Thomas Piketty's best-selling book, Capital in the Twenty-First Century, serves as a watershed example of the dual contradictions of capitalism and proves that the last century was characterized by a sharp divergence between social classes. He warns that the main driver of inequality—the tendency of returns on capital to exceed the rate of economic growth—threatens to generate extreme inequalities that stir discontent and undermine democratic values.

Much like Piketty's work, economists at The New School for Social Research strive to analyze the dynamics of capitalism using historical and empirical analysis and, through SCEPA, its policy implications. Following Piketty's remarks, New School Professor Anwar Shaikh and New School PhD Heather Boushey presented their own comments as well as join in a panel discussion to answer the question, where do we go from here?

Participants:

Thomas Piketty, Professor of Economics at the Paris School of Economics

Anwar Shaikh, Professor of Economics at The New School for Social Research

Heather Boushey, Executive Director and Chief Economist at the Washington Center
for Equitable Growth

 

posterOn Wednesday, September 9th, I will present King's College's annual Labor Day Lecture 4 p.m. in the Burke Auditorium. Titled, "Bread, Roses and Rest: Security Meaningful Retirement for All," I will discuss the need for retirement reform to ensure that all Americans are afforded the opportunity for a dignified retirement. The event is co-sponsored by the McGowan Center for Ethics and Social Responsibility at King's Collge and Wilkes-Barre's Peace and Justice Center.

You can read more about the event in Northern Pennsylvania's Times Leader's article, "Clinton Appointee to Speak on Retirement Policy at King's."

On June 23, 2014, SCEPA Director Teresa Ghilarducci appeared on MSNBC's UP with Steve Kornacki along with Neera Tanden from the Center for American Progress and Paul Sonn with the National Employment Law Project to discuss the bigger economic picture that necessitates raising the minimum wage. The panel discussed the facts that productivity gains have far eclipsed wage gains, that the federal minimum wage has been stagnant since 2009, and that the average hourly pay has declined over the past 12 months. The panel overwhelming agreed the best way to address these structural economic issues is through increased collective bargaining. A recent working paper by Teresa Ghilarducci and Joelle Saad-Lessler find two factors that significantly impact the likelihood of obtaining employer-offered benefits - time spent unemployed and union status. Therefore, attempts to raise wages must address the decline in workers' bargaining power and change the norms relating to benefits and wage provision. The City of Seattle has taken the largest step in addressing the wage gap by elevating their minimum wage to $15 an hour, while Massachusetts offers the highest state level minimum wage at $11 an hour. Teresa Ghilarducci ended the MSNBC panel with a summary of the advantages of unionization for both workers and employers.

The newly published 'Retirement Readiness in New York City: Trends in Plan Sponsorship, Participation and Income Security' report by Joelle Saad-lessler, Kate Bahn and I documents research, conducted at the request of New York City Comptroller Scott Stringer, reveals a 17% drop (from 49% to 41%) between 2001 and 2011 in the percentage of New York City workers participating in a retirement plan at work. Only 12% of New Yorkers had a defined benefit (DB) plan. The DB plan guarantees a pension return, whereas defined contribution (DC) plans i.e. 401(k)/IRA do not. As a result, DB plans maintained an average income replacement rate of 90% versus the DC plan, which on average only replaced 48% of workers' salaries throughout retirement. The consequences of declining employer-sponsored plans and low replacement rates threaten workers' standard of living in retirement and could increase poverty levels among the city's older residents. This research makes clear that under the current system of retirement savings, the only workers protected from a significant reduction in their living standards at retirement are the dwindling number of workers with traditional DB plans.

 

Currently, 59% of New Yorkers do have access to a retirement plan. Of those who do have a plan—either a defined contribution or a defined benefit plan—the majority have less than $30,000 for their retirement.

With an average annual benefit of only $15,528, Social Security is quickly becoming an inadequate income replacement at retirement. Without a supplemental income, many individuals will spend the later years of their lives in poverty, adding expenses to constrained working families, and requiring support from government at all levels.

The New York City Central Labor Council, AFL-CIO joined SCEPA on Tuesday, June 17th, for a conference on retirement security with New York City Comptroller, Scott Stringer and New York State Comptroller, Thomas DiNapoli. The conference addressed both problems and solutions to New York City’s retirement security crisis. At the conference, Scott Stringer announced the creation of an advisory panel to examine ways to provide retirement security for all New Yorkers.  

Conference Materials:
Retirement Readiness in New York City
Account Balances by Income: Even the Highest Earners Don't Have Enough
The Future of Elderly Poverty in America
What Would it Cost to Eliminate Extreme Elderly Poverty in New York City?
Pension Replacement and Downward Mobility
Confronting NYC's Retirement Crisis
John Adler's Presentation
James Parrott Presentation 

Below is a recent interview I had with Governing Magazine Editor Penelope Lemov on local and national efforts to mitigate the retirement crisis, in "States Search for Retirement Security Beyond Obama's myRA."

PL: How would you define the stakes states and localities have in public retirement security?

TG: Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers will be poor or near poor in retirement, living on a food budget of about $5 a day. It isn't just a matter of people being able to keep up their standard of living. We're talking about people who will be old and in a chronic state of deprivation -- with all the attendant dislocation that causes. Cities will suffer a decline in the stability of neighborhoods. Neighborhoods are rich when they have grandmothers who are stable and able to function.

The New York Times' Kate Taylor raises the issue of New York City's retirement insecurity in her article, As the City's Elderly Population Swells, Concerns Rise Over Lack of Access to Retirement Plans. She documents the decrease in workers' access to retirement plans at work found in SCEPA's research, Are New Yorkers Ready for Retirement?

"According to Ms. Ghilarducci's research, 59 percent of workers in the city do not have either a pension or a 401(k), up from 51 percent a decade ago. Many small businesses do not have the human resources capacity to manage a 401(k). Moreover, Ms. Ghilarducci says, 401(k)'s are less than ideal for workers themselves, since they charge higher fees and have lower rates of return than pension funds, in part because people can withdraw their money at any time."

The solution: "creating a pooled pension fund for private sector workers that the city itself could manage."