Category Archives: News Blog

The Rising Earning Power of Women

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The Rise of Female Breadwinners

Who is the higher income earner in your family?

Over time, the U.S. has seen a rise in female breadwinners. In fact, the proportion of women who earn more than their male partners has almost doubled since 1981.

Today’s Markets in a Minute chart–from New York Life Investments–illustrates the historical trajectory of women’s earning power, as well as systemic challenges women still face.

Then and Now: Gaining Ground

In the last 40 years, there has been considerable progress in both the percentage and number of female breadwinners.

1981 1991 2001 2011 2018
% Female Breadwinners 16% 21% 24% 28% 29%
# Female Breadwinners 4.1M 6.5M 8.1M 8.8M 9.6M

For families that had dual incomes, only 16% of households in 1981 had a female breadwinner. This was equal to about 4 million women across the country at the time.

Fast-forward to the present, and close to 10 million married, female breadwinners were part of the U.S. labor pool in 2018.

Breakthroughs Could Link to Education

Higher education rates and rising earning power are helping to decouple women from pre-existing financial stereotypes.

For married female breadwinners*, the impact of education often plays out as follows:

Education level % of Women Earning Equal or More Than Partner
More education than partner 49%
Same education as partner 29%
Less education than partner 20%

Source: Pew Research Center
*Over age 25

The odds of a woman earning the same or more than her partner skyrockets nearly 250% if she has more education, compared to if she has less education.

Interestingly, when it comes to career trajectories, women and men share similar decision-making rationales. Among surveyed women, 83% were more likely to delay having kids in order to advance their careers, compared to 79% of men. The primary reason: to help secure a stronger financial standing for their future children.

While it is clear that women have become a growing financial force over time, they still face many persistent challenges today.

A Chorus of Systemic Barriers

Women experience a litany of headwinds, both overt and subtle. What are some variables that continue to have a pervasive impact on women’s finances?

Media Bias
According to one study, 65% of media language directed towards women and their finances surrounded “excessive spending”. In contrast, 70% of language towards men discussed “making money” as a masculine ideal.

Financial Well-being
According to a global survey, 85% of women manage day-to-day expenses as much as or more than their spouse. However, 58% of women defer long-term financial and investment decisions to their husbands.

Gender Wage Gap
Based on the median salary for all men and women, women earn 79 cents for every dollar men make in 2019. The gap starts small and continues to grow as people age. How can women close the gap? The Georgetown Center on Education and the Workforce has some advice:

  • Get one more degree
  • Pick a high-paying college major, such as the STEM fields
  • Negotiate starting pay

If current earning trends continue, women will not receive equal pay until 2059.

Leadership Roles
While more women are in the workforce compared to previous generations, they tend to be in lower positions.

Women in S&P 500 Companies

Role Women’s Representation in Role
CEOs 5.8%
Top Earners 11.0%
Board Seats 21.2%
Executive/Senior-Level Officials and Managers 26.5%
First/Mid-Level Officials and Managers 36.9%
Total Employees 44.7%

Why are there so few women CEOs? Men dominate management roles that influence the company’s bottom line, such as COO or sales. On the other hand, female executives typically fill roles in areas like human resources or legal—which rarely lead to a CEO appointment.

The Road Ahead

The last 40 years have shown immense progress, yet there is still plenty of room for further advancement.

Women belong in all places where decisions are being made… It shouldn’t be that women are the exception.

—Ruth Bader Ginsburg, U.S. Supreme Court Justice

 

Who is Prepared to Work at Home in the US

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How Many Employees Are Prepared To Work From Home?

from the St Louis Fed

Due to COVID-19, many firms are asking their employees to work remotely. There are also cases of firms halting work altogether, including automobile manufacturers halting production lines.

In response to the viral outbreak, many state governments have ordered public spaces – such as restaurants – to close or to limit occupancy. In occupations less prepared for remote work, we will expect to see more workers furloughed or laid off as a response to these public health measures. Below we discuss which types of workers are most likely to adjust to the current crisis by working from home based on occupation and income.

Who Can Telecommute?

An increasing trend toward telecommuting since 1980 has been documented in other research by the Federal Reserve Bank of St. Louis.[1] Here, we consider a broader definition of telework in the U.S.: workers who have worked from home at least once during a one-month period. We consider these workers as capable of working remotely under current circumstances. We estimate 13% of full-time workers are ready for remote work as of 2017.[2]

Remote Worker Occupations

The first figure decomposes remote-ready workers by occupation.

Stacked bar chart showing occupation groups for remote workers

Professional workers (includes managerial and technical occupations) represent a little more than 75% of remote-ready workers. Service workers (includes sales) represent approximately 14%. Manufacturing (which also includes construction and farming) and clerical occupations each represent only 5% of remote-ready workers.

