Latest Yahoo Column: Don't Cash Out Your 401(k)

Recently, Fidelity Investments, the nation's largest IRA and 401(k) provider, surveyed 20- to 40-year-olds and found that a disappointing 40 percent of them had cashed out their 401(k) when leaving a job. John Ragnoni, the company's Senior VP of retirement products, calls this decision a "retirement killer," which he explains with a simple example.

Human Capital or Humane Capitalism?

David Brooks on a book I first saw covered in the Chronicle of Higher Ed last week: “The Race Between Education and Technology,” (working paper here).

Basically, the authors argue, educational attainment was very high and rising in America up until 1970. Then high school graduation rates peaked, and college completion rates stagnated as well (as I point out in my book). The increase in inequality since then, the writers argue, as measured by the college wage premium, is caused by a decline in the supply side of educated citizens, which also threatens our international economic competitiveness. "America’s lead over its economic rivals has been entirely forfeited, with many nations surging ahead in school attainment. This threatens the country’s long-term prospects. It also widens the gap between rich and poor. "

I am all for increasing investment in education. But I don't buy Brooks' further argument that human-capital policies should dominate and replace all other labor market reforms. A simple look at median incomes by education since 1970, which I use in all my presentations, shows a decline in the incomes of less educated workers combined with stagnating income for more educated workers. And the breakdown in the health care and retirement systems affects workers at all education levels. Simply handing out more diplomas is not going to make the United States a more broadly prosperous place, although we'd all like it to be true.

Wall Street Journal, of All Places, On Re-Regulating the Economy

"The housing and financial crisis convulsing the U.S. is powering a new wave of government regulation of business and the economy...In fact, some proponents today of a bigger oversight role for government are Republican heirs to the legacy of President Reagan."

The pendulum's swinging back: toward a strong, progressive, activist government that does more to make the playing field fair. It's what people want.

"By a 53%-to-42% margin, Americans want government to "do more to solve problems," according to a Wall Street Journal/NBC News poll released Wednesday. A dozen years earlier, respondents opposed government action by a 2-to-1 margin."

(Young Americans support this idea even more).

New Online Nonprofit For 18-34 year olds; Help With Money, Work, and Health challenges

The SEIU, one of the nation's biggest and most active unions, is taking a new approach toward providing services to and advocating for financially strapped young people. You may never meet a union organizer, but they hope you'll turn to Qvisory for information and tools to help with money, work, and health challenges.

It looks like the website has a lot of useful information. I'll be blogging on the site occasionally (pro bono); they have quite a roster of young bloggers covering these issues very, very well. They also will have political action alerts on issues like credit card regulations, and they're promoting discounts on certain online tools related to budgeting and credit counseling. All in all, this could develop into a very useful resource if it catches on.

I get approaches from people and organizations almost every week who have some kind of idea to do something like this for Generation Debt, and who want me to sign on or become a part of it. I think that keeping it nonprofit is a really good idea, rather than connecting it to a certain product or financial services company. (Although they are endorsing certain products...hmm. Seems like there's always going to be gray areas there). And the connection with a particular type of political organizing that has proven to be very effective in the past is certainly potentially powerful and intriguing. As a matter of policy, I promote collective, progressive political action as well as personal responsibility, even though it alienates the free-market weirdos. You know what? Actually, I hope they are alienated. Enjoy your unregulated economy with no social safety net, guys. It's doing awesome right about now. And if you don't like it...don't read my blog.

Above is a tagcloud from the first report Qvisory released along with their launch, capturing the problems that are most on the mind of Generation Debt, according to their survey. " 55 percent say that their finances, the economic squeeze and money are their biggest problems. "

What's the Value of a College Degree?

A take from the Wall Street Journal:

"A four-year college degree, seen for generations as a ticket to a better life, is no longer enough to guarantee a steadily rising paycheck."
As one of my brilliant subjects from Generation Debt, who sent me the link, put it, "Ya think?"

And from the Times, about Berea College in Kentucky, a member of the Work College Consortium (which I've written about before and find really intriguing); The school accepts only low-income applicants, charges no tuition, has no frills, and requires students to work 10 hours a week on campus.

“You can literally come to Berea with nothing but what you can carry, and graduate debt free,” said Joseph P. Bagnoli Jr., the associate provost for enrollment management. “We call it the best education money can’t buy.”

New Yahoo! Column: Student Loan Repayment

My latest Yahoo! column gives all the info on new laws and resources to help people repay their student loans.

On July 1, Generation Debt got some good news: New rules came into effect making college and graduate school loan repayment much more affordable for a wide range of people.

The idea behind the rules, applauded by student advocates, is to make our higher education system more equitable by helping those who graduate, play by the rules, and meet their obligations to repay the cost of their education.

One question that appeared in the comments: can you get a direct consolidation loan if you already have a lenders' consolidation loan?

According to the fed's web site FAQ section, the answer is YES if you specifically intend to apply for the Public Service Loan Repayment program and can show that you are eligible.

Economic Downturn Means More Jobless Youth

Says the Washington Post:
Young adults seeking low-skill service jobs for the summer must contend with older, laid-off workers, illegal immigrants and college graduates who cannot find work in their fields, as well as with cuts in federal summer jobs programs.
As a result, the national youth jobless rate for June was at its highest in six decades, with 37 percent of teenagers ages 16 to 19 employed, compared with 51 percent in June 2000, according to Northeastern
University's Center for Labor Market Studies, which analyzed Labor Department data.

Six decades! I guess the kids can always join the army,

Latest Yahoo Column: Social Security/Medicare

My latest Yahoo! column grew out of the Youth Entitlement Summit I attended a few weeks ago in DC. These are always sticky issues to talk about and some people think liberals & progressives shouldn't even bring them up, but I don't feel bound by that kind of movement-think. These are the most important and biggest social welfare programs we have, and if we, liberals and progressives, don't have the courage to discuss them, defend them, and fix them, then why bother advocating more social welfare programs such as a universal health care system?