Category: Earnings/Wages


Collapse in pay lies behind Britain’s return to work: Self-employed are hidden victims of recession, report warns

The study by the Resolution Foundation think tank reveals the dark side of the sharp growth in self-employment, which has helped the Government to maintain its boast that unemployment is falling as more and more people find work.

Since the start of the recession five years ago, the number of self-employed has risen by 650,000 to 4.5 million. They now represent 15 per cent of the active workforce.

But the new analysis reveals that the average weekly income of someone in self-employment is 20 per cent lower than in 2008.  As a result, a typical self-employed worker now earns 40 per cent than a typical employee.  An Ipsos-Mori survey commissioned as part of the report also found that 27 per cent of those who became self-employed in the past five year do so because they had no other choice – up from 10 per cent five years ago.

Gavin Kelly, chief executive of the Resolution Foundation, said: “Self-employment is often a highly precarious existence which isn’t that well supported by public policy. High levels of self-employment seem likely to be here to stay and policy-makers have some catching up to do.”

The grim truth about pay and living standards in some the regions of the UK has also been highlighted by official EU figures showing that parts of Britain are effectively poorer that countries from  former communist countries in Eastern Europe.

People in Cornwall and the Welsh Valleys are worse off than residents of Estonia and Lithuania, according to Eurostat figures comparing wealth across the EU using a measure known as “purchasing power standards” – which takes into account GDP per person and cost of living.

In addition, Durham and the Tees Valley, in the north east of England, are poorer than those in the wealthiest regions of Bulgaria and Romania, the two most deprived countries in the EU.

By contrast, the Eurostat figures show that London is the richest place in Europe.

According to the Resolution Foundation report, self-employed people are more likely than people in full time employment to complain of being under employed.

 

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Pension fears for rising number of self-employed

Higher levels of self employment have become a permanent feature of the UK economy as a result of Britain’s ageing workforce and a greater desire for Britons to “work for themselves”.

The Resolution Foundation said the increase in self-employment also presented a “worrying picture of the security and vulnerability of self employed people”, who have traditionally saved less for retirement than employees. Photo: PA

Higher levels of self employment have become a permanent feature of the UK economy as a result of Britain’s ageing workforce and a greater desire for Britons to “work for themselves”.

The number of people who are self employed has grown by 650,000 since the 2008 financial crisis, to 4.5m, meaning one in seven workers is now self employed.

While some of the shift towards self-employment has been caused by cyclical factors, the Resolution Foundation said 73pc of workers had chosen to become self-employed. “The high self-employment numbers are here to stay,” said Laura Gardiner, a senior policy analyst at Resolution Foundation.

The rise in self employment has attracted attention from the Bank of England, where policymakers have argued over whether the increase reflects structural changes in the UK economy or “disguised labour market slack” because many of these workers would prefer to be working full-time.

While the Foundation said there was less slack in the economy caused by self-employment than some policymakers believed, it said underemployment among these workers was “marginally worse than for employees”, representing a reversal of the pre-crisis trend.

 

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ByBruce Kennedy

Another bad sign for America’s middle class

You don’t have to be an economic victim of the Great Recession to know that America’s middle class is being squeezed in an unprecedented manner. Not only is the U.S. middle class no longer the world’s richest, according to recent research, but millions of families who were once financially secure are now living hand-to-mouth.

What’s going on? A new report from the National Employment Law Project finds that, nearly five years after the recession officially ended, most of the jobs that have been created during the recovery offer lower wages. Such positions made up 22 percent of jobs lost in the recession, but have accounted for 44 percent of employment growth.

 

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Where is the middle class heading?

 

The labor research and advocacy group also found that, from the outset of the recession in late 2007 to its low point in February of 2010, “employment losses occurred throughout the economy, but were concentrated in mid-wage and higher-wage industries.”

