Women of Color Go into Construction Trades

women for color in construction figureThe annual pay for a plumber in Omaha, Nebraska, with three years of experience is around $55,000 a year, while a certified nursing assistant there earns $30,000. Or compare an electrician in the Phoenix area making $62,000 to $39,000 for a dental assistant.

Recognizing that many of the occupations dominated by women don’t pay well, young women of color are increasingly moving into the construction trades. Black, Latina, and Asian women and women of mixed race account for 45 percent of the 308,000 women working in the trades. This exceeds their 38 percent share of the women’s labor force overall, according to an analysis of 2016-2018 data by Ariane Hegewisch of the Institute for Women’s Policy Research. The largest group is Latina women.

Women of color are gravitating to construction jobs – carpenter, electrician, laborer, plumber, mason, painter, and metal worker – because they offer paid apprenticeships, good pay, and benefits to workers who don’t have a college degree. The International Union of Painters and Allied Trades even has maternity leave.

woman cutting woodBeing a sheet metal worker has “given me the financial ability to take care of my family,” Monica Yamada, a member of Local 104 in San Francisco, said in a recent webinar hosted by the policy institute and Chicago Women in Trades.

But working in a man’s world is challenging. Women say they often feel marginalized or harassed, or they receive fewer opportunities for career-advancing training or assignments at the construction site. “Women must fight to advance and to learn new aspects of the trade that men automatically get to do,” said the institute’s study director, Chandra Childers. …Learn More

Minimum Wage and Disability Applications

Maid in hotel corridor

Do applications for federal disability benefits rise, fall, or remain unchanged when the minimum wage increases?

Understanding whether the minimum wage affects disability applications is an important issue as Congress debates an increase in the federal minimum and the states have been very active: 14 states began last year with a higher minimum wage after passing new legislation or ballot initiatives. Another seven states had previously enacted automatic yearly increases in their minimums.

One possibility considered in a new study is that applications to the U.S. Social Security Administration for disability benefits could decline if wages increase enough to make a steady paycheck that much more appealing than a modest monthly disability check. But Syracuse University economist Gary Engelhardt finds that hiking the minimum wage did not reduce applications from 2002 through 2017.

Since applications didn’t go down, could a higher minimum wage increase applications instead? Some economists argue that employers, when faced with a higher mandatory wage, may lay off some of their less-skilled hourly employees or cut back their hours. This might – indirectly – be a motivation to apply for disability.

Engelhardt tested this idea in a second analysis, recognizing that it takes time for employers to make staffing changes in response to a higher wage. Once again, he found no impact on disability applications.

“Changes in the minimum wage are not moving individuals on and off” of disability, the researcher concluded. 

To read this study, authored by Gary Engelhardt, see “The Impact of the Minimum Wage on DI Participation.” Learn More

colorful arrows

What the Research Can Tell us about Retiring

It’s difficult to envision what life will look like on the other side of the consequential decision to retire.

But research can help demystify what lies ahead – about the decision itself, the financial challenges, and even the taxes. Readers understand this, as evidenced by the most popular blog posts in the first three months of the year.

Here are the highlights:

The retirement decision. The article, “Retirement Ages Geared to Life Expectancy,” attracted the most reader traffic. Myriad considerations go into a decision to retire. But a sense of whether one might live a long time – because of good health or simply seeing that parents or neighbors are living unusually long – is a compelling reason to postpone retirement either to remain active or to build up one’s finances to fund a longer retirement.

A recent study found that as men’s life spans have increased, they have responded by remaining in the labor force longer, especially in areas of the country with strong job markets and more opportunity. This is also true, though to a lesser extent, for working women.

The planning. The second most popular blog was, “Big Picture Helps with Retirement Finances.” It described the success researchers have had with an online tool they designed, which shows older workers the impact on their retirement income of various decisions. When participants in the experiment selected when to start Social Security or how to withdraw 401(k) funds, the tool estimated their total retirement income. If they changed their minds, the income estimate would change.

The tool isn’t sold commercially. But it’s encouraging that researchers are looking for real-world solutions to the financial planning problem, since the insights from experiments like these often make their way into the online tools that are available to everyone.

The taxes. It’s common for a worker’s income to drop after retiring. So the good news shouldn’t be surprising in a study highlighted in a recent blog, “How Much Will Your Retirement Taxes Be?” Four out of five retired households pay little or no federal and state income taxes, the researchers found. But taxes are an important consideration for retirees who have saved substantial sums. …Learn More

Working Multiple Jobs to Make Ends Meet

If people need to work and can work, they will work. That’s my takeaway from a new set of data that sketches a clearer picture of U.S. workers who are holding down multiple jobs.

