About 12.7 percent of Americans lived be

About 12.7 percent of Americans lived below the poverty line in 2016. StanislauV/shutterstock.com
Robert L. Fischer, Case Western Reserve University
On July 12, President Trump’s Council of Economic Advisers concluded that America’s long-running war on poverty “is largely over and a success.”
I am a researcher who has studied poverty for nearly 20 years in Cleveland, a city with one of the country’s highest rates of poverty. While the council’s conclusion makes for a dramatic headline, it simply does not align with the reality of poverty in the U.S. today.

What is poverty?
The U.S. federal poverty line is set annually by the federal government, based on algorithms developed in the 1960s and adjusted for inflation.
In 2018, the federal poverty line for a family of four in the contiguous U.S. is $25,100. It’s somewhat higher in Hawaii ($28,870) and Alaska ($31,380).
However, the technical weaknesses of the federal poverty line are well known to researchers and those who work with populations in poverty. This measure considers only earned income, ignoring the costs of living for different family types, receipt of public benefits, as well as the value of assets, such as a home or car, held by families.
Most references to poverty refer to either the poverty rate or the number of people in poverty. The poverty rate is essentially the percentage of all people or a subcategory who have income below the poverty line. This allows researchers to compare over time even as the U.S. population increases. For example, 12.7 percent of the U.S. population was in poverty in 2016. The rate has hovered around 12 to 15 percent since 1980.
Other discussions reference the raw number of people in poverty. In 2016, 40.6 million people lived in poverty, up from approximately 25 million in 1980. The number of people in poverty gives a sense of the scale of the concern and helps to inform the design of relevant policies.
Both of these indicators fluctuate with the economy. For example, the poverty population grew by 10 million during the 2007 to 2009 recession, equating to an increase of approximately 4 percent in the rate.
The rates of poverty over time by age show that, while poverty among seniors has declined, child poverty and poverty among adults have changed little over the last 40 years. Today, the poverty rate among children is nearly double the rate experienced by seniors.

The July report by the Council of Economic Advisers uses an alternate way of measuring poverty, based on households’ consumption of goods, to conclude that poverty has dramatically declined. Though this method may be useful for underpinning an argument for broader work requirements for the poor, the much more favorable picture it paints simply does not reconcile with the observed reality in the U.S. today.

Deserving versus undeserving poor
Political discussions about poverty often include underlying assumptions about whether those living in poverty are responsible for their own circumstances.
One perspective identifies certain categories of poor as more deserving of assistance because they are victims of circumstance. These include children, widows, the disabled and workers who have lost a job. Other individuals who are perceived to have made bad choices – such as school dropouts, people with criminal backgrounds or drug users – may be less likely to receive sympathetic treatment in these discussions. The path to poverty is important, but likely shows that most individuals suffered earlier circumstances that contributed to the outcome.
Among the working-age poor in the U.S. (ages 18 to 64), approximately 35 percent are not eligible to work, meaning they are disabled, a student or retired. Among the poor who are eligible to work, fully 63 percent do so.
Earlier this year, lawmakers in the House proposed new work requirements for recipients of SNAP and Medicaid. But this ignores the reality that a large number of the poor who are eligible for benefits are children and would not be expected to work. Sixty-three percent of adults who are eligible for benefits can work and already do. The issue here is more so that these individuals cannot secure and retain full-time employment of a wage sufficient to lift their family from poverty.

A culture of poverty?
The circumstances of poverty limit the odds that someone can escape poverty. Individuals living in poverty or belonging to families in poverty often work but still have limited resources – in regard to employment, housing, health care, education and child care, just to name a few domains.
If a family is surrounded by other households also struggling with poverty, this further exacerbates their circumstances. It’s akin to being a weak swimmer in a pool surrounded by other weak swimmers. The potential for assistance and benefit from those around you further limits your chances of success.

