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VA OIG — Administrative Investigation, Prohibited Personnel Practice and Preferential Treatment, National Cemetery Administration, VA Central Office

July 22, 2014 Comments off

Administrative Investigation, Prohibited Personnel Practice and Preferential Treatment, National Cemetery Administration, VA Central Office (PDF)
Source: U.S. Department of Veterans Affairs, Office of Inspector General

The former Under Secretary for Memorial Affairs engaged in a prohibited personnel practice when he created a position and preselected an employee for that position. He also engaged in preferential treatment of an NCA contractor when he developed a less-than-arm’s-length relationship with the contractor. Further, NCA improperly gave the contractor sole-source contracts to provide one-to-one services to select NCA employees.

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Moving Up or Standing Still? Access to Middle-Skilled Work for Newly Arrived Migrants in the European Union

July 22, 2014 Comments off

Moving Up or Standing Still? Access to Middle-Skilled Work for Newly Arrived Migrants in the European Union
Source: Migration Policy Institute

Over the past 15 years, migration in Europe has changed considerably. The economic boom in the early and mid-2000s and expanded mobility owing to European Union enlargement helped create new populations of migrants from both within and beyond the European Union. These recent migrants are more educated than earlier arrivals and many are highly skilled. Against the backdrop of the global economic crisis, which profoundly affected many migrant-receiving countries in Europe, governments are grappling with questions of how to ensure that immigrants are able to find employment and progress into better jobs over time.

This overview report caps a series of six country case studies evaluating the employment outcomes for foreign-born workers in the Czech Republic, France, Germany, Spain, Sweden, and the United Kingdom. The study examines how easy it is for newcomers in the European Union to establish themselves in destination-country labor markets in the first ten years after arrival, and how well they are able to move out of unskilled work and into middle-skilled jobs.

Flattening Tax Incentives for Retirement Saving

July 19, 2014 Comments off

Flattening Tax Incentives for Retirement Saving
Source: Brookings Institution

The United States’ pension system has failed millions of workers who enter into retirement with very limited assets relative to what they need to live securely the rest of their lives. According to Survey of Consumer Finance data, about 40 percent of households headed by someone near retirement (ages 55–64) do not hold any assets in retirement savings accounts. The median retirement savings account balance for all households in this age group is only $12,000 (Rhee 2013).

At the same time, the pension landscape has been gradually shifting away from defined benefit (DB) pension plans toward defined contribution (DC) plans. The shift is especially pronounced in the private sector. Between 1989 and 2012, the proportion of private industry full-time workers participating in DB pension plans declined from 42 to 19 percent, while the share participating in DC plans increased from 40 to 51 percent (Bureau of Labor Statistics 2013; Wiatrowski 2011). While DB plans often provide significant benefits for the lucky minority who have been in a single job for many years before retirement, DC plans can be more beneficial for a mobile workforce. At the same time, the transition from DB to DC plans has also presented new challenges.

Because DB pensions are tied to employers, long-term workers sometimes achieve adequate protection even without much planning on their own part. They are automatically enrolled and often do not even have to contribute. Benefits are automatically paid when workers retire. With DB pensions, employers bear the responsibility for ensuring that employees receive pension benefits. In contrast, DC retirement accounts are owned by employees. With most DC plans, the most familiar of which are 401(k)-type plans, workers bear the responsibility for their own financial security. Unless such plans include automatic features, workers have to actively decide to participate, how much to contribute, which investments to put their money in, and how to manage their benefits through retirement.

This paper focuses on the effects of the tax preferences for employer-sponsored defined contribution plans. Using two notable microsimulation models, we simulate the effect of changes in contribution limits to retirement plans, the saver’s credit, and the exclusion of contributions from taxable income on current and future taxes and retirement savings. We find that reducing 401(k) contribution limits would primarily increase taxes for the richest taxpayers; expanding the saver’s credit would raise saving incentives and lower taxes for low- and middle-income taxpayers; and removing the exclusion for retirement saving incentives and replacing it with a 25 percent refundable credit will benefit some taxpayers—mainly low- and middle-income taxpayers—while raising taxes and reducing retirement assets for others—primarily those at the top of the income distribution.

