Day: June 25, 2020

The IRS sent more than $1 billion in stimulus checks to dead people

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The Internal Revenue Service sent out 1.1 million stimulus checks to dead people totaling $1.4 billion, according to a new report from a government watchdog agency.

As the IRS hurried to process direct payments to Americans reeling from the coronavirus outbreak, the Government Accountability Office said the tax agency didn’t use Social Security death records to filter out payments to the deceased.

The $1.4 billion paid to dead people accounts for 0.5% of the total value of stimulus checks.

The watchdog agency noted Thursday it recommended a way for the IRS to avoid sending stimulus checks to dead people back in 2013, after some Great Recession-era stimulus checks went to the dead.

At that time, more than 71,500 dead Social Security recipients were paid a total $18 million of the $13 billion allotted for all Social Security recipients in the Obama-era stimulus package, according to the Social Security Administration’s Inspector General.

The IRS used those 2013 recommendations to create a process where it used death records to update taxpayer accounts.

But it didn’t use the controls when it came to stimulus checks and “substantially increased the risk of potentially making improper payments to decedents,” according to the Government Accountability Office (GAO) report.

As of May 31, the IRS has distributed 160.4 million stimulus checks, dubbed “economic impact payments” either as direct deposits, paper checks or debit card. The payments totaled $269.3 billion.

The $1.4 billion paid to dead people accounts for 0.5% of that total.

The IRS started distributing the checks in early April and stories started cropping up about checks to dead people — including one from a friend of a Kentucky congressman.

Don’t miss: I received a $1,200 stimulus check addressed to my late mother. What should I do now?

The stimulus checks are $1,200 for people with adjusted gross incomes below $75,000 and $2,400 for married couples making less than $150,000. The IRS looks at 2019 income returns to determine eligibility, and if it doesn’t have that, it looks at the 2018 return.

If a person had a 2018 return, but died, the IRS — without reliance on death records — wouldn’t have a way to know if the recipient was alive.

Last month, Treasury Secretary Steven Mnuchin said the relatives of dead stimulus checks recipients needed to return the money.

Last month, Treasury Secretary Steven Mnuchin said the relatives of dead stimulus checks recipients needed to return the money.

The IRS outlined a process on how to remit payment. The instructions, however, don’t discuss consequences if people do not send the money back.

Apart from the instructions on the IRS website, the new report said the tax collector isn’t planning extra steps to notify ineligible recipients and their families about the return process. The IRS should rethink that decision, the GAO report said.

The IRS and the Treasury Department didn’t immediately respond to a request comment on GAO report or consequences for people who do not return checks.

The IRS and Treasury Department didn’t use death records before sending out the first three batches of payments. That accounted for 72% of all the stimulus check money disbursed by May 31.

The IRS has full access to the Social Security Administration’s death records, according to the GAO but the Treasury Department its Bureau of Fiscal Service, which actually distributed the money, do not.

The Treasury Department should have the same access to the records, the GAO recommended.

Mortgage rates hold steady at record lows — but can you really take advantage of them?

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Mortgage rates remained at all-time lows for the second week in the row, which could present an opportunity for some homeowners to grow their emergency funds.

The 30-year fixed-rate mortgage averaged 3.13% for the week ending June 25, unchanged from the week prior, Freddie Mac FMCC, reported Thursday. Comparatively, these loans had an average rate of 3.73% a year ago.

The 15-year fixed-rate mortgage rose one basis point to an average of 2.59%, while the 5-year Treasury-indexed hybrid adjustable-rate mortgage fell by that same amount to 3.08%.

“Mortgage rates held steady today as investors remained concerned about the economic and real estate outlook, following this week’s drop in existing home sales and the International Monetary Fund’s downgraded global GDP forecast,” said George Ratiu, senior economist at

The low-rate environment has made refinancing a more attractive proposition overall to many Americans.

But cash-out refinances, through which homeowners can tap some of their home’s equity, have taken on additional significance in the context of the country’s shaky economy.

“A cash-out refinance may also provide borrowers with some breathing room in the event that they find themselves in a short-term financial challenge,” said Rick Sharga, a mortgage industry veteran and founder of CJ Patrick Company, a real-estate consulting firm.

Don’t miss:Mortgage rates keep falling to record lows — so is now a good time to refinance?

But getting a cash-out refinance could prove difficult right now. Most banks have restricted their mortgage lending activity significantly amid the coronavirus pandemic. Many require borrowers to have higher credit scores, lower debt-to-income ratios and a more solid employment history than prior to the outbreak in order to qualify for a loan.

Borrowers who work in industries hard hit by the pandemic may face an extra burden in qualifying for a new mortgage, experts said.

Lenders have also mandated that borrowers have larger down payments, meaning lower loan-to-value ratios. That could limit how much a homeowner could pull out of their home if they can find a lender willing to do a cash-out refinance.

Also read:This is how long the coronavirus pandemic could delay millennials’ homeownership

Many studies have shown that a significant share of Americans lack an emergency fund to cover unexpected expenses or a loss of income. As jobless claims continue to remain high, having access to one’s home equity could prove handy in the unfortunate event that a homeowner loses her job or faces a salary cut.

But cash-out refinances aren’t foolproof. “Borrowers should be careful that they don’t tap into their equity, spend that money and run up new, higher interest debt — that’s a lose-lose scenario,” Sharga said.

