Photo by Karen Roach/via Adobe

Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.

It’s heartburn time for the hold-harmless crowd, thanks to the seemingly routine announcement by Social Security last week that its annual cost of living adjustment for 2018 will boost benefits by 2 percent.

Thanks to the convoluted rules brought to you by the folks who run Social Security and Medicare – not to mention their overseers in Congress – it will take me some time to explain why this news means that millions of people receiving Social Security and Medicare will suffer next year from financial indigestion.

READ MORE: 4 tips for making the most of Medicare’s open enrollment

Medicare recipients also receiving Social Security must have their monthly Part B Medicare premiums deducted from their Social Security payment. About 70 percent of Medicare enrollees are in this boat. The rest are either new to Medicare, earn enough to trigger Medicare’s high-income surcharges, or earn so little that Medicaid pays their Medicare premiums.

Social Security’s “hold harmless” rule says that Social Security benefits cannot decline from one year to the next. This means that higher Part B premiums can’t cause a reduction in a person’s net Social Security benefits.

Historically, increases in Social Security’s annual cost of living adjustment (COLA) have been large enough to cover any boosts in Part B premiums and still produce a net gain in Social Security payments.

However, the rate of inflation used to determine the COLA has been so small in recent years that the COLA was zero in 2016 and only three-tenths of one percent this year. With medical costs continuing to rise, Medicare had no choice but to raise its Part B premiums. Even with a one-time government bailout in 2016, the Part B premium went up to $121.80; this year, it rose to $134.

(These premiums, by the way, remain a great health care bargain for Medicare recipients. Medicare only charges enough for Part B to cover about 25 percent of program costs; taxpayers foot the other 75 percent.)

Those higher premiums were paid only by people who were not held harmless. For the larger group that was protected in 2016, their premiums remained at $104.90 a month, while those not held harmless had to pay $121.80. The 0.3 percent COLA this year boosted benefits a bit, but virtually all of these gains went to pay higher Part B premiums.

People not held harmless this year are paying $134 a month for Part B. People who have been held harmless, in most cases, had to tack 0.3 percent of their 2017 Social Security payment onto either $104.90 or $121.80 for their Part B coverage. Because everyone’s Social Security benefits are different, this meant that everyone’s Part B premium would be different as well.

Here are a couple of examples to illustrate the range of different Part B premiums.

Take someone who was held harmless in 2016 and receives only $1,000 a month from Social Security (before Part B premiums are deducted). They were paying $104.90 for Part B in 2016, and received a $3 monthly boost in 2017 Social Security benefits (0.3 percent of $900). All of this paltry increase would go toward higher Part B premiums, raising their monthly premium to $107.90.

Now, consider a higher earner who began Medicare in 2016 and had to pay $121.80 a month for their Part B. If their gross Social Security benefit was $2,500 a month, they would have seen it rise by $7.50 a month this year (0.3 percent of $2,500). They would have been held harmless this year from the full $134 monthly Part B premium. But all of their COLA gain would have gone to paying Part B, and their monthly premium would have increased by $7.50, from $121.80 to $129.30.

Congratulations if you are not totally confused by now, and many thanks if you haven’t simply stopped reading! But if you’ve stuck it out this long, I am betting you also have figured out that the impact of a 2 percent COLA will be much higher Part B premiums for lower earners who have been held harmless.

Medicare has not yet announced the 2018 premium for Part B, although it was earlier projected to remain stable at $134 a month. Even if this good-news projection comes to pass, many of those folks held harmless in 2016 and 2017 will not receive any of their 2 percent Social Security boost. For people receiving modest Social Security benefits, all of the increase will go toward higher Part B premiums.

Using the earlier examples, our lower-earning recipient would see their $903 monthly benefit boosted by about $18.06. All of this would be tacked onto their Part B premium, increasing it from $107.60 to roughly $125.66. This is less than $134, of course, but I doubt that anyone in this situation would consider themselves fortunate to be receiving no effective Social Security increase, even though the 2.0 percent COLA is the program’s largest in five years.

And our higher earner? Their $2,507.50 benefit would rise by $50.15 to $2,557.65. Remember that they were already paying $129.30 each month for their Part B. If the Part B premium does stay at $134 next year, their premium would rise by only $4.70 a month, allowing them to keep more than 90 percent of their COLA increase.

Let the complaints begin!

Next week, I will resume answering your questions, as well as taking a further look at changes in Medicare plans that might cause you to consider 2018 changes to your coverage during this year’s Medicare open enrollment period, which began October 15 and extends through Dec. 7.

The post Why this Social Security boost is no boon for lower earners appeared first on PBS NewsHour.

President Donald Trump speaks during a meeting with Republican Congressional leaders about tax reform at the White House on September 5, 2017. File photo by REUTERS/Joshua Roberts

In House Speaker Paul Ryan’s words, the Republican tax reform plan is “our best opportunity in a generation to deliver real middle-class tax relief, create jobs here at home, and fuel unprecedented economic growth.”

But the plan — a Trump-era version of Reaganomics — leaves several crucial questions unanswered, starting with how economic growth will actually take place. Who will work harder? Which group of the underemployed will get decent-paying full-time jobs? Which businesses are likely to invest more? The economist Paul Krugman was right when he called the fantasy economy conjured up in the GOP proposal “voodoo economics.” (The economist Joe Stiglitz recently made the same argument as well).

For a closer look at the problems with the proposal, let’s start with the potential impact on the middle class? It’s true that the middle class has been hollowed out in recent decades. But the Republican plan won’t provide enough relief to make a real difference for middle class tax payers.

Take a median household of two earners with an income of $59,000. The best estimate is that their after-tax income will increase by 1.2% or by $704. To be sure, that is nothing to scoff at. It is twice as much as their income gains during the previous 17 years but it is hardly enough to be a game changer for them. Their likelihood of affording college for their kids will not increase, for example. Their consumption will be not increase the economy’s aggregate demand appreciably either.

In contrast, the super-rich will become amazingly even richer. If the GOP had its way, the top tax rate would decline from 39.6 percent to 35 percent for a married couple earning more than $470,000. Take a typical CEO of a major corporation who earns, say $20 million. With a typical effective tax bill of 25.6 percent for someone in that position, their take home pay currently would be around $14.8 million. Under the new plan, the tax bill would decline by 4.6 percent, or roughly $900,000. However, according to the nonpartisan Tax Policy Center, the gain would be even more — roughly $1.2 million.

Either way, in this scenario the windfall would leave the CEO with disposable income of around $16 million. This would certainly be enough to buy some political influence. So, the tax cuts feed a vicious circle that lead from the windfall to political power and the ability to influence the public’s worldview and thereby gain further profits and additional power both political and economic.

That was the consequence of Reaganomics as well as that the tax cuts put in place under former President George W. Bush. The trickle-down effect had the viscosity of molasses: it stuck with the ultra-rich, the top 1.2 million wealthiest households in the country. Even the 90th percentile got only a tiny bit of the crumbs. What did the country get overall from the Reagan tax cuts? The GDP per capita grew during the 1980s at roughly 2.5 percent per year, which is respectable, but only 0.1 percent above what it was in prior and subsequent decades. That does not seem like a big enough dividend for the $2 trillion increase in the government deficit and the hollowing out of the middle class.

READ MORE: A major sticking point in the Republican tax plan, explained

During the best years under George W. Bush, from 2002 to 2007, the economy might have grown at 3 percent per year but the top 1 percent captured fully 65 percent of that growth. The bottom 99 percent of the population, on the other hand, saw its income grow by only 1.3 percent. Those heady days were based on bubble prices and unsustainable finance, and we all know how that story ended.

Furthermore, the deficit increased — even before the Great Recession started — by $1.5 trillion. Combined, the three Republican administrations before Obama’s accounted for an unheard-of increase in government debt of $3.5 trillion. And what did the U.S. get for it? A rise in economic inequality, an erosion of the social contract, and political dysfunction.

The connection between increasing inequality and political power should not be overlooked. Under the current GOP plan, middle class families will not gain any significant political power through their $704 increase in disposable income whereas the top 1 percent will most certainly take advantage of their windfall. The dangers of this ought to be obvious. Even former Federal Reserve chairman Alan Greenspan, a free-market aficionado, admitted as much ten years ago, when he warned: “if you have an increasing sense that the rewards of capitalism are being distributed unjustly, the system will not stand.”

The GOP tax plan also ignores the fact that relative incomes matter a lot. A further rise in inequality means that the 99 percent will have a more difficult time keeping up with the Joneses. That’s why so many people went deeply into debt in the run-up to the last financial crisis, and why savings rates have declined so markedly. It’s much harder to keep up with the social norm when inequality rises. So by tipping the scales of inequality even further, the GOP would make it more difficult for everyone else to keep up with the social norms as defined by the upper echelons of society.

As for overall economic growth, the prospects are not good. Cutting corporate tax rates is central to the tax plan, and the GOP argument that lower rates will spur the economy. But why should businesses invest more at a time when there is excess capacity? According to the Federal Reserve Bank of St. Louis, 24 percent of industrial capital stock is idle. In other words, firms could increase production by 24 percent without undertaking further investment. Their problem is not taxes.

Indeed, many iconic corporations pay no taxes anyhow even though they earn profits. The list includes GE, Boeing, Verizon between 2008 and 2013, Corning 2008-1012, Pfizer 2010-2012, Honeywell 2009-2010, Merck 2009 and 2010, Bank of America and Citigroup 2010, FedEx 2011. All of these companies actually received a subsidy from taxpayers in those years. Rather, the problem U.S. corporations have is a lack of demand for their products. And funneling more money into the hands of the wealthiest individuals and companies will not increase demand for U.S. goods.

According to Krugman, “history offers not a shred of support for faith in the pro-growth effects of tax cuts.” The Tax Policy Center agrees. The center predicted no acceleration in growth and a sea of red ink as a result of the GOP tax reform plan. Even the business-friendly Wall Street Journal referred to the tax-growth relationship optimistically as “tenuous”.

At its core, the tax plan was made by the 1 percent for the 1 percent. Apparently greed has no limits. Make no mistake about it: this is nothing less than class warfare. And as Warren Buffett, the second richest man in America, so astutely recognized, “my class has won,” We were fooled by Reaganomics. We were fooled by George W. Bush tax cuts. Will the 1 percent fool us again? Or will Abraham Lincoln be proved was right, when he said that you can’t fool all of the people all of the time.

The post Column: GOP tax cuts would make the rich even richer appeared first on PBS NewsHour.

When you respond to a tantalizing job ad, you’re on your own — and that can lead to trouble. Photo by Getty Images

Nick Corcodilos started headhunting in Silicon Valley in 1979 and has answered over 30,000 questions from the Ask The Headhunter community.

