Money Culture

March 30, 2023

You’re over 50. You have built up a lot of equity in your home, and your life savings is finally gaining some critical mass.

And yet, your odds of being rejected for a refinancing mortgage start going up rapidly after age 50 and really accelerate around 70, according to a study by Natee Amornsiripanitch at the Federal Reserve Bank of Philadelphia. This evidence, concludes a recent summary of the study, “is large and robust.”

The research has important implications for older workers trying to prepare financially for retirement or retirees planning to change their living arrangements. Higher rejection rates can throw a wrench into refinancing an existing mortgage, cashing out some home equity, and possibly downsizing to a less expensive home.

Yes, rejecting borrowers based on age is illegal. The Equal Credit Opportunity Act bars discrimination due to age, race and many other reasons. However, the law does allow bankers to take into account factors like the “length of time to retirement” and “the life expectancy of the applicant” that indicate the risk to the banker that a borrower won’t be able to pay back the loan or see it to term.

The researcher analyzed rejection rates for refinance mortgages in seven age groups, starting at 18. The incremental increases in the probability of being rejected for a mortgage rise sharply in the three oldest groups: the 50s, the 60s, and 70 and over. To put the older borrowers’ rejection rates in perspective, within the sample of mortgage applications studied, they exceed the rates for Black and Hispanic borrowers, whom other research has also shown are denied mortgages at higher rates than White borrowers.

This study may surprise older borrowers, who tend to have higher credit scores that would seem to make it easier – not harder – to borrow money. The researcher focused on a couple reasons for the higher rejection rates. …
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March 28, 2023

As workers age, poor health or disabling physical conditions can interfere with holding down a job. Sometimes people are forced to quit working if things get really rough, whether they’re ready to retire or not.

But race also figures into this predicament, because workers of color are already in poorer health and tend to have more vulnerable employment situations than White workers. A new study compares what’s it’s like to be an older Black, Hispanic or Asian person who is trying to keep working in two countries with similar cultures: the United States and England.

The United States does not come out on top.

The building blocks for this research are basic comparisons of White and minority workers’ health and employment rates in each country. In both cases, the gaps between the races are largest in the United States.

People of color, ages 50 to 70, in both England and the United States are much less healthy than Whites their age. But the researchers find the health disparities are larger here than in England, where the National Health Service provides universal healthcare. The differences between the two countries persisted in analyses using individuals’ own reports on their health in a survey and using medical diagnoses like diabetes and cardiovascular disease.

The racial gap in employment is also larger in the United States. The employment rate for older American men of color is 10 percentage points lower than for White men and 5 percentage points lower for older women of color. In England, the researchers said, the differences are “modest” after taking into account the fact that Whites and minorities in England have different health and education levels than older workers here.

The disadvantages of being an older worker of color are compounded if they suddenly experience a new medical condition or injury. But when this occurs, the researchers concluded, “the [negative] impact of health shocks on employment is larger for nonwhites than for Whites and is larger in the U.S. than England.”

Comparing women of color in both countries illustrates this dramatically. A sudden worsening in health is responsible for 19 percent of the drop in employment for older women of color in the United States, compared with 13 percent for White women, the researchers found. This negative effect on employment for women of color in this country is three times larger than in England. …Learn More

March 23, 2023

The remote work necessitated by COVID may be here to stay in five English-speaking countries from Australia to the United States.

That’s the conclusion from a study of 250 million online job ads – nearly half of them in this country. The number of postings in January that offered remote work for one or more days per week was three to five times larger than the remote work positions advertised on the cusp of the pandemic in 2019. Notably, their numbers increased sharply last year as COVID was retreating.

The countries in the study are: Australia, Canada, New Zealand, the United Kingdom, and the United States. The United Kingdom has the largest share of positions advertising remote work – 18 percent. The United States and Australia each have 12 percent.

During the first two months of the pandemic, as businesses around the world shut down, remote work soared. That initial spike was followed by sustained growth throughout the pandemic.

“It has become clear that this shift will endure long after the initial forcing event,” the researchers said.

They identified fully or partially remote positions by working with a Boston data company that scraped government and private-employer websites, job boards, and job-vacancy aggregators like Indeed.com and Monster.com. They searched key words in the job ads including remote work, work from home, and home office.

All five countries experienced big increases in remote work, but the researchers said there is “a high degree of heterogeneity in remote work adoption” in the industries and companies where these flexible jobs are located. …Learn More

March 21, 2023

It’s been well documented that the COVID recession and layoffs in 2020 were particularly hard on Black, Hispanic, and Latino Americans. But if they had a disabling physical and medical condition, they felt it much more.

In a new study examining the cumulative impact of having a disability combined with the disadvantages of being an older minority worker or retiree,  the racial disparities were apparent on a variety of fronts – in the inability to pay for essentials, at work, and through some difficulty obtaining medical care.