‘Borrowers should be careful that they don’t tap into their equity, spend that money and run up new, higher interest debt — that’s a lose-lose scenario.’

— Rick Sharga, founder of CJ Patrick Company, a real-estate consulting firm

Time may be of the essence, too. “The recent surge of coronavirus cases in a number of states across the country has only added to the uncertainty, making it increasingly difficult for lenders to price in the appropriate amount of risk and gauge the long-term value of the loan they’re issuing,” said Matthew Speakman, an economist at Zillow ZG, -0.88% .

“That said, should this increase in COVID-19 case volume continue, mortgage rates would almost certainly fall further to new all-time lows; however, rates would likely rise if states can demonstrate that they have a handle on the virus,” Speakman added.

Low mortgage rates also benefit home buyers, naturally, since it makes the transaction more affordable. But even here, there will be limits to which buyers can actually take advantage of the low-rate environment.

Aside from the added challenges in qualifying for a loan, the housing market today remains highly competitive thanks to the low supply of homes for sale.

“Uncertainty over jobs is keeping many sellers on the sidelines and the steep decline in the number of homes for sale is pushing prices above their pre-pandemic pace and making homes less affordable for buyers currently in the market,” Ratiu said. “Low mortgage rates can only go so far in motivating buyers, when they meet reduced credit availability, fewer homes and higher prices.”

Where Should I Retire?: I’ve got a budget of $3,300 a month and want to be near some ‘wild’ areas — where should I retire?

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Dear MarketWatch,

I want to retire within a one day (about 10-hour) drive of my family in Northern New Jersey. I want to be on the water, fresh or salt, and near some “wild” areas like national or state parks, wilderness areas, etc. My retirement income will be about $3,300 a month before taxes and I’d like to keep those to a minimum. Obviously, a good hospital and airport are important and I like local theater, live music and a college town is a plus.

What have you got for me?


Dear Ken,

Natural beauty, low taxes and access to good medical care and entertainment options — you’re hardly alone. Your budget of just under $40,000 makes it more of a challenge, but here are some strong suggestions. Given how housing costs and crime rates can vary, don’t forget to check out the nearby towns.

Morgantown, West Virginia

That request for “wild” areas grabbed me, and my first thought was West Virginia, specifically Morgantown, a river town of 30,000 nestled in the Appalachian foothills and home to West Virginia University and about 27,000 college students. As you’ve figured out, a college town punches above its weight with amenities, in this case a teaching hospital as well as theater and music.

You’ve got water — especially the Cheat River to the east and its whitewater rapids. Cheat Lake and Copper Rock State Forest are less than half an hour east of the city, so there are plenty of outdoor opportunities. Plus Morgantown is in the middle of the 238-mile Parkersburg to Pittsburgh (P2P) Rail-Trail under development (overlapping in part with the Great Allegheny Passage) that will open up even more options.

Taxes are relatively low; the National Tax Foundation says the state ranks 19th for “Tax Freedom Day” — how long it takes to pay all federal, state and local taxes for the year.

You didn’t mention whether you’ll be selling a house and using the proceeds for housing. So I’m assuming you’ll be renting. The median rent, including utilities, is $821, according to the Census Bureau, or about 25% of your budget. You can see what’s available now on (owned, just like MarketWatch, by News Corp.).

Overall, the cost of living here is lower than in my other two suggestions.

The airport isn’t great; flights are only to Pittsburgh and BWI airports. Or you can drive two hours to Pittsburgh (an area you may also want to check out, but affordable housing will be harder to find). The drive to northern New Jersey is about six hours.

Roanoke, Virginia

If Morgantown doesn’t appeal, what about Roanoke, Va., with the Blue Ridge Mountains and the George Washington and Jefferson National Forests as your playground and the Appalachian Trail around the corner? You’d have some great hiking and mountain-biking options. Plus there’s Smith Mountain Lake with 500 miles of shoreline an hour away.

Roanoke is a bigger city than Morgantown, with about 100,000 people, and has a better airport. There’s a walkable, lively downtown, the extensive Roanoke Valley Greenway system for more biking and walking options, one of the oldest farmers markets in the country, plenty of cultural options, including some minor-league sports, and three health-care systems, including the Veterans’ Administration and a level 1 trauma center.

If you’re looking for craft beer, the Roanoke area is your place. On top of the locals, Deschutes, the Bend, Ore., brewer, is building its East Coast brewery here.

The town’s average age is actually decreasing as more young professionals move in, a good sign. But the college town feeling may be less pronounced than in my other choices; Roanoke College is a 2,000-student liberal arts school. You can always get your big-sports fix at Virginia Tech 45 minutes away in the smaller city of Blacksburg.

Virginia isn’t as tax-friendly as West Virginia, but the overall cost of living in the Roanoke area is 10% below national average. The median rent in the county is $949, according to the Census Bureau, but still under 30% of your budget. (See what’s on the market now)

And if you decide you want to supplement your income, the Roanoke area’s unemployment rate has been below the national average, unlike Morgantown, making it easier to get a job.

The drive to North Jersey is seven hours along Skyline Drive (and you miss the Washington, D.C. traffic). There’s also Amtrak service for those times you don’t want to drive.

