Articles filed under Finance

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  • Millennials shift to homeownership as rents soar Mar 29, 2015 7:38 AM
    Americans in their 20s and early 30s are getting a nudge toward homeownership a decade after sales peaked during the housing bubble. It’s not their nagging parents. It’s rents, which have risen so much that buying is making more sense.

  • If you put 10% of your paycheck into savings, you should be able to retire Mar 29, 2015 7:34 AM
    The Center for Retirement Research at Boston College estimates that 53 percent of households are at risk of not being able to maintain their standard of living once they retire. But many investment managers argue that financial security is actually within reach for most Americans, if only they took some simple steps -- and stuck with them.

  • Black and Latino families twice as likely as others to be low-income Mar 22, 2015 7:37 AM
    As the U.S. economy has picked up again after the recession, it’s become clear that some Americans are getting a bigger share of the recovery than others. A new report released Monday by the Working Families Project, a national initiative that pushes state governments to adopt family-friendly policies, shows that black and Hispanic working families are twice as likely as those headed by whites and Asians to be poor or low-income — a gap that has widened since the recession. The report said that the growing racial inequality raises urgent questions about the nation’s economic future, as black and Hispanic families are becoming an ever larger part of the national fabric. The report said the number of minority workers in the labor force is projected to increase sharply by 2022, while the number of white workers is decreasing. If current trends hold, too many minority workers will not be “prepared for their roles,” the study said. And researchers argue the government should do more. State lawmakers should push for policies such as increasing the minimum wage, expanding financial aid for college, and expanding Medicaid and refundable tax credits for working families to close the gap. “This is a moral as well as economic issue that’s defining the fairness of our society,” said Brandon Roberts, a co-author of the report. “The inequality between hardworking families in America is very real and must be addressed.” Overall, nearly one-third of all working families are either in poverty or earn no more than twice the poverty rate, which is $40,180 a year for a family of three. But 55 percent of Hispanic families and 49 percent of black families fall into that category, in part because they have lower levels of educational attainment than whites and Asians, who have just under one in four working families that are low-income. The report said that nearly half of all low-income working families — and nearly three out of four low-income black working families — are headed by single parents. Also, more than half of low-income Hispanic families had at least one parent who did not complete high school. By contrast, just 16 percent of white workers were high school dropouts. Still, educational differences explain just part of the income gap, as white workers tend to earn higher wages than blacks and Hispanics at every educational level. The report, which is based on census statistics, found that the median earnings for white high school dropouts working full time was $31,606 — which was higher than the $31,061 earned by black high school graduates in full-time jobs. The report, which was funded by the Annie E. Casey, Ford, Kresge and Joyce foundations, found that low-income black and Hispanic workers tend to be concentrated in low-paying professions such as food preparation, retail sales, health care aides and housekeeping. Changing that, the report emphasized, is crucial to the nation’s future. “In little more than a generation, racial/ethnic minorities will make up the majority of the U.S. population and labor force,” the report said. “Minority workers will play a critical role in keeping Social Security and Medicare solvent. But if current levels of inequality persist, younger workers and their families will not be able to move into the middle class, which will significantly impact the well-being of our country.” • Fletcher is a national economics correspondent, writing about unemployment, state and municipal debt, the evolving job market and the auto industry.