In this special Making Sen$e edition of Ask The Headhunter, Nick shares insider advice and contrarian methods about winning and keeping the right job, on one condition: that you, dear Making Sense reader, send Nick your questions about your personal challenges with job hunting, interviewing, networking, resumes, job boards or salary negotiations. No guarantees — just a promise to do his best to offer useful advice.

Question: My son interviewed with a sales company. There were six applicants all interviewed at the same time. He was one of two offered a job on the first interview. When he questioned them on benefits, he was told that it would be discussed in training.

He showed up for his first day at work, where he was supposed to start training, and he asked again about benefits. He was told that no one was officially hired the first week, and that there were no benefits.

READ MORE: If you’re expected to jump through hoops to get an interview, here’s what to say

These people are a scam with deceptive hiring practices. I want to pursue some kind of action on this and I do not know where to go. They promised him the world and now his world is crushed!

Nick Corcodilos: If I published nothing but readers’ stories about job scams, I could do a daily column on the subject and keep it going month after month. The loosey-goosey behavior that online “recruiting” tools promote and enable has turned online job hunting into a very risky proposition.

You have no idea whom you’re dealing with.

When you respond to a tantalizing job ad, you’re on your own. And that can lead to trouble. It’s up to you to verify that you’re dealing with a legitimate job opportunity. Do not assume that because it’s on some job board it’s real — and that it’s not a scam.

Here are some clear signals that may reveal problems.

A company with no people
Do basic research. Look up the company or the recruiter. Does the website “About” section list the names of people who run the company or recruiting firm? Can you verify those people by looking them up on LinkedIn, Facebook, Twitter and other common social media sites? If the site lists no people’s names that you can verify, run.

Any legitimate business is proud of its owners, managers and employees and will feature biographies that are easily verified elsewhere online. Some of the biggest employment scams I’ve found online were readily identified this way.

Group interviews
Does the employer or recruiter tell you you’ll be interviewed along with several other applicants at the same time? Run.

A legitimate job interview is between you and a hiring manager. If a group of applicants are interviewed together, that’s usually a sales pitch. The “company” wants to efficiently do its pitch to as many people as possible at the same time. This is what happened to your son.

One-sided interviews
Does the interviewer spend the entire meeting talking about the business without ever asking you good, relevant questions to assess your skills and abilities? Run.

It’s a sales pitch. They don’t need to assess you because they don’t need workers. They need suckers who will “qualify” to part with their money when the “interviewer” gets around to explaining that you have to pay for training, special materials, or for the “opportunity to proceed.”

Oral offers
They like you and want to hire you and tell you you’re hired — without giving you a written, signed offer that includes full details about the job, the title, the pay and benefits? Run.

I can’t tell you how many people report they got an oral offer and assurance of employment, quit their old jobs, cancelled the lease on their apartment, and moved — only to learn the job offer was never finalized. See “Get it in writing.”

What your son should do

Even legitimate companies are sometimes guilty of promoting jobs without fully disclosing the job, the compensation or the benefits. It’s up to the applicant to check and verify each step of the way. If something doesn’t seem right, ask questions. If the answers are inadequate or don’t make sense, walk away. The suggestions above apply to any job situation—not just to obvious scams. Your son should have done due diligence. See “When job offers are bad for you.”

READ MORE: How to spot a job recruiter without standards

There are two legal approaches you can pursue for your son. (Mind you, I’m not a lawyer and this is not legal advice.) Contact your state attorney general’s office and the department of consumer affairs to file a complaint. Or, hire a lawyer who specializes in consumer fraud.

My advice is to talk to the authorities, because I think you’re going to have a heck of a time getting a legal remedy for your son’s poor judgment. In the future, please tell your son to use his best judgment, and to run when he encounters the tip-offs listed above.

Dear Readers: These are just a few tip-offs to job scams. Have you been scammed into an interview that turned out not to be what you expected? Did you bail out of an “opportunity” because you smelled a rat? Please share your job-scam stories and signals so we can all learn what to look for to avoid getting ripped off.

Nick Corcodilos invites Making Sense readers to subscribe to his free weekly Ask The Headhunter© Newsletter. His in-depth “how to” PDF books are available on his website: “How to Work With Headhunters…and how to make headhunters work for you,” “Keep Your Salary Under Wraps,” “How Can I Change Careers?” and “Fearless Job Hunting.”

Send your questions to Nick, and join him for discussion every week here on Making Sense. Thanks for participating!

Copyright © 2016 Nick Corcodilos. All rights reserved in all media. Ask the Headhunter® is a registered trademark.

The post Ask the Headhunter: 4 signs that you should run from a job scam appeared first on PBS NewsHour.

President Donald Trump speaks about tax reform in Harrisburg, Pennsylvania, on October 11, 2017. File photo by REUTERS/Joshua Roberts

The state and local tax deduction has become a key sticking point for Republicans negotiating tax reform. How the tax break gets handled will help determine the final price tag of the tax legislation Republicans hope to pass by the end of the year.

The White House has called for eliminating the tax break, known as “SALT,” to help pay for the personal and business tax cuts President Donald Trump promised. But some House Republicans are pushing to keep a version of the deduction in place. The debate is the latest chapter in a decades-long fight between supporters who say the tax break helps middle-class taxpayers, and critics who claim it’s a costly federal subsidy.

Here is a guide to the state and local deduction, and what might happen if it gets tweaked or eliminated altogether.

How SALT works

The current tax code allows individuals and households who itemize deductions to deduct state and local real estate and personal property taxes from their federal returns. Taxpayers can also deduct either state and local income taxes or sales taxes. Most people choose to itemize their state and local income and real estate taxes, which combined account for 95 percent of all SALT deductions.

Who takes the deduction?

The vast majority of people who receive the state and local tax break are high-income earners. In 2014, 81 percent of all SALT deductions were claimed by people earning $100,000 or more, according to data from the Tax Policy Center. Just 10 percent of all state and local deductions were claimed by taxpayers earning less than $50,000.

READ MORE: Can tax reform save Trump’s legislative agenda?

Wealthier people also claim larger state and local deductions. The average claim by people earning between $100,000 and $200,000 in 2014 was $11,000. In contrast, the average claim that year by taxpayers earning between $20,000 and $50,000 was just $3,800. Most of the federally-funded tax break flows to middle- and upper-middle-class earners in states with high state and local income and real estate taxes. In 2014, taxpayers in New York state claimed the largest average state and local deduction, at $21,000, followed by Connecticut ($18,900), New Jersey ($17,200), and California ($17,100).

Far fewer people would choose to itemize deductions — including their state and local taxes — under the current White House tax plan, because it would significantly increase the standard deduction for individuals and married couples who file jointly.

How much does this tax break cost the federal government?

The Treasury Department estimated last year that the federal government would spend $783 billion on state and local income tax deductions between 2016 and 2026. A full repeal of the tax break — which would include scrapping the deductions for state and local real estate, personal property and sales taxes — would raise $1.3 trillion over the next decade, the Tax Policy Center found.

WATCH: Dreading doing your taxes? Other countries show us there’s a different way

Eliminating the SALT deduction would generate the second-largest source of revenue under the tax proposal the White House and Republican leaders put out last month. The largest source of revenue, nearly $1.6 trillion, would come from eliminating personal exemptions. Overall, the tax plan, which included a full SALT repeal, would cost $2.4 trillion over 10 years, according to the nonpartisan Tax Policy Center.

Getting rid of the state and local tax deduction is “one of the biggest revenue increasers” in the current plan, Frank Sammartino, a senior fellow at the Tax Policy Center, said. “If it’s not part of the package, it’s hard to see where they make that up.”

Different approaches

House Republicans are reportedly considering a proposal to keep the SALT deduction in place for taxpayers with incomes of up to $400,000, though the final cap could be closer to $250,000. That would add hundreds of billions to the deficit over 10 years, depending on the cap, unless lawmakers found another way to offset the cost.

Senate Republicans have sent mixed signals on the tax break. After the White House rolled out its “unified framework” on tax reform last month, Senate Finance Chairman Orrin Hatch, R-Utah, who helped craft the framework, said he wanted to leave the SALT deductions unchanged. But last week, Sen. Tim Scott, R-S.C., said the Senate Finance Committee’s tax legislation would likely include a provision fully eliminating the state and local tax break.

Why the politics are so tricky

The people who benefit most from the state and local deduction are high-income earners in blue states like New York and California. But many live in wealthy congressional districts represented by Republicans. GOP lawmakers represent 45 percent of the 20 House districts with the highest percentage of SALT claims. That’s why some House Republicans with constituents who benefit from the tax break, like Rep. Peter King, R-N.Y., have opposed getting rid of it. Senate Minority Leader Chuck Schumer, D-N.Y., has also come out strongly against the proposal.

“It’s kind of discouraging that some people on the Hill are trying to keep part of the break,” said Rachel Greszler, a tax expert at the conservative Heritage Foundation. “Regardless of who benefits and who loses, it’s a bad policy.”

The White House has insisted on a full repeal of the deduction, but it’s possible Mr. Trump would accept a compromise if House and Senate Republicans can reach a deal. A full repeal would be a victory for opponents who have called for eliminating the state and local tax break for years. Republicans considered eliminating the deduction in 1986, when Congress last passed a major tax overhaul, but the proposal was left out of the final law.

The post A major sticking point in the Republican tax plan, explained appeared first on PBS NewsHour.

Journalist Philip Moeller urges current Medicare enrollees to take advantage of this opportunity to evaluate their Medicare coverage and decide if they wish to make any changes next year. Photo by Troels Graugaard/Getty Images

Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.

Medicare’s annual open enrollment season begins Oct. 15 and extends through Dec. 7. So, once again, I will mount my little soapbox and urge current Medicare enrollees to take advantage of this opportunity to evaluate their Medicare coverage and decide if they wish to make any changes next year.

I will be returning to this topic in future installments of Ask Phil. For now, here are a few preparatory pointers.

1. Don’t be in a rush.

Open enrollment decisions – even those made in December – will take effect Jan. 1. You can and should take time to understand how your current Medicare policies will change next year, and whether you can improve coverage, save money, or both, by changing your mix of policies.

2. Carefully study the details like costs changes and provider network.

If you have private Medicare insurance policies – Medicare Advantage, Part D drug plans, or state-regulated Medigap supplement plans – you should already have received annual notices explaining how the prices and coverage terms of these plans will change in 2018.

I urge you to spend some time with these documents. Look not only at how premiums will change but also at co-pays, deductibles and other costs.

