Making Retirement Savings Universal

In Carrie Schwab Pomerantz’s “Culture of Investing,” (Townhall.com, 11/13/07), she points out that “60 percent of people age 45 or older have less than $100,000 in retirement savings.”  While it is alarming that many are not saving at the levels needed to prepare for retirement, it should come as no surprise.  Many workers do not have access to investment vehicles that make savings possible.

Pomerantz highlights the good work done by employers, such as McDonald’s, which has tracked employee savings rates, instituted automatic enrollment plans, and initiated an aggressive matching program in the company’s 401(k) program.  Of course, many employers do not provide access to 401(k) or 403(b) plans, which leads to lower levels of savings.  As we all know, it is much easier to save in increments of $100 or $250, especially if it is automatically pulled from pre-tax dollars.  Instead, without the benefit of 401(k) or 403(b) plans, workers are required to contribute in denominations of $1,000 or $2,500 in after-tax dollars!

If we genuinely want to encourage every worker to save for retirement, we should be dedicated to providing a universal tax-deferred savings vehicle for every American.
-Lonny Stern | Communications and Outreach Director

Why are African Americans Slipping Down the Income Ladder?

Today, the Pew Charitable Trust’s Economic Mobility Project released three new reports showing that while two-thirds of Americans earn more than their parents, the ability of future generations to get ahead largely depends on their parent’s income. In addition, the study finds that mobility has racial disparities, with a significant finding that is likely to generate a lot of debate: African Americans are less likely to do better financially than their parents, and are more likely to fall down the economic ladder. This is true regardless of their income or class position.

Both of these findings are disturbing. For while it is undeniable that most Americans are better off than their parents (indicating that there is still mobility in America), the fact that this mobility is increasingly tied to the economic position of one’s parents undermines a core belief that America is a place where anybody can get ahead by hard work alone. That mobility appears to have a racial dimension is particularly discouraging.

What accounts for this downward mobility, particularly among  children of middle-class blacks? An article in the Washington Post quotes experts who speculate that the decline could be attributed to a number of factors, including an increase in the number of single-parent black households, the persistence of educational gaps between black and white kids, or the disparities in wealth between black and white families of similar incomes.

Whatever the cause, the findings have troubling implications for the promise of middle-class mobility in this country.

-Amanda Levinson | Director of Policy Programs

Video Blog: Voices from the Valley

After a few years’ hiatus, the media is again awash with news from Silicon Valley. The center of much of our nation’s technological innovation, Silicon Valley attracts some of the brightest, most creative thinkers from across the country and around the world. In many ways, Silicon Valley represents the ultimate promise of the American Dream: scores of young, smart, enthusiastic workers (immigrant and citizens alike) arrive here with a few ideas and an irrepressible work ethic, and transform themselves into successful entrepreneurs whose inventions change the world. As a result, the area (which runs roughly 60 miles, from San Francisco to San Jose) has been transformed into one of the most desirable–and expensive–places to live in the United States. The area is commonly referenced for articles about the New Gilded Age, and with good reason. The median price for a single-family home is $788,000, while the median income is $46,920 (nationally, those numbers are $212,300 and $30,400, respectively).

Indeed, the area is so expensive–and some of the salaries so high–that the New York Times coined a term oft repeated around these parts–“Working Class Millionaires”–people who have millions in the bank, but still feel, somehow, that they cannot get ahead. That’s not to say that everyone in the Valley is a millionaire–indeed, most people are not, and that’s where the problems arise. What’s it like to be “middle class” but have no hope of owning a home? How do most people afford basic necessities like health care, child care, and transportation?

In this occasional video blog, I will interview a cross-section of people who live and work in Silicon Valley for insight into these and other questions. It is my hope that these interviews will spark discussion about opportunity and the vitality of the American Dream.

-Amanda Levinson | Director of Policy Programs