Even the basic reality of family structure feeds into the consideration of poverty. Twenty-seven percent of female-headed households with no other adult live in poverty, dramatically higher than the 5 percent poverty rate of married couple families.
Poverty exists in all areas of the country, but the population living in high-poverty neighborhoods has increased over time. Following the Great Recession, some 14 million people lived in extremely poor neighborhoods, more than twice as many as had done so in 2000. Some areas saw some dramatic growth in their poor populations living in high-poverty areas.

📷Given the complexity of poverty as a civic issue, decision makers should understand the full range of evidence about the circumstances of the poor. This is especially important before undertaking a major change to the social safety net such as broad-based work requirements for those receiving non-cash assistance.
Robert L. Fischer, Co-Director of the Center on Urban Poverty and Community Development, Case Western Reserve University
This article was originally published on The Conversation. Read the original article.

 

How to get ready for the economic recession coming in 2017

Time to stock up? Canned goods via http://www.shutterstock.com

Jay L. Zagorsky, The Ohio State University

My outlook for 2017 and beyond is that the U.S. economy will likely see another recession.

Yes, the economic picture currently looks wonderful. The Dow and S&P 500 are at record levels. Unemployment is well below 5 percent of the labor force. Inflation is still tame. The U.S. dollar is strong.

The U.S. economy has grown dramatically over the long run. GDP has increased by one-third since the beginning of the 21st century, even after adjusting for inflation.

However, capitalist economies do not simply grow steadily larger. Instead, their long-term growth is periodically punctured by downturns.

The record of all economic ups and downs over the last century and a half shows the U.S. economy has experienced 33 recessions. This means recessions occur roughly once every five years.

Our present economic expansion has lasted far longer than five years. The Great Recession ended in June 2009, about seven and half years ago. Even though many indicators look amazing today, if history is any guide, we are due for another economic downturn.

In which case, it’s a good time for a primer on recessions and how to prepare for them.

Recession, explained.

Who calls a recession?

The dates of when recessions in the U.S. begin and end are declared by a nonpartisan organization called the National Bureau of Economic Research, or NBER. Within the NBER, a small committee, currently comprising nine professors, officially decides when a recession has occurred usually months after the fact.

The group does not use two quarters of falling GDP as their guide, a common rule of thumb journalists and others employ to describe recessions. That’s in part because GDP figures are often revised by the U.S. government. Deciding when a country is or is not in a recession based on numbers that are constantly moving is not sensible.

Instead the committee uses many factors beyond GDP such as employment, income, industrial production and retail sales.

The four longest economic booms have all occurred since John Glenn orbited the Earth.
AP Photo

How long are the longest expansions?

In U.S. economic history, no economic expansion has lasted more than a decade.

The current economic expansion is the fourth-longest on record. This record stretches all the way back to the 1850s.

The three longer booms all occurred since John Glenn orbited the Earth. The third-longest expansion started in 1982 and lasted close to eight years. The second-longest began in 1961 and lasted a bit less than nine years. The longest expansion we’ve experienced started in 1991 and lasted a decade, until the dot-com bubble burst in 2001.

This means that the current period of growth is entering the economic history books as something special. In just a few months it will overtake the 1982 boom and become the third-longest U.S. expansion on record.

How much longer can it continue?

No one knows why economic expansions end. It could be a sudden trigger like the collapse of Lehman Brothers in late 2008 or just a general loss of confidence.

Economic theories, such as works by economist Hyman Minsky, explain that the longer an expansion continues, the more likely a recession becomes.

The length of an expansion matters because banks lower their lending standards over time. At the end of very long expansions, banks and finance companies are willing to lend to almost anyone because they become overly optimistic. Some of this willingness to lend carelessly is currently seen in U.S. car loans.

In Minsky models the economy is like a game of musical chairs at a party. Everyone has a wonderful time until the music stops and everyone wants to sit down simultaneously. Then suddenly “the euphoria becomes a panic, the boom becomes a slump.”

Whatever the reasons that expansions end, the fact that the U.S. has never had an expansion that lasted longer than a decade does not bode well for the current one lasting much longer.

