Gotham Gazette http://www.gothamgazette.com/component/tags/tag/628 Tue, 12 Dec 2017 06:47:40 +0000 en-gb webmaster@gothamgazette.com (Webmaster) Private Sector Retirement Security Plans Become Next Progressive Cause http://www.gothamgazette.com/?id=6192:private-sector-retirement-security-plans-become-next-progressive-cause http://www.gothamgazette.com/?id=6192:private-sector-retirement-security-plans-become-next-progressive-cause de blasio state of the city

De Blasio delivers his State of the City (photo: Demetrius Freeman/Mayor's Office) 


Experts warn that the entire country could be headed for a financial crisis caused by the fact that an aging workforce has not been saving for retirement.

Whether due to cutbacks of public pensions, the lack of retirement plans offered by private employers, or workers forced to raid their savings, it appears to a growing number of advocates and politicians that many Americans will be forced to keep working far into old age or attempt to survive on below-poverty-level support from Social Security and local welfare programs.

"If we don't make sure something is in place to prevent this, the city and state will have a catastrophe on their hands," Beth Finkel, director of AARP's New York office, told Gotham Gazette. "Ultimately these people are going to turn to the state and city to survive."

City officials cite stark statistics - only 43 percent of working New Yorkers have access to a retirement plan and 40 percent of New Yorkers between the ages of 50 and 64 have less than $10,000 saved for retirement.

It appears to be an issue that is keeping New York's political leaders up at night. It also presents an opportunity for elected officials to lead on another progressive policy matter.

Gov. Andrew Cuomo and Mayor Bill de Blasio both announced plans to confront the issue in their recent annual addresses - Cuomo's State of the State, de Blasio's State of the City. Cuomo appointed SUNY Chairman Carl McCall to head a commission to study the issue, while de Blasio said he plans to work on legislation with the City Council that would allow the city to offer retirement plans to private sector workers who are not offered plans by their employer. He outlined the framework in his Feb. 4 speech.

De Blasio's plan would make the city the first in the country to offer such a retirement program, although a few states have adopted legislation to create something similar.

Many see the issue of government-backed retirement for private sector workers as the next progressive push, after minimum wage and paid family leave. De Blasio said as much during a recent appearance on Bill Samuel's Effective Radio program. "So this is our contribution to New York City towards what I hope will be a much bigger forward march of history and it certainly aligns with what we've done on the other issues you've talked about like paid sick leave and affordable housing, pre-K, et cetera," said de Blasio. "This is a package of things that have to change urgently, not just at the local level, but up to the federal level."

De Blasio's retirement plan would require employers with 10 or more employees to offer voluntary access to a city-run retirement plan. The city would cover upfront costs of starting the plan and a board would be appointed to implement it. Employees would have their contributions automatically deducted from their paychecks. Neither the city nor the state would contribute to the plans.

Businesses would not be able to drop plans they currently offer. The bill will be crafted by the de Blasio administration in collaboration with the offices of City Council Speaker Mark-Viverito, Public Advocate Tish James, and Comptroller Scott Stringer. Representatives of the de Blasio administration did not respond when asked about a timeline to introduce a bill.

"[I]t's something the city would manage and we would put some initial investment into," the mayor told Samuels during his Sunday radio appearance. "And it would give every worker the opportunity to join a retirement security plan that they could really depend on, would not evaporate because it would be supported and backed by the City of New York, and it would mean putting their own resources into it," de Blasio said.

The de Blasio administration has also asked the federal government to act to ease burdens and liabilities the city could face in managing retirement accounts. However, not many involved in the issue expect Washington to take action anytime soon. The Department of Labor has been giving guidance to states that have attempted to implement similar programs, but has yet to issue a full set of guidelines. It is likely that the state would have to approve any city-backed retirement program.

The mayor is set to hold a press conference on the plan Thursday afternoon at City Hall at which Stringer, James, and Mark-Viverito will each also speak.

Stringer was one of the first New York officials to take on the issue, constructing a working group of nationally recognized academics to study the retirement crisis in February of last year. The group, which features academics from across the political spectrum, is expected to issue recommendations this spring.

"There's no question we have a looming crisis on our hands when it comes to retirement security – in New York and the nation," Stringer said in a statement to Gotham Gazette. "Today, 57 percent of New Yorkers lack access to a workplace retirement plan, which has huge implications both for city services and for the ability of our seniors to live out their lives in dignity."

Citing a "need to recognize that one size does not fit all when it comes to retirement security," Stringer said that his "office has been working over the past year with a diverse group of some of the nation's top academics to put together thoughtful, innovative proposals to increase retirement savings options and protect the City's budget."

Public Advocate James proposed a bill in February of last year that would have established a review commission to study the feasibility of a city-backed pension fund for private workers. The bill hasn't made it out of committee, but de Blasio's plan appears to be making it obsolete. James issued a study about the impending retirement crisis.

"There are so many major players who are committed to this that it is hard to imagine we won't get something done, but the devil is in the details," said Finkel of AARP. "I think the major players understand the urgency. Every year we put off is another year people aren't saving."

Samuels, head of public policy think tank Effective NY, said he has been lobbying top state and city leaders on the issue for a few years. Now, he said, even with interest from Cuomo, de Blasio, and a host of other city officials known to compete with each other, "There is a cooperative environment at this point." Samuels says that a number of the leaders involved in the issue have been meeting to hash out a sensible solution.

