| Fed Study Finds 2 million in "Forced Retirement", 48% Cannot Afford an Unexpected $400 Expense Posted: 07 Aug 2014 09:20 PM PDT I have talked about " forced retirement" 174 times over the course of the past few years. I defined the term as those who retired because they had to, not because they wanted to. Why might they have to? Easy. If someone of retirement age wants a job and needs a job and needs income, but does not have a job the choice (after expiring unemployment benefits is to retire). These people should be considered unemployed, but they are not. Instead they dropped out of the labor force. We can now put some numbers on "forced retirement" thanks to a Fed study that shows 40% of households show signs of financial stress Four out of 10 American households were straining financially five years after the Great Recession -- many struggling with tight credit, education debt and retirement issues, according to a new Federal Reserve survey of consumers.
This latest snapshot, which the Fed said was aimed at monitoring the recovery and risks to financial stability, adds to the understanding of the severity of the Great Recession's effect on households and individuals.
The survey found, for example, that 15% of those who had retired since 2008 had retired earlier than planned because of the downturn. Only 4% said they had retired later than expected. Based on demographics, that translates into roughly 2 million more people retiring since 2008 than if the recession had not occurred.
"This suggests that some of the folks who dropped out of the labor force during the recession will not be returning," said Scott Hoyt, an economist at Moody's Analytics. Study ResultsThe above is from the LA Times which (as typical of mainstream media) did not bother linking to the study. Inquiring minds may wish to see the actual study results. The Fed report on the Economic Well-Being of U.S. Households in 2013, released today, is 200 pages long, but that is no excuse for failing to link to it. Items in red below are things I found particularly noteworthy. Key Findings - Over 60 percent of respondents reported that their families are either "doing okay" or "living comfortably" financially; another one-fourth, however, said that they were "just getting by" financially and another 13 percent said they were struggling to do so
- The effects of the recession continued to be felt by many: 34 percent reported that they were somewhat worse off or much worse off financially than they had been five years earlier, 34 percent reported that they were about the same, and 30 percent reported that they were somewhat or much better off
- 42 percent reported that they had delayed a major purchase or expense directly due to the recession, and 18 percent put off what they considered to be a major life decision as a result of the recession
- Just over half of respondents were putting some portion of their income away in savings, although about one-fifth were spending more than they earned
- 61 percent reported that they expected their income to stay the same in the next 12 months, while 21 percent expected it to increase and 16 percent expected it to decline
Renters- The most common reasons cited by renters for renting rather than owning a home were an inability to afford the necessary down payment (45 percent) and an inability to qualify for a mortgage (29 percent)
- 10 percent of renters reported that they were currently looking to buy a home
Credit experiences and expectations- 31 percent of respondents had applied for some type of credit in the prior 12 months
- One-third of those who applied for credit were turned down or given less credit than they applied for
- 19 percent of respondents put off applying for some type of credit because they thought they would be turned down
- Just over half of respondents were confident in their ability to obtain a mortgage, were they to apply
- Experience with credit appears to vary by race and ethnicity, with non-Hispanic blacks and Hispanics disproportionately likely to report being denied credit, to put off applying for credit, and to express a lack of confidence about successfully applying for a mortgage, though these effects are partially explained by other factors correlated with race/ethnicity and credit, such as education
Financing of education- 24 percent reported having education debt of some kind, with 16 percent having acquired debt for their own education, 7 percent for their spouse/partner's education, and 6 percent for their child's education
- Among those with debt for their own education, those who failed to complete the program they borrowed money for were far more likely to report having to cut back on spending to make their student loan payments (54 percent versus 39 percent for those who completed) and to believe that the costs of the education outweighed any financial benefits they received from the education (56 percent versus 38 percent for those who completed)
Savings- Among those who had savings prior to 2008, 57 percent reported using up some or all of their savings in the Great Recession and its aftermath
- Only 48 percent of respondents said that they would completely cover a hypothetical emergency expense costing $400 without selling something or borrowing money
Retirement- Almost half of respondents had not planned financially for retirement, with 24 percent saying they had given only a little thought to financial planning for their retirement and another 25 percent saying they had done no planning at all
- 31 percent of respondents reported having no retirement savings or pension, including 19 percent of those ages 55 to 64, and 25 percent didn't know how they will pay their expenses in retirement
- Among those ages 55 to 64 who had not yet retired, only 18 percent planned to follow the traditional retirement model of working full time until a set date and then stop working altogether, while 24 percent expected to keep working as long as possible, 18 percent expected to retire and then work a part-time job, and 9 percent expected to retire and then become self-employed
- The Great Recession pushed back the planned date of retirement for two-fifths of those ages 45 and over who had not yet retired
- 15 percent of those who had retired since 2008 reported that they retired earlier than planned due to the recession, while only 4 percent had retired later than expected
Medical expenses- 34 percent of respondents reported going without some form of medical care in the prior 12 months because they could not afford it
- 43 percent of respondents reported that they could not afford to pay for a major medical expense out of pocket, and 34 percent reported that it is only somewhat likely that they could afford to pay
- 24 percent of respondents experienced what they described as a major unexpected medical expense that they had to pay out of pocket in the prior 12 months
Interestingly, 60% say they are doing OK or better , yet 48% cannot find a mere $400 for an unexpected emergency. That suggests to me that nearly half the county is on a paycheck-to-paycheck struggle. Here's another curiosity: The above report is clearly deflationary, as is " McCashier" Your $15.00 Per Hour McDonald's Worker Replacement, yet people manage to get hyperinflation out of this mix. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Meet "McCashier" Your $15.00 Per Hour McDonald's Worker Replacement Posted: 07 Aug 2014 12:53 PM PDT Sure. You can make $15 an hour at McDonald's, at least in Seattle. You just have to perform better than this machine.  But if you are not more cost effective that that machine, then not only do you not make $15, you do not have a job at all. That machine is the not so distant replacement for cashiers demanding more and more pay. A Reddit comment says the cashiers at this McDonald's were replaced by machines. Comments indicate the store is the company owned McDonald's Innovation Center at 1253 N Schmidt Rd, Romeoville, IL 60446, United States. Any readers care to check that out? Math, Not Counting Benefits- For a location open 24 hours: The cost of human cashiers, not counting benefits, $15/hour * 24 hours * 365 days/year = $131,400
- For a location open 6AM to Midnight: $15/hour * 18 hours * 365 = $98,550.