Columbia, South Carolina

If you’re willing to drive a bit more than 10 hours, Columbia, S.C. pops up as a prime choice in MarketWatch’s “where should I retire” tool.

This city of 133,000 people is another river town and home to both the state capital and the University of South Carolina with its 35,000 students and SEC sports. Of the three, this definitely will offer you the most cultural choices, and craft brewers abound too. Minor-league baseball offers more summer entertainment, and there are plenty of biking and walking trails. As for your water and wild fix, Lake Murray, a 50,000-acre man-made lake, is 15 miles away and Harbison State Forest is a bit closer. Congaree National Park, which preserves the largest tract of old growth bottomland hardwood forest left in the United States, is a half-hour away.

The airport you want? Nonstops to eight major cities, mostly on the East Coast. The far bigger Charlotte, N.C., airport is less than two hours away. It, too, has Amtrak service.

Of the three, temperatures are the hottest, and it is the muggiest. But if you hate snow, you’ll barely get any here.

South Carolina matches West Virginia in tax-friendliness, using that same National Tax Foundation calculation. Median rents across the county are $952, according to the Census Bureau, and the city itself is a bit cheaper. (Here’s what’s on the market now)

Overall, the cost of living is about 8% below the national average. Unemployment here, too, has been below the national average.

A word of warning: it’s being discovered.

Of course, the numbers will tell you only so much. Spend some time in each place you’re considering and see what clicks with you. You may also want to spend some time thinking more deeply about taxes and which kind you’ll pay. Many states don’t tax Social Security. That may make Pennsylvania and Maryland more appealing, for example. On the flip side, sales taxes in Columbia are an above-average 8%.

Read: I ran the tax numbers for a semi-retired life, and they look amazing

I did look north, but Burlington, VT, is a tougher budget fit. Ithaca, NY, was cast aside for the same reason. Anyone have any other suggestions for Ken? Weigh in below.

Mark Hulbert: Why there’s so much drama about when to claim Social Security

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No wonder there’s such wide disagreement about the optimal age at which to begin receiving Social Security.

Seemingly trivial differences in how you ask the question lead to dramatically different responses. You get one answer if you frame the issue in terms of how long soon-to-be retirees must live before they make up the income they lose by not claiming their Social Security benefits at age 62. And you get quite another if you frame the issue in terms of how much less their monthly payment will be if they start receiving benefits before reaching the maximum retirement age of 70.

These two ways of framing the issue are just the flip sides of the same coin, of course, so if we were entirely rational economic actors, as economists like to assume, our answers would be the same regardless of how the question is phrased.

But, needless to say, we’re not entirely rational.

Welcome to the growing field in behavioral economics known as “choice architecture.” It focuses on the impact on our choices of the different ways in which those choices are framed.

One economist who has extensively studied choice architecture is Dan Ariely, a professor of psychology and behavioral economics at Duke University. He goes so far as to argue that our decisions are often made for us, since how choices are framed can have a bigger impact on our answers than the thought process we go through in coming up with those answers. (Click here for one of Ariely’s TED talks on the subject.)

So while we think we are objectively analyzing the pros and cons of the choices we’re given, we in fact are being unconsciously led toward one choice or another simply because of how those choices are framed.

The impact of choice architecture on the Social Security claiming decision was studied several years ago by Jeffrey Brown (Dean of the College of Business at the University of Illinois at Urbana-Champaign and director of the Retirement Research Center of the National Bureau of Economic Research), Arie Kapteyn (a professor of economics at the University of Southern California), and Olivia Mitchell (who holds two professorships at the Wharton School of the University of Pennsylvania: Business Economics and Public Policy, and Insurance and Risk Management).

To understand their findings, it’s worth remembering that the Social Security Administration (SSA) has set the magnitude of Social Security benefits to be actuarially equivalent no matter when you decide to begin receiving benefits. If you claim your benefits at age 62, the first year in which you’re eligible, you will receive payments over a longer period of time but at a reduced rate. If you instead claim at age 70, the age by which you must begin receiving benefits, your monthly payments will be commensurately higher.

The net effect is that, if you live as long as what is shown in the SSA’s actuarial tables to be your life expectancy, the inflation-adjusted value of your lifetime benefits will be more or less the same regardless of when you start claiming benefits. That means there’s a limit to how much benefit you get from slicing and dicing the numbers.

For their study, the professors surveyed several thousand soon-to-be retirees about the age at which they intended to claim their Social Security benefits, altering slightly the way the question was asked. Those slightly differences had a huge impact.

Consider two of the ways in which the professors posed the survey question:

• The first started by reporting how much the monthly benefit would be if the respondent chose to begin receiving benefits at age 62. It then reported the impact of delaying this claiming decision, indicating how many years he would need to live before receiving the same lifetime Social Security benefits he otherwise have received by not delaying.

— Specifically, this first way of posing the question read: “If you delay claiming, your monthly benefit will increase. For example, if you claim your benefits at age 63 (one year later), your benefit will increase by $103 per month… However, by delaying your benefit by one year, you will forfeit the $18,588 that you would have received between age 62 and 63. By our calculations, you would need to live at least 15 more years in order to get back the $18,588 you forfeited by waiting one year.” [These dollar amounts were current at the time the Survey was conducted.]