International Migration: The Relationship with Economic and Policy Factors in the Home and Destination Country

July 18, 2014 Comments off

International Migration: The Relationship with Economic and Policy Factors in the Home and Destination Country
Source: OECD

Unfavourable demographic trends in many OECD countries threaten the sustainability of potential labour resources, GDP growth and fiscal positions. One factor that is expected to mitigate these trends is continued inflows of migrant workers from low income economies. However, a rapid catch-up in productivity and wages in these traditional source countries vis-à-vis the OECD may weaken economic incentives for migration and imply a transition away from current migration patterns. This paper uses data of the high-skilled and low-skilled migrant stock between 92 origin and 44 destination countries to highlight the relationship between economic factors and migration. The paper also attempts to uncover links with policy and demographic factors prevailing in the origin and destination countries. The analysis suggests that higher skill-specific wages in the destination country are associated with more migration. This relationship appears to be particularly strong for migrants from middle-income countries, supporting theories of an inverted-U relationship between origin country economic development and the propensity to migrate. Policy differences between the destination and origin also appear important, for example in terms of regulations on businesses and labour markets, along with the relative quality of institutions. In some instances, the effects on high-skilled and low-skilled migrants differ markedly. Combining the estimated coefficients from the model with the skill-specific wage profile from the OECD long-term growth projections highlights the potential for weaker future migrant flows to OECD countries than implied by past trends and embedded in official projections.

Entrepreneurs Have the Potential to Create 10 Million Youth Jobs in G20 Countries, New Accenture Research Finds

July 18, 2014 Comments off

Entrepreneurs Have the Potential to Create 10 Million Youth Jobs in G20 Countries, New Accenture Research Finds
Source: Accenture

Entrepreneurs can help drive the creation of 10 million youth jobs across the G20 countries if existing barriers to entrepreneurship were lifted, according to new research from Accenture (NYSE: ACN). The study also indicates that while 74 percent of entrepreneurs surveyed by Accenture say they plan to recruit young talent in 2014, many believe that a shortage of people with relevant skills is hindering job creation and growth.

The Accenture study, “The promise of digital entrepreneurs: creating 10 million youth jobs in the G20 countries,” analyzes the views of more than 1,000 entrepreneurs and highlights the barriers that are limiting the potential of entrepreneurs to create jobs and grow the economy. The report illustrates that while 85 percent believe they have a critical role to play in the creation of jobs for young people, they face a number of challenges including securing funding, scaling and sustaining innovation, growing internationally and accessing the right skills. The study was developed ahead of the G20 Young Entrepreneurs’ Alliance Summit in Sydney.

The report indicates that many entrepreneurs believe more could be done to foster an environment of youth job creation in their country. Only one quarter (26 percent) consider the actions taken by their government to support youth job creation as relevant and efficient. Additionally, more than half (54 percent) cite a lack of incentives as a barrier to taking on more young people.

Maternity protection makes headway amid vast global gaps

July 17, 2014 Comments off

Maternity protection makes headway amid vast global gaps
Source: International Labour Organization

KEY FACTS AND FIGURES

  • 66 out of 185 countries and territories have ratified at least one of the three ILO maternity protection Conventions.
  • 53 per cent (98 countries) meet the ILO standard of at least 14 weeks maternity leave.
  • 58 per cent (107 countries) now finance maternity leave cash benefits through social security. Between 1994 and 2013 financing of cash benefits through employer liability fell from 33 to 25 per cent.
  • A large majority of women workers, around 830 million, are not adequately covered in practice, mainly in developing countries.
  • 45 per cent (74 countries) provide cash benefits of at least two-thirds of earnings for at least 14 weeks – an overall increase of 3 per cent since the last ILO review in 2010.
  • A statutory right to paternity leave is found in 78 of the 167 countries. Leave is paid in 70 of these, underlining the trend of greater involvement of fathers around childbirth. In 1994, paternity leave existed in 40 of 141 countries with available data.
  • 75 per cent (121 countries out of 160) provide for daily nursing breaks after maternity leave.

