tag:theconversation.com,2011:/uk/topics/income-712/articlesIncome – The Conversation2024-02-07T13:12:18Ztag:theconversation.com,2011:article/2200312024-02-07T13:12:18Z2024-02-07T13:12:18ZPower outages leave poor communities in the dark longer: Evidence from 15M outages raises questions about recovery times<figure><img src="https://images.theconversation.com/files/573708/original/file-20240206-24-a4nh4l.jpg?ixlib=rb-1.1.0&rect=7%2C7%2C5168%2C3437&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Low-income communities often have a longer wait for electricity to come back after outages.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/457a5faae7c84a23947a3e781c5ce4a3">AP Photo/Gerald Herbert</a></span></figcaption></figure><p>Electricity is essential to just about everyone – rich and poor, old and young. Yet, when severe storms strike, socioeconomically disadvantaged communities often wait longest to recover.</p>
<p>That isn’t just a perception.</p>
<p>We analyzed <a href="https://doi.org/10.1093/pnasnexus/pgad295">data from over 15 million consumers</a> in 588 U.S. counties who lost power when hurricanes made landfall between January 2017 and October 2020. The results show that poorer communities did indeed wait longer for the lights to go back on.</p>
<p>A 1-decile drop in socioeconomic status in the Centers for Disease Control and Prevention’s <a href="https://www.atsdr.cdc.gov/placeandhealth/svi/index.html">social vulnerability index</a> was associated with a 6.1% longer outage on average. This corresponds to waiting an extra 170 minutes on average for power to be restored, and sometimes much longer. </p>
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<img alt="Two maps of the southeastern U.S. show a correlation between outages and social vulnerability." src="https://images.theconversation.com/files/573707/original/file-20240206-24-n9l871.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/573707/original/file-20240206-24-n9l871.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=784&fit=crop&dpr=1 600w, https://images.theconversation.com/files/573707/original/file-20240206-24-n9l871.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=784&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/573707/original/file-20240206-24-n9l871.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=784&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/573707/original/file-20240206-24-n9l871.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=985&fit=crop&dpr=1 754w, https://images.theconversation.com/files/573707/original/file-20240206-24-n9l871.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=985&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/573707/original/file-20240206-24-n9l871.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=985&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The top map shows the total duration of power outages over eight storms by county. The lower map is a comparison with socioeconomic status taken into account, showing that counties with lower average socioeconomic status have longer outages than expected.</span>
<span class="attribution"><a class="source" href="https://academic.oup.com/pnasnexus/article/2/10/pgad295/7286530">Ganz et al, 2023, PNAS Nexus</a></span>
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<h2>Implications for policy and utilities</h2>
<p>One likely reason for this disparity is written into utilities’ <a href="https://www.publicpower.org/system/files/documents/Restoration_Best_Practices_Guidebook_2018.pdf">standard storm recovery policies</a>. Often, these polices prioritize critical infrastructure first when restoring power after an outage, then large commercial and industrial customers. They next seek to recover as many households as they can as quickly as possible.</p>
<p>While this approach may seem procedurally fair, these recovery routines appear to have an unintended effect of often making vulnerable communities wait longer for electricity to be restored. One <a href="https://doi.org/10.1371/journal.pone.0218883">reason may be</a> that these communities are farther from critical infrastructure, or they may be predominantly in older neighborhoods where power infrastructure requires more significant repairs.</p>
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<img alt="A store in Austin, Texas, is closed during a widespread power outage amid a winter cold snap in 2021." src="https://images.theconversation.com/files/573641/original/file-20240206-23-lotgsh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/573641/original/file-20240206-23-lotgsh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/573641/original/file-20240206-23-lotgsh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/573641/original/file-20240206-23-lotgsh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/573641/original/file-20240206-23-lotgsh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/573641/original/file-20240206-23-lotgsh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/573641/original/file-20240206-23-lotgsh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Commercial areas are often higher on the priority list for faster power recovery in an outage. This store was still closed for several days during Texas’ widespread outages in 2021.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/sign-states-that-a-fiesta-mart-is-closed-because-of-a-power-news-photo/1231222415?adppopup=true">Montinique Monroe/Getty Images</a></span>
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<p>The upshot is that households that are <a href="https://www.brookings.edu/articles/hurricanes-hit-the-poor-the-hardest/">already at greater risk</a> from severe weather – whether due to being in flood-prone areas or in vulnerable buildings – and those who are least likely to have insurance or other resources to help them recover are also likely to face the longest storm-caused power outages. Long outages can mean refrigerated food goes bad, no running water and delays in repairing damage, including delays in running fans to dry out water damage and avoid mold.</p>
<p>Our study spanned 108 service regions, including investor-owned utilities, cooperatives and public utilities. The differential impact on poorer communities did not line up with any particular storm, region or individual utility. We also found no correlation with race, ethnicity or housing type. Only average socioeconomic level stood out.</p>
<h2>How to make power recovery less biased</h2>
<p>There are ways to improve power recovery times for everyone, beyond the necessary work of improving the stability of power distribution.</p>
<p>Policymakers and utilities can start by reexamining power restoration practices and power infrastructure maintenance, such as replacing aging utility poles and trimming trees, with disadvantaged communities in mind.</p>
<p>Power providers already have <a href="https://doi.org/10.1016/j.joule.2021.07.006">granular data on power usage</a> and <a href="https://ieeexplore.ieee.org/stamp/stamp.jsp?arnumber=9913670">grid performance in their service regions</a>. They can begin experimenting with alternative recovery routines that consider the vulnerability of their customers in ways that do not substantially affect average recovery duration.</p>
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<img alt="Two men look at cell phones in the dark on a porch." src="https://images.theconversation.com/files/573650/original/file-20240206-19-b8ktkh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/573650/original/file-20240206-19-b8ktkh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/573650/original/file-20240206-19-b8ktkh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/573650/original/file-20240206-19-b8ktkh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/573650/original/file-20240206-19-b8ktkh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/573650/original/file-20240206-19-b8ktkh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/573650/original/file-20240206-19-b8ktkh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">People in some Fort Myers, Fla., neighborhoods still lacked water and electricity more than a week after Hurricane Ian in 2022.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/sign-states-that-a-fiesta-mart-is-closed-because-of-a-power-news-photo/1231222415?adppopup=true">Montinique Monroe/Getty Images</a></span>
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<p>For socioeconomically <a href="https://atlas.eia.gov/pages/04021248819144108b36cbf27327d11c">vulnerable regions</a> that are likely to experience long outages because of their locations and possibly the aging energy infrastructure, utilities and policymakers can proactively ensure that households are well prepared to evacuate or have access to backup sources of power.</p>
<p>For example, the U.S. Department of Energy announced in October 2023 that it would invest in <a href="https://www.energy.gov/gdo/articles/keeping-lights-our-neighborhoods-during-power-outages">developing dozens of resilience hubs and microgrids</a> to help supply local power to key buildings within communities when the wider grid goes down. Louisiana plans several of these hubs, using solar and large-scale batteries, in or near disadvantaged communities.</p>
<p>Policymakers and utilities can also invest in broader energy infrastructure and renewable energy in these vulnerable communities. The U.S. Department of Energy’s <a href="https://www.energy.gov/justice/justice40-initiative">Justice40 program</a> directs that 40% of the benefit from certain federal energy, transportation and housing investments benefit disadvantaged communities. That may help residents who need public help the most.</p>
<p>Severe weather events are <a href="https://theconversation.com/climate-change-is-intensifying-the-water-cycle-bringing-more-powerful-storms-and-flooding-heres-what-the-science-shows-187951">becoming more common</a> as <a href="https://theconversation.com/2023s-billion-dollar-disasters-list-shattered-the-us-record-with-28-big-weather-and-climate-disasters-amid-earths-hottest-year-on-record-220634">global temperatures rise</a>. That increases the need for better planning and approaches that don’t leave low-income residents in the dark.</p>
<p><em>Chenghao Duan, a Ph.D. student at Georgia Tech, also contributed to this article.</em></p><img src="https://counter.theconversation.com/content/220031/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Researchers tracked power outages after 8 major storms to see how wealth corresponded to recovery time.Chuanyi Ji, Associate Professor of Engineering, Georgia Institute of TechnologyScott C. Ganz, Associate Teaching Professor of Business and Economics, Georgetown UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2185072023-12-07T02:48:10Z2023-12-07T02:48:10ZSexual orientation and earnings appear to be linked – but patterns differ for NZ men and women<p>New Zealand has made substantial progress on promoting LGBTQ+ rights over the past 20 years, including legalising same-sex civil unions in 2004, <a href="https://www.rnz.co.nz/news/political/133003/parliament-passes-same-sex-marriage-bill">legalising same-sex marriage</a> in 2013, and <a href="https://www.tengakaukahukura.nz/banning-conversion-practices">banning conversion practices</a> in 2022. </p>
<p>One thing missing, however, is a clear view of the employment prospects and experiences of the LGBTQ+ population.</p>
<p><a href="https://docs.iza.org/dp14496.pdf">Most studies</a> from overseas show varying income patterns, with gay men generally earning less than heterosexual men, and lesbian women paid more than heterosexual women. </p>
<p>Our new research provides the <a href="https://www.aut.ac.nz/__data/assets/pdf_file/0008/824930/working-paper-23_05.pdf">first empirical evidence</a> of the relationship between minority sexual orientation and the labour market earnings of New Zealand adults. And it looks like the patterns seen overseas are being replicated locally.</p>
<h2>Identifying LGBTQ+ couples</h2>
<p>One of the biggest challenges for empirical research such as ours is the lack of relevant data on the LGBTQ+ population. Barring a few <a href="https://www.stats.govt.nz/news/one-third-of-people-who-identify-as-lgbt-plus-hold-a-bachelors-degree-or-higher/">nationally representative surveys</a>, there aren’t many sources of economic data that allow identification of individuals belonging to the Rainbow+ community.</p>
<p>To address this information gap, we used various administrative data sets in Stats NZ’s <a href="https://www.stats.govt.nz/integrated-data/integrated-data-infrastructure/">Integrated Data Infrastructure</a>. Specifically, we used data from the 2013 and 2018 Censuses, which included a household roster with detailed information on relationships among individuals. </p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/we-asked-same-gender-couples-how-they-share-the-mental-load-at-home-the-results-might-surprise-you-208667">We asked same-gender couples how they share the 'mental load' at home. The results might surprise you</a>
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<p>This allowed us to identify households with two adults of the same sex, where the second adult is described as the spouse or de-facto partner of the person completing the forms. We compared this with individuals in different-sex relationships (as opposed to heterosexual, as some partners may identify as bisexual). </p>
<p>Additionally, our analysis focused on full-time working adults aged between 25 and 64, who were unlikely to be pursuing further education during the period of our analysis.</p>
<h2>Earning profile by sexual orientation</h2>
<p>We linked our sample to the Inland Revenue’s individual tax records, which have detailed information on labour market earnings. </p>
<p>Individuals in same-sex couples appeared to be younger, more likely to have a bachelor’s degree, more likely to live in the urban areas of Auckland or Wellington, and less likely to be married than individuals in different-sex couples. We accounted for these differences in our main analysis.</p>
<p>We found that women in same-sex couples earn 6-7% more than similarly situated women in different-sex couples. For men, the opposite pattern emerged. Men in same-sex couples earned significantly less than otherwise similar men in different-sex couples by an average difference of 6-7%.</p>
<p>We also looked into different sub-groups, such as the marital status of the couple, the duration of cohabitation, or the location of residence and so on. </p>
<p>Importantly, there was no meaningful change in the earnings differences from 2013 to 2018, despite continued improvement in societal attitudes toward sexual minorities. </p>
<p>We also found the earnings differences were larger for married individuals than for people in de-facto relationships for both men and women in same-sex couples. </p>
<p>The earnings differences were smaller for younger individuals (under 45 years old) for both men and women in same-sex couples, compared to their counterparts in different-sex couples. The earnings deficit for men in same-sex couples was also significantly smaller in major cities like Auckland and Wellington, than in the rest of the country.</p>
<h2>Gaps in the data</h2>
<p>The gaps in available data mean our study has some limitations. Firstly, we do not have direct information about people’s sexual orientation. </p>
<p>Also, we were unable to identify single or non-partnered sexual minorities whose labour market experiences may differ. Hopefully, results from the 2023 Census will provide new insights. For the first time, this year’s census included questions about gender and sexual identity.</p>
<p>Finally, the data used to identify same-sex couples depends on individuals reporting they are in a same-sex romantic relationship, which may be under-reported due to stigma.</p>
<h2>The road ahead</h2>
<p>Empirical research documenting the wellbeing of Aotearoa’s LGBTQ+ population is important from a policy perspective. For example, there is <a href="https://static1.squarespace.com/static/5bdbb75ccef37259122e59aa/t/629e7d2d64349d3b11b08919/1654553906843/Same+and+Multiple+Sex+Attracted_030622.pdf">ample evidence</a> of significant disparities in the mental health and wellbeing of Aotearoa’s Rainbow+ youth. There have been <a href="https://www.stats.govt.nz/news/2023-census-first-to-collect-gender-and-sexual-identity-from-everyone-in-aotearoa-new-zealand/">recent efforts</a> to address the common data-related challenges that will help inform these policies. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-parenthood-continues-to-cost-women-more-than-men-97243">How parenthood continues to cost women more than men</a>
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<p>Our study is part of a much wider ongoing international collaboration with the <a href="https://www.vanderbilt.edu/lgbtq-policy-lab/">LGBTQ+ Policy Lab</a> at Vanderbilt University. </p>
<p>The aim is to understand the experiences and life outcomes of individuals belonging to the Rainbow+ community. We hope to develop a knowledge base that taps into the social, economic, physical and mental wellbeing of sexual and gender minorities in Aotearoa New Zealand. </p>
<p>Understanding the experiences of this community will help us build on the progress of the past two decades to create a more inclusive Aotearoa New Zealand.</p><img src="https://counter.theconversation.com/content/218507/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alexander Plum received funding from the Health Research Council (HRC). </span></em></p><p class="fine-print"><em><span>The views here are the authors' own and do not reflect those of the Federal Reserve Board of Governors, Federal
Reserve System, or Statistics New Zealand.</span></em></p>Why do gay men generally earn less than heterosexual men, and lesbian women more than heterosexual women? New research aims to find out why, and how LGBTQ+ inclusivity can be improved.Alexander Plum, Senior Research Fellow in Applied Labour Economics, Auckland University of TechnologyKabir Dasgupta, Research associate, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2132702023-09-14T11:47:05Z2023-09-14T11:47:05ZWealthy but worried: why the UK’s top 10% are turning their backs on the rest of society<figure><img src="https://images.theconversation.com/files/548010/original/file-20230913-25-9kovxd.jpg?ixlib=rb-1.1.0&rect=406%2C583%2C5339%2C3253&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/flat-isometric-crowd-people-forming-silhouette-577734244">Sentavio/Shutterstock</a></span></figcaption></figure><blockquote>
<p>I feel fairly middle of the road and average, but objectively I know this is completely untrue. I am at the top of the income percentiles – though I also know I’m miles away from the very rich. Everything I earn goes at the end of the month: on school fees, holidays, and so on. I never feel cash-rich. (William, City firm director in his 50s)</p>
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<p>Recently, there seem to have been a lot of people like William, in privileged jobs and on six-figure salaries, complaining that they’re “struggling” – including to <a href="https://www.thetimes.co.uk/article/200k-a-year-and-struggling-affluence-isnt-what-it-was-6sdmx3ml8">The Times</a>, <a href="https://www.indy100.com/viral/100-grand-salary-income-wealth">The Independent</a>, the <a href="https://www.dailymail.co.uk/money/bills/article-9798509/Even-wealthy-dont-cash-rainy-day.html">Mail</a> and the <a href="https://www.telegraph.co.uk/tax/income-tax/why-125000-does-not-make-rich-britain-today/#:%7E:text=The%20Telegraph's%20analysis%20found%20that,after%20taxes%20and%20basic%20outgoings">Telegraph</a>. Perhaps you recall the <a href="https://www.independent.co.uk/news/uk/home-news/question-time-video-man-top-earners-tax-percent-80000-explained-a9213351.html">BBC Question Time</a> audience member who, weeks before the 2019 general election, couldn’t believe that his salary of over £80,000 made him part of the top 5% of UK earners – despite the UK being a country where <a href="https://www.jrf.org.uk/sites/default/files/jrf/uk_poverty_2023_-_the_essential_guide_to_understanding_poverty_in_the_uk_0_0.pdf">almost a third of children live in poverty</a>.</p>
<p>You may instinctively feel little sympathy for these high earners, but don’t let that stop you reading on. Their views and actions should matter to us all. Like it or not, they have disproportionate political influence – representing a large proportion of key decision-makers in business, the media, political parties and academia, not to mention most senior doctors, lawyers and judges.</p>
<p>And in their private lives and behaviour, more and more of this group appear to be turning their backs on the rest of society. When interviewing them for our book <a href="https://policy.bristoluniversitypress.co.uk/uncomfortably-off">Uncomfortably Off: Why the top 10% of Earners Should Care About Inequality</a> (co-authored by <a href="https://feps-europe.eu/person/gerry-mitchell/">Gerry Mitchell</a>), we heard repeated concerns about the threats now posed to their lifestyle and status. This is from people who, while a long way from the UK’s “super-rich”, enjoy far more wealth and privilege than the majority of the country.</p>
<p>We also found misperceptions about wider UK society were common among this group – for example, that state social spending is higher than in other countries, that people in poverty and receiving the most from the state are largely out of work, and that they, as high earners, do not benefit as much from the state as those on lower incomes, forgetting how much <a href="https://www.dannydorling.org/wp-content/files/dannydorling_publication_id4277.pdf">they rely on the state over their lifetimes</a>.</p>
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<p><em>This article is run in partnership with <a href="https://howthelightgetsin.org/festivals/london?utm_source=MP+L23+Conversation&utm_medium=Article+feature&utm_campaign=HTLGI+London+2023&utm_id=The+Conversation">HowTheLightGetsIn</a>, the world’s largest philosophy and music festival.</em></p>
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<p>And we often saw a distance between the worldviews expressed by many in the top 10% and their own actions. For instance, many say they have strong meritocratic beliefs, yet are increasingly reliant on their assets and wealth to secure advantages for themselves and their children, meaning inequalities among millennials and younger generations will become more dependent on inheritance. Such thinking was captured by <a href="https://www.telegraph.co.uk/money/consumer-affairs/millennials-generation-x-inherit-twice-much-baby-boomers/">a recent Telegraph</a> article that declared: “No more rags to riches – family money will be the key to getting wealthy.”</p>
<p>The environment is another area where thoughts and actions often diverge among this high-earning group. While worrying about the environment is positively correlated with income and education, research also shows that the higher your income, <a href="https://wid.world/news-article/climate-change-the-global-inequality-of-carbon-emissions/">the higher your carbon footprint</a>.</p>
<p>One potential endpoint is a world of bunkers, without trust or a functioning public realm, where we all declare one thing and do another without much heed to the common good. But increasing inequality doesn’t just threaten those in poverty – it <a href="https://www.theguardian.com/inequality/2018/sep/18/kate-pickett-richard-wilkinson-mental-wellbeing-inequality-the-spirit-level">negatively affects</a> the whole of society. It means higher imprisonment rates and more expense devoted to security, more mistrust in everyday interactions, worse health outcomes, less social mobility and more political polarisation, to mention just a few of these effects.</p>
<p>This is the road we are on, with UK inequality levels projected to reach a <a href="https://www.resolutionfoundation.org/publications/the-living-standards-outlook-2023/#:%7E:text=Although%20income%20inequality%20across%20the,per%20cent%20in%202027%2D28.">record high</a> in 2027-28. Can anything be done to encourage the UK’s highest earners to recognise that their best hope of a happier, healthier, more secure future – including for future generations of their families – is by working with society as a whole, not turning their backs on it? Or is it already too late?</p>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/irFHlgBpkzw?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Launch video for the book Uncomfortably Off.</span></figcaption>
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<h2>Who’s in the top 10%?</h2>
<blockquote>
<p>If you’re in a privileged position, and all your friends are from a similar background, then you don’t think about inequality on a day-to-day basis. (Luke, young strategy consultant for a Big Four accounting firm)</p>
</blockquote>
<p>In the UK, the threshold for the top 10% of personal income before tax is £59,200, according to the <a href="https://www.gov.uk/government/statistics/percentile-points-from-1-to-99-for-total-income-before-and-after-tax">HMRC’s latest statistics</a>. This is over twice the median wage, which is generally under £30,000.</p>
<p>But the top 10% incorporates a wide range of incomes. Accountants, academics, doctors, civil servants and IT specialists are still typically much closer to the UK’s median wage than the poorest members of the top 1%, who earn upwards of £180,000. The higher you climb up the distribution ladder, the larger the distance between the steps becomes, which is perhaps why a 2020 <a href="https://trustforlondon.org.uk/research/can-public-consensus-identify-a-riches-line/">Trust for London</a> report found little agreement on where the “riches line” is – defining who, exactly, is rich and who isn’t.</p>
<p>The way we think of richness is generally absolute rather than relative. Images of Lord Sugar, Donald Trump and the characters of Succession come to mind – along with Ferraris, caviar and private jets. Such thinking may explain why some in the top 10% agree with the principle that the <a href="https://www.ft.com/content/9d528ae9-ac82-44f1-84a8-36a2c0bf1ab7">rich need to pay more tax</a>, but do not think it includes them.</p>
<p>And while this is a diverse group, they still <a href="https://www.tasc.ie/publications/inequality-and-the-top-10-in-europe-full-report/">share many characteristics</a>. The majority are men, middle-aged, southern, white and married. Members of the top 10% are more likely to own their home or have a mortgage. More than 80% are professionals and managers, and over 75% hold a university degree.</p>
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<img alt="" src="https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=600&fit=crop&dpr=1 600w, https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=600&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=600&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=754&fit=crop&dpr=1 754w, https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=754&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/288776/original/file-20190820-170910-8bv1s7.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=754&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><strong><em>This article is part of Conversation Insights</em></strong>
<br><em>The Insights team generates <a href="https://theconversation.com/uk/topics/insights-series-71218">long-form journalism</a> derived from interdisciplinary research. The team is working with academics from different backgrounds who have been engaged in projects aimed at tackling societal and scientific challenges.</em></p>
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<p>Just as they’re sociologically characterised by their education and occupation, high earners usually define themselves by hard work. After telling us they “didn’t feel rich”, most would admit they were in some way “privileged” – then follow that with a declaration of having “worked hard” to get there. Most clearly feel they’ve earned their privileged position, and that “life is fair”.</p>
<p>At the same time, even though they define themselves through their graft, many high earners don’t think <a href="https://www.vox.com/2018/5/8/17308744/bullshit-jobs-book-david-graeber-occupy-wall-street-karl-marx">their work is particularly meaningful</a>. Susannah, who is in a very senior position at a large bank, was blunt about the contribution of her work to society at large:</p>
<blockquote>
<p>[Laughs]: Not much really … Well, I suppose you could say that I’m helping to make sure the bank are spending efficiently. They’ve got a huge customer base globally, so we’re helping deliver products at a more affordable price and the customer service they get around that is better. But if I compare that to my husband’s contribution as a [public sector worker], his is way more.</p>
</blockquote>
<p>The more that someone’s position is based on being able to distinguish themselves from others – be it through the accumulation of money or “cultural capital” – the less incentive there is to socialise with others who cannot meet this criteria of what is valuable.</p>
<p>Luke spent the first part of his life in a private school, enlisted in the army, then attended Oxbridge. He was later a teacher in the Teach First programme, before starting work as a consultant. He told us that his background meant he doesn’t really think about inequality on a daily basis. He comes from a privileged upbringing and all his friends do too. He does not interact with anyone outside his socioeconomic group, although he did when he was a teacher, commenting: “It was clear I was teaching kids with very different lives.”</p>
<p>An exception among our interviewees was those who had experienced upward mobility. Many of them answered that they did know people who were significantly less wealthy, and who still lived in the place from which they had “escaped”. Gemma, a consultant with a £100,000+ income in her late 30s, moved from the north of England to London. She told us:</p>
<blockquote>
<p>You don’t know what people earn in London. My closest friends tend to be people I’ve worked with, that’s just how it’s turned out, so you’re meeting people at around the same economic level. At home, I know what people do and how much they earn.</p>
</blockquote>
<h2>How the top 10% feel about the world today</h2>
<blockquote>
<p>As I’ve started to earn more and worked hard for it, I care more about the tax I pay. I didn’t think about it when I was younger … But now I’m more aware of it and how it’s helping society. (Louise, sales consultant for a global tech company in her 40s)</p>
</blockquote>
<p>When we asked Louise about inequality, the less well-off and whether the rich should do more, her answers were broadly the same as we would give: inequality is detrimental to society and not inevitable; those in poverty struggle because of circumstances beyond their control; the rich should make much greater efforts to address inequality. However, when asked which political party she voted for in the last election, she responded: “The Conservatives.”</p>
<p>The obvious question we should have asked next was, why? But for some reason, we let the silence linger – until Louise’s voice cracked slightly. “The tax issue,” she said. “Protecting high earners.”</p>
<p>Like so many of the “uncomfortably off” we interviewed – including members of the top 10% by income in Ireland, Spain and Sweden – Louise did not think of herself as rich. She agreed there should be more redistribution and more help for those worse-off in society, but she didn’t agree it should come out of her taxes. This was not an uncommon view among our interviewees:</p>
<blockquote>
<p>If I’m contributing to people who are below the poverty line, fine. But if I’m funding people who are sitting at home and don’t want to work, then I’m not happy about it. Do I want taxes to go up for higher earners? No, I pay more than enough. (Sean, small business owner in his 40s with a top 1% income)</p>
</blockquote>
<p>Our interviewees often don’t think of themselves as beneficiaries of public policy, and tend to think state action is, almost by definition, overweening and invasive – forgetting the myriad ways that all of us depend on public infrastructure and on underpaid <a href="https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/articles/coronavirusandkeyworkersintheuk/2020-05-15">key workers</a>. This even applies to those who, like Sean, do not come from wealthy families themselves. </p>
<p>Whenever they can afford it through their own spending or as a perk from employment, high earners in the UK are increasingly <a href="https://www.bbc.co.uk/news/uk-northern-ireland-64971161">relying on the private sector</a>, especially as they see the public sector as <a href="https://theconversation.com/school-concrete-crisis-how-raac-has-been-used-well-beyond-its-expiry-date-212893">crumbling</a> and <a href="https://theconversation.com/strikes-why-refusing-public-sector-pay-rises-wont-help-reduce-inflation-198333">inefficient</a>. The more they do so, the less likely they are to associate paying tax with something that benefits them directly and to trust public solutions to public problems.</p>
