Dive Brief:
- Retirement savings lag in America, as 1 in 3 U.S. workers have no access to a retirement savings plan, including half of workers at employers with fewer than 50 employees and more than three-quarters of part-time workers.
- According to a Department of Labor blog post, retirement security is essential to ensuring American workers’ long-term economic prosperity, but retirement savings have not kept pace with the nation’s aging population and other economic and demographic changes.
- With that in mind, this week the Labor Department unveiled a new grant program to help workers – especially low-wage workers – adapt to the changing nature of America’s workplace through retirement savings benefits, especially within the "portable" benefits category.
Dive Insight:
The Portable Retirement Benefits Planning grant program is designed to help workers who traditionally lack access to employer-provided retirement benefits, including independent contractors, or those less likely to have income from pensions or assets. The Labor Dept. says it is especially important for low-wage workers and women, who face a higher risk of poverty in their retirement due to inadequate retirement savings, lower average lifetime earnings, lower likelihood of working full-time, greater likelihood of taking unpaid time off for caregiving, and longer life spans.
The new program will award two to four grants of between $25,000 and $75,000 to help nonprofit organizations develop a portable retirement benefits program for their members, clients and constituents.
At the same time, this week at the Democratic National Convention, Sen. Mark Warner (D-Virginia), an honorary chair of the Future of Work Initiative from the Aspen Institute, spoke about the need to create a new social contract between workers and employers. The Aspen Institute's Future of Work Initiative earlier this month released recommendations on how to begin creating a portable benefits systems for on-demand economy workers. The guide offers employers a thorough background on the thinking in this arena, as well as detail on the Future of Work’s suggestions for creative next steps to address portable benefits.
Taken together, these are promising developments in moving forward the creation of a modern social safety net for "gig economy" workers, many of them who have little or no benefits, especially healthcare coverage and retirement savings. It's an ongoing discussion, but one that will require cooperation in Washington D.C. to succeed.