Keep it well stuffed.
Piggie bank via http://www.shutterstock.com

What should you do?

No individual has the power to stop a recession. However, by planning you can mitigate the impact an economic downturn has on you and your family.

Right now most people are enjoying good economic times. They will not last forever. Save some money now. Pay down credit card debt and other loans. Give yourself a financial cushion that will protect you in the event of an economic downturn.

How much you need to save depends on your risk tolerance. One guide is that over the past century and a half, the typical recession has lasted less than 1.5 years.

Recessions do not come like clockwork, however. The data suggest no clear pattern of how long expansions last. But since only three expansions since the 1850s have beaten the one we are currently living through, it’s best not to be overconfident that the current one will continue forever.

Instead, make some plans now to mitigate the next downturn. Even if I am wrong, the worst thing that will happen is that you will have less debt and more money saved. Is that so bad?

Jay L. Zagorsky, Economist and Research Scientist, The Ohio State University

This article was originally published on The Conversation. Read the original article.

Deutsche Bank turmoil shows risks of weakening bank capital standards

A whirlwind of speculation about Deutsche Bank’s health has surrounded its headquarters in Munich. AP Photo/Michael Probst

Is the financial system headed for another ‘Lehman moment’?

Anjan V. Thakor, Washington University in St Louis

Deutsche Bank, a venerable 146-year-old bank whose very name symbolizes the German financial system, has recently found itself in considerable turmoil.

The kicker came in September when the Department of Justice slapped it with a US$14 billion fine for alleged wrongdoing during the financial crisis. But Deutsche Bank was already being buffeted by a string of bad news. Its stock price has slumped over the past year due to a decline in investment banking and dim prospects for its commercial banking business.

This has led to speculation about whether the German government will have to bail it out and, if it doesn’t, whether markets will soon experience another “Lehman moment” – referring to how the collapse of the U.S. investment bank sparked a global financial meltdown in 2008.

As I see it, these concerns obscure the much deeper problem that afflicts the European banking sector and that a bailout alone will do nothing to resolve: a lack of capital.

It also offers a stark warning for U.S. regulators amid talk of changes to banking rules – especially Dodd-Frank – under the new administration. While some changes to the U.S. financial system may be worthwhile, easing capital standards would be a mistake and make another financial crisis much more likely.

Instead, regulators on both sides of the Atlantic need to make sure there’s no question their banks are able to withstand a shock – whether a billion-dollar fine or something much more severe.

Why Deutsche Bank won’t be bailed out

While allowing a bank that has the size and prominence of Deutsche Bank to fail is obviously an event that could have seismic repercussions, bailing it out is not something that would be easy for the German government to do.

There are many reasons for this. One is reputational. Angela Merkel, the German chancellor, has been critical of other governments (especially in Europe) for using taxpayer funds to bail out their banks.

Second, there is little support among German taxpayers for the bailout, so it would also be politically costly.

While it’s interesting to speculate about this, there are other questions that are even more pertinent. First, what is the real problem here? Why is Deutsche Bank in the mess it finds itself in? What can we do to prevent our major financial institutions from being so fragile in the future?

There are many factors responsible for what ails Deutsche Bank. Perhaps none figures more prominently than its capital position during and after the crisis.

Who’s the riskiest of them all?

Among its peer institutions, Deutsche Bank is the riskiest based on its “leverage ratio,” which essentially measures how much equity capital it has as a percentage of total assets.

On June 30, its leverage ratio stood at a shockingly low 2.68 percent, or about half the average for the eight biggest U.S. banks, according to the Federal Deposit Insurance Corporation. That means it had only $2.68 in equity for every $100 in assets.

A low ratio means it has less cushion if there’s a problem. Since banks are required to mark many of their assets to market, an adverse price movement that reduces the value of its assets by just 3 percent would completely wipe out its equity.

