Posts Tagged "worker"

Caregiving’s Toll on Work Happens Quickly

Caregiving often wins out in the struggle between work and fulfilling one’s obligation to a family member or friend who needs help.

Researchers have documented the phenomenon of workers being forced to eventually leave their jobs so they can devote more time to the person in their care. But the impact on the work lives of the people who are new to their caregiving duties is often dramatic and happens very quickly, a new study finds.

Employment levels for workers who become caregivers declined by 6 percent within a year after they started, and most of the drop occurred because they left the labor force entirely, according to the analysis linking Census Bureau surveys on informal care with the Social Security Administration’s employment records for working-age adults.

The decline in employment may occur as early as four months after caregiving starts, based on a second analysis using only the Census data.

Caregivers who decide to stop working are also more likely to go on federal disability – either right away or years later. Many of the people receiving the benefits are older people who, despite their disabilities, had persisted in their jobs. Once they were needed by a family member, they may have decided to apply for disability to offset some of the loss of income from working.

Indeed, the largest employment declines were experienced by people over age 62, who often have an elderly parent or spouse in need of care – and sometimes both. For many of them, leaving a job coincided with claiming their Social Security benefits in an indication that caregiving is often pushing them to retire. Workers between 45 and 61 saw a smaller decline in employment after becoming caregivers.

Men’s and women’s paths from worker to caregiver are different, however. Women report small declines in their employment levels, and they return to the labor force relatively quickly. The impact on men is more dramatic and long-lasting. …Learn More

Public-Sector Pensions Weathered Pandemic

The economic turmoil in the early months of the pandemic – a plunging stock market and soaring unemployment – posed a real threat to state and local government pension funds and the workers who rely on them.

One group was particularly vulnerable: public-sector workers who aren’t covered by Social Security and lack the backstop of the federal government if their employer pension plans get into trouble.

The Center for Retirement Research has some good news for these 5 million noncovered workers living in 20 states. Their pension plans got through the first two years of the pandemic unscathed.

In dollar terms, government contributions to these defined benefit pension plans actually increased during COVID. That and a roaring stock market in 2021 significantly improved their financial condition. Of course, this sunny report is clouded by what is happening to the stock market now – it has reversed course and dropped 20 percent this year.

But the researchers’ assessment is that COVID was not the financial disaster many had feared for the public-sector workers who aren’t covered by Social Security.

The 59 noncovered plans in the study vary in size from small local pension plans like the Pittsburgh Police Relief and Pension Fund to the nation’s largest state plan, the California Public Employees Retirement System.

Congress’ financial support during COVID played an important role in stabilizing state and local governments’ finances. They received hundreds of billions in pandemic relief from the CARES Act in March 2020 and, a year later, the American Rescue Plan. The federal relief checks to families and businesses also added billions to state and local tax bases. Importantly, tax revenues snapped back after a brief drop in 2020, because high-income workers, who pay more in taxes, didn’t suffer the dramatic layoffs experienced by low-income workers.

The federal support provided the fiscal breathing room for governments to make their pension contributions on schedule. In fact, some of the states with the most poorly funded plans – namely New Jersey and Connecticut – took advantage of the fiscal windfall to make historically large contributions in 2022. …Learn More

Enhancement to Savers Tax Credit is Minor

The Savers Tax Credit sounds great on paper. Low-income people get a federal tax credit for saving money for retirement.

But this part of the tax code always seems to disappoint.

The House recently overwhelmingly passed a bill, the Secure Act 2.0, that – along with numerous other retirement provisions – makes the savers credit more generous for some low-income workers.

Under current law, taxpayers can get one of three credits – 10 percent, 20 percent, or 50 percent of the amount they save in a 401(k). The Secure Act, which is now headed for the Senate, would somewhat increase the top income levels for the 50 percent credit – from $20,500 currently to $24,000 for single taxpayers and from $41,000 to $48,000 for married couples. The dollar value of the caps on their credits would remain at the current $1,000 and $2,000, respectively.

The House bill would also eliminate the 10 percent and 20 percent credits for higher-income workers and begin phasing out the dollar caps once taxpayers exceed the $24,000 and $48,000 income levels.

The proposed tweak to the tax structure “is not a dramatic change to who gets the credit,” said Samantha Jacoby, the senior tax legal analyst for the Center on Budget and Policy Priorities.

The House also failed to fix the fundamental flaw in the savers credit: it is non-refundable. This means workers who don’t owe any taxes don’t qualify. Without refundability, Jacoby and Chuck Marr write in a recent report, the House bill “ignores a critical reason why so few people with low and moderate incomes claim the credit.”

Disappointment with the tweaks to the savers credit is apparent in the context of the entire bill, which gives much more to higher-income people. For example, the House increased the age that taxation of 401(k) withdrawals kicks in from 72 to 75. Some retirees with modest incomes will tap their savings long before that and won’t benefit from the provision.

“Overwhelmingly, the people who will benefit from this bill are the people who are higher income and already have secure retirements,” Jacoby said.

