The Bureau of Labor Statistics reported a 3.2 percent unemployment rate for workers age 55 and older in June, an increase of 0.1 percentage points from May.
The low unemployment rate for near retirees is good news. The bad news is that no one can work forever, and our calculations report a collapse in retirement plan coverage for near-retirees in the 36 years since Reagan took office.
Unfortunately, workers in the four rust belt states—where workers once had bargaining power—suffered steeper declines in plan coverage rates than did workers in the rest of the country.
Thanks to unionized manufacturing jobs, 61 percent of near-retirees in Michigan, Ohio, Pennsylvania, and Wisconsin were covered by a retirement plan at work during Reagan’s first term. The share of covered workers collapsed by 10 percentage points to 51 percent during Obama’s second term, after which these states voted for Trump.
In the rest of the U.S., the share declined by 7 percentage points, from 53 percent to 46 percent.
The closing coverage gap reflects a race to the bottom in which firms are less likely to offer retirement benefits. As a result, workers are at greater risk of facing poverty and hardship in old age.
Obama’s automatic IRA plan didn’t get anywhere, and in 2017 Congressional Republicans rolled back support for state and city coverage reform efforts.
Now, it’s up to the Trump administration to make a dignified retirement possible for workers by expanding Social Security and increasing access to retirement savings plan for future generations through Guaranteed Retirement Accounts (GRAs).
GRAs are individual accounts requiring contributions from employees, employers, and government throughout a worker’s career. They provide a safe, effective vehicle for workers to accumulate personal savings.
Teresa Ghilarducci is a labor economist and nationally-recognized expert in retirement security. She is the Bernard L. and Irene Schwartz professor of economics at The New School for Social Research and the Director of the Schwartz Center for Economic Policy Analysis (SCEPA) and The New School’s Retirement Equity Lab (ReLab).
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
This professor does not live in the real world. She suggesting “expanding Social Security” … a program with zero dollars in it and Trillions in liabilities. It may the worst run government program of all time. Her comments are dangerous.
I’m surprised to find an article written by her as part of your newsletter given her history. We already have a ‘guaranteed retirement income’ in Social Security and it is struggling to keep up. We don’t need a new layer of it mandated. She is very dangerous to the retirement community and to workers in general.