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Monday PM Daily | April 16, 2018
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Study: 1 in 3 Americans fall into financially fragile category
By Business Record Staff
Would an unexpected medical bill, car repair or other emergency set your household finances back considerably? If so, you may be among the 1 in 3 Americans considered to be
"financially fragile."
It’s a widespread problem affecting millions of Americans, according to a study just released by the National Endowment for Financial Education. Conducted by the Global Financial Literacy Excellence Center at George Washington University, the study found that 36 percent of Americans are financially fragile, meaning they are unable to cope with emergency expenses in a short time frame.
That number has dropped since 2009 during the Great Recession, when nearly 50 percent of working-age adults were considered financially fragile. Still, the prevalence of unsteady
personal finances is concerning, the researchers said.
"Financial fragility does not mean simply lack of precautionary savings," says Annamaria Lusardi, academic director of GFLEC. "Both sides of households’ balance sheet matter; heavy indebtedness can also make individuals financially fragile."
Researchers investigated the causes of financial fragility and found three main factors: high debt, lack of assets and low financial literacy.
Higher income does not always protect against financial fragility, the researchers found. Not surprisingly, the majority of financially fragile people are in the low-income bracket. Yet almost 30 percent of middle-income households (annual income in the $50,000-$75,000 range) and 20 percent of high-income households (annual income $75,000-$ $100,000) also are considered financially fragile.
Financial fragility is shown to make people vulnerable not only in the short term, but also in the long term, as
financially fragile individuals are less likely to plan for their retirement.
The higher a person’s education level, the lower the probability of being financially fragile. Also at risk are women; a substantially higher proportion of working-age women are financially fragile relative to men.
"Financial fragility is a multifaceted problem facing a wide representation of the American population," said Billy Hensley, senior director of education at NEFE. "We urge everyone to consider the unique factors in their life and prioritize their finances accordingly to work toward long-term financial goals."
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NEWS BRIEFS
7 Younkers stores, including Jordan Creek and Merle Hay, on at-risk list
Younkers stores in Jordan Creek Mall, Merle Hay Mall and five other Iowa locations could close by the end of 2018 if parent company Bon-Ton Stores Inc. fails to find a buyer. Bon-Ton filed for bankruptcy in February, and by law notified the state of Iowa that the potential job losses could happen, reports the Cedar Rapids Gazette. Bon-Ton is currently in negotiations to sell the company to an investor group, spokeswoman Christine Hojnacki said in a statement. More than 600 Iowa jobs would be affected. The Iowa stores at risk of closing are located at Merle Hay Mall, Des Moines; Jordan Creek Mall, West Des Moines; Kennedy Mall, Dubuque; Lindale Mall, Cedar Rapids; Coral Ridge Mall, Coralville; Southbridge Mall, Mason City; and Southern Hills Mall, Sioux City. In January, Younkers announced that two Iowa stores in Cedar Falls (College Square Mall) and southwest Cedar Rapids (Westdale Mall) were scheduled to close this year.
Minn. bank ordered to pay $4.5M to
northwest Iowa businessman in loan fraud case
A federal jury has ordered a Minnesota-based bank to pay Akron businessman and former council member John Lucken $4.5 million in a deal gone sour that was initially cast as a way to support a local business. Heritage Bank of Spicer, Minn., was found guilty of fraudulent misrepresentation after Lucken loaned $500,000 to Dirks Motor Co., according to a release from the Davis Brown Law Firm, where attorneys Stanley Thompson and Jason Lawrence represented Lucken. Half of the loan was to settle a debt owed by the car dealership and half to "back up" the bank’s financing of the dealership. If those conditions were met, Heritage Bank promised that it would provide a loan to support the dealership’s continued operation. The bank did not issue the loan, and the dealership, which had been owned and operated by the Dirks family since 1923, was sold. The jury awarded Lucken’s trust $4 million in punitive
damages, $500,000 on the fraudulent misrepresentation claim and $45,000 for an "unlawful tying" arrangement, according to the release. The lawsuit was brought in U.S. District Court for the Northern District of Iowa.
Laborshed study: Nearly 62 percent of Iowans have training beyond high school
The median annual salary in Iowa increased by $4,000 to $64,000 per year, and the median hourly wage increased by $1 to $17 per hour, according to the 2017 Statewide
Laborshed Analysis released last week by Iowa Workforce Development. Underemployment also decreased from 2016, according to the study, which showed the underemployment rate dropped from 5.1 percent in 2016 to 4.5 percent in 2017. Total underemployment measures three categories: inadequate hours, mismatched skills and low income. The percentage of employed workers who have completed education or training beyond high school, which has been trending upward since 2008, reached 61.6 percent. The state’s goal through the Future Ready Iowa initiative is to increase that percentage to 70 percent by 2025.