In particular, pay attention to how your drug plans are pricing your prescription drugs. These plans feature multiple pricing tiers, with the most common structures having five tiers – preferred generics, other generics, preferred branded drugs, other branded drugs, and expensive specialty medications. Look for pricing changes within tiers and also to see if any of your medications have been moved from one tier to another.

If you have a Medicare Advantage plan, make sure your current health care providers are still in the plan’s provider network in 2018. It wouldn’t hurt to call the offices of your primary doctor and key specialists to ask them if they are making any key changes for Medicare patients next year.

3. Use Medicare’s online tools if you have concerns.

If your review of 2018 changes in your existing coverage raises any red flags, you can use Medicare’s online Plan Finder to review other Medicare Advantage and Part D plans available where you live. There is a separate Medigap Policy Search tool.

READ MORE: A procrastinator’s guide to navigating Medicare open enrollment

There are tutorials explaining how to use these tools. If this work is too daunting for you, enlist a family member to help. If you still have questions, contact a local office of the State Health Insurance Assistance Program (SHIP), which offers free Medicare counseling. Its representatives spend a lot of time with Plan Finder and other Medicare insurance tools.

4. Some switches are easy; others not so much.

Open enrollment allows you to freely switch among Medicare Advantage and Part D plans. You cannot be denied coverage or charged more money because of your age or pre-existing conditions. (There are exceptions for people with End-Stage Renal Disease.) You also can switch from basic Medicare (Parts A and B) to a Medicare Advantage plan, and vice versa.

However, you may not be able to switch easily among Medigap plans or buy a new plan. When a person enrolls in Medicare for the first time, they usually enjoy what are called “guaranteed issue rights” that require insurers to sell them Medigap plans on favorable terms. These rights normally expire six months after this initial Medicare eligibility period. Afterwards, Medigap insurers may be permitted to charge higher rates or even deny coverage to a person based on their age and pre-existing conditions. Depending on where you live, this may not ever be a problem, but it’s something you should explore carefully before making related open enrollment decisions.

Look for more detailed reports in coming weeks, including answers to your open enrollment questions.

Here are this week’s reader questions:

Ron – Ore.: When my wife and I both turned 66 in 2014, she applied for full Social Security benefits and I filed a restricted application to receive spousal benefits. I plan to file for my own benefits when I turn 70 in 2018. We both currently have Medicare Part B premiums deducted from our Social Security benefits.

When I apply for my full benefits at age 70 will my Medicare Part B premium be set at the then current “new enrollee” rate or will I continue to be “held harmless” since I have been paying Medicare Part B premiums from my spousal benefits since 2014?

Phil Moeller: Ron is among several readers who have asked whether taking a new Social Security benefit can “reset” their Part B premium, even if they have been held harmless against previous Part B premium increases. The simple answer is yes, but there is little that is simple about Social Security’s hold harmless rules. Inasmuch as Social Security will soon be announcing its 2018 annual cost of living adjustment (COLA), it’s a good time to review this issue.

The principle behind the hold harmless rule is that Social Security rules prevent the agency from reducing the size of a person’s net benefit from one year to the next. This is the amount of money a person actually receives, and reflects any deductions from the benefit. By law, anyone on Medicare who is receiving Social Security benefits must have their Part B premium deducted from their Social Security payment.

Rising health expenses have caused a regular boost in Part B premiums in recent years. Normally, rising inflation creates a Social Security COLA that is big enough to pay for higher Part B premiums and also raise the net benefit paid to Social Security recipients.

In recent years, however, rates of inflation have been very low. The Social Security COLA was zero for a couple of years and very small last year. As a result, higher Part B premiums would have actually reduced net Social Security benefits. To avoid this, people who had Part B premiums deducted from their Social Security benefits were held harmless. As a result, their Part B premiums either did not rise at all, or else rose only by an amount that would avoid an actual decline in their Social Security payments the following year.

This situation confuses even me, and I’ve been writing about it for years! Here’s a longer take on the topic.

The takeaway in terms of answering Ron’s question is to return to the core purpose of the hold harmless rule, which is to prevent a person’s Social Security benefits from declining from one year to the next.

Following the money, so to speak, the issue for Ron and others with similar questions is whether the new benefit they are claiming will result in higher Social Security payments. Of course, this is what would happen, or else why would Ron and others want to file for an additional benefit in the first place?

But when people’s benefits rise in this manner, then it also means they might be able to pay the current level of Part B premiums – now $134 a month – without causing a reduction in their net Social Security benefits. So, even though Ron has been held harmless in the past, Social Security is correct in assessing him a higher Part B premium as a result of his new benefit entitlement.

This reply does not address the broader issue of how higher Part B premiums affect the roughly 30 percent of Social Security recipients who aren’t held harmless. I will address this late this fall after Social Security has announced the 2018 COLA and Medicare has set next year’s Part B premiums.

Karen – Pa.: I will be 62 in February. My husband died in 2008 at age 55. I won’t get much Social Security because I didn’t work much in the United States, and when I did, I was a teacher. His benefits are better. If I take my Social Security at 62 and then take his at 66, will mine then stop? If I don’t take them before I start taking his at 66, will I lose mine?

Phil Moeller: Taking your own benefits at 62 and then claiming a survivor benefit when you reach full retirement age is your best option. Because you were born in 1956, your full retirement age is not 66 but 66 and four months of age. When you reach that age and file for your survivor benefit, you should receive an additional payment each month equal to the amount by which that benefit exceeds your own retirement benefit.

READ MORE: Can I work and still collect my late husband’s Social Security benefits?

Make it clear when you file for your own retirement benefit that you are filing only for that benefit right now, and that you will file for your survivor benefit when you have reached your full retirement age.

Lastly, because your survivor benefit is greater than your own retirement benefit, failing to claim your own retirement would result in you receiving no benefits on your own work record. Social Security, by the way, never pays the full amount of two benefits at the same time, but rather an amount that is roughly equal to the greater of the two.

Ron: My wife is nearly 67 and has had Medicare since age 65. She feels that her choices are sometimes limited because she has to choose a doctor who accepts Medicare. Sometimes, she feels like this may not give her access to the most qualified doctor or health care provider. She also has a Medigap supplement F plan that pays all the deductibles and copayments. I realize that Medicare is usually the primary payer, but aren’t there times when a different individual health policy in addition to Medicare could be beneficial?

Phil Moeller: At last count, more than 90 percent of all doctors accept Medicare, so I’d think your wife should be comforted that there is a qualified doctor who accepts Medicare who can meet her medical needs. However, good doctors often have practices that are completely filled, and it can be hard to find a good doctor, whether he or she accepts Medicare or not.

As for another private insurance policy, I don’t hold out high hopes that she could even find such a policy, let alone be able to afford the premiums.

READ MORE: How do I know if my doctor accepts Medicare?

It could be that your wife’s best solution would be to find a doctor in a concierge practice. These practices enroll a limited number of patients, charge patients an annual fee, and usually work with Medicare and other insurers. Patients can get access to these doctors on a regular basis. Of course, you pay for this access, but if your finances can handle the expense, perhaps this is a route your wife would like to take.

It seems to me your wife’s first step would be to locate the doctor or doctors she would ideally like to see. Do they accept Medicare? If not, what do their offices say about insurance? I realize this could be a time-consuming process, but I really don’t know of any short-cuts here.

The post 4 tips for making the most of Medicare’s open enrollment appeared first on PBS NewsHour.

Some employers think what they’re doing a clever “pre-assessment” of job applicants, laying the burden on you while avoiding putting their own skin in the game, explains Ask the Headhunter columnist Nick Corcodilos. Photo by Getty Images

Nick Corcodilos started headhunting in Silicon Valley in 1979 and has answered over 30,000 questions from the Ask The Headhunter community.

In this special Making Sen$e edition of Ask The Headhunter, Nick shares insider advice and contrarian methods about winning and keeping the right job, on one condition: that you, dear Making Sense reader, send Nick your questions about your personal challenges with job hunting, interviewing, networking, resumes, job boards or salary negotiations. No guarantees — just a promise to do his best to offer useful advice.

This is my 250th Ask The Headhunter column for NewsHour, which debuted five years ago in October 2012. Thanks to all our readers for your provocative questions and comments about job hunting and hiring!

Question: I really enjoy your direct and honest feedback to job hunters each week. I’d like to get your thoughts on jobs that make you do “assessment tests” to prove you are qualified.

My favorite was for a company in the San Francisco Bay Area that needs to fill a marketing and web content position. Two hours before the phone interview, the marketing director sends me an email saying that I need to prove my research skills and she will send me a question 10 minutes before our interview time. I have to research the question and have it submitted before the interview.

I was ready to walk but did it just to see if I could. (I succeeded). After the talk, I was unimpressed with her abilities and withdrew my application.

READ MORE: Why employers can afford to be rude to you

Recently, during my first in-person interview for another job, I was asked to write a five-page press release by the next day. I politely told the manager that my extensive work experience speaks for itself and I would be happy to send links to my previous press releases. She said that wasn’t good enough and I said, “I’m withdrawing my application.”

As you can tell, I’m ready to walk away from imposing situations like this, that, for the most part, waste your time. What is the proper way to say “no” to these assessments? Thanks!

Nick Corcodilos: My compliments for walking away from these kinds of abusive hurdles. Such employers undoubtedly think what they’re doing is a clever “pre-assessment” of job applicants. That is, they want to assess whether it’s worth their time to meet and assess you. They lay the burden on you, while they avoid putting their own skin in the game.

READ MORE: 5 tips for avoiding terrible employers

My guess is they add this step because some HR consulting firm charged them a bundle for “best methods” in recruiting. But there’s nothing “best” about abusing the job candidates those same employers complain are in short supply! Talk about trying to appeal to a candidate!

Assessment tests are often bogus
Job assessment tests come in many flavors. Tests and assessments can be useful tools for employers and job seekers. But more often than not, they’re misused. Some assessment methods are transparently ridiculous and unreasonable — and they’re not assessments at all. They’re bogus. (See “An insider’s biggest beefs with employment testing.”)

I think the way you’re dealing with unreasonable demands is just fine. And I don’t think anything you say to employers or recruiters is going to make them stop insisting that you jump through hoops, participate in totally one-sided “interviews,” and do free work. These employers have established a policy and a process. You’re not likely to change any of it. But it may be fun to make a point to them — a point that may hit home after they lose lots of good job applicants to their competitors.

(For an in-depth look at this topic, see Dr. Erica Klein’s short book, ”Employment Tests: Get The Edge”.)

READ MORE: How to win any job

I love your story about the marketing director. I wonder if she instructs her company’s salespeople to pre-assess potential customers by making them submit a five-page statement about “Why I’m worthy to listen to your sales pitch.”

