Policy Bits ~ 3 Things to Know & Watch This Week
May 23-29, 2016 ~ Karly Malpiede Andrus
Obama Administration Tweaks Final Overtime Rule, New Rule Starts 12/1/2016
- Salaried workers who make over $23,660 per year are not guaranteed any extra pay when they put in more than 40 hours per week, a threshold that hasn’t been updated since 1975. Under the new rule, finalized last week by the Obama administration and the DOL, the cutoff will now be $47,476 and updated every 3 years. This will affect 4.2 million people, more than half of whom are college educated women; it is expected to raise wages by $12 billion over the next decade. Twelve million workers were covered by overtime rules in 1979 but due to inflation’s only 3.5 million are covered today. The final rule keeps some loopholes in place, anyone classified as executive, administrative or professional is exempt. Employers can choose to raise wages or bring current job description into line with a 40 hour work week, either way working families should enjoy either more take home pay or more time with their families. http://goo.gl/EZs9MV
- We often address how to accommodate individuals and families working increasingly more hours for less pay through increased government or private sector subsidies for housing, child care, and etcetera however we do not often look at the other side of the equation – if workers made more money for their labor we would not need as much public subsidy. This could have a direct positive affect for many residents and local partners. Ironically, it can be a complicating factor for non-profit organizations, which are split in their response to the new rule. The DOL released special guidance to nonprofits; https://goo.gl/bO9TKH
Middle Class Shrinks in Colorado and Across the U.S. as Incomes Fall
- Colorado communities, like most nationwide are experiencing a shrinking middle class, with most of these people dropping into the lower class. One of the most disturbing findings in the Pew study is even though the bar needed to enter the middle class dropped from $45,115 in 1999 to $41,641 in 2014, a smaller share of the population was able to cross it. Peter Moricic, economist at University of Maryland, noted “The middle class is shrinking, suicides and drug abuse are up, fertility has dropped precipitously, millions of college graduates are stuck places like Starbucks, and homeownership is a s 48-year low.” Important to note, even when a high paying job is created a larger number of low paying service sector jobs are created. Also, more Baby Boomers are retiring, relying on fixed income benefits that ratchet down household incomes. Income for the typical household fell, even in wealthier cities. http://goo.gl/U1nkhp
- This report shows the need for affordable housing that fills a range of cost and product types. It also shows that if work continues to not pay we will need more and more subsidies to just allow people to live in working poor or poverty situations.
Inaugural Financial Coaching Census released
- Financial coaching is an application of techniques emerging from research in positive psychology, a key assumption is that the client is creative and resourceful yet may need assistance. Unlike a counselor who helps solve problems, the coach provides a structure for clients to develop their own solutions. Financial coaching is a growing area and one of great interest in the asset building field. It shows promise in helping people build financial capability and assets by learning to set financial goals, and Asset Funders recently released their first census of the field and practices. http://goo.gl/C3mLfN
- This effort has been explored by the Financial Empowerment office at Denver. These tools can be helpful to local residents and partners as we explore ways to help working poor families.