, New York City Mayor Bill de Blasio announced that residents who register for the city's municipal identification cards in January 2015 will receive free admission to the city's top cultural institutions for one year:
"The municipal ID is a powerful tool to bring more New Yorkers out of the shadows and into the mainstream. It is now also a key that opens the door for hundreds of thousands of more New Yorkers to our City's premier assets in culture, science and entertainment," said Mayor Bill de Blasio. "The Municipal ID Card embodies the values we cherish most about inclusivity and equality, and these memberships are another step forward on providing greater access and opportunity for our people." [NYC.gov, 9/18/14]
Fox Host Claims Municipal ID Program Will Give Undocumented Immigrants Voting RightsFox's Steve Doocy: Undocumented Immigrants Could Use ID Cards To Vote In Local And State Elections. In a September 19 segment highlighting de Blasio's municipal ID program, Fox & Friends co-host Steve Doocy claimed that New York City's new municipal ID program will allow undocumented immigrants to vote in local and state elections:
DOOCY: Mayor de Blasio here in New York City ran on making sure that people in this country illegally who make New York City their home could get an I.D. card that they could use to, among other things, vote in local and state elections. Well, now, to try to get as many people as possible to get these cards, these New York City municipal I.D. cards, what they're doing is they're going to have incentives. Go ahead, get a membership for one year to 33 of the city's signature cultural institutions, like the Bronx Zoo, the Met, Lincoln Center or Carnegie Hall. [Fox News, Fox & Friends, 9/19/14]
New York City's Election Laws Prohibit Non-Citizens From VotingNew York City Board Of Elections: Only US Citizens Can Register To Vote. According to New York City's Board of Elections, only U.S. citizens are eligible to register to vote in the city (emphasis added):
To register to vote in the City of New York, you must:
1. Be a citizen of the United States (Includes those persons born in Puerto Rico, Guam and the U.S. Virgin Islands).
2. Be a New York City resident for at least 30 days.
3. Be 18 years of age before the next election.
4. Not be serving a jail sentence or be on parole for a felony conviction.
5. Not be adjudged mentally incompetent by a court.
6. Not claim the right to vote elsewhere (outside the City of New York). [Board of Elections in The City of New York, accessed 9/19/14]
Municipal IDs Provide Much-Needed Services For Undocumented ImmigrantsCenter For Popular Democracy: Municipal IDs Improve Undocumented Immigrants' Access To Community Services And Increase Community Participation. In a 2013 report on municipal ID programs, the Center for Popular Democracy (CPD) explained that the "ability to provide proof of identity is a basic necessity" that affects "almost every aspect of daily life." According to CPD, having access to identification cards improves overall community safety by giving undocumented residents better access to local authorities, allows cardholders access to "basic services" like cashing checks and seeing a doctor, and decreases problems of racial profiling. CPD explained the goals of municipal IDs in their report:
Improve community safety by making it easier for those without state-issued ID to interact with local authorities. Improve access to financial services by providing a form of ID that will allow those without other forms of identification to open bank accounts. Mitigate impact of racial profiling. Make symbolic statement of welcome and solidarity to immigrant residents. Promote unity and sense of membership in the local community among all residents. [Center for Popular Democracy, December 2013]Catholic Legal Immigration Network: "Offering Municipal ID Cards To All City Residents Is Fundamentally Fair." In an April 14 memo, the Catholic Legal Immigration Network (CLINIC) asserted that cities throughout the US should issue municipal ID cards to all residents and that doing so would allow marginalized residents access to basic necessities like community safety, housing, health care at local clinics, and financial services:
All residents deserve the right to be identified. The ability to prove one's identity is a fundamental human right - not a privilege. Municipal ID cards allow all residents the opportunity to participate more fully in the economy and meet their basic needs such as buying groceries. Paying for purchases with a check, credit card, or debit card often requires an ID. Identification will enable card holders to access services essential to their families such as renting apartments, obtaining utilities, accessing health clinics, filling prescriptions, acquiring insurance, and picking up their children at school. Enabling individuals to open bank accounts so that they don't have to carry their savings protects them from theft. Access to banking services allows people to save to support their families and to participate more easily in the economy.[...]