• The second simply reported what the respondent’s monthly payment would be at each possible age at which benefits could be claimed. It didn’t frame these payment amounts as more or less than those associated with another claiming age, but just the raw amounts themselves.

— Specifically, this second way of posing the question read: “Suppose that you claim your benefit at age 66. In this case you will receive $2,065 each month… If you claim one year earlier, at age 65, your benefit would be $1,927 a month. If you claim one year later, at age 67, your benefit would be $2,230 a month.”

Notice that, in comparison with the second, the first way of posing the question frames the decision as a risky bet on your life expectancy. Since we don’t like to take risky bets with our retirements, it shouldn’t surprise us that this way of posing the question would lead people to an earlier claiming age. And that is precisely what the professors found: Respondents who had their choice framed in the first way chose an earlier claiming age—15 months earlier, on average. That statistically was very significant.

Note furthermore that these are just two of the ways in which the professors made seemingly slight changes in their survey question. Each of the additional eight changes they analyzed also had an impact on the average claiming age of respondents.

There is much irony here. Think of all the ink that has been spilled over the years in an attempt to come up with the one right answer for when you should begin receiving Social Security—only to discover that the answers were predetermined by seemingly benign differences in how the questions were worded in the first place.

The general implication of this research is the need to be aware of the potential impact of how a question is framed. Specifically for when to claim Social Security, the implication is to examine the question from each of many different angles. A good place to start is by asking the 10 different questions that the professors posed in their surveys.

Mark Hulbert is a regular contributor to MarketWatch. His Hulbert Ratings tracks investment newsletters that pay a flat fee to be audited. Hulbert can be reached at

California voters will weigh in on affirmative action in November. Here’s what that means for the rest of the country

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Over the past few decades the question of whether affirmative action is an appropriate antidote to centuries of discriminatory policies have animated the court system and voting booth. As Americans have become increasingly focused on systemic racism over the past several weeks, those questions have taken on new urgency.

Now, California voters will have a chance to weigh in with potentially precedent-setting consequences for the way colleges consider race in admissions — one of the most hotly contested battlegrounds in the affirmative action debate.

On Wednesday, the California Senate voted to approve California Assembly Constitutional Amendment No. 5, which seeks to repeal Proposition 209. The law, passed in 1996, bans the state from discriminating against or offering preferential treatment on the basis of race, gender and other criteria in hiring public employees, awarding public contracts and admissions to public universities in the state.

If approved by voters, the law would allow the state’s public colleges to consider race in their admissions process. But the decision could also have implications for the higher education landscape beyond California.

‘There is a growing recognition that there is an inexcusable gap between who we profess to want to be as a society and who we are.’

— Jonathan Feingold, a professor at Boston University’s School of Law

“It’s not a far reach to think that if voters in California begin to think differently about college admissions and understand the importance of racial equity and racial diversity and rescind their ban, that might prompt people in other states to think similarly,” said Ralph Banks, a professor at Stanford Law School. “It could even affect Supreme Court decision making.”

The role of race in college admissions

Already, the U.S. Supreme Court has limited the ability of colleges to use race as a factor in admissions decisions. Colleges are allowed to consider race only as part of a broader goal of achieving educational diversity. In addition, they can only weigh race as part of a holistic evaluation process that considers many factors — strategies such as quota systems are effectively banned.

These restrictions set a ceiling for how large of a role race can play in college admissions. It’s possible that bar could change. Lawsuits against Harvard University and the University of North Carolina Chapel Hill over the schools’ admissions practices are winding their way through the court system and could make their way to the Supreme Court.

Stakeholders have expected that if given the opportunity to weigh in again, the court would likely restrict colleges’ ability to use race even further, given the conservative majority of the justices. But the decision of California voters could change that calculus, said Banks, the author of the forthcoming book, “Meritocracy in an Age of Inequality: Race, Class and College Admissions.”

Throughout history there are examples of politics at the state level influencing the Supreme Court. Before the court outlawed state bans on interracial marriage, several states repealed their own laws. Before the Supreme Court legalized gay marriage in 2015, dozens of states had already done so.

In those cases, “public opinion shifted and the atmosphere changed and then it seemed more sensible or less radical even for the Supreme Court to step in,” Banks said.

Influence of protests

Now, there’s a major force shifting public opinion — the demonstrations and attention to systemic racism in the aftermath of the killing of George Floyd by police.

“It’s impossible to extricate this from the protests we’re seeing,” Jonathan Feingold, a professor at Boston University’s School of Law, said of the debate over affirmative action. “There is a growing recognition that there is an inexcusable gap between who we profess to want to be as a society and who we are.” One way to close that gap is to account for race and gender in college admissions, hiring and other decisions, he said.

When the University of California’s Board of Regents announced their endorsement of ACA 5, they referenced the current political moment. “There is amazing momentum for righting the wrongs caused by centuries of systemic racism in our country,” John Pérez, the chair of the Board of Regents, said in a statement, “the UC Board of Regents’ votes to endorse ACA 5 and to repeal Proposition 209 plays a part in that effort.”

America’s higher education system is plagued with inequities. The colleges and universities that educate the bulk of low-income students and students of color tend to have fewer resources. The segment of elite, wealthy schools that have the funds to get students to and through school with minimal debt educate a relatively small share of these students.

