Media clips
-
The percentage of U.S. workers enrolled in employer-based retirement plans has declined over the past couple decades and “retirement inequality” has worsened since 401(k) plans were introduced in the 1980s.
Those were the big takeaways of a study by the liberal-leaning Economic Policy Institute that explored the impact of defined contributions plans – which were never meant to replace Social Security or defined benefit pension plans – on retirement savings.
The rise of the 401(k), EPI said, created new disparities between the wealthy and those who earn less. EPI’s “Retirement Inequality Chartbook” offers dozens of charts that look at retirement preparedness and outcomes by income, race and ethnicity, education, gender and marital status.
Its conclusion? The 401(k) revolution created a few big winners and many losers.
Benefits Pro September 6, 2013 -
Not only is the typical 401(k) a lousy way for most people to save for retirement, it is also making wealth inequality worse, according to a new study.
You’re probably aware that in recent decades 401(k) plans have risen to replace pension plans as the first line of retirement savings for millions of Americans. But most of the benefit of these plans, such as it is, has accrued to the wealthiest Americans, argues the Economic Policy Institute, a left-leaning think tank, using an armada of charts.
That means the poorest Americans are increasingly left to rely on Social Security as their primary source of retirement income at a time when many in Washington are trying to squeeze Social Security benefits.
The Huffington Post September 6, 2013 -
The once-dominant defined benefit pension plan–which pays out a fixed amount after an employee retires–is on its way to becoming an historical artifact. More and more employers are offering 401(k) plans instead, which require employees to pay into their own accounts, sometimes with and sometimes without a matching contribution. And according to a new analysis from the labor-oriented Economic Policy Institute, the effect has been a stratification of retirement savings by education, income, and race–which could deepen inequality among the elderly as the population ages.
It’s actually possible to tell a positive story here, in which the average size of retirement accounts has grown overall in recent decades, and aggregate saving and household net worth as a percentage of income have started to bounce back since the recession first hit in 2008:
The Washington Post September 6, 2013 -
Recent headlines about retirement savings have been guardedly optimistic, with reports showing that savings-account balances have risen steadily since the recession and that more workers are managing to put money aside. But a study released today by the nonprofit Economic Policy Institute takes a look at related statistics and reaches a mostly downbeat conclusion. The benefits of the nest-egg rebound, the study’s authors argue, are going primarily to the wealthiest 20% of Americans—setting the stage for drastic economic inequality among U.S. retirees.
The EPI is a think-tank that puts a big emphasis on lower- and middle-class economic issues and has strong relationships with organized labor. The report, by economists Monique Morrissey and Natalie Sabadish, advances the broader argument that the migration of retirement plans away from pensions and toward 401(k)s has undermined middle-income people’s retirements. (Whether traditional pensions were and are financially sustainable for employers, of course, is an ongoing argument in which the pro-pension side has generally been losing out.)
MarketWatch September 6, 2013 -
According to a new study, the 401(k) savings account isn’t adequately providing for people’s retirement and is adding to the nation’s growing wealth inequality.
The report from the Economic Policy Institute, a liberal-leaning public policy think-tank, illustrates how the shift from pensions to individual savings accounts has affected retirees. The authors find that it is the wealthiest workers who are benefiting the most because they can actually contribute enough to make 401(k) plans work for retirement.
CBS Moneywatch September 6, 2013 -
The 401(k) system has led to deep financial woes for a generation of American workers, leaving most people with inadequate retirement savings and dreary prospects for their latter years, according to a new research report.
The widespread adoption of 401(k) plans in the last three decades has benefited upper-income workers, providing them with a coveted tax break even as it has left them at the mercy of the volatile stock market, according to the analysis by the Economic Policy Institute, a liberal think tank.
But the 401(k) system has been a dud for the vast majority of Americans, with women, young people and minorities among the broad groups whose financial well-being is at risk because they’re not saving enough.
Los Angeles Times September 6, 2013 -
Thanks to David Cooper of the Economic Policy Institute, my computer was soon feasting on employment data for the first half of this year. And as you see in the chart below, the data showed a positive relationship between unemployment rates and the involuntary part-timers’ share of employment.
The New York Times September 6, 2013 -
Adding to the challenge is the aging of the American work force. Economists have long known that the participation rate — the share of the population that’s working or looking for work — would decline as the Baby Boom generation approached retirement. But they disagree as to how much of the recent decline is based on demographics, which makes it hard to interpret the monthly jobs data. (For more on this debate, see our friendly “feud” with Jim Tankersley of the Washington Post, which also generated some discussion among actual economists.)
Wall Street Journal September 6, 2013 -
On Wednesday’s edition of “The Tavis Smiley Show,” Algernon Austin, director of EPI’s Program on Race, Ethnicity, and the Economy, discussed with host Tavis Smiley the hard work that remains in order to meet the March on Washington’s economic goals.
Tavis Smiley August 29, 2013 -
Of the 241 CEOs studied, 134 remain active CEOs in their companies, the report said.
The executives who were fired left with an average payment of $47.7 million, the report said.
Aside from zeroing in on specific performance failures, the report criticized “a giant loophole in the federal tax code” that allows corporations to deduct unlimited amounts on their income taxes for the expense of executive stock options and other “performance-based” pay.
The Economic Policy Institute has estimated that the loophole cost the U.S. Treasury $30.4 billion between 2007 and 2010.
The Kansas City Star August 29, 2013