By contrast, mid-wage positions, which composed 37 percent of the jobs cut in the recession, have made up only 26 percent of those recovered. High-wage industries, which made up 41 percent of recession jobs lost, reportedly had a 30 percent recovery growth.

“Today, there are nearly 2 million fewer jobs in mid- and higher-wage industries than there were before the recession took hold, while there are 1.85 million more jobs in lower-wage industries,” NELP said in a statement,

 

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The low wage jobs explosion

  @Luhby April 28, 2014: 4:57 PM ET

low wage explosionLow wage jobs are on the rise.

NEW YORK (CNNMoney)

Looking for a job? The ones you’ll find will likely be low wage.

The labor market has been recovering since the Great Recession ended, but many of the jobs created have been in low-wage industries, according to a new report by the National Employment Law Project, a left-leaning group.

Among the fastest-growing jobs: Food services, home health care and retail — all of which pay relatively little.

Better paying blue-collar industries, such as construction and manufacturing, have not recovered to their employment levels before the recession.

Lower wage industries accounted for 44% of employment growth since employment hit bottom in February 2010, the group found.

Going back to the start of the recession six years ago, the nation has added 1.85 million jobs in low-wage industries, but mid-wage and higher-wage industries have shed nearly 1 million positions each.

 

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Reuters

People wait in line to meet a job recruiter at the UJA-Federation Connect to Care job fair in New York March 6, 2013. REUTERS/Shannon Stapleton

People wait in line to meet a job recruiter at the UJA-Federation Connect to Care job fair in New York March 6, 2013.

Credit: Reuters/Shannon Stapleton

 U.S. job growth jumps, but shrinking labor force a blemish

WASHINGTON Fri May 2, 2014 4:52pm EDT

(Reuters) – U.S. employers hired workers at the fastest clip in more than two years in April, pointing to a rebound in economic growth after a dreadful winter and keeping the Federal Reserve on track to end bond purchases this year.

The brightening outlook was, however, tempered somewhat by a sharp increase in the number of people dropping out of the labor force, which pushed the unemployment rate to a 5-1/2-year low of 6.3 percent. Wage growth also was stagnant.

Nonfarm payrolls surged 288,000 last month, the Labor Department said on Friday. That was largest gain since January 2012 and beat economists’ expectations for only a 210,000 rise.

“It lends significant legitimacy to the positive tone in the wide array of post-February economic reports, which have all been consistently pointing to a significant pick-up in economic growth momentum this quarter,” said Millan Mulraine, deputy chief economist at TD Securities in New York.

March and February’s data was revised to show 36,000 more jobs than previously reported.

U.S. stocks briefly rallied on the report, which was later eclipsed by rising tensions in Ukraine. Stocks ended lower, while safe-haven bids pushed the yield in the 30-year U.S. government bond to its lowest level in more than 10 months.

The dollar was flat against a basket of currencies.

About 806,000 people dropped out of the labor force in April, unwinding the previous months’ gains. That helped to push down the unemployment rate 0.4 percentage point to its lowest level since in September 2008.

The labor force participation rate, or the share of working-age Americans who are employed or unemployed but looking for a job, also fell four-tenths of a percentage point to 62.8 percent last month, slipping back to a 36-year low touched in December.

Overall, however, the data suggested the economy was gathering strength and led investors to pull forward their bets on when the Fed will start to raise interest rates.

The strong payrolls growth added to upbeat data such as consumer spending and industrial production in suggesting that sputtering growth in the first quarter was an aberration, weighed down by an unusually cold and disruptive winter.

 

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Factbox

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Reuters

Discouraged job seekers behind shrinking labor force

WASHINGTON Fri Apr 5, 2013 6:58pm EDT

People wait in line to meet a job recruiter at the UJA-Federation Connect to Care job fair in New York March 6, 2013. REUTERS/Shannon Stapleton

People wait in line to meet a job recruiter at the UJA-Federation Connect to Care job fair in New York March 6, 2013.