We can see that the bank’s low capital is bad from at least two perspectives. One is that a 2.68 percent leverage ratio is less than what Bear Stearns had (2.78 percent) in early 2008 before it collapsed and had to be rescued by the U.S. government via a deal with JPMorgan Chase.

Another is that under the Basel III’s capital rules, banks are required to have a leverage ratio exceeding 3 percent. As an interesting contrast, U.S. bank regulators have adopted a 5 percent minimum leverage ratio for domestic banks. (One caveat is that European regulators [European Banking Authority] gave Deutsche Bank a ratio of 2.96 percent earlier this year,slightly higher than what the FDIC gave it, but still very worrisome.)

The ‘doom spiral’

Extensive academic research has revealed that a lot of bad things can happen when a bank has critically low capital.

One is that its internal culture gets skewed in favor of growth and excessive risk taking. Deals that can make the bank a lot of money if they pan out (but can also cost the taxpayers a lot) become more attractive. The other consequence is that there is “debt overhang” – so much debt that shareholders are unwilling to infuse any more equity into the bank since most of the benefits of the new equity will flow to the depositors and other creditors.

So this creates a sort of “doom spiral”: More equity is needed to rescue the bank, but excessive debt stands in the way. So the government finds itself on the horns of a dilemma, either let the bank fail or infuse taxpayer money to rescue it.

Finally, more highly levered banks also make a bigger contribution to systemic risk, which is the risk that the whole system will fail, as we saw during the financial crisis.

We see some evidence of these forces operating at Deutsche Bank. Reports suggest the bank is unlikely to raise new equity because its stock price is “too low” and trading at about 25 percent of the book value of its equity. That means the market thinks the value of the bank’s equity is worth just 25 cents when the bank’s balance sheet states it as one dollar. Put slightly differently, if Duetsche bank states its shareholders equity on its balance sheet as $100, the market will actually pay only $25 to buy it.

One reason for the low stock price is its dim business prospects, thanks to anemic economic growth in Europe and tighter banking regulations. The other, of course, is the aforementioned debt overhang.

With such low capital, it is also hardly surprising that its U.S. unit failed the Federal Reserve Bank’s stress test in June. The only other major bank that failed was the U.S. unit of Santander. When a bank fails a test, it is not allowed to remit dividends back to its parent company and may face harsher sanctions. In addition there is reputational damage and potential loss of customer trust, which can be very damaging to the stock price.

Moreover, consistent with the predictions of academic research, the International Monetary Fund named the bank as “the most important net contributor to systemic risk.” In other words, by keeping capital that is too low from a prudential regulation standpoint, Deutsche Bank is creating risk, not only for itself but for the whole global financial system.

The real concern

So, the real problem for global financial stability is not whether Deutsche Bank will be bailed out. It is the question of what bank regulators are going to do to get more equity capital into banking.

In this regard, U.S. bank regulators have done considerably better than European (and Japanese) bank regulators. During the financial crisis, the U.S. government took equity stakes in banks, effectively recapitalizing them. When the shareholders of these banks repurchased the government’s stakes, private equity capital replaced taxpayer-provided capital, and the U.S. banking system ended up on a much sounder footing as a result.

By contrast, this did not happen in Europe. In fact, banks in Europe lobbied their bank regulators to water down the Basel III capital rules so as to avoid having to raise billions of euros in new capital. As a result, banking fragility in Europe remains considerably higher than in the U.S.

What should be done going forward? I think the single biggest regulatory imperative in banking is to get banks to have significantly higher capital ratios, both in the U.S. and in Europe, although the problem in Europe is more pressing.

And American taxpayers and bank regulators cannot afford to be smug about American banks being better capitalized than European banks. There may be lobbying of the new administration to water down capital requirements but doing so will be bad for the economy, both here and globally. Hopefully we will not repeat the mistakes made in Europe.

We live in a highly interconnected global financial system. European banking fragility imperils the U.S. and indeed the global financial system. Bailouts generally do not foster future financial stability; higher capital does. That’s where the answer lies.