Past research has shown that once the pandemic hit, people with disabilities, who tend to have lower incomes, had an even tougher time financially than in the years prior to COVID. The racial aspect of these hardships was explored in this new research, as dramatized by the difficulty some Black, Hispanic, and Latino people with disabilities had paying their rent or mortgage.

During the height of the pandemic in 2020, paying for housing was a problem for about 13 percent of them. That was about four times the rate for Whites with disabilities and was also a much bigger issue than Blacks, Hispanics, or Latinos without disabilities faced.

Racial differences were also evident when people of color with disabilities tried to buy another essential: groceries. One in five said they couldn’t afford all the food they needed – roughly three times the rate for Whites with disabilities and about twice the rate for Hispanics, Latinos and Blacks without disabilities. …Learn More

March 16, 2023

The types of long-term care located in various communities are largely driven by what their oldest residents can afford. This has created stark differences in what’s available to White and minority retirees, a new study finds.

Assisted living facilities, despite the high cost, have been the fastest-growing part of the long-term care industry over the past 20 years. In the cities and suburbs, where the vast majority of Americans live, more of these facilities are located in predominantly White communities. Adult day care centers, at less than half the price of assisted living, have also expanded but are concentrated in communities of color.

The research also revealed that bank redlining has contributed to the racial disparities. Historic discrimination in mortgage lending has made it difficult for Black and Hispanic workers to accumulate the home equity they can use later to finance more comprehensive forms of long-term care. Government programs also play a role in what’s available: some states get waivers to use federal funds from the Supplemental Security Income program to subsidize adult day care for low-income retirees.

The essence of this study is the contrast in long-term care facilities in White versus minority communities at a time the industry is increasingly privatized – and expensive. The options that are available in each community reflect to a large extent their residents’ socioeconomic status.

The best example is assisted living facilities in which older people rent an apartment and receive assistance with their activities of daily living – dining service and help with a wheelchair or personal care like housekeeping, showering, and dressing – that don’t require a nurse’s care.

The number of assisted living facilities without nursing has more than doubled since 2000, to 26,800 nationwide, the researchers found. Older people who can afford to live in these residences, which are concentrated in White communities in more populated areas, enjoy a comfortable living standard that includes a smorgasbord of scheduled activities, without having to rely on their adult children to take care of them.

The racial disparity in long-term care is starkest when comparing these permanent residences with a much more affordable option concentrated in city neighborhoods of color: adult day care centers. The centers are often a better choice economically for minority retirees, who tend to have lower incomes and more debt than Whites. Day care costs around $20,300 per year, compared with about $54,000 for assisted living. …Learn More

On the Web

March 14, 2023

Do you know the main reason Americans slip into homelessness? Are you aware of the roots of this longstanding crisis?

The best way to counter negative views of homelessness is to develop a better understanding of why it exists and who it affects. The Urban Institute has put together a quick quiz to explore an issue that people with secure jobs and comfortable housing don’t think much about – and might prefer not to think about.

The federal government’s latest estimate of the homeless population makes clear that little progress has been made in reducing it, despite many communities’ efforts to address it. On a single night in January 2022, 582,462 people were homeless and either living on the streets or in homeless shelters or transitional housing. That includes more than 50,000 families.

The homeless population last year roughly matched the January 2020 count and is an increase from 567,715 in January 2019. The 2021 figure, experts agree, is unreliable because many communities curtailed their homeless counts during the surge in COVID cases, which may have actually increased the population.

A better understanding of homelessness is the first step to finding some solutions. Spend five minutes and learn something about the issue. Here’s the quiz. …Learn More

Behavior

March 9, 2023

COVID has moved from a central place in our lives to a risk that, while still important to heed, has moved out of the foreground.

One thing we will not forget, however, is COVID’s toll on nursing homes and other long-term care facilities, where the virus has killed more than 200,000 older Americans and staff. The tragedy also played out in nursing homes in Canada, where the deaths received high-profile coverage in the news media, just as they did in this country.

A survey of Canadians at the end of 2020, while COVID was still raging, indicates that the pandemic caused major changes in their thinking about old age. The reaction of a majority of people in their 50s and 60s to what they saw happening was to say they intend to avoid ever spending time in a nursing home, according to a summary of the survey by Canadian researchers.

It’s not hard to understand why so many deaths left such a lasting impression. What may be more surprising is the potentially big shift in what Canadians now believe should be done to address the situation.

More than two out of three Canadians surveyed said government could increase taxes to fund more government support for someone to come into retirees’ homes and help them with daily activities such as cooking, shopping, showering, and dressing.

But home care is an expensive proposition: the cost of one month in a nursing facility in Canada would buy only about two hours of home care per day. However, about one in four individuals said they would also take more responsibility themselves for preventing a nursing home stay by saving money to pay for their future home care. …Learn More