Credit: Reuters/Shannon Stapleton


(Reuters) – Americans giving up the hunt for jobs were likely behind a sharp drop in the U.S. workforce last month, a bad sign for an economy that is struggling to achieve a faster growth pace.

The number of working-age Americans counted as part of the labor force — either with a job or looking for one — tumbled by 496,000 in March, the biggest fall since December 2009, the Labor Department said on Friday. That pushed the so-called workforce participation rate to a 34-year low of 63.3 percent.

March marked the second month in a row that the participation rate declined — 626,000 people have dropped from the work force since January.

Friday’s report showed a decline in the number of discouraged job seekers last month after a pop in February, which at first glance might suggest the drop in the workforce was mainly because of shifting demographics.

But a closer look at the underlying numbers raises questions about the notion that retiring baby boomers were the driving force behind the shrinking workforce.

“You have to think that it’s a large part demographics, but demographics are not really going to have such a big effect on month-to-month changes,” said Keith Hall, senior research fellow at George Mason University’s Mercatus Center.

Of the nearly 500,000 people dropping out, just 118,000 were aged 55 and older, meaning more than three-quarters of the increase came from below-retirement-age adults.

Also, the number of people 65 and older counted as part of the workforce actually rose by 27,000, which followed a 72,000 increase in February.

Hall said the sluggish economy was forcing some older Americans to continue working to rebuild retirement nest-eggs that were shattered during the 2007-09 recession.

Indeed, the participation rate for Americans between 55 and 64 years old held steady at a relatively high 65 percent. On the other hand, participation by the 25-29 age group was the lowest since record-keeping started in 1982.

“People are just giving up the search for work. A lot of them would like to work and they aren’t, that is a serious sickness in the economy,” said Peter McHenry, assistant economics professor at the College of William & Mary in Williamsburg, Virginia.

The drop in participation helped to lower the unemployment rate by a tenth of a percentage point to 7.6 percent. If the workforce had not contracted, the jobless rate would have risen two-tenths of a percentage point to 7.9 percent in March.

 

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Yahoo Finance
In this April 10, 2014 photo, Jennifer Stickney, a recruiter for Right at Home, which provides in-home care and assistance, answers questions from nursing students at a job fair on the campus of Kaplan University in Lincoln, Neb. The Labor Department on Friday, May 2, 2014 said U.S. employers added a robust 288,000 jobs in April, the most in two years, the strongest evidence to date that the economy is picking up after a brutal winter slowed growth. (AP Photo/Nati Harnik)
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In this April 10, 2014 photo, Jennifer Stickney, a recruiter for Right at Home, which provides in-home care and assistance, answers questions from nursing students at a job fair on the campus of Kaplan University in Lincoln, Neb. The Labor Department on Friday, May 2, 2014 said U.S. employers added a robust 288,000 jobs in April, the most in two years, the strongest evidence to date that the economy is picking up after a brutal winter slowed growth. (AP Photo/Nati Harnik)

Any period of unemployment can have a crippling effect on a worker’s career and finances. But to be both young and unemployed in America presents its own set of unique challenges.

Workers under the age of 30 have contended with five solid years of double-digit unemployment — 19% for 16- to 19-year-olds and 10.6% for 20- to 24-year-olds at last count. The economy is slowly improving and there are jobs to be had again. The overall U.S. unemployment rate dropped to 6.3% in April as 288,000 jobs were added — the highest in two years, the Labor Department announced Friday.  But young people who haven’t been able to find work are now struggling to compete in a tough job market with little experience.

“The longer you’re not in the workforce, the harder it is to get back in,” says Rory O’Sullivan, deputy director of the Young Invincibles. “Employers look at resumes and there are a lot of young people working outside of their field of study. You can imagine all those things can make it harder to build a career.”

As many as one in five high school graduates and one in 10 college graduates are considered “disconnected youths,” those who are not working or enrolled in college, according to a new report by the Economic Policy Institute, a liberal think tank.

