Employers Routinely Avoid Paying Overtime

Walk into a restaurant, retail store or hotel, and you might encounter a manager who seems to be doing the same tasks as the people he’s managing. Maybe you’re in one of those jobs.

A lawsuit by employees against a retail store revealed how meaningless the title of manager can be: the store managers were “stocking shelves, running cash registers, unloading trucks and cleaning parking lots, floors and bathrooms.” Hardly the types of responsibilities that go with overseeing one’s coworkers.

The employees were suing for overtime pay under a Depression-era federal law to receive back pay for overtime when they worked more than 40 hours per week.

Employers are exempt from paying overtime under this rule, however, if the employee is a manager earning more than $35,568 per year, rather than an hourly wage. One last requirement to qualify for the overtime exemption is that employers must give the worker executive or administrative duties that include supervising others on the job.

To satisfy the amorphous definition of who qualifies as a manager, new research finds that U.S. employers are much more likely to come up with creative, “fake-sounding” managerial titles – bingo manager, food-cart manager, director of first impressions, carpet-shampoo manager, and lead shower-door installer – for jobs paying just above the overtime pay threshold.

Employers “strategically use job titles to exploit regulatory [pay] thresholds,” which saves more than 13 percent for each manager who qualifies as exempt from the overtime rule, said the researchers, who include a Harvard Business School professor. The practice is “systematic” and saves U.S. employers some $4 billion in payroll costs every year.

The situation for workers used to be worse, however. Millions more became eligible for overtime pay when the pay threshold was increased 50 percent, to $684 per week – or $35,568 per year – in January 2020, from the $455 per week rate in place at the time of this study. …Learn More

Middle Class Gets the Most from Medicare

width=This is a fact of retirement life: older Americans haven’t paid as much into Medicare and Medicaid as government spends on their healthcare and nursing home stays.

But it is middle-class retirees who get the most out of the system, according to a new study.

Middle-income households receive about $230,000 to $260,000 more in Medicare and Medicaid benefits, on average, during their retirement years than the total amount they’ve paid in. Their contributions consist of the Medicare payroll and income taxes deducted from workers’ paychecks, the portion of their federal and state income taxes devoted to Medicare and Medicaid, and the Medicare Part B and D premiums they are paying in retirement.

The net benefit of the programs to the middle class dwarfs the $153,000 in average net benefits for retired households in the top fifth of the lifetime earnings distribution, and it also exceeds the $196,000 gain for the bottom fifth.

The middle class is defined as the second, third, and fourth of the five earnings groups the researchers analyzed in this study. The annual data used to calculate the health spending and payment estimates for this analysis are adjusted for inflation.

width=Americans over 65 receive a third of all the medical care provided in this country. This new research, funded by the U.S. Social Security Administration, uses government administrative data to compare the benefits of Medicare and its smaller companion program, Medicaid, for each earnings group.

There are two reasons the middle class gets the most from the system. First, although the top earners live the longest and receive the most medical care, the middle class lives almost as long and ends up receiving a significant amount of care. …Learn More

Falling Math Scores May Cut Future Earnings

Scores on 8th grade standardized math tests dropped during the pandemic, reversing a large part of the gains students had made since the 1990s. U.S. Secretary of Education Miguel Cardona called the news last October “appalling.”

But declining scores only confirmed for many parents what they had witnessed as their children struggled to engage in classes conducted over Zoom when the schools were closed down.

Now comes some of the fallout. The decline in math scores between 2019 and 2022 is expected to reduce the lifetime earnings for the average student by nearly 2 percent, or $19,400 in today’s dollars, according to a new study.

This may not sound like a lot spread out over a decades-long career. But think about it this way: after years of rising test scores and incomes, recent 8th graders may lose several hundred dollars a year in income just because they grew up during a pandemic.

And the impact of being competent in mathematics goes beyond lost earnings. Lower test scores lead to lower graduation rates, fewer kids in college, and more teen pregnancies, arrests and incarceration. So, it’s important to make sure these kids make up for lost time by improving their test scores during high school. …Learn More

50 Years of Financial Progress for Women

As the lower-paid sex, women have no shortage of insecurities about their retirement finances.

Only one in five working women feels “very confident” of being able to retire comfortably, the Transamerica Center for Retirement Studies reports in its annual retirement survey. More than half say they don’t earn enough or have too much debt to leave a lot of room for saving. Four in 10 expect to retire after 70 or not at all.

These insecurities probably reflect, to some extent, the poor retirement preparedness of Americans as a whole, not just women. In fact, women have made significant strides over the past half century. A new study documenting their personal and economic progress since the 1970s finds that their financial standing, compared with men, has improved.