The ability to prove one's identity increases the likelihood that an individual will report a crime and file a police report. In particular, those without immigration status will be less fearful of detention and deportation. Law enforcement will spend less time and fewer resources identifying individuals when all residents are eligible for municipal ID cards. Police will be able to focus on protecting the public. When all city residents can prove their identity, city employees such as firefighters and EMTs can better serve everyone. [Catholic Legal Immigration Network, April 2014]CNN: San Francisco Implemented Municipal ID Program To Address Public Safety Concerns For Immigrants. On February 24, CNN reported that San Francisco city officials implemented a municipal ID program to address the "serious public safety problem" that occurs when immigrant victims are unable to report crime to local police:
"Residents without access to bank accounts often carry large amounts of money on them or store it in their homes, making them targets for crime. And, those who can't produce proof of identity are often reluctant to report crimes to the police," said Megan A. Caygill-Wallach of the San Francisco city administrator's budget and planning office.
Although immigrants are victimized by crime at rates similar to or greater than the general population, they report crime at lower rates, according to studies. The underreporting of crime poses a serious public safety problem and erodes the ability of law enforcement to function effectively in the city. [CNN, 2/24/14]
Other Marginalized Residents Also Benefit From Municipal IDsCatholic Legal Immigration Network: Municipal IDs Help Other "Vulnerable Residents" Like The Elderly. In its 2014 memo, CLINIC argued that municipal IDs also help the elderly, low-income residents, the homeless and the recently incarcerated:
Municipal ID cards will help our most vulnerable residents, including undocumented immigrants, victims of domestic violence or natural disaster, the homeless, low-income senior citizens, and the formerly incarcerated. The ability to prove one's identity fosters a sense of pride, belonging, and shared community and facilitates integration and participation in civic life. When residents can access the services necessary to take care of themselves and their families, communities become socially and economically stronger. [CLINIC, 4/2014]Source
The Spy Who Fired Me
Harpers Magazine - March 2015, by Esther Kaplan - Last March, Jim Cramer, the host of CNBC’s Mad Money, devoted part of his show to a company called Cornerstone OnDemand. Cornerstone, Cramer...
Harpers Magazine - March 2015, by Esther Kaplan - Last March, Jim Cramer, the host of CNBC’s Mad Money, devoted part of his show to a company called Cornerstone OnDemand. Cornerstone, Cramer shouted at the camera, is “a cloud-based-software-as-a-service play” in the “talent-management” field. Companies that use its platform can quickly assess an employee’s performance by analyzing his or her online interactions, including emails, instant messages, and Web use. “We’ve been managing people exactly the same way for the last hundred and fifty years,” Cornerstone’s CEO, Adam Miller, told Cramer. With the rise of the global workforce, the remote workforce, the smartphone and the tablet, it’s time to “manage people differently.” Clients include Virgin Media, Barclays, and Starwood Hotels.
Cornerstone, as Miller likes to tell investors, is positioning itself to be “on the vanguard of big data in the cloud” and a leader in the “gamification of performance management.” To be assessed by Cornerstone is to have your collaborative partnerships scored as assets and your brainstorms rewarded with electronic badges (genius idea!). It is to have scads of information swept up about what you do each day, whom you communicate with, and what you communicate about. Cornerstone converts that data into metrics to be factored in to your performance reviews and decisions about how much you’ll be paid.
Miller’s company is part of an $11 billion industry that also includes workforcemanagement systems such as Kronos and “enterprise social” platforms such as Microsoft’s Yammer, Salesforce’s Chatter, and, soon, Facebook at Work. Every aspect of an office worker’s life can now be measured, and an increasing number of corporations and institutions—from cosmetics companies to car-rental agencies—are using that informationto make hiring and firing decisions. Cramer, for one, is bullish on the idea: investing in companies like Cornerstone, he said, “can make you boatloads of money literally year after year!”
A survey from the American Management Association found that 66 percent of employers monitor the Internet use of their employees, 45 percent track employee keystrokes, and 43 percent monitor employee email. Only two states, Delaware and Connecticut, require companies to inform their employees that such monitoring is taking place. According to Marc Smith, a sociologist with the Social Media Research Foundation, “Anythingyou do with a piece of hardware that’s provided to you by the employer, every keystroke, is the property of the employer. Personal calls, private photos—if you put it on the company laptop, your company owns it. They may analyze any electronic record at any time for any purpose. It’s not your data.”
