27 March 2021

ADDRESSING WEALTH INEQUALITY > Poverty, Wealth and Savings In A Post-Pandemic Economy


This is somewhat academic, but let's see if there are any actual and possible outcomes in what they a White Paper that can be downloaded
 
 

The COVID-19 recession has laid bare the reality of the lack of wealth among millions of American workers in the bottom half of the income distribution, many of whom have disproportionately lost their jobs and have no meaningful assets to fall back on. The median net worth of the bottom 50 percent of American families is $0. Without sufficient wealth or money put aside in savings, low- and moderate-income workers are forced to work into old age, since just one job loss or health crisis could spiral them into poverty. 

Today, the Economic Innovation Group (EIG) released a white paper co-authored by a bipartisan pair of economists, Professor Teresa Ghilarducci, a labor economist at the New School and leading expert on retirement security, and EIG Economic Advisory Board member Dr. Kevin Hassett, Vice President and Managing Director of The Lindsey Group and the former Chair of the White House Council of Economic Advisers, outlining a bold and achievable proposal to address wealth inequality.

In "What If Low-Income American Workers Had Access to Wealth Building Vehicles Like the Federal Employees’ Thrift Savings Plan?" the unlikely pair call attention to the urgency of addressing wealth inequality in America and outline a policy proposal that would expand access to a program modeled after the federal Thrift Savings Plan (TSP) to low- and moderate-income Americans

The lack of retirement savings among the bottom 50 percent of American workers is a leading factor in the overall landscape of wealth inequality. Low- and moderate-income Americans are largely unable to realize the benefits of popular retirement savings programs, such as IRAs and 401(k)s that incentivize long-term saving and wealth building for Americans with taxable income. More than half of American workers over the age of 25—most of them low and moderate-income or minorities—are not participating in an employer-sponsored retirement plan. 

Professor Ghilarducci and Dr. Hassett call for a program modeled after the highly successful TSP for low- and moderate-income American workers, a highly successful and closely studied program that features automatic enrollment for eligible workers, very low fee ratios, simple plan options, and matching federal contributions. This program would address the longer-term challenge of helping more American workers build long-term savings, retirement security, and intergenerational wealth—and in turn, gives them a more direct stake in the American Dream and our national economic success.
Interactive Tool: Building Wealth with a Federal Savings Match
The paper estimates that for the median household in the bottom 25 percent of the wealth distribution, 40 years of participation in such a program could provide them with a savings account balance anywhere between $138,000 and $610,000, depending on the level of the government match and the rate of return on investment.

Visit 
our website to explore the potential wealth generation effects of such a program using our interactive tool and to download the full white paper.  
Inclusive Wealth Building Initiative Coverage
Axios
How to make poorer Americans richer
Felix Salmon

Bloomberg Law

Open Thrift Savings Plan to Low-Wage Workers, Study Suggests
Lydia O'Neal and Austin Ramsey 

Our mailing address is:
Economic Innovation Group
616 H St NW
Washington, DC 20001-5800

 

 

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