It gets worse
Readers recently shared stories of pre-interview demands for all kinds of extensive “screening” — all to be done by the job seeker on their own time with no pay while the employer does nothing.

• One employer tries to cajole applicants with this phony challenge, “to help us find the top 1% of talent,” then tells the job seeker to spend ”8 to 10 hours” on a “sample project” prior to moving on to the next step of the selection process. When the applicant fails, they are directed to a “partner company” that will sell them “training” to bring them up to the 1 percent level.
• Another job ad — for an administrative assistant — requires you to spend an entire week performing sample tasks to qualify for interviews. With no pay.
• Yet another reader got suckered into producing several pieces of sample work that required several hours of her time. She had never even had a real interview — just three phone calls. She was ready to do even more to get the highly prized “in-person interview.”

But you asked me how to say no to these “assessments.”

When you’re asked to jump through hoops that you think are unreasonable, be ready to respond. Here are my suggestions about how to say it, ranked by snarkiness. Decide how far you want to go.

Meet, or beat it.

How to say it:

“I’d be happy to invest my time to meet with you so we can determine whether we should work together. If there’s serious mutual interest, I’d be glad to show you how I’d do the job profitably. But without a corresponding investment of time from a serious employer, it’s just not prudent for me to do what’s essentially a one-sided assessment. I’m currently in discussions with three other employers and I expect to choose one in the next X days. If you’d like to meet to explore working together, I’d be glad to come in on one of these dates and times: [list 2 or 3 dates]. If those are not convenient, please suggest some others and I will look forward to talking shop.”

That’s pretty assertive, but so is an employer’s demand that you do work before just a phone interview. I’m a big believer in showing how you’ll do the work to win the job — in a face-to-face meeting. But if the employer isn’t investing its own time and effort, it’s presumptuous of them to expect you to do so.

Pay me for the work.

Sometimes it helps to put a price on what the employer is demanding. (See Why employers should pay to interview you.)

How to say it:

“Just as I’m sure you don’t charge prospective customers to do a sales call, or to provide product samples for their evaluation, I don’t charge for interview meetings or samples of my work. I’d be more than happy to meet with you. But if you want me to work solo while you attend to other matters, my hourly rate is $X. If you’re willing to invest a couple of hours of your time, I’ll invest mine, too — no charge.”

Don’t do free work.

I’ll do it if you’ll do it.

Sometimes it helps to put the shoe on the employer’s foot. You’ll win only the most honorable fans with this, but please understand that this is the shoe the employer is trying to get you to walk miles in.

How to say it:

“Attached is a psychological assessment test to be completed by the manager I’d be working for if your company were to hire me. If you’ll please have him or her complete it, to help me ensure I’d be working for a properly qualified manager, then I’d be glad to take your assessment, too. Since you already have my resume, kindly forward a copy of the manager’s resume so I can review it. Since time is of the essence, please be aware that I’m at the offer stage with two of your leading competitors.”

I don’t perform tricks.

This one’s pretty snarky but, hey, would you go on a blind date with someone who’s not going to show up?

How to say it:

“An interview is called that because ‘inter-‘ means between, mutually, reciprocally, together — not one-sided. I’m looking for a good employer, and that means one that respects me enough to invest time together and reciprocally. I don’t jump for treats. Do you really have so many great candidates that you can afford to ask them all to do tricks before you’ll interview them? I’m ready to interview you if you’re ready to interview me.”

You’re not worth my trouble.

This one requires no explanation.

How to say it:

“Talk to the hand.“

Why do employers do this?

You know such jump-through-the-hoop job assessments are inappropriate and usually offensive. So do I. Why don’t employers know it?

It’s pretty simple. These are employers who don’t know how to recruit job candidates. They want you to do the work, preferably with no investment on their part. These employers want you to incur costs before they do. They want you to pay for hiring managers’ (and HR’s) ineptitude. They’re all telling you one thing: “You don’t want to work here because we have no idea how to hire.”

Dear Readers: What are the most ridiculous or offensive “pre-interview” hurdles you’ve been asked to jump? How have you responded?

Nick Corcodilos invites Making Sense readers to subscribe to his free weekly Ask The Headhunter© Newsletter. His in-depth “how to” PDF books are available on his website: “How to Work With Headhunters…and how to make headhunters work for you,” “Keep Your Salary Under Wraps,” “How Can I Change Careers?” and “Fearless Job Hunting.”

Send your questions to Nick, and join him for discussion every week here on Making Sense. Thanks for participating!

Copyright © 2016 Nick Corcodilos. All rights reserved in all media. Ask the Headhunter® is a registered trademark.

The post Ask the Headhunter: If you’re expected to jump through hoops to get an interview, here’s what to say appeared first on PBS NewsHour.

Editor’s note: Jonathan Meer is a professor at Texas A&M University, and an expert on charitable giving. This analysis is being published here in collaboration with EconoFact, a nonpartisan economic publication.

THE ISSUE

Giving by individuals accounts for nearly three-quarters of charitable giving in the United States, over $280 billion in 2016. Changes to tax policy can have an effect on the incentives individuals and households face when making the decision of how much to give to charity. The U.S. tax code currently encourages charitable giving by individuals who itemize their expenses. Recent tax reform proposals differ widely on how to treat charitable giving.

THE FACTS

• The deduction for charitable giving is intended to subsidize nonprofit organizations and encourage activities that provide societal value. The reasoning is that these organizations may supplement or substitute for government activities while potentially being more responsive and directly accountable. The charitable giving deduction was established shortly after the income tax itself, by the War Revenue Act of 1917. Currently, it is capped at 50 percent of adjusted gross income, and is only available to households that itemize deductions. About 30 percent of households do so and tend to be higher-income, but they represent about 80 percent of giving by individuals. (See this review for a history of the charitable contribution deduction.)
• Higher-income households derive greater tax benefits from the charitable tax deduction. A tax deduction reduces taxable income by the amount deducted; it thus reduces total tax liability by the tax rate times that amount. Given the progressive nature of the tax code, with increasing marginal rates, that means that a deduction is worth more to higher income households.

  The Congressional Budget Office estimates that over 80 percent of this benefit accrues to households in the top quintile of the income distribution, with over one-third accruing to the top 1 percent of households (see chart). These deductions and credits are called tax expenditures, since they are functionally equivalent to the government raising those funds and then expending them itself. The total tax expenditure of the charitable giving deduction to all qualifying organizations was $54 billion in 2016.

• Recent tax reform proposals differ in their treatment of the charitable giving. Some have proposed expanding the availability of the deduction to all households, irrespective of whether they itemize. Others cap or even eliminate the deduction. Others still recommend a tax credit rather than a deduction, in which all tax filing units receive the same benefit from making a donation regardless of their tax bracket. A number of states also offer additional state tax incentives for charitable giving.

  The version of the Trump administration’s tax proposal circulating as of this date would leave the charitable deduction in place. However, the current plan includes a proposal to double the value of the standard deduction, reducing the number of households itemizing their returns (eliminating eligibility for the charitable giving tax deduction). In addition, the administration is proposing reductions to marginal tax rates, which would also reduce the value of tax incentives for charitable donations.

• Does the existence of the deduction for charitable giving benefit society? Valuing the societal benefit created by nonprofit organizations is difficult and often subjective, with some arguing that the largest beneficiaries of the deduction are not the most worthy causes. But the exclusion is more easily justified if the increase in charitable giving it causes is at least as much as the reduction in tax revenues that comes from allowing the deduction. Estimates from the economics literature vary, but suggest that charitable giving is quite responsive to tax incentives and that this is likely to be the case.

WHAT THIS MEANS

Tax policy is extremely complex and any changes involve numerous factors that will affect individuals’ giving patterns and government revenues; overall estimates differ dramatically depending on the specifics of the proposal. As a general rule, though, reductions in tax incentives will reduce donations. Completely eliminating the tax exclusion for charity would reduce charitable giving substantially.

Tax revenues would increase, borne mostly by higher-income households, making the tax code more progressive. While high-income households give to all causes, they provide the majority of donations to organizations supporting health, education, and the arts. On the other hand, expanding the deduction to all households would likely increase giving somewhat, though it would primarily be a windfall to households that already make donations. Lower-income households face lower marginal tax rates and thus would not be as responsive to the deduction.

The post Analysis: How tax reform could impact charitable giving appeared first on PBS NewsHour.

A job seeker talks to a recruiter from UC Health at the Colorado Hospital Association job fair in Denver, Colorado, on October 4, 2017. Photo by REUTERS/Rick Wilking

The unemployment rate dropped from 4.4 percent to 4.2 percent in September, while the economy lost 33,000 jobs. Impossible, right?

Well, no. As we’ve explained here for years, the two numbers, released Friday by the Bureau of Labor Statistics in its September jobs report, come from two completely different monthly surveys: one of households (a sample of 60,000), and the other of “establishments” — places that employ folks (a sample of 147,000 businesses and government agencies). The unemployment number comes from the household survey; the jobs created figure, by contrast, comes from the establishment or “payroll” survey.

So why did they differ so dramatically last month? Two probable reasons. One may be that September’s storms and hurricanes put many jobs on hold, but didn’t eliminate them permanently. Employment in “food services and drinking places” alone dropped by 100,000, after adding an average of 24,000 a month since last fall. But those jobs-on-hold presumably didn’t show up in the household survey, because people on temporary hiatus due to disruptions like a storm are still reported as employed.

The second reason for the discrepancy is one we’ve pointed out again and again: you can’t trust any one month’s numbers. In fact, this message is drummed home every month when the Bureau of Labor Statistics itself not only reports last month’s data, but revises the data from the previous two months. The revisions Friday? As the BLS put it: “The change in total nonfarm payroll employment for July was revised down from +189,000 to +138,000, and the change for August was revised up from +156,000 to +169,000.”

In other words, the supposedly gratifying payroll total reported in August was actually paltry, and in the following month it was better than reported.

Another number pops out in the latest household survey, a number somewhere between weird and implausible: 900,000 more Americans were reported as “employed” in September than the month before. Really? When the number of jobs went down by 33,000? So when interpreting data from any given month — and especially one battered by extreme weather, it’s best to exercise extreme caution and not overreact to supposed trends or anomalies.

One of our go-to economists on the monthly numbers, the University of Michigan’s Justin Wolfers, tweeted: “That six-or-seven year run — the longest ever run of consecutive positive payroll growth — looks to be over.”

There should be an embedded item here. Please visit the original post to view it.