“There is little evidence that young adults have been able to ‘shelter in school’ from the labor market effects of the Great Recession,” the authors write. “Increases in college and university enrollment rates between 2007 and 2012 were no greater than before the recession began—and since 2012, college enrollment rates have dropped substantially.”

If these “idle” young people were factored into unemployment rates, it would raise the combined rate of unemployment for 16- to 25-year-olds from 14.5% to 18.1%.

And of those young people who have managed to find work, nearly half are considered to be underemployed, often working in part-time jobs that may have little or nothing to do with their chosen career path. What’s more, young people who graduate in 2014 will likely earn less than they would have if they had graduated in a stronger economy, the EPI report says.

Wages for high school graduates have dropped by 9.8% since the recession and wages for young college graduates fell by 6.9%.

Youth unemployment isn’t just a “young people” problem either. A recent report by the Young Invincibles estimates it has cost the U.S. economy nearly $9 billion in lost tax revenue since 2007. Each unemployed 18- to 24-year-old represents an estimated $3,200 in lost tax revenue, and each 25- to 34-year-old costs more than twice as much: $7,000.  And with nearly one-third of millennials living at home with their parents, parents who might have otherwise been enjoying the relief of an empty nest must instead continue their roles as financial guardians.

The reality is that young people are disproportionately impacted by economic downturns and no matter how much the U.S. economy improves, they will be feeling the effects of the recession for many years to come.

We spoke with several young people under the age of 30 — all solidly in the “underemployed” camp — who are struggling to launch their careers.

 

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Photo: Sara Beck

“My resume is a work of art.”

Sara Beck, 28, has spent the better part of a year trying and failing to find a full-time marketing position in Plymouth, Minn.

Her troubles have little to do with her lack of education or job skills: She has an MBA in international business, spent six years working abroad, and speaks perfect Spanish.

“My problem is that I’m either too experienced or not experienced enough for some of the jobs I want,” she says. “I had a really promising interview, but I got an email recently that they decided to go with candidates whose experience aligned more with the requirements. It was an entry-level position.”

While Beck pursues a career in the U.S., her husband, a Chilean national, stayed behind in Santiago to work on obtaining a work visa. She’s caring for their daughter on her own while living with relatives until she can find work.

“I can’t send my daughter to the daycare of my choice because I’m saving money,” she says. “I have more than $70,000 left in student loan debt. It’s insane to think about.

In the meantime, she has cobbled together enough freelance work to stay afloat — writing, editing and translating gigs that put food on the table but don’t necessarily improve her odds of landing a marketing job.

“I try to take a job in, say, content writing and apply it to a job as a business analyst,” she says. “My resume is a work of art.”

 

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10 Stories From The Cold, Hard Streets Of America That Will Break Your Heart

Depressed - Photo by Sander van der Wel

If the economy is really “getting better”, then why have millions upon millions of formerly middle class Americans been pushed to the point of utter despair?

The stories that you are about to read are absolutely heartbreaking.  I don’t know how anyone can read them without getting chills.  In America today, if you lose a good job, there is a good chance that you will get back on your feet before too long.  But there is also a good chance that you won’t be able to find a decent job and will plunge into the abyss of depression and desperation that so many millions of other Americans have fallen into.  As I wrote about earlier this month, the U.S. economy is definitely not getting any better.  For example, if you assume that the percentage of Americans that want to work is about at the long term average, then the official unemployment rate in the United States would be above 11 percent.  And compared to six years ago, 1,154,000 fewer Americans are working today even though our population has gotten significantly larger since then.  Behind all of these numbers are real flesh and blood people, and you are about to hear from some of them.  The following are 10 stories from the cold, hard streets of America that will break your heart…

#1 A 34-year-old man named Rocco

“While my wife goes to work, I’ve been staying at home to conserve fuel. I’ve been losing weight from eating less, so my family has more on their plates. It feels like the government and big business expect more and more while trying to give back as little as possible. Soon my internet connection will be shut off and since most companies don’t offer paper applications, how will I find work then? Walking around for miles a day, asking for an application that may or may not be available?”