Granted, women are still a long way from pay parity. But the improvements in retirement preparedness are impressive because they occurred despite the fact that women have become more independent – they are more likely to be living on their own and supporting themselves. Roughly two-thirds of boomer women born after 1953 either have never married or have been divorced for some part of their adult lives, according to the Center for Retirement Research.

What undergirds their personal and financial independence are college degrees and women’s growing participation in the labor force over five decades.

One in three baby boomer women born in the mid-1950s through the mid-1960s has a college degree – twice that of their mothers who were born during the Great Depression. Armed with the degrees, young boomer women flooded into the labor force. Three-fourths were working between their mid-30s and mid-40s, compared with 57 percent employment in the Depression-era cohort at that age. Men’s labor force participation has been much higher historically but barely changes over time.

Black women have always worked more than White women. But they too increased their labor force participation as they gained more education.

So how has women’s robust participation in the work world bolstered their financial security? …Learn More

COVID’s Small Impact on Future Mortality

The most COVID deaths were among Americans over age 60, who accounted for 300,000 of the 500,000 U.S. deaths from the disease in its first year.

A new study by the Center for Retirement Research finds, not surprisingly, that the oldest survivors of the early months of the pandemic were healthier than those who died from the virus. Taking this into account, the researchers estimated what mortality might look like in a “post-COVID” world in an analysis that was based on a big assumption – that COVID’s deaths were confined to a single year.

Factoring in the early impact of the virus, the researchers found that, despite COVID’s tragic toll in the over-60 population, their future mortality would decline only slightly because the number of COVID deaths was low relative to the group’s overall population.

Even a small drop in mortality might seem counterintuitive at a time the media were widely reporting that COVID was causing a dramatic increase in the annual death rate. But future mortality is different.

The researchers decided to test whether mortality would decline over the next decade because the older people who survived the pandemic were less likely to have the medical conditions like heart disease, high blood pressure, and cancer that made others in their age group vulnerable. COVID’s survivors are a healthier population, they explained, with lower mortality rates than those who entered the pandemic. …Learn More

The Cost of Having a Disability in COVID

In COVID’s early months, millions of workers’ incomes dried up as the unemployment rate skyrocketed. But older Americans were somewhat shielded from the downturn.

That’s because they either are over 62 and on Social Security or receive federal disability benefits every month at higher rates than young adults. And just like everybody else, they got relief checks from Congress to soften the blow from the pandemic.

Yet, despite the reliability of a government check, older Americans with disabilities suffered from “acute financial insecurity,” according to a new study that seeks to understand why.

During the pandemic, people over the age of 50 with disabilities reported having much more difficulty paying for food than people without a disability. They also showed more signs of financial distress, including missing a payment on a credit card, utility, or medical bill, researcher Zachary Morris found.

But the heart of his analysis of household financial data was confirmation of his suspicion that a loss of income was not the primary reason that financial insecurity increased for people with disabilities during the pandemic.

Much of the strain came from higher spending likely resulting from rising costs for disability-related items such as prescription drugs like insulin, assistive technologies, and personal protective equipment to protect themselves during the stay-at-home orders. A 12 percent increase last year in the cost of home health aides was a prime example that hit people with disabilities particularly hard. …Learn More

Spouse in Nursing Home Raises Poverty Risk

When nursing home care uses up a widow’s savings, the federal Medicaid program will kick in and cover her bills for care. But it’s more complicated for couples.

If one spouse moves into a nursing home and the bills start piling up, the person who is still living in their home can face serious financial hardship and even poverty.

This is a significant risk facing the one in three married people in their early 70s whose spouse will eventually wind up in a nursing home, researchers at RAND found in a study on the financial impact on couples rather than individuals.

It’s not unusual to pay roughly $90,000 for a year for a semi-private in a nursing home, though many people have relatively short stays. A common misconception about Medicare is that it covers all nursing home bills. It does not. The program pays for just 100 days of care in a skilled nursing facility and only after someone has been in the hospital and needs more time for recovery or rehabilitation.

High-income retirees pay directly for care that doesn’t follow a hospital stay, because in most states Medicaid kicks in only after couples deplete all but about $3,000 in savings to cover the cost of the nursing home. There is one significant protection for couples under Medicaid’s eligibility rules: their home does not count as an asset as long as a spouse continues to live there.

But if an unlucky couple has high out-of-pocket spending due to a long stay in a nursing home, the researchers found that it increases the chances they will run through virtually all of their savings and become impoverished. While poverty is far less likely for higher-income couples, they are not immune. …Learn More