By John W. Schoen
updated 10/25/2004 3:13:23 PM ET 2004-10-25T19:13:23

June 24, 2004

A number of readers this week have asked about getting in on a lawsuit filed by six female Wal-mart workers who claim they weren't paid as well as men. The suit was granted class action status by a federal judge earlier this week -- which means an estimated 1.6 million workers could be due some back pay. If you're one of them, it's probably easier than you think to join the suit. (And you won't even have to pay for the phone call.)


How can someone join the Wal-Mart class action lawsuit?                                    
          Guadalupe -- (Address withheld)

You’re in luck. If you’re a past or current female Wal-mart employee, for now, all you have to do is wait. You only have to do something if you don’t want to join the class action.

The lawsuit, which was originally filed three years ago on behalf of six women, claims that Wal-mart didn’t pay them as well as men and didn’t offer them the same opportunities for promotions. This week, the judge hearing the case ruled that lawyers can argue the case on behalf of all women who work at Wal-Mart in the United States, or who worked there at any time since December 26, 1998. (The class includes workers at the company’s discount stores, supercenters, neighborhood stores, and Sam's Clubs. Workers at distribution centers, headquarters or overseas stores are not included.)

So unless you decide opt out and file your own lawsuit, you’re automatically covered – as long as you can prove you’re in the class. (We hope you saved all those pay stubs.)

That’s the major benefit that class action lawsuits offer people who believe they’ve been harmed and want to file a claim. Someone else does all the work and, if they succeed, you get to collect.

There are other reasons why it can make sense to combine lawsuits by people who share a common claim against a single company. Individuals who’ve been hurt are spared the expense of hiring their own lawyers. The company may be able to settle all claims at once and avoid a long and expensive trial. And the court system is spared the burden of hearing the same arguments over and over in separate cases.

But there are definite drawbacks. For starters, much of the money ends up in the hands of lawyers, reducing the amount paid to those who were actually harmed. It doesn’t cost the lawyers suing Wal-mart much more money to try the case for one woman than for 100. But by increasing the number of plaintiffs to as many as 1.6 million current and former workers, those lawyers can dramatically increase the amount of damages they ask for -- to make up for all the money that they claim Wal-mart owes all of those female employees. If the company decides to settle the case, it will pay more. And in this case could be slapped with punitive damages – a kind of giant fine designed to punish a company for behaving badly. Either way, expanding the case to a class action automatically expands the size of the lawyers’ paychecks.

It can also be difficult to define a class of people that were all harmed in exactly the same way. A number of attempts, for example, have been made to sue tobacco companies on behalf of all smokers. But the harm caused by smoking varies greatly according to how much you smoked and other factors that vary from one smoker to the next. Wal-mart will almost certainly try to make that argument –- that conditions for more than a million employees working in thousands of stores varied too widely for them to be considered a class -– when it appeals the ruling that allowed the class action to go forward.

Even if that appeal fails, it will be at least a year before the case goes to trial. And, of course, there’s no guarantee the class action will succeed. This week’s ruling just allows the case to go forward; it has nothing at all to do with whether Wal-mart will win or lose the case.

Major Market Indices

For more on the class action, check out the Web site set up by the lawyers who brought the case. If they win, you'll have plenty of time to contact them and let them know you're due some back pay. 

June 17, 2004

With Fed Chairman Greenspan this week all but posting a schedule of interest rate increases on the Fed's Web site, John in Arizona is facing a common quandary for those looking to retire soon. Since bond prices usually fall as interest rates rise, how can his rejigger his investments to generate more income — without losing money in bonds?  Meanwhile, Pauline thought she had a great deal on a bond paying 9 percent — until the government "called" it back. She wants to know what gives — or in this case, why they took it.


Now we know the interest rates will rise but we do not know how high or for how long. Do to my age and retirement planning it seems necessary to rebalance my portfolio to include about 50 percent in bonds. We plan to use the bond income to supplement our social security payments. When the rates rise the value of bonds and bond funds fall. Is it wise to start buying bond funds now by dollar cost averaging into them for a full 50 percent position?
         John W. -- Tucson, Ariz.

This is one of the toughest investment questions facing Baby Boomers approaching retirement — so you’re in good company. Since you’ll need your investments to generate income, and you’ll also want to lower your overall risk, you’ll need to shift more of your assets into bonds. But with Fed Chairman Alan Greenspan signaling to the world that shorter-term interest rates are headed higher, this doesn’t look like a great time to by bonds. (That’s because bond prices fall as interest rates rise. For details on why, check out our answer to Carlos in Caracas  below).