#2 Homeless people wasting away in “Obamavilles” on the outskirts of Baltimore, Maryland…

A sheet of plastic laid over a clothesline. A mini-fortress of milk crates stacked under a tree. A thin mattress on a flimsy crate lying in a dark tunnel.

On the edge of Baltimore’s woodlands, dozens of the city’s transients live in makeshift homes which they consider safer than homeless shelters.

You can see some incredible photos of how these homeless people are living right here.

#3 A 50-year-old woman in Pennsylvania named Karen

“My husband only makes 10 dollars an hour and drives 30 miles round trip, so it’s taking all we have just to keep the Jeep filled with gas. We stopped going to church and all to save gas. We are homebodies now, afraid to use what gas we have. We save two kids from getting put in foster care just to be hit like this. It’s just a constant trap they try to keep you from receiving any help! I’m so disgusted when my 12-year-old asks me why we don’t have snacks anymore, or why are we eating so much rice, etc.”

#4 The following is an excerpt from a comment that was recently left by one of my readers

“I live right at ground zero. South West Virginia and let me tell you things are bad and getting worse by the day. We don’t do drugs but have family members hooked on meth and or pills or both. Many of these pills are prescribed by local doctors either Suboxone to get you off the opiates, a total joke by the way and tons of Xanax why would anyone need 120 Xanax a month how can you even be expected to function. These pills get traded for cash sex and other items, same goes for the SNAP cards. We have family members going to jail repeatedly for the same crimes making meth, selling pills and stealing anything that’s not nailed down. People who are 30 years old look like they are 55 years old. The jobs here are awful walmat, gas stations, fast food etc. Most of our whole county is on the government dole.”

#5 A 55-year-old man from California named Randy Carpadus

“I was working as a firefighter for the state of California and was laid off in April 2012, right at the beginning of fire season. At my age, I’m not going to be picked up by another fire department. They want younger guys.

I’ve applied for everything from truck driver, to sales, to nonprofit work. I’ve sent out almost 400 resumes, and I’ve gotten nothing. I’ve done whatever I could to make ends meet.

Through some connections, I got a temp job as a truck driver in Napa Valley — a 3-hour commute from where I live. I lived in my car and worked during grape harvest.”

#6 In this tough economic environment, debt collectors are becoming even more aggressive.  Just check out the kind of harassment that one woman named Jennifer Posey has been put through…

“This is Jimmy Lee calling from CheckCare. Just letting you know we’re in full force,” he said. The man had a thick Southern accent that stretched the word “you” into a two-syllable accusation. “We’re going to have warrants out for your arrest in Columbus, Ga.,” the man threatened. “We know you have an apartment on the canal in Clearwater.”

It was when he mentioned her home in Florida that Posey began to feel anxious. “We’re hurting you,” he continued. “We’re hurting your family, your son’s family, your cousin’s family. Whatever we can do to get you to pay.”

Forty minutes later, her phone rang again. “What about that 12-, 13-year-old child you’re trying to raise?” the voice sneered.

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KING5

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by GLENN FARLEY / KING5 News Aviation Specialist

Bio | Email | Follow: @GlennFarley

Posted on February 20, 2014 at 7:28 PM

Updated Friday, Feb 21 at 7:09 AM

On Sunday, members of the Machinists Union District 837 in St. Louis will vote on a new seven-and-a-half-year contract extension, similar to what Machinists in Washington state barely approved on January 3 to win production of the 777X airliner.

One thing in common is that the St. Louis Machinists are also being asked to move away from a traditional pension plan to a 401k style “defined contribution plan.”  In those plans employee contributions into a retirement fund are matched by the company, with the money invested in things like stocks and bonds. That move has been met with anger and resistance in the Puget Sound.