Remote Worker Incomes

The next figure decomposes the remote-ready workers by household income.

Stacked bar chart showing household income for remote workers

Individuals in household earning more than $100,000 per year comprise 60% of teleworkers. Those with incomes less than $50,000, together, are only 11% of remote-ready workers.

Effects on Workers

These figures suggest which workers are likely to be asked to work from home during the pandemic event and which are likely to be out of work (though some may remain on payroll). Those with higher household incomes in professional occupations are most likely to work remotely.

Whose Problems Should the US Federal Reserve Address?

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The Crisis in Financial Markets Began Before COVID-19.

The Federal Reserve has been committing hundreds of billions to short-term lending markets for months. It’s time to make that power work for more than just Wall Street, Matt Stoller and Graham Steele suggest.

Well before the pandemic, the Fed injected hundreds of billions of dollars into repo markets for reasons that are unclear.

Last week, the Federal Reserve staged a large-scale intervention in short-term money markets, announcing that it would make $1.5 trillion in loans available in the coming days. It followed with a big rate cut. And this week, the Federal Reserve is going to start lending to any big corporation that needs it, an emergency measure it last took during the 2008 financial crisis. It will be lending essentially unlimited sums to hedge funds, banks, and brokerages.

These subsidies to the financial sector might make sense today, because the COVID-19 pandemic was unexpected and every sector is having problems. The central bank must act and act boldly at such a moment.

But it’s important to divide up responses to the pandemic into shocks to the system that are a necessary result of an unexpected catastrophe, and preexisting problems that we never addressed that are made worse by the outbreak. Seen in that light, what the Fed is doing looks much riskier than it first appears. While the scale of the Fed’s announcement dwarfs its preceding interventions, this was the third of its kind in just the last six months.

Before fears of a recession driven by the impact of COVID-19, there were funding squeezes in the fall and winter of 2019, caused by as-yet unidentified factors. What we do know is that we never fixed the plumbing of the financial system after the 2008 financial crisis, because it’s more profitable for certain financial actors to rely on the Federal Reserve’s balance sheet than to force them to act responsibly. Defenders of the status quo ignore the fundamental questions raised by the fact that shocks, both large and small, have required the Fed to repeatedly prop up short-term credit markets.

Without getting too technical, here’s what’s going on. You and I deposit and borrow money in a simple, regulated system. We get loans through a bank or credit card company, and deposit money in banks guaranteed by the Federal Deposit Insurance Corporation. If our bank goes under, our bank account is guaranteed up to $250,000 by the government.

But hedge funds, brokerages, and big corporations operate in a different banking system. They essentially deposit and borrow money using instruments called “repurchase agreements,” commercial paper, and money market funds, all of which are key parts of what is called the “shadow banking” sector. These instruments are mostly unregulated, which means they can cause bank runs. The government agency charged with investigating what caused the 2008 crisis found that the lack of regulation in this shadow banking sector was a key cause of the crisis.

In 2008, after runs in the shadow banking markets, the Federal Reserve established a variety of rescue programs, lending billions of dollars to keep credit flowing between financial institutions—one of which the Fed has now reopened. But well before the pandemic, throughout last fall and winter, the Fed injected hundreds of billions of dollars into repo markets to ensure proper liquidity and keep interest rates from skyrocketing. Nobody really knows why that was necessary, and faced with today’s crisis, it’s more of an afterthought. But it speaks to the continued instability in these markets.

Short-term funding markets are smaller and more resilient now than they were during the financial crisis, but they still account for trillions of dollars in daily lending. Part of the reason for that is the Fed’s generosity, providing liquidity to the repo market. Still, former banking regulator Daniel Tarullo the panics produced by volatile short-term funding are one of the “greatest risks to financial stability” remaining in all of nonbank credit provision. And even now, bankers are trying to roll back what rules do exist.

Defenders of the status quo ignore the fundamental questions raised by the fact that shocks have required the Fed to repeatedly prop up short-term credit markets.

In the wake of each of the episodes of turmoil in shadow lending, we have avoided asking fundamental questions about the fragile structure of our financial markets. Is our economy best served by a financial system where billions of dollars in essentially “hot money” sloshes around in the good times, but seizes up at the hint of some disruption unless the government intervenes? Is it good for our society, more broadly, to use our central bank’s balance sheet solely to support banks, hedge funds, and other financial actors? Is this really the best system that we can design, or are there more democratic alternatives to the status quo?