For the machine to be cost effective, all it needs to do is cost less than $100,000 a year to buy and maintain. By the way, it won't just be McDonald's that eliminates cashiers. Expect to see machines like that everywhere. Basic cost-accounting math demands that outcome. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
| Obama Considers Airstrikes or Humanitarian Air Drops in Iraq Posted: 07 Aug 2014 11:04 AM PDT Iraq is a complete mess thanks to the idiotic actions of president Bush who wasted trillions of dollars removing Sadaam Hussein only to see the country disintegrate into a civil war crisis far worse than leaving Hussein in control. For his part, Obama gave support to "moderate rebels" in the Syrian civil war, and of course those rebels turned out to be Al Qaeda forces, including the radical Isis group, now capturing huge chunks of Iraq.
Obama Considers AirstrikesIsis has now taken over so much of Iraq that Obama Weighs Airstrikes or Aid to Help Trapped Iraqis. President Obama is considering airstrikes or airdrops of food and medicine to address a humanitarian crisis among as many as 40,000 religious minorities in Iraq who have been dying of heat and thirst on a mountaintop after death threats from the Islamic State in Iraq and Syria, administration officials said on Thursday.
The president, in meetings with his national security team at the White House on Thursday morning, has been weighing a series of options ranging from dropping humanitarian supplies on Mount Sinjar to military strikes on the fighters from ISIS now at the base of the mountain, a senior administration official said.
The administration official said that "the president is weighing both passive and active options," defining passive action as dropping humanitarian supplies. He added, using an alternative name for ISIS, "More active, we could target the ISIL elements that are besieging the base of the mountain."
The administration had been delaying taking any military action against ISIS until there is a new Iraqi government. Both White House and Pentagon officials have said privately that the United States would not intervene militarily until Prime Minister Nuri Kamal al-Maliki stepped down.
But administration officials said on Thursday that the crisis on Mount Sinjar may be forcing their hand. About 40 children have already died from the heat and dehydration, according to Unicef, while as many as 40,000 people have been sheltering in the bare mountains without food, water or access to supplies. What Does ISIS Control?In an infographic, the New York Times asks and answers What Does ISIS Control? Isis Advances on KurdsYesterday the Times reported Sunni Extremists Repel Kurdish Forces in IraqSunni extremists repelled efforts by Kurdish pesh merga forces on Wednesday to push them back in areas east of Mosul in northern Iraq, and shelled a predominantly Christian village there, in what appeared to be a renewed push along the Kurdish border to take ground, control oil fields and water resources and expel minority groups.
As artillery shells landed in the village of Qara Qosh, which is largely Christian, and plumes of smoke from the explosions drifted across the dry Nineveh plain just 25 miles from the Kurdish capital, Erbil, panicked residents fled in cars and pickups piled with their belongings, creating long lines at checkpoints guarded by the Kurdish pesh merga.
"We heard the sound of artillery," said Ahmed, a father of three. "It was very close to us; the windows were shaking, and when I looked at my family's faces, I had to leave." Rogue StateInquiring minds may also wish to consider A Rogue State Along Two Rivers ... How ISIS Came to Control Large Portions of Syria and Iraq. Mission AccomplishedPlease recall President Bush parachuting aboard the USS Abraham Lincoln in 2003, and giving a " Mission Accomplished Speech" on Iraq.   What Was the Mission? Some of you may be asking "What the hell was the mission?" It's a good question too, and I have the answer: To destabilize Iraq thereby insuring perpetual war. The mission was accomplished so well, that not only is Iraq in a state of civil war with extreme radical groups in control over many populated areas, Obama now considers US military action. As missions in pure stupidity go, it would tough to find a better example. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com |
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