Shrinking Paychecks for Men: A New Challenge for the Economy
American household income is rising, but it may not be time to celebrate just yet—especially if you are a male. Men are not just still earning less than they did before the recession started, but their incomes continue to shrink, according to the latest data from the Census Bureau. The trend is part of the reason the gender pay gap is narrowing: Women are earning more, but their male counterparts are losing ground.
Annual median income for men who work full time declined to $51,640 last year, or about 0.4% below their 2015 earnings. They represented the only major demographic group to lose income. The trend may help explain why the labor participation rate for men continues to decline despite a stronger economy. Some men may not be finding the type of remunerative jobs that were once plentiful, such as in manufacturing or middle-skilled work, and are opting to sit on the sidelines. “Men are doing worse than they were in 1973,” said Sheldon Danziger, president of the Russell Sage Foundation, which focuses on poverty research. “Women’s earnings are substantially higher, but men’s earnings have declined.” Danziger noted the trend is not affecting all men: Higher-skilled and educated male workers are earning more, while men without college degrees are losing out.
Men have not enjoyed income gains since the early 1970s, although women have made strides in the workforce, both through education and higher earnings. Women now earn 80.5 cents for every $1 men earn, the Census said on Tuesday. It marks the first decline in the wage gap since 2007. “This is a complicated subject, especially in light of the fact that, on average, a woman earns 80 cents for every dollar a man earns,” Mary Coleman, senior vice president and COO of Economic Mobility Pathways, said. “That said, for three decades now women have been entering and excelling in professions largely dominated by men. This is especially true in medicine and law.”
Men are facing a number of challenges, Coleman said, including the high cost of college, which places it out of reach for young low-income men who are fathers and breadwinners, as well as inadequate social networks. Since the recession started almost a decade ago, men’s income has slid 1.1%, while women are earning 2.3% more, according to data from the Economic Policy Institute. The workforce participation rate for men stood at 69% in August, a decline of 4 percentage points since the recession began. The rate also slid for women, but only by about 2 percentage points.
Households overall are earning more, but that is largely due to gains among women. Stark disparities in income are also apparent, with wealthy Americans reaching an all-time high in median annual income last year, leaving working class and poor workers behind. Men are suffering from job losses in the manufacturing, transportation, and utilities sectors, according to a recent report from the Georgetown Center on Education and the Workforce and JPMorgan Chase. Demand has shifted to jobs in skilled services such as health care, finance, and education, which may favor women.
But it is not only older men who are dropping out of the workforce. Young men are also working less. That trend prompted economists to ask whether men are skipping out on work because the available work was not attractive. Rather than a generation of slacker men, the economists surmised that wage growth—or the lack of it—is probably the bigger issue, especially for men without college degrees.
Donald Trump’s presidential campaign successfully homed in on the problems of the male worker with a pledge to revive manufacturing. While factory jobs have increased slightly so far this year, there are still 1.3 million fewer of them than just a decade ago, according to the Bureau of Labor Statistics. Despite recent economic growth, these data signal challenges ahead for the economy.
Citations
- http://cbsn.ws/2fl2RSu CBS News
- http://bit.ly/2h05z3P – US Census Bureau
23andMe Aims to Leverage its Genetic Data for Drug Development
23andMe is best known for its $199 at-home spit-tube DNA test, but the consumer genetics company has been making strides in the last few years to get into drug development and research. The company first began making moves early in 2015, forging a partnership with Pfizer to conduct a bit of drug research using 23andMe’s genetic data.
The pact was formed in the midst of orders from the Food and Drug Administration that 23andMe cease sales of its consumer health report product, which drove a major portion of both 23andMe’s revenue and brand awareness at the time. 23andMe appeared to double down on that effort soon after, announcing a new therapeutics division, recruiting Genentech’s Richard Scheller to lead the program, and bringing on veteran scientists from the pharmaceuticals industry.
The FDA has slowly approved genetic health risk tests for certain diseases since. For example, soon after Scheller joined, the agency allowed 23andMe to conduct a test for the rare genetic disease Bloom Syndrome. Earlier this year, it gave the green light to 10 different genetic risk tests made by 23andMe, including for Parkinson’s and Alzheimer’s. Meanwhile, 23andMe has continued hiring talent with deep roots in pharmaceuticals, including bringing aboard even more scientists from Genentech, which is also an early investor in 23andMe.
No wonder. The company now has more than 2 million consumers contributing DNA samples—80% of whom have consented to the use of their information for research; that’s a pretty sizable database to mine for potential new drug targets. 23andMe further conducts online surveys based on genetic information with the millions of customers in its database willing to participate. It has also started a Parkinson’s research study, offered to those eligible and with certain genetic markers for the disease. Last year, 23andMe also started to partner with companies like Celmatix to conduct studies on fertility and genetics.
The firm now has more financial muscle to put behind these efforts, too. 23andMe just raised $250 million from Sequoia Capital. Even if a healthy portion of its new funding is used to beef up 23andMe’s therapeutics division, that does not mean the company is free of challenges. In fact, it will face a new set of them, including trying to create space for itself despite a very crowded landscape. “I don’t see anything that’s going to create differentiation for them over the long run,” says Paul DeSantis, a genomics and immuno-oncology analyst who has looked at 23andMe as a potential investment for his employer, The Gerson Lehrman Group. “Everyone is so much further ahead of them,” he adds.