Anjan V. Thakor, Professor of Finance, Washington University in St Louis

This article was originally published on The Conversation. Read the original article.

The Hidden Homeless Population

Photo: Phillip Jeffrey: fadetoplay.com / Flickr

By Roseangela Hartford

A growing number of homeless students lack the academic and community support they need to get off the streets.

Most children in the United States spend their school days dreaming of their next birthday party or worrying whether they’re popular enough. Not America’s homeless youth.

Students like Jamie Talley, who first became homeless at age 2, are thinking about how the weather will affect their sleep and how to silence their growling stomachs during a test.

“I was pushed out of the world and left to survive on my own,” Talley said in a scholarship essay quoted by the Washington Post. “I had given up on the possibilities for me to become somebody.”

Fortunately, Talley had a teacher who helped her get Medicaid and pushed her to focus on her education.

But most homeless students don’t feel supported at school. They feel that their schools simply don’t have the funding, time, staff, community awareness, or resources to help, and that’s the way it’s always going to be. This feeling of invisibility continues to disconnect citizens with consistent housing from those without.

Read More Source: The Hidden Homeless Population

Americans are paying more and more to live in the same places they once abandoned

Neat, colorful row of homes in Chicago’s Douglas Park neighborhood. (Getty Images)

America’s urban downtowns were neglected for decades, abandoned for newer malls in the suburbs and bigger homes on the edge of town. The construction of new highways helped speed their decline. And rising crime nearly killed them.

That’s the story of much of the second half of the 20th century in cities such as Washington, D.C., New York and Chicago. But newly unveiled housing data dating back to 1990 show that these long-shunned city centers have been attracting Americans again. According to detailed data from the Federal Housing Finance Agency, home prices over the past 25 years have appreciated more in the heart of big cities than just about anywhere else.

“After decades of hollowing out,” write FHFA economists Alexander Bogin, William Larson and William Doerner, “center-cities are becoming increasingly popular.”

In the Washington area, the highest price appreciation is in parts of downtown Washington.

Read More:

Source: Americans are paying more and more to live in the same places they once abandoned – Orlando Sentinel

Three little scams: manipulating the housing crisis.

Manipulating the housing crisis

“The crisis is not one of supply and demand. The imbalance of supply and demand is one of the problems. The actual crisis consists of hundreds of families being driven out of their homes by artificial rent increases, and those rent increases are driven in turn by the plan to build massive market rate housing developments. Ironically, both San Francisco and Berkeley developed their respective “inclusionary” measures in order to resolve the housing crisis. They will, however, only make the crisis worse because of what such “inclusionary plans” ignore. First, they ignore the distinct class bias contained in each proposition. Second, it is a bias that is unavoidable as long as housing development is linked to corporate financing. And third, there is the fact that all corporate developers have the same ability to avoid fulfilling their “affordable housing” requirement (a legal escape hatch). Ultimately, it is the class bias inherent in these plans that serves to mask the fact that “market rate” housing is the source of the crisis itself.”

Read More:

Source: Three little scams: manipulating the housing crisis. Category: Page One from The Berkeley Daily Planet

So What’s Going On In The Retail Industry ?

January 16, 2016

Retail store closings in the U.S. have less to do with economic implications and more to do with sociological insights.  Store closings are no longer about discretionary income as much as they are about consumer empowerment and how retail consumption is shapeshifting in response to rapidly changing consumer behaviors and preferences.