This last comment refers to frequent accusations President Donald Trump made as a candidate that the BLS data willfully camouflaged a sagging economy under former President Barack Obama. And though he’s now changed his tune and taken credit for the jobs reports under his administration, Mr. Trump may have succeeded in cowing the agency. This month’s written summary of data included a curious sentence about the dramatic reversal in the payroll number: “Total nonfarm payroll employment changed little (-33,000),” the agency noted (italics mine). For an economy that has added well over 100,000 jobs a month for years now, “changed little” could be viewed as timorous understatement.

But again, let’s not overreact. Wolfers had tweeted that he anticipated “a not-very-interpretable jobs report,” and that’s just what we got. Which means we should also be careful not to wax enthusiastic over the apparently healthy wage increase included in the September numbers.

Finally, as regular readers know, when the jobs numbers come out the first Friday of every month, we have for years added our own more inclusive reckoning of un- and underemployment, U-7, which includes people who say they want a full-time job but can’t find it. The U-7 was 11.4 percent in September, down from 11.8 percent the previous month.

The post The unemployment rate and jobs total went down? What’s up? appeared first on PBS NewsHour.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York on October 4, 2017. Photo by REUTERS/Brendan McDermid

History might not repeat itself, but it does rhyme. Robert Z. Aliber, an emeritus professor of international economics at the University of Chicago and expert on financial crises, has noted that an innovation is at the root of every financial crash. In 1987 it was portfolio insurance; for the Great Recession in 2008 it was securitization. The obvious candidate for the next crisis is Exchange-traded funds, or ETFs.

What is an ETF? It is a pool of securities whose shares are traded in real-time on stock exchanges. Buying a share of an ETF is like buying a share of a company. Like mutual funds, ETFs are diversified within an asset class — such as an ETF that mimics the S&P 500 index. Unlike a mutual fund that mimics an index, however, these shares trade during trading hours, while a mutual fund is effectively traded at the close of business each trading day at a price that equals the net asset value (NAV) of the fund. Thus, an investor inclined to time the market will be attracted to an ETF, because waiting until a price at the end of the day might result in a missed opportunity.

Now let’s get into the weeds a bit (more). ETF sponsors do not trade directly with investors. Investors buy and sell only with market makers or authorized participants. Each ETF might have some 30 authorized participants who together create a secondary market for the shares of the ETF, which investors buy on an exchange.

The ease of buying or selling shares of an ETF creates some risks. If orders to buy or sell greatly exceed what the market will bear, the price of the ETF might diverge from the net asset value of the underlying assets. In such cases the authorized participants, in their role as market makers, arbitrage the difference. These efforts could lead to a sudden rise in market orders, which are information-less: they do not result from any specific knowledge of the securities being sold. Extreme situations could result in fire sales.

Two aspects make innovations like ETFs ripe vehicles for mischief that can lead to financial crises. First, they have force: while dumb ideas are quickly discarded, good innovations provide purchase for the imagination, which is fueled by seeing others making money. Second, an innovation is new and untried, so the imagination is unconstrained by adverse experience. Leading up to 1987, for example, portfolio insurance was promoted as the vehicle to protect against stock market losses. It became popular among large investment operations.

But what might work for a single operation might very well become a disaster when many investors act at the same time. In the late 1980s, the idea was that you would sell futures to hedge a declining market. But when everyone tried to do this at once, the market seizes and crashes as it did on Oct. 19, 1987.

Two decades later, the Great Recession was fueled in large part by the widely accepted assumption that the securitization of mortgages made ownership of mortgages less risky. The securities were diversified by including many mortgages within a pool, and diversified geographically. And the rating agents stamped their approval. Congress, likely impressed by this innovation, also put pressure on Fannie Mae and Freddie Mac to increase home ownership by issuing questionable mortgages — which were entered on their books as “sub-prime.” At the root of it all was an untested innovation.

Leading up to 2008, investors and policymakers alike lulled themselves into believing that house prices only rise. Mortgage-backed securities were being bought and sold with little attention to the underlying mortgages and no one cared while house prices kept rising. But eventually, house prices not only stopped rising, they declined to the point that the value of a mortgage security depended on the ability of the homeowner to repay. Many couldn’t and the collateral no longer covered the mortgage.

Both the 1987 and 2008 crises exhibited the marks of an experiment many of us did in grade school. Remember mixing a slurry of cornstarch and water? It was easily done, if done slowly. But what happened when you tried to stir too fast? It locked up solid. The stock market is a cornstarch-in-a-water slurry. If trading is moderate the market clears, but if everyone rushes at once for the exit, the market freezes or goes into a freefall search of buyers.

So why might ETFs be the next innovation to go awry? For starters, the concept of an ETF is a sound idea: they offer real-time trading and broad diversification. But it is untested, in the sense that ETFs have yet to be exposed to a real-life stress test. Investors are operating with the belief that they’re liquid and tradable in real-time, and they are well diversified within their asset class. But how liquid are they really?

The billionaire investor Howard Marks has made a persuasive case that an ETF is only as liquid as the underlying assets. What if those underlying assets can’t be readily sold? What happens if investors suddenly find cause to press the sell button on their smartphone? Can those orders be refused? At some point, the authorized participants (market makers) will be forced to liquidate a portion of the underlying assets in informationless trades. In other words: Sell, period. The result is a fire sale.

One might think that an S&P 500 ETF would be less susceptible to sudden illiquidity. But think of October 1987. And then consider that the volume of the S&P ETFs, reportedly, far exceeds the volume one might expect if S&P ETF investors were mainly patient, buy-and-hold, long-term investors. It appears that many institutional investors use these ETFs to hedge positions. What would happen if this trading suddenly dried up or, worse, if these ETF positions were suddenly liquidated forcing the authorized participants to sell heavily the underlying shares? And let’s remember that investors buy ETFs to avoid the need to study many businesses.

My gosh, The Efficient Market Hypothesis has taught us that studying 500 companies is a waste of time; the market knows everything already, so just buy the ETF! But this puts the average investor way outside his or her sphere of competence. We know what happens when investors know little or nothing about the underlying assets. Remember securitized mortgages? How reliable are your decisions when you know little about a matter? We lull ourselves into thinking that diversification gets us off the hook. But can we be sure that the slurry won’t freeze up again under extreme, not-yet-tested conditions? As Mark Twain wrote in his novel “Pudd’nhead Wilson,” “Behold, the fool saith, ‘Put not thine eggs in the one basket’—which is a manner of saying, ‘Scatter your money and your attention’; but the wise man saith, ‘Put all your eggs in the one basket and—WATCH THAT BASKET.’”

Pudd’nhead Wilson is wise. Modern finance and human nature have lead us to confuse volatility with risk of permanent loss. We prize diversification because it reduces volatility, but does that reduce permanent loss, particularly when we know little about the underlying assets? Perhaps we should think of it a little bit more as a marriage: make one good decision, and then LEARN TO HANDLE THE VOLATILITY that arises along the way.

Warren Buffett observed long ago that one should only own a stock if one is prepared to have the price decline 50 percent, because sooner or later it will. Otherwise one risks the urge to sell at the worst time. My guess is that the majority of ETF investors are not prepared for prices to decline 50 percent, or less. The ETF has deluded investors into thinking they are safe— and they can get out by pressing the sell button.

I began by arguing that an innovation is at the root of a financial crash. But remember, innovations aren’t the cause of a crash, they exacerbate them. The economist Robert Aliber notes that crises are often caused by a shift in foreign capital flows into the United States. Aliber thinks that shift has again happened, drying up the capital inflows buoying stock prices, and a significant decline is imminent. Innovation put off the day of reckoning and, in doing so, exacerbate the reversion to the mean.

Recently, billions of dollars have been flowing into all manner of ETFs. Yet there hasn’t been enough attention paid to the potential systemic risk of ETFs. Charlie Munger, the vice chairman of Berkshire Hathaway, was right when he said that if you haven’t overturned a long-held view in the past 12 months, you haven’t been thinking. It’s time to start thinking. That doesn’t mean we should rush to throw out good ideas; it means we should take the time to examine them properly. A clearer-headed view of the risks of ETFs is a good place to start.

The post Column: This innovation could lead to the next financial crisis appeared first on PBS NewsHour.

Donna Dibo, a former opioid addict, spoke to PBS NewsHour recently about her addiction and its impact on her life.

Editor’s note: As part of the NewsHour’s series on the opioid epidemic, I went to eastern Ohio and interviewed three former addicts who are trying to work their back into society — and into the workforce. The interviewees were so candid and revealing that they deserve more time than a few soundbites in a broadcast story.

The broadcast segment will run tonight on the NewsHour. Here’s the first of the interviews (you can watch it here or in the video below), with a woman named Donna Dibo, who is participating in a jobs training program for ex-addicts in Youngstown, Ohio. The interview was edited for length and clarity.

PAUL SOLMAN: Why are so many kids using drugs? Just to experiment because that’s the nature of being a kid?

DONNA DIBO A lot of kids grow up in the homes where there’s alcohol and drugs and it’s hard to be the odd one out and say, “I’m not going to do this.” For me, it was just normal. It was the everyday thing.

PAUL SOLMAN: How much of a factor is boredom in taking drugs, whatever the drugs are? You’re just bored and it’s something to do.

DONNA DIBO: I do believe that that does play a factor. I wouldn’t say a big factor, like not even 50 percent, but around 20-25 percent.

PAUL SOLMAN: If that’s 20 or 25 percent, what’s the 75 percent, or the biggest factor?

DONNA DIBO: For me, the longest time, it was the thrill of it. The hunt. Of course, getting high, that was the thing. Then it starts to tire you down after a while, the running, the chasing, just all of it.

PAUL SOLMAN: It’s exciting at first because it’s subversive?

DONNA DIBO: Absolutely. Yeah, you meet new people. You think they’re cool, and, “I want to do what they’re doing.” Oh, yeah.

PAUL SOLMAN: The high is worth the wait?

DONNA DIBO: Yeah. In the beginning, it is, but then after that, it’s not so much. It’s like you’re chasing to get back to that point that you can’t get to.

I was in a bad car accident when I was pregnant with my daughter 17 years ago, and she was okay thankfully. However, after I delivered her, my back was real bad. They put me in for an MRI, and [found that] the fourth, fifth, and sixth vertebra were bulging. I had two that were herniated. It was just really bad, so they started the epidurals on me, then the nerve blocks when they didn’t work, and throughout that process, that’s how the pills came into my life.

I was in pain so much, and in the beginning when I was taking those pills, I didn’t have pain anymore, so then I would overdo it, just cleaning, going to work, whatever it was. Then, when they started to wear off, right back to that point. Then, once that happens for a while, you start to build up a tolerance, so then you need another one. Then another one. That’s how it happened for me.