The St. Louis labor agreement was announced Wednesday night and is being recommended by the leadership for passage. Unlike the Puget Sound region of Washington, which is seeing a booming business in airliner production, St. Louis factories are focused on fighter jets and military hardware and are struggling with tighter defense budgets.

Right now production of the F-18 Super Hornet is slated to end in just two years in 2016 unless more orders can be found.  Boeing is expected to make the case to the Pentagon that by lowering the relative price of the jets with a new labor deal it can bring in more business and secure jobs. The plant also makes big parts for the C-17 cargo jet for the U.S. Air Force that is slated to shut down in late 2015.  Boeing assembles the C-17 in Long Beach, California.

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The legitimate questions to ask at this point in time  would  be …….

Exactly  what money  would  the low and  middle-income  earners  be  putting aside for  savings?

Considering the  unemployment  rate  and the  rising  number of the homeless how realistic or  honest  would this  proposal  be?  

In a  world where the  working  middle class are disappearing and the poor can barely feed themselves and their  families , are retirement  savings accounts truly an achievable reality?

 

~Desert Rose~

 

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New Geography . com

The U.S. Middle Class Is Turning Proletarian

drill-press.jpg

The biggest issue facing the American economy, and our political system, is the gradual descent of the middle class into proletarian status. This process, which has been going on intermittently since the 1970s, has worsened considerably over the past five years, and threatens to turn this century into one marked by downward mobility.

The decline has less to do with the power of the “one percent” per se than with the drying up of opportunity amid what is seen on Wall Street and in the White House as a sustained recovery. Despite President Obama’s rhetorical devotion to reducing inequality, it has widened significantly under his watch. Not only did the income of the middle 60% of households drop between 2010 and 2012 while that of the top 20% rose, the income of the middle 60% declined by a greater percentage than the poorest quintile. The middle 60% of earners’ share of the national pie has fallen from 53% in 1970 to 45% in 2012.

This group, what I call the yeoman class — the small business owners, the suburban homeowners , the family farmers or skilled construction tradespeople– is increasingly endangered. Once the dominant class in America, it is clearly shrinking: In the four decades since 1971 the percentage of Americans earning between two-thirds and twice the national median income has dropped from 61% to 51% of the population, according to Pew.

Roughly one in three people born into middle class-households , those between the 30th and 70th percentiles of income, now fall out of that status as adults.

Neither party has a reasonable program to halt the decline of the middle class. Previous generations of liberals — say Walter Reuther, Hubert Humphrey, Harry Truman, Pat Brown — recognized broad-based economic growth was a necessary precursor to upward mobility and social justice. However, many in the new wave of progressives engage in fantastical economics built around such things as “urban density” and “green jobs,”  while adopting policies that restrict growth in manufacturing, energy and housing. When all else fails, some, like Oregon’s John Kitzhaber, try to change the topic by advocating shifting emphasis from measures of economic growth to “happiness.”

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Feb. 21, 2014, 5:00 a.m. EST

Obama plan: Cut tax breaks for richest retirement savers

Plan designed to spur saving by low-, middle-income earners

By Robert Powell, MarketWatch

President Barack Obama plans to ask Congress in early March, as part of his fiscal 2015 budget, to reduce some of the tax advantages for employer-sponsored retirement plans for higher-income earners, according to published reports.

Plus, the president wants to limit the value of all tax deductions, defined contribution exclusions and IRA deductions to 28% of income — and include an overall cap on all retirement accounts, including pensions, that could bring in $1 billion a year in new tax revenue, according to a Pensions & Investments report. Read Companies bracing for 1-2 retirement punch .

According to the report, the proposals are designed to direct more of the tax preference for retirement savings toward getting more low- and middle-income people into the habit of saving.

Based on current tax brackets, Pensions & Investments reported that the 28% limit would reduce the tax advantages of retirement savings for people earning more than $183,000 or couples earning more than $225,000. And the overall cap for all tax-preferred retirement accounts would limit them to providing an annual retirement income of $205,000, which would currently cap tax-preferred accounts at $3.4 million, but could go lower as interest rates rise.