Here are 16 companies that have closed stores or will close stores soon:
Office supply company Staples has announced plans to close 225 stores by 2015, which is about 15 percent of its chain. Staples already closed 40 stores last year. Industry analysts expect Staples’ main competitor, Office Depot, which bought OfficeMax last year, to announce its own round of store closings soon.
Radio Shack has announced plans to close 20 percent of its stores this year, which is as many as 1,100 stores. The company, which operates around 4,000 stores, reported that its sales fell by 19 percent last year.
Albertsons closed 26 stores in January and February according to Supermarket News. Analysts expect many more Albertsons could soon be shuttered because Albertsons owner hedge fund Cerberus Capital Management just bought Safeway Inc. Some Safeway stores could soon shut down as well.
Clothing retailer Abercrombie & Fitch is planning to close 220 stores by the end of 2015. The company is also planning to shut down an entire chain it owns, Gilly Hicks, which has 20 stores, 24/7 Wall Street reported.
Barnes & Nobles is planning to shut down one-third of its stores in the next year: about 218 stores. The chain has already closed its iconic flagship store in New York City.

J.C. Penney is closing about 33 stores and laying off about 2,000 employees.
The Record newspaper in New Jersey reported that Toys R Us has plans to close 100 stores.
The Sweetbay Supermarket chain will close all 17 of the stores it operates in the Tampa Bay area, The Herald Tribune newspaper reported. Many of the stores might open as Winn-Dixie Stores. Sweetbay closed 33 stores in Florida last year.
The entire Loehmann’s chain of discount clothing stores in the New York City area shut down. Loehmann’s once operated 39 stores, The New York Times reported, and was considered an institution by generations of New Yorkers.
Industry analyst John Kernan told CNN that he expects Sears Holdings, which owns both Sears and Kmart, to close another 500 stores this year. Sears has already shut down its flagship store in Chicago.
Quiznos has filed for bankruptcy, USA Today reported, and could close many of its 2,100 stores.
Sbarro which operates pizza and Italian restaurants in malls is planning to close 155 locations in the United States and Canada. That means nearly 20 percent of Sbarro’s will close. The chain operates around 800 outlets.
Ruby Tuesday announced plans to close 30 restaurants in January after its sales fell by 7.8 percent. The chain currently operates around 775 steakhouses across the US.
An unknown number of Red Lobster stores will be sold. The chain is in such bad shape that the parent company, Darden Restaurants Inc., had to issue a press release stating that the chain would not close. Instead, Darden is planning to spin Red Lobster off into another company and sell some of its stores.
Ralph’s, a subsidiary of Kroger, has announced plans to close 15 supermarkets in Southern California within 60 days.
Safeway closed 72 Dominick’s grocery stores in the Chicago area last year.

What follows is a complete, updated, and ongoing list of U.S. retail chains that are closing underperforming retail store locations, downsizing, or going bankrupt and out of business in the 2015 calendar year.

Retail industry — and economic data

Wal-Mart to close 269 stores, 154 of them in the US

Complete 2015 Retail Store Closings Sorted by Store Closing Numbers >>

Monthly & Annual Retail Trade

For a complete list of ‪Walmart‬ stores closings click here.

 

 

Priorities…

I recently attended a YWCA event where the speaker challenged us to consider how we spend our time, our money, and what words we tell ourselves. This got me thinking about our GOP members of Congress. If we reflect on those three topics in regard to the GOP in both houses of our Congress, we see that they’ve spent their time and our money trying to repeal Obamacare, shutting down the government, setting up budgets that cut money for needed social service programs while giving tax breaks to the 1% and corporations. The words they tell themselves are despicable. They demonize the poor and lionize the wealthy. They claim to be Christian while cutting services that help poor people and provide assistance to them.

What are the GOP priorities? They have told us repeatedly. Privatize services, tax cuts for wealthy, cuts to basic services that people need, and lessening regulations on corporations. Now, how many people who vote for GOP candidates support these goals? We must help people realize exactly what they are supporting when they vote for Republicans. We only have a short time to get voters educated. Will you help? Write a letter to the editor. Tweet something. Post something about it on Facebook. Tell your friends and family. Together we can make a difference. But, we must act. We can’t wait for any political party to do it for us.