But all is not lost — or doesn’t have to be. Different types of bonds react differently to those interest rate moves. Shorter-term Treasury paper (technically called bills) may hardly feel the impact, especially if you hold them to maturity. That can be as short as 90 days. So one way to blunt the impact of the coming rise in rates is to “stay short.”

Short-term paper typically offers a lower yield, though. So if you need to maximize the return on your “fixed-income” (aka bond) holdings, there are alternatives out there. But, as with all investments, higher return comes with higher risk

If you’re looking for higher returns, some investors are taking a look at so-called bank loan funds which, as the name implies, invest in companies that need to borrow from a bank because they have lousy bond ratings. These loans are typically adjusted every few months, so as rates rise, so does the interest paid by these borrowers. There’s a reason, of course, why their credit ratings are lousy: they may not repay the loan — that’s where the added risk comes in. But fund managers are paid to separate the dead-beat loans from those that are most likely to be re-paid.

Another option is a fund that invests in pools of adjustable rate home mortgages. In theory, as those rates are adjusted higher, so is the return on your fund.

Keep in mind that bond funds can be riskier than owning bonds outright. If the fund manager picks the wrong bonds, you could lose more money than if you’d bought a bond and held it to maturity. Don’t forget to look carefully at the fund fees and expenses; if they’re too high they could eat up the added return you’re looking for. (For more on picking a fund, check out the fund page at our partners at MSN Money.)

There’s also some evidence that the impact of the coming rate rise may not be as severe as it was in, say, 1994 — when a series of rapid fire rate hikes sent bond prices plunging. And keep in mind that the Fed’s decision on shorter-rates (the only ones it can control) don’t always have the same impact on long term rates, which are set by traders buying and selling bonds all day long. At the moment, some bond watchers say the market has resigned itself to the coming rate hikes — “pricing in” expectations of higher rates. In other words, much of the damage to bond prices may have already been done.

As for dollar cost averaging (buying a fixed amount of an investment every week or month), it’s a great long term savings-investing strategy because it forces you to buy more shares when prices are low and fewer when prices are high. If your time horizon is short, it won’t offer the same advantages.  But it’s always better to ease into a new position gradually then to make a big shift all of a sudden.

If your main objective to not lose money, you might consider moving some of your fixed income funds into a money market fund. Most investors have shunned these because they pay such small returns. But if short-term interest rates rise, so will the return on money market funds.

In January of 1999, my broker suggested that I invest in U.S. Treasury Bonds.  At his suggestion I did. The price $121.39 per share. The description read as follows:

                    20,000 U.S. Treasury Bonds
                   CPN 9.125% Due 5/15/09
                   DTD 5/15/79 FC 11/15/79
                   Call 5/15/04 @100.000

As it stood, I received dividends in May of each year. Very suddenly my broker phoned me and told me that the bond was being called because of the current interest rates on Government Bonds and with this one the rate was too high. And, as a result he bought U.S. Bonds to replace them at 6.0%. I was under the belief that after purchasing the original Bonds with the yield of 9.0% that I could keep them forever. Can you shed some light on this for me?   
          Pauline T.

Newly issued Treasury bonds are not callable, but some older bonds — issued before 1985 — are callable within five years of maturity. In your case, these are 30-year bonds, issued May 15, 1979, which you purchased in the secondary market. The call provision was spelled out on your order ticket as “Call 5/15/04 @100.000.” (As for why these bonds were called, check out the next answer to Ann in Florida.)

In any case, as noted in the "due" date of the ticket, these would have matured on May 15, 2009. All bonds pay interest only for the life of the loan.

Unfortunately, as with everything else in life, nothing is “forever.”

June 11, 2004

They're called "bearer bonds" because they're supposed to be payable to whoever is holding them, but Ann in Florida says her husband is having trouble cashing his in. Meanwhile, R.R. in Virginia has a more pressing concern: Someone screwed up his electronic tax payment and he wants to know who's responsible to making nice with the IRS.

As always, if you'd like to write to us, please include your first name and hometown

My husband has some old fashioned bearer bonds that have to be clipped in order to receive their value.  Every time he tries to cash them in at the bank, he finds they have been called or there is some other problem which prohibits him receiving the value of the bonds.  He would like to just sell them, if possible, to be rid of the frustration. Do you know where he might be able to dispose of them?
Ann M. -- Central Florida

The first place to start is the finance department or treasurer of the company or municipality that issued the bonds.