With the advent of wireless connectivity, along with a steep drop in the price of computer processors, electronic sensors, GPS devices, and radio-frequency identification tags, monitoring has become commonplace.Many retail workers now clock in with a thumb scan. Nurses wear badges that track how often they wash their hands. Warehouse workers carry devices that assign them their next task and give them a time by which they must complete it. Some may soon be outfitted with augmented-reality devices to more efficiently locate products.
In industry after industry, this data collection is part of an expensive, high-tech effort to squeeze every last drop of productivity from corporate workforces, an effort that pushes employees to their mental, emotional, and physical limits; claims control over their working and nonworking hours; and compensates them as little as possible, even at the risk of violating labor laws. In some cases, these new systems produce impressive results for the bottom line: after Unified Grocers, a large wholesaler, implemented an electronic tasking system for its warehouse workers, the firm was able to cut payroll expenses by 25 percent while increasing sales by 36 percent. A 2013 study of five chain restaurants found that electronic monitoring decreased employee theft and increased hourly sales. In other cases, however, the return on investment isn’t so clear. As one Cornerstonereport says of corporate social-networking tools.“ There is no generally accepted model for their implementation or standard set of metrics for measuring R.O.I.” Yet this has hardly slowed adoption.
Read the full article here.
LA is Taking On the Fair Workweek Fight - It Could Change Your Life
LA is Taking On the Fair Workweek Fight - It Could Change Your Life
The Center for Popular Democracy did an extensive national study of retail workers in 2017, surveying over 1,000 people working in retail and finding that despite statewide minimum wage gains and...
The Center for Popular Democracy did an extensive national study of retail workers in 2017, surveying over 1,000 people working in retail and finding that despite statewide minimum wage gains and some voluntary reforms by employers, many people struggle to achieve economic stability due to significant income volatility and wage stagnation.
Read the full article here.
Let cities better help their retirees
In less than 20 years, one in every five Americans will be over the age of 65 and we will live longer than any generation before us. For those without adequate savings for retirement, those added...
In less than 20 years, one in every five Americans will be over the age of 65 and we will live longer than any generation before us. For those without adequate savings for retirement, those added years will be a time of uncertainty and dependency rather than leisure.
Connecticut is the latest state seeking to stave off this looming crisis in elder poverty, passing legislation to provide access to a state-sponsored retirement plan for the 600,000 Connecticut residents who do not have a plan through their employers. The bill will automatically enroll workers in businesses with five or more workers in a retirement plan overseen by a new quasi-public authority. Connecticut joins California, Illinois, and more than a dozen other states pushing for state-sponsored plans to encourage workers to save for retirement.
The accelerated pace of activity follows decades of wage stagnation that have left the average American worker with just half of what workers saved in the 1970s. Half of those nearing retirement have no retirement savings at all and those that do have savings have only enough to provide a median income of around $400 per month.
At the same time, employers have largely abandoned defined benefit pension plans that once guaranteed a minimum level of security based on salary and length of service, opting instead for plans that put the onus on workers to build up their own retirement accounts. Today, more than half of American workers have no private pension coverage at all.
Those who retire without a pension or sufficient savings will depend largely on Social Security for their retirement income, a system that will grow increasingly burdened as baby boomers retire, leaving fewer workers to cover the costs of each retiree.
This daunting reality has spurred states like Connecticut to act.
Innovation at the state level, however, is currently hindered by the federal Employment Retirement Security Act (ERISA), which generally preempts state action on private sector pensions. State legislatures have had to build language into bills making any plan contingent on an exemption from federal ERISA requirements. This burden creates uncertainty for both workers and state administrators, preventing many states from even exploring the possibility of a plan.
In response, the Department of Labor (DOL) is currently developing a safe harbor rule that would clarify how states can bypass ERISA requirements. The rule would let states develop the retirement security model that best suits their residents, while also learning from the successes and missteps of other state plans.
While the proposed DOL rule is a great first step, it does not go far enough in its present form. The rule is limited to states, but cities such as New York are also considering similar plans. They should be afforded the same opportunity to ensure a secure retirement for their residents.
In developing its rule, the DOL should aim to reach the largest possible number of workers, including those whose state legislatures are unable or unwilling to address retirement security. Including cities also allows for more tailored programs when demographics and industries vary widely across a state.
Preventing an elder poverty crisis will require creative solutions at all levels of government. The DOL should ensure that federal regulations foster that creativity, rather than stifle it.
By ANDREW FRIEDMAN
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2 months ago
2 months ago