  • At current rate, American women won’t see equal pay until 2058 Mar 22, 2015 7:35 AM
    When it comes to equal pay, the American woman is stuck in a proverbial waiting room. But the number on her ticket — the length of her stay — largely depends on where she lives and to whom she was born. A new report from the Institute for Women’s Policy Research, released this week, predicts U.S. women won’t reach pay parity with men until 2058. And the wait could be much longer for those in Wyoming and Louisiana, for example, where women on average make less money than female peers in other states. Closing the gender wage gap is generations away in Wyoming, the study’s authors predict. The projected year: 2159. Louisiana ranks second to last by a half-century (2106) and is followed by North Dakota (2104). To reach these dismal conclusions, researchers crunched U.S. census data: How many women in a given area were working? In management roles? In science, technology, engineering or math fields? At what pay? Rates of progress, the researchers found, varied drastically by state, race and educational attainment. The unifying theme: Women across the country have a long way to go. The analysis isn’t entirely bleak. As women’s earnings have grown (while men’s have stagnated), the gender pay gap narrowed sharply in the 1980s and ‘90s. In 2013, women made 78.3 cents for every dollar men earn, ed up from 60.2 cents in 1980. During the past three decades, inflation-adjusted median earnings for women’s full-time, year-round work spiked nationally from $30,138 to $39,157. Men’s earnings decreased slightly from $50,096 to $50,033. Since the early 2000s, though, progress toward wage equality has sputtered almost to a halt. Median earnings for women have remained largely consistent. But female labor force participation declined from 59.6 percent in 2002 to 57 percent in 2014, according to the Bureau of Labor Statistics. Women also remain underrepresented in the highest-paying fields: engineering, technology and medicine. Across industries, they hold far fewer upper-management positions. For example, only 16.9 percent of Fortune 500 board seats are female-occupied. Parity appears closer for East Coast women. New York has the narrowest wage gap: Empire State women earn 87.6 cents for every dollar banked by men. Maryland and the District of Columbia, trail slightly with 87.4 and 87, respectively. Less urbanized states show the starkest disparities. The gender earnings ratio in Louisiana is 66.7, ranking dead last. Women in West Virginia (67.3) and Wyoming (67.9) don’t fare much better. Florida women could reach equal pay first — in 2038. California and Maryland are tied for second (2042). Women’s earnings differ by race and ethnicity: across the largest ethnic groups in the United States, Asian Pacific Islander women earn the most annually at $46,000, making 88.5 cents for every dollar earned by men. Native American and Hispanic women take home the least annual income at $31,000 and $28,000, respectively. Hispanic women, though, face the widest wage gap of America’s most prominent racial groups. The female-to-male ratio: 53.8 percent. Women now outpace men in college enrollment. Those with a bachelor’s degree typically earn twice as much as those with less than a high school diploma. But across all levels of education, men earn significantly more than women with equal schooling. The wage gap is the largest for those with the most educational attainment: Women with graduate degrees make only 69.1 percent of what men with graduate degrees earn. The share jumps to 71.4 percent for women with bachelor’s degrees. (Both groups take on comparable amounts of debt.) The report’s conclusion: “These data indicate that women need more educational qualifications than men do to secure jobs that pay well,” researchers wrote. Millennial women face a narrower wage gap, earning 85.7 cents for every dollar earned by male peers. More than 1 in 3 millennial women work in managerial or professional occupations, compared with 1 in 4 millennial men. It’s important to note that many female workers of this generation have not yet hit their childbearing years. Mixing motherhood and employment is an oft-cited driver of pay disparities. The majority of senior citizens — people older than 65 — are women. Many work full time: 14 percent worked year-round in 2013, according to census data. But on average, they made less than younger demographics, or women 16 to 65: $37,000 annually, compared with $38,000 annually.

  • If economists were right, you would have a raise by now Mar 22, 2015 7:34 AM
    Six years into the U.S. expansion, the link between falling unemployment and rising wages — once almost as basic to economic theory as supply and demand — seems to be coming unhinged.

  • Who could win and who could lose if the Fed hikes rates Mar 22, 2015 7:32 AM
    Interest rates could soon rise in the U.S. for the first time in almost a decade, and that’s shaking up financial markets. If you own stocks of Coca-Cola or Procter & Gamble, you may already see the impact in your 401(k). And if you’re making plans to visit Europe, you’ve probably noticed the dollar has surged against the euro.