When I had to take them for my back, I didn’t even really like them at first. I was getting sick off them, [so] then the doctor just switched the kind. I went from Vicodin to Percocet. Then, I was okay with them. My body reacted okay to them. Once I started, I just… It was very hard to stop.

[The doctor] was just writing and writing and writing [prescriptions]. You can go in there and tell him, “I can’t get out of bed in the morning.” He’s going to give you a script for 120. That’s just how it was. When I went in there and told him, “Okay, one four times a day isn’t doing much for me anymore,” then that’s when he doubled it. It was that easy. Then I started to learn how to talk to doctors after that, and what to say to seek them out. That’s what I was doing.

PAUL SOLMAN: Were you working during this time, after your car accident?

DONNA DIBO: Yes. Waitressing. I love people. I’m a people person, so I loved to waitress.

PAUL SOLMAN: But it’s hard work, particularly if you have a back problem.

DONNA DIBO: It is. It is, but when you have four or five pills at once, you’re pretty much okay after that, until you start to come down off of it, and then you take more. That’s pretty much how it works.

PAUL SOLMAN: Did you have to give up waitressing?

DONNA DIBO: Yes. I did. That was one of six jobs, actually, that I’ve given up due to addiction. I was coming in late for work, sometimes I was calling off. I would not show up, or if I did show up, it was just a matter of I couldn’t focus. I was getting the orders wrong for people.

PAUL SOLMAN: How long have you been out of the workforce?

DONNA DIBO: I’ve been out of work for about seven years.

PAUL SOLMAN: [When you were working], you were spending everything you get as a waitress on your habit. What was happening to your kids?

DONNA DIBO: Not just my income. My husband’s income as well. It got to the point to where he had to literally sit me down and say, ‘Your name has to come off the bank account. That’s just the bottom line.’ Of course, I was angry and mad, because I was so caught up in my addiction, I thought he was the bad guy, but in all reality, he had to do that, because I was taking literally everything away from him and our children.

PAUL SOLMAN: It must’ve been hard in the beginning, wasn’t it, to talk about this stuff?

DONNA DIBO: Yes. It’s hard to say, ‘Listen. You know that cell phone you just had? No one stole it. I stole it.’

PAUL SOLMAN: You stole it from your daughter and sold it?

DONNA DIBO: Absolutely.

PAUL SOLMAN: How much did you get for it?

DONNA DIBO: About 100 bucks. You never get what it’s really worth when you’re dealing with drug dealers. And Sears, I’m no longer allowed on their property. I stole so much from them, I probably own their store to be honest. I would boost. That’s what we called it, boosting. I would go into all the stores. My trunk and my backseat would be full with everything. I would just sell it to people everywhere. I did that for a couple years.

PAUL SOLMAN: Really? How do you get away with it?

DONNA DIBO: You just got to know where the cameras are. I talk. I’m a talker, so in all reality, I would go ask them where it was, and I was going to steal it the whole time, but I do believe, if you talk to people, if you go in there and you just look suspicious, they’re going to know what you’re doing. I just came up with this brilliant plan to just talk to them, “Hey, how you doing? How’s your day? Blah, blah, blah,” and right out the door with everything.

PAUL SOLMAN: But you finally got caught?

DONNA DIBO: Yeah. Sure did. I was being greedy.

PAUL SOLMAN: What’s the greediest?

DONNA DIBO: The comforter sets, or you know,

PAUL SOLMAN: The comforter sets?

DONNA DIBO: Walking right out the door like I bought them. Absolutely. The shoes, the boots, I had 20 pair of boots that I bought for my husband. He thought I bought them. I did not buy them. I just walked right out the store with them. I don’t know what it is. It’s just I had a knack for it.

PAUL SOLMAN: [Eventually], did you switch from pills to heroin because heroin was easier to get, more affordable?

DONNA DIBO: That is one of the main reasons why I switched to heroin, but in all reality, honestly, it was easier. I hate to say that, but there was so many heroin dealers. It was just more convenient. I’ve gone through being sick from pills, from not having pills, and the sickness is nothing compared to not having heroin. It is nothing. Your body just… it’s like you stood in line and let a football player just ram you without any padding. It is like a job itself, actually. It is.

PAUL SOLMAN: Just trying to find that day’s drugs?

DONNA DIBO: Yes. Then, once that day is over, your mind’s already going 1,000 times a minute thinking, ‘What am I going to do for the next day?’ [Looking for drugs] is a full time job.

The post ‘Boosting’ to support her habit — one woman’s nightmare appeared first on PBS NewsHour.

Photo by Getty Images

Editor’s Note: Journalist Philip Moeller is here to provide the answers you need on aging and retirement. His weekly column, “Ask Phil,” aims to help older Americans and their families by answering their health care and financial questions. Phil is the author of the new book, “Get What’s Yours for Medicare,” and co-author of “Get What’s Yours: The Revised Secrets to Maxing Out Your Social Security.” Send your questions to Phil.

Michael – Pa.: I just reached my full retirement age of 66; my wife is 62. We need to apply for Social Security benefits right now because I’ve just lost my job. My wife’s current benefits would be about $500 and mine about $2,400. If she applied for spousal benefits instead of her benefits, would we see higher monthly benefits?

Phil Moeller: I’m sorry about your job loss, and I understand that you really need the money now. Because your wife’s benefit is so small, I’d suggest that you file for your own benefit first. This will enable her to file for a spousal benefit right away. It will be reduced from what she’d get if she waited to file until her full retirement age, but it will still be larger than her own retirement benefit. Unfortunately, 2015 changes to Social Security laws make it impossible for her to file for a spousal benefit without also filing at the same time for her own retirement benefit. She will get nothing from that benefit, because it’s smaller than her spousal benefit.

By the way, if you decide to look for a new job and are successful, you may have some options about Social Security. The cleanest choice would be to withdraw from the program and pay back the benefits you’ve already received. This option is good for up to a year after you began receiving benefits. I know it might be hard to come up with those funds, but doing do would permit you to “reset” your benefit entitlements and thus increase your benefits by deferring them to a later filing date.

You also could suspend your benefits. This would avoid the need to repay any past benefits to Social Security, and it would allow you to earn delayed retirement credits until the time you unsuspended. However, under those 2015 law changes. your wife would no longer be able to receive her spousal benefit if you suspended your own benefit. In that event, suspending your benefit might no longer be attractive. You can run the numbers to decide.

Neil: My wife is 67 and became Medicare-eligible two years ago. She has no recent work record, no quarters of credit (in the last 30 years) and no retirement benefits. And she has been paying more than $400 a month for Part A. I turned 62 a few months ago, have sufficient quarters for benefits, still work, and have not yet filed for Social Security benefits.

READ MORE: How do I get the Medicare coverage I want with the lowest out-of-pocket cost?

I believe that since I’m now 62 and eligible for retirement benefits, although not claiming them, my wife should now be able to get Medicare Part A at no cost by claiming on my record. Yes? (I know she had to pay Part A premiums after her 65th birthday and before I turned 62). I’ve been told this is the case, but the Medicare representatives my wife has spoken with don’t seem to know this and we can’t (yet) seem to get her Part A premiums eliminated.

Phil Moeller: Your understanding is correct. Here is a formal explanation of this rule. Social Security handles Medicare enrollments and premiums. I suggest you call Social Security, and not Medicare, and try to get this worked out. Hopefully, citing this rule will help, should the representative not be familiar with it.

Linda – Fla.: I have always been told that I didn’t qualify for Social Security since I worked for the state college system in Massachusetts and paid into the state retirement system instead of Social Security. I retired at age 55 and began collecting my pension along with health insurance through the state system. Annually, I received a notice from Social Security that I didn’t qualify for Social Security or Medicare. I was never told that I would be covered by Medicare as my husband’s spouse once he turned 65, so I didn’t apply, and continued to participate in the state program. Years later, the discrepancy was caught by Social Security, and I signed up. But I am being charged an extra $40 a month because I failed to sign up earlier! However, for some reason, I am now receiving a small Social Security payment of $40 each month! I am confused.

Phil Moeller: Wow. What a mess!

In the real world in which we all live, you might be better off letting sleeping dogs lie, as the old saying goes. After all, your mystery payment of $40 a month cancels out the $40 late-enrollment penalty that you think you’re being unfairly charged. Once you formally engage Social Security in evaluating your situation, who knows how badly things could fall off the rails! This is an overworked agency that makes mistakes even on good days.

If it matters, your spousal eligibility for Medicare, and thus for premium-free Part A of Medicare, began when your husband turned 62, not 65. If you were out any money because you did not sign up for Medicare when he turned 62, you might be able to appeal this to Social Security. It would help if you had some of those old notices where the agency said you were not eligible for premium-free Part A. This was true as far as your own earnings record was concerned, but not true when your spousal eligibility was taken into account.

Lastly, for what it’s worth, there is no test for Part B eligibility other than being a legal resident of the U.S. for five years. However, because people need Part A to qualify for most private Medicare policies, they think of that requirement as affecting their overall eligibility for Medicare.

Lisa – Okla.: I will turn 60 in October and am planning my retirement details. My husband of 32 years received full disability at 58 and died at age 63 (five years ago). I visited a Social Security office last summer. I was told the most I could receive would be my own retirement benefit, because my benefit would be more than half of what his benefit had been. After reading your Social Security book, this seems like a spousal benefit and not a widow’s benefit. I had thought I could take my own benefit early at a reduced rate, then transfer to his when I reached full retirement age. It’s all very confusing!

Phil Moeller: You are right on both counts – your understanding is correct and it is all very confusing! Your survivor benefit is not half of his but all of his. I’m gathering from your note that this will be greater than yours, so I’d advise you to take your own benefit as soon as you can, which is age 62. Then, when you reach your full retirement age, you would apply for your survivor benefit, which will have reached its maximum amount at that time.

READ MORE: Can I work and still collect my late husband’s Social Security benefits?

If you will be 60 this fall, it means you were born in 1957, and that your full retirement age is 66 years and six months. When you file for your survivor benefit, you should receive an additional payment each month equal to the amount by which that benefit exceeds your own retirement benefit.

Make it clear when you file for your own retirement benefit that you are filing only for that benefit, and that you will file for your survivor benefit when you have reached your full retirement age.

Anonymous – Mich.: I’m 63 and retired, but still have health insurance through my employer. At what point do I file for the Medicare coverage? I’ve heard six months prior to reaching 65 but I want to be sure.

Phil Moeller: You need to find out from your former employer what happens to your health coverage when you turn 65. Most employer retiree health plans require people to get Medicare when they turn 65. At that time, Medicare becomes the primary insurer and the employer plan becomes secondary, and can help pay claims that Medicare does not fully cover. If this is the case, you will have a seven-month initial enrollment period that begins three months before your birthday, and includes your birthday month and the following three months.

