Income

Money Can Buy Happiness

March 16, 2018 By Twila VanLeer

Contrary to the common adage that says you can’t buy happiness, a massive research project conducted by Purdue University and the University of Virginia indicates that there is a certain amount of happiness that is related to satisfaction with life that comes from a certain income.

The two universities analyzed World Gallup Poll data that was gathered from 1.7 million people in 164 countries and cross-referenced earnings with life satisfaction. The results of the study were published in the journal Nature Human Behavior.

The study acknowledged that costs and standards of living varied among the countries included in the study and factored that into their conclusions.

The upshot for Americans was that an ideal income for individuals is $95,000 per year to obtain life satisfaction. Emotional well-being, the study showed, is achievable at $60,000 to $75,000 per year. Families with children, of course, will need more.

The researchers defined life satisfaction as an overall assessment of how one is doing financially. Emotional well-being related to day-to-day feelings such as happiness, sadness, excitement, anger, etc.

The extensive survey also indicated that once a threshold was reached, additional increases in income actually were associated with reduced happiness, indicating that the more people have, the more they want. They tend to compare themselves with others more often.

There is a happiness “tipping point,” the researchers concluded., related to how well an individual feels about money. A small decline in earnings causes one to relate with others who make slightly lower incomes, perhaps because of the costs that come with higher incomes, said Andrew Jebb, lead author of the study and a doctoral student at Purdue.

He noted that the findings of the large study raise issues about money and happiness across cultures. “Money is only part of what really makes us happy and we’re learning more about the limits of money.“

Living Wage Laws Difficult To Enforce

May 28, 2016 By Twila VanLeer

For the cities that endorse the Living Wage Law, ensuring compliance is difficult.

A number of cities have bowed to pressure from labor advocates and enacted “living wage” laws, some of them phasing in plans that will top out at $15 per hour.

A living wage is the minimum income necessary for a worker to meet their basic needs. It was designed to fight poverty, but the ripple effects that come after cities actually adopt the Living Wage Laws are numerous.

Ensuring that employers actually follow the new guidelines is difficult. State and federal laws don’t require employers to provide data proving that they are in compliance, oversight agencies say. The data is most often contained in payment check stubs, but employers are not required to share the information.

Cities That Use Living Wage Laws

Among cities that have adopted the wage increases are Santa Fe and Albuquerque, New Mexico, San Francisco, California, and Washington D.C. The issue is on the agendas of many state legislatures and city governments as the press for better wages heats up.

Complaints

Enforcers generally rely on worker complaints to initiate actions against employers who do not conform, but the employees are reluctant to complain for fear of reprisals, so many instances of non-compliance go unnoticed. Labor groups estimate that a quarter of the country’s workers who fall under the guidelines are not receiving the legislated wages. But if one employee complains, enforcers use it as leverage to investigate pay records for all of the business’ employees on the supposition that the problem affects more than the single complainant.

Recommendations For Enforcement

Haeyoung Yoon of the National Employment Law Project calls the problem “pervasive and rampant” in an Associated Press news article. The project recommends higher fines against non-compliant employers and more stringent enforcement. The costs of enforcement are high, but could be recouped through fines, she said.

Some employers don’t understand the new laws, but others sidestep the provisions by requiring workers to work unpaid or off the clock to make up the difference. Others raise the wage, but cut the benefits.

Law Suits

Hospitality and transportation workers serving in SeaTac, Washington are granted the Living Wage Law. This community however needed courts to enforce compliance and have filed more than a dozen class-action suits this year in behalf of workers. The total amount of contested wages, related benefits and possible penalties could add up to $62.5 million.

On-Demand Workers: Be Aware of Tax Issues

May 1, 2016 By Twila VanLeer

Tax issues with on demand workers. — Uber workers are considered self-employed and have to set aside money for taxes.

If you make your living doing on-demand jobs, defined by the Internal Revenue Service as an “online marketplace or application that connects free lance providers with customers,” you need to be aware that Uncle Sam will tax your income.

About 10 percent of the U.S. workforce falls into this category – some 14.6 million people. It’s a business and is regulated by the same tax requirements that apply to more usual businesses.

Set Aside A Portion Of Your Income

The smart thing to do is set aside a portion of your income through the year so the April l5 deadline doesn’t catch you by surprise. For instance, people who drive for Uber or Airbnb or otherwise routinely do jobs that are on-demand, may be considered independent contractors. They are likely to receive a 1099 form reporting their income, rather than a W-2. And since there is no automatic withdrawal of taxes, the individual is responsible for keeping track and anticipating tax charges.

Self-Employment Tax

Not only are these self-employed persons responsible for routine taxes, they also may be required to pay a self-employment tax, which has been imposed by the IRS as payment for Social Security and Medicare.

Keep Track Of Possible Deductibles

Anticipating taxes should prompt on-demand workers to keep track of possible deductibles. Drivers, for instance, can deduct the costs of car washes, providing water or snacks for passengers, etc. Accurate records will be invaluable when you sit down to fill out the tax forms.

Schedule C

Schedule C is the form you need to report profit and loss from business income. SE is used to compute the self-employment tax.

Rental Income

Some people add to their income by renting out their home for special occasions. Think Super Bowl. They may realize big bucks for their efforts, but the income is taxable. A one-shot rental is not taxable, but two or more triggers taxes. If you rent your home out for 15 days or longer, you must start to report the rental income and the particulars associated with the rental, such as deductions for utility expenses, etc. That means you have to separate your own expenses from those associated with the rental.

Making estimated tax payments through the year will help fend off the shock you might experience when it comes time to file.

More information is available through Publication 334, the IRS Tax Guide for Small Businesses. Publication 527 focuses on rental income and expenses and Publication 463 offers guidelines on the use of your vehicle for business purposes.

Women Today Earn Nearly Three Times What Their Mothers Did

May 5, 2014 By Twila VanLeer

"More women are in the labor force now than a generation ago, and they are working longer hours and earning more money than mothers did." — “More women are in the labor force now than a generation ago, and they are working longer hours and earning more money than mothers did.”

Today’s working woman probably makes three times what her mother did. But they don’t earn on par with their dads, or their brothers. So the male component retains the more frequent breadwinner status, with the female members of the families supplying supplemental income.

A study by the Pew Economic Mobility Project compared what women who were about age 40 earned in the late 1960s and early 1970s earned, in comparison with their daughters in the same age group in the 2000s.

“Increases in hours worked and wages translate into higher annual
earnings: Women today earn nearly three times what mothers did.”

The research showed that a higher percentage of women work today and they work longer hours at higher wages. Four times more women work outside the home now than did in the earlier time frame. Men’s jobs suffered more in the Great Recession, making women’s income more important to the family’s well-being.

All wages are adjusted to 2009 dollars. Daughters’ and sons’ characteristics are measured from 2001 to 2009 and mothers’ and fathers’ from 1968 to 1972.

At every income level, today’s women outstripped their mother’s earnings by at least 50 percent, the project learned. The wage differential between fathers and sons was lower, but the sons emerged as the group that leads in earnings.

Daughters have made big advances, but in comparison with their dads, are still at the bottom of the earnings ladder. Their per-hour income is less than Dad’s was thirty years ago, the study showed. Women leaving the workforce temporarily or permanently to be mothers accounts for some of the difference.

The Pew researchers, however, look ahead to trends that show the wage differences will continue to shrink. Women are graduating from college at higher rates now than men. The wages of the youngest women in the sampling are more on a parity with their male peers, assuring that their financial contributions to their families in the future will be even more important.