  1. We could restrict the use of short-term obligations or give citizens direct access to Federal Reserve bank accounts.
  2. The Fed could lend to nonfinancial businesses, or financial guarantees could be paired with aid for struggling families and workers.
  3. We could subject all financial institutions that benefit from a government backstop—whether engaged in boring banking or shadow banking—to the same comprehensive level of regulation.

These reforms would not only make the economy more resilient.  They would make sure everyone benefits from the Fed’s actions.

We made the choice to structure our financial markets this way, which means we also have the power to change them. It is time for us to stop conceiving of the financial markets, and especially short-term credit markets, as if they are the product of some immutable laws of physics. How many times will we let the plumbing of the financial markets get clogged before we ask if it’s time to finally replace the pipes?

Is Action of the Federal Reserve in the US Enough?

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The US Federal Reserve will pump more than $1 trillion as it ramps up its market intervention as coronavirus melts down the economy.

  • The Fed announced a bold new initiative in an effort to calm market tumult amid the coronavirus meltdown.
  • In all, the new moves pump in up to $1.5 trillion into the financial system in an effort to combat potential freezes brought on by the coronavirus.
  • This was the second day in a row and the third time this week the Fed has stepped in.
  • Stocks staged a sharp turnaround from earlier losses, though some of those gains were pared.
New York Fed to conduct purchases across range of maturities

“These changes are being made to address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak,” the New York Fed said in an early afternoon announcement amid a washout on Wall Street that was heading toward the worst day since 1987.

Stocks were off their lows following the announcement though some of the gains were pared as the market digested the moves. Some in the market were skeptical that the move was enough, and even whether the the Fed itself had the proper tools to reverse the current market downtrend.

“We continue to emphasize that this Fed will act aggressively and in particular that central banks are focused on safeguarding market functioning at this point, and will continue to provide liquidity in scale,” Ebrahim Rahbari, director of global economics at Citi Research. “However, despite the sharp initial risk rally, we think these measures will still not be sufficiently to durably stabilize market sentiment yet in light of credit concerns and escalating health concerns.”

One part of the announcement saw the Fed widen the scale for its $60 billion worth of money the Treasury purchases, which to now had been confined to short-term T-bills.

Blunting The Impact And Hard Choices:

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Early Lessons From China

From the International Monetary Fund: The impact of the coronavirus is having a profound and serious impact on the global economy and has sent policymakers looking for ways to respond. China’s experience so far shows that the right policies make a difference in fighting the disease and mitigating its impact – but some of these policies come with difficult economic tradeoffs.

Hard choices
Blunting The Impact And Hard Choices

Alexei Talimonov
https://www.w-t-w.org/en/cartoon/alexei-talimonov/

 

Other Ways Of Money Laundering!

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Art World: “Panic. Absolute Bloody Panic”
Can the art world clean up its act? In the secretive art market, new anti-money laundering legislation has landed like a bomb.

Jan Dalley reports:  A senior gallerist is describing the first reaction of fellow members of the Society of London Art Dealers to new regulations to combat money laundering in the art market. I’m hardly surprised: even after 15 years of covering the art world as a journalist, I’m often amazed by its peculiar codes and customs, still substantially based on relationships, private agreements and trust.

But this old-school way of doing things, which provides a climate ripe for exploitation by the unscrupulous, is under challenge from the modern world. There has long been concern over the ease with which suspect funds can be laundered through the buying and selling of art. Now, at last, we are seeing a concerted attempt to get to grips with the issue, which — even if welcomed by most — has sparked resentment and wariness. This almost unregulated sector doesn’t take easily or kindly to attempts to legislate it. What we do not know is whether the EU initiative — the fifth Anti-Money Laundering Directive, which spread the net to include luxury goods, property and the art market, and which became law in the UK in January — will prove equal to a problem some have considered intractable.

The art trade seems almost ridiculously tailor-made for money laundering — because of the value of some pieces, because they are usually easily portable, and most of all because of the cult of secrecy that holds sway in the sector. There’s nothing inherently wrong with secretiveness; there can be valid and innocent reasons for it. But there’s clearly room for subterfuge. At least 50 per cent of all art transactions are entirely private and handshake deals are still common; even in the auction houses, which appear to be so public-facing, the price may be disclosed but the identities of both buyer and seller are often guarded to the grave.

Perhaps most significantly of all, there is no registration of ownership of artworks, as there is with shares or property — we don’t know for certain where even some of the most famous pictures are held, or who in fact owns them. Take Van Gogh’s “Sunflowers”, one version of which sold in 1987 for a then spectacular $39.9m to a Japanese buyer (or possibly his company): does anyone know where it is now? …..FT.com
Financial Times: @FT

ft.com

 

How to Whistle-Blow: Dissensus and Demand

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What makes an external whistleblower effective?

