Help low-wage workers save for the future
Hand-wringing over the plight of the working poor is a non-partisan activity. Everyone gets in on the act – Democrats, Republicans, Libertarians and all the rest. Beyond the angst, hardly anything ever gets done. Until now.
Legislators have an excellent opportunity to give those who work hard but have no path to save for retirement an opportunity to help themselves. And it won’t cost much.
Through Senate Bill 1234, Senate President Pro Tem Kevin de León would provide people whose employers don’t provide pensions or 401(k) plans with a relatively easy way to set aside a little for the time when they can no longer work. De León began working on the idea in 2012, establishing a study. That study is done, and his SB 1234 would implement what De León calls Secure Choice.
Awaiting a vote in the Assembly, the bill would create a potentially far-reaching social program with limited risks. Individuals could set up individual retirement accounts that would be overseen by the new California Secure Choice Retirement Savings Investment Board. Their money would be invested mainly in U.S. Treasury bills, an investment so safe that people all over the world buy them in times of global stress. Whatever workers save through Secure Choice would supplement Social Security and any other retirement savings.
Wednesday, acknowledging amendments spelling out the bill’s limits, the California Chamber of Commerce, the California Manufacturers & Technology Association and several other business groups dropped opposition.
An employer’s responsibility is simply to provide workers the paperwork to sign up – along with all the other forms new employee must fill out. The amended bill specifically says employers are not responsible for providing advice and employers have zero liability for any decisions employees make. There are no matching dollars, no incentives and no liabilities if the investments don’t pan out.
The legislation makes clear that taxpayers aren’t on the hook if the investments sour, either. And after six years, the cost of administering the fund would be capped at 1 percent.
If lawmakers approve it – and they really should – the program would be phased in, starting with companies employing 100, and expanding to businesses with as few as five workers. It’s purely voluntary, meaning workers can opt out at any time. In fact, the bill repeats the term “opt-out” eight times.
Union members are excluded, but those covered include restaurant workers (including teenagers working part-time), in-home supportive service workers, janitors, those working for farm labor contractors, and many others. They’d be expected to sock away from 2 to 5 percent of their pay.
Secure Choice would not specifically cover so-called gig workers, such as Uber drivers. Understanding that people find new jobs, the individual accounts would be entirely portable, following workers as they move from job to job. And those Lyft or Uber drivers could sign up to make voluntary contributions.
De León, a liberal Los Angeles Democrat, proposed the bill with his Aunt Francisca in mind. She worked a lifetime cleaning houses and tending to infirm people and never saved for retirement.
Even conservatives should like this bill; it limits the size of government and recognizes the limitations of Social Security while helping wage earners help themselves.
Assemblymembers: Stop wringing your hands and raise them in support of SB 1234.
This story was originally published August 18, 2016 at 1:27 PM with the headline "Help low-wage workers save for the future."