So, who might feel the effects of this proposal? Largely, the top 5% of tax payers. According to the Tax Policy Center, a partnership between the Urban Institute and Brookings Institution, there are about 6.07 million Americans who earned above $200,000 in 2011 and they make up the top 4.2% of taxpayers, according to published reports. Read more about the president’s tax proposal here: Who makes more than $250k, and are they rich?

And what do experts have to say about what the president might propose? In the main, they say the rich need not worry that their tax breaks for saving for retirement will be cut.

“We’ve heard these kinds of proposals being discussed in policy circles for a couple of years now,” said Skip Schweiss, president of TD Ameritrade Trust Co. and managing director of TD Ameritrade Institutional. “It would not surprise me to see these ideas become more formalized through President Obama’s 2015 budget proposal.”

But even though experts expect the president to propose reductions to some of the tax advantages for employer-sponsored retirement plans for higher-income earners, few expect any congressional action. “Given the congressional divide, it’s hard to see something like this becoming law, but of course one never knows,” said Schweiss.

 

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Enlarge Photo

** FILE ** House Speaker John A. Boehner, Ohio Republican, speaks President Obama. (Associated Press photographs)

By Ben Wolfgang

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The Washington Times

Saturday brought more evidence of how differently President Obama and congressional Republicans will approach this crucial election year, with the White House turning attention to its economic and income-equality agenda while the GOP remains focused on the health-care reform law and its fallout across the country.

In his weekly address, the president again pushed for a minimum wage hike — from $7.25 to $10.10 — for all Americans and highlighted the fact that he recently implemented such a pay raise for federal contractors through executive action.

But Rep. Tom Rooney, a Florida Republican who gave this week’s GOP address, didn’t mention the president’s minimum-wage push or any related issue, choosing instead to focus entirely on Obamacare.

The minimum wage increase for all Americans is a key piece of what Mr. Obama has dubbed the “opportunity agenda,” and unlike other parts of that agenda, it must go through Congress.

“Raising the minimum wage wouldn’t just raise their wages — its effect would lift wages for about 28 million Americans,” the president said. “It would lift millions of Americans out of poverty and help millions more work their way out of poverty without requiring a single dollar in new taxes or spending. It will give more businesses more customers with more money to spend, and that means growing the economy for everyone. You deserve to know where the people who represent you stand on this. If they don’t support raising the federal minimum wage to $10.10 an hour, ask them ‘why not?’”

 

 

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  @Luhby February 6, 2014: 6:03 PM ET

AOL CEO: Obamacare leads to 401(k) cut
NEW YORK (CNNMoney)

AOL became the latest company to blame Obamacare for cutting back on employee benefits.

The tech firm will now pay its 401(k) company match only to employees who are active on Dec. 31 of that year, as opposed to in their paychecks throughout the year. So those who leave the company before the end of the year will forfeit the match.

AOL (AOL) CEO Tim Armstrong blamed $7.1 million in additional Obamacare costs the company is facing this year. Had the company not made the change in its 401(k) payments, employees would have seen their health insurance costs increase, he told CNN Thursday.

Armstrong did not provide a lot of specifics about what aspects of Obamacare were pushing up the company’s health care costs, but said it was one factor affecting the 401(k) restructuring.

“The Obamacare Act and some of the changes that happened there had increases in our health care costs,” Armstrong told CNN. “We had to make a choice whether we pass those on or whether we took other benefits and reduce them.”

Some employees will still see their premiums rise, depending on the plan they picked, though AOL “ate a huge piece of the increase.”

The news came on a day when AOL announced 2013 was “its most successful year in the last decade,” reporting revenues of $2.3 billion.