Central Iowa Philanthropy Day seeking nominations
Nominations are being accepted for the 33rd annual Philanthropy Day Awards Luncheon on Nov. 16. The Central Iowa Chapter of the Association of Fundraising Professionals, in a news release, requests submissions for the following categories: Outstanding Individual Philanthropist; Outstanding Volunteer Fundraiser; Outstanding Corporate/Foundation Philanthropist (two categories); and Outstanding Youth in Philanthropy. To receive application materials, complete this form by Friday. Nomination forms will be sent
electronically with a completion deadline of May 18. Collaboration among organizations is encouraged.
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THE INSIDER NOTEBOOK
2 business owners organize kids’ business fair BY SUZANNE BEHNKE: Two local women who are small-business owners and moms are organizing a kids’ business fair April 29. We in the Business Record newsroom had not heard of this happening before. The idea came close to home. Kathleen Riessen’s sons, Caden and Noah, wanted to sell something outside their home. "We started researching things they could sell," said Riessen, of Kathleen Riessen and Co. "I ran across a kids’ business fair in Texas, and it sounded cool." Read more
MORE NOTEBOOK ITEMS: Read more Insider bits and bites of the finer side of Iowa business online.
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THIS WEEK IN LIFT IOWA
Guest Opinion: Do you desire to make a bigger impact?
By Brianne Fitzgerald: Imagine this: There is a charitable organization in the community where you’ve been volunteering for years. You’ve been assisting with a few specific volunteer tasks over the years, and one day the volunteer coordinator asks you if you would consider lending your time to help go through their human resource policies and procedures. It’s been several years since they’ve been updated, and there are a few vacancies that need to be filled soon. Read more
Sign up for the Business Record's weekly Lift IOWA newsletter.
Read more at businessrecord.com/LiftIOWA.
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NEWS BRIEFS
East Village parking meters will now charge on nights and Saturdays
Des Moines Register: The days of parking for free on evenings and weekends in the East Village are over. Des Moines is extending its new parking plan to the historic neighborhood starting April 23. That means you will pay to park at meters from 9 a.m. to 9 p.m. Monday through Saturday on every street in the East Village and Market District neighborhoods.
Supreme Court weighs widening states’ reach on online sales taxes
Wall Street Journal: Billions of dollars of goods sold each year by independent merchants on Amazon.com and other online marketplaces would be vulnerable to state sales taxes for the first time if justices decide to reverse a quarter-century-old precedent in a case before the Supreme Court this week. In the case, South Dakota is seeking to overturn a longtime precedent under which states can’t require retailers to collect sales taxes unless the companies have a physical presence in the state.
Toyota to launch 'talking' vehicles in United States in 2021
Reuters: Toyota Motor Corp. plans to start selling U.S. vehicles that can talk to each other using short-range wireless technology in 2021, the Japanese automaker said today, potentially preventing thousands of accidents annually. Toyota hopes to adopt the dedicated short-range communications systems in the United States
across most of its lineup by the mid-2020s. It said it hopes that by announcing its plans, other automakers will follow suit.
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ONE GOOD READ
The middle class is growing again -- but slowlyCNN Money: After losing ground for years, the U.S. middle class is slowly clawing its way back.
In 38 states, a larger share of households were "middle class" in 2016 than in 2013, according to a new Stateline analysis. This group, which is defined as earning between two-thirds and twice the state's size-adjusted median household income, had contracted in every state except Wyoming between 2000 and 2013.
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BUSINESS RECORD CALENDARNEWLY ANNOUNCED EVENTS
April 16: Mercy College of Health Science’s new Academic Center for Excellence
Host: Mercy College of Health Science
About: A brief dedication program will be held at 5:30 p.m. to officially open the center. The Academic Center for Excellence is home to state-of-the-art classrooms and laboratories.
When: 4-7 p.m.
Where: Academic Center for
Excellence
Learn more
April 16: "Why We Get Into Ethical Difficulty and How to Stop Ourselves"
Host: Ivy College of Business, Murray Bacon Center for Business Ethics and the Committee on Lectures, which is funded by Student Government
About: Author and academic Marianne Jennings will tackle business
ethics in an upcoming talk at Iowa State University. In this lecture, Jennings will discuss patterns in ethical decline as well as how to avoid missteps. This lecture is free and open to the public.
When: 7 p.m.
Where: Memorial Union Great Hall, Iowa State University
Learn more
View our full calendar to see the latest curated business and community events, or suggest an event.
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KCCI TOP STORIES
Flyer beware? '60 Minutes' investigates Allegiant Air
Steve Kroft, a "60 Minutes" correspondent, has spent more than seven months investigating the safety record of Allegiant Air, and, this week on the broadcast, he shared his findings in a two-part report. Kroft found that between Jan. 1, 2016, and the end of October, Allegiant experienced more than 100 serious mechanical incidents. Read more
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Tonight:
Mainly clear. Low 23. Winds NW at 10 to 15 mph.
Tuesday:
Sunshine. High 52. Winds ENE at 10 to 15 mph.
Get the latest KCCI weather.
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BUSINESS RECORD IOWA INDEXThe Iowa Index is an unweighted average of all 22 Iowa-based public companies. Below is a live look at those 22, plus 15 additional companies with large operations in Iowa.
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