Another barrier to use of the savers credit is a lack of awareness that it exists. The share of tax filers who claim the credit has increased in the past 20 years but still hasn’t reached 10 percent, according to a report by Transamerica Institute. …Learn More

Woman in a dark place

Opioids Make it Harder, Not Easier to Work

The twin goals of prescribing opioids to workers with a bad back or arthritis are to alleviate their pain and keep them employed.

But the use and abuse of opioids can cause poor memory, extreme drowsiness, and an inability to engage in normal social interactions – all of which limit workers’ ability to function. Opioids also have serious physical effects outside of the dependence itself.

The resulting detachment from the labor market, revealed in a new research study, calls into question any benefits the medications have.

Between 2012 and 2018, average employment declined by nearly 2 percent for every 10 additional opioid prescriptions per 100 adults in a county-sized area, the researchers found. Wages also dropped by 6 percent, indicating that the opioid users who do remain employed are less productive.

The painkillers had more permanent consequences, too, when workers, unable to cope, left the labor market for good. The rate of applications for federal disability benefits increased sharply in the areas with higher prescribing rates, according to the study funded by the U. S. Social Security Administration, which runs the disability program. …Learn More

The power of words being typed

Viewing Retirement Saving as a Fresh Start

Employers have learned over the years that understanding employee psychology is critical to getting them to save for retirement. Researchers have landed on a novel idea along those lines: explain to employees that they have an opportunity to save in a 401(k) or increase their 401(k) saving on a future date that represents a fresh start, such as a birthday or the first day of spring.

In a 2021 study in the journal Organizational Behavior and Human Decision Processes, this “fresh start framing” during an experiment increased the percentage of workers who agreed to contribute to their employer retirement plans and increased the share of pay contributed to the plans. In both cases, the increases were well in excess of 25 percent in a comparison with employees who were presented with less salient future dates.

Add this technique to a well-established one that growing numbers of employers already use with some success: automatically enrolling workers in the 401(k), and sometimes automatically increasing their contributions, which research has shown can work better than waiting for them to do it themselves. Most of the retirement plans in the study did not have any automatic features, and the fresh start dates proved another way to elicit better saving habits – voluntarily.

The option to delay a commitment to save is based on an assumption that people are more willing to make a change that involves sacrifice if it can be postponed – smokers often try to quit this way. One theory for using a fresh start date is that it imbues a feeling of optimism, giving employees permission to set aside past failures. …Learn More

People of different ages and nationalities

Workers: Social Security Info is Eye-Opening

Most workers have never created an online my SocialSecurity account to get an estimate of their future retirement benefits. The people who do use this feature tend to be older or are retired and already receiving their benefits.

If only more younger adults would log on.

One 31-year-old worker, after looking up his personal estimate for the first time, learned that his future benefit is “not quite nearly enough to survive on.” The estimate – retrieved during an interview with researchers for a new study – prompted him to think about a retirement plan now. A 43-year-old woman realized her spouse’s decision about when to retire would affect her spousal benefit from Social Security. “I had no idea,” she said, calling the information “a reality check.”

And it’s a good thing one 60-year-old logged on to my Social Security. He didn’t know he qualified for retirement benefits, because the last time he’d checked, he had not built up the earnings record – 40 quarters of work – the program requires. “I will look into it further and find out exactly what is going on,” he said.

These and other revelations came from interviews with 24 workers by University of Southern California researchers Lila Rabinovich and Francisco Perez-Arce. They combined these insights with a much larger, online survey to analyze how Americans use the valuable benefit estimates available to them.

It’s important to understand why my Social Security isn’t being used more, especially since first-time users described the online feature as easy to use and eye-opening. Going online didn’t seem to be an issue either, because the people in the survey already search for other information that way.

One of the primary reasons the workers hadn’t looked up their personal accounts, the researchers concluded, was a lack of awareness the feature existed. But this isn’t at all surprising for younger workers, who are more concerned about developing their careers than about retiring. …Learn More

minimum wage text

The Economy, Minimum Wage, and Disability

The federal minimum wage is $7.25 an hour and hasn’t budged since 2009. But many states and some municipalities have raised their minimum wages. Today, more than half of the state minimums exceed the federal minimum.

Now a new trend has emerged: 19 states have enacted or approved automatic yearly increases in their minimum wages to protect their residents from inflation. These adjustments just went into effect this year in Arizona, Colorado, Maine, and Washington D.C.

How might higher minimum wages affect applications for disability insurance? On the one hand, the higher pay could prevent some people with mild disabilities from resorting to the fallback option: applying for disability benefits. But if small employers lay people off to cut costs or feel they can’t afford to hire workers at the new higher minimum wage, applications could go up. Facing fewer job opportunities, more low-wage workers might apply for benefits from a program that currently covers some 16 million Americans.

A new study finds that a rising minimum wage does, indeed, increase disability applications to the U.S. Social Security Administration. But the researchers stress that this impact is minimal compared with the increase driven by an economic downturn that throws more people out of work.

In their analysis of nearly 3,000 counties from 2000 through 2015, a one-dollar increase in the minimum wage added some 80,000 more applications to the disability program and its companion, the Supplemental Security Income program for the poor, elderly, and adults with disabilities. That represents a 2 percent increase.

Contrast that to the impact of a rising unemployment rate, which was about three times larger. …Learn More