US workers with more than one jobNearly 8 percent of workers had two or more jobs in 2018, the latest year of data available from the U.S. Census Bureau. The data also show that holding two or more jobs becomes more common during economic expansions, when jobs are plentiful, and falls during recessions, when the opportunities dry up.

But the longer-term trend is up: the share of people holding multiple jobs has slowly increased over the past two decades. In a recent webinar, Census Bureau economist James Spletzer provided a couple of reasons.

First, the country has lost millions of manufacturing jobs over several decades. They have been replaced by lower-quality jobs in retail and in service industries like health care, hotels and food preparation – and that’s where multiple job holders tend to work.

A second, related reason for working in multiple jobs is the “stagnation of earnings at the lower end of the earnings distribution,” Spletzer said. …Learn More

College grad drowning

A Lot of Student Debt May Never Be Paid Off

student loan chartFor half to two-thirds of the college loans made over the past decade, the former students owe more than they initially borrowed.

This is the result of a federal program that bases monthly student loan payments on the borrowers’ income if they aren’t earning enough to afford the standard payments. But the monthly payments in these much-needed Income Driven Repayment (IDR) plans are often less than is required to fully service the principal and interest on the loans. So instead of getting ahead, borrowers are perennially behind and never chip away at the balances.

People who go into the repayment plans are “trying to bail out a boat with a bucket that has a hole in it,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a non-profit that gives free information and advice to people needing help with their loans.

Marshall Steinbaum, an economist with the University of Utah, estimates that at least half of all student loans might never be repaid, based on his back-of-the-envelope calculation. That share is also growing, he said in an email, because more and more former students are enrolling in IDR programs.

The inability to pay “is baked into the system,” Steinbaum wrote in The Appeal. …Learn More

UK Pension Reforms Show Some Promise

woman in the UK on her phone

Unlike the United States, the United Kingdom has implemented bold reforms to its retirement system over the past decade.

Two of the biggest changes were gradual increases in the minimum age for collecting a pension under the national social security program and requiring private employers to automatically enroll their workers in an employee savings plan.

The goals of the reforms were to keep government spending in check and encourage individuals – who are living longer – to work longer, while helping them build up more private savings through employer-based plans. On balance, the notion is that workers will end up better prepared financially when they retire. Time will tell how successful these reforms will ultimately be.

But, so far, the results have been somewhat promising, concludes an Institute of Fiscal Studies report on workers’ changing expectations and attitudes about their retirement prospects.

In a major reform to private-sector plans, lawmakers started expanding coverage in 2012 by requiring that employers – the largest ones were first –  automatically enroll workers earning more than £10,000 (about $14,000) in a retirement savings plan. The total contributions to the plans must now be at least 8 percent of each worker’s earnings, with employers providing at least 3 percent.

This reform seems to have enhanced workers’ sense of financial security. In 2017, 78 percent said in a survey that they expect to get some retirement income from an employer savings plan – up from 63 percent in 2013. And while workers are permitted to opt out of the plans, they are doing so at consistently low rates.

On the retirement front, the minimum age to collect benefits under the U.K. social security system, the National Insurance Scheme, has risen dramatically for women. A decade ago, they could collect a pension at 60, but that had increased to 66 by last year. They are now in line with men, whose minimum age was 65 for many years and also rose to 66 last year. In the future, the increases are expected to continue: a 50-year-old worker would not be able to collect his pension until he is 68. …Learn More

brain and money

Retirees Who Tested Well Added More Debt

A new study finds that debt burdens have grown for older workers and retirees in recent decades. But this isn’t the first research to reach that conclusion.

What is new is whose debt burden is increasing the most: the people who score higher on simple memory and math tests.

Across the three age groups the researchers examined – 56-61, 62-67, and 68-73 – the high scorers on the cognitive tests were more likely to have debts exceeding half of their assets in 2014 than the high scorers who were the same ages back in 1998.

They also added disproportionately more mortgage debt than people with lower cognition during the study’s time frame, a period when house prices were rising.

The upshot of this study is that people who have retained more of their memory and facility with numbers are “more financially fragile” than the high scorers were in the past, the University of Southern California researchers said.

The findings run counter to a common belief that financial companies in recent years have had more success selling their increasingly complex products to unwitting borrowers – a belief perhaps fostered by the subprime mortgages targeted to risky borrowers in the mid-2000s that triggered the global financial collapse.

Older Workers taking on more debtThe share of the older people in the study who were carrying debt increased between 1998 and 2014 regardless of their cognitive ability. The biggest jump occurred after 62 – a popular retirement age pegged to Social Security eligibility.

The heart of the analysis, however, is exploring the connection between cognitive ability and financial vulnerability. The researchers found the opposite of what one might expect: debt problems have loomed larger over time for those with higher scores on survey questions testing word recall and cognitive ability using simple subtraction and backward-counting exercises. …
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