READ MORE: Does Medicare make sense for seniors with employer health coverage?

I urge people to sign up early during this period, and thus make sure they have no break in their primary health insurance coverage. These are things you can confirm with the employer plan.

Brandi – Fla.: Twice in the last two years my 80-year-old father (with Alzheimer’s) has mysteriously had his Medicare switched from an all-expenses-paid plan (including prescriptions) to the PPO Florida Blue plan. Florida Blue says Medicare made the switch, and Medicare says that Florida Blue made the switch!

Who in their right mind would switch a man with a monthly income of less than $1,200 from a free plan to one with a $53 monthly premium and co-pays? And this has happened TWICE! He didn’t sign up for it, and as his legal power of attorney, I didn’t sign up for it either.

Meanwhile the medical bills are in the thousands, and he has been denied some medical care that Medicare would have covered. I haven’t paid these premiums, and he doesn’t even know what premiums are at this point. I don’t feel we should have to pay a dime (although he paid some medical bills and prescriptions before I caught on). Does this happen to anyone else? Don’t they need a signature? If they can’t prove we signed up then how can we be held accountable?

Phil Moeller: Fair or not, in some circumstances, Medicare health plans do have the authority to assign people to a plan without their permission, although it’s my understanding that they have a legal responsibility to tell them this is happening.

Having said this, I do not know if this is what has happened. It sounds like your father is on Medicaid as well as Medicare. Because Medicaid eligibility and related rules are affected by state rules, I would not hazard a guess as to what has been going on with your father’s coverage.

There are a couple of Medicare nonprofits that sometimes help people with these kinds of problems. It’s their call whether to try and help or not. The two I have in mind are the Medicare Rights Center and the Center for Medicare Advocacy. I hope one of them can help you. And please let me know how things turn out for your father. Perhaps you can learn things that will help others as well as him.

The post I’m 66 and I just lost my job. How do we maximize our Social Security? appeared first on PBS NewsHour.

The best talent doesn’t answer recruiters dialing for dollars, writes Ask the Headhunter Nick Corcodilos. Photo by Getty Images

Nick Corcodilos started headhunting in Silicon Valley in 1979 and has answered over 30,000 questions from the Ask The Headhunter community.

In this special Making Sen$e edition of Ask The Headhunter, Nick shares insider advice and contrarian methods about winning and keeping the right job, on one condition: that you, dear Making Sense reader, send Nick your questions about your personal challenges with job hunting, interviewing, networking, resumes, job boards or salary negotiations. No guarantees — just a promise to do his best to offer useful advice.

We’re going to skip the Q&A this week because I’ve been receiving complaints from readers about recruiters.

A reader just told me a recruiter for a major multi-national corporation briefly solicited her by phone after an email solicitation after he found her on LinkedIn. His caller ID was “PRIVATE.” The number was blocked. When he called her again later, it was not from a company number. She worries who she’s dealing with. He wants to send her for an interview with the hiring manager.

Said the reader: “He knows nothing about me, not really. And I know nothing about the manager, the job, or what’s expected.”

I told her to forget about him. He’s one of a new ilk: recruiters with no standards who are dialing for dollars.

What you need to know about recruiters

Here’s the first thing to know about headhunters and recruiters. The good ones, who are worth the money employers pay them, would never in a million years send a candidate to interview with a hiring manager without themselves thoroughly interviewing, vetting and reference-checking the candidate.

That’s what they’re paid for. They do their jobs to protect their reputations.

READ MORE: Why recruiters aren’t always good for the economy

Today, I’d say 99 percent (or more) of recruiters routinely pluck a name from LinkedIn and set up an interview. There is no value in that. It’s dialing for dollars and hoping for a hit. (They don’t care about their reputations because they don’t have reputations. They have cellphones.) It’s why most job interviews are failures.

Are these kinds of recruiters for real? No, they’re not.

If a good recruiter is involved with a hire, the hit rate (hire rate) should be incredibly high. With good recruiters and headhunters, it is. With crank recruiters, the hit rate is dismal — because it should be.

And it’s why job seekers are so demoralized, frustrated and angry about having their time wasted. They actually bring it on themselves because they’re not vetting the recruiters who don’t bother to vet them. The job seekers trust the system, even if they know it’s destroying their careers.

One reader today sent me four Glassdoor job ads from four different staffing firms. All are for the same job at one real company. All four staffing firms are dialing for dollars. Glassdoor makes money four times when it sells space to post those ads. But it’s not just Glassdoor. LinkedIn does the same thing.

What happens when job seekers are free

When candidates are free — it so cheap to solicit them that they really are essentially free — it’s okay for recruiters to make tons of mistakes when recruiting and hiring. They can quickly find all the job seekers they want.

But the cost of this game to job seekers can be staggering.

Today I received three other emails from people who accepted or started jobs only to have their job offers rescinded outright, or to get terminated after eight hours of work. One of them quit a year-long job to accept a job offer. Another moved across the country. It cost all of them dearly.

They all rushed into questionable deals. The reader at the beginning of this story saw the signals and walked away. It was clear to her that the recruiter was using her, not placing her.

Employers don’t care. To employers, job candidates are free, too. What employers do to new hires doesn’t matter. It doesn’t affect an employer’s reputation. Thousands more job candidates are waiting in line.

So thank you, Glassdoor. Thank you, LinkedIn. Thank you, Indeed. Thank you, ZipRecruiter. Thank you, dialers for dollars. Thank you, HR. Thank you, employers.

READ MORE: Column: ZipRecruiter turned hiring into a beauty pageant where everyone loses

Good headhunters love this. It means they have less competition when they go looking for the best talent. The best talent doesn’t answer recruiters dialing for dollars. Most job seekers are happy to be suckered — as long as they can have their job searches “automated.” Most job seekers have been corralled and are being processed, chewed up, spit out, and abused by recruiters dialing for dollars. They’re out of the way. This makes it easier for good headhunters who earn their money to find and actually recruit the right talent.

Dear Readers: How do you tell the difference between good recruiters and unsavory recruiters? How do you tell a real solicitation from a terrible risk?

Nick Corcodilos invites Making Sense readers to subscribe to his free weekly Ask The Headhunter© Newsletter. His in-depth “how to” PDF books are available on his website: “How to Work With Headhunters…and how to make headhunters work for you,” “Keep Your Salary Under Wraps,” “How Can I Change Careers?” and “Fearless Job Hunting.”

Send your questions to Nick, and join him for discussion every week here on Making Sense. Thanks for participating!

Copyright © 2016 Nick Corcodilos. All rights reserved in all media. Ask the Headhunter® is a registered trademark.

The post Ask the Headhunter: How to spot a job recruiter without standards appeared first on PBS NewsHour.

Photo illustration by Getty Images

Editor’s note: The PBS NewsHour has been in the business of airing voices worth listening to for more than 40 years. Recently, we came across Susie Kaufman, a former hospice chaplain and current blogger. Kaufman has a quiet voice that spoke to us and that, we think, might speak to you.

On the way to dinner in Minneapolis recently, a friend and I met Donna, an ancient relic of a woman sweeping grass clippings into a dustpan in her front yard. She wore a pink pinafore and a wig that rested on her head like an affectionate cocker spaniel. Donna invited us to come into her garden, a sea of purple phlox, and even to walk behind the house where tomatoes proliferated despite the rainy summer. This woman made me smile. It was entirely involuntary and got me thinking about all the forced smiles I’ve pasted on my face over the years.

We seventysomethings were born into the thick of mid-century striving and compliance, every day another opportunity to be good and do good. You have only to look at the photographs. We were the little darlings of the post-war American middle class and we had to look the part. We had to look happy.

Do the research in your own photograph albums. Not the digital ones, living untethered in the cloud. Not even the looseleaf ones with slippery plastic sleeves. I mean the frayed volumes of family life where pictures of varying sizes, some sepia, some polaroid, some with scalloped edges, are affixed with adhesive corners to the stiff paper and labeled, for example, “Susie’s sixth birthday, 1951.”

You will notice that the studio shots of your grandparents are serious business. I imagine the women corseting up, the men straightening their collars and cuffs as they get ready to pose for the photographer on the Bowery. No one is smiling. Everyone understands the gravity of the sit. It’s the proof of their arrival, their material heft preserved for posterity. Check out the whipped confection hairdos, the pocket watches.

Now, fast forward 40 or 50 years. The photograph has become more than a record of accomplishment. It is now, above all, an occasion for flaunting family happiness. There is no yelling, no withdrawal of affection on the Kodak Brownie. Everyone is saying cheese.

There is an entire body of thought that views the act of smiling as a spiritual practice. The Buddhist teacher, Thich Nhat Hanh writes that a true smile comes from dwelling in awareness. You don’t wear it like an article of clothing, and it has no utility. It won’t help you ingratiate yourself with your colleagues.

A true smile is simply a response to noticing how remarkable it is that you’re here on the planet. It conveys the sense of being alive, experiencing, all at once, the in here of yourself and the out there of the world. Encountering the gardener in the pink pinafore.

Occasions for smiles of awareness don’t arise on schedule like visits from the wedding photographer wandering the hall, table to table, documenting the bride and groom standing in turn behind each group of overstuffed relatives. They are sometimes mixed with loss.

Recently, on a September day, the grass an end-of-summer green scattered with the first fallen leaves, we ran into an old friend walking out of the cemetery in the Berkshires an idyllic place rich in historic resonance. She wanted to know if we had visited her husband’s grave. “Not recently,” I admitted. “Do you think he’s comfortable in there”? “I hope so,” she answered, with a loving, wide-open grin.

This could be the real estate of our future, we thought out loud, standing on the sidewalk. Entering the gates then, her smile at our backs, we stopped at the grave of our friend, piled with small stones of remembrance.

The post seventysomething: Sometimes you don’t want to put on a happy face appeared first on PBS NewsHour.

Editor’s note: Francine D. Blau and Lawrence M. Kahn are economics professors at Cornell University. The research in this post is based on “The Gender Wage Gap: Extent, Trends and Explanations,” an article Blau and Kahn co-wrote in the September, 2017 of the Journal of Economic Literature. This analysis is being published here in collaboration with EconoFact, a nonpartisan economic publication.

The issue

In 2016 women who worked year-round and full-time earned, on average, around 81 cents for every dollar earned by men. Though still substantial, the difference in women’s average earnings relative to men’s has narrowed considerably since the 1970s. But the largest improvement in women’s wages relative to men’s happened during the 1980s and progress has been slower and more uneven since then. This is especially true for women at the top of the income distribution. Gender wage gaps at the higher levels of the wage scale are larger and declined more slowly over time than at lower and mid-income levels. By 2010, the wage gap between men and women was larger for the highly skilled than for other workers, suggesting that developments in the labor market for executives and highly skilled workers especially favored men.