If the bonds are callable, they may have, in effect, expired early. Issuers of bonds often put a clause in the offering saying that they can “call” the bonds before maturity, which means that pay off the remaining principal and they no longer owe you interest. It’s a bit like you telling the bank you’re refinancing your mortgage. And usually the reason is the same: If a municipality is paying high interest rates on a bond, they can call that bond (redeem it early) and pay off investors with proceeds from a new issue with a lower interest, thus saving money for taxpayers of that municipality.

But if the coupons were supposed to have been paid before the bond was called, they may still have some value — unless the original issue spelled out how long you have to redeem them. (Another question for the finance department of the issuers of bonds you hold.)

Bonds all have the same basic terms — you give the issuer money, they pay you back over the life of the bond with interest. But each issue is essentially a unique contract between issuer and investor. And the devil is in the fine print.

If you find that the bonds, in fact, have no investment value, consider hanging on to them anyway. They may have value as collectibles, depending on how old they are (along with a variety of factors like rarity or graphic design of the certificate.) There are a number of Web sites out there that buy and sell old stock and bond certificates. Here’s one of them.

My accountant didn't get my check on time to pay my income taxes for 2003, so we electronically transferred money from my account to the IRS (there is a record of this) which he said they had done before.  He got some kind of confirmation, or notice that it had gone through.   Unfortunately, in tracking my account, I noticed that there was too much money in it, and after checking, discovered that the transfer never went through and that the money was not taken from my account.  My accountant is checking on this and it is taking a lot longer than I thought it would.  I haven't sent in more money yet because I have been waiting for results of his investigation.  Will the fact that there is a record that the transfer was attempted, but the discovery that it didn't go through was more than a month later — do you think I can avoid penalty — and maybe even interest?  My taxes were only somewhere around $800.  Should my accountant have told me to send the check right away after the discovery?  (I live in Virginia and he is in Illinois — my taxes from last year are tied up with my father's estate.)  Is my accountant liable for any of this?  I think he did file for an extension.
          R. R. -- Alexandria, Va.

Unfortunately, you alone are responsible for filing a correct return and making sure that the taxes due are paid by April 15th. Filing an extension gives you extra time to file a return, but you still have to send in what you think you owe. You don’t get an extension to pay unless you specifically negotiate that with the IRS.

However, if you can produce the confirmation that it was paid, you may be able to argue that you “paid” in good faith and only later discovered the error. At this point, if you’re sure you haven’t paid, the best thing would be to pay what you owe. If, for some reason, it turns out you paid twice (Unlikely: if the money is still in your account, where did the payment come from?) the IRS will either refund your overpayment or let you apply it to next year’s taxes. (Take the refund: There’s no reason to give Uncle Sam an interest-free loan.)

Since you’re only a few months late, the penalty on $800 won’t be too severe. But it will only increase the longer you wait to pay.

As for your accountant’s liability, it’s your job to check your return and make sure the IRS is paid. Some preparers offer electronic payment as a convenience, but unless you paid him the money and he failed to send it to the IRS, he’s pretty much in the clear. The faulty confirmation notice, though, is a sign of sloppy work: Either he didn’t understand what he was looking at or the confirmation was in error and he should have looked into it. In any case, you may want to find another accountant.

Of all the parties involved, it sounds like the financial institution that was instructed to wire the money is most responsible. You should ask them to write a letter saying they screwed up (if, in fact, they did). They’ll resist doing this. Unfortunately, if you read the gobbledygook fine print you signed when you opened the account, you’ll probably find lawyer language saying they’re not “liable” for damages that result from these screw-ups.

June 4, 2004

As the latest monthly employment report gets its usual treatment under the microscope, Pat in Ohio is trying to figure out just who gets counted as "employed" and who doesn't. Robert in North Carolina, meanwhile, has his own concerns about those weekly jobless numbers: with hundreds of thousands of jobs lost each week, won't we all soon be out of work?

Don't count on jobs data
I know in my company, when an employee takes early retirement, with incentives such as 26 weeks separation pay, they draw unemployment checks for 6 months. Aren't they counted as new unemployed workers, when in fact they took early retirement?
          Pat D. -- Columbus, Ohio

It depends who’s doing the counting. Since employment levels are such an important measure of a nation’s economic health, our government looks at the job market from a number of different angles.