<p>Sometimes, this withdrawal into the private realm is justified as a progressive stance to protect others. Maria, a marketing director in her 40s, told us, regarding her recent decision to use private education and healthcare for her family:</p>
<blockquote>
<p>I’ve decided to go private to give my space to someone else. The government wants us to do that – why else would they be advertising that there are no doctors?</p>
</blockquote>
<figure class="align-center ">
<img alt="Two men in suits with very different piles of cash" src="https://images.theconversation.com/files/548014/original/file-20230913-17-imqte4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/548014/original/file-20230913-17-imqte4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=372&fit=crop&dpr=1 600w, https://images.theconversation.com/files/548014/original/file-20230913-17-imqte4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=372&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/548014/original/file-20230913-17-imqte4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=372&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/548014/original/file-20230913-17-imqte4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=468&fit=crop&dpr=1 754w, https://images.theconversation.com/files/548014/original/file-20230913-17-imqte4.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=468&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/548014/original/file-20230913-17-imqte4.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=468&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-vector/pay-gap-between-men-two-businessmen-1933629035">Overearth/Shutterstock</a></span>
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<h2>Cracks in the narrative</h2>
<blockquote>
<p>I worry about my kids. I don’t know what they’re going to do because of all the jobs – and I say this from a financial services background – a lot of the entry-level jobs have been moved offshore. The job where I started [at an accountancy firm] is now done in India, and has been done in India for some years … So it’s harder to break into those industries. (Susannah, works in an international bank with a top 1% income, in her 40s)</p>
</blockquote>
<p>As a rule, the UK’s highest earners appear relatively pessimistic about their country’s future, but quite optimistic about their own. This signals a tacit distance between how they see their lives and the fate of the rest. However menacing and huge the challenges of climate change and inequality might be, many are confident they will still manage to do well. Politics, as terrible as it is at the moment, mostly happens to others.</p>
<p>However, cracks are starting to appear in this narrative. We conducted a first round of interviews between 2018 and 2019, and a second in early 2022. During the first round, many in the top 10% said they worried that their children would not be able to climb the professional ladder as they did. They had seen a decline in the status of hitherto solidly middle-class professions that now appear in turmoil, such as <a href="https://www.lawsociety.org.uk/topics/legal-aid/bar-strike-what-you-need-to-know">barristers</a>, <a href="https://www.theguardian.com/society/2023/aug/31/junior-doctors-nhs-england-vote-to-continue-strikes-through-winter#:%7E:text=Junior%20doctors%20went%20on%20strike,fell%20by%2026.2%25%20since%202008.">doctors</a>, and <a href="https://www.ucu.org.uk/article/13171/Start-of-university-term-to-be-hit-with-five-days-of-UK-wide-strikes">academics</a>. Respondents such as Susannah were starting to observe that the link between hard work, education and pay might be weakening as middle-class jobs are being hollowed out, threatened by automation, offshoring and <a href="https://precaritypilot.net/precarisation-and-self-precarisation/#:%7E:text=Precarisation%20denotes%20the%20decisions%20and,workers%20decide%20to%20precarise%20themselves.">precarisation</a>.</p>
<p>During the second round, the cracks appeared even wider. Amid the Ukraine invasion and with inflation rising sharply, many told us they had started feeling the pinch themselves – especially those who relied more on their income than on savings and assets. For some, the private fees required to remain in the same circles as the UK’s wealthiest, and for their children to have a fighting chance of the best jobs of the future, appeared at risk of falling out of reach. </p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/london-is-a-major-reason-for-the-uks-inequality-problem-unfortunately-city-leaders-dont-want-to-talk-about-it-212762">London is a major reason for the UK's inequality problem. Unfortunately, City leaders don't want to talk about it</a>
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</em>
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<p>According to the <a href="https://www.resolutionfoundation.org/publications/living-standards-outlook-summer-2023/#:%7E:text=Key%20findings,income%20fall%20in%202022%2D23.">Resolution Foundation</a>, UK citizens are living through the worst parliament on record for household income growth. Meanwhile, as the economist <a href="https://blogs.lse.ac.uk/europpblog/2020/02/21/thomas-piketty-the-current-economic-system-is-not-working-when-it-comes-to-solving-inequality/">Thomas Piketty</a> has long argued, the preeminence of capital over wages is only becoming starker. </p>
<p>In such circumstances, what should high-income earners do? The most obvious answer is to turn as much of their income as possible into assets, in an effort to insulate themselves from inequality: to move away, to hoard, to guarantee advantages for their children. In the pursuit of all of that, tax is just a burden, rather than a potentially progressive tool for the benefit of society as a whole. This is in some sense rational. High earners can see that income from assets is not taxed in the same way, and fear the impact of redistribution on the capacity to pass on privileges to their children.</p>
<p>The top 10% may be floating away in their own socio-economic bubble, but this strategy of social distancing may ultimately prove ineffectual. Inequality doesn’t just threaten those in poverty but <a href="https://www.theguardian.com/inequality/2018/sep/18/kate-pickett-richard-wilkinson-mental-wellbeing-inequality-the-spirit-level">affects the whole of society</a>, whether through an increase in, for example, imprisonment rates, a greater burden on the health service (including higher levels of mental illness), or living in less functional and cohesive communities.</p>
<p>Even those who recognise the dangers – and long-term unsustainability – of isolating and insulating themselves from wider society struggle to find a palatable alternative. Having been raised to see individual hard work as the solution to most things, the combined challenges of AI, global warming and the gig economy – coupled with increasing concentration of wealth at the very top – makes the world a confusing place for many high earners.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/j9T7q93jWHM?wmode=transparent&start=8" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Danny Dorling, professor of geography at the University of Oxford, discusses the global super-rich.</span></figcaption>
</figure>
<h2>‘Everyone became polarised’</h2>
<p>The austerity measures adopted by the UK government since 2010 have done very little to increase investment and economic growth. According to inequality expert <a href="https://repositorio.cepal.org/server/api/core/bitstreams/f5af8bf4-18a6-4bca-8000-e95b09ef04bb/content">Gabriel Palma</a>, the UK, like many other rich economies, is undergoing a process of “Latinamericanisation” – of “relentless inequality and perennial underperformance”.</p>
<p>Despite this, the UK’s relatively high earners have, until recently, been mostly insulated from the worst effects of inequality. Their share of national income has grown in the past few years <a href="https://blogs.lse.ac.uk/politicsandpolicy/to-grasp-the-extent-of-inequality-look-at-the-relatively-well-off/">while that of most people has declined</a>. Yet some we interviewed said they were feeling the political effects of a more unequal and polarised society, describing politics today as “extreme” and appearing nostalgic for a lost “centre ground”. Tony, a senior IT manager told us:</p>
<blockquote>
<p>Everything now is ‘far’ [left or right] – what’s happened to the centre group? It’s not just in politics, it’s in every area of life. There’s nowhere everyone can meet … The age of debate is disappearing. The age where you could persuade people of your opinion has gone. I don’t know when it happened – everyone became polarised.</p>
</blockquote>
<p>Yet the reality is their policy preferences still tend to coincide with policy outcomes <a href="https://press.princeton.edu/books/paperback/9780691162423/affluence-and-influence">much more closely than other income groups</a>. We summarise these preferences as “small ‘l’ liberal” in two key aspects.</p>
<p>First, we found that most high earners intuitively hold an individualised worldview in which everyone is responsible for his or her own actions, and should be left alone as long as they don’t hurt anyone else and can prove that they can support themselves and their families. Through their educational and professional successes, they have managed to attain such a position for themselves so it follows that they should have the prerogative to be left mostly alone. This is seen as simply common sense.</p>
<p>Second, while this group is more likely than the rest to be relatively liberal on issues such as same-sex marriage, abortion and immigration, their views on the economy are not so left-of-centre. High earners are the most likely income group to oppose tax increases. According to both surveys and our interviews, a majority were against redistributive policies or raising taxes. <a href="https://www.tasc.ie/publications/inequality-and-the-top-10-in-europe-policy-recomme/">Comparatively</a>, the anti-welfare inclination of the UK’s top 10% is noticeable, along with its stronger support of meritocratic beliefs.</p>
<p>Michael Sandel, a professor of government at Harvard Business School, has studied the negative societal effects of <a href="https://news.harvard.edu/gazette/story/2021/01/the-myth-of-meritocracy-according-to-michael-sandel/">belief in meritocracy in the US</a>. For example, many young Americans are sold the message that they have won college places or landed desirable jobs on their own merit – ignoring the social and economic advantages that have helped along the way. This, Sandel observes, can corrode social cohesion because:</p>
<blockquote>
<p>The more we think of ourselves as self-made and self-sufficient, the harder it is to learn gratitude and humility. And without these sentiments, it is hard to care for the common good.</p>
</blockquote>
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<iframe width="440" height="260" src="https://www.youtube.com/embed/zcnBM7rlZsI?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Michael Sandel on mistaken ideas of meritocracy.</span></figcaption>
</figure>
<h2>What can be done to change this mindset?</h2>
<p>Any organisation (political or third-sector) arguing for a more liveable and equal society than the UK has now must be able to include at least some of the relatively well-off, by convincing them that greater public investment – and thus higher levels of taxation of one form or another – will benefit them too.</p>
<p>This demands more <a href="https://en.wikipedia.org/wiki/Sociological_imagination">sociological imagination</a> on the part of the UK’s high earners – a greater understanding both of their own position, and that the circumstances that allowed them to become high earners in the first place are not available to all.</p>
<p>However, appealing to any social group at a cognitive level is unlikely to work on its own, especially as the way they have carried out their lives until now, has, in their own minds, been proved correct. Most think they’re taxed enough already, that they aren’t rich and therefore the welfare state is a burden on them, and will increasingly go private.</p>
<p>Whether their position is based on their bottom line or their educational credentials, many have been socialised to create a distance between themselves and “others”. Yet the evidence we see of their mounting anxiety about simply remaining where they are suggests the material interests of many high earners may be changing. </p>
<p>The strategies they have used to propel their, until now, upward trajectories may be becoming less effective – while policies that would benefit the majority would also benefit them. These could include strengthening the welfare state, destigmatising the use of public services, demanding more from the private sector, favouring investment in public infrastructure, and taxing the wealthiest in society. However, none of these policies are currently being championed, either by the government or opposition.</p>
<p>To encourage greater acceptance among high earners, one framing of such policies is to envision a future in which being part of the 90% doesn’t seem so terrible after all. Writing about the US, <a href="https://www.brookings.edu/books/dream-hoarders/">Richard Reeves</a> has argued that high-income earners should be OK with the idea of their children falling down the income ladder. One strand of a more cohesive future is that this prospect shouldn’t be immediately horrifying to them.</p>
<p>While members of the UK’s top 10% often work for and with the very highest earners in industries such as finance and management consultancy, the interests of these two groups increasingly look quite different. It is certainly unhelpful to demonise the top 10% as the main culprits for the UK’s social and economic ills.</p>
<p>Instead, we urgently need to encourage their greater participation in society for the future common good. As the social scientist <a href="https://www.theguardian.com/society/2021/jan/04/sir-john-hills-obituary">Sir John Hills</a> put it in his 2014 defence of the welfare state, <a href="https://policy.bristoluniversitypress.co.uk/good-times-bad-times-1">Good Times, Bad Times</a>:</p>
<blockquote>
<p>When we pay in more than we get out, we are helping our parents, our children, ourselves at another time – and ourselves as we might have been, had life not turned out quite so well. In that sense, we are all – nearly all – in it together.</p>
</blockquote>
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<img alt="" src="https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=112&fit=crop&dpr=1 600w, https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=112&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=112&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=140&fit=crop&dpr=1 754w, https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=140&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/313478/original/file-20200204-41481-1n8vco4.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=140&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<p><em><a href="https://howthelightgetsin.org/festivals/london?utm_source=MP+L23+Conversation&utm_medium=Article+feature&utm_campaign=HTLGI+London+2023&utm_id=The+Conversation">HowTheLightGetsIn</a>’s theme for London 2023 is <a href="https://howthelightgetsin.org/festivals/london/the-big-ideas">Dangers, Desire and Destiny</a>. The two-day festival on September 23-24 covers everything from politics, science, philosophy and the arts and attracts a host of speakers including Nobel Laureates, Pulitzer prize-winners, political activists and world leading thinkers.</em></p>
<p><em>Alongside the Conversation’s curated event <a href="https://howthelightgetsin.org/events/the-common-good-16017">The Common Good</a>, expect to see Alastair Campbell, Rory Stewart, Ruby Wax, Michio Kaku, David Baddiel, Carol Gilligan, Martin Wolf and more lock horns over a packed weekend of debates, talks and performances. <a href="https://howthelightgetsin.org/festivals/london/programme?utm_source=MP+L23+Conversation&utm_medium=Article+feature&utm_campaign=HTLGI+London+2023&utm_id=The+Conversation">Explore the full programme here</a> and don’t miss out on <a href="https://howthelightgetsin.org/festivals/london/festival-passes?utm_source=MP+L23+Conversation&utm_medium=Article+feature&utm_campaign=HTLGI+London+2023&utm_id=The+Conversation">20% off tickets using code CONVO23</a>.</em></p><img src="https://counter.theconversation.com/content/213270/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marcos Gonzalez Hernando receives funding from the Agencia Nacional de Investigación y Desarrollo and from the Centro de Estudios del Conflicto y Cohesión Social. This research was initially sponsored by the Foundation of European Progressive Studies and the Think-tank for Action on Social Change. His book, Uncomfortably Off: Why the Top 10% of Earners Should Care about Inequality, co-authored by Gerry Mitchell, is published by Policy Press (May 2023).
</span></em></p>You may feel little sympathy for people in the top bracket of earnings, but don’t let that stop you reading. Like it or not, their views and actions matter to everyoneMarcos Gonzalez Hernando, Honorary Research Fellow, UCL Social Research Institute, UCLLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2098812023-08-15T20:03:28Z2023-08-15T20:03:28ZBoosting paid maternity leave would help the economy, not just parents<figure><img src="https://images.theconversation.com/files/542705/original/file-20230814-19-qifa2s.jpg?ixlib=rb-1.1.0&rect=183%2C218%2C3581%2C1782&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/search/newborn-baby?image_type=photo">Shutterstock</a></span></figcaption></figure><p>Increasing the rate of paid maternity leave, so it is tied to prior earnings, rather than just increasing the time off work, could lead to better and fairer outcomes for Australian families.</p>
<p>It could also help the country by supporting women’s workforce participation and boosting fertility rates.</p>
<p>Australia currently has the <a href="https://www.oecd.org/els/soc/PF2_1_Parental_leave_systems.pdf">lowest rate of paid maternity leave</a> of all OECD countries except the United States, which is the only OECD country without any government-mandated paid maternity leave. </p>
<p>From July 1 2023, the Australian government increased the duration of paid maternity leave to 20 weeks, with an extra two weeks to be added to the scheme every year until it reaches 26 weeks. However, the rate of pay, which is equivalent to the national minimum wage - $882.80 a week - remains the same.</p>
<p>This is around 42% of average previous earnings, or currently 8 weeks’ average pay. </p>
<p>Many Australian families see their incomes drop, sometimes massively, if they take maternity leave. And if they’re paying off a mortgage, or have high expenses, it may be difficult to survive on that income without significant prior savings.</p>
<p><a href="https://www.wgea.gov.au/parental-leave">About six out of ten employers</a> offer paid maternity leave in addition to the government scheme, yet the length and rate of pay vary across firms. Government organisations, universities and large consulting firms are quite generous, but other industries not so much.</p>
<p>In retail and construction, only two out of ten employers offer extra maternity leave, according to a <a href="https://www.wgea.gov.au/sites/default/files/documents/gender%20balanced%20parental%20leave.pdf">report by the Australian Workplace and Gender Equality Agency</a>. Smaller companies are also less likely to offer additional leave.</p>
<p>In Switzerland and many other OECD countries, maternity leave benefits are tied to earnings – often 80-100% of prior pay. This system is fairer and avoids the potential plunge in income. </p>
<h2>Weighing up the value of the Swiss model</h2>
<p><a href="https://doi.org/10.1016/j.labeco.2023.102364">Our research</a> examined the impact of the government-mandated paid maternity leave in Switzerland, on employment, earnings, job continuity and fertility. The Swiss benefit was set at 80% of previous earnings for most women, a fairly generous provision. </p>
<p>The maternity leave benefits were funded through mandatory social security contributions by employers and employees, which only increased marginally as a result of the mandate.</p>
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<img alt="" src="https://images.theconversation.com/files/542710/original/file-20230815-23-dickav.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/542710/original/file-20230815-23-dickav.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=421&fit=crop&dpr=1 600w, https://images.theconversation.com/files/542710/original/file-20230815-23-dickav.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=421&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/542710/original/file-20230815-23-dickav.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=421&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/542710/original/file-20230815-23-dickav.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=528&fit=crop&dpr=1 754w, https://images.theconversation.com/files/542710/original/file-20230815-23-dickav.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=528&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/542710/original/file-20230815-23-dickav.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=528&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Swiss maternity leave model helped reduce the declining fertility rate and improve work-life balance. Shutterstock.</span>
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<p>We were also able to compare firms that had prior paid maternity leave provisions in place to those that did not offer this benefit, and examine the impact. </p>
<p>Before the mandate was introduced, around 40% of employers already offered their female workforce paid maternity leave, but leave provisions differed enormously. </p>
<p>The maternity leave mandate therefore introduced a minimum level of paid maternity leave to all eligible women and reduced inequalities in coverage. Employers were free to offer more generous schemes at their own expense.</p>
<h2>How the scheme affected a mother’s work-life balance</h2>
<p>The Swiss mandate started on July 1 2005 and provided 14 weeks of maternity leave benefits, and job protection during pregnancy and the 16-week period following birth.</p>
<p>Not all women benefited from the mandate in the same way. Mothers who gained access to paid maternity leave for the first time had slightly higher employment rates and saw their earnings increase by around 8% in the five years after giving birth.</p>
<p>The maternity leave mandate therefore successfully kept these women in the workforce and allowed them to work more hours or in better-paid jobs upon returning from leave. It improved the “work” side of their work-life balance. </p>
<p>In contrast, mothers who worked in firms that offered paid maternity leave prior to the mandate became more likely to have a second child. Among them, the share with two children (or more) jumped from 73% to 77% after the mandate.</p>
<p>Their employment rate and earnings remained stable even though they had more children on average. The mandate therefore enhanced the “life” side of the work-life balance for these mothers. </p>
<h2>What about their employers?</h2>
<p>Did the employers benefit from the mandate or did it increase their administrative burden and costs? Our research suggests firms benefited, too. </p>
<p>The mandate induced mothers to return to the same employer after maternity leave. Given worker turnover is costly, this helped firms cut recruitment and training costs. </p>
<p>Most importantly, however, the costs arising from maternity leave payments dropped for many businesses, as the mandated maternity leave benefits were covered by the social security fund. </p>
<h2>Lessons for Australia</h2>
<p>The Swiss maternity leave mandate - in combination with better access to affordable early childcare - helped <a href="https://ourworldindata.org/fertility-rate">stop the declining fertility rate in Switzerland</a> and improved the work-life balance for thousands of families. </p>
<p>The government-funded maternity leave introduced in Australia in 2011 slightly increased the desire to have more children, <a href="https://doi.org/10.1111/1475-4932.12561">according to 2020 research</a>. However, the recently implemented two-week increase is probably too short to have any detectable impact. </p>
<p>Moreover, the level of maternity leave benefits, and not just the duration of leave, matter greatly for families in deciding whether to have another child.</p>
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Read more:
<a href="https://theconversation.com/paid-family-leave-makes-people-happier-global-data-shows-179539">Paid family leave makes people happier, global data shows</a>
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<p>A <a href="https://doi.org/10.1016/j.jpubeco.2018.07.010">recent study from Germany</a> found earnings-dependent maternity leave benefits (in contrast to a low flat rate) can successfully increase fertility rates for women with higher education (and earnings) who otherwise tend to have few or no children. </p>
<p>Women working in smaller companies and in industries less likely to offer additional maternity leave would particularly benefit from a Swiss-style system.</p>
<p>A decade ago, Australia’s Coalition government proposed a maternity leave scheme tied to 100% of prior earnings. The recent increase in the length of the paid maternity leave scheme in Australia will help many families. But Australian policymakers might also want to start - or revisit - conversations about the benefit level.</p><img src="https://counter.theconversation.com/content/209881/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Esther Mirjam Girsberger does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia could benefit from revisiting a plan to match maternity leave pay rates with prior earnings as occurs in Switzerland.Esther Mirjam Girsberger, Lecturer in Economics, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2037072023-04-13T19:26:32Z2023-04-13T19:26:32ZWhy is Tax Day on April 18 this year? And how did early spring become tax season, anyhow?<figure><img src="https://images.theconversation.com/files/520926/original/file-20230413-28-prjdsv.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4000%2C2646&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A red-letter day? Hardly!</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/tax-payment-day-marked-on-a-calendar-april-18-2023-royalty-free-image/1461423007?phrase=tax%20deadline%202023&adppopup=true">iStock / Getty Images Plus</a></span></figcaption></figure><p>Mid-April has arrived. And along with the spring sunshine, that means the often dreaded civic duty of finishing off one’s taxes.</p>
<p>It’s an arduous time for many, characterized by navigating increasingly confusing rules to arrive at the best refund possible. For some, it means <a href="https://theconversation.com/i-tried-to-pay-my-taxes-in-cash-heres-what-happened-and-why-the-irs-should-make-it-easier-to-do-so-203282">writing a check</a> to the federal government. Not fun.</p>
<p>On a brighter note, the tax deadline has been pushed back to April 18 this year, giving those leaving it to the last minute a few extra days. Usually, the day falls on April 15.</p>
<p>But why is Tax Day in April anyway? Well, it hasn’t always been.</p>
<p>The federal individual income tax was permanently enacted by the <a href="https://www.reaganlibrary.gov/constitutional-amendments-amendment-16-income-taxes#:%7E:text=The%20Congress%20shall%20have%20power,to%20any%20census%20or%20enumeration.">16th Amendment in 1913</a>. Before that, the only federal individual income tax that existed was in place for <a href="https://guides.loc.gov/this-month-in-business-history/april/tax-day">about a decade beginning in 1861 to ease the financial burden of the Civil War</a> on the government.</p>
<h2>Extending the deadline</h2>
<p>The tradition of filing tax returns in early spring has historically been a practical one. Since individual tax returns encompass a calendar year, Congress sought to allow time for individuals to fully account for all of their income, deductions and credits.</p>
<p>The original due date for individual income tax returns was March 1, just over a year following the adoption of the 16th Amendment on Feb. 3, 1913.</p>
<p>Back then, not many taxpayers needed to file a tax return, since the filing requirement applied only to <a href="https://www.crf-usa.org/bill-of-rights-in-action/bria-11-3-b-the-income-tax-amendment-most-thought-it-was-a-great-idea-in-1913.html">single filers with income over US$3,000</a> and married filers with income over $4,000 – about $90,000 and $120,000 in today’s dollars, respectively.</p>
<p>In 1914, this threshold represented approximately the top 4% of earners, so filing a tax return was a burden reserved for the wealthy.</p>
<p>Quickly realizing that many taxpayers needed more time to complete their returns, Congress pushed the tax deadline back to March 15, effective in 1919.</p>
<p>And on that date Tax Day stood for over 30 years. </p>
<p>But with more taxpayers needing to file returns <a href="https://www.irs.gov/pub/irs-soi/02inpetr.pdf">as the filing threshold declined</a> and the tax laws grew in complexity, Americans needed even more time to correctly complete their returns.</p>
<p>So in 1954, Congress overhauled the tax system and adopted a major revision to the <a href="https://www.census.gov/history/www/reference/privacy_confidentiality/title_26_us_code_1.html">Internal Revenue Code</a>.</p>
<p>This change also came with another extension of the tax deadline for individuals, pushing the due date back again to the familiar April 15.</p>
<p>The intent of giving taxpayers an extra month to prepare their returns was to allow more people the ability to file on time – and often get refunds more quickly. Not only did this change assist taxpayers, but it also allowed the Internal Revenue Service <a href="https://taxprof.typepad.com/taxprof_blog/2017/04/weekly-tax-highlight-and-roundup-1.html">more time to spread out its workload</a>.</p>
<p>The April 15 deadline proved to be a more reasonable deadline, and it has stuck with U.S. taxpayers for almost 70 years.</p>
<p>Since 1955, the IRS has established earlier due dates for many information returns that provide numbers feeding into Form 1040, such as Forms 1099 and W-2, both of which are due Jan. 31, to ensure that most taxpayers are able to file by Tax Day.</p>
<p>In 2016, the IRS pushed the due date of <a href="https://www.journalofaccountancy.com/news/2015/jul/tax-return-due-dates-changed-201512746.html">other returns forward a month to March 15</a>, again in an effort to allow more individuals to timely file.</p>
<h2>So why later this year?</h2>
<p>The mid-April date seems to work for the majority of taxpayers – in most years, anyhow. According to the IRS, <a href="https://www.irs.gov/statistics/filing-season-statistics">about 90% of taxpayers</a> were able to file their returns by the deadline in 2021, with the other 10% requesting <a href="https://www.irs.gov/forms-pubs/extension-of-time-to-file-your-tax-return#:%7E:text=Individual%20tax%20filers%2C%20regardless%20of,until%20the%20next%20business%20day.">a six-month extension to file</a>.</p>
<p>But for the tax year 2022, <a href="https://www.forbes.com/advisor/taxes/how-to-file-a-tax-extension-with-the-irs/#:%7E:text=Millions%20of%20Americans%20file%20federal,season%2C%20according%20to%20the%20IRS.">about 19 million taxpayers extended their returns</a>, a significant increase from prior years due to the increased complexity of the tax code brought on by temporary provisions relating to the COVID-19 pandemic.</p>
<p>So why is Tax Day this year April 18 instead of April 15?</p>
<p>Any time a deadline falls on a Saturday or Sunday, the IRS pushes the due date to the following Monday, which would be April 17, 2023. However, any federal holiday also pushes the date back by a day. Since <a href="https://emancipation.dc.gov/#:%7E:text=It%20is%20this%20legislation%2C%20and,April%2016%2C%20DC%20Emancipation%20Day.">Emancipation Day, which usually falls on April 16</a>, is observed in Washington, D.C., on April 17 this year, Tax Day was pushed back an additional day to Tuesday, April 18, 2023.</p>
<p>While having a tax deadline of April 18 happens only about every six years, the IRS occasionally pushes back the filing deadline for emergency situations like natural disasters, although these are often local. For example, the IRS extended the original due date of individual tax returns in disaster areas in <a href="https://tax.thomsonreuters.com/news/california-alabama-georgia-may-15-disaster-relief-deadline-extended-to-october-16/">Alabama, California and Georgia until Oct. 16, 2023</a>. Similarly, the IRS pushed the national deadline <a href="https://www.irs.gov/newsroom/payment-deadline-extended-to-july-15-2020">back to July 15, 2020</a>, in the early stages of the COVID-19 pandemic.</p>
<p>So use your extra days of tax preparation time wisely in 2023 and be sure to file your individual income tax return, or request an extension to file by April 18.</p>