Gender and time allocation of cohabiting and married women and men in France, Italy, and the United States

July 17, 2014 Comments off

Gender and time allocation of cohabiting and married women and men in France, Italy, and the United States
Source: Demographic Research

Background:
Women, who generally do more unpaid and less paid work than men, have greater incentives to stay in marriages than cohabiting unions, which generally carry fewer legal protections for individuals that wish to dissolve their relationship. The extent to which cohabitation is institutionalized, however, is a matter of policy and varies substantially by country. The gender gap in paid and unpaid work between married and cohabiting individuals should be larger in countries where cohabitation is less institutionalized and where those in cohabiting relationships have relatively fewer legal protections should the relationship dissolve, yet few studies have explored this variation.

Objective:
Using time diary data from France, Italy, and the United States, we assess the time men and women devote to paid and unpaid work in cohabiting and married couples. These three countries provide a useful diversity in marital regimes for examining these expectations: France, where cohabitation is most “marriage like” and where partnerships can be registered and carry legal rights; the United States, where cohabitation is common but is short-lived and unstable and where legal protections vary across states; and Italy, where cohabitation is not common and where such unions are not legally acknowledged and less socially approved than in either France or the United States.

Results:
Cohabitating men’s and women’s time allocated to market and nonmarket work is generally more similar than married men and women. Our expectations about country differences are only partially borne out by the findings. Greater gender differences in the time allocated to market and nonmarket work are found in Italy relative to either France or the U.S.

Why Is Veteran Unemployment So High?

July 17, 2014 Comments off

Why Is Veteran Unemployment So High?
Source: RAND Corporation

According to official statistics, the unemployment rate of young military veterans ages 18-24 reached 29 percent in 2011. This report seeks to put that statistic in perspective by examining the historical time-series of veteran unemployment, comparing the veteran unemployment rate to that of non-veterans, and examining how veteran unemployment varies with time since military separation. Between 2000 and 2011, younger veterans were, on average, 3.4 percentage points more likely to be unemployed than similarly situated younger non-veterans. However, this difference between veteran and non-veteran unemployment falls rapidly with age and time since military separation. The report concludes that the best available evidence supports the hypothesis that relatively high rates of veteran unemployment reflect the fact that veterans, especially younger veterans, are more likely to have recently separated from a job — namely, military service — and, consequently, are more likely to be engaged in job search, which takes time, especially during periods of slow economic growth. The available evidence lends little support to the hypothesis that veterans are inherently disadvantaged in the civilian labor market. Limiting unemployment benefits available to recently separated veterans would likely reduce the length of unemployment spells, but the net effect of such a policy action on the long-term federal budget is unclear. There is very limited evidence on the effectiveness of other federal policies aimed at facilitating the transition of veterans into the civilian labor market.

New From the GAO

July 15, 2014 Comments off

New GAO Report and Testimonies
Source: Government Accountability Office

Report

1. Medicaid Payment: Comparisons of Selected Services under Fee-for-Service, Managed Care, and Private Insurance. GAO-14-533, July 15.
http://www.gao.gov/products/GAO-14-533
Highlights – http://www.gao.gov/assets/670/664783.pdf

Testimonies

1. VA Disability Claims Processing: Preliminary Observations on Accuracy Rates and Quality Assurance Activities, by Daniel Bertoni, director, education, workforce and income security issues, before the House Committee on Veterans’ Affairs. GAO-14-731T, July 14.
http://www.gao.gov/products/GAO-14-731T
Highlights – http://www.gao.gov/assets/670/664762.pdf

2. Helium Program: BLM’s Implementation of the Helium Stewardship Act of 2013, by Anne-Marie Fennell, director, natural resources and environment, before the Subcommittee on Energy and Mineral Resources, House Committee on Natural Resources. GAO-14-751T, July 15.
http://www.gao.gov/products/GAO-14-751T
Highlights – http://www.gao.gov/assets/670/664778.pdf

