June 2, 2016
Medicaid Expansion: Winners vs Losers
Low-income residents are in better financial shape in the 31 states that have expanded their Medicaid health coverage under the Affordable Care Act (ACA).
That’s the bottom line in a new study finding that they have fewer unpaid bills being sent to collection agencies and their collection balances are $600 to $1,000 lower than their counterparts in non-expansion states. This contrasts with the years prior to the 2014 Medicaid reform, when residents of would-be expansion and non-expansion states had very similar financial profiles.
State decisions about whether or not to expand their Medicaid rolls are having “unambiguous” and “important financial impacts,” concluded researchers at the University of Michigan, the University of Illinois, and the Federal Reserve Bank of Chicago.
Medical crises are expensive for most workers but are virtually insurmountable for low-income Americans. The annual cost of care for someone hospitalized at some time during 2012, for example, was $25,000 – more than many low-wage workers earn in a year.
To address this risk, the ACA expanded Medicaid health coverage to more people and established a new income threshold to qualify at 138 percent of the federal poverty level – or about $16,000 for an individual. A U.S. Supreme Court decision later gave states the option of expanding their Medicaid programs.
The researchers’ findings were based on credit reporting data on 1.8 million individuals between 19 and 64 years old who are living below 138 percent of the federal poverty. They analyzed the impact of Medicaid availability on non-medical debt, such as credit cards, in zip codes with the highest percentage of people under the threshold during 2014 and 2015. [Mortgage debt was excluded.]
The purpose of health insurance is to provide a financial cushion by limiting the spike in out-of-pocket expenditures when a medical crisis strikes. For low-wage workers, this cushion takes the form of Medicaid.Learn More
May 31, 2016
Going Abroad? Is Currency a Work of Art?
As Squared Away readers scatter to the winds this summer, those going overseas should take a close look at the currencies in their travel destinations.
There are some gorgeous currencies out in the world, in places like Sao Tome & Principe off of the coast of Gabon in West Africa. June begins peak season for the island country, which The Lonely Planet says has a relaxed “leve leve” vibe to go with its miles of beaches, “swaths of emerald rainforest, soaring volcanic peaks and mellow fishing villages.”
Sao Tomean Dobra
Currency as art is a refreshing contrast to U.S. currencies, with their button-down images of presidents and buildings. Try the red-billed kingfisher bird on Sao Tome & Principe’s 50,000 dobra – or the curved bow of the boat on Norway’s 100 kroner note.
These were among the currencies selected by the coupon website, Couponbox.com, for its recent spotlight on the world’s “10 most beautiful banknotes.” To see the others, click here. …Learn More
May 26, 2016
Array of Financial Products is Dizzying
Rather than put his money in a bank, my cousin, who’s in his mid-40s, makes loans in $25 increments on a peer-to-peer lending website. He decides on the amount of risk he’s willing to take on – and the riskier the borrowers he chooses, the more he earns on his “savings.”
My cousin’s $25 investments illustrate how much our consumer finance market has evolved over several decades. We all embrace the convenience. Car loans are a more affordable way to buy a vehicle, Internet banking lets homebuyers get several mortgage quotes at once, and paying with cell phones is much easier than paying with cash or even credit cards.
But all this innovation has a downside. One example is the change from installment credit with fixed payments in the early 1960s to revolving credit, which lets consumers choose to pay a small required minimum – and increases the high credit-card interest that undisciplined borrowers pay. A recent and egregious innovation is companies that purchased lawsuit settlements from victims of lead paint poisoning for a fraction of their value. Both innovations offer convenience in exchange for personal financial impacts that are either excessive or difficult to recognize.
A primary outcome of all this financial innovation is that U.S. households “in aggregate have taken on greater risk,” conclude professors at the Harvard Business School in their 2010 paper, “A Brief Postwar History of US Consumer Finance.” Consumers now have an enormous amount of latitude – arguably too much latitude – to borrow, shift assets, save for retirement (or not), play the markets, or engage in peer-to-peer lending, they say.
As a result, risks pervade our investment portfolios, savings and retirement accounts, borrowing decisions, and how we purchase consumer goods. And that’s the problem. …Learn More
May 24, 2016
Find Best Job Market with Online Tool
This online tool for exploring urban job markets is very cool.