<p>Although this time of year can often be <a href="https://www.cnn.com/2019/04/12/health/tax-day-money-stress/index.html">stressful and confusing because of complicated tax laws</a>, it will be over soon enough.</p><img src="https://counter.theconversation.com/content/203707/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Thomas Godwin does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The federal government wanted to give taxpayers a couple months to prepare the year’s taxes. But as filing became more complex, the date was pushed back.Thomas Godwin, Assistant Professor of Accounting, Purdue UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2036162023-04-13T12:24:02Z2023-04-13T12:24:02ZAmericans spend more time and money filing their taxes than residents of other countries — but there are some benefits to a complex tax code<figure><img src="https://images.theconversation.com/files/520568/original/file-20230412-22-xymmgt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The average U.S. taxpayer spends 13 hours filing their return.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/forms-royalty-free-image/109504675">Mehmed Zelkovic/Moment Collection/Getty Images</a></span></figcaption></figure><p>Tax Day falls on April 18 in 2023. But if you’re one of the <a href="https://www.irs.gov/pub/irs-utl/filing-season-statistics-2009-to-current-year.csv">20%-25% of Americans</a> who wait until the last minute to file, don’t panic – you still have time.</p>
<p>The IRS estimates that the average taxpayer spends <a href="https://www.irs.gov/pub/irs-pdf/i1040gi.pdf">13 hours</a> to complete their return. If you own a business, the estimate increases to <a href="https://www.irs.gov/pub/irs-pdf/i1040gi.pdf">25 hours</a>. That said, filing can be tricky.</p>
<p>As <a href="https://scholar.google.com/citations?user=9MFrZwUAAAAJ&hl=en">accounting</a> <a href="https://scholar.google.com/citations?user=kR0qeI4AAAAJ&hl=en&oi=ao">professors</a> and hosts of the podcast “<a href="https://www.taxes-for-the-masses.com">Taxes for the Masses</a>,” we know the U.S. tax system is more complex than many other countries. That complexity, however, has benefits as well as drawbacks.</p>
<h2>Simpler tax systems abroad</h2>
<p>Although the U.S. income tax system asks individuals to devote their time to complete a tax return each year – or pay someone to do it for you – dozens of countries have found another way. </p>
<p>Some nations, <a href="https://www.taxpolicycenter.org/briefing-book/what-other-countries-use-return-free-filing">such as the U.K.</a>, offer return-free systems where taxpayers have the exact correct amount of income tax withheld from their earnings during the year. </p>
<p>Other countries, <a href="https://www.oecd.org/tax/administration/36280368.pdf">such as Denmark and Spain</a>, offer tax reconciliation systems whereby the tax authority fills out the return for the taxpayer using information from third parties, such as employers and banks, with knowledge of your financial goings-on. All the taxpayer must do is review the form and submit any corrections. These systems shift the costs of determining one’s tax bill – currently estimated to be over <a href="https://www.gsa.gov/cdnstatic/54121D%20Tax%20Preparation%20Services%20in%20the%20US%20Industry%20Report.pdf">US$11 billion</a> a year in the U.S. – <a href="https://www.jstor.org/stable/40913156">from taxpayers to the government</a>. </p>
<p>The goal of return-free and tax reconciliation systems is to withhold the exact right amount of tax during the year so there’s no need to true up these amounts to the actual tax liability. So why can’t the U.S. do something similar? Well, exact withholding is easiest to do when the tax code is simple. And the U.S. tax code is not simple.</p>
<p>In fact, when the Treasury Department reported to Congress in 2003 on the feasibility of a return-free system in the U.S., the report was titled <a href="https://home.treasury.gov/system/files/131/Report-Return-Free-2003.pdf">Tax Simplification is a Prerequisite</a>.</p>
<h2>What makes the US system so complex?</h2>
<p>A simpler system taxes each individual separately. The U.S., however, taxes single individuals and married couples differently. This approach makes it difficult to withhold the right amount of tax because the applicable tax rate depends on more than just your income. It includes, for example, that of your spouse, which your bank or employer may not know.</p>
<p>A simpler system would also have flat or fewer tax rates. Instead, the U.S. has numerous tax brackets, with the goal of ensuring that higher earners pay higher rates of income tax. Although progressive rate structures like this <a href="https://us.aicpa.org/content/dam/aicpa/advocacy/tax/downloadabledocuments/tax-policy-concept-statement-no-1-global.pdf">are aimed at fairness</a>, in that those who can afford to pay more do pay more, this type of tax system adds complexity. </p>
<p>Other countries retain progressive systems with fewer tax brackets. For example, the U.K. currently has <a href="https://www.gov.uk/income-tax-rates">four tax brackets</a>, compared with <a href="https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2022">seven in the U.S</a>.</p>
<p>The U.S. also has different rates for ordinary income such as wages versus income such as dividends and capital gains, which are typically taxed at lower rates – in part to spur investment and also because investment income has arguably already been taxed. But the U.S. system adds complexity because capital gains on investments held for less than a year and some dividends are not taxed at preferential rates. These different rates – from different levels and types of income – reduce the chances of getting withholding right. </p>
<p>The U.S. system also adds complexity with the <a href="https://www.irs.gov/credits-deductions-for-individuals">sheer number of deductions and credits</a> available to taxpayers. Deductions reduce the amount of taxable income you have, thereby reducing your tax liability. Say a single individual has $80,000 of wage income and $15,000 of deductions. Their taxable income is $65,000. At 2022 rates, their tax liability is $9,617. Those $15,000 of deductions saved them $3,300 in taxes. </p>
<p>Fortunately, there are a lot deductions. Unfortunately, taxpayers often have to jump through hoops to qualify. You can deduct <a href="https://www.irs.gov/taxtopics/tc419">gambling losses</a> but only if you have gambling winnings, <a href="https://www.irs.gov/taxtopics/tc503">state income taxes</a> but only up to $10,000 each year, and <a href="https://www.irs.gov/taxtopics/tc456">student loan interest</a> but only if you make less than $85,000 or $175,000, depending on your marital status. </p>
<p>Further, these deductions come in different flavors: “above-the-line” deductions and “below-the-line” deductions, which themselves come in two flavors – itemized and standard. Taxpayers itemize deductions only if those amounts exceed the standard deduction. That means you might spend several hours tallying receipts for <a href="https://theconversation.com/whats-the-charitable-deduction-an-economist-explains-162647">itemized charitable donations</a> only to find you can’t deduct any of them because the total is less than your standard deduction. </p>
<p>Credits are another valuable element of the tax system because they reduce your tax liability dollar for dollar. Let’s go back to our single taxpayer with $65,000 in taxable income and a $9,617 tax liability before credits. A $1,000 credit – say for higher education or renewable energy – reduces their tax liability to $8,617. But credits also add complexity because they can be reduced as your income increases, and they can have extensive eligibility requirements.</p>
<h2>Benefits of a complex system</h2>
<p>One benefit of all this complexity is that it gives the tax system flexibility to provide economic stimulus and other responses to current events, like a global pandemic. For example, Congress allowed taxpayers to receive <a href="https://theconversation.com/a-300-charitable-deduction-explained-138247">guaranteed tax benefits</a> for some <a href="https://taxfoundation.org/charitable-deduction-tax-incentives/">charitable contributions</a> made during the pandemic as above-the-line deductions, instead of the usual requirement that taxpayers first determine whether they could itemize the charitable contribution as a below-the-line deduction. </p>
<p>Even if the U.S. could drastically simplify its tax system, a return-free or tax reconciliation system comes with its own problems. Transitioning would require a significant investment in IRS resources, and although in 2022 Congress passed an <a href="https://www.cbo.gov/publication/57444">$80 billion boost to IRS funding</a> over the next 10 years, much of this amount is needed to shore up the current system. </p>
<p>And estimates suggest that, at best, a return-free or tax reconciliation system in the U.S. would work for only <a href="https://www.taxpolicycenter.org/briefing-book/what-are-benefits-return-free-filing">62 million taxpayers</a>, meaning the majority of U.S. taxpayers would still have to complete a tax return because the withholding or pre-populated return wouldn’t be right. </p>
<p>Meanwhile, a simpler tax system potentially makes it more difficult for Congress to use tax policy to stimulate the economy or encourage certain desirable behaviors, such as investing in <a href="https://www.epa.gov/green-power-markets/inflation-reduction-act">renewable energy</a>. </p>
<p>Finally, exact withholding, when it works correctly, takes away the sizable refunds <a href="https://www.researchgate.net/publication/228272373_An_Investigation_of_Why_Taxpayers_Prefer_Refunds_A_Theory_of_Planned_Behavior_Approach">some Americans enjoy</a>. </p>
<p>In the end, no tax system is perfect. The U.S. must decide whether the complexity of its tax system is worth the time and the <a href="https://www.irs.gov/pub/irs-pdf/i1040gi.pdf">average $250 cost</a> taxpayers spend on filing their own returns instead of spending that on more pleasant activities.</p><img src="https://counter.theconversation.com/content/203616/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The co-hosts of the ‘Taxes for the Masses’ podcast explain the upside and downside of all those credits and deductions.Bridget Stomberg, Associate Professor of Accounting, Indiana UniversityLisa De Simone, Associate Professor of Accounting, The University of Texas at AustinLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2031062023-04-04T21:28:17Z2023-04-04T21:28:17ZAlberta’s minimum wage report leaves out labour perspectives in favour of corporate interests<figure><img src="https://images.theconversation.com/files/519118/original/file-20230403-22-xyoj5t.JPG?ixlib=rb-1.1.0&rect=0%2C62%2C2878%2C1805&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Alberta government recently released a report on the effect of the previous NDP government's minimum wage increase.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Jonathan Hayward</span></span></figcaption></figure><p>Alberta’s minimum wage expert panel report was recently released <a href="https://www.cbc.ca/news/canada/edmonton/alberta-government-releases-minimum-wage-report-more-than-3-years-after-it-was-submitted-1.6782946">three years after it was submitted</a> to the provincial government.</p>
<p>This panel was formed by the United Conservative Party of Alberta to study the impact of the gradual <a href="https://edmontonjournal.com/news/politics/ndp-promise-to-raise-minimum-wage-to-15-per-hour-takes-effect">minimum wage increase that was instituted by the previous NDP government</a> — from $10.20 per hour in 2015 to $15 in 2018. </p>
<p>The report arrives <a href="https://www.elections.ab.ca/elections/albertas-next-election/">just months before Alberta’s provincial election</a> on May 29. While it could be used by politicians to further their election strategy, it’s important to understand the context of the report.</p>
<p>No matter how airtight the report appears, it has been shaped by standard economics. In other words, it has been shaped by absolute faith in free markets, privatization, liberalization, deregulation, <a href="https://www.investopedia.com/ask/answers/12/austerity-measures.asp">austerity measures</a> and the removal of price controls like the minimum wage.</p>
<p>This single panel report on the supposed ills of the minimum wage should be viewed within the vast, diverse spectrum of economic literature, not just standard economics.</p>
<h2>Key findings</h2>
<p>The report shows a loss of about 25,000 jobs for 15- to 24-year-olds due to the shift to $15-an-hour minimum wage. Among older workers, <a href="https://calgaryherald.com/news/politics/alberta-government-minimum-wage-panel-report">the effects were found to be statistically insignificant</a>. </p>
<p>Brian Jean, Alberta’s minister of jobs, economy and northern development, said the main lesson from the report is to avoid “<a href="https://www.cbc.ca/news/canada/edmonton/alberta-government-releases-minimum-wage-report-more-than-3-years-after-it-was-submitted-1.6782946">large, unexpected changes to minimum wages</a>.”</p>
<p>The report recommends having a lower minimum wage for less experienced workers and those in rural areas, but there’s no sign of this happening anytime soon. Jean said <a href="https://calgary.citynews.ca/2023/03/17/alberta-minimum-wage/">there are no current plans to change Alberta’s existing minimum wage structure</a>.</p>
<figure class="align-center ">
<img alt="A white middle-aged man speaks to someone off camera" src="https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">According to Brian Jean, Alberta’s minister of jobs, economy and northern development, the main takeaway from the minimum wage report is to avoid ‘large, unexpected changes to minimum wages.’</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Codie McLachlan</span></span>
</figcaption>
</figure>
<p>The <a href="https://www.alberta.ca/minimum-wage-expert-panel.aspx">panel included at least three business interest representatives</a> but no representation from labour unions. This absence does not reflect neutrality or a level playing field where different interests are balanced. </p>
<p>The report is based on sophisticated statistical methods led by economics academics. Standard economics gives precedence to efficiency and provides a centre stage to utility and profit maximization. Any concerns about equity and sustainability are secondary. </p>
<p>Standard economics ignores dissident and diverse voices that <a href="https://doi.org/10.1080/00213624.2021.1874786">offer a more nuanced view about minimum wage</a>. It’s unsurprising that, when I looked into the economics literature to develop a <a href="https://libjournals.mtsu.edu/index.php/jfee/article/view/1902/1197">renewed perspective on teaching minimum wage</a>, I found so much conflict on the impact of minimum wage on employment. </p>
<h2>What the literature says</h2>
<p>One 2006 working paper <a href="https://doi.org/10.3386/w12663">that examined literature about the employment effects of global minimum wages</a> supports the argument that minimum wage has a negative impact on employment. It found that a 10 per cent increase in the minimum wage reduces teenage employment between one and three per cent.</p>
<p>On the other hand, <a href="https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stanley%20Publication%20Selection%20Bias%20in%20Min%20Wage%20Research-A%20Metaregression%20Analysis.pdf">another paper that looked at 64 studies in the United States between 1972 and 2007</a> found there were zero employment effects of minimum wage.</p>
<p>In Canada, a more recent study by <a href="https://policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2014/10/Dispelling_Minimum_Wage_Mythology.pdf">economists at the Canadian Centre for Policy Alternatives</a> also found no connection between minimum wage and employment levels, based on minimum wage increases in 10 provinces from 1983 to 2012.</p>
<p>Such conflicting evidence cautions us to view studies based on statistical analysis very carefully. <a href="https://faculty.econ.ucdavis.edu/faculty/kdsalyer/LECTURES/Ecn200e/summers_illusion.pdf">American economist and professor Lawrence Summers</a> once wrote that “formal econometric work has had little impact on the growth of economic knowledge.” He said it “creates an art form for others to admire and emulate but provides us with little new knowledge.” </p>
<h2>Support for minimum wage</h2>
<p>Conflicting evidence about the effects of minimum wage should not prevent us from taking a stand in support of the working poor. It should be noted that about <a href="https://www.progressive-economics.ca/2017/06/economists-support-15-minimum-wage-in-ontario/">53 economists endorsed a $15 minimum wage</a> for Ontario in 2017. </p>
<p>Similarly, <a href="https://www.epi.org/minimum-wage-statement/">more than 600 economics professors</a> in the U.S. signed a letter in 2014 concluding that increases in minimum wage have little to no negative effect on employment even during a weak labour market. This includes seven Nobel Prize winning economists who endorsed raising minimum wages by 40 per cent. </p>
<figure class="align-center ">
<img alt="A young woman speaks on the phone as she works behind a cash register in a fast-food restaurant" src="https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The Alberta report recommends having a lower minimum wage for less experienced workers and those in rural areas, but there is no sign of this happening anytime soon.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Christopher Katsarov</span></span>
</figcaption>
</figure>
<p><a href="https://eml.berkeley.edu/%7Esaez/lee-saezJpubE12minwage.pdf">Economists David Lee and Emmanuel Saez</a> argue that minimum wage is “desirable if the government values redistribution toward low-wage workers” and that “the unemployment induced by the minimum wage is efficient.” </p>
<p>This means that unemployment hits workers who are marginally attached to their jobs, not older essential workers. This is what the Alberta report found as well — there was no significant impact on the jobs of older workers who were not using minimum wage jobs as temporary stepping stones. </p>
<h2>Centring different perspectives</h2>
<p>Given standard economics and business interests, it was to be expected that a whole panel would be created to find faults with the gradual increase to the minimum wage, which rose by $4.80 per hour from 2015 to 2018. </p>
<p>In contrast, the UCP government <a href="https://www.alberta.ca/about-tax-levy-rates-prescribed-interest-rates.aspx#corporate">drastically dropped corporate taxes</a> to eight per cent from 12 per cent from 2019 to 2020. But there has been no panel questioning the <a href="https://www.oecd.org/naec/events/multidimensional-well-being/G_Zucman.pdf">efficacy of corporate tax cuts</a>.</p>
<p>Overall, the report is shaped by standard economics and gives precedence to business interests. It ignores labour interests and perspectives that centre equity over efficiency and contest the standard opinion about the minimum wage. </p>
<p>Instead of viewing the minimum wage as detrimental, dissident perspectives view the minimum wage as a tool to alleviate the plight of the working poor.</p>
<p>In the upcoming Alberta election, the public has a choice: go with the standard opinion that supports corporations or side with dissident voices that give voice to the working poor in a world marred by increasing inequality and shaped by free markets run amok.</p><img src="https://counter.theconversation.com/content/203106/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Junaid B. Jahangir is not affiliated with any organization. I have in the past done research assistance work for the Parkland Institute. </span></em></p>The Alberta government’s report on the supposed ills of the minimum wage should be viewed within the vast, diverse spectrum of economic literature, not just standard economics.Junaid B. Jahangir, Associate Professor, MacEwan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1955902022-12-29T05:23:35Z2022-12-29T05:23:35ZFive tips for developing and managing your budget – even in tough economic times<figure><img src="https://images.theconversation.com/files/498995/original/file-20221205-21-ak9ukz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Budgeting offers more opportunities to save money. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/paying-monthly-expenses-royalty-free-image/1227600099?phrase=personal%20budgeting&adppopup=true">Getty Images </a></span></figcaption></figure><p>There’s nothing quite like a new year to prompt us to take stock of our lives, our health, our goals – and our finances. Many people will start 2023 by contemplating how best to budget, plan and save. This is always a good set of aims, but it’s especially important in the inflation-prone and unpredictable economies we’re seeing <a href="https://www.statista.com/statistics/268225/countries-with-the-highest-inflation-rate/">all over Africa and the world</a>.</p>
<p>Budgeting is especially key. It is the most effective method to <a href="https://www.thebalancemoney.com/how-to-make-a-budget-1289587">monitor income and expenditure</a>. <a href="https://www.uslendingcompany.com/blog/key-differences-in-writing-a-household-budget-vs-a-personal-budget/">Personal budgets</a> can help you to monitor your resources in pursuit of larger financial goals. Budgeting also offers <a href="https://www.acrwebsite.org/volumes/v46/acr_vol46_2411998.pdf">more opportunities</a> to save money, reduce your debts and live a comfortable life. It can even <a href="https://prucomm.ac.uk/assets/uploads/blog/2013/04/Personal-Budgets-review-of-evidence_FINAL-REPORT.pdf">improve your mental health</a>.</p>
<p>But where should you start? What questions do you need to answer in creating a budget? Here are some tips that I’ve learned – not just as an economist, but as a research cost analyst and someone who keeps a budget too. </p>
<h2>1. Understand the broader economic conditions</h2>
<p>It is imperative that individuals keep themselves aware and up-to-date on the realities of their country’s economic landscape. You don’t have to be a professional economist, but keep an eye on new developments like free business registration, small business development funds and printing of new money notes. What is the current exchange rate? What’s the political landscape and what international factors, like the price of crude oil, are at play? You should also watch the inflation rate and have a sense of unemployment trends.</p>
<p>This economic awareness will prepare you to draft your own budget and you’ll have a sense of when external factors mean it’s time to revisit your plans.</p>
<h2>2. Review your income sources</h2>
<p>The ability to earn income is critical to sustaining livelihoods. Having a definite source of income is the bedrock of budgeting. </p>
<p>Some important questions you should ask about your income – and how you might budget with it – include:</p>
<ul>
<li> What is my current income? </li>
<li> What do I use my income for?</li>
<li> Am I able to save, given my current income?</li>
<li> What proportion of my income do I save and what proportion do I spend?</li>
<li> Do I have the capacity to earn more than this?</li>
<li> How can I improve my income?</li>
</ul>
<p>Your answers can help you to identify gaps or untapped potential. Those with irregular or unpredictable income should factor in the element of time-gap in their income, for effective budgeting. Time gap is when they are not earning income. And everyone should make allowance in their budgets for uncertainties like health issues, social engagements, inflation, unemployment, recession and price shocks. </p>
<h2>3. Appraise your expenses</h2>
<p>Expenses can be broadly categorised into “variable” and “fixed”. </p>
<p>Fixed expenses recur within a short period: housing, food, transport, medical costs, electricity, utilities, toiletries and clothing. Variable expenses are more long-term and irregular, such as investment in property or interest-yielding assets, and the purchase of machinery. </p>
<p>The main essence of revising our expenses is to analyse and possibly improve our spending habits. In reviewing our expenses, we can consider issues such as:</p>
<ul>
<li> What is the proportion of consumption-savings ratio from my income? This is how much do I spend compared to how much I save.</li>
<li> What are my regular expenses?</li>
<li> What are my fixed, capital or investment expenses?</li>
<li> What are my extraordinary expenses that need modification?</li>
<li> Have there been emergency or extraordinary expenses?</li>
</ul>
<p>A careful response to the issues raised above offers an occasion to re-evaluate the pattern and direction of our expenses. For instance, overspending, unplanned or extraordinary expenses can be identified. This can lead to an optimal, efficient reallocation of available resources.</p>
<h2>4. Stabilise your finances through savings</h2>
<p>Savings have been <a href="https://klinglercpa.com/bedrock-principles-for-saving-money/">described</a> as a financial stabiliser, given their potential to cater for urgent needs and create opportunities for investments. </p>
<p>Of course, savings have more value when they grow faster than the rate of inflation. Inflation erodes the value of savings. For instance, an amount of 300,000 naira (US$676) saved to purchase an autorickshaw today may be impossible in two months’ time with an inflation rate of 10% when the tricycle price rises to 330,000 naira (US$744). The reverse is the case when there is deflation. </p>
<p>Therefore, it is advisable to improve the value of savings through investments in interest-yielding assets such as stocks, shares, bonds, microfinance and production. </p>
<p>That’s not to say it’s always easy to save. Many income earners spend as they go, not seeing savings as part of their budgets. Harsh economic realities can also make it difficult – sometimes seemingly impossible – to save. But it’s not impossible: savings can be made in small amounts, through a daily, weekly or monthly contribution to collections, cooperative schemes or microfinance affiliations. For instance, a point of sale business in Nigeria can permit a daily contribution of 500 naira (US$1.13) over 25 work days, giving an average saving of 12,500 naira (US$28.18) per month. </p>
<p>The Point-of-Sale business started in Nigeria in 2013 when the Central Bank of Nigeria introduced the agent banking system. A POS agent operates and processes transactions through a POS service provider. Providers of such services include banks, microfinance banks and fintech companies.</p>
<h2>5. Run a flexible budget</h2>
<p>Once your budget is created, remember that it’s not set in stone. It should be flexible if anything changes in your life. For instance, an amount saved to buy a car can be invested in a promising venture buying shares through public offerings or private placements in multinational organisations like Nestle or Unilever. </p>
<p>Also, health emergencies or career advancement programmes can require taking some money out of our savings. </p>
<p>In all, budgeting should be flexible enough to incorporate exigencies, especially when catering for the current situation will culminate into a greater good.</p><img src="https://counter.theconversation.com/content/195590/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Oluwabunmi Adejumo does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Budgets are imperative for people to manage their resources and attain financial goals.Oluwabunmi Adejumo, Lecturer/Researcher, Obafemi Awolowo UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1902162022-09-29T19:25:23Z2022-09-29T19:25:23ZBetter income assistance programs are needed to help people with rising cost of living<figure><img src="https://images.theconversation.com/files/486164/original/file-20220922-15282-7odj0v.jpg?ixlib=rb-1.1.0&rect=186%2C186%2C4791%2C3261&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Canada’s current social assistance programs are not doing enough to support Canadians.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/better-income-assistance-programs-are-needed-to-help-people-with-rising-cost-of-living" width="100%" height="400"></iframe>
<p>At the onset of the pandemic, the Canadian federal government cobbled together a series of programs to <a href="https://www.canada.ca/en/department-finance/news/2020/07/economic-and-fiscal-snapshot-2020--house-speech.html">help vulnerable populations who needed support</a>. These measures included boosts to <a href="https://pm.gc.ca/en/news/news-releases/2020/05/03/families-receive-increased-support-through-canada-child-benefit">Canada Child Benefit payments</a>, the <a href="https://financialpost.com/personal-finance/taxes/the-gst-hst-credit-has-been-boosted-due-to-covid-19-heres-what-you-need-to-know">goods and services (GST) tax credit</a> and the <a href="https://pm.gc.ca/en/news/news-releases/2020/06/04/canadian-seniors-receive-special-payment-early-july">Old Age Security and Guaranteed Income Supplement</a> for seniors.</p>
<p>This choice of programs is telling in two important respects. First, they all came in the form of income-tested monthly benefits paid through the tax system. Secondly, the programs were mostly directed at families with children and seniors, with the exception of the GST credit that provides tax-free payments to individuals and families across Canada <a href="https://www.statcan.gc.ca/en/topics-start/poverty">at or below the poverty line</a>. </p>
<p>The addition of the <a href="https://www.canada.ca/en/services/benefits/ei/cerb-application.html">Canada Emergency Response Benefit</a> for workers who lost significant income during the pandemic, along with liberalized eligibility rules for Employment Insurance, were necessary but still <a href="https://policyoptions.irpp.org/magazines/august-2021/redesigning-canadas-social-safety-net-for-the-post-pandemic-economy/">left large gaps in protection for others who were economically vulnerable, notably singles and couples without children</a>.</p>
<p>The provincial governments, <a href="https://www.thecanadianencyclopedia.ca/en/article/social-and-welfare-services">who are in charge of social and welfare assistance</a> in Canada, <a href="https://policyalternatives.ca/newsroom/news-releases/provinces-have-upped-their-covid-19-spending-feds-still-picking-most-tab">largely left pandemic income support to the federal government</a>. More recently, the provinces have been active in attempting to cushion the impact of rising energy prices and inflation, as federal assistance measures expire.</p>
<h2>Diversity of assistance programs</h2>
<p><a href="https://www.alberta.ca/about-fuel-tax.aspx">Alberta</a>, <a href="https://www.taxpayer.com/newsroom/furey%E2%80%99s-gas-tax-cut-helps-confront-soaring-living-costs">Newfoundland</a> and <a href="https://toronto.ctvnews.ca/ontario-government-introduces-legislation-to-temporarily-cut-gas-fuel-taxes-1.5846934">Ontario</a> have introduced temporary reductions in gas taxes, which are directed at families in general rather than those with lower incomes. <a href="https://montrealgazette.com/business/local-business/personal-finance/delean-how-quebecs-500-cost-of-living-payment-affects-tax-returns">Québec introduced a non-taxable $500 benefit</a> to taxpayers with incomes under $100,000 in 2021, with reduced payments for incomes up to $150,000. </p>
<figure class="align-center ">
<img alt="People walk in front of a Shell gas station sign displaying a gas price of 227.9" src="https://images.theconversation.com/files/485989/original/file-20220921-15282-ptxago.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/485989/original/file-20220921-15282-ptxago.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=405&fit=crop&dpr=1 600w, https://images.theconversation.com/files/485989/original/file-20220921-15282-ptxago.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=405&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/485989/original/file-20220921-15282-ptxago.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=405&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/485989/original/file-20220921-15282-ptxago.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=508&fit=crop&dpr=1 754w, https://images.theconversation.com/files/485989/original/file-20220921-15282-ptxago.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=508&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/485989/original/file-20220921-15282-ptxago.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=508&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Reductions in gas taxes in Alberta, Newfoundland and Ontario are aimed at families that own cars, rather than those with lower incomes.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Darryl Dyck</span></span>
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</figure>
<p>In 2021, <a href="https://www.cbc.ca/news/canada/manitoba/manitoba-family-affordability-package-cheques-1.6568070">Manitoba provided families with household incomes under $175,000</a> a $250 benefit for their first child and $200 for each additional child. They also provided $300 benefits for senior households with incomes under $40,000 who claimed the education property tax credit in 2021, or received provincial Employment and Income Assistance. </p>
<p><a href="https://www2.gov.bc.ca/gov/content/family-social-supports/affordability/cost-living">British Columbia is quadrupling the fourth quarter federal Climate Action Tax Credit</a>, which is based on net income and family size. There is clearly a vast diversity of social assistance programs at both the federal and provincial levels — but are they enough to help those in need?</p>