3. Federal Workforce: Human Capital Management Challenges and the Path to Reform, by Robert Goldenkoff, director, strategic issues, before the Subcommittee on Federal Workforce, U.S. Postal Service and the Census, House Committee on Oversight and Government Reform. GAO-14-723T, July 15.
http://www.gao.gov/products/GAO-14-723T
Highlights – http://www.gao.gov/assets/670/664773.pdf

Twenty-Three Years and Still Waiting for Change — Why It’s Time to Give Tipped Workers the Regular Minimum Wage

July 15, 2014 Comments off

Twenty-Three Years and Still Waiting for Change — Why It’s Time to Give Tipped Workers the Regular Minimum Wage
Source: Economic Policy Institute

Last year marked the 75th anniversary of the Fair Labor Standards Act (FLSA), the legislation that established many of the basic labor protections workers enjoy today, such as a 40-hour workweek, overtime protection, and a national minimum wage. There have been periodic amendments to the FLSA over the years, but the 1966 amendments were especially significant. They extended protections to hotel, restaurant, and other service workers who had previously been excluded from the FLSA, but also introduced a new “subminimum wage” for workers who customarily and regularly receive tips. Unlike temporary subminimum wages (such as those for students, youths, and workers in training), the “tip credit” provision afforded to employers uniquely established a permanent sub-wage for tipped workers, under the assumption that these workers’ tips, when added to the sub-wage, would ensure that these workers’ hourly earnings were at least equal to the regular minimum wage. The creation of the tip credit—the difference, paid for by customers’ tips, between the regular minimum wage and the sub-wage for tipped workers—fundamentally changed the practice of tipping. Whereas tips had once been simply a token of gratitude from the served to the server, they became, at least in part, a subsidy from consumers to the employers of tipped workers. In other words, part of the employer wage bill is now paid by customers via their tips.

Today, this two-tiered wage system continues to exist, yet the subsidy to employers provided by customers in restaurants, salons, casinos, and other businesses that employ tipped workers is larger than it has ever been. At the federal level, it currently stands at $5.12 per hour, as employers are required to pay their tipped staff a “tipped minimum wage” of only $2.13 per hour, and the federal regular minimum wage is currently $7.252 Remarkably, the federal tipped minimum wage has been stuck at $2.13 since 1991—a 23-year stretch, over which time inflation has lowered the purchasing power of the federal tipped minimum wage to its lowest point ever.

Proposed federal minimum-wage legislation, the Fair Minimum Wage Act of 2014—also known as the Harkin–Miller bill—would not only increase the federal regular minimum wage to $10.10, but for the first time in decades would also reconnect the subminimum wage for tipped workers back to the regular minimum wage by requiring the former be equal to 70 percent of the latter. This would be a strong step in the right direction; however, we present evidence that tipped workers would be better off still if we simply eliminated the tipped minimum wage, and paid these workers the full regular minimum wage.

UK Wages Over the Past Four Decades, 2014

July 15, 2014 Comments off

UK Wages Over the Past Four Decades, 2014
Source: Office for National Statistics

This report looks at changes in earnings in the UK over the past forty years. It makes use of distributional and cohort analysis to assess the impact of the recession on real earnings as well as looking at the impact of the introduction of the national minimum wage.

Exploring the Retirement Consumption Puzzle

July 14, 2014 Comments off

Exploring the Retirement Consumption Puzzle
Source: Journal of Financial Planning

Executive Summary

  • Empirical research on retiree spending has noted a “retirement consumption puzzle,” where retiree expenditures tend to decrease both upon and during retirement. This decrease in spending is inconsistent with general economic theories on consumption, which suggest individuals seek to maintain constant consumption over their lifetimes.
  • Government data on consumption was analyzed in this study to understand how retiree consumption actually changes over time.
  • The results of the analysis suggest that although the retiree consumption basket is likely to increase at a rate that is faster than general inflation, actual retiree spending tends to decline in retirement in real terms. This decrease in real consumption averages approximately 1 percent per year during retirement.
  • A “retirement spending smile” effect is noted. This finding has important implications when estimating retirement withdrawal rates and determining optimal spending strategies.

