Scottrade to become TD Ameritrade

I was surprised to read in my inbox today a message from my account custodian Scottrade Advisor Service that they are selling Scottrade to TD Ameritrade. Many of my clients who have been with me before 2011 are already familiar with TD Ameritrade statements and other correspondence because I chose to custody my accounts there when I was using Genworth Financial Wealth Management. I think that many of the features that were available to me at TDA were superior to those offered by the relative fledgling Scottrade Advisor Service. TDA has been able to archive more account data and it is readily accessible to advisors. The statements of account are also more informative and easier for my clients to read. The upshot is, I think this will be good for me and good for my clients.

The myth of the young, jobless gamer?

video-gamer-devolutionHave young men abandoned dead end, minimum wage jobs for their old room and hours of cheap video gaming fun? Dean Baker at the Center for Economic and Policy Research does not deny the trend but believes they are the victims; not the perpetrators of this phenomenon.

Baker’s weekly blog, “Beat the Press” tells us that the non-peer reviewed theory, reported in the Washington Post does not hold up very well because it does not explain the declining labor force participation by women and also older men. Baker believes that slack demand is responsible for this spurning of work. The slackness is in young non-college educated men who have retreated to (or remain entrenched) in their parents’ home, blissfully whiling away the hours gaming according to the WaPo.  Baker blames the balanced budget hawks who have imposed economic austerity on the country. He implies that that the 18-24 year old men are spurning low wage, low reward jobs if they can and are, in fact happier as a result. Keep in mind that the current Federal Minimum Wage is $7.25 / hour. This wage is probably not enough for a single young man to live independently upon; at least not like a Spartan. The Washington Post article implies that this, well call them millennials, are layabouts who can have more fun on their parent’s couch.

As I reflect upon my own struggle to find work without my degree, I realize that I did not live independently but I shared a house with peers. Even in this arrangement, I had assistance on occasion from my parents and financial student aid.  The first job I had that could sustain me as a single man required me to work very long hours on a low salary and with big responsibilities. It had nothing to do with what I studied in college. I was lucky to find an industrial job (mining copper) with union scale wages and benefits. Again, I was working alongside of workers who had no college education at all. I like to hold responsible the fact that 1975, the year I graduated from college was the peak of the worst US recession since the Great Depression and entry-level college education jobs were not plentiful. It was not until nearly 10 years after I graduated that I found my first job based upon my education.

It remains to be seen if Hillary Clinton is elected and is successful in raising the Federal minimum to $15/hour will these “lazy young millennials” then answer the call to low reward jobs that do pay a living wage.

Paid sick leave mostly a “win” for business

"The Sick Child" -Gabriel Metsu
“The Sick Child” -Gabriel Metsu

The Center for Economic and Policy Research (CEPR) has once again scooped the major dailies with this story about a study that was conducted of 352 New York City businesses of five or more employees. All of these businesses are subject to a new New York City ordinance requiring employers to provide paid sick time for their employees. The study found that only 14% of those businesses reported an increase in costs and 98% reported there was no abuse of the policy.

Wells Fargo bank spanked by the CFPB for maximizing student loan fees

The most interesting fact in this article originally from Reuters news service is that:

“Last year, the CFPB found that more than 8 million U.S. borrowers are in default on more than $110 billion in student loans. Breakdowns in student loan servicing may be driving the problem, the bureau said.

Simage-20160331-28459-fk6s7ntudent loans make up the second largest U.S. consumer debt market with roughly $1.3 trillion owed by borrowers who took out federal and private loans, the bureau said.”

Taken in the aggregate, it seems that student borrowers are terrible risks for banks. On the face of it, millions of mostly young people have no respect for their debts or the institution(s) that helped them get that very advantageous college education. A scenario is easy to imagine in which comfortable college graduates simply throw away the bill from their bank benefactor while they dutifully make their $4,000 condominium payment.

However, perhaps it is more a matter of their ability to pay. Can it be that promising young people marketing their shiny new degree find there are few job opportunities that pay enough to live on, let alone pay their debts? Anecdotally, I am the father of two young men; one a member of the college class of 2010; another of the class of 2013. Both are self-employed in businesses they created while in college or soon after graduation. They did not seek work from others’ businesses but created their own businesses to work in. The vast majority of their peers have not been so lucky. I have seen many who have accepted low-level administrative positions or even make ends meet delivering pizzas. Some can find no work at all and are “boomerang” kids who had to return to their parent’s home. Many conservatives may argue that: they should have chosen a more employable major course of study; there is work for any who want it;  or regardless of their financial situation, a debt is a debt and it should be paid, on time.

Those who cast aspersions on the liberal arts or fine arts graduate may not know much about what is required to earn a college degree. Much of the first two years of college involve the same courses for pre-med; engineering; hard sciences; teaching; business and public administration as majors in psychology, fine arts, languages, and philosophy. This portion of a college education alone imbues the student with a host of skills and knowledge that sets them apart from the vast majority of people who never attended college. They have the potential for much greater productivity in any business. To condemn them for chosing a poor career path is blaming the victim. They want to be more productive; were led to believe they would be if they continued in school; they even borrowed money to gain the advantage they were told they would have.

Did our children fail the system, or did the system fail them?

I would like to further explore the way in which state universities have lost their mission and have become quasi-private centers for business profitability. That will be for a future post.