Read More and Watch Video Here

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AOL chief cuts 401(k) benefits, blames Obamacare and two “distressed babies”

  • February 7 at 11:07 am

AOL chief executive Tim Armstrong blames the new health care law for why his company has made a major change to its 401(k) benefits. (Photo by Pete Marovich/Bloomberg)
AOL chief executive Tim Armstrong blames the new health care law for why his company has made a major change to its 401(k) benefits. (Photo by Pete Marovich/Bloomberg)

AOL chief executive Tim Armstrong Thursday offered a number of unusual explanations for why his company pulled back its 401(k) benefits for employees this year. The first reason: Obamacare. The second: two women at the company who had “distressed babies” in 2012.

The stock, which reached $51 on Thursday morning because of a good earnings release by AOL, fell to 47.15 by the end of regular trading. It’s down another 2.5 percent Friday.

How did this mess begin? The Washington Post reported Tuesday that AOL quietly made a major change to its 401(k) plan by switching its match to a lump sum at the end of the year, rather than contributing with every paycheck. The benefit is only available to employees who are still active on Dec. 31.

Retirement experts widely agree that the change hurts all employees–not just those who leave mid-year–since savers miss out on the benefits of investing more money throughout the year, a strategy known as “dollar cost averaging.”

When he was asked on CNBC this morning why AOL was making the change, Armstrong said it was to spare employees from what he described as the added costs of Obamacare.

Here’s the video:

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Working poor Texans struggle in Medicaid, ACA gap

by MARK WIGGINS / KVUE News and photojournalist PETER HULL

Bio | Email | Follow: @MarkW_KVUE

kvue.com

Posted on February 5, 2014 at 6:29 PM

Updated today at 6:41 PM

AUSTIN — For 28-year old Irma Aguilar, raising four young children while working a full-time job is difficult enough.

Suffering from a damaged disc in her neck and debilitating high blood pressure that leaves her dizzy and bouts of anxiety, she needs medical coverage. An assistant manager at a national pizza chain, the San Antonio resident earns too much to qualify for Medicaid, but too little to qualify for discounted plans on the health insurance marketplace.
“It just makes me feel like, how am I supposed to get help? I thought that working hard for your money was supposed to help you go on in life and help you get some kind of insurance, and we can’t even get that,” said Aguilar. “We’re the ones working hard. We’re the ones doing everything, and we can’t even get a penny out of it. We don’t get nothing. So, do I have to stop working and let my kids drain and me drain so that way I can get help? It’s just not fair to me, and it’s not fair to my kids.”
Roughly 1 million Texans are in a similar situation: unable to qualify for Medicaid under Texas’ stringent restrictions and unable to afford to purchase plans offered under the Affordable Care Act. On Wednesday, representatives of dozens of organizations gathered at the Texas Capitol to launch a new campaign demanding something be done for them.
“It’s a moral responsibility to address this situation,” said Sister J.T. Dwyer of the Seton Health Care Family. “Our mission is to care for and improve the health of those we serve with a special concern for the poor and vulnerable. So, wouldn’t we be interested in this? These are the vulnerable people who are left out.”
With 6 million uninsured individuals, Texas leads the nation in the number of residents without health care coverage. A project of the Cover Texas Now Coalition, Texas Left Me Out is a campaign to compel lawmakers to develop a solution to insuring Texas’ working poor who fall in the coverage “gap” resulting from the U.S. Supreme Court’s decision not to require states to expand Medicaid to those unable to afford coverage through the health insurance marketplace.
“The problem is that, because the law was written assuming that the Medicaid piece would be there, they said nobody below the poverty line is going to get the sliding scale of subsidies with premiums in the new health insurance marketplace,” said Anne Dunkelberg, associate director of the progressive Center for Public Policy Priorities.
For a $15 billion investment in state money, over the next 10 years Texas would draw down about $100 million in federal funds, which Texans will be taxed for regardless. Gov. Rick Perry has opposed expanding Medicaid, calling the system “broken.” Instead, Perry has advocated for a block grant which the federal government has thus far seemed disinclined to provide.
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