Arts and Culture in Australia: A Statistical Overview, 2014

July 14, 2014 Comments off

Arts and Culture in Australia: A Statistical Overview, 2014
Source: Australian Bureau of Statistics

Provides a statistical overview of culture in Australia. Contains information on a range of topics including employment in culture, time spent on cultural activities, attendances at cultural venues and events, expenditure on culture, and imports and exports of cultural goods and services. Also provides profiles of the cultural sectors, grouped according to the Australian Culture and Leisure Industry Classification.

The Future of the Army’s Civilian Workforce: Comparing Projected Inventory with Anticipated Requirements and Estimating Cost Under Different Personnel Policies

July 14, 2014 Comments off

The Future of the Army’s Civilian Workforce: Comparing Projected Inventory with Anticipated Requirements and Estimating Cost Under Different Personnel Policies
Source: RAND Corporation

In keeping with the coming drawdown in military end strength, the Department of Defense is planning to scale back its civilian workforce over the next several years. After reaching nearly 295,000 full-time employees in fiscal year (FY) 2010, the size of Army’s civilian workforce has started to fall. It is necessary to manage this drawdown so that sufficient people remain available in key positions. The authors projected the future supply of Army civilians under various scenarios and examined how the Army might manage supply to meet projected demand, by bringing together workforce supply and demand models. The RAND Inventory Model was used to project the supply of Army civilians, by command and occupation, based on historical patterns of internal transfers and separations, and various scenarios for future hiring. The supply projections were matched with demand projections from RAND’s Generating-Force-to-Operator model, which translates budgets for the Army’s operating force into projected changes in the institutional Army, to estimate the numbers of new hires or force reductions needed to meet the demand for civilians. The findings suggest that meeting future targets will require reducing hiring rates below historical levels but that substantial hiring will still be needed in most commands. If demand drops considerably below current projections, larger cuts would likely be required. Workforce cost is projected to change largely in line with the number of personnel. If requirements based on the FY 2014 President’s Budget are met by FY 2017, nominal costs are projected to remain approximately constant, with expected civilian pay raises offsetting workforce reductions.

The Funding of State and Local Pensions: 2013-2017

July 14, 2014 Comments off

The Funding of State and Local Pensions: 2013-2017
Source: Center for State & Local Government Excellence

Key findings:

  • Despite a strong stock market, the funded status of public plans in 2013 remained unchanged at 72 percent for two reasons: actuarial smoothed assets grew modestly, and CalPERS, one of the nation’s largest plans, significantly revised its reported funded ratio.
  • Funded levels among plans vary significantly.
  • An encouraging sign is that many sponsors appear to be paying a larger share of their annual required contribution.
  • There is slight improvement in 2013 at the top: 6 percent are 100 percent funded or better; 28 percent are more than 80 percent funded.
  • Going forward, the funded ratio is projected to gradually move above 80 percent, assuming expected stock market returns.

Analysis surveyed 114 state and 36 local plans.

CBO — Answers to Questions From Senator Hatch About Various Options for Payroll Taxes and Social Security

July 14, 2014 Comments off

Answers to Questions From Senator Hatch About Various Options for Payroll Taxes and Social Security
Source: Congressional Budget Office

Senator Orrin Hatch asked CBO several questions about the implications of altering the Social Security payroll tax rates as well as the taxable maximum (the maximum amount of earnings on which those payroll taxes are imposed). This document provides CBO’s answers to those questions.

For the various options discussed, CBO presents the changes that would result in the annual payroll taxes paid by employees and employers, and for people born at various times and with various levels of earnings, the change in their median lifetime payroll taxes and median initial replacement rates (benefits as a percentage of career-average earnings).

CBO based its answers on projections issued last September in The 2013 Long-Term Budget Outlook. In that report, the 75-year projection period for Social Security spans 2013 to 2087. All changes to payroll tax rates and the taxable maximum analyzed for this report would begin in January 2015.