In addition, metrics that are often the gateways to these schools — like standardized test scores — often benefit students with access to resources like well-funded public schools and test prep courses. The UC system announced earlier this year that it would suspend the requirement that California applicants submit an SAT or ACT score and eventually move to a “test-blind” system, where admissions officers can’t consider these scores in their decisions.

Debate over affirmative action mirrors others around the country

Advocates of repealing Proposition 209 say that the restrictions it has imposed over the past 24 years have made it difficult for California’s public colleges and universities to address these diversity issues.

“We can’t ignore the fact that racism does exist,” said Elisha Smith-Arrillaga, the executive director of Education Trust-West, an organization focused on equity in education. “The way that we think about affirmative action is that having race is one of many tools that you use in allocating resources just helps to level the playing field.”

Before 1996, when the law was enacted, the share of freshman in the University of California system from underrepresented racial groups averaged around 20%, according to a fact-sheet from the UC system. In 1998, that share dropped to 15%. By 2016, that share had increased to 37%. During the same period, the share of high school graduates from underrepresented racial groups grew from 39% to 56%.

Supporters of the 1996 law look at that same data and argue that the state’s schools have become more diverse during the period Proposition 209 has been in place. They also worry that getting rid of it could effectively discriminate against some groups.

Similar debates are raging in other settings. The organization suing Harvard has argued that the school’s policies discriminate against high-achieving Asian-American applicants while giving a boost to students from other racial groups. In New York City, the mayor’s proposal to eliminate the use of a standardized test in admissions to elite public high schools, as a way to ensure the institutions better reflect the diversity of the city, was met with opposition, particularly from some Asian-American families who said the plan would unfairly cut off their kids’ access to these schools.

“You’re putting the thumb on the scale,” said Crystal Lu, the president of the Silicon Valley Chinese Association Foundation, which opposes ACA 5. “You are hurting somebody by propping someone else up.” Lu and other supporters of Proposition 209 say instead of repealing it, lawmakers should focus on addressing issues like inequality in the kindergarten through 12th grade school system, which contributes to the inequity in higher education.

For Kyndall Dowell, a rising junior at UC Berkeley, repealing Proposition 209 is about more than just ensuring there are more students who look like her on campus. Dowell said one of the reasons she got involved in efforts to repeal the provision is because she’s aware that once she graduates from a prestigious university, she’ll still enter a job market where Black women like her make 61% of what white men do on average.

She hopes that allowing government employers and agencies to consider race more explicitly in hiring and contracting could help to level that playing field.

“This current climate has exposed a lot of the ugliness, a lot of the baggage, that America has yet to clean and make right,” Dowell said. “While ACA 5 may not be the end all be all, it may not solve all of our issues as a state, but I do think it is a step in the right direction.”

People receiving unemployment benefits are MORE likely to look for jobs, Chicago Fed study finds

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Unemployment benefits have been a touchy subject for lawmakers lately, as the supplemental $600 a week that unemployed Americans have been receiving as part of the $2.2 trillion CARES Act expires next month.

Members of the Trump administration argue that the extra $600 creates a disincentive for the more than 20 million unemployed Americans to search for a new job — especially given that two-thirds of Americans who are out of work due to the pandemic are receiving more money in unemployment benefits than they got from their jobs. In turn, they hold that when unemployed Americans stop receiving that extra $600 next month — if lawmakers fail to enact new legislation — unemployed people will put more effort into finding a new job.

Related: The extra $600 Americans get in weekly unemployment benefits ends next month — here’s what lawmakers are proposing to replace it

But a recent study by the Chicago Federal Reserve found just the opposite to be true.

People on unemployment benefits on average spend more than 14 hours a week job searching and send more than 12 applications a month.

“Those currently collecting benefits search more than twice as intensely as those who have exhausted their benefits,” states a recent study conducted by the Chicago Fed.

Typically, unemployment benefits last six months and on average pay individuals approximately 35% of their previous weekly salary, according to the Chicago Fed.

By August 1, Americans who lost their jobs in early March and have been receiving state unemployment benefits will continue to receive them, but will get $600 less than they were previously getting.

Don’t miss: White House ‘very seriously considering’ another stimulus bill — here’s how the CARES Act has impacted poverty rates

“We are particularly interested in understanding the relationship between unemployment benefits and job search now, given the sharp increase in unemployment during the ongoing Covid-19 crisis and the high levels of additional [unemployment insurance] benefits available as part of the recent federal Coronavirus Aid, Relief, and Economic Security (CARES) Act,” the Chicago Fed researchers noted.

People on unemployment benefits on average spend more than 14 hours a week job searching and send more than 12 applications a month. Unlike those who have exhausted their benefits, they are more likely to not settle for a job that pays less than what they were previously paid. People who have exhausted their benefits spend over 12 hours a week job searching on average and send out over 9 applications a month, the Chicago Fed study found.

If an individual is unable to secure a new job within that six-month period, they become more pessimistic about job opportunities, and hence are more likely to accept a job that pays less than what they previously made, the Chicago Fed researchers concluded.

Furthermore, the longer they remain unemployed, the less employable they appear in the eyes of employers, “leaving these individuals with fewer and lower-quality job offers,” the study stated.