It could be a big help for high school and college graduates looking for work, especially those willing to migrate to a new city and trying to figure where to go. What’s unique about it is that it ranks the nation’s large, mid-sized, and small cities based on the user’s personal preferences.
To use the tool, created by the American Institute for Economic Research (AIER), the job hunter decides how high to rank the importance – from 5 (most important) to 1 (not important) – of nine different aspects of the job market and lifestyle in their ideal city: low unemployment, high average earnings, high labor force participation, public transportation, highly educated peers, low rent, high diversity, plentiful bars and restaurants, and many arts and entertainment options.
To test it, I selected a 5 for low unemployment and high labor force participation and a 1 for everything else (the bar scene, public transit, diversity etc.). Cities like Minneapolis, Denver, Salt Lake City, and Austin came up as the best cities, when these two job-market criteria were most important.
AIER also compares different cities in a report, which is available here.
Of course, other things are important when relocating. But the tool forces job hunters to balance their priorities – a strong job market or a good bar scene? To play around with AIER’s gadget, click here.Learn More
May 19, 2016
Quiz: Financial Well-being or Unease?
What does it mean to have a sense of financial well-being? Or what does it mean to have its opposite, financial uneasiness?
Based on in-depth interviews with dozens of people in focus groups, the federal Consumer Financial Protection Bureau has developed a financial well-being quiz. The quiz is the agency’s attempt to quantify a very subjective concept so that researchers can measure it and integrate this measure into their research, said Genevieve Melford, a senior research analyst for the CFPB.
“It’s about creating a tool that allows meaningful research and effective interventions that might help people,” she said.
We think regular people can also gain personal insight by taking a short version of the CFPB’s quiz on this blog. After taking the quiz, write down your score, and return to the blog to learn what it means.
May 17, 2016
The Secret to Longer Life: Keep Working
If having an adequate income in retirement won’t persuade you to delay that retirement date by a year or two, try this argument: you’ll live longer.
A new study in the Journal of Epidemiology and Community Health found strong evidence that older workers who retire even one year later have lower mortality rates. This held true for both healthy and unhealthy people.
The researchers at Oregon State and Colorado State used a survey of older workers to follow some 3,000 people who were employed in 1992 but had retired by 2010. Since health drives mortality and is a factor in deciding when to retire, they separated their research subjects into two groups – healthy and unhealthy – to see if they had different results.
The healthy people were more likely to be physically active, non-smokers with a lower body mass index and fewer chronic medical conditions. Other research has shown that having meaningful work can also contribute to health at older ages.
Over the period of the study, one in four unhealthy retirees died, compared with just about one in 10 healthy people. But the survival odds improved for people in both groups who retired after age 65, reducing the risk of healthy people dying by 11 percent and unhealthy people by 9 percent for each year of delay.
These general results aren’t necessarily true of every individual worker: some people are in such stressful or physically demanding jobs that retirement might be good for their health. Further, the reasons behind the health benefits of a longer working life are not fully understood. …Learn More
May 12, 2016
Contingent Labor Force Growing Fast
Most workers quickly realize that the best solution to low earnings in a job with scant or non-existent benefits is to move on to something better.
But this is increasingly difficult to pull off, because technology and other powerful forces are reshaping the 21st century economy – and degrading the quality of the jobs that are available. As companies seek to cut labor costs, technologies like scheduling software for retail and fast-food workers and platforms like Uber and Task Rabbit are making it easier to do.
The result has been a rapidly growing contingent labor force of temp-agency workers, freelancers, independent contractors, workers for contract companies, and on-call workers with unpredictable schedules, according to a recent study by prominent Harvard and Princeton economists. They estimate that this contingent labor force has increased from 10 percent of all U.S. workers in 2005 to nearly 16 percent today. Its growth effectively accounts for all of the net job gains over the past decade.
The transformation under way is so apparent that it has earned nicknames like the “gig,” “sharing,” or “on-demand” economy. The resulting jobs are often touted as giving workers flexibility and the freedom to earn more money – and sometimes they do. The researchers conducted their own survey of more than 3,800 contingent workers, and business consultants and computer engineers might be good examples of the independent contractors and freelancers who said in the survey that they prefer their arrangements to working for someone else. …Learn More