Vulnerability of Social Institutions

July 11, 2014 Comments off

Vulnerability of Social Institutions
Source: OECD

Future generations will pay a high price if we fail to reform pension, health care and unemployment schemes. Social institutions will be tested in the coming years by ageing and slowing growth that threaten their sustainability and the adequacy of their deliveries, undermining the risk sharing that social institutions provide. In the face of these challenges, social institutions need to be reformed and adjusted regularly to adapt to trend changes and to shocks with-long lasting effects.

Census Bureau Reports Majority of STEM College Graduates Do Not Work in STEM Occupations

July 10, 2014 Comments off

Census Bureau Reports Majority of STEM College Graduates Do Not Work in STEM Occupations
Source: U.S. Census Bureau

The U.S. Census Bureau reported today that 74 percent of those who have a bachelor’s degree in science, technology, engineering and math — commonly referred to as STEM — are not employed in STEM occupations. In addition, men continue to be overrepresented in STEM, especially in computer and engineering occupations. About 86 percent of engineers and 74 percent of computer professionals are men.

According to new statistics from the 2012 American Community Survey, engineering and computer, math and statistics majors had the largest share of graduates going into a STEM field with about half employed in a STEM occupation. Science majors had fewer of their graduates employed in STEM. About 26 percent of physical science majors; 15 percent of biological, environmental and agricultural sciences majors; 10 percent of psychology majors; and 7 percent of social science majors were employed in STEM.

Approximately 14 percent of engineers were women, where they were most underrepresented of all the STEM fields. Representation of women was higher among mathematicians and statisticians (45 percent), life scientists (47 percent) and social scientists (63 percent). The rates of mathematicians and statisticians, and life scientists are not statistically different from each other.

Performance for Pay? The Relation Between CEO Incentive Compensation and Future Stock Price Performance

July 9, 2014 Comments off

Performance for Pay? The Relation Between CEO Incentive Compensation and Future Stock Price Performance
Source: Social Science Research Network

We find evidence that CEO pay is negatively related to future stock returns for periods up to three years after sorting on pay. For example, firms that pay their CEOs in the top ten percent of excess pay earn negative abnormal returns over the next three years of approximately -8%. The effect is stronger for CEOs who receive higher incentive pay relative to their peers. Our results appear to be driven by high-pay induced CEO overconfidence that leads to shareholder wealth losses from activities such as overinvestment and value-destroying mergers and acquisitions.

New From the GAO

July 9, 2014 Comments off

New GAO Reports and Testimony
Source: Government Accountability Office

Reports

1. Bureau of Alcohol, Tobacco, Firearms and Explosives: Enhancing Data Collection Could Improve Management of Investigations. GAO-14-553, June 30.
http://www.gao.gov/products/GAO-14-553
Highlights – http://www.gao.gov/assets/670/664515.pdf

2. Human Capital: DOD Should Fully Develop Its Civilian Strategic Workforce Plan to Aid Decision Makers. GAO-14-565, July 9.
http://www.gao.gov/products/GAO-14-565
Highlights – http://www.gao.gov/assets/670/664698.pdf

3. NOAA Aircraft: Aging Fleet and Future Challenges Underscore the Need for a Capital Asset Plan. GAO-14-566, July 9.
http://www.gao.gov/products/GAO-14-566
Highlights – http://www.gao.gov/assets/670/664708.pdf

4. Export-Import Bank: Information on Export Credit Agency Financing for Wide-Body Jets. GAO-14-642R, July 8.
http://www.gao.gov/products/GAO-14-642R

Testimony

1. Improper Payments: Government-Wide Estimates and Reduction Strategies, by Beryl H. Davis, director, financial management and assurance, before the Subcommittee on Government Operations, House Committee on Oversight and Government Reform. GAO-14-737T, July 9.
http://www.gao.gov/products/GAO-14-737T
Highlights – http://www.gao.gov/assets/670/664693.pdf

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