<h2>Building assistance programs</h2>
<p>Underlying these government programs is a historic framework that comes down to three principles: benefit coverage, government generosity, and tapering or reducing the benefits based on income.</p>
<p>In Canada, most social assistance programs are limited or conditional, meaning recipients must meet certain criteria to receive support. Programs tend to be geared toward seniors, families with children and <a href="https://www.canada.ca/en/revenue-agency/services/child-family-benefits/canada-workers-benefit.html">working age adults with imposed employment conditions</a>. While universal coverage <a href="https://pubs.aeaweb.org/doi/pdfplus/10.1257/089533003769204380">has been around since 1962</a>, it <a href="https://www.vox.com/future-perfect/2020/2/19/21112570/universal-basic-income-ubi-map">has never gone beyond the experimental stage in North America</a>. </p>
<p>The distribution of income assistance often comes down to the question of who in need of help will actually receive support. In other words, these programs depend on generosity: Who is and is not deserving of coverage? This generosity depends both on the fiscal capacity of governments and their willingness to devote resources to the assistance of those in need. </p>
<figure class="align-center ">
<img alt="A middle age caregiver sitting and reading on a bench beside an elderly woman, presumably her client. The caregiver's face is in focus. The elderly woman is slightly blurred." src="https://images.theconversation.com/files/486162/original/file-20220922-34664-4sn0xe.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/486162/original/file-20220922-34664-4sn0xe.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=397&fit=crop&dpr=1 600w, https://images.theconversation.com/files/486162/original/file-20220922-34664-4sn0xe.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=397&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/486162/original/file-20220922-34664-4sn0xe.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=397&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/486162/original/file-20220922-34664-4sn0xe.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=499&fit=crop&dpr=1 754w, https://images.theconversation.com/files/486162/original/file-20220922-34664-4sn0xe.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=499&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/486162/original/file-20220922-34664-4sn0xe.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=499&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Most social assistance programs in Canada are oriented toward elderly people and families with children.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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<p>It’s clear that <a href="https://maytree.com/wp-content/uploads/Welfare_in_Canada_2020.pdf">current federal and provincial income support falls short of Canada’s official poverty line</a>, now enshrined under the <a href="https://laws-lois.justice.gc.ca/eng/acts/P-16.81/page-1.html">Poverty Reduction Act</a>. This is especially significant for non-elderly adults without children who do not receive federal child or seniors benefits.</p>
<p>The effectiveness of social programs also depends on how they are tapered. Tapering refers to the way benefits are distributed to program recipients. Tapering on the basis of family income has been a hallmark of Canadian income supports since the early proposals for a guaranteed basic income, with lower income families receiving larger amounts of benefits for a given financial outlay. </p>
<p>Tapering characterizes the main federal income support programs and was <a href="https://www.poltext.org/sites/poltext.org/files/plateformesV2/Canada/CAN_PL_2015_LIB_en.pdf">explicit in the reasoning behind the current Canada Child Benefit</a> that replaced the <a href="https://www.budget.gc.ca/efp-peb/2014/uccb-puge-eng.html">Universal Child Care Benefit</a>. However, the benefit is not tapered enough — it <a href="https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/budget-2016-growing-middle-class/canada-child-benefit.html">guarantees families with incomes up to $200,000 receive benefits</a>. This limited tapering means those with the greatest need get less than they might otherwise.</p>
<h2>Better support for Canadians</h2>
<p>It’s clear that Canada’s current income assistance programs are not doing enough to support Canadians. Canadians are <a href="https://policyoptions.irpp.org/magazines/september-2022/crowdfunding-inflation-needs/">increasingly turning to crowdfunding sites for support</a> to keep them afloat during personal and family crises.</p>
<p>If the goal of temporary assistance is to help those in need, it must have broader coverage and better tapering. <a href="https://www.canada.ca/en/revenue-agency/services/child-family-benefits/gsthstc-amount.html">The only program that qualifies at present is the GST credit</a>, but even these payments are modest and only delivered quarterly. </p>
<p>The federal government has just decided to <a href="https://www.canada.ca/en/department-finance/news/2022/09/making-life-more-affordable-doubling-the-goods-and-services-tax-credit-for-sixmonths.html">double the GST credit for six months</a> to deliver additional relief to these low-income families, but a family of four will only receive a maximum of an additional $467 a year from this measure.</p>
<p>A more generous income assistance program should also have more frequent regular payments. Expanding the GST credit might be more helpful, but other ways to supplement or replace provincial social assistance programs, such as a <a href="https://www.policyschool.ca/wp-content/uploads/2022/06/HSP101-Research-GuaranteedBasicIncome.pdf">guaranteed basic income for working-age Canadians</a>, might provide better support for those in need.</p><img src="https://counter.theconversation.com/content/190216/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Wayne Simpson does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Canada’s current income assistance programs are not doing enough to support Canadians. If the goal of temporary assistance is to help those in need, these programs must have better, broader coverage.Wayne Simpson, Professor, Department of Economics, University of ManitobaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1896712022-09-18T08:50:58Z2022-09-18T08:50:58ZNew data on the e-levy in Ghana: unpopular tax on mobile money transfers is hitting the poor hardest<figure><img src="https://images.theconversation.com/files/484000/original/file-20220912-18-n7y3vq.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A lot of African countries have implemented taxes on electronic transactions</span> <span class="attribution"><span class="source">Wikimedia Commons</span></span></figcaption></figure><p>Ghana’s introduction of a <a href="https://www.bbc.com/news/world-africa-61248366">a 1.5% tax on mobile money transactions</a> in May 2022 has been watched closely by policymakers across Africa. The proponents of the electronic transaction levy (e-levy) argue that taxes on mobile money — commonly referred to in Ghana as MoMo — present an opportunity for cash-strapped governments to raise funds in the complex post-pandemic context. </p>
<p>In Ghana, the “e-levy” has been linked to the current administration’s “<a href="http://osm.gov.gh/assets/downloads/ghana_beyond_aid_charter.pdf">Ghana Beyond Aid</a>” strategy for reducing aid dependence.</p>
<p>Taxes on MoMo, in Ghana and elsewhere, have also been justified as a way to “capture” those working in the informal economy, who are perceived as being untaxed. Critics have pointed out, however, that informal workers (who make up <a href="https://www.wiego.org/sites/default/files/publications/file/WIEGO_Statistical_Brief_N21_0.pdf">89% of total employment</a> in Ghana) already pay a <a href="https://www.wiego.org/sites/default/files/publications/file/Rogan_Taxation_Debates_WIEGO_WorkingPaperNo41_2020.pdf">range of fees and taxes</a>. Therefore they may be disproportionately affected by this new tax. </p>
<p>Despite much speculation about the impact of the e-levy, there has been little empirical evidence. In particular, it is important to consider how informal workers actually use mobile money, how the levy affects them and how they perceive it.</p>
<p>Our recent <a href="https://opendocs.ids.ac.uk/opendocs/handle/20.500.12413/17625">study</a> looked at the likely impact of the levy on high and low earners in the informal economy. It was based on a representative survey of 2,700 informal sector operators – employers and own-account workers – in Accra before the tax was introduced. We found that despite the minimum threshold shielding some users, the tax likely has a negative impact on equity. We also found that informal workers’ scepticism about the tax was rooted in concerns about equity and in mistrust of the government more widely.</p>
<h2>Assumption 1: e-levy will target higher earners</h2>
<p>One of the assumptions prior to the implementation of the e-levy was that it would be an efficient way to target higher earning segments of the informal sector. These segments are perceived as being under-taxed and more likely than lower-income earners to use mobile money.</p>
<p>A key question, therefore, is whether mobile money usage is concentrated among higher income earners. This assumption only partially stands up to the evidence. We found that about half (51%) of the informal sector operators in Accra use mobile money. It is widely used by women and men, by different occupational groups and across the earnings distribution. But the distribution of the actual monthly transaction amounts is revealing (Figure 1). </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/483043/original/file-20220906-14-79imou.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/483043/original/file-20220906-14-79imou.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=361&fit=crop&dpr=1 600w, https://images.theconversation.com/files/483043/original/file-20220906-14-79imou.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=361&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/483043/original/file-20220906-14-79imou.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=361&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/483043/original/file-20220906-14-79imou.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=453&fit=crop&dpr=1 754w, https://images.theconversation.com/files/483043/original/file-20220906-14-79imou.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=453&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/483043/original/file-20220906-14-79imou.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=453&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Figure 1.</span>
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</figure>
<p>As expected, the top-earning group (quintile 5) reported transacting the most on the MoMo platform (about 500 and 700 cedis for female and male workers, respectively). However, lower-income earners will also be affected by the e-levy. This is because informal workers in the lowest earning group transacted more than those in several of the higher earnings categories.</p>
<p>About 41% of MoMo users in the informal sector do not have a bank account. Mobile money transfers may be particularly important for the unbanked, who typically account for the lower earning and more vulnerable segments of the workforce. We found 43% in the lowest earning quintile had bank accounts compared with 54% in the highest earning quintile.</p>
<h2>Assumption 2: excluding small transactions will make the levy fair</h2>
<p>It was anticipated that the exemption for transactions below 100 cedis per day would shield lower-income earners. It was expected to limit the negative impacts of the tax on the poor.</p>
<p>Based on MoMo usage data, we were able to estimate e-levy liability according to whether mobile money transactions in the previous month exceeded the 100 cedis threshold. Sixty-one percent of the users reported that they would be liable for some amount of e-levy payment based on their past MoMo transaction patterns and amounts. Here, our results provide some support for the government’s suggestion that the threshold would protect about <a href="https://citinewsroom.com/2021/11/momo-tax-wont-affect-about-40-of-ghanaians-adu-boahen/">40% of MoMo users</a> from taxation. </p>
<p>However, when the mobile money transaction amounts over the threshold are calculated as a share of earnings, it is clear that the levy is still a highly regressive tax (Figure 2) – meaning the tax burden is highest on the lowest earners. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/483044/original/file-20220906-12-1crisw.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/483044/original/file-20220906-12-1crisw.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=361&fit=crop&dpr=1 600w, https://images.theconversation.com/files/483044/original/file-20220906-12-1crisw.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=361&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/483044/original/file-20220906-12-1crisw.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=361&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/483044/original/file-20220906-12-1crisw.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=453&fit=crop&dpr=1 754w, https://images.theconversation.com/files/483044/original/file-20220906-12-1crisw.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=453&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/483044/original/file-20220906-12-1crisw.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=453&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Figure 2.</span>
</figcaption>
</figure>
<p>Lower earners bear a disproportionate share of the levy. The tax would account for just over 8% and 6% of monthly earnings for men and women, respectively, in the lowest earning quintile. Among the top earning quintile, in contrast, the projected tax would be less than 1% of earnings for both women and men. </p>
<h2>Assumption 3: support for the e-levy would vary on political lines</h2>
<p>As <a href="https://www.afrobarometer.org/articles/majority-of-ghanaians-oppose-e-levy-not-confident-it-will-fund-development-programmes-new-afrobarometer-study-shows/">other surveys</a> have highlighted, the e-levy is highly unpopular in Ghana. We found that 83% of Accra’s informal workers disapproved of it. They worried about how it would affect the poor, that it would be unfair, or raise an already high tax burden.</p>
<p>The levy was the subject of verbal and even physical <a href="https://www.africanews.com/2021/12/21/brawl-in-ghana-s-parliament-over-proposed-e-levy/">fights in parliament</a> between the two main parties. The New Patriotic Party administration blamed public opposition to the levy on alleged propaganda by the minority National Democratic Council. This might suggest that support for the levy would broadly fall along party lines. Our study found that supporters of the New Patriotic Party were indeed more likely to support the levy. But only 32% of them approved. Overall, perceptions of the government and its performance influenced opinions on the levy. </p>
<p>We also found that women were more critical of the e-levy, even when we controlled for a range of demographic and political features. Only 12% of women approved of it, compared with 21% of men. This striking difference highlights the importance of further research in this area, particularly to explore the relative impacts on men and women.</p>
<h2>Implications for policy</h2>
<p>The designers of Ghana’s e-levy argued that it would lead to a better distribution of the tax burden by bringing ostensibly untaxed informal sector workers into the tax net (fairness) while shielding the poorest (equity). While the threshold is successful in shielding some lower income users, we found, the e-levy is still highly regressive.</p>
<p>Our evidence suggests that the threshold should be raised and regularly adjusted for inflation. More generally, revenue authorities should focus on other ways of taxing high income workers in the informal economy, including professionals. At the very least, revenues from the e-levy should be used in a way that offsets its distributional impacts. This could mean targeting new spending on public infrastructure, goods and services that benefit informal workers. Government could also subsidise premiums paid by informal sector workers to join the National Health Insurance Scheme or contributions to the National Pension Scheme.</p>
<p>Our data suggests that key decisions about policy design and implementation were founded on assumptions that are not backed by empirical evidence. Continued research on the impacts of the e-levy in the coming months and years will help ensure that policymaking is evidence-based, with a more complete understanding of how the levy affects citizens and workers.</p><img src="https://counter.theconversation.com/content/189671/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mike Rogan a Research Associate with the Urban Policies Programme in WIEGO (Women in Informal Employment: Globalizing and Organizing). The research described in this article was made possible by generous support from the Swedish International Development Cooperation Agency. </span></em></p><p class="fine-print"><em><span>Max Gallien is a research fellow at the Institute of Development Studies (IDS) and the International Centre for Tax and Development (ICTD). Through the ICTD, the research described in this article has also been supported by the UK Foreign, Commonwealth and Development Office, the Norwegian Agency for Development Cooperation and the Bill & Melinda Gates Foundation.</span></em></p><p class="fine-print"><em><span>Vanessa van den Boogaard is a Research Fellow at the International Centre for Tax and Development (ICTD) and the University of Toronto.
</span></em></p><p class="fine-print"><em><span>Nana Akua Anyidoho does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The tax on electronic transactions has not generated as much revenue as the government of Ghana expected.Mike Rogan, Associate Professor, Rhodes UniversityMax Gallien, Research Fellow, Institute of Development StudiesNana Akua Anyidoho, Associate Professor & Director, Centre for Social Policy Studies, University of GhanaVanessa van den Boogaard, Research Fellow, Institute of Development StudiesLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1880272022-09-08T15:34:34Z2022-09-08T15:34:34ZWest Africa’s fisher women are experts at coping with job insecurity – but policymakers are using their resilience against them<figure><img src="https://images.theconversation.com/files/481645/original/file-20220829-25-36667.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A large number of West African women rely on the blue economy to survive</span> <span class="attribution"><span class="source">MaaikeZaal/GettyImages</span></span></figcaption></figure><p>All along West Africa’s coastline, women play a vital role in the <a href="https://theconversation.com/women-are-a-mainstay-of-fishing-in-west-africa-but-they-get-a-raw-deal-159283">fisheries sector</a> as processors, traders and distributors. </p>
<p>But they face many challenges – like job insecurity, a lack of finance, availability of fish and child care – and they’re also vulnerable to shocks, like the COVID pandemic. </p>
<p>Simplistic assessments <a href="https://thecommonwealth.org/news/women-show-way-covid-19-resilience-says-commonwealth-secretary-general">by government</a> and <a href="https://www.worldfishcenter.org/story/african-women-join-forces-overcome-covid-19-challenges-aquatic-food-systems">nongovernmental organisations</a> will often praise their resilience in facing these challenges. But this masks the dangers inherent in some of their coping strategies, as we’ve shown in a <a href="https://www.frontiersin.org/articles/10.3389/fmars.2022.862780/full">recent study</a> documenting their experiences in West Africa during COVID. </p>
<p>Women are adept at coping because they have to be. Compared with men, women carry a <a href="https://www.unwomen.org/en/news/stories/2017/10/op-ed-ded-puri-women-addressing-hunger-malnutrition-and-poverty">disproportionate burden</a> of ensuring food is on the table for their families. This is because they’re the ones at home whilst the men are at sea. Women will therefore often diversify their income sources to support their families. </p>
<p>Their ability to cope or adapt in times of adversity should not absolve states or governments of the responsibility to address the sources of their hardship. </p>
<p>Although there is an <a href="https://businessfightspoverty.org/womens-financial-inclusion-in-west-africa-from-policy-to-practice/">awareness</a> by West African governments of the need for policies that benefit both men and women, countries across the region <a href="https://reliefweb.int/report/world/west-africa-inequality-crisis-how-west-african-governments-are-failing-reduce">are failing</a> at addressing their root challenges.</p>
<h2>Challenges women in fisheries face</h2>
<p>The main challenge is that women find themselves excluded from policy making and their contributions are largely undervalued by government and financial institutions compared to men who are counted and supported due to their contributions as fishers. Yet women are big contributors to the sector. </p>
<p><a href="https://us1.campaign-archive.com/?u=57d4f65971ce7da5b7cad3586&id=484c667590">As the direct contact with the end-users</a>, women are at the top of the value chain. The women traders pre-finance fishing activities, are the owners of boats, and purchase outboard engines, food for the crew or fuel for fishing trips. Though often invisible to the casual observer, <a href="https://us1.campaign-archive.com/?u=57d4f65971ce7da5b7cad3586&id=484c667590">women are the power</a> behind fishing enterprises and the settlements along rich fishing grounds.</p>
<p>These dynamics produce gendered vulnerabilities. For instance, social expectations render women invisible and increase their <a href="https://www.sciencedirect.com/science/article/pii/S0308597X12002175#:%7E:text=The%20traditional%20roles%20of%20men%20and%20women%20within,look%20after%20the%20home%20and%20family%E2%80%94as%20the%20caregivers.">earnings gaps</a>. Specifically, women’s fisheries work is often perceived by policy makers merely as an extension of their <a href="https://www.tandfonline.com/doi/abs/10.1080/08920753.2017.1278143?journalCode=ucmg20">household responsibility</a>. These activities may include book keeping, gear repairs, and provisioning for fishing trips.</p>
<p>As a consequence, women are excluded from financial, and other, support from state institutions. This limits their livelihood security and makes them particularly vulnerable to disruptions threatening their already precarious livelihoods. </p>
<p>New challenges they face include the <a href="https://theconversation.com/african-marine-rules-favour-big-industry-leaving-small-scale-fishers-in-the-lurch-171829">depletion</a> of fish stocks due to <a href="https://www.nature.com/articles/srep32607">climate change</a>, <a href="https://theconversation.com/nigerias-depleting-fish-stocks-may-pose-a-threat-to-regional-security-105168">pollution</a>, <a href="https://theconversation.com/african-marine-rules-favour-big-industry-leaving-small-scale-fishers-in-the-lurch-171829">over-fishing and illegal</a>, unreported and unregulated fishing. </p>
<p>These challenges will affect men too, but women feel the impact more because their income are dispelled on their families and they do not get support from the state.</p>
<p>They’re also vulnerable to shocks. My colleagues and I <a href="https://www.frontiersin.org/articles/10.3389/fmars.2022.862780/full">examined</a> the impact of the COVID restrictions on fisherfolk and saw how lockdown measures, travel restrictions and border closures all affected fish processing and trade. </p>
<p>Women weren’t able to sell as much. The movements of fisher people were disrupted, so there wasn’t as much fish available. And fish spoiled because of curfews, market closures and because there were fewer women allowed at processing sites. <a href="https://www.frontiersin.org/articles/10.3389/fmars.2022.862780/full">Men were also affected by these disruptions</a> but because they dominate the at sea activities, their disruptions were mostly restricted to labour and production. </p>
<p>The fisher women found various coping strategies. </p>
<h2>Negative coping strategies</h2>
<p>Fisher women find ways to cope with their challenges but some strategies – like those employed during the COVID pandemic – can bring negative outcomes. </p>
<p>One <a href="https://www.frontiersin.org/articles/10.3389/fmars.2020.00318/full?&field=&journalName=Frontiers_in_Marine_Science&id=511454">of these is the practice of</a> “sex for fish” or “sex for finance”. We found that women engaged in sexual acts in exchange for buying fish on credit or in exchange for money.</p>
<p>This practice is <a href="https://theconversation.com/women-are-a-mainstay-of-fishing-in-west-africa-but-they-get-a-raw-deal-159283">not new</a> and there are worrying health implications – like <a href="https://theconversation.com/women-are-a-mainstay-of-fishing-in-west-africa-but-they-get-a-raw-deal-159283">rising</a> HIV/AIDS infection rates within fishing communities. Fishing communities in Africa have HIV infection prevalence rates <a href="https://onlinelibrary.wiley.com/doi/10.1111/tmi.13520#:%7E:text=Fishing%20communities%20in%20both%20Africa%20and%20Asia%20have,Risk-taking%20behaviour%20is%20common%20in%20these%20population%20groups.">4 to 14 times</a> higher than the national average, <a href="https://www.fao.org/africa/news/detail-news/en/c/274831/">due to transactional sex</a>.</p>
<p>Another coping strategy in <a href="https://www.frontiersin.org/articles/10.3389/fmars.2022.862780/full">Ghana</a> was to involve middlemen and use technology. Women dispatched parcels of fish to customers via taxi or public minibuses. They would get paid through mobile money before sending the fish. They managed to get the fish to their customers, but their profit was halved as they had to involve a third party.</p>
<p>Women shouldn’t have to resort to coping strategies like these. <a href="https://www.frontiersin.org/articles/10.3389/fmars.2020.00318/full?&field=&journalName=Frontiers_in_Marine_Science&id=511454">In a time of adversity</a>, the things that make them vulnerable must be addressed. </p>
<h2>Supporting women</h2>
<p>There are several steps to take. </p>
<p>Women need support in the form of finance and subsidies. They should also be included in fisheries related policy deliberations and their views represented. For instance, they must be supported when fishing bans <a href="https://www.sciencedirect.com/science/article/pii/S0308597X21004589">link</a> – to conserve fish stocks – are introduced. </p>
<p>Government must invest in infrastructure to help transform the sector. Investments would include an integrated cold chain to keep fish fresh, potable water supply to allow good hygienic practices, and innovative smoking facilities, so fish can be preserved and sold in a different form.</p>
<p>In addition, greater priority must be given to women’s digital skills training. This would ensure that more women take the advantage offered by technology to reach more potential customers and at an affordable rate.</p>
<p>Ensuring that women are not left behind requires access to affordable credit. For instance, <a href="https://theconversation.com/women-are-a-mainstay-of-fishing-in-west-africa-but-they-get-a-raw-deal-159283">establishing and supporting</a> financial organisations – such as credit unions, banks and cooperatives to provide credit at affordable rates to women.</p>
<p>The government should also support women with easier access to markets. One of these markets should be the the African Continental Free Trade Area (<a href="https://africa.unwomen.org/en/digital-library/publications/2019/07/opportunities-for-women-in-the-acfta">AfCFTA</a>). Women already benefit from trans-boundary trade, and ensuring that they can cross borders to sell their products without disruptions will introduce them to new markets and increase their income.</p>
<h2>Learning from past experience</h2>
<p>Policymakers can also learn from some of the fisher women’s more positive coping strategies. </p>
<p>Something we saw in several countries is that women coped by coming together, seeking out partnerships and opportunities. <a href="https://www.frontiersin.org/articles/10.3389/fmars.2022.862780/full">In Ghana</a>, for instance, women formed community village savings and loan associations with the support of the West Coast Women Ambassadors, a civil society organisation.</p>
<p>The aim of these associations was to bring financial services closer to members. They also acted as a rallying point for initiating community development activities such as business education. </p>
<p>Because the association was well-organised, and presented as a group, the women were able to secure a loan from the Business Advisory Centre. This is a state public agency that provides business advice, training services and marketing avenues to small business enterprises.</p>
<p>They also partnered with <a href="https://www.cffacape.org/news-blog/something-cool-for-cte-divoire-women-fish-processors-will-give-them-more-power-in-the-marketplace">Conservation des Espèces</a> – a marine conservation NGO which focuses on protecting marine turtles and their habitats. In exchange for cooperation from the women’s groups and their networks, the NGO will provide them with a cold room and ice factory. Cooperation included discouraging turtle poaching and encroachment on their habitats and helping the NGO to monitor turtles by reporting on sightings.</p>
<p>Romanticising women navigating adversity as strong, resilient and having supernatural abilities to endure disruptions takes attention away from the failure of the government to identify and address the source of their adversity. </p>
<p>Importantly, by addressing the root challenges of women, those of men will also be dealt with as the challenges are cyclical and interrelated.</p><img src="https://counter.theconversation.com/content/188027/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ifesinachi Okafor-Yarwood receives funding from the Scottish Funding Council.</span></em></p>The ability of West Africa’s fisher women to cope or adapt in times of adversity should not let policymakers off the hook.Ifesinachi Okafor-Yarwood, Lecturer, University of St AndrewsLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1867932022-07-27T15:54:07Z2022-07-27T15:54:07ZWhy a universal job guarantee beats the basic income pipe dream<figure><img src="https://images.theconversation.com/files/475693/original/file-20220722-18-jhu2db.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4143%2C2572&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In theory, a universal job guarantee could help stabilize inflation by providing stable, full-time employment, addressing unemployment, enhancing economic productivity and reinforcing price stability.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>With the <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220609/dq220609a-eng.htm">current cost-of-living crisis</a> resulting in dramatic inflation, higher interest rates and a looming recession, people have been searching for solutions to the economic crisis. A universal job guarantee may just be the answer we’re looking for, especially since <a href="https://globalnews.ca/news/8975848/canada-economy-jobs-june/">Canada lost 43,000 jobs in June</a>.</p>
<p>While most people are familiar with the idea of a <a href="https://basicincome.stanford.edu/about/what-is-ubi/">universal basic income</a> — the notion of giving every citizen a basic income, irrespective of their income level or need — few are familiar with the idea of a universal job guarantee.</p>
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<a href="https://theconversation.com/a-guaranteed-basic-income-could-end-poverty-so-why-isnt-it-happening-182638">A guaranteed basic income could end poverty, so why isn’t it happening?</a>
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<p>Instead of a guaranteed fixed income, a universal job guarantee policy provides jobs — and wages — to people who aren’t able to find work on their own. In theory, a universal job guarantee could help stabilize inflation by providing stable, full-time employment, addressing unemployment, enhancing economic productivity and reinforcing price stability.</p>
<p>Job guarantee programs are crucial for a number of reasons. <a href="https://www.cbpp.org/research/full-employment/the-federal-job-guarantee-a-policy-to-achieve-permanent-full-employment">They keep people in the labour force, alleviate poverty, improve health and well-being, add meaning to people’s lives and help the most vulnerable</a>. They also provide crucial non-monetary benefits that have historically been associated with universal basic income, including improvements to “<a href="https://www.pbo-dpb.ca/en/publications/RP-2122-001-S--distributional-fiscal-analysis-national-guaranteed-basic-income--analyse-financiere-distributive-un-revenu-base-garanti-echelle-nationale">health, education, social cohesion and productivity</a>.”</p>
