Friday Financial Five – January 30th, 2015

Friday, January 30, 2015

Dan Forbes, GoLocalWorcester MINDSETTER™

Employment report shows continued positivity

Employment numbers again looked positive, with an unemployment rate for December of 5.6%. Jobless claims have fallen to the lowest level since 2000. There are also indications that an increased percentage of employment changes are employee driven, which might lead to wage growth as workers mobilize in search of higher paychecks. Some areas of the country are still lagging, as the West’s 6.3 percent leads the country. The District of Columbia, California, and Mississippi are all at rates of 7 percent or greater.

IBM continues to get battered

Global employer, IBM, made news this month when word leaked that the company might reduce employee count by 100,000. The company came out publicly refuting the report, affirming there would be a small layoff as part of a “rebalancing”, with laid-off positions being replaced. According to Forbes, there is evidence that multiple layoffs are taking place, and the stock has seen a drop from its 52 week high.

529 plans may face tax benefit reduction

Many people saving for college opt for a 529 plan, which currently offers a favorable tax treatment for funds withdrawn to pay for qualified educational expenses. The White House feels it disproportionately favors the wealthy and is actively looking to reduce this benefit. Any change would be coupled with the expansion of the American Opportunity Tax Credit, which is subject to income limits for couples and singles. The government would also like to eliminate the student loan interest deduction for new borrowers.

Millennials want a shift in corporate mentality

Millennials, or Generation Y’ers, are those that reached young adulthood around the turn of the century. Deloitte’s 2015 Millennial Survey attempts to quantify the changing perspective of the international business community’s younger members. There’s a clear differentiation from what’s considered traditional corporate thinking, as Millennials are more concerned with a company’s societal impact and less focused on the bottom line. Just over a quarter of this group feels their skills are being adequately utilized.

Obamacare enrollment approaching 10 million

With roughly three weeks left in the enrollment period, 9.5 million consumers have enrolled in the federal and state exchanges, according to the Department of Health and Human Services. For Healthcare.gov, 87 percent chose a plan that is intended to benefit from tax credits and 35 percent are under the age of 35. Outside estimates anticipate total enrollment will finish near 12 million, after a 2014 enrollment of between 7 and 8 million.

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].

Related Slideshow: Massachusetts Business Rankings

See how Massachusetts stacked up.

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WalletHub

Massachusetts has 2015's 28th highest insurance premium penalties for high risk drivers, according to a WalletHub report.

Mass is behind Colorado and New Mexico who come in at 26 and 27 spots respectively while Mass is ahead of Tennessee and the District of Columbia who rank 29 and 30 respectively.

Massachusetts ranks 14th overall in the category of DUI conviction annual premium increase with an amount of $756.

Massachusetts ranks 20th overall in the category of speeding over 20 mph annual premium increase with a total of $261 while ranking 21 overall in the category of two accidents annual premium increase with a total of $1,364.

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WalletHub

Massachusetts has been ranked as the 5th most eco-friendly state in the country, according to a recent study by WalletHub.

Mass ranks tenth in environmental quality and fourth in Eco-Friendly Behaviors landing them in 8th overall.

Mass is behind Minnesota and New York who are in the fourth and third spots respectively, and in front of Washington and New Hampshire who come in at the six and seven spots.

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The Economist

Small Business Friendliness Grade: D+

The Economist grades states on an A+ to F grading scale for its small business climate. Massachusetts ranks near the bottom of the nation, joining New Mexico and New York in receiving D+ grades. 9 states scored worse than a D+ in the Economist rankings.

Overbearing bureaucracy and excessive licensing is stifling small business in America.

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CNBC

#25 CNBC

CNBC ranks each state in cost of doing business, economy, technology and innovation.

Massachusetts' unemployment rate as of May 2014 was 5.6 percent. The state added 9,100 jobs in the month of May.

Forbes

#13 Forbes

Forbes ranks each state in business costs, economic climate, and growth prospects.

The most damning in the commentary:

Massachusetts’ business costs, including labor, energy and taxes, are the highest of the 48 contiguous states—only Hawaii is higher—at 20% above the national average.

ChiefExecutive.net

#47 ChiefExecutive.net

ChiefExecutive.net ranks each state in taxations and regulations, workforce quality, and living environment.

The most damning in the commentary:

Taxation and regulation are always the key barometers. Massachusetts and Oregon are the worst.

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Tax Foundation

#25 Tax Foundation

Tax Foundation ranks each state in corporate tax rank, sales tax rank, and unemployment insurance tax rank.

Massachusetts ranked #49 in unemployment insurance tax.

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Wallet Hub

#10 Wallet Hub

Wallet Hub ranks each state in ROI rank, state tax rank, and overall government services.

Massachusetts ranked #49 in worst roads and bridges, but ranked #7 in overall government services.

ALEC

#41 ALEC

ALEC ranks each state in economic performance and outlook.

Although Massachusetts ranked low in economic performance, a forward-looking forecast is based on the state’s standing in 15 important state policy variables. Some of these variables include top marginal personal income tax rate and sales tax burden.

Kauffman Foundation

#29 Kauffman Foundation

Kauffman Foundation ranks each state in entrepreneurship.

Entrepreneurial activity generally is highest in Western and Southern states
and lowest in Midwestern and Northeastern states.

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Free Enterprise

#18 Free Enterprise

Free Enterprise ranks each state in performance, exports, innovation + entrepreneurship, business climate, talent pipeline, infrastructure.

Massachusetts's reputation as a hotspot for science and technology endures in this year's rankings. The commonwealth is a center for STEM jobs and university research and development, ranking 4th and 2nd, respectively, in those two categories. It also ranks 6th as a center for high-tech establishments. Massachusetts is taking aggressive steps to bolster economic activity with high-impact university-industry R&D projects and new tools for tech-based startup companies.