October 20, 2020
Expect More Moms to Sacrifice Careers
Working mothers scrambled when the schools shut their doors last spring, but they found ways to cope. The 2020-21 school year may push many of them over the edge.
Last spring, one in four women nationwide who’d either quit their jobs or were laid off blamed the difficulties of working after the schools closed or they lost child care to COVID-19, a Northeastern survey found.
Alicia Sasser Modestino is in the midst of repeating the survey but believes that the situation has only gotten harder for working mothers this fall.
“When you look down the barrel of a full school year of hybrid or remote learning,” the stopgap measures mothers deployed last spring “are not sustainable,” said Modestino, a mother of four and research director for Northeastern’s Dukakis Center for Urban and Regional Policy.
“If it’s not going to be Congress giving money for schools to reopen safely or the state opening child care centers, a parent is going to have to give up their job, and we know from history that it’s more likely to be women,” she said.
The impact of school closings on Millennials and Generation X can’t be overstated. In 75 of the 100 largest U.S. school districts, returning to school has meant students connecting to Zoom from their bedrooms or kitchen tables.
In the COVID-19 pandemic, a disproportionate share of women have been laid off, because they dominate face-to-face industries – nursing, retail, customer service – that are more vulnerable to closing. But something new is happening to mothers in this downturn. …Learn More
October 15, 2020
Older and Self-Employed – a Diverse Lot
Self-employed workers who are 50 and older fall into a hierarchy of sorts, a new study finds.
The largest group is the 75 percent who work independently in jobs like freelancer and gig worker. Their average earnings are low – $18,000 a year – and they are more likely to be women or Hispanics.
The other 25 percent of the self-employed older workers are primarily white men and are evenly divided between business owners and managers who work on a contract basis. These individuals tend to be doctors, lawyers, or executives in industries ranging from finance and construction to retail.
To get a better handle on who is choosing self-employment and why, University of Michigan researcher Joelle Abramowitz analyzed 2016 survey data from the Health and Retirement Study. These data included not only older workers’ employment status but also specific information about their employers, industries, and occupations.
The self-employed account for roughly one out of five older workers, but the arrangement is especially popular among boomers over 65 – a third of the workers in this age group are self-employed.
Abramowitz’s research, funded by the U.S. Social Security Administration, finds a lot of diversity in the jobs the self-employed do and in their perceptions of work.
The low-paid independent workers dominate jobs like caregiver, cleaner, farmer, artist, and beauty industry worker. Many view themselves as “retired” and say they would rather not work but apparently need to supplement their retirement income.
In contrast, the owners and managers are far less likely to see themselves as officially retired. Compared with the independent workers, they earn considerably more and are wealthier. The net value of their financial, housing and other wealth exceeds $1 million on average.
Their attitudes are different too. …Learn More
October 13, 2020
The Economics of Being Black in the U.S.
The COVID-19 recession demonstrates an axiom of economics. Black unemployment always exceeds the rate for whites, the spikes are higher in recessions, and, in a recovery, employment recovers more slowly.
A record number of Black Americans were employed in 2019. But when the economy seized up in the spring, their unemployment rate soared to 17 percent, before floating down to a still-high 12.1 percent in September. Meanwhile, the white unemployment rate dropped in half, to 7 percent.
The much higher peaks in the unemployment rate for Blacks than whites and the slower recovery are baked into the economy.
This phenomenon occurred during the “jobless recovery” from the 2001 downturn. When the economy had finally restored all of the jobs lost in that recession, the Black jobless rate remained stubbornly higher.
And after the 2008-2009 recession, as the University of California, Berkeley’s Labor Center accurately predicted at the time, Black unemployment hovered at “catastrophic levels” longer than the white rate did. This disparity is now the issue in the COVID-19 recession.
Geoffrey Sanzenbacher, a Boston College economist who writes a blog about inequality, gives three interrelated reasons for Black workers’ higher unemployment rates.
First, “The U.S. still has a tremendous amount of education inequality, and the unemployment rate is always higher for people with less education,” he wrote in an email. Despite the big strides by Black men and women to obtain college degrees, roughly 30 percent have degrees, compared with more than 40 percent of whites, he said.
Second, Black workers without degrees are vulnerable because they are more likely to earn an hourly wage. An hourly paycheck means that a company can cut costs by simply reducing or eliminating a worker’s hours. “It’s much easier to lay off hourly workers, whose employment is more flexible by nature, than salaried workers,” Sanzenbacher said. …Learn More
October 8, 2020
Video: Boomers in RVs Seek Job, Security
Sales and rentals of recreational vehicles have skyrocketed during the pandemic as people working remotely use their newfound freedom to move their workplaces to the great outdoors.
Outdoorsy – the Airbnb of recreational vehicles (RVs) – reports that 40 percent of its new rental customers are under age 40. But long before younger adults hit the road, thousands of baby boomers were buying RVs to roam the country in search of work.
