For a woman, being an economist in academia is not unlike any other workplace.

In an interview with PBS about gender and power in the economics profession, ReLab Director and economist Teresa Ghilarducci notes that women economists face not only sexual harassment and the undermining of their ability from male coworkers, but they also face more age discrimination.

Evidence can be found in the fact that women’s pay peaks at the early age of 45. After that, a woman’s compensation falls 9% from 45 to 55 and another 9% from 55 to 65. For men, earnings peak in their early to mid-fifties.

Ghilarducci asserts that sexual harassment is not about sex, but dominance. With more women earning higher-level degrees, competition increases. Sexual harassment and discrimination serve as tools to protect privileged status.

December 2017 Unemployment Report for Workers Over 55

The Bureau of Labor Statistics reported an unemployment rate of 3.3% for workers age 55 and older for the month of December, an increase of 0.2 percentage points from November. While this headline unemployment rate is still at historic lows, it only counts as unemployed those who actively sought employment in the last month.

This is a repost from Huffington Post.

Happy New Year - and happy new you! Time to take stock of your joints, your gut, and your wallet. The latter includes the biggest source of wealth most of us will ever have – Social Security. For a young family, the insurance value of Social Security is worth about $200,000. We pay for Social Security benefits by paying the FICA tax, which is 12.4% of earnings split evenly between the employer and the employee up to a 2018 cap of $128,400. Ninety-five percent of us will pay FICA all year long because our annual earnings fall below the cap.

However, it is because of this cap that the highest earners in America will stop paying the FICA tax before the end of the first week of January 2018. For example, the top-paid executive at Charter Communication (he makes $98 million a year and got a 500% raise last year) stopped paying by noon on January 1, right about when the ibuprofen kicked in to nurse New Year’s Eve hangovers. The CEO of CBS earned $68 million last year, a 22% raise from the year before, and will stop paying FICA tax by your first day back at work on January 2 (if you aren’t among the millions working on the New Year’s Day).

This game – ‘when do rich people stop paying for Social Security?’ – could go on forever. We can have fun with the calculations: who will finish paying by their first coffee break of the day? After brushing their teeth?

The earnings cap means that people earning the highest salaries (the top 1% is about 133,000 people earning an average of $2.5 million per year) pay into Social Security as if they only earn $128,400 per year. Their Social Security benefits are also calculated as if they make only that amount.

Every year, this cap means that over $2 trillion dollars of earnings escapes Social Security tax. This happens not by design, but by accident. According to Kathleen Romig of the Center for Budget and Policy Priorities, in 1983, Social Security reformers never imagined we would see such a rapid increase in earnings above the cap, nor did they imagine that the bottom 94% of earnings would experience wage stagnation during the 1990s and 2000s. According to the Economic Policy Institute, those earning the highest incomes would enjoy all the earnings gains of the last 40 years.

Of the many policy instruments available to help the middle and working class gain security by rewarding hard work, taxing earnings over the cap for Social Security is one way Congress can address the lopsided growth of income for the lucky few.

Social Security is in good shape and well funded. However, the program will only have enough money to pay ¾ of benefits in 2027 unless the system obtains about $300-$340 billion per year starting in 2028 or a cool trillion now, according to the nonpartisan Congressional Budget Office. To benchmark what $300 billion means, the President and Congressional Republicans passed an unpopular tax bill that cut federal revenue by over 4 times what Social Security needs – by 2028, 83% of the $1.5 trillion tax cut will go to the top 1% of taxpayers.  

Let’s review: Social Security needs $300 billion and $1.2 trillion of the benefits of the recent tax bill went to the top 1% of taxpayers.

Karen Smith at the nonpartisan Urban Institute argues that raising the earnings cap could ensure Social Security’s financial strength. Because raising the cap would mean only a few of the highest earners pay more, it is unlikely to inhibit overall economic activity. The richest people in America would not lose their social status or economic well being, though they and their employer will pay, on average, $300,000 more in Social Security taxes. They will still have the same power, influence, and goods and services. The biggest impact is that Social Security will be solvent.

We could also collect revenue for Social Security from income that is currently not counted as labor income. The richest 20 Americans – including four members of the Mars candy family members and three Waltons - likely earn at least 6% per year in dividends, interest, and capital gains on their wealth, or $45 billion. The lowest 21 million earners also earned $45 billion.