  • The real promise of the ‘sharing economy’ is what it could do for the poor Mar 22, 2015 7:38 AM
    The sharing economy often feels like a place full of well-off millennials, digital natives who have smartphones, credit cards and reliable Internet connections. You need a certain amount of online savvy to rent a spare room on the Internet, not too mention the extra income to use Uber instead of the bus. Then there’s the cultural barrier to entry that’s a little harder to define: You have to be cool with sharing an apartment or loaning a tool to someone you met on the Internet. This picture of who’s doing the sharing in the sharing economy today makes this argument from New York University’s Samuel Fraiberger and Arun Sundararajan provocative: In the long run, they argue in a new paper, the people who stand to benefit the most from new peer-to-peer rental marketplaces for everything from cars to gadgets are low-income consumers. They repeatedly found that result in a model they developed, using data from the car-rental service Getaround, to test how the sharing economy will change ownership patterns and asset prices, and who these marketplaces will benefit as they expand. “We highlight this finding because it speaks to what may eventually be the true promise of the sharing economy,” they write, “as a force that democratizes access to a higher standard of living.” This argument makes economic sense, in theory. Any time you create a rental alternative for goods that previously had to be owned, that benefits people who couldn’t afford to buy those goods before. This applies not just to cars, but to vacations, blenders, designers dresses, tools, plumbing equipment. Now people who couldn’t afford a $300 monthly car payment might be able to spend $15 here or there to ride in another person’s car or rent one to run weekly errands. Now people who’d never have the money to buy a drill have more options to rent one instead. Until now, these were goods accessed primarily through ownership. And if you couldn’t afford to own them, you simply didn’t use them at all. Peer-to-peer marketplaces where people pay less to use these things only occasionally could fundamentally change that dynamic. Fraiberger and Sundararajan additionally argue that lower-income consumers who now own, say, a costly car, will be able to shift to renting one instead. They’ll probably make that shift from owning to renting at higher rates than upper-income consumers for whom the savings wouldn’t be as valuable. Lower-income consumers also stand to gain the most from renting out their goods on these platforms. The ability to make extra income off expensive items makes those items less expensive. And this effect is more powerful if you’re low-income: If you’re a waitress, an extra $20 from renting your car probably means more to you than if you’re a lawyer. In fact, perhaps $20 here and there will enable you to trade up from a used car to a new one. “One of the reasons why I have found the sharing economy a really appealing topic,” Sundararajan says, “is because I think that it creates this opportunity for people to be able to get stuff and experience stuff that they wouldn’t otherwise be able to afford.” He’s had this experience himself in Uber Black cars. “I wasn’t the kind of person who went around everywhere in black cars,” he says. “It felt good, it felt like I was living someone else’s life. You press a button and a town car rolls up and takes you where you want to go. I’ve heard this from people on Rent the Runaway, or from people who take better vacations because they can now afford them with Airbnb.” It’s not clear, however, that the people who stand to benefit the most from the sharing economy in an economic model will actually gain those benefits in the real world. There’s not a lot of evidence right now that lower-income consumers are using these platforms in large numbers. In fact, there’s some evidence of the opposite. Bikeshare systems are a great example of a cheap alternative to transit that could save low-income workers a lot of money. But many cities have struggled to lure low-income riders. Part of the barrier is logistical; you have to have a credit card and a smartphone to access many of these platforms today. But another piece may be cultural. A lot of survey data suggests that lower-income people are less trusting of their neighbors or society in general than the upper-income. And trust is a key prerequisite in any marketplace where people lend and borrow possessions with strangers. It’s also worth asking this awkward question: Will upper-income consumers still be as eager to share (or rent) their homes, cars and possessions when these marketplaces expand to include more low-income users? Does this kind of sharing work today, in other words, because most people aren’t sharing across socioeconomic lines? • Badger is a reporter for Wonkblog covering urban policy. She was previously a staff writer at The Atlantic Cities.

  • Stocks fall as Fed meets on interest rates Mar 17, 2015 5:10 PM
    U.S. employers have added more than 200,000 jobs in each of the past 12 months, and the unemployment rate has fallen to 5.5 percent. That is the lowest rate in seven years. On the down side, a report on Monday showed output at the nation’s factories fell for a third straight month in February. “We keep getting good economic information, then bad economic information,” said Aaron Jett, an equity strategist at Bel-Air Investment Advisors. “There’s no conviction about what the Fed will do.”