<h2>Economic stabilizer</h2>
<p>There are a few unique barriers that undermine universal basic income and its ability to be implemented. As we have seen with government support programs related to COVID-19, government stimulus in the form of direct cash <a href="https://www.cbc.ca/news/politics/chrystia-freeland-inflation-1.6501750">can cause inflation</a>. These programs <a href="https://www.cbc.ca/news/business/jobs-business-subsidies-column-don-pittis-1.6129604">reduce the supply of lower skilled employees in the job market</a>, as some people invariably decide to stay at home, rather than work. </p>
<p>Like the <a href="https://www.canada.ca/en/revenue-agency/services/benefits/apply-for-cerb-with-cra.html">Canada Emergency Response Benefit</a>, universal basic income might take away the incentive to work for some, resulting in a labour market bereft of workers. This would result in a vicious cycle: employers would raise wages to attract those willing to work, which would increase inflation and cost of living, causing businesses, in turn, to raise costs to be able to afford higher salaries for their workers. </p>
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<img alt="A 'Now Hiring' sign hanging in the window of a building" src="https://images.theconversation.com/files/475690/original/file-20220722-14-mvzc8r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/475690/original/file-20220722-14-mvzc8r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=344&fit=crop&dpr=1 600w, https://images.theconversation.com/files/475690/original/file-20220722-14-mvzc8r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=344&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/475690/original/file-20220722-14-mvzc8r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=344&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/475690/original/file-20220722-14-mvzc8r.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=432&fit=crop&dpr=1 754w, https://images.theconversation.com/files/475690/original/file-20220722-14-mvzc8r.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=432&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/475690/original/file-20220722-14-mvzc8r.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=432&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Government stimulus programs can reduce the supply of lower skilled employees in the job market, as some people invariably decide to stay at home, rather than work.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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<p><a href="https://www.thestar.com/business/2022/07/05/high-interest-rates-will-trigger-a-recession-just-look-at-history-for-evidence-new-study-argues.html">The effects of cash stimulus without controls can be far reaching</a>. To take the resulting steam out of the economy, policy-makers often resort to blunt counter measures like increasing interest rates, which can lead to a recession.</p>
<p>In contrast, a universal job guarantee would generate revenue for the government through taxable income, thereby reducing the cost of the program while simultaneously enhancing other sectors of the economy, such as the environment or infrastructure. It would ensure that people are able to earn money and, therefore, be able to spend money.</p>
<h2>More politically feasible</h2>
<p>Part of the reason why universal basic income hasn’t been successful in Canada is because it <a href="https://www.cbc.ca/news/canada-how-basic-income-works-1.6179760">hasn’t been championed by any mainstream Canadian political party</a>. A program like that would require either the Liberal or the Conservative Party of Canada to make universal basic income part of their electoral platform.</p>
<p>On the contrary, a universal job guarantee would be more appealing to voters because it addresses labour shortages while guaranteeing minimum wage. Considering there are already programs that help people find fulfilling jobs, it isn’t too much of a stretch to imagine a scaled-up version run by the federal government.</p>
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<img alt="A man attending a virtual job interview using a laptop" src="https://images.theconversation.com/files/475689/original/file-20220722-15-zpkskz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/475689/original/file-20220722-15-zpkskz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/475689/original/file-20220722-15-zpkskz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/475689/original/file-20220722-15-zpkskz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/475689/original/file-20220722-15-zpkskz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/475689/original/file-20220722-15-zpkskz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/475689/original/file-20220722-15-zpkskz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Job programs keep people in the labour force, alleviate poverty, improve health and well-being, add meaning to people’s lives and help the most vulnerable.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
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<p>Consider <a href="https://www.canada.ca/en/employment-social-development/services/funding/canada-summer-jobs.html">Canada’s summer student work programs, where the Canadian government subsidizes businesses to hire students</a>, or other employment programs, such as <a href="https://www.infrastructure.gc.ca/about-apropos/people-personnes/people-personnes-eng.html">building infrastructure to last generations</a> or <a href="https://treecanada.ca/">tree planting</a>. A universal job guarantee would build on these established programs and be more likely to garner political support based on precedent.</p>
<h2>A path toward a universal job guarantee</h2>
<p>People want better jobs and a consistent source of income. Economies with full employment <a href="https://doi.org/10.14746/sr.2019.3.2.04">operate at their full potential with higher productivity and stability</a> than those with high unemployment. </p>
<p>When I worked as a senior policy advisor for the government of Canada, the most effective bureaucrats that were able to implement policy were aware of politics and ideology and how governments of the day are driven by them and the likelihood of votes. They knew how to frame good policy within a party’s platform to attract voters.</p>
<p>Other countries are already taking the plunge. In October 2020, Austria announced they were running <a href="https://www.businessinsider.com/austria-worlds-first-universal-jobs-guarantee-experiment-2020-11">the world’s first universal jobs guarantee experiment</a>. Canada would do well to keep an eye on the pilot program and see how it unfolds.</p>
<p>However, I caution us to be realistic: we cannot throw out fantastical ideas of universality of a job guarantee or a universal basic income without understanding how governments, democracy and politics inform policy making. For a country as large as Canada, this kind of transformative change needs to take place in steps. </p>
<p>While it remains to be seen whether a sensible and practically implementable universal job guarantee program can be implemented in Canada, building on existing programs that have already proven to work is a good place to start.</p><img src="https://counter.theconversation.com/content/186793/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Daniel Tsai does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Instead of a guaranteed fixed income, a universal job guarantee policy provides jobs — and wages — to people who aren’t able to find work on their own.Daniel Tsai, Lecturer in Business and Law, Toronto Metropolitan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1842332022-06-15T12:26:05Z2022-06-15T12:26:05ZTrouble paying bills can take a heavy toll on fathers’ mental health, leading to family conflict<figure><img src="https://images.theconversation.com/files/468597/original/file-20220613-26-2d92sb.jpg?ixlib=rb-1.1.0&rect=164%2C65%2C5306%2C3379&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Most research on poverty has focused on the effects on mothers, but a new study shows the importance of turning increased attention to fathers' mental health.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/father-walking-with-son-and-daughter-in-park-at-royalty-free-image/1321546994?adppopup=true">kieferpix/iStock via Getty Images Plus</a></span></figcaption></figure><p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take about interesting academic work.</em></p>
<h2>The big idea</h2>
<p>For families on low incomes, difficulty paying utility bills, rent, mortgage or health care costs set the stage for parental mental health problems, especially for fathers, that then lead to potentially violent family conflict. These are the key findings of a study I led <a href="https://doi.org/10.1111/fare.12698">that was recently published</a> in the journal Family Relations. </p>
<p>Prior poverty research has been primarily conducted with mothers, with a predominant focus on low incomes, without considering the role of so-called “material hardship” and its impact on fathers. Family income refers to a specific dollar amount that parents bring in through paid work, <a href="https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines">such as an annual household income of US$27,750 for a family of four</a>, whereas material hardship – or the “everyday hardships of making ends meet” – refers to whether a family has faced any challenges meeting basic needs such as food, utilities and health insurance. </p>
<p>My research team found that it was not low family income per se but rather the everyday hardships of making ends meet that was linked with fathers’ poorer mental health that then led to more negative conflict behaviors with the mothers. Such conflict behaviors included blaming the partner for things that go wrong; putting down a partner’s feelings, opinions or desires; or little arguments turning into ugly fights with accusations and name-calling. Such verbal aggression can be damaging to the partner relationship and <a href="https://doi.org/10.1177/0886260520948514">is shown to be harmful for young children</a> who witness their parents engaging in such behaviors.</p>
<p>To carry out this study, my team used data from the <a href="https://www.icpsr.umich.edu/web/ICPSR/studies/29781">Building Strong Families project</a>, a large and racially diverse sample of 2,794 mostly unmarried heterosexual couples caring for young children and living with low income. Our goal was to examine how economic insecurity – defined as low family income and material hardship – was associated with mothers’ and fathers’ mental health conditions and relationship functioning. </p>
<p>One of the key findings was that the association between material hardships such as difficulty paying for bills, rent and health insurance and destructive conflict behaviors worked primarily through fathers’ depressive symptoms and not those of the mother. Examples of depressive symptoms included feelings of sadness, sleep problems, difficulty concentrating, disinterest in eating, and loneliness. </p>
<h2>Why it matters</h2>
<p>These findings suggest that the negative effects of material hardship on relationship dynamics within couples operate by hurting fathers’ mental health more so than that of mothers. In light of traditional gender norms, fathers may feel more stressed than mothers when they are not able to fulfill the primary breadwinner role. That is, when fathers feel they are not economically providing <a href="https://theconversation.com/when-police-stop-black-men-the-effects-reach-into-their-homes-and-families-144321">to alleviate everyday economic stressors in their families</a>, that can lead to more mental health problems and more conflict between fathers and mothers. Our study suggests the importance of focusing equal attention on fathers and how family interventions might help alleviate the issues that lead to fathers’ depressive symptoms and negative conflict between parents. </p>
<p>Relatedly, during the COVID-19 pandemic, parents – <a href="https://www.acf.hhs.gov/sites/default/files/documents/opre/opre-charmed-lessons-covid-father-relationships-programs-brief-feb-2022.pdf">including fathers of low-income status</a> – have experienced high levels of pandemic-related unemployment, economic insecurity and mental health problems. As such, addressing fathers’ and mothers’ mental health seems exceptionally critical and has the potential to support healthy family functioning during the ongoing pandemic. </p>
<h2>What other research is being done</h2>
<p>I am beginning to explore how families might be resilient against the negative effects of poverty by looking at positive relationships between parents as sources of strength. For example, <a href="https://doi.org/10.3389/fpsyg.2021.729654">in another study I led</a>, I showed that when mothers and fathers focused on positive behaviors such as being a good co-parenting team on behalf of their children, they were more likely to withstand economic stressors linked with poverty and to engage in warm and sensitive parenting that benefited their young children’s social development.</p><img src="https://counter.theconversation.com/content/184233/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>In conducting the research mentioned in this research brief, Joyce Y. Lee was supported by a fellowship from the Administration for Children and Families (Children’s Bureau) under grant no. 90PR0009-01-00. </span></em></p>In families that are facing economic insecurity, fathers are more likely to experience depressive symptoms that can lead to conflict.Joyce Y. Lee, Assistant Professor of Social Work, The Ohio State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1810182022-05-08T12:22:58Z2022-05-08T12:22:58ZThe future of tipping should be driven by Canadians, not businesses<figure><img src="https://images.theconversation.com/files/461368/original/file-20220504-23-ww3zeq.jpg?ixlib=rb-1.1.0&rect=201%2C613%2C6367%2C3822&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Tipping reshapes the relationship between workers and their managers, and workers and consumers. In doing so, it has wide-ranging effects on workers.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Tipping has long been a source of <a href="https://books.google.ca/books?id=PJfTYcB48uIC&printsec=frontcover&redir_esc=y#v=onepage&q&f=false">significant controversy</a>, spilling over from time to time into the <a href="https://www.tvo.org/article/its-time-to-abolish-tipping-once-and-for-all">pages of Canadian media</a>. Canadians’ views on tipping remain divided, as <a href="https://theconversation.com/at-the-tipping-point-its-time-to-include-tips-in-menu-prices-as-restaurants-reopen-from-covid-lockdowns-164017">a recent survey</a> by researchers from Dalhousie University has found.</p>
<p>One reason why tipping garners so much interest is that it <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=368727">reshapes the relationship</a> between workers and their managers, and workers and consumers. In doing so, it has wide-ranging effects on workers. </p>
<p>On the one hand, tipping can boost workers’ income and give workers a <a href="https://tupress.temple.edu/book/3138">greater sense of control over some facets of their work</a>. On the other, more problematic, hand it often comes with a range of negative outcomes that are not always apparent to consumers. </p>
<p>These include <a href="https://www.emerald.com/insight/content/doi/10.1108/EDI-04-2019-0127/full/html?utm_source=rss&utm_medium=feed&utm_campaign=rss_journalLatest">sexual harassment</a>, pressure to engage in <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=368727">degrading and demeaning behaviours</a>, <a href="https://doi.org/10.1080/15378020.2016.1215760">inequality</a> among different groups of workers, <a href="https://doi.org/10.1111/j.1559-1816.2008.00338.x">racial discrimination</a> and <a href="https://doi.org/10.1002/symb.413">unpredictable incomes</a>. </p>
<p>Tipping <a href="https://doi.org/10.1177%2F10564926221088729">might also have a range of societal impacts</a>, including exacerbating class distinctions and legitimizing other employment practices like <a href="https://points.datasociety.net/racing-for-tips-4816da5b5096">classifying workers as independent contractors</a> that can be harmful to workers. Clearly, tipping is neither a neutral or trivial activity.</p>
<h2>A shifting landscape</h2>
<p>Tipping <a href="https://www.newswire.ca/news-releases/gig-economy-workforce-rockets-to-more-than-one-in-ten-of-canadians-a-further-third-are-open-to-joining-reveals-new-study-812441559.html">underpins much of the rapidly growing contemporary gig economy</a>, in which 13 per cent of Canadians are reported to have worked in 2021. </p>
<p>Tipping is spreading to more and more parts of the hospitality industry, including <a href="https://www.emerald.com/insight/content/doi/10.1108/IJCHM-12-2019-0981/full/html">cafes and limited-service restaurants</a>. Soon, it might even spread to <a href="https://time.com/5499027/flight-attendants-to-keep-tips-frontier/">airlines</a>, <a href="https://nationalpost.com/news/the-100000-a-year-waitress-isnt-a-myth-some-hard-truths-about-tipping-in-canada">liquor stores</a> and <a href="https://globalnews.ca/news/3539922/customers-fear-tip-shaming-as-gratuity-expectations-grow/">pet grooming businesses</a>.</p>
<p>These changes are taking place before our eyes without any serious policy debate or direction. When tipping does receive policy attention, it is often limited to <a href="https://news.gov.bc.ca/releases/2021LBR0022-001048">tweaking or eliminating different minimum wages for tipped workers</a>, and adapting laws around <a href="https://www.ontario.ca/page/employees-tips-other-gratuities">tip pooling</a>. </p>
<figure class="align-center ">
<img alt="Woman sitting at an outdoor restaurant table using a cell phone" src="https://images.theconversation.com/files/461361/original/file-20220504-19-ra6avh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/461361/original/file-20220504-19-ra6avh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/461361/original/file-20220504-19-ra6avh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/461361/original/file-20220504-19-ra6avh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/461361/original/file-20220504-19-ra6avh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/461361/original/file-20220504-19-ra6avh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/461361/original/file-20220504-19-ra6avh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">More and more businesses have chosen to amplify tipping by prompting customers to tip via payment portals or apps.</span>
<span class="attribution"><span class="source">(AP Photo/Jacquelyn Martin)</span></span>
</figcaption>
</figure>
<p>While these are important topics, these efforts fail to tackle the complex issues and trade-offs associated with tipping in a comprehensive manner. They represent a missed opportunity to start a conversation we need to have as a society. Instead, it is businesses that are often in the driver’s seat.</p>
<p>While some businesses, including <a href="https://montrealgazette.com/business/local-business/no-more-tipping-at-montreal-cafe-larrys-heres-how-and-why">Larry’s in Montréal</a> and <a href="https://theprovince.com/news/b.c./servers-now-accepting-tips-again-at-canadas-first-no-tipping-restaurant-smoke-n-water">Smoke ‘N Water in Parksville, B.C.</a>, have tried to eliminate tipping, more commonly they have amplified it by <a href="https://doi.org/10.1177%2F1094670519900553">prompting customers to tip via payment portals or apps</a>. Businesses have many reasons to do this, notably the opportunity to cut costs by shifting some of the <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=368727">responsibility for workers’ compensations onto consumers</a>. </p>
<p>Once tipping starts to become more common in a particular industry,
strong <a href="https://www.sciencedirect.com/science/article/pii/S0167487014001056">norms tend to form around it</a> that are hard to break. If this pattern holds in industries where tipping is spreading in Canada, millions more Canadian workers could see their working lives significantly altered. </p>
<h2>It’s time for a serious conversation</h2>
<p>In light of these trends and our current knowledge of the impacts of tipping, we should pause and ask ourselves: is this really what we want the future of work to look like in Canada? </p>
<p>As a business and sustainability professor, I argue that it is time for Canadians, their representatives and policymakers to have a serious conversation about the future of compensation in Canada and what role, if any, tipping ought to play in it.</p>
<p>This conversation should include a thorough consideration of pros and cons of tipping and its alternatives, like <a href="https://doi.org/10.1108/08876040810881722">service charges and service-inclusive pricing</a>, and the supporting practices needed to successfully transition from one approach to another. </p>
<p>It should also provide opportunities for Canadian workers to learn and deliberate together by accessing expert insights, research and stakeholder perspectives, like those of <a href="https://not9to5.org/about-us/">Not 9 To 5</a> and the <a href="https://workersolidarity.ca/">Worker Solidarity Network</a>. </p>
<figure class="align-center ">
<img alt="A barista standing behind a counter with a tip jar on it. A customer is putting money in the jar." src="https://images.theconversation.com/files/461365/original/file-20220504-25-zf0pih.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/461365/original/file-20220504-25-zf0pih.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/461365/original/file-20220504-25-zf0pih.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/461365/original/file-20220504-25-zf0pih.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/461365/original/file-20220504-25-zf0pih.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/461365/original/file-20220504-25-zf0pih.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/461365/original/file-20220504-25-zf0pih.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Canadians, their representatives and policymakers need to have a serious conversation the future of compensation in Canada and whether tipping should play a role in it.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>We could take inspiration from the recent work of the <a href="https://www.ontario.ca/document/future-work-ontario">Ontario Workforce Recovery Advisory Committee</a>, which leveraged extensive stakeholder consultations and research when drafting its report on the future of work in Ontario. We could also draw on the growing number of <a href="https://participedia.net/method/4258">citizens’ assemblies</a> that are tackling issues like <a href="https://www.fsrao.ca/newsroom/fsra-receives-residents-reference-panels-final-report-automotive-insurance-ontario">auto insurance</a> and <a href="https://www.commissioncanada.ca/">democratic expression</a>.</p>
<h2>The future of tipping</h2>
<p>Canadians may ultimately express a desire for the elimination of tipping, at least in some sectors, as was the case <a href="https://www.sciencedirect.com/science/article/pii/S1053535704001027">in some U.S. states in the past</a>. This could be coupled with policies to give workers some of the benefits tipping can have, namely higher wages and a greater sense of control by giving workers more <a href="https://www.mindtools.com/pages/article/newtmm_81.htm">autonomy over how they do their jobs</a>. </p>
<p>Alternatively, Canadians may want to keep the practice of tipping, but implement clear rules about <a href="https://doi.org/10.1287/mnsc.2019.3541">techniques used to solicit tips through apps and platforms</a>, higher wages for workers and transparency about how tips are distributed and whether any tipped minimum wages apply to workers.</p>
<p>Rather than tipping being largely determined by businesses as they tinker with payment portals, it should be defined by Canadians who, though they may experience tipping on a regular basis, have not been given the chance to properly reflect on it. </p>
<p>This will become all the more important as the pandemic draws our attention to the importance of creating an economy that offers <a href="https://ppforum.ca/publications/the-future-is-now-creating-decent-work-post-pandemic/">decent and quality work for all of us</a>.</p><img src="https://counter.theconversation.com/content/181018/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Simon Pek receives funding from the University of Victoria's President's Chair award. </span></em></p>The future of tipping should be defined by Canadians, not businesses seeking to shift responsibility for worker compensation onto consumers.Simon Pek, Assistant Professor, Gustavson School of Business, University of VictoriaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1785182022-03-25T12:09:22Z2022-03-25T12:09:22ZEven after lockdowns eased, pandemic depression persisted across social classes – new study<figure><img src="https://images.theconversation.com/files/452589/original/file-20220316-8340-8x10vq.jpeg?ixlib=rb-1.1.0&rect=90%2C1114%2C5226%2C2498&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The high and persistent prevalence of depression suggests that mental illness increased for all social classes during the COVID-19 pandemic.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/pandemic-covid-19-lockdown-pensive-woman-home-at-royalty-free-image/1226431883">piola666/E+ via Getty Images</a></span></figcaption></figure><p><em>The <a href="https://theconversation.com/us/topics/research-brief-83231">Research Brief</a> is a short take about interesting academic work.</em> </p>
<h2>The big idea</h2>
<p>One year into the COVID-19 pandemic, we found that more than 1 in 5 U.S. adults reported probable depression <a href="https://doi.org/10.1126/sciadv.abm9737">in both spring 2020 and spring 2021</a>. We also found that financial assets helped reduce the persistence of symptoms – but only to a point. Our recently published research highlights COVID-19’s continuing mental health effects on the U.S. population.</p>
<p>We launched a national study in March 2020 measuring mental health and assets. COVID-19 <a href="https://www.federalregister.gov/documents/2020/03/18/2020-05794/declaring-a-national-emergency-concerning-the-novel-coronavirus-disease-covid-19-outbreak">was a national emergency</a>, as deaths were on the rise. Schools, workplaces and government offices closed as Americans were urged to stay home. At that time, we found that 27.8% of U.S. adults in our study reported symptoms of depression, such as losing interest in activities or feeling down or hopeless. This number was over three times as high as the national <a href="http://jamanetwork.com/article.aspx?doi=10.1001/jamanetworkopen.2020.19686">pre-pandemic depression estimate</a> of 8.5%.</p>
<figure class="align-center ">
<img alt="Woman wearing a surgical mask sits on the steps of an office building, resting her elbow on a bent knee holding her forehead, with her purse and work binder beside her." src="https://images.theconversation.com/files/452594/original/file-20220316-8201-1m1a6j2.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/452594/original/file-20220316-8201-1m1a6j2.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=351&fit=crop&dpr=1 600w, https://images.theconversation.com/files/452594/original/file-20220316-8201-1m1a6j2.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=351&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/452594/original/file-20220316-8201-1m1a6j2.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=351&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/452594/original/file-20220316-8201-1m1a6j2.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=442&fit=crop&dpr=1 754w, https://images.theconversation.com/files/452594/original/file-20220316-8201-1m1a6j2.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=442&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/452594/original/file-20220316-8201-1m1a6j2.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=442&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A new study finds that depression increased for all social classes during the COVID-19 pandemic.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/unemployed-businesswoman-having-stressed-after-royalty-free-image">boy_anupong/Moment via Getty Images</a></span>
</figcaption>
</figure>
<p>Most striking to us was that a year into the pandemic, depression rates remained high, despite hopeful signs of reducing infections and deaths. In April 2021, people were lining up <a href="https://www.usda.gov/media/blog/2021/04/09/celebrating-1-million-covid-vaccines-administered-usda">for COVID-19 vaccine shots</a>, doctors were finding <a href="https://doi.org/10.1093/ofid/ofab050">better COVID-19 treatments</a> and efforts to reopen society were under way. But by that point, the share of adults in our survey reporting symptoms of depression had gone up to 32.8%.</p>
<p>Worse yet, that higher 2021 number included 20.3% who had reported symptoms of depression both in April 2020 and in April 2021. This finding suggests that poor mental health driven by the pandemic was both prevalent and persistent. </p>
<p>We also wanted to know which assets – financial, physical and social – might be influencing people’s mental health during the pandemic. In our first survey, we found that people who came into the pandemic with relatively few assets – especially financial ones – were <a href="http://dx.doi.org/10.1136/jech-2020-215213">more likely to be affected</a> by COVID-19-related stresses. </p>
<p>In our April 2021 follow-up survey, we were interested in the relationship between mental health and asset status. We looked at financial assets such as personal savings, physical assets such as home ownership and social assets of education and marital status. We compared people who were similar in terms of marriage, education and home ownership. We found that people in households earning less than US$20,000 a year were 3.5 times as likely to report persistent depression symptoms as those making $75,000.</p>
<p>We also found that people who had $5,000 or more in savings or a bank account reported less persistent depression. Having more assets, however, did not reduce the depression-inducing stress of losing a job, suffering relationship problems or experiencing financial difficulties during the pandemic.</p>
<h2>Why it matters</h2>
<p>Nearly 1 million U.S. lives have been lost to COVID-19, and there have been almost <a href="https://covid.cdc.gov/covid-data-tracker/#new-hospital-admissions">5 million hospitalizations</a>. But measuring the effect of the pandemic on the nation’s mental health is just beginning. And we believe the pandemic’s sustained impact on the nation’s mental health is unprecedented.</p>
<h2>What’s next</h2>
<p>Our next move is to further examine <a href="http://dx.doi.org/10.1136/jech-2020-215213">areas of overlap</a> between those who started the pandemic with fewer assets and those who suffered job losses, relationship problems or financial difficulties during the pandemic. </p>
<p>People who have fewer assets are the ones most at risk of depression, especially depression that lasts over time with social upheaval. Assets can be a cushion, but even they did not protect people from the harmful effects of stressors brought on by the pandemic. Our research shows that although the pandemic <a href="https://doi.org/10.1016/S0140-6736(22)00100-3">seems to be easing</a>, Americans are still suffering. And they may continue to feel ill effects on their mental health for a long time to come. </p>
<p>[<em>Get fascinating science, health and technology news.</em> <a href="https://memberservices.theconversation.com/newsletters/?nl=science&source=inline-science-fascinating">Sign up for The Conversation’s weekly science newsletter</a>.]</p><img src="https://counter.theconversation.com/content/178518/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sandro Galea received funding from the Rockefeller and deBeaumont Foundations for this work.</span></em></p><p class="fine-print"><em><span>Catherine Ettman does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Adults in the US reported the same levels of depression a year into the pandemic as they did at the outset.Catherine Ettman, PhD Candidate, Boston UniversitySandro Galea, Professor of Family Medicine, Boston UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1767922022-02-23T15:34:38Z2022-02-23T15:34:38ZShow me the money: Employees not only want better pay, they want status<figure><img src="https://images.theconversation.com/files/447034/original/file-20220217-17-gnekqx.jpg?ixlib=rb-1.1.0&rect=0%2C550%2C4091%2C2480&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Over 50 per cent of working Americans continue to be dissatisfied with their 'unjust' incomes. They say it isn't sufficient to meet their family expenses.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 175px; border: none; position: relative; z-index: 1;" allowtransparency="" src="https://narrations.ad-auris.com/widget/the-conversation-canada/show-me-the-money--employees-not-only-want-better-pay--they-want-status" width="100%" height="400"></iframe>