Pat Taylor Fuller has a blogspot named Pat’s Commentary

http://pageposts1123.blogspot.com/

#6 Top Over Paid CEOs-Robert Allen “Bob” Iger

Robert Allen “Bob” Iger (born February 10, 1951) is an American businessman and the current chairman and chief executive officer of The Walt Disney Company. He was named president of Disney in 2000, and later succeeded Michael Eisner as chief executive in 2005, after a successful effort by Roy E. Disney to shake-up the management of the company. Iger oversaw the acquisition of Pixar Animation Studios in 2006, following a period of strained relations with the animation studio. He also led the company to acquire Marvel Entertainment in 2009 and Lucasfilm in 2012, further broadening Disney’s intellectual property franchises.

Compensation

While CEO of Walt Disney in 2009, Iger earned total compensation of $29,028,362, which included a base salary of $2,038,462, a cash bonus of $9,260,000, stock awards of $6,336,509 and option awards of $8,308,647.^[18] Iger earned a $13.5 million bonus in 2010, which was a 45.4% increase from 2009.^[19] He made $34.3M in 2013, with his cash bonus down 14.7% from the previous year.^[20]

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Ensuring Hardworking Americans Retire with Dignity #FinancialAdvisors #Economy

In this week’s address, the President reiterated his commitment to middle-class economics, and to ensuring that all hardworking Americans get the secure and dignified retirement they deserve.

While most financial advisers prioritize their clients’ futures, there are some who direct their clients towards bad investments in return for back-door payments and hidden fees. That’s why, earlier this week, the President announced that he is calling on the Department of Labor to update rules to protect families from conflicts of interest by requiring financial advisers to put their clients’ best interest before their own profits.

The President emphasized his promise to keep fighting for this policy and for others that benefit millions of working and middle-class Americans.

Remarks of President Barack Obama
Weekly Address
The White House
February 28, 2015

Hi everybody.  In America, we believe that a lifetime of hard work and responsibility should be rewarded with a shot at a secure, dignified retirement.  It’s one of the critical components of middle-class life – and this week, I took new steps to protect it.

Six years after the crisis that shook a lot of people’s faith in a secure retirement, our economy is steadily growing.  Last year was the best year for job growth since the 1990s.  All told, over the past five years, the private sector has added nearly 12 million new jobs.  And since I took office, the stock market has more than doubled, replenishing the 401(k)s of millions of families.

But while we’ve come a long way, we’ve got more work to do to make sure that our recovery reaches more Americans, not just those at the top.  That’s what middle-class economics is all about—the idea that this country does best when everyone gets their fair shot, everybody does their fair share, and everyone plays by the same set of rules.

That last part—making sure everyone plays by the same set of rules—is why we passed historic Wall Street Reform and a Credit Card Bill of Rights.   It’s why we created a new consumer watchdog agency.  And it’s why we’re taking new action to protect hardworking families’ retirement security. If you’re working hard and putting away money, you should have the peace of mind that the financial advice you’re getting is sound and that your investments are protected.

But right now, there are no rules of the road.  Many financial advisers put their clients’ interest first – but some financial advisers get backdoor payments and hidden fees in exchange for steering people into bad investments.  All told, bad advice that results from these conflicts of interest costs middle-class and working families about $17 billion every year. 

This week, I called on the Department of Labor to change that – to update the rules and require that retirement advisers put the best interests of their clients above their own financial interests.  Middle-class families cannot afford to lose their hard earned savings after a lifetime of work.  They deserve to be treated with fairness and respect.  And that’s what this rule would do.

While many financial advisers support these basic safeguards to prevent abuse, I know some special interests will fight this with everything they’ve got.  But while we welcome different perspectives and ideas on how to move forward, what I won’t accept is the notion that there’s nothing we can do to make sure that hard-working, responsible Americans who scrimp and save can retire with security and dignity.

We’re going to keep pushing for this rule, because it’s the right thing to do for our workers and for our country.  The strength of our economy rests on whether hard-working families can not only share in America’s success, but can also contribute to America’s success.  And that’s what I will never stop fighting for – an economy where everyone who works hard has the chance to get ahead.

Thanks, and have a great weekend.

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