This single mother started with $20,000 and is now an early-retired millionaire — here’s one thing that helped her

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Jackie Cummings Koski has been a member of her local investment club for 11 years and is now on the board of directors — but when she first started out, she had little money to her name and no clear path to financial freedom.

Divorce inspired this woman to learn about money and she retired early

Koski joined the club so that she could improve her knowledge about investing, but it was also where she was able to openly talk about her divorce and find meaningful ways to provide security — for herself and her young daughter. Each fellow member became something of a mentor to her, and the discussions were inviting. “It was all very uplifting,” she said.

Joining the investment club, along with following a budget and spending well under her means, has made the former saleswoman financially independent. In the last 11 years, the single mother has gone from $20,000 in her 401(k) at the time of her divorce to $1.3 million, and she’s now a financial counselor to others. She reached financial independence at 46, and retired three years later.

See: This early retiree found her calling during the COVID-19 pandemic

Mentorships, whether one-on-one or in a group, can be crucial to achieving goals. Connecting on a personal level helps. When Koski works with her clients, including high-school students and those in underserved populations, she talks about growing up in rural poverty, with a single father who had a sixth-grade education and was raising six children.

“All of those things play into how hard it was in the very beginning,” she said. “Going from poverty to financially independent — that’s a path that most people I’m working with can get and connect with.”

The FIRE movement, short for “financial independence, retire early,” has no shortage of inspiring stories about people who cut their spending in half, downsized their homes or took on numerous jobs to save as much as possible. But not everyone can follow that path. Some FIRE bloggers may also not be aware of the subtle advantages they had growing up, such as starting out in a middle-class family or living in an area with public transportation to get to the library or a job.

Koski has followed a few of the mainstays of the FIRE movement, however, such as slashing spending and investing much of the rest. As a sales representative at LexisNexis, her salary varied from year to year with an average of about $80,000, but she spent between $40,000 to $45,000 a year and put the rest away.

The early retiree pointed out that this wouldn’t be possible everywhere — she lives in Ohio, where home prices are not nearly as high as some major hubs like New York City or San Francisco — so her mortgage, taxes and insurance amounted to about $1,000 a month. Still, she was careful with her money. She’d buy a luxury vehicle, but one that was three to five years old and with a price tag half of what it was when it was new. She worked only a few miles away from home, so gas wasn’t a huge budget item. She didn’t deprive herself of spending on food, and would go out to eat for lunch or dinner.

“I didn’t design my life to live off of $45,000,” she said. “I backed into it and discovered that my expenses were $45,000.” At the same time, she was maxing out all of her investment accounts, including her 401(k), individual retirement account and a Health Savings Account.

Immersing yourself in an environment that supports the same values and goals is important. Koski was the first in her family to graduate college, and didn’t have many sources for advice about finances when she was starting out — so she figured it out on her own. “By changing my environment, I was exposed to different things,” she said.

Also see: I’m a 32-year-old stay-at-home mom, and my husband earns $150,000 a year. Will I ever be able to enjoy a retirement?

The COVID-19 crisis has the potential to worsen future retirement security, and in some cases has already deteriorated Americans’ current well-being, but people may be able to use this time to learn more about money and their own personal finances, Koski said. People can turn to the internet, books or maybe even an investing club (socially distanced, of course) to learn more about saving, budgets, investing and personal finance topics.

Savers can also use this time to reflect on what’s working financially, what isn’t, what goals they’d like to achieve and dig into why they behave the way they do with their money. Breaking down what it would take to reach that goal is an eye-opener. For example, Koski tells students and aspiring investors that saving $50 a week for 40 years can get someone to $1 million.

“You’re not going to be saving or investing unless in your mind you believe it will make a difference,” she said. “It may take a while to really get your head around things like me, but it happens, and when it does, it is very, very powerful.”

Is Robinhood making money off those day-trading millennials? Well, yes. That’s kind of the point.

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As the twin black swans of the coronavirus pandemic and the historic oil price collapse rocked financial markets early in 2020, opportunities emerged.

So did media narratives.

One of the most popular: that bored young people, stuck at home with no access to sports or bars or live entertainment, went day-trading instead, in many cases with an online brokerage that seems tailor-made for the Gen-Y set: Robinhood.

While there’s plenty of evidence that handfuls of millennials are day-trading, and in some cases losing a lot of money, with sad and shocking outcomes, their numbers and any impact they may be having on the market is less certain.

What’s more, for anyone who’s spent a career observing and helping fine-tune the infrastructure behind financial market trading, some of the discussion about what’s actually going on isn’t informed, or helpful, according to one analyst.

“There is a narrative out there that somehow Robinhood was doing something nefarious to make money off their clients in a way that was illegal or unethical or outside the norm,” said Dave Nadig, a veteran of exchange-traded funds, an industry that depends on — and has arguably helped bring to maturity — the financial system’s pipes and plumbing. “Actually, it’s a tempest in a teapot.”

Related:Retail investors are getting ‘hosed’ with the biggest oil ETF down more than 30% this week

The chatter about how Robinhood and other brokerages make money reveals a deep misunderstanding about how trading actually happens, Nadig told MarketWatch. Nadig blogged about order flow, in his capacity as chief investment officer and director of research at ETF Database, but also shared some thoughts in an attempt to set the record straight, and hopefully help the average investor understand what’s going on when he or she makes a trade.