<p>There has been endless chatter about the Great [<em>insert pandemic-related work trend here</em>].</p>
<p><a href="https://www.theatlantic.com/ideas/archive/2021/10/great-resignation-accelerating/620382/">Resignation</a>. <a href="https://www.npr.org/sections/money/2022/01/25/1075115539/the-great-resignation-more-like-the-great-renegotiation">Renegotiation</a>. <a href="https://www.cnbc.com/2022/02/04/companies-are-reinventing-rules-as-employees-seek-remote-work-and-flexible-hours.html">Reshuffle</a>. </p>
<p>Regardless of the descriptor used, employees in the United States are purportedly <a href="https://www.nytimes.com/2022/01/04/business/economy/job-openings-coronavirus.html">re-evaluating</a> the role of work in their lives. While some of this is related to deeper <a href="https://www.npr.org/sections/money/2021/10/19/1047032996/why-are-so-many-americans-quitting-their-jobs">existential questions</a> — like “What am I doing with my life?” or “Is this really how I want to be spending most of my waking hours?” — there might be a much simpler and more practical explanation for the <a href="https://time.com/6051955/work-after-covid-19/">take-this-job-and-reinvent-it</a> wave.</p>
<p>A classic quote from the 1996 film <em>Jerry Maguire</em> captures it well. Sports agent Jerry Maguire (played by Tom Cruise) has been fired and as he embarks to become an independent agent he desperately tries to retain one of his clients, football star Rod Tidwell (Cuba Gooding Jr.). </p>
<p>Tidwell shouts his demands: “<a href="https://www.youtube.com/watch?v=FFrag8ll85w">Show me the money!</a>” He adds: “I have a family to support, Jerry!”</p>
<h2>Earning enough to make ends meet</h2>
<p>Given what Americans say about their earnings, you’d think many would be bellowing like Tidwell. From Jan. 19 to Feb. 2, 2022, my research assistant and I partnered with Angus Reid Global to field a national survey of 2,000 working Americans. We asked: <em>Do you feel that the income from your job alone is enough to meet your family’s usual monthly expenses and bills?</em> </p>
<p>An astonishing 54.8 percent said “no.” </p>
<figure class="align-right ">
<img alt="A list of household expenses and income is placed on top of a bill with a calculator beside it" src="https://images.theconversation.com/files/447393/original/file-20220219-67390-5bhg5t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/447393/original/file-20220219-67390-5bhg5t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=374&fit=crop&dpr=1 600w, https://images.theconversation.com/files/447393/original/file-20220219-67390-5bhg5t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=374&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/447393/original/file-20220219-67390-5bhg5t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=374&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/447393/original/file-20220219-67390-5bhg5t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=470&fit=crop&dpr=1 754w, https://images.theconversation.com/files/447393/original/file-20220219-67390-5bhg5t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=470&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/447393/original/file-20220219-67390-5bhg5t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=470&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Over the past two decades, more than half of surveyed American workers weren’t able to make ends meet with their job earnings alone.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Considering the ominous news <a href="https://www.nytimes.com/2022/01/24/learning/lesson-plans/lesson-of-the-day-inflation-has-arrived-heres-what-you-need-to-know.html">about inflation</a> lately, we figured that this unfavourable perception has spiked from previous years. But looking back through two decades of U.S. data from the <a href="https://gssdataexplorer.norc.org/variables/2817/vshow">General Social Survey (GSS)</a> — a highly reputable national survey of Americans — we were surprised by how prevalent and stable the “no” responses have been. </p>
<p>In 2018, the last time the GSS asked this question, 50.8 percent of American workers reported that the income from their job was not enough to make ends meet. And the percentage was even higher in previous years: 52.9 in 2014; 53.4 in 2006 and 55.9 in 2002. The highest on record — 58.2 per cent — occurred in 2010 at the tail end of the Great Recession.</p>
<h2>How fair is what you earn?</h2>
<p>But “show me the money” isn’t only about having enough for life’s necessities. It’s also about the sense of fairness — what scholars refer to as <a href="https://doi.org/10.1146/annurev.so.09.080183.001245">distributive justice</a>. In our survey, we asked: <em>How fair is what you earn on your job in comparison to others doing the same type of work you do?</em></p>
<p>While 37.9 per cent feel they are paid appropriately, 52.7 per cent feel they are paid less than they deserve. On this indicator, the shift is substantial. <a href="https://gssdataexplorer.norc.org/variables/2816/vshow">Between 2002 and 2018</a>, 40.6 per cent on average have described their pay as being somewhat less or much less than they deserve, with 2010 again being the outlier at 46.2 percent.</p>
<p>We need to earn enough to live, and the amount should be just. But there’s another element of pay that reflects something deeper. <a href="https://doi.org/10.1037/a0038781">A fundamental human motive: status</a>. Justifying his “show me the money” plea, Tidwell roars: “I’m a role model, Jerry,” adding “it’s a very personal … very important thing.” </p>
<figure class="align-center ">
<img alt="A graphical representation of people standing on piles of differing amount of money." src="https://images.theconversation.com/files/447392/original/file-20220219-42890-13sd2ql.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/447392/original/file-20220219-42890-13sd2ql.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/447392/original/file-20220219-42890-13sd2ql.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/447392/original/file-20220219-42890-13sd2ql.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/447392/original/file-20220219-42890-13sd2ql.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/447392/original/file-20220219-42890-13sd2ql.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/447392/original/file-20220219-42890-13sd2ql.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Income, which can often be distributed unfairly, determines social status.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Status matters. Not only in the eyes of others, but in our own self-evaluations too. Sociologists refer to this as <a href="http://sparqtools.org/mobility-measure/macarthur-scale-of-subjective-social-status-adult-version/">subjective social status</a>. To measure it, we told respondents to think of a ladder. At the top (10) are the people who are the best off. At the bottom (1) are the people who are the worst off. And, we asked: <em>Where would you put yourself at the present time?</em></p>
<p>On average, American workers report a 6 on the status ladder. But those who report insufficient earnings and feel severely underpaid score significantly lower (4.9), compared to those who have sufficient earnings and feel their pay is appropriate (6.6). That difference holds regardless of education, occupation, income and job authority. </p>
<h2>Can money buy happiness?</h2>
<p>Some say <a href="https://www.pnas.org/content/107/38/16489">money can’t buy happiness</a>, but it goes a long way to providing status. And status often <a href="https://doi.org/10.1016/j.copsyc.2019.07.014">translates into happiness</a>. </p>
<p>In our survey, Americans who don’t earn enough to make ends meet and feel underpaid are less happy and hopeful about the future. Life, for them, is less enjoyable. Inadequate earnings and feeling underpaid also erode happiness more strongly than the objective indicators of low socio-economic standing do. And one’s position on the status ladder eclipses all other socio-economic indicators in predicting happiness.</p>
<p>Our sample doesn’t include any professional football stars. But it does contain a broad cross-section of American workers — doggie daycare assistants, accountants, truck drivers, software engineers, sous chefs, electricians, candle-makers and on and on. All have a few things in common: They want to earn enough money to make ends meet, they want to be paid fairly for the work they do and they all share the fundamental human motive for status.</p>
<p>As dated as <em>Jerry Maguire</em> feels, “show me the money” still resonates. Maybe it always will. Given how consistent these indicators of income dissatisfaction have been for the past few decades, perhaps the Great Re-evaluation of work should focus first and foremost on compensation. Channel your inner Rod Tidwell!</p>
<p><em>Xin Ming Matthew Zhou, an undergraduate research assistant in the Department of Sociology at the University of Toronto, co-authored this article</em></p><img src="https://counter.theconversation.com/content/176792/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Scott Schieman receives funding from Social Science and Humanities Research Council. </span></em></p>Many Americans regularly report that they don’t make enough to support their families. Status plays a role — while money can’t buy happiness, it can bring status, which can lead to happiness.Scott Schieman, Professor of Sociology and Canada Research Chair, University of TorontoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1765952022-02-10T14:05:57Z2022-02-10T14:05:57ZGhana’s electronic transaction tax: not a bad idea, but must be properly designed<figure><img src="https://images.theconversation.com/files/445691/original/file-20220210-23-1xklwqa.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Christian Thompson/Anadolu Agency via Getty Images</span></span></figcaption></figure><p>The government of Ghana’s revenue collection has performed poorly for some years now. The average <a href="https://mofep.gov.gh/sites/default/files/budget-statements/2021-Budget-Highlights_v1.pdf">growth rate</a> of total government revenue and grants has fallen sharply from 32.6% (2009-2012) to 19.9% (2013-2016) and 14.6% (2017-2020). The total revenue as a ratio of GDP <a href="https://mofep.gov.gh/news-and-events/2021-03-11/survey-of-the-ghanaian-tax-system">currently stands at 16%</a>. This is lower than the <a href="https://www.oecd.org/tax/tax-policy/brochure-revenue-statistics-africa.pdf">sub-Saharan average of 25% of GDP</a>.</p>
<p>This needs to be improved. There is no substitute for domestic resource mobilisation. Even if the government borrows to finance projects and programs, they will still need to mobilise revenue domestically to service and repay the debt.</p>
<p>The government of Ghana needs to intensify domestic revenue mobilisation. It has to be very strategic and raise funds from all sectors of the economy. One measure government has proposed to increase revenue collection is the 1.5% tax on electronic transactions. This proposal has been rejected by the major opposition party, the National Democratic Congress and a section of Ghanaians. Many analysts have also criticised the policy, with some of them offering no alternatives. </p>
<p>The government’s reasons for the tax is that it wants to tax the incomes from Ghana’s large informal sector. According to the <a href="https://statsghana.gov.gh/gssmain/storage/img/infobank/2021%20PHC%20Provisional%20Results%20Press%20Release.pdf">2021 population and housing census</a>, there are about 10 million workers in Ghana. Out of this number, 2.3 million Ghanaians work in the formal sector and they automatically pay personal income tax. The government finds it difficult to tax the incomes of the remaining 7.7 million workers in the informal sector. </p>
<p>The tax is also aimed at an area of the economy – the services sector – which has seen increased economic activity and is, rightly, viewed as having high revenue-generating potential. The service sector takes the lion’s share of GDP and employment. According to the Ghana Statistical Service , it takes about 53.3% share of employment and 49.2% share of GDP. It is only proper that the economic activity of this sector is properly examined and taxed. </p>
<p>In addition, the information and telecommunication sub-sector is one of the <a href="https://oxfordbusinessgroup.com/overview/ripple-effect-sectoral-growth-supported-expanding-mobile-money-market-improved-access-data-and">fastest-growing sub-sectors</a> in the country. Mobile Money (MOMO) transactions is growing very fast. According to the Minister of Finance <a href="https://newsghana.com.gh/mobile-money-transactions-hit-gh%E2%82%B5953-2bn-in-2021/">MOMo transactions have increased</a> from GHS 78.5 billion in 2016 to GHS 953.2 billion (US$ 150 billion) in 2021.</p>
<p>In principle, I agree with the imposition of a levy on an electronic transaction (e-levy), but must be designed to achieve the purpose of raising revenue from the informal sector. I hope that the various views and suggestions that have been made are taken into consideration and it is designed properly to raise the needed revenue. </p>
<h2>How to fix the design</h2>
<p>Taxes help to raise revenue. The basic National Income determination principle states that the tax multiplier effect on the Gross Domestic Product (GDP) is negative, but the effect of the government expenditure multiplier on GDP is positive. So why should the government collect tax? </p>
<p>Governments must collect taxes to raise revenue and spend prudently with the hope that the positive government expenditure multiplier effect on Gross Domestic Product would outweigh the negative tax multiplier effect on GDP, with an overall positive effect on the GDP. Based on this principle, the e-levy will reduce disposable incomes, but when properly applied, it will help government finance its development just, like any other tax revenue.</p>
<p>The economic principle is to tax incomes and not the medium of payment. If one of the objectives of the e-levy is to tax the incomes of workers in the informal sector, then only the receiver should bear the burden of the e-levy. Asking the sender to pay the e-levy will not amount to taxing the incomes of wokers in the informal sector. If the receiver is made to bear the entire burden of the e-levy, it would offer the following two benefits: incomes would be taxed – and not the medium of payment, and secondly, Ghana’s informal sector workers would now pay income tax. </p>
<p>To ensure that workers in the informal sector pay personal income tax, there must be a policy that the only mode of paying informal sector workers should be through the electronic system (so that their incomes can be taxed). Secondly, to avoid multiple taxations, certain transactions must be exempted from attracting the e-levy. For example, using mobile money transactions to pay taxes, school fees, bills, and the like. </p>
<p>I also believe a lot of anomalies associated with the e-levy can be corrected through the filing of returns. With digitisation and synchronisation of the national identification card, known as the Ghana card, with mobile phone numbers and Tax Identification Numbers, it will be easier to identify all tax payers. Even non-Ghanaians who do not have the card but still do business in Ghana cannot escape due to digitisation. </p>
<p>The e-levy can take another form. Instead of taxing the transaction itself, the government could impose a tax on the charges collected by the telecommunications companies. Some charge 1% on every mobile money transaction. After incorporating government tax, the charge on mobile money transactions could be increased from 1% to say 2% or 3%. Depending on the price elasticity of demand for the commodity, the telcos could then decide to either share the tax burden with their customers or absorb the whole tax burden.</p>
<p>It’s also important that government clearly explains its decision to introduce e-levy. Taxes must be efficient, and the tax rate must be optimal. </p>
<p>To help government optimise revenue generation from the levy, there should be a cost-benefit analysis of the e-levy before arriving at the optimal tax rate. I presume the proposed tax rate of 1.5% is the optimal tax rate based on Government’s calculations. The government’s cost-benefit analysis about the electrinic tax must be available for public scrutiny. If the cost-benefit analysis hasn’t been done, the government must contract a consultant to do it on their behalf.</p>
<p>Lastly, the government must ensure transparency and accountability of the use of the e-levy. If the people see that their money is being put to good use, they would pay, and even pay more.</p><img src="https://counter.theconversation.com/content/176595/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Adu Owusu Sarkodie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>A levy on electronic transactions in Ghana makes sense if the government gets the architecture for it rightAdu Owusu Sarkodie, Lecturer, Department of Economics, University of GhanaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1737202022-01-20T13:46:04Z2022-01-20T13:46:04ZThe better you are at math, the more money seems to influence your satisfaction<figure><img src="https://images.theconversation.com/files/441590/original/file-20220119-23-mo0nsn.jpg?ixlib=rb-1.1.0&rect=0%2C139%2C4787%2C3063&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Being better at math increases income but also ties satisfaction more closely to money.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/man-throwing-dollar-bills-in-the-air-arms-raised-in-royalty-free-image/200381413-001?adppopup=true"> Jonathan Kitchen/Digital Vision via Getty Images</a></span></figcaption></figure><p>Your grade school math teacher probably told you that being good at math would be very important to your grownup self. But maybe the younger you didn’t believe that at the time. A lot of research, though, has shown that <a href="https://theconversation.com/people-who-are-bad-with-numbers-often-find-it-harder-to-make-ends-meet-even-if-they-are-not-poor-172272">your teacher was right</a>. </p>
<p>We are two researchers who study decision-making and how it relates to wealth and happiness. In a study published in November 2021, we found that, in general, people who are better at math <a href="https://doi.org/10.1371/journal.pone.0259331">make more money and are more satisfied with their lives</a> than people who aren’t as mathematically talented. But being good at math seems to be a double-edged sword. Although math-proficient people are very satisfied when they have high incomes, they are more dissatisfied, compared to those who aren’t as good at math, when they don’t make a lot of money. </p>
<p>Many researchers have suggested that more money only increases <a href="https://qz.com/1503207/a-nobel-prize-winning-psychologist-defines-happiness-versus-satisfaction/">life satisfaction and happiness</a> up to a certain point. Our research modifies this idea by showing that satisfaction derived from income relates strongly to how good a person is at math. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/441600/original/file-20220119-27-1kh4idi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A person holding a pencil above a sheet of paper." src="https://images.theconversation.com/files/441600/original/file-20220119-27-1kh4idi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/441600/original/file-20220119-27-1kh4idi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/441600/original/file-20220119-27-1kh4idi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/441600/original/file-20220119-27-1kh4idi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/441600/original/file-20220119-27-1kh4idi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/441600/original/file-20220119-27-1kh4idi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/441600/original/file-20220119-27-1kh4idi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Nearly 6,000 people responded to a survey that asked about math skills, income and life satisfaction.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/student-taking-math-quiz-cropped-royalty-free-image/97612935?adppopup=true">PhotoAlto/Odilon Dimier via Getty Images</a></span>
</figcaption>
</figure>
<h2>A math and happiness test</h2>
<p>We investigated the relationship between math ability, income and life satisfaction, using surveys sent to 5,748 diverse Americans as part of the <a href="https://uasdata.usc.edu/index.php">Understanding America Study</a>.</p>
<p>The study included two questions and one test relevant to our research. One question asked participants about their household yearly income. Another one asked respondents to rate how satisfied they are with their lives on a scale of zero to 10.</p>
<p>Finally, people answered eight math questions that varied in difficulty to get a sense of their math skills. For example, one of the moderately difficult questions was: “Jerry received both the 15th highest and the 15th lowest mark in the class. How many students are in the class?” The correct answer is 29 students.</p>
<p>We then combined the results to see how they all related to one another. </p>
<p>Math skills and income also are tied to <a href="https://theconversation.com/money-buys-even-more-happiness-than-it-used-to-141766">level of education,</a> so, in our analyses, we controlled for education, verbal intelligence, personality traits and other demographics.</p>
<h2>Connecting math skills to income and satisfaction</h2>
<p>On average, the better a person was at math, the <a href="https://doi.org/10.1371/journal.pone.0259331">more money they made</a>. For every one additional right answer on the eight-question math test, people reported an average of $4,062 more in annual income. </p>
<p>Imagine you have two people with the same level of education, one of whom answered none of the math questions correctly and the other answered all of them correctly. Our research predicts that the person who answered all of the questions correctly will earn about $30,000 more each year.</p>
<p>The survey also showed that people who are better at math were, on average, also more satisfied with their lives than those with lower math ability. This finding agrees with <a href="https://doi.org/10.1257/0002828041464551">a lot of other research</a> and suggests that income influences life satisfaction.</p>
<p>But prior research has shown that the relationship between income and satisfaction is not as straightforward as “more money equals greater happiness.” It turns out that how satisfied a person is with their income often depends on how they feel it <a href="https://doi.org/10.1177/0956797610362671">compares to other people’s incomes</a>.</p>
<p>Other research has also shown that people who are better at math tend to make <a href="https://doi.org/10.1093/oso/9780190861094.001.0001">more numerical comparisons</a> in general than those who are worse at math. This led our team to suspect that math-proficient people would compare incomes more, too. Our results seem to show just that. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/439268/original/file-20220104-15-15r038f.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A graph correlating math skills to life satisfaction and income." src="https://images.theconversation.com/files/439268/original/file-20220104-15-15r038f.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/439268/original/file-20220104-15-15r038f.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=513&fit=crop&dpr=1 600w, https://images.theconversation.com/files/439268/original/file-20220104-15-15r038f.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=513&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/439268/original/file-20220104-15-15r038f.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=513&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/439268/original/file-20220104-15-15r038f.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=645&fit=crop&dpr=1 754w, https://images.theconversation.com/files/439268/original/file-20220104-15-15r038f.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=645&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/439268/original/file-20220104-15-15r038f.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=645&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">This chart shows that people who scored highest on the math test (red line) appear to be happiest when they make a lot of money (top right of graph), but also the least satisfied when they make less money (bottom left of graph). Different color lines correspond to the number of math questions answered correctly.</span>
<span class="attribution"><span class="source">Ellen Peters, Pär Bjälkebring</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<p>Simply put, the better a person was at math, the <a href="https://doi.org/10.1371/journal.pone.0259331">more they cared about how much money they make</a>. People who are better at math had the highest life satisfaction when they had high incomes. But deriving satisfaction from income goes both ways. These people also had the lowest life satisfaction when they had lower incomes. Among people who aren’t as good at math, income didn’t relate to satisfaction nearly as much. Thus, the same income was valued differently depending on a person’s math skills.</p>
<h2>Money does buy happiness for some</h2>
<p>An often-quoted fact – backed up by research – says that once a person makes around $95,000 a year, <a href="https://doi.org/10.1038/s41562-017-0277-0">earning more money doesn’t dramatically increase satisfaction</a>. This concept is called <a href="https://www.nature.com/articles/s41562-017-0277-0?mod=article_inline">income satiation</a>. Our research challenges that blanket statement.</p>
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<p>Interestingly, the people who are best at math did not seem to show income satiation. They were more and more satisfied with more income, and there didn’t appear to be an upper limit. This did not hold true for people who weren’t as talented at math. The least math-proficient group gained more satisfaction from income only until about $50,000. After that, earning more money made little difference.</p>
<p>For some, money does seem to buy happiness. While more work needs to be done to really understand why, we think it may be because math-oriented people compare numbers – including incomes – to make sense of the world. And maybe that’s not always a great thing. In comparison, those who are worse at math appear to derive life satisfaction from sources other than income. So if you are feeling dissatisfied with your income, maybe seeing beyond the numbers will be a winning strategy for you.</p><img src="https://counter.theconversation.com/content/173720/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pär Bjälkebring receives funding from Swedish Research Council (VR; DNR-2016-00507). </span></em></p><p class="fine-print"><em><span>Ellen Peters receives funding from the U.S. National Science Foundation and USAFacts.</span></em></p>Compared to people who aren’t as good at math, people who are better at math are more happy when they have high incomes and less happy when they have lower incomes.Pär Bjälkebring, Assistant Professor of Psychology, University of GothenburgEllen Peters, Director, Center for Science Communication Research, University of OregonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1742142022-01-07T13:03:20Z2022-01-07T13:03:20ZNew data shows COVID will continue to have a negative financial impact on many UK households<figure><img src="https://images.theconversation.com/files/439792/original/file-20220107-17-1903oyt.jpg?ixlib=rb-1.1.0&rect=46%2C0%2C5182%2C3436&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The economic effects of COVID have not been equal.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/wooden-figures-on-stacks-coins-concept-1667755309">Shutterstock/Andrii Zastrozhnov</a></span></figcaption></figure><p>Ever since it started, the pandemic has <a href="https://theconversation.com/we-asked-70-000-people-how-coronavirus-affected-them-what-they-told-us-revealed-a-lot-about-inequality-in-the-uk-143718">exacerbated the inequality</a> that already existed between households in the UK. Those with secure incomes, savings and assets have been able to deal with the financial shocks of COVID, while millions of others have not.</p>
<p><a href="https://www.financialfairness.org.uk/en/our-work/publications/coronavirus-financial-impact-tracker-december-2021">A recent survey</a> of 5,770 people suggests that this inequality could widen even further. For most of the 4.7 million households whose financial situation has already deteriorated a lot according to the data, the outlook for 2022 is expected to get worse. </p>
<p>It’s a vicious cycle. For many, COVID caused a prolonged and deep financial shock brought about by a loss of earnings. This meant they drew heavily on savings (if they had any) and increased the amount they owed on credit cards, overdrafts and loans. </p>
<p>This was often accompanied by a considerable and enforced negative change in spending patterns. In some cases, spending fell because people had to cut back to make ends meet, while in others spending went up to <a href="https://www.theguardian.com/business/2021/sep/03/inflation-set-to-surge-this-autumn-as-brexit-and-covid-combine">due to rises</a> in the cost of essentials such as food and fuel. </p>
<p>In contrast, there were 1.7 million households whose financial situation has improved a lot since the start of the pandemic. They experienced a “virtuous circle” in which 57% saw their savings increase due to factors such as home working and severely curtailed social activities (and therefore spending). </p>
<p>This also led to 17% owing considerably less than they did before. Only 4% of them saw their spending change for negative reasons. </p>
<p>Among those whose financial situation has already deteriorated substantially, the outlook was estimated to be “poor” or “quite poor” for 72% of them (3.4 million households). The outlook was similarly bleak for single-parent households (65%), those with a disabled inhabitant (66%) and households receiving Universal Credit (83%).</p>
<h2>Polarising pandemic</h2>
<p>A <a href="https://www.financialfairness.org.uk/en/our-work/publications/the-financial-impact-of-the-pandemic-a-review-of-the-literature">separate review</a> of around 240 publications about the pandemic’s financial impact paints a similar picture of a divided population. The overall story from these research papers by academics, thinktanks, charities and others was remarkably consistent across the worst affected groups: people with disabilities, members of some minority ethnic groups, single parents, people in insecure work and renters. </p>
<p>It was a story of disadvantage in the labour market, of reduced incomes and low financial resilience, of increased expenditure and financial burdens, and of unequal and often insufficient state support. By October 2020, for example, a <a href="https://www.tuc.org.uk/news/disabled-workers-earning-fifth-less-non-disabled-peers-tuc-analysis-reveals">growing disability pay gap</a> meant that disabled people working full-time were earning £3,800 less per year, on average, than their non-disabled counterparts. That’s an increase on the previous year of £800. </p>
<p>So despite comparatively <a href="https://www.bbc.co.uk/news/business-57987091">positive forecasts elsewhere</a> about economic growth and employment, at a household level the evidence paints a picture of increased poverty and inequality over the longer term. By 2025, an <a href="https://www.resolutionfoundation.org/app/uploads/2021/01/Living-standards-outlook-2021.pdf">estimated 23% of people</a> in the UK (roughly 15 million) will be living in relative poverty, up from 21.1% in 2021. </p>
<figure class="align-center ">
<img alt="Piggy bank wearing a face mask." src="https://images.theconversation.com/files/439800/original/file-20220107-32935-1cdrkah.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/439800/original/file-20220107-32935-1cdrkah.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/439800/original/file-20220107-32935-1cdrkah.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/439800/original/file-20220107-32935-1cdrkah.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/439800/original/file-20220107-32935-1cdrkah.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/439800/original/file-20220107-32935-1cdrkah.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/439800/original/file-20220107-32935-1cdrkah.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Lost savings.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/close-piggy-bank-wearing-protective-face-1680833905">Shutterstock/NAR studio</a></span>
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</figure>
<p>Echoing the UK government’s early response to the pandemic, the main target of recent interventions such as an <a href="https://ifs.org.uk/budget-2021">increase in the national living wage</a> has been low-income working households rather than those which are not in work. Proposals for additional support also do not offset <a href="https://www.jrf.org.uk/sites/default/files/jrf/migrated/files/CostofCuts-Full.pdf">previous deep cuts</a> to social security and local government funding over the last decade. </p>