  • New Dreamliner rolls out; union in wings? Mar 17, 2015 7:13 PM
    The aircraft is 20 feet longer and carries more passengers than the standard 787 Dreamliner. It’s also the 250th Dreamliner delivered by the company.

  • A glimpse at the selling-your-business process Mar 16, 2015 5:00 AM
    Small Business Columnist Jim Kendall takes a glimpse at selling your own business. He talks to local experts about the process.

  • Tourney pools illustrate NCAA struggles with gambling Mar 15, 2015 8:05 AM
    The NCAA men's basketball tournament bracket pool is an inimitably American tradition that encapsulates all that is complicated, contradictory and, some say, hypocritical about the cultural and financial heft of sports in our society.

  • Kirkland’s in Hoffman Estates to close by March 31 Mar 10, 2015 3:45 PM
    Kirkland's home furnishing store at Poplar Creek Crossing in Hoffman Estates is closing by the end of March.

  • Major credit agencies agree to changes sought by advocates Mar 9, 2015 9:49 AM
    The three largest credit-reporting agencies say they will change how they handle records, including making the dispute process easier for consumers and providing a waiting period before medical debts are reported. Consumer advocates have long sought a revamp. Data collected by the agencies on hundreds of millions of people are used to create “credit scores” which can determine who gets a loan and how much interest is paid on that loan.

  • Fraudsters profit as more file their taxes online Mar 8, 2015 7:41 AM
    When Jeff Parish signed onto his TurboTax account recently, he was surprised to see that the popular online filing service had already calculated a federal refund — to the tune of more than $5,000. But there was a problem. The 61-year-old marketing executive from Fairfax, Virginia, was just starting the process of filing his taxes, not finishing it. Somebody had broken into his account, completed a fraudulent return and diverted Parish’s refund to a prepaid debit card.

  • Customers of retailers facing bankruptcy often left holding gift cards Mar 8, 2015 7:43 AM
    Since the end of last year, retailers representing thousands of stores have declared bankruptcy and begun winding down their businesses. RadioShack, the almost-century-old electronics chain, joined the list when it filed on Feb. 5. The company got court approval to honor gift cards for 30 days after that date, meaning customers have to act by the end of the week if they want to use the cards.

  • Why it’s nearly impossible for you to sue your credit card company Mar 8, 2015 7:33 AM
    The Consumer Financial Protection Bureau is expected to issue a major report next week on what consumer advocates say is one of the leading but most misunderstood ways that companies limit a customer’s rights, people familiar with the matter said. The practice is called “mandatory arbitration,” which bars consumers from filing class action lawsuits or taking other steps to seek relief after they feel a company has wronged them.

  • Economist: Winter weather hampering economy Mar 4, 2015 3:00 PM
    About 500 business community leaders attended a Lake County Partners economic breakfast Wednesday morning where Economist Diane Swonk said we are going from a Wall Street to a Main Street economy. Economic Architect Mark Lautman spoke about economic development changes.

  • All the things women could afford if there was no gender pay gap Mar 1, 2015 7:00 AM
    Two houses, 14 cars, or 37 years of family meals: That’s what the inequality in earnings between women and men can end up costing a woman over her lifetime, according to analysis by the Center for American Progress.

  • Millennials won’t lose recession scars anytime soon Mar 1, 2015 7:44 AM
    With the U.S. economy gaining steam, employers are finally hiring — and those benefits have spread to most corners of the job market. Even America’s young adults, who bore the brunt of the downturn, are starting to regain their economic footing. That doesn’t mean all is well for millennials, especially those who entered the workforce when things were at their worst. Improvements in the headline statistics mask some of the longer- lasting effects of the recession.

  • How restaurants get you to spend more money Mar 1, 2015 7:00 AM
    You may think you’re immune to transparent sales pitches like, “Do you want fries with that?” But the tactics restaurants use to nudge you into spending a little extra may be subtler than you realize. Here’s a look at a few ways companies get you to spend (and eat) more than you intended.

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