Read:Here’s the right way to trade ETFs

Most investors think that when they try to sell a stock or an ETF, the brokerage platform they use will find another interested investor to buy it — and vice versa.

In fact, all brokerages work with companies called market makers, whose job it is to liaise between everyone who wants trades to happen: the buyer, the seller, and both parties’ brokers.

The term “market maker” and the various metaphors often used to describe them make their role sound very personal, almost bespoke, Nadig thinks. In reality, such firms operate massive algorithm-based programs that allow them to see huge swathes of financial markets at once: who wants to buy, and at what price, who wants to sell and the price they want to get, and, crucially, whether the market maker can make a few basis points on the difference.

“What we’re talking about is an extraordinarily thin margin business,” Nadig said. “It happens millions of times per second.”

It’s so high-volume, in fact, that market makers pay brokerages for the ability to be the middleman in the transactions. That’s known as “order flow,” and it’s the process that’s caught the attention of social media.

“If you’re trading on Robinhood, just know your order flow data is sold to hedge funds so they can front run you,” one anonymous Twitter user wrote.

Nadig thinks that’s misguided. Market makers should benefit a broker’s customers not just by facilitating the trade, but also by allowing them to realize better prices. Just as market makers use huge computer programs to figure out which trades to take, brokerages have their own, rules-based, programs, that route trades so they can happen most efficiently.

Unfortunately, it’s impossible to fact-check any brokerage’s claims of what the industry calls “price improvements,” Nadig notes. It’s worth pointing out that Robinhood was fined $1.25 million in 2019 to settle a complaint from a regulator that it did not ensure its customers received the best price for trades. That’s even more incentive for the company to play by the rules now, Nadig thinks.

There is some transparency into order flow, however: the Securities and Exchange Commission requires that broker-dealers file a quarterly “routing report.” Robinhood’s most recent one is here.

Robinhood media relations department did not respond to specific MarketWatch requests for comment for this story, but referred readers to an online article about how it routes orders. Of the 2019 fine, a spokesperson said, by email, “The facts on which the settlement is based do not reflect our practices or procedures today. The agreement relates to an historic issue during the 2016-2017 timeframe involving consideration of alternative markets for order routing, internal written procedures, and the need for additional review of certain order types. Over the last two years, we have significantly improved our execution monitoring tools and processes relating to best execution, and we have established relationships with additional market makers.”

Perhaps more important than the specific logistics about order flow, Nadig thinks, is the underlying reality: millions of people trade with brokerages like Robinhood (and Schwab, Interactive Brokers, TD Ameritrade, and many more), for free.

Brokerages have other sources of income, of course — margin lending, advisory arms, and so on. But most of all, “Every broker is in the business of getting transactions moving through the system. They just want volume,” Nadig said. Any lubrication that helps that movement is important, he said. Ultimately, “Robinhood is not there to teach you financial literacy or how to pay down your student loan. It is very good at getting you to make transactions. It’s Tinder but for money.”

Related:Are ETFs safe… for retail investors?

Twitter employees are getting an Election Day perk this November

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Twitter is giving its staff a paid day off so they can cast their vote in national elections, the company announced Tuesday.

The social media company will close Tuesday, Nov. 3 so employees can vote in the presidential election. When workers in other countries have a national election, they’ll also get a paid day off as well, the company added.

“Given the importance of voting, going forward all national election voting days that take place on a weekday will be a paid day off,” the internal announcement said.

Twitter’s approximate 5,100 staffers previously had up to two hours of paid time off to vote. The workers tasked with cybersecurity responsibilities will stay on the job that day, the company said.

Twitter TWTR, -3.58% joins a growing list of companies that give workers paid time off — sometimes the whole day — so they have one less barrier in getting to the voting booth.

Don’t miss: Twitter labels Trump tweet as ‘glorifying violence’

National voter turnout rates have hovered at just over 50% during the past two major elections: it was 55.6% in the 2016 presidential election and 53.4% in the 2018 mid-term elections.

Patagonia, the outdoor retailer, has been closing its retail stores and corporate office every Election Day since 2016. All U.S. employees are paid for the day, a spokeswoman said. Levi Strauss & Co. LEVI, -3.70% gives its workers five hours of paid time off on Election Day.

Time To Vote, a non-partisan coalition of businesses, pledges some type of accommodation so its rank and file can go and vote. The companies signing on are taking steps such as offering paid time off, cancelling meetings for the day or helping workers with early voting and mail-in ballots. More than 380 companies have signed up as earlier this year, the coalition’s website said.

Two members include Walmart WMT, -0.63% , which has a website where workers can register to vote. Employees at the retail chain have up to three hours of paid time off, a spokesman said. Another member, Best Buy BBY, -2.35% , announced last week it would be shortening store hours on Election Day to give its members a chance to vote.

See also:Why some companies want their employees (and customers) to vote

Forty-three percent of companies said they offered workers paid time off for voting, according to a 2019 annual benefits survey from the Society for Human Resources Management. That’s essentially unchanged from the 44% of surveyed companies that offered the paid time off for voting in 2018 and the 42% in 2017.