<p>In response, there have been calls for immediate action to <a href="https://www.resolutionfoundation.org/press-releases/2022-set-to-be-the-year-of-the-squeeze-as-wages-stall-and-families-face-a-1200-hit-from-next-april-as-energy-bills-and-taxes-rise/">tackle rising energy bills</a> and [increase Universal Credit payments]. Others argue for improvements in the availability and <a href="https://cpag.org.uk/sites/default/files/files/policypost/CPAG_briefing_budget_2021.pdf">affordability of childcare</a> as well as more <a href="https://www.jrf.org.uk/blog/does-budget-deliver-governments-bold-ambition-build-new-economy">secure and affordable housing</a>. It is also worth noting the apparent lack of recognition by the government of the links between financial difficulty and wellbeing, despite <a href="https://pubmed.ncbi.nlm.nih.gov/24121465/">strong evidence</a> of a link between poverty and poor mental health. </p>
<p>Since our survey data was collected in October 2021, the economic outlook has been further hit by <a href="https://theconversation.com/inflation-why-it-is-the-biggest-test-yet-for-central-bank-independence-173676">rising inflation</a> (which reached 5.1% the following month). The cost of fuel, gas and electricity are all expected to go up in 2022, which particularly affects lower-income households who spend <a href="https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/familyspendingintheuk/financialyearendingmarch2016">a greater proportion</a> of their income on essentials. At the start of 2022 then, it seems that those who have already suffered the greatest economic hardship will continue to bear the financial brunt of the pandemic.</p><img src="https://counter.theconversation.com/content/174214/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sharon Collard receives funding from abrdn Financial Fairness Trust (formerly Standard Life Foundation). </span></em></p>Bleak expectations for 2022.Sharon Collard, Professor of Personal Finance, University of BristolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1708772021-11-08T06:34:26Z2021-11-08T06:34:26ZWhy happiness is becoming more expensive and out of reach for many Australians<figure><img src="https://images.theconversation.com/files/430693/original/file-20211108-10171-1sm1wxt.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5010%2C3710&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>One of the most well-known findings in the economic study of happiness is that, on average, happiness increases with income, but <a href="https://www.theguardian.com/money/2016/jan/07/can-money-buy-happiness">at a certain point diminishing returns set in</a>.</p>
<p>In other words, money can only buy a fixed level of happiness, after which extra income and wealth doesn’t make much difference. Presumably after this point, happiness depends on other things, such as <a href="https://blogs.lse.ac.uk/behaviouralscience/2016/01/04/does-money-buy-happiness-it-depends-on-the-context/">health, leisure time, quality of friendships and close family</a>.</p>
<p>Our new study, published in October, found the income level required to be happy in Australia <a href="https://www.sciencedirect.com/science/article/pii/S235282732100224X">has been increasing and moving out of reach of most Australians</a>.</p>
<p>The happiness of increasing numbers of Australians has become more dependent on income than ever this millennium.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/can-money-buy-happiness-29570">Can money buy happiness?</a>
</strong>
</em>
</p>
<hr>
<h2>Happiness increases with income, to a point</h2>
<p>Nobel prize winning psychologist Daniel Kahneman first described the change point where extra income begins to matter less for happiness. He found this change point <a href="https://www.pnas.org/content/107/38/16489.short">in the United States was US$75,000</a> in 2008.</p>
<p>This was substantially more than the US median income of $52,000 in the same year.</p>
<p>The difference revealed an unacknowledged inequity in the distribution of well-being in the US economy. The happiness of the poorest majority of the US population (<a href="https://dqydj.com/household-income-by-year/">68%</a>) was tied to marginal changes in income, while that of a richer minority (32%) wasn’t.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-paradox-of-happiness-the-more-you-chase-it-the-more-elusive-it-becomes-112217">The paradox of happiness: the more you chase it the more elusive it becomes</a>
</strong>
</em>
</p>
<hr>
<p>But what about fairer, more egalitarian countries with a strong middle-class, like Australia? Since the start of the millennium, Australia has enjoyed a <a href="https://www.pc.gov.au/research/completed/rising-inequality">growing household real income and stable levels of income inequality</a>, better than the US and on <a href="https://data.oecd.org/inequality/income-inequality.htm">par with the OECD average</a>.</p>
<p>And the average level of <a href="https://www.oecdbetterlifeindex.org/topics/life-satisfaction/">life-satisfaction</a> in Australia has been reliably higher than the OECD average, as well as the US.</p>
<p>In terms of real income, income inequality and overall life satisfaction, Australia has a stable and solid record.</p>
<p>However, life satisfaction isn’t the same as happiness.</p>
<h2>What did we study?</h2>
<p>We used data from the influential Household, Income and Labour Dynamics in Australia (HILDA) <a href="https://melbourneinstitute.unimelb.edu.au/hilda">survey</a>, provided by the Melbourne Institute.</p>
<p>This data show Australia’s average happiness has been declining since 2009.</p>
<p>The annual HILDA survey asks Australians to recall how often they felt happy, joyful, sad, tired or depressed in the last month, in each year since 2001.</p>
<p>The frequency of these feelings is quite different from a single rating of how satisfied you are with your life.</p>
<p>In <a href="https://www.sciencedirect.com/science/article/pii/S235282732100224X">our study</a>, we combined each person’s frequencies into a single <em>happiness score</em> to see how it changed between 2001 and 2019 in relation to household income.</p>
<p>When people were asked to consider how often they experienced different emotions in the past month, rather than how satisfied they are with their life in general, the average happiness score peaked in 2009 and has declined every year since 2012.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/429661/original/file-20211101-19-1akyflf.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/429661/original/file-20211101-19-1akyflf.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=429&fit=crop&dpr=1 600w, https://images.theconversation.com/files/429661/original/file-20211101-19-1akyflf.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=429&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/429661/original/file-20211101-19-1akyflf.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=429&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/429661/original/file-20211101-19-1akyflf.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=539&fit=crop&dpr=1 754w, https://images.theconversation.com/files/429661/original/file-20211101-19-1akyflf.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=539&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/429661/original/file-20211101-19-1akyflf.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=539&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Household income and life satisfaction have been stable in Australia since 2009, while happiness has been decreasing.</span>
<span class="attribution"><span class="source">HILDA survey</span></span>
</figcaption>
</figure>
<h2>What did we find?</h2>
<p>The change point at which the happiness of most Australians no longer strongly depends on income has almost doubled from A$43,000 to A$74,000.</p>
<p>At the same time, the median income has lingered at less than A$50,000 per year since 2009. </p>
<p>The number of Australians on an income below this change point has increased from around 60% to 74%.</p>
<p>These changes have taken place after adjusting for inflation and cost-of-living increases. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/430696/original/file-20211108-10121-109l8gj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/430696/original/file-20211108-10121-109l8gj.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=429&fit=crop&dpr=1 600w, https://images.theconversation.com/files/430696/original/file-20211108-10121-109l8gj.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=429&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/430696/original/file-20211108-10121-109l8gj.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=429&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/430696/original/file-20211108-10121-109l8gj.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=539&fit=crop&dpr=1 754w, https://images.theconversation.com/files/430696/original/file-20211108-10121-109l8gj.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=539&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/430696/original/file-20211108-10121-109l8gj.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=539&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Average happiness has declined as the population below the income change point has increased.</span>
<span class="attribution"><span class="source">HILDA survey</span></span>
</figcaption>
</figure>
<h2>So what does this trend over time mean?</h2>
<p>Our work shows someone living in the average Australian household earning A$50,000 in 2001 and the equivalent amount in 2019 (adjusted for inflation) has become much less happy over the past two decades.</p>
<p>On the other hand, the happiness of people living in a wealthier household (for example, $80,000 per household) has been largely preserved.</p>
<p>Over the first two decades of this millennium, more and more Australians’ happiness has become dependent on their income, despite high life satisfaction ratings and stable income inequality across households.</p>
<p>These measures of economic well-being and equity, typically published by economic wonks and government policy-makers, aren’t revealing potentially important changes in the underlying marginal return on income across the Australian economy.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/so-many-in-the-west-are-depressed-because-theyre-expected-not-to-be-79672">So many in the West are depressed because they're expected not to be</a>
</strong>
</em>
</p>
<hr>
<p>Income by itself doesn’t explain a large proportion of the variance in happiness, only around 5% (ranging between 1.6% to 14.8% in our study). But it’s still concerning because across the entire population these small changes can be expected to accumulate.</p>
<p>Australians’ happiness is becoming more sensitive to income as the change point has increased. At the same time, incomes are stagnating and happiness levels are declining, which is likely to drive further inequities in well-being between the rich and poor in Australia.</p>
<p>As Australia heads into a post-COVID world and deals with the economic after-effects of the pandemic, our government and its advisers need to pay attention to more than GDP and growth, and ask whether the distribution of well-being and happiness is improving for everyone.</p><img src="https://counter.theconversation.com/content/170877/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nick Glozier receives funding from the Australian Research Council's Centre of Excellence for Children and Families over the Life Course (Project ID CE200100025).</span></em></p><p class="fine-print"><em><span>Richard Morris does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The change point at which the happiness of most Australians no longer strongly depends on income has almost doubled from A$43,000 to A$74,000.Richard Morris, Research scientist, University of SydneyNick Glozier, Professor of Psychological Medicine, BMRI & Disciplne of Psychiatry, University of SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1700842021-10-27T12:19:23Z2021-10-27T12:19:23ZCollege cost calculators aren’t precise, but they could easily be made better<figure><img src="https://images.theconversation.com/files/428340/original/file-20211025-27-1lhhjxy.jpg?ixlib=rb-1.1.0&rect=22%2C0%2C4920%2C3570&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">College expenses determined by net price calculators can vary by an average of $5,700.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/mixed-race-mother-and-daughter-using-laptop-royalty-free-image/476803847?adppopup=true">Ariel Skelley/DigitalVision via Getty Images Plus</a></span></figcaption></figure><p>The best way to figure out how much you have to pay for college is not to go by the sticker price. Instead, it’s to go by a college’s net price, which is often much lower. That’s because the net price tells you how much you have to pay to attend a particular school after you get your financial aid.</p>
<p>So why would anyone go by the sticker price when they could go by the more accurate net price? The main reason is that the net price is often unknown until after you get a college offer letter. These offer letters spell out how much financial aid you can expect.</p>
<p>One way to speed up how fast you can calculate the net price for a school is to use an online tool called a <a href="https://collegecost.ed.gov/net-price">net price calculator</a>. As its name suggests, a net price calculator is meant to give you a better sense of the actual price you have to pay to go to a particular college. The net price calculator does this by providing a more individualized price estimate based on you or your family’s financial circumstances.</p>
<p>You might think all net price calculators are created equal. As researchers who study the <a href="https://scholar.google.com/citations?user=q98teuMAAAAJ&hl=en&oi=ao">economics</a> of <a href="https://scholar.google.com/citations?user=PVTM08QAAAAJ&hl=en&oi=ao">higher education</a>, we can tell you they are not.</p>
<p>In a 2021 peer-reviewed study, we found that the prices determined by net price calculators <a href="https://doi.org/10.1162/edfp_a_00353">vary by an average of US$5,700 per student</a> for students from families with the same or similar economic situations. That means the price determined by a net price calculator can be off by plus or minus $5,700. That’s pretty significant because – over the course of four years – that adds up to $22,800 and can determine whether and how much you need to borrow in student loans.</p>
<h2>Differences in calculators</h2>
<p>Some net price calculators are <a href="https://doi.org/10.1177%2F0895904819867398">more user-friendly</a> than others.</p>
<p>Some of them ask students to provide financial information that is <a href="https://files.eric.ed.gov/fulltext/ED611240.pdf">hard to access</a>. For others, the calculators might provide cost of attendance information – as well as grant aid information – that <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2555051">could be outdated</a>.</p>
<p>Since all net price calculators don’t work the same way, it can also be <a href="https://files.eric.ed.gov/fulltext/ED611240.pdf">hard to compare</a> prices from different schools.</p>
<p>The U.S. Department of Education provides a free <a href="https://nces.ed.gov/ipeds/netpricecalculator/#/">net price calculator template</a>. It doesn’t require that much information, and most student users can provide the information on their own. </p>
<h2>Proposed improvements</h2>
<p>There’s a bill in Congress that aims to improve net price calculators. It’s called the <a href="https://www.congress.gov/bill/117th-congress/senate-bill/1448?r=45&s=1">Net Price Calculator Improvement Act</a>. </p>
<p>Introduced in April 2021 by Sen. Charles “Chuck” Grassley, a Republican from Iowa, the bill would create a minimum set of requirements for net price calculators. It would also allow for the U.S. Department of Education to create a universal net price calculator that would have students answer one set of questions and get net price estimates for several schools.</p>
<p>The bill has only a <a href="https://www.govtrack.us/congress/bills/117/s1448">3% chance of becoming law</a>, according to a website that scores bills based on their chances of being passed.</p>
<p>The federal net price calculator template requests information about a student’s household income. This is reportable in increments of $10,000 that range from $30,000 to $99,999. It also asks what your family size is, whether you plan to live in a college dorm or off-campus and how many family members are in college. This in turn allows the federal template net price calculator to generate identical financial aid estimates for similar students attending the same postsecondary institution. However, actual aid awards may be very different.</p>
<h2>In search of a fix</h2>
<p>Since figuring out financial aid is <a href="https://www.sciencedirect.com/science/article/pii/S0272775716301248?casa_token=JCWaXtmINpAAAAAA:QnNtKnhx-2HwG2fVDMHioEj1pGC6tcTGe-py8XGnTjvdkmwp2sNSQjeLcJ1dIgyexFYVQO_exQ">not easy to do</a>, we identified three simple changes that would make the federal net price calculator template more accurate.</p>
<h2>1. High school GPA</h2>
<p>Even though a lot of colleges and universities award merit-based aid – basically scholarships – the current template does not request any academic information. A simple change like asking students for their high school GPA could help better predict merit-based grants. On the user-facing side of the calculator, students would just enter their GPA. On the back end, where colleges enter their aid information, colleges could set up GPA requirements for students to get various scholarships offered through the school.</p>
<h2>2. Anticipated financial aid application timing</h2>
<p>Different colleges have <a href="https://studentaid.gov/articles/know-your-fafsa-deadlines/">different deadlines</a> for financial aid from within. If net price calculators could capture the date when a student plans to apply for financial aid, the calculator could include only aid the student would be eligible to receive. For example, if a student submits an application after a college’s institutional aid deadline but before a state or federal deadline, then the school’s calculator would include only state and federal aid in the net price estimate.</p>
<h2>3. Expanded income bracket</h2>
<p>The current income categories top out at $99,999, meaning that a family earning $100,000 is treated identically to a family earning 10 times that amount. An additional option of $100,000-$150,000 would help to distinguish upper-middle-income families from upper-income families. According to table A-2 on <a href="https://www.census.gov/data/tables/2021/demo/income-poverty/p60-273.html">this Census website</a>, 15.3% of the 129.9 million households in the U.S. – or 19.9 million households – have incomes between $100,000 and $150,000.</p>
<p>The average undergraduate student from a family with a household income between $100,000 and $150,000 receives more than $4,400 in grant aid. This is according to a <a href="https://nces.ed.gov/surveys/npsas/">National Postsecondary Student Aid Study</a> from 2016 – the most recent data available.</p>
<h2>Better estimates</h2>
<p><a href="https://doi.org/10.1162/edfp_a_00353">Our study</a> included 7,600 students at 900 different colleges and universities. We had an even mix of public and private colleges. </p>
<p>We found that information collected on the current version of the federal template net price calculator accounts for 70% of the variation in actual aid awards for students attending the same university. In other words, the inputs these calculators require can account for 70 cents of every dollar in aid awarded.</p>
<p>Our proposed changes can help net price calculators do a better job of estimating aid for similar students. With these additions, we found that the information that net price calculators use would predict 86 cents of each dollar in aid awarded.</p>
<p>Even if these changes were adopted, there would still be a lot of variation in the prices determined by net price calculators. The variation changes based on the type of college in question. For instance, at private, four-year institutions, amounts varied by nearly $11,000. By contrast, within community colleges, it was about $2,400.</p>
<p>Taking these figures into account, a federal net price calculator template could also help prospective students estimate high and low ends of their expected grant awards.</p>
<p>Our proposed modifications are straightforward to implement and require only basic information from student users. They also allow for a universal federal template that colleges and universities can adapt to their own financial aid award processes.</p>
<p>As Congress considers legislation to improve how net price calculators look and function, keeping the tool simple to use is one of the most important aspects to consider. Choosing a college is among the most consequential financial decisions that students and their families will ever make. More accurate and easy-to-use tools should make the decision easier than it would otherwise be.</p><img src="https://counter.theconversation.com/content/170084/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Net price calculators – online tools meant to estimate what students will actually pay for college – can produce varying results for students in similar economic situations, researchers find.Aaron Anthony, Director of Operations, Institute for Learning, University of PittsburghLindsay Page, Adjunct associate, Brown UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1628452021-06-29T15:35:03Z2021-06-29T15:35:03ZWhy efforts by Côte d’Ivoire and Ghana to help cocoa farmers haven’t worked<figure><img src="https://images.theconversation.com/files/408344/original/file-20210625-14-21a4xy.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">West African cocoa farmers are largely poor despite the value of their crop</span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Cocoa_farmer_David_Kebu_Jnr_holding_the_finished_product,_dried_cocoa_beans_ready_for_export._(10687070725).jpg">Irene Scott/Wikimedia Commons</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>A <a href="https://www.voicenetwork.eu/wp-content/uploads/2019/09/190905-VOICE-Position-on-West-African-Cocoa-Floor-Price.pdf">cocoa pricing agreement</a> designed to protect farmers in Côte d’Ivoire and Ghana from destitution is <a href="https://www.reuters.com/article/ivorycoast-ghana-cocoa-idUSL5N2O3518">being circumvented</a> by multinationals, the main buyers of cocoa beans. </p>
<p>Cocoa is the plant from which chocolate is made. Côte d’Ivoire and Ghana together account for <a href="https://www.statista.com/statistics/263855/cocoa-bean-production-worldwide-by-region/">65% of global cocoa production</a>, but farmers in these two countries earn less than <a href="https://theconversation.com/ghanas-cocoa-farmers-are-trapped-by-the-chocolate-industry-124761">6% of the chocolate industry’s total revenue</a>.</p>
<p>The cocoa bean value chain has five major segments. The first is cocoa bean production, which involves local farmers. The second is sourcing and marketing, which involves local and international traders and exporters of cocoa beans and semi-processed products. The third is processing, which involves grinders and chocolate manufacturers. The fourth is distribution, which involves retailers. And finally, there are the consumers. </p>
<p>Cocoa growers’ share of the final product has reduced over the years as traders, brands and retailers have taken a bigger cut. For example, according to <a href="https://www.fairtrade.org.uk/wp-content/uploads/legacy/Cocoa-commodity-briefing-6May16.pdf">Fairtrade</a>, when cocoa prices were high in the 1970s, cocoa accounted for up to 50% of the value of a chocolate bar. This fell to 16% in the 1980s and today farmers receive around 6% of the value. Cocoa farmers in Ghana now make roughly $1 a day (this often includes being subsidised by the Ghanaian government). Those in Côte d’Ivoire make <a href="https://www.weforum.org/agenda/2020/11/cocoa-chocolate-supply-chain-business-bar-africa-exports/">around</a> $0.78 a day.</p>
<p>The living-income differential <a href="https://www.voicenetwork.eu/wp-content/uploads/2019/09/190905-VOICE-Position-on-West-African-Cocoa-Floor-Price.pdf">programme</a>, launched last year, was designed by both countries to help cocoa farmers escape poverty by adding a premium to the prevailing market price. But only a month after the launch of the programme, <a href="https://www.reuters.com/world/africa/ivory-coast-says-chocolate-traders-failing-pay-farmers-living-wage-premium-2021-06-18/">authorities in the two countries disclosed</a> that confectionery multinationals were refusing to pay farmers the agreed living wage. </p>
<p>The US multinational <a href="https://www.reuters.com/world/africa/ivory-coast-says-chocolate-traders-failing-pay-farmers-living-wage-premium-2021-06-18/">Mondelz</a>, for instance, was recently accused of paying a negative country differential. Last year another US firm, <a href="https://www.confectionerynews.com/Article/2020/11/23/Hershey-move-of-buying-cocoa-on-futures-market-threatens-LID-agreement-with-Ghana-and-Cote-d-Ivoire">Hershey</a>, bought from futures exchanges to avoid paying the differential and other companies are changing their buying patterns as well. </p>
<p>I have <a href="https://www.academia.edu/36081141/Sustainability_winners_and_losers_in_business-_biased_cocoa_sustainability_programmes_in_West_Africa">studied the relationship</a> between growers in the two countries and global buyers in <a href="https://theconversation.com/ghanas-cocoa-farmers-are-trapped-by-the-chocolate-industry-124761">previous articles</a>. As it is currently structured, the living-income differential programme is sending the wrong signal to cocoa farmers. And multinational buyers will benefit from it at the expense of farmers.</p>
<h2>The main problem</h2>
<p>Just before the October 2020 cocoa growing season, Ghana <a href="https://www.reuters.com/article/cocoa-ghana-idUSL5N2GL5J1">announced</a> that the guaranteed sum paid to cocoa farmers would increase by 28% per tonne for the new growing season. Côte d’Ivoire implemented a 21% increase in the price of the main crop of the 2020/2021 season. </p>
<p>These announcements were part of the living-income differential programme, which made headlines in 2019 when the two countries came together to form an agreement to provide a living wage to more than a million small scale cocoa farmers.</p>
<p>On the surface, the agreement looked like a cartel; it was even dubbed “COPEC”, a snide reference to the oil exporting cartel OPEC. But there are many problems with this arrangement. Both Ghana and Côte d’Ivoire were betting on the willingness of multinational companies to exhibit compassion by declaring their support. Instead of restricting supply to increase prices, the mechanism simply adds a premium of $400 per tonne to prevailing world market prices (which are mainly affected by the amount of cocoa in the market), without addressing market leakages and the effect of the premium on both world market prices and future supplies.</p>
<p>Unsurprisingly, there has been a general decrease in demand since the programme was launched, along with reports of confectionery multinationals’ buying indirectly to avoid the premium. Hershey openly diversified its cocoa sources the moment the living income differential came online. Other confectionery multinationals are doing the same indirectly, because the official demand is now significantly lower than in previous years. Multinationals are blaming this on the effect of COVID-19 on cocoa demand. </p>
<p>However, this explanation could be an excuse, because there is some evidence that confectionery sales have actually increased during <a href="https://www.theguardian.com/business/2020/oct/31/chocolate-sales-soar-uk-shoppers-comfort-eat-at-home-covid">the lockdown</a>. Both Ghana and Côte d’Ivoire are likely to have a great deal of unsold cocoa at the end of the season, which will further reduce the market price.</p>
<p>Indeed, the Ivorian government has already announced a reduction of producer prices by 9% <a href="https://www.confectionerynews.com/Article/2021/04/19/Cote-d-Ivoire-lowers-guaranteed-price-paid-to-its-cocoa-farmers-while-demanding-more-output">by April 2021</a>; Ghana may not follow suit but the <a href="https://www.bloomberg.com/news/articles/2021-06-21/biggest-cocoa-harvest-in-decade-spurs-record-debt-sales-by-ghana">debt incurred by the Cocoa Board</a> could well increase. Both countries <a href="https://www.confectionerynews.com/Article/2021/06/24/Ghana-and-Cote-d-Ivoire-launch-new-threats-to-cocoa-companies-over-LID-payments">have promised</a> to name and shame companies that are not complying with the payments.</p>
<p>The obvious problem with the differential is that it is bound to increase cocoa supply (because more farmers will move into cocoa production) and reduce demand through official channels. Both outcomes will further increase the supply of cocoa and drive prices downward. The $400 premium or more could be wiped out of cocoa prices as a result of the extra supply that the programme creates.</p>
<p>One bargaining position available to African countries is to exclude from sustainability programmes any firms that fail to comply with the programme. Multinationals claim that sustainability programmes are for the good of farmers, but they actually perform practical commercial functions such as guaranteeing supply and giving certain firms the stamp of ethical sourcing needed to placate environmental and humanitarian groups and possibly avoid lawsuits. </p>
<h2>Solving the problem</h2>
<p>One solution to the above problem, which both Ghana and Côte d’Ivoire are trying to solve, is to control and restrict supply instead of simply adding a price premium.</p>
<p>In 1987, when <a href="https://www.latimes.com/archives/la-xpm-1989-07-12-mn-3402-story.html">cocoa prices collapsed</a>, the then president of Côte d’Ivoire, Félix Houphouët-Boigny, responded by implementing a withholding scheme. The country then controlled roughly 40% of the market. However, this was not enough to control cocoa prices. <a href="https://www.jstor.org/stable/160925?seq=1#metadata_info_tab_contents">Scholars</a> have often suggested that Houphouët-Boigny failed to control cocoa prices in the 1980s because new supplying countries (such as Malaysia) made up for the shortfall. </p>
<p>Restricting supply is the one sure way to influence price. However, this measure must be implemented differently from Houphouët-Boigny’s rash decision in 1987. Together, Ghana and Côte d’Ivoire control 65% of the world cocoa market; they would only need to team up with three other countries (Indonesia, Nigeria and Cameroon) to gain a share large enough to fully control cocoa prices. </p>
<p>However, given the current structure of the sector in both countries, this would be difficult to achieve for two reasons. First, the IMF has already liberalised the marketing system in both countries, so what Houphouët-Boigny did in 1987 would now be almost impossible. The second, and perhaps most important, reason is that the so-called sustainability programmes organised by multinationals in both countries are in effect productivity programmes, in that they are structured to increase production and supply. Hence, they are inimical to any attempt to control supply.</p><img src="https://counter.theconversation.com/content/162845/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael E Odijie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Ghana and Côte d'Ivoire’s best option is to control and restrict supply instead of simply adding a price premium.Michael E Odijie, Research associate, UCLLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1519452020-12-16T13:24:04Z2020-12-16T13:24:04ZFooting the COVID-19 bill: economic case for tax hike on wealthy<figure><img src="https://images.theconversation.com/files/374595/original/file-20201213-20-1760vw0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Sheila Fitzgerald / Shutterstock.com</span></span></figcaption></figure><p>Governments shouldn’t be worried that raising taxes on the rich will harm their economies when deciding on how to pay for COVID-19. Our <a href="http://eprints.lse.ac.uk/107919/">new research</a>, which has yet to be peer reviewed, on 18 advanced economies shows that major tax cuts for the rich over the past 50 years have pushed up inequality but have had no significant effects on economic growth or unemployment. </p>
<p>These findings shed new light on a debate that has long divided policymakers, with one side claiming higher taxes on the rich could raise revenue and reduce inequality, and the other arguing that low taxes on the rich are the best route to wider <a href="https://www.theguardian.com/us-news/2017/dec/16/donald-trump-republican-tax-cuts-us-economy-rock">economic prosperity</a>.</p>
<p>The data suggests that low taxes on the rich bring economies little benefit, and this suggests there is a strong economic case for raising taxes on the rich to help repair public finances following the pandemic.</p>