Kate Kenny and Alexis Bushnell report:  Whistleblowers represent an important conduit for dissensus, providing valuable information about ethical breaches and organizational wrongdoing. They often speak out about injustice from a relatively weak position of power, with the aim of changing the status quo. But many external whistleblowers fail in this attempt to make their claims heard and thus secure change. Some can experience severe retaliation and public blacklisting, while others are ignored.

This article examines how whistleblowers can succeed in bringing their claims to the public’s atten- tion. We draw on analyses of political struggle by Ernesto Laclau and Chantal Mouffe. Specifically, we propose that through the raising of a demand, the whistleblowing subject can emerge as part of a chain of equivalences, in a counter-hegemonic movement that challenges the status quo. An analysis of a high-profile case of tax justice whistleblowing-that of Rudolf Elmer-illustrates our argument. Our proposed theoretical framing builds upon and contributes to literature on whistleblowing as organizational parrhesia by demonstrating how parrhesiastic demand might lead to change in public perception through the formation of alliances with other disparate interests—albeit that the process is precarious and complex.

Practically, our article illuminates a persistent concern for those engaged in dissensus via whistleblowing, and whose actions are frequently ignored or silenced. We demonstrate how such actions can move towards securing public support in order to make a differ-ence and achieve change…Elmers Story 2020

Isabell Hemming
www.w-t-w.org/en/isabell-hemming

A Whistleblower’s War Against Off-Shore Banking

Josef Ackermann’s Leadership Changed The Bank In 2002

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Dark Towers’ exposes chaos and corruption at the bank that holds Trump’s secrets.
Deutsche Bank was willing to work with Donald Trump when others would not. In his book, David Enrich details Deutsche Bank’s quest to become the world’s largest bank — and how its corporate culture led to countless.

Dave Davies reports: In the 1990s, long before he became president, Donald Trump was known as a cash-strapped New York City businessman with shaky credit.

“His record of defaulting on loans and stiffing his business partners was very long and very well-documented,” New York Times finance editor David Enrich says. “Any mainstream financial institution that had competent risk management systems in place — there is no way they were going to do business with Donald Trump.”

Enter Deutsche Bank, which Enrich says was a “second-tier player” in the banking world in the 1990s. Seeking to make a name for itself, the bank was willing to work with Trump when others would not.

“The bank was so hungry for profits, for short-term profits, and so hungry to make a name for itself in the United States that it was really eager to just disregard any red flags that presented themselves with clients,” Enrich says. “Trump would default on a bond offering. He would default on a loan. He would sue the bank. And yet, time after time, Deutsche Bank executives kept going back to him for more business.”

On Deutsche Bank’s concerns about Trump holding political office…
On Deutsche Bank’s ties to the Nazi regime…
On Deutsche Bank’s transformation in the 1990s…
On Deutsche Bank violating American sanctions…
On Deutsche Bank laundering money for Russian customers…
On the chaos at the Deutsche Bank office in Jacksonville, Fla., which analyzes suspicious transactions…
mprnews.org

www.paolo-calleri.de/

EU To Put Cayman Islands On Tax Haven Blacklist

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The top 10 countries that have done the most to proliferate corporate tax avoidance and break down the global corporate tax system are:

1. British Virgin Islands (British territory)
2. Bermuda (British territory)
3. Cayman Islands (British territory)
4. Netherlands
5. Switzerland
6. Luxembourg
7. Jersey (British dependency)
8. Singapore
9. Bahamas
10. Hong Kong

These 10 jurisdictions alone are responsible for over half (52 per cent) of the world’s corporate tax avoidance risks as measured by the Corporate Tax Haven Index. Over two fifths of global foreign direct investment4 reported by the International Monetary Fund is booked in these 10 countries, where the lowest available corporate tax rates averaged 0.54 per cent…Taxjustice.net

Cayman Islands
In wake of Brexit, EU to put Cayman Islands on tax haven blacklist.
Decision on British overseas territory comes less than two weeks after UK left bloc.

The Cayman Islands, a British overseas territory, is to be put on an EU blacklist of tax havens, less than two weeks after the UK’s withdrawal from the bloc.

In a clear indication of the country’s loss of influence on the EU’s decision-making, the bloc’s 27 finance ministers are expected to sign off on the decision next week.

The EU’s blacklist is an attempt to clamp down on the estimated £506bn lost to aggressive tax avoidance every year but member states are not “screened” in the process of drawing up the blacklist…..TheGuardian.com

Design Rachel Gold
@wtwfinance
www.w-t-w.org/en/rachel-gold