White House ‘very seriously considering’ another stimulus bill — here’s how the CARES Act has impacted poverty rates

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The Trump administration is “very seriously considering” another stimulus bill as the coronavirus pandemic continues, Treasury Secretary Steven Mnuchin said Tuesday.

Speaking to Bloomberg three months after lawmakers passed the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, Mnuchin revealed few details on what a new round of fiscal relief would look like, though he did say it will be “much more targeted to the businesses that are impacted.”

As for the funds that are already being disbursed under the CARES act, Mnuchin said, “There’s no question that money is having a major impact on the economy.”

In a separate interview Tuesday with Time Magazine, Mnuchin said a bill could take shape next month.

While Republican and Democratic lawmakers figure out the provisions for another bill, researchers say the CARES Act is helping families now — as long as they can access the money.

Stimulus checks and expanded unemployment payments could help keep America’s poverty rate around where it was before the coronavirus outbreak, according to new research from Columbia University.

One measure of poverty would have climbed from an estimated 12.5% rate to 16.3% without any sort of federal intervention, the researchers said. (Great Recession-era levels peaked at approximately 16%, according to U.S. Census Bureau data.)

But because of the money from stimulus checks and expanded unemployment, that poverty rate stayed at an estimated 12.7%, the Columbia researchers projected.

A four-person family with two kids under age 18 is considered to live under the poverty threshold if their income is under $25,926 a year, according to the Census Bureau’s 2019 threshold, its most recent figure.

The Columbia researchers’ calculations assume “medium access” to the money, which means 70% of eligible people received stimulus checks and 60% of recently unemployed people received their expanded unemployment.

The stimulus checks paid $1,200 to every eligible adult making under $75,000 or $2,400 for a married couple earning under $150,000. The government also cut $500 checks for every eligible child. The Internal Revenue Service had issued 159 million stimulus payments as of early June, the agency said.

The stimulus bill also paid unemployed workers $600 a week on top of state unemployment benefits. That extra federal money will end at the end of July. As the pandemic shut businesses, unemployment soared from decades-low rates to double-digit territory, standing at 13.3% in May.

As lawmakers debate another relief bill, the Columbia study serves as another illustration of how important the stimulus money has been for the millions of Americans who have received benefits and stimulus checks.

The findings also underscore the potential harm for people who are missing out on the money.

For example, approximately 7% of people said they unsuccessfully applied for unemployment benefits or gave up because the process was too tough, according an approximate 25,000-person survey in April from the left-leaning Economic Policy Institute.

The stimulus bill has been a “critically important anti-poverty measure,” according to the researchers, Zachary Parolin, Megan Curran and Christopher Wimer. But bureaucratic barriers to get unemployment benefits and certain deadlines to reap stimulus check money “threaten to weaken the poverty reduction potential of the CARES Act,” they added.

The study also raises the question of what will happen later this summer after the stimulus checks are paid out and the enhanced unemployment payments stop at the end of July.

‘If high unemployment rates persist, additional income support will likely be needed to mitigate hardship in the short-term and prevent subsequent rises in poverty and economic insecurity moving forward.’

— Authors in ‘The CARES act and poverty in the COVID-19 crisis’

“If high unemployment rates persist, additional income support will likely be needed to mitigate hardship in the short-term and prevent subsequent rises in poverty and economic insecurity moving forward,” they wrote.

See also:What to do if someone else is fraudulently claiming your unemployment benefits

The U.S. Census Bureau has two ways to gauge poverty levels. There’s the official measure, which focuses on gross pre-tax cash income and the “supplemental poverty measure,” which focuses of after-tax money and a broader base of potential benefits. The study focused on the second measure.

The researchers emphasized that they used monthly census income data from April to aid their simulation. Though they were looking at yearly projected poverty rates, they acknowledged the yearly rate wouldn’t capture the “immediate hardship” of many families as they waited for money — or their problems if income dries up after the stimulus money runs out.

‘A significant number of families are explicitly left out’

Approximately 30 million people are unable to access stimulus money because of eligibility rules surrounding stimulus checks and unemployment benefits, the researchers said. This includes approximately 15 million people who are 17 and above, who are still being claimed as dependents by their families for tax purposes.

See also: ‘My mother claimed me as a dependent in 2019, but I was not aware of this.’ What can I do to claim my $1,200 stimulus check?

Approximately 15 million people in immigrant families are also left out of the stimulus money, they study said. The rules on stimulus check eligibility and immigration status can get complicated. For example, green card holders are eligible for a check, but not necessarily their spouse.

Likewise, both people in a married couple need a Social Security number to get the stimulus check, the IRS says. If one person has an “individual taxpayer identification number,” a tax number for non-citizens, the IRS says the couple cannot collect the check.

Several lawsuits have challenged the rules on stimulus checks and immigration status.

In some pending class-action cases, U.S. citizens contend they are missing out on stimulus money because they are married to non-citizens. They are being punished because of who they choose to marry, they say.

In one case, seven U.S. citizen children born in the states to non-citizen parents argue they are being deprived of their $500 stimulus checks because of their parents’ immigration status. Either one or both of their parents are undocumented immigrants, court papers said.

Last week, District of Maryland Federal Judge Paul Grimm said the children could proceed with the case. He denied the government’s dismissal motion and scheduled more briefing in the case for next month.

The Justice Department and Treasury Department did not immediately respond to a request for comment.