<p>As the COVID-19 pandemic is putting government finances under pressure worldwide, higher taxes on the rich are back on the political agenda. In the US, the president-elect, Joe Biden, has promised to <a href="https://www.cnbc.com/2020/11/10/heres-whats-ahead-for-president-elect-bidens-tax-plan.html">raise taxes on top income earners and corporations</a>. Voices demanding a wealth tax have also become louder in the <a href="https://blogs.lse.ac.uk/businessreview/2020/12/09/is-it-time-for-a-wealth-tax-to-offset-the-economic-damage-from-covid-19/">UK</a> and <a href="https://theconversation.com/how-a-one-off-tax-on-wealth-could-cover-the-economic-cost-of-the-coronavirus-crisis-137677">Germany</a>. Given the damage the pandemic has done to economies, the notion of getting the most affluent to help foot the bill is one that has many supporters. But once again this is being countered by those who insist that low taxes are crucial for stimulating the economy.</p>
<p>Such arguments about the efficiency advantages of low taxes on the rich have been powerful drivers of previous tax cuts. The graph below shows <a href="https://www.taxrich.uk/data">a new comprehensive indicator</a> that measures taxes on the rich across countries and over time by combining the most important taxes on the rich including taxes on top incomes, capital and inheritances. Since the 1980s, many countries have legislated major tax cuts for the rich. For instance, the two Reagan tax cuts in the US reduced top rate taxes substantially in 1982 and 1987. In the UK, taxes on the rich dropped significantly under the Thatcher administration, with major tax cuts in 1979 and 1988.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/374495/original/file-20201211-20-b6tw65.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/374495/original/file-20201211-20-b6tw65.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/374495/original/file-20201211-20-b6tw65.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=381&fit=crop&dpr=1 600w, https://images.theconversation.com/files/374495/original/file-20201211-20-b6tw65.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=381&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/374495/original/file-20201211-20-b6tw65.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=381&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/374495/original/file-20201211-20-b6tw65.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=479&fit=crop&dpr=1 754w, https://images.theconversation.com/files/374495/original/file-20201211-20-b6tw65.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=479&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/374495/original/file-20201211-20-b6tw65.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=479&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Note: Vertical red lines show years with major tax cuts for the rich.</span>
<span class="attribution"><span class="source">Author provided</span></span>
</figcaption>
</figure>
<p>Falling taxes on the rich have coincided with a period of rising inequality, especially at the top of the income distribution as the graph below shows. This trend has been most severe in the Anglo-Saxon countries. The US really stands out, with over one-fifth of pre-tax national income now going to the richest 1% of individuals.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/374497/original/file-20201211-22-mqmlwh.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/374497/original/file-20201211-22-mqmlwh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/374497/original/file-20201211-22-mqmlwh.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=380&fit=crop&dpr=1 600w, https://images.theconversation.com/files/374497/original/file-20201211-22-mqmlwh.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=380&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/374497/original/file-20201211-22-mqmlwh.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=380&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/374497/original/file-20201211-22-mqmlwh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=477&fit=crop&dpr=1 754w, https://images.theconversation.com/files/374497/original/file-20201211-22-mqmlwh.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=477&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/374497/original/file-20201211-22-mqmlwh.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=477&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">World Inequality Database, wid.world (data accessed 10 July 2020)</span></span>
</figcaption>
</figure>
<h2>Few economic benefits of low taxes on the rich</h2>
<p>Our research compared countries that passed laws for major tax cuts in a given year with those that didn’t. For example, we looked at economic outcomes in Australia following the 1987 tax reform and the USA following the 1982 tax cuts and compare them to economic outcomes in countries that did not cut taxes on the rich at the same time (the results are in the graph below). We repeated such comparisons for each major tax cut for the rich in 18 Organisation for Economic Co-operation and Development (OECD) member countries from 1965 to 2015.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/374490/original/file-20201211-23-n797us.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/374490/original/file-20201211-23-n797us.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/374490/original/file-20201211-23-n797us.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=330&fit=crop&dpr=1 600w, https://images.theconversation.com/files/374490/original/file-20201211-23-n797us.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=330&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/374490/original/file-20201211-23-n797us.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=330&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/374490/original/file-20201211-23-n797us.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=415&fit=crop&dpr=1 754w, https://images.theconversation.com/files/374490/original/file-20201211-23-n797us.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=415&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/374490/original/file-20201211-23-n797us.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=415&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Note: Red squares show years with major tax cuts for the rich, and blue squares show years without.</span>
<span class="attribution"><span class="source">Author provided</span></span>
</figcaption>
</figure>
<p>Our results show that countries that implemented major tax cuts saw the richest 1% increase their income share in the following years. Five years after reform, the effect was a more than 0.8 percentage points increase in the top 1% income share (see the graph below). As a comparison, in the US, the poorest 10% of income earners have a total income share of 1.8%. In contrast, we did not find any significant effect of tax cuts on economic growth and unemployment. Gross domestic product per capita and unemployment rates are nearly identical after five years in countries that cut taxes on the rich and in those that did not.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/374491/original/file-20201211-17-1j3cm87.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/374491/original/file-20201211-17-1j3cm87.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=262&fit=crop&dpr=1 600w, https://images.theconversation.com/files/374491/original/file-20201211-17-1j3cm87.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=262&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/374491/original/file-20201211-17-1j3cm87.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=262&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/374491/original/file-20201211-17-1j3cm87.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=329&fit=crop&dpr=1 754w, https://images.theconversation.com/files/374491/original/file-20201211-17-1j3cm87.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=329&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/374491/original/file-20201211-17-1j3cm87.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=329&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Note: Dark blue line shows the effect of major tax cut for the rich over time. 95% confidence area is shaded in light blue.</span>
<span class="attribution"><span class="source">Author provided</span></span>
</figcaption>
</figure>
<h2>The rich could pay the coronavirus bill</h2>
<p>Many analysts and policymakers believe that taxes will need to rise in the coming years to ensure the sustainability of public finances. Higher taxes on the rich could help to fund the substantial and <a href="https://theconversation.com/coronavirus-has-brought-the-welfare-state-back-and-it-might-be-here-to-stay-138564">potentially long-lasting</a> expansion of government spending and social protection seen during the pandemic. They could also help address health and economic inequalities, which have only been <a href="https://theconversation.com/the-coronavirus-pandemic-is-already-increasing-inequality-135992">exacerbated by COVID-19</a> and its economic fallout. </p>
<p>Such tax rises after crises are not unprecedented. Historically, the main drivers of taxes on the rich were <a href="https://theconversation.com/are-we-ready-to-raise-taxes-on-the-rich-history-says-no-57777">wars</a> and <a href="https://academic.oup.com/ser/advance-article-abstract/doi/10.1093/ser/mwz055/5704798">economic catastrophes</a>. The COVID-19 crisis might have a similar effect. </p>
<p>Our <a href="https://www.taxrich.uk/">recent research</a> shows that the economic case for low taxes on the rich is weak. Major tax cuts for the rich since the 1980s have <a href="https://theconversation.com/inequality-in-the-oecd-is-at-a-record-high-and-society-is-suffering-as-a-result-119962">worsened income inequality</a> without boosting economic performance. This might be welcome news for supporters of higher taxes on the rich in the wake of the pandemic.</p><img src="https://counter.theconversation.com/content/151945/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>We find low taxes on the rich bring economies little benefit. This suggests there is a strong economic case for raising taxes on the rich to help repair public finances following the pandemic.David Hope, Lecturer in Political Economy, King's College LondonJulian Limberg, Lecturer in Public Policy, King's College LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1512892020-12-14T19:06:43Z2020-12-14T19:06:43ZOur research shows more Australians receive unemployment payments than you think<figure><img src="https://images.theconversation.com/files/374143/original/file-20201210-24-x7dx38.jpg?ixlib=rb-1.1.0&rect=24%2C73%2C5095%2C3555&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Kelly Barnes/AAP</span></span></figcaption></figure><p>Australians receiving unemployment payments are often <a href="https://insidestory.org.au/them-and-us-the-enduring-power-of-welfare-myths/">negatively portrayed</a> as a relatively small group of people with personal or behavioural problems that stop them from getting a job. </p>
<p>The unparalleled growth in unemployment during COVID-19 has opened up significant space to challenge long-held perceptions of “them and us” when it comes to welfare. </p>
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Read more:
<a href="https://theconversation.com/whos-really-behaving-badly-confronting-australias-cashless-welfare-card-151847">Who's really behaving badly? Confronting Australia’s cashless welfare card</a>
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</p>
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<p>Nevertheless, extra support to Australia’s unemployed has already been <a href="https://theconversation.com/unemployment-support-will-be-slashed-by-300-this-week-this-wont-help-people-find-work-146289">substantially wound back</a> — with plans to <a href="https://www.sbs.com.au/news/some-330-000-more-australians-will-fall-into-poverty-when-coronavirus-supplement-is-cut-modelling-warns">do so again</a> by the end of the year. </p>
<p>Our <a href="http://library.bsl.org.au/jspui/bitstream/1/12353/1/Bowman_et_al_Everyone_counts_Newstart_Allowance_Dec2020.pdf">new study</a>, by a team at the Brotherhood of St Laurence, RMIT University and the Australian National University, highlights significant misunderstandings about the scale and scope of Australians who received Newstart — the unemployment payment <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/rp1920/Quick_Guides/JobSeekerPayment">replaced by JobsSeeker Payment</a> earlier this year.</p>
<p>Bottom line? It’s much more common to get the payment than you think. </p>
<h2>‘Everyone counts’: our research</h2>
<p>This <a href="https://www.bsl.org.au/research/publications/everyone-counts/">study</a> makes use of <a href="https://www.aihw.gov.au/about-our-data/our-data-collections/department-of-social-services-data-over-multiple-i">a Department of Social Services
database</a> that records every interaction with Centrelink. This is the first time results from this database have been published by independent researchers.</p>
<p>It has given us an important opportunity to track how people have used unemployment payments — specifically Newstart Allowance — from 2001 to 2016 (the years available for study). </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/forget-jobseeker-in-our-post-covid-economy-australia-needs-a-liveable-income-guarantee-instead-141535">Forget JobSeeker. In our post-COVID economy, Australia needs a 'liveable income guarantee' instead</a>
</strong>
</em>
</p>
<hr>
<p>We took a simple but new approach: to count every individual who ever received Newstart between those years.</p>
<p>Most statistics on the number of people receiving payments are reported as the “stock”, which is the number of recipients on a specific date in that year. With these new data, we are able to measure the “flow”, which is the number of people who ever received a payment during the course of each year, as well as over the whole period since 2001.</p>
<p>Our analysis is part of broader research that aims to gain a clearer understanding of the dimensions of “income volatility” (sudden changes in income) in Australia.</p>
<h2>How many people receive payments?</h2>
<p>We found receiving unemployment payments was much more common than previously thought during the study period.</p>
<p>For example, between 2013 and 2016, the number of people receiving Newstart at the end of the financial year ranged between 660,000 and 750,000. But over the course of each of those years, well over 1.1 million separate individuals received an unemployment payment. </p>
<p>This suggests approximately one in 11 people (9%) in the labour
force received Newstart in any of these years.</p>
<p>Overall, when we look at the “flow” figures, more than 4.4 million people received Newstart between 2001 and 2016 (nearly 2.5 million men and 2 million women). This is nearly one quarter of the qualified working-age population over this period. </p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/374343/original/file-20201211-15-134gorc.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><span class="source">Author provided/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<hr>
<p>We also found the proportion of women receiving Newstart
increased from 30% in 2001 to 46% in 2016. In part this reflects <a href="https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Budget_Office/Publications/Research_reports/JobSeeker_Payment">policy changes</a> that predominantly affected women, such as
restricting access to parenting payments and the increase in the Age Pension age for women.</p>
<h2>Time spent on welfare varies</h2>
<p>There is a widely-held view that many unemployed people rely on the payment for a <a href="https://www.acoss.org.au/wp-content/uploads/2019/11/SurvivingNotLiving.pdf">long time</a>. But our analysis provides a mixed picture on this point.</p>
<p>Nearly half of the Newstart population of 4.4 million (47%) received the payment for less than a year. Over two-thirds (68%) received it for less than two years. </p>
<p>So this would appear to contradict the idea most people rely on it long-term. However, it remains important to recognise that a significant minority still do.</p>
<p>At the other extreme, around 15% were on the payment for a total of five or more years. About 3.6% had been on it for ten or more years.</p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=871&fit=crop&dpr=1 600w, https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=871&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=871&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1095&fit=crop&dpr=1 754w, https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1095&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/374352/original/file-20201211-23-1dav7if.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1095&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><span class="source">Author provided/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<hr>
<p>Between the two extremes — people who had only one short period on Newstart and people who spent most of these years on it — there are a multitude of differing patterns. This reflects both the ups and downs of the Australian labour market and the volatile circumstances experienced by many working-age Australians.</p>
<h2>Dramatic rise in payment suspensions</h2>
<p>Fluctuating income is a <a href="https://journals.sagepub.com/doi/full/10.1177/0003122418823184">key cause</a> of household financial and emotional stress. It can affect well-being as much as (if not more than) low wages.</p>
<p>For people receiving an income support payment,
the disruption caused by uncertain income is even worse — even a day’s delay in payment can have major consequences when it comes to paying bills or rent. </p>
<p>People on Newstart (now JobSeeker) can have their payments suspended either for not <a href="https://www.servicesaustralia.gov.au/individuals/services/centrelink/jobseeker-payment/how-report-and-manage-your-payment">reporting their income</a> correctly or not meeting <a href="https://www.servicesaustralia.gov.au/individuals/topics/mutual-obligation-requirements/29751">job-seeking requirements</a>. Successive governments have increasingly sought to <a href="https://journals.sagepub.com/doi/10.1177/0095399719839362">enforce</a> this — which has led to more uncertainty around the payment.</p>
<p>Our study found rates of suspension increased dramatically over the study period, from 2% in 2001 to 11% to 2016. Of those who were suspended, the likelihood of experiencing multiple suspensions increased from 2.3% to 14%. </p>
<hr>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=445&fit=crop&dpr=1 600w, https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=445&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=445&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=560&fit=crop&dpr=1 754w, https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=560&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/374348/original/file-20201211-16-st0xgf.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=560&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="attribution"><span class="source">Author provided/The Conversation</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
</figcaption>
</figure>
<hr>
<p>Women were more likely to have been suspended on multiple
occasions than men. In 2016, 12.7% of the 556,000 women who received Newstart were suspended, compared to 9.8% of the 653,000 men.</p>
<h2>Social security is not a ‘marginal’ issue</h2>
<p>The biggest lesson of our study is that the idea social security payments are confined to a group of unfortunate individuals and families living at the margins of society is incorrect. </p>
<p>Our findings show how short-term reliance on unemployment benefits is relatively common. Social security, like healthcare and education, should be viewed as a core part of mainstream Australian life. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/when-the-coronavirus-supplement-stops-jobseeker-needs-to-increase-by-185-a-week-138417">When the Coronavirus Supplement stops, JobSeeker needs to increase by $185 a week</a>
</strong>
</em>
</p>
<hr>
<p>Our insights also demonstrate that while longer-term reliance on Newstart is an important policy issue, short-term reliance is underestimated. They also shed new light on the increasing share of recipients — especially women — who are facing irregular payments due to suspensions.</p>
<p>Along with ongoing concerns about the <a href="https://theconversation.com/when-the-coronavirus-supplement-stops-jobseeker-needs-to-increase-by-185-a-week-138417">adequacy</a> of income support payments - highlighted once again by a recent <a href="https://apo.org.au/sites/default/files/resource-files/2020-04/apo-nid303530.pdf">Senate inquiry</a>, as well as by business groups like the <a href="https://www.smh.com.au/politics/federal/retail-groups-warn-cutting-back-jobseeker-could-hit-employment-20200810-p55ka5.html">Australian Retailers Association</a> — this raises questions about the extent to which the Australian social security system is effectively fulfilling its <a href="https://www.data.gov.au/organisations/org-dga-f7696dc3-e407-4c5f-bfaa-1f6d9ef37f17">stated mission</a>, </p>
<blockquote>
<p>to improve the lifetime well-being of individuals and families.</p>
</blockquote><img src="https://counter.theconversation.com/content/151289/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Whiteford has received funding from the Australian Research Council and the Department of Social Services. He is a Policy Advisor to the Australian Council of Social Service and a Fellow of the Centre for Policy Development.</span></em></p><p class="fine-print"><em><span>Ashton de Silva has in recent times received funding from the Australian Housing Urban Research Institute (related to a different project). Further, he has received grants from several firms in the private sector albeit unrelated to this particular project as well as organisations such as the CPA and Regional Australia Institute. In addition, he has been engaged by government bodies including the Australian Tax Office and the Australian Securities Investment Commission.</span></em></p><p class="fine-print"><em><span>Dina Bowman is a Principal Research Fellow in the Brotherhood of St Laurence's Research and Policy Centre. Her current research is supported by philanthropic funding to the Brotherhood of St Laurence - including donations from ANZ.</span></em></p><p class="fine-print"><em><span>Marcus Banks is a casual researcher at RMIT University in the School of Economics, Finance and Marketing. He is an active NTEU Delegate and supports campaigns by the Australian Unemployed Workers Union. He has received funding from the Australian Housing and Urban Research Institute and the Australian Securities Investment Commission.</span></em></p><p class="fine-print"><em><span>Zsuzsanna Csereklyei has in the past received funding from the Australian Housing Urban Research Institute, and the Australian Government, Department of Foreign Affairs and Trade (related to different projects). </span></em></p>A new study highlights significant misunderstandings about the scale and scope of Australians who receive unemployment payments.Peter Whiteford, Professor, Crawford School of Public Policy, Australian National UniversityAshton De Silva, Associate Professor of Economics, RMIT UniversityDina Bowman, Principal Research Fellow, Research & Policy Centre, Brotherhood of St Laurence, and Honorary Principal Fellow, The University of MelbourneMarcus Banks, Social policy and consumer finance researcher, School of Economics, Finance and Marketing, RMIT UniversityZsuzsanna Csereklyei, Lecturer in Economics, RMIT UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1469132020-11-17T13:24:49Z2020-11-17T13:24:49ZNearly two-thirds of older Black Americans can’t afford to live alone without help – and it’s even tougher for Latinos<figure><img src="https://images.theconversation.com/files/369383/original/file-20201114-17-l5hul6.jpg?ixlib=rb-1.1.0&rect=60%2C0%2C6720%2C4184&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">When budgets get tight, health care can suffer.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/senior-black-woman-patting-the-family-dog-royalty-free-image/1190823862">Willie B. Thomas via Getty Images</a></span></figcaption></figure><p>Older Americans who want to live independently face serious economic challenges. Half who live alone <a href="https://scholarworks.umb.edu/demographyofaging/46/">don’t have enough income</a> to afford even a bare-bones budget in their home communities, and nearly 1 in 4 couples face the same problem. </p>
<p>Those numbers add up to at least 11 million older adults who are struggling to make ends meet, a new analysis shows.</p>
<p>The numbers are worse for older people of color. Dramatically higher percentages of Black, Latino and Asian older adults live on incomes that don’t meet their cost of living, even with Social Security. That can mean skipping needed health care, not having enough food, living in unhealthy conditions or having to move in with family. </p>
<p>These disparities often reflect lifelong disadvantages that add up as people of color encounter structural racism and discrimination that shape their ability to buy property and save for the future. </p>
<p><iframe id="opECI" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/opECI/4/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>To calculate realistic rates of economic insecurity and estimate the disparities, my colleagues <a href="https://www.umb.edu/demographyofaging/our_team/jan_mutchler">and I</a> used the <a href="http://elderindex.org/">Elder Index</a>, created by the University of Massachusetts Boston to measure the true cost of living for older adults. It tracks expenses for housing, health care, transportation, food and other basics, county by county. We paired the index with state-level income data to determine the percentage of people who don’t have enough income to cover their cost of living.</p>
<p>When we <a href="https://scholarworks.umb.edu/demographyofaging/46/">compared this information by race or ethnicity</a>, wide disparities in economic security became apparent. </p>
<h2>Disadvantages and stress add up</h2>
<p>The disadvantages people of color face can extend through their lifetimes and can pass on to future generations. </p>
<p>Not having access to high-quality education and training programs that prepare young people for stable and well-paying careers, for example, can result in people of color having lower incomes and accumulating less wealth. </p>
<p>The median net worth of U.S. white families is nearly <a href="https://www.federalreserve.gov/publications/files/scf20.pdf">eight times greater</a> than that of Black families, a gap due in part to whites receiving <a href="https://www.brookings.edu/blog/up-front/2020/02/27/examining-the-black-white-wealth-gap/">larger inheritances</a>. Social Security benefits, which are based on the person’s earnings, are also lower on average for people of color, with the typical older Black or Latino family receiving <a href="https://www.aarp.org/content/dam/aarp/ppi/2016-03/social-security-a-key-income-source-for-older-minorities-aarp-ppi.pdf">annual benefits about 24% lower</a> than what the typical non-Hispanic white family receives.</p>
<p>Black Americans are also <a href="https://www.urban.org/policy-centers/housing-finance-policy-center/projects/reducing-racial-homeownership-gap">less likely to own a home</a> than their white counterparts, which can reduce their ability to build wealth.</p>
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<p>Securing and protecting health into later life is also more challenging for many people of color. Exposure to unhealthy environments and poor access to health care result in health disparities that <a href="https://link.springer.com/article/10.1007/s11113-013-9273-x">ripple throughout life</a>. </p>
<p>Discrimination and bias in educational institutions, workplaces and health care settings, and throughout the community, can yield unfair outcomes and provoke health-damaging stress responses that persist for a lifetime. Moreover, a large number of older Latinos and Asians in the U.S. are immigrants. Although many have lived in the U.S. for decades, a sizable share arrived at an older age, and some may not have worked long enough in the U.S. to be eligible for Social Security benefits or safety-net programs that require citizenship. </p>
<p>These experiences accumulated over a lifetime can lead to starkly different levels of economic security for older adults based on race and ethnicity. </p>
<p><iframe id="uHiVq" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/uHiVq/9/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Where disparities run deepest</h2>
<p>We found that the rates of elder economic insecurity among people of color also vary among states. </p>
<p>Among older Black singles, rates of economic insecurity ranged from 46% in West Virginia to 80% in Rhode Island. States with the greatest levels of elder economic insecurity tended to be in the Deep South or the Northeast, generally reflecting areas of particularly low income or high costs. But older Black singles experienced greater rates of economic insecurity than older white singles in every state we analyzed.</p>
<p>The geographic differences are complex. </p>
<p>Nationally, the disparity between Black and white economic insecurity for singles is 17 percentage points – 64% of single Black seniors compared with 47% of single white seniors. But some states have far higher disparities. </p>
<p>For example, the economic insecurity difference between single Black and white seniors is 26 percentage points in both Mississippi and South Carolina, 29 in Rhode Island, and 39 in Washington, D.C. Between single Latino and white seniors, the disparity was 32 percentage points in both Texas and Massachusetts. The states with the highest disparities tend to have disproportionately high levels of economic insecurity among people of color, rather than unusually low levels of economic insecurity among their white counterparts. </p>
<p>These disparities didn’t just appear at later life but rather are structured by lifelong inequalities. More research will be required to fully understand the geographic patterns, but these inequalities are likely related to historical patterns of racism and to geographically distinct ways in which racial groups have become incorporated into local economies. </p>
<p><iframe id="x7aU1" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/x7aU1/8/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>How to help struggling seniors</h2>
<p>There are ways to help everyone build financial security for retirement. Investing in public education, ensuring fair access to well-paying and stable employment and promoting financial literacy about how to attain a secure retirement can help break the accumulation of disadvantage.</p>
<p>[<em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>.]</p>
<p>Today’s older adults who are struggling financially can’t go back, but there are several ways to help them now:</p>
<ul>
<li><p>Policies can promote affordable housing and affordable health care, which represent the biggest components of older Americans’ budgets. </p></li>
<li><p>Governments can promote mechanisms that allow people to keep working into later life, which allows people to continue generating income and building wealth, and also delays drawing down other income sources such as pensions or Social Security benefits. </p></li>
<li><p>Social Security and Medicare — the foundations of a secure retirement for millions of Americans — are essential for these groups. Older people of color <a href="https://www.aarp.org/content/dam/aarp/ppi/2016-03/social-security-a-key-income-source-for-older-minorities-aarp-ppi.pdf">rely more heavily</a> than their white counterparts on Social Security and are at heightened risk when these programs are threatened.</p></li>
<li><p>Making sure government assistance programs such as SNAP benefits for food and housing subsidies are accessible to the people who need them can also help. Ensuring access includes providing information in multiple languages and hiring outreach workers who understand the population’s needs.</p></li>
</ul>
<p>The scale of the economic insecurity we’ve measured among older adults of color shows how critical government support can be to people living near the financial edge. Their ability to live independently in later life may depend on it.</p><img src="https://counter.theconversation.com/content/146913/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jan Mutchler receives funding in support of the Elder Index from the RRF Foundation for Aging, The National Council On Aging; The Henry and Marilyn Taub Foundation; The Silver Century Foundation; and Gary and Mary West Foundation.</span></em></p>Elder economic insecurity is a problem for all races, but it’s far more common for people of color, particularly in certain states.Jan Mutchler, Professor, Department of Gerontology, McCormack Graduate School Director, Center for Social and Demographic Research on Aging, Gerontology Institute, UMass BostonLicensed as Creative Commons – attribution, no derivatives.