To DeSantis’s point, there is plenty of activity right now in pharmacogenomics, or the study of how our genes react to certain drugs. Juno Therapeutics is just one publicly traded company with a focus on cancer drugs targeted to unique DNA markers. Drug maker Novartis also recently announced the development of the first FDA-approved CAR-T cancer immunotherapy drug. In addition, succeeding on any drug breakthrough could well take at least a decade, meaning that a push into drug research could take a while to bear fruit for 23andMe. That could further push out an IPO. “When you intend to go public you need to have a lead indication,” says DeSantis. “You need some clinical trial data and you need to have a platform. To me, 23andMe doesn’t have that.”
Maybe it will, sooner than DeSantis predicts. Maybe it won’t. In the meantime, the company is forging ahead with its original plan to democratize genetic health. Part of that entails working with the FDA to gain approval for more genetic risks tests, including for breast cancer markers BRCA-1 and BRCA-2. If approved, that would give 23andMe a leg-up on competitors like genetics testing upstart Color Genomics by eliminating the need for third-party approval from a physician. Still, knowing one may have a genetic marker for a certain disease will only take 23andMe’s customers so far. It would be far more powerful if the company were capable of delivering a potential cure. 23andMe seems to be betting on its large trove of data to carry it into a future where it can do both.
Citations
- http://tcrn.ch/2eVTHPz – TechCrunch
- http://for.tn/2eYVJuD – Fortune
The Good News Is . . .
- Declining interest rates helped boost mortgage activity, with purchase applications for home mortgages rising a seasonally adjusted 11% percent in the past week after adjustment for the Labor Day holiday, while applications for refinancing, which are not seasonally adjusted, rose 9%. The refinance share of mortgage activity increased by 0.1 percentage points to 51.0%, the highest level since January. The average interest rate on 30-year fixed-rate conforming mortgages ($424,100 or less) fell 3 basis points to 4.03%, the lowest rate since November 2016.
- Cracker Barrel Old Country Store Inc., an operator of home-style country food restaurants and stores, reported earnings of $2.23 per share, an increase of 11.32% over year-earlier earnings of $2.12 per share. The firm’s earnings topped the consensus estimate of analysts by $0.06. The company reported revenues of $743.2 million. Management attributed the results to increases in average check size, menu price increases and improved operating margins.
- Blue Bottle announced that it had sold a 68% stake in itself to the large food conglomerate Nestlé. It is a sign of how so-called third-wave specialty coffee—pour-over brews and perfectly steeped drinks—has become a hot business. The niche accounts for less than 10% of the overall coffee industry. But it is growing rapidly and, perhaps more important, it commands higher prices and bigger profit margins. Taking a majority stake in Blue Bottle will help Nestlé expand an existing foothold in the coffee sector built around the Nescafé and Nespresso line of products to a flourishing new industry with a highly dedicated consumer base of millennials. Having Nestlé as a majority owner will also help Blue Bottle buttress its expansion plans, which run from opening new outlets across North America and Asia to selling roasted beans and New Orleans-style cold brew drinks in stores.
Citations
- https://bloom.bg/2eVhfSb – Bloomberg
- http://cnb.cx/2lwnm3s – CNBC
- http://bit.ly/2fm8m3I – Cracker Barrel Old Country Store Inc.
- http://nyti.ms/2xo8MjS – NY Times Dealbook
Planning Tips
Tips for Protecting Your Credit Information After the Equifax Hack
If you have a credit report, you may be one of the 143 million American consumers whose sensitive personal information was exposed in a data breach at Equifax, one of the nation’s three major credit reporting agencies. Below are steps you can take to help protect your information from being misused. Be sure to consult with your financial advisor to determine what actions are most appropriate for your particular circumstances.
Visit Equifax’s website, www.equifaxsecurity2017.com – Find out if your information was exposed. Click on the “Potential Impact” tab and enter your last name and the last six digits of your Social Security number. Your Social Security number is sensitive information, so make sure you are on a secure computer and an encrypted network connection any time you enter it. The site will tell you if you have been affected by this breach. Whether or not your information was exposed, U.S. consumers can get a year of free credit monitoring and other services. The site will give you a date when you can come back to enroll. Write down the date and come back to the site and click “Enroll” on that date.
Check your credit reports – You can check your credit reports from Equifax, Experian, and TransUnion—for free—by visiting annualcreditreport.com. Accounts or activity that you do not recognize could indicate identity theft. Visit IdentityTheft.gov to find out what to do.
Consider placing a credit freeze on your files – A credit freeze makes it harder for someone to open a new account in your name. Keep in mind that a credit freeze will not prevent a thief from making charges to your existing accounts. Monitor your existing credit card and bank accounts closely for charges you do not recognize.
Place a fraud alert on your account – If you decide against a credit freeze, consider placing a fraud alert on your files. A fraud alert warns creditors that you may be an identity theft victim and that they should verify that anyone seeking credit in your name really is you.
File your taxes early – File your taxes as soon as you have the tax information you need, before a scammer can. Tax identity theft happens when someone uses your Social Security number to get a tax refund or a job. Respond right away to letters from the IRS about possible identity theft.
Citations
- http://bit.ly/2wNHFPb – Federal Trade Commission
- http://bit.ly/2wd5VuB – AARP
- http://read.bi/2xByFxq – Business Insider
- http://bit.ly/2wsQ8Tx – Forbes
- https://usat.ly/2xkIVsS – USA Today