The top 20 richest people in the United States earned $22 billion per year each on inherited wealth and other non-labor sources of income. They did not pay any Social Security tax on that income. In contrast, the bottom 21 million earned $2,000 per year each on average and paid 6.4% of Social Security tax. However, if these billionaires paid Social Security tax on all their income, the Social Security system would instantly have 10% more revenue.

The Retirement Equity Lab at the New School for Social Research (where I am the director) has documented the retirement crisis in America. We need comprehensive pension reform, but private pension reform will not work unless we also shore up and expand Social Security. The first step is to right the wrong of lopsided earnings growth and raise the earnings cap. We should also tax some financial capital to strengthen and expand Social Security.

The vast majority of Americans of all ages, income levels, and political affiliations are opposed to Social Security benefit cuts in any form. Tax increases are the most popular way to fix Social Security among the American public. However, the tax increase will face significant opposition from the 5% or so of Americans whose incomes top that ceiling, as the tax hikes are much larger for the very highest earners.

A National Academy of Social Insurance survey reports that 77% of Americans feel it is critical to preserve Social Security benefits for future generations, even if it means raising taxes. Among respondents, 81% agreed that they don't mind paying taxes into Social Security "because it provides security and stability to millions." This includes majorities of every age group, income level, and political affiliation.

Solving the retirement crisis by shoring up pension income is the best policy idea for the new year. Eliminating the Social Security earnings cap is unlike the sugar and spending austerity resolutions you made: this policy is very little pain and all gain.

While heralding the bipartisan effort and innovation of active states, ReLab's new report, "State Retirement Reform: Lifting Up Best Practices," seeks to broaden options for future legislation by raising up best practices from the movement's early leaders.

This report demonstrates:

  • State-level retirement reform efforts continue to emerge at a breathtaking pace, with 22 states introducing legislation since Trump’s inauguration.
  • State policymakers are modeling legislation on bills moving forward in other states, following four policy vehicles.
  • The comprehensive hybrid model that combines marketplaces, open MEPs, and auto-IRAs provides the best option to increase access to coverage.
  • State-level programs point toward comprehensive reform in Guaranteed Retirement Accounts.

Due to lack of coverage and a systemic reliance on defined contribution plans, workers do not have enough saved for retirement.

ReLab’s policy note, Inadequate Retirement Savings for Workers Nearing Retirement, documents that the median retirement savings account balance for those nearing retirement is $15,000. 

Employer-sponsored retirement plans are intended to bridge the gap between Social Security and targeted retirement income. Unfortunately, in 2014, 35% of those nearing retirement did not have access to retirement plan, a share that has increased over the last 30 years.
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 In the 1980’s, 401(k) plans - or defined contribution (DC) plans - became widespread. For most workers in the private sector, they replaced rather than supplemented traditional pension plans, or defined benefit (DB) plans.  In theory, DC plans could enable participants to accumulate adequate wealth by the time they retire. But in practice, account balances fall short, reflecting spotty eligibility histories, non-participation, inadequate contributions and employer matches, pre-retirement withdrawals, high fees, and subpar investment returns. These faults are inherent to the DC system and cannot be fixed by regulation.

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 These low savings balances will not be enough to allow retirees to maintain their standard of living, a fact that is true at all income levels. 

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 The combined effects of cuts to Social Security benefits and the consequences of a broken DC-centric savings system has created a retirement crisis. Few workers without workplace retirement plans save for retirement. Without significant reform to the retirement system, many workers who reach retirement age will be forced to choose between working longer and suffering severe drops in their living standards in retirement. But many older workers cannot work longer due to physical or mental impairment, and those that are capable of working face a labor market unfriendly to older workers.

Rather than worsening the retirement crisis by cutting Social Security benefits, policymakers should both strengthen Social Security and expand retirement plan coverage. Guaranteed Retirement Accounts (GRAs) are individual accounts requiring employers and employees to contribute with a fair and effective refundable tax credit provided by the government. GRAs provide a safe, effective vehicle for workers to accumulate personal retirement savings over their working lives.

November 2017 Unemployment Report for Workers Over 55

The Bureau of Labor Statistics today reported a 3.1% unemployment rate for workers age 55 and older in November, a rate unchanged from October. This low aggregate number hides the prevalence of low-paying jobs among older workers, especially women.

October 2017 Unemployment Report for Workers Over 55

The Bureau of Labor Statistics today reported a 3.2% unemployment rate for workers age 55 and older in October, a rate unchanged from September. While this aggregate number is low, the reality is that many older workers have low-paying jobs that don’t provide retirement savings coverage. Older women are especially likely to be in low-paying jobs, in part due to the unequal division of household work.