The facts

• The gap in earnings between men and women has closed substantially since the mid-1950s, with the most dramatic progress happening during the 1980s (see chart above). After many years of little progress, women working year-round and full-time went from earning about 60 percent as much as men did in 1980 to making about 72 percent by 1990 (the gap in wages of full-time workers measured on a weekly basis tends to be smaller). The progress of women’s wages relative to men’s continued after the 1980s, but at a slower and more uneven rate of increase. By 2014, women full-time workers earned about 79 percent of what men did on an annual basis and about 83 percent on a weekly basis (numbers cited come from this study we co-authored, which offers a comprehensive review of the trends and explanations for the gender wage gap).
• Women surpassed men in education and nearly caught up with them in terms of work experience, which played an important role in reducing the wage gap. In the case of education there was a dramatic reversal of the gender gap. In 1981, women had lower average levels of schooling than men and were less likely to have exactly a bachelor’s or an advanced degree. But, beginning in the 1980s, young women began to catch up to and eventually surpass young men in pursuing higher education. In 2014, for example, women earned 57 percent of bachelor’s degrees and 61 percent of associate degrees. They also surpassed men at the post-graduate level receiving 60 percent of master’s degrees, 52 percent of Ph.D’.s and 49 percent of first professional degrees (see here, chapter 8). With the continued infusion of younger cohorts in which women were more highly educated than men, gender differences in education flipped and women are now more highly educated on average than men.

  In terms of work experience, the story is also one of considerable narrowing of the differences between the genders. In 1981, men had nearly 7 more years of full-time job experience on average than women. By 2011, the gap had fallen markedly to only 1.4 years, with the fastest catch-up occurring during the 1980s. As a result of these advancements, a much smaller portion of the current wage gap between men and women can be attributed to differences between them in schooling or work experience. In 1980 the fact that women lagged behind men in education and experience accounted for 27 percent of gender wage differences. By 2010, differences in education and experience only accounted for about 8 percent of the – much smaller – wage gap. Although the type of education women receive has changed toward more mathematics and career-oriented programs, they continue to lag in higher-paying STEM fields (science, technology, engineering and mathematics).

• Differences in the occupations and industries in which men and women tend to work remain important in accounting for the gender wage gap — and their importance has risen over time. Since the 1970s, women have made progress in climbing the occupational ladder from less well-paid administrative support and service occupations towards managerial positions. Similarly, women have made significant inroads into higher-paying professions that were traditionally male dominated: Women have branched out from teaching or nursing and become more prevalent in traditionally male-dominated law, medicine and engineering. However, reductions in occupational segregation by sex seem to have plateaued or slowed since the 1990s. And, the differences in employment among the genders across occupations and industries remain significant.

  Moreover, while women have ascended managerial ranks, they remain underrepresented at the very top tier of the management hierarchy: although women are nearly half of managers in Fortune 500 companies, they comprised only 14.3 percent of executive officers in 2012, and made up 3.8 percent of CEOs and held just 16.6 percent of board seats in 2011 (see here for more information on women in S&P 500 companies). Changes in the relative returns to different occupations also played a role: Increasing returns to occupations in which men are more heavily represented contributed to the gender wage gap. Consequently, by 2010 — especially given the diminishing importance of education and experience — gender differences in occupation and industry together accounted for over one half of the gender wage gap.

• Is there a glass ceiling? The move towards greater gender parity in pay since the 1980s has not been uniform across the income spectrum. Women at the top of the income distribution made less progress in narrowing the gap with respect to their male counterparts than women at the middle and bottom of the income distribution. Though they started out trailing men by similar percentages in 1980, by 2010 women’s earnings at the top were between 74-77 percent of their male counterparts, while at the bottom of the income distribution women were earning 82-88 percent of men’s wages and about 82 percent at the median. The convergence in earnings at the bottom reflects, in part, losses by men who have seen a decrease of lucrative jobs for less educated workers in sectors such as manufacturing. It is difficult to determine whether the lower pay and scarcity of women at the top is due to the fact that women are relative newcomers and it takes time to move through the ranks or whether there are particular barriers to their advancement that present a “glass ceiling.” It could also reflect greater work-family conflicts for women that reduce their productivity or interest in high-level positions.

  There is some evidence that career-family tradeoffs are a particularly important factor in wage differences for women in high-skilled jobs. Workforce interruptions, fewer hours worked or greater workplace flexibility have a considerable cost in terms of earnings in some higher-paying occupations. Studies of lawyers and business school graduates have found that men and women earn equivalent wages after graduation but diverge widely as they progress in their careers: 15 years after graduation male lawyers earned 52 percent more than their female counterparts and male MBA graduates earned 82 percent more 10-16 years out of school. To the degree that women continue to assume traditional gender roles within the family, they are more likely to take time off to have or raise children and may place a higher value on workplace flexibility than men. As a result, they may be willing to accept lower wages in return for greater flexibility.

• A substantial share of the gender wage gap cannot be explained by differences in the observable characteristics between men and women, suggesting that discrimination may continue to play a role. This unexplained portion of the wage gap decreased markedly during the 1980s, suggesting a potential decrease in discrimination during the decade, but has remained fairly steady since then. Economists have found evidence of men being favored over equally qualified women in specific instances. For example, an audit study of high-priced restaurants in Philadelphia found women to have a 40 percent lower probability of being called for an interview and to be 50 percent less likely to receive a job offer. Another study found that when symphony orchestras began to adopt “blind” auditions for musicians — in which a screen is used to conceal the identity of the candidate — it substantially increased the probability that women would advance out of preliminary rounds and be winners in the final round.

  Beyond discrimination, it may be that there are differences between the genders that are more difficult to measure than education or work experience that result in different wages. For instance, gender differences in psychological factors or non-cognitive skills may account for a small portion of the unexplained gender wage gap. Women have been found to be less willing than men to negotiate and compete. On the other hand, there is some evidence that women have better interpersonal or “people” skills and are more agreeable than men. Firms and industries may place higher or lower values on such attributes and compensate accordingly. The extent to which these factors are due to societal expectations or are ingrained is a subject of debate.

• Gender roles and the gender division of labor within the family continue to impact women’s work. Research continues to indicate a negative relationship between children and women’s wages, commonly known as the motherhood wage penalty. This penalty could be attributed to the firm’s anticipating that motherhood may cause a woman to leave her employer or alter her productivity. Evidence also indicates that women are more likely to quit their jobs or to exit the labor market for family-related reasons, while men are more likely to quit for job-related reasons, adversely affecting women’s wages relative to men’s. Additionally, the greater tendency of men to determine the geographic location of the family, even among highly educated couples, continues to be a factor in the gender wage gap.

What this means

There has been substantial convergence in the labor market earnings of men and women since the 1980s. Women have made tremendous gains in education and work experience, but reaching pay parity remains elusive. Finding ways to further reduce the gap is likely to hinge on achieving a better understanding of why men and women tend to sort into different occupations and industries. Similarly, recent trends point to the importance of looking into why women’s progress in higher-skilled jobs has been relatively slower. Addressing work-family issues is also important in furthering gender equity in the labor market.

The post Analysis: Why women continue to make less than men appeared first on PBS NewsHour.

Ellen Pao leaves San Francisco Superior Court Civic Center Courthouse during a lunch break in her court case on March 25, 2015. Pao is the author of a new book, “Reset: My Fight for Inclusion and Lasting Change.” File Photo by REUTERS/Stephen Lam

Editor’s note: Ellen Pao’s new book, “Reset: My Fight for Inclusion and Lasting Change,” chronicles her career in Silicon Valley and gender discrimination lawsuit against the venture capital firm Kleiner Perkins Caufield & Byers. Pao recently spoke with PBS NewsHour economics correspondent Paul Solman. Here is an excerpt of their conversation, edited for length and clarity. Watch the full segment on Thursday’s broadcast.

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Paul Solman: From your biography, you do not seem like the person who would sue Kleiner Perkins, or for that matter, pretty much anyone.

Ellen Pao: It’s not my nature. I think the lawsuit was part of a mission to call attention to this problem. I had tried so many other ways beforehand. But this is a culture that has pervasive problems, and seeing the extent of it, [I knew] we need to do a whole reset.

PS: What was the percentage of women in venture capital when you were there?

EP: I believe it was about 6 percent.

PS: And what’s it now?

EP: I think it’s gone down. I think it’s gone down to maybe 5 percent. And you know, less than 1 percent are black, or Latinx.

PS: Do you think that you were sort of suppressing feelings you were having at the time, or the sense you were getting that there was systemic discrimination against you as a woman? Perhaps you as a minority?

EP: There were a lot of small things that would make it very hard for women to be successful. So women were asked to take notes at meetings, and men were not. Women were asked to babysit. Women were asked to do some of the menial tasks of organizing events and planning conferences that the men were not. So, when it came time to invest, which was the work that you would get recognized and promoted for and compensated for, it was much harder for women to be taken seriously and it was harder to get investments through, and it was harder to be successful.

I was getting blocked. I wasn’t being invited to meetings. One of the women at the firm also actually mapped out investments for the women and investments for the men, and showed that the women’s investments were doing significantly better … we have more experience, we have more education, on average, and, we’re not getting promoted. And, as a group, most of the men got promoted.

WATCH: Women eschew Wall Street’s boys’club — and its glass ceiling

PS: And you weren’t getting promoted because?

EP: Because we were women. And there was some kind of belief that the men were better, despite all of the results and the records.

PS: When you confronted that reality, did you think, ‘I’m in the wrong place? This is the wrong world for me?’

EP: I actually tried to quit in 2007. I said, this culture … it’s not my culture. And they told me they wanted to change their culture, that the things that I was bringing up were things that they did not want to be. It wasn’t until I really saw [that] I [couldn’t] succeed, or any other woman in the firm — that was really the catalyst for me litigating.

PS: So you felt it was your duty to sue?

EP: Yeah, I would say that. I felt if I didn’t do it, then who would do it? So I sued for sexual discrimination and retaliation.

PS: Was it worth it?

EP: Yeah. I would do it again. And I think that this year, with all these people coming out and with the press and the public being so much more receptive to their stories and being able to take them at face value, [the kind of criticism] I went through has kind of dissipated as people see, wow, this is a huge problem.

The post Ellen Pao on her gender discrimination suit: ‘If I didn’t do it, then who would?’ appeared first on PBS NewsHour.