The report that gets the most attention -– released the first Friday of every month -– is actually two reports. The monthly “payroll” survey looks at a sampling of hundreds of thousands of employers to see how many people are on their books. A separate “household” survey contacts people at home and asks them about their employment status: Are you employed, unemployed or not looking for work? (True, people who are sitting at home waiting  to answer the phone are more likely to be out of work, but the folks down at the Bureau of Labor Statistics have been doing this awhile, so they’ve got that angle covered.) For more on the technical differences and how the two surveys are conducted, check out the BLS Web site.

A third survey, released every Thursday, adds up how many new people signed up for state-supervised unemployment insurance in the latest week -– on the theory that this will show how many people were just fired, laid off or quit.

These three surveys can produce very different results, which is why they sometimes give off mixed signals. Let's look at the case of your early retiree.

First, she’ll show up in the weekly “jobless claims” number as soon as she signs up to collect unemployment insurance. But after six months, or whenever her benefits are exhausted, she’ll no longer be considered “unemployed” by this survey –- even if she’s still out of work.

When the BLS calls her employer, the company may report that her job was cut -- unless she was immediately replaced. For example, a company might lay off a worker in one money-losing division while simultaneously hiring a worker in an unrelated division that’s prospering. In that case, the number of workers on the payroll would stay the same. So as far as that survey is concerned, no jobs were lost.

The BLS might then catch up with our early retiree at home through the household survey. But even then, it’s up to her to decide whether she’s truly “retired” or just “unemployed.” In order to be classified as unemployed, you have to be officially “in the work force” and “actively looking for work.”  

And if you need to work two jobs to make ends meet, you’ll show up as two jobs in the payroll survey but only one job in the household survey.

Some unemployed people get discouraged and quit looking; in the eyes of the government, they are no longer “unemployed.” If they start looking again, they’re officially back in the “work force” and will be counted as unemployed again if they still can't find a job. That can have the effect of nudging the unemployment rate higher.

For all the attention paid to these monthly numbers, the science of keeping track of who’s working and who’s not is far from exact. But these surveys do a better job than anything else that’s out there.

Over time, these reports give a pretty good indication of where jobs are being created and where they’re being lost. For the thousands of economists, investors, elected representatives, policymakers and employers, the value of these data more than make up for the faulty impressions occasionally created by just looking at individual reports.

But that doesn't stop Wall Street -- and the media -- from pouncing on these reports and enthusiastically dissecting the data every month.

Full unemployment?
Whenever the first-time unemployment numbers go down even slightly, and is below 400,000, that is considered good news and stocks go up. But over 300,000 people getting laid off every week? That sounds awful. Even 100,000 every week sounds bad. How can so many people get so optimistic about such numbers? If 300,000 people lose their jobs every week, which has happened for as long as I have been watching these numbers, won't the entire U.S. eventually be unemployed?
          Robert B. -- Durham, N.C.

It would be distressing if this report were the complete employment picture. At a rate of 300,000 jobs lost each week, with a total U.S. workforce of about 146.7 million people (as of April), we'd all be out of work in about 9.5 years. 

Fortunately, the so-called weekly "jobless claims" report gives you only the bad half of the picture. It's simply a tally of all those people who signed up for unemployment insurance in a given week. It doesn't include information on how many new jobs were created or how many of those unemployed workers who signed up for benefits weeks ago went back to work.

For that, you have to look at the monthly jobs data. But even then (see above), the picture is far from clear.


Ever wonder what a P/E ratio is and why it's so important? Are you confused about the official definition of a recession? And just what the heck is a derivative? We're here to give you the answers.'s weekly feature "The Answer Desk" helps you make sense of business, the economy and investing. So send along your questions to and we'll try to get you the answer. (Please include your home town with your question; we'll only include your first name if we use your question.)

Any question is fair game, with one exception: no questions about specific investment recommendations, please -- we'll leave the stock picking to the "pros."

Each week, we'll take some of the most-frequently-asked questions and answer them here. We may not be able to answer every question, but over the weeks and months we will provide a comprehensive resource for you, explaining some more puzzling aspects of business and finance.

You can mail in questions at any time and then check this column every Friday for the answers.

(All information will remain confidential in accordance with MSN's privacy policy.)

© 2013 Reprints


Discussion comments


Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 3.79%
$30K home equity loan FICO 4.99%
$75K home equity loan FICO 4.69%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.83%
Cash Back Cards 17.80%
Rewards Cards 17.18%