Rather than seeking psychological relief from COVID, as younger workers are doing, the boomers – some retired and some unemployed – are looking for financial security.
In this excellent PBS NewsHour segment, Paul Solman talked to boomers who park their RVs at campsites near whatever seasonal jobs they can find at places like Amazon and JCPenney warehouses, sugar beet farms, and theme parks and national parks.
During the summer tourist season, Judy Arnold has been working at Yellowstone National Park in Wyoming. But with so many businesses shut down by the pandemic, she worries about where her next job will come from. “I definitely need an income,” she told the NewHour.
George Stoutenburgh gave two reasons for his wanderlust. …Learn More
October 6, 2020
Boomers Move into Post-Career Jobs
Many baby boomers retire the conventional way – by leaving their career jobs. For the others, the first step in retiring involves stopping over in a different job than they’ve held for years.
A sketch of the older workers who transition to post-career jobs – and their reasons for doing so – emerges from a survey of a fairly elite group of mostly college-educated professionals: clients of the Vanguard investment company.
They made the job transitions for a variety of reasons. More than half of them either had initially retired but decided to go back to work or were forced out of a long-term job by a layoff, firing, or business closure. However, Vanguard’s clients are apparently in good health, because they rarely made changes due to a medical condition.
The boomers usually changed jobs during their 50s. The post-career jobs were often in entirely different occupations or industries, which required the workers to make big trade-offs, according to the 2015 survey, which was designed by Vanguard and several academic researchers.
The old positions were usually full-time, and, as a result, had rigid schedules. Half of the people who found a new job said they now have flexible schedules. But everyone who moved into a post-career job took a 20 percent pay cut, on average, either because they’re working fewer hours or are in a different industry or occupation where the skills honed over the years are not as valued.
There’s also telling evidence that many of the boomers in post-career employment were eager to make this tradeoff. They typically moved from the career job to the new one in about a month, an indication that many had landed the new job prior to leaving the old one. …Learn More
October 1, 2020
Cash from Kids Slows After Parents Retire
But a new study uncovers a twist in this familiar story: once the parents are old enough to collect Social Security, the money flowing from adult child to parent slows down. And when this occurs, the offspring are able to start saving money.
Social Security, by reducing disadvantaged parents’ reliance on their children, “may be able to interrupt the cycle of poverty between generations,” Howard University researcher Andria Smythe concluded from her analysis.
To chart changes over time in cash transfers within families, Smythe followed U.S. households’ finances between 1999 and 2017 using survey data from the Panel Study of Income Dynamics.
She found that the financial support going to parents in the bottom half of the U.S. income distribution was substantial. These parents received about $8,000 from their offspring over time. In contrast, among the higher-income families, money consistently flowed in the opposite direction – from parent to child.
After the lower-income parents turned 62 and started their Social Security, the likelihood the adult children would continue to support them declined, according to the study, which was conducted for the Retirement and Disability Research Consortium.
This, in turn, had a positive effect on the adult children’s wealth. People who grew up in lower-income families saw the biggest bump in wealth, adding about $13,000 in the years after their parents turned 62.
Social Security benefits, Smythe concludes, “may contribute to wealth-building among the adult children’s generation.”
September 29, 2020
How High School Finance Courses Fail
In more than 30 states, completing a personal finance course is required for a high school degree.
The requirement started gaining traction around the country in 2005, despite the long-running debate about whether the courses even work.
A new study gets at whether high school instruction is effective by asking a fresh question: do the finance classes make people feel better about their situation – and feeling better about one’s finances is an indication things are, in fact, improving.
This departs from past studies focused on objective measures like credit scores and past-due loans.
The researchers find that high school courses have generally been a positive development: adults who grew up in states that require the courses do, in fact, feel better about their finances compared to people from states lacking a requirement.
But what’s interesting in this study is that a group of disadvantaged Americans feel worse off for having taken the courses: high school graduates who didn’t go on to college. Rather than helping them manage their financial challenges, the classes are only making things worse.
Before examining the reason for this, consider how the researchers measured the feeling of well-being. They used recent data from a series of questions asked by the FINRA Investor Education Foundation: Do you feel you have control over your money? Could you afford an unexpected expense? Do you have a sense of achieving your financial goals?
Most important, FINRA asked, do you have the financial “freedom to make choices that allow a person to enjoy life”? FINRA’s survey was conducted in 2018, but this question is relevant in the COVID-19 recession. Enjoying life is essentially the flip side of having financial stress, which is currently very high among low-income workers without college degrees.
The researchers argue that adults with no more than a high school diploma who’d taken the personal finance classes feel worse, because the classes delivered a “harsh dose of reality” that can “make economically vulnerable people more aware of their precarious financial situation.” …Learn More