It is unclear how a state plan might interact with a city plan - whether one would override the other, or if it would make sense to have two if the state acts. Some insiders see de Blasio and Cuomo focused on an issue and wonder when the competition and skullduggery will start. Some hope that city officials will unite around one plan that will then be used by the Cuomo administration as a blueprint. De Blasio administration officials said they would welcome action by the state.

Samuels said he was first moved to address the issue during a trip to his hometown of Canandaigua, in Western New York, while talking to his old friends about their children. "Their kids, even if they had a 401K, they had to raid it for an emergency, so they have nothing for retirement. It was an eye-opener," explained Samuels.

"There is a real national problem and it's not going to get solved in Washington. We have a startling number of people heading into retirement in poverty," Samuels told Gotham Gazette. "I worked for a company that put 15 percent of my salary into retirement. Reagan convinced people they should manage their own money. So What happened was 401Ks were set up and almost all companies stopped putting any money in toward retirement."

There is debate among politicians, academics, advocates, and business leaders about how to offer a retirement plan that actually helps workers save without hurting small businesses. Issues in play include: what size of businesses to target, how to manage employee deductions, what kind of plans make sense for workers, and how to make sure plans are transferable should an employee find a new job or move. There will also be questions about management of the program, as there always are about public pension funds.

The Partnership for New York City, a leading city business group, is supportive of the idea behind de Blasio's plan. The group's president, Kathryn Wylde, said in an interview that the issue is extremely complicated and that she has concerns. "Frankly, I'd rather have the federal government or the state do something broader," Wylde told Gotham Gazette, whiling stressing that she supports de Blasio's action.

Wylde said businesses in different locales would have more of an equal footing if a retirement plan was offered by the federal or state government. She also pointed to underlying economic issues. "I'm not sure that simply providing a plan is a magic bullet," Wylde said. "People living on subsistence wages aren't suddenly going to have enough money to save. So I'm not sure there is a way to make this work without some sort of subsidy."

Mike Durant, state director for the National Federation for Independent Business, said that his members are concerned about having the state get involved in the issue, given their current fight against New York Democrats' push for a higher minimum wage and paid family leave.

"From the small employer perspective, we balloted our members on this topic last Fall with 85 percent of respondents opposed, with wide-ranging fears," Durant told Gotham Gazette.

Durant said members are concerned about liability issues, and "yet another mandate handed down by government that could potentially fail to recognize the significant differences between Main Street and big business." Costs for managing contributions could be prohibitive to small "mom and pop" businesses that operate without a formal human resources office, Durant said.

"Simply, these proposals are concerning and have many moving parts and there is definitely not a simple solution across the spectrum of business," said Durant. "Albany has definitely not proven it is capable of acknowledging the complex differences between big and small business through legislation, which adds to our concerns."

A number of states have passed legislation to implement state-backed private sector retirement plans in a variety of ways.

California adopted such a plan in 2012. There, the bill requires employers of five or more that don't offer a retirement plan to offer a savings plan similar to an IRA that is backed by the California Public Employees' Retirement System.

Illinois adopted a plan in 2014 that requires employers that do not offer a retirement plan, have been in business for more than two years, and employ 25 or more to automatically enroll employees in a state-managed plan that offers a variety of investment plans and payroll deduction levels.

Connecticut has dedicated $400,000 to the creation of a board to study and create a state-based retirement security plan. The plan must be submitted to the state by April of this year.

None of these states have begun accepting contributions to their plans and many are waiting for more guidance from the federal government.

Samuels, of EffectiveNY, said that the wide variety of opinions on how to implement a plan, the number of principles involved, and the scope of the debate are encouraging to him. "Everyone is on the same page that this is an important issue," he said. "There is lots of overlap but we are headed toward a solution. The reason I pushed the city first is I felt it would be tough to get through in the state, but the politics have changed and now Cuomo has named a commission."

Finkel of AARP said that she expects New York City will lead on the issue and that cities and other states across the country will follow.

"Studies tell us that people are 15 times more likely to save if they have something automatically deducted from their paycheck. It's low-hanging fruit and I would hope that New York City will be the first city in the country to implement this kind of plan."

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by David King, Albany editor, Gotham Gazette
     

Read more by this writer.

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Private Sector Retirement Security Plans Become Next Progressive Cause Wed, 24 Feb 2016 23:31:50 +0000
Cuomo Seizes on Wage Issue as Legislature Sits Paralyzed by Scandal, Partisanship http://www.gothamgazette.com/?id=5739:cuomo-seizes-on-wage-issue-as-legislature-sits-paralyzed-by-scandal-partisanship http://www.gothamgazette.com/?id=5739:cuomo-seizes-on-wage-issue-as-legislature-sits-paralyzed-by-scandal-partisanship Cuomo

Gov. Cuomo at a minimum wage rally (Office of the Governor - Kevin P. Coughlin)


"Do we have any members of labor in the house today? I can't hear you!" Gov. Andrew Cuomo shouted to a crowd of union members holding signs touting the "Fight for $15." Cuomo held a large rally in Manhattan's Union Square earlier this month as he announced he had instructed his labor commissioner to empanel a wage board to consider upping the minimum wage for fast food workers.

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Cuomo Seizes on Wage Issue as Legislature Sits Paralyzed by Scandal, Partisanship Tue, 26 May 2015 02:10:07 +0000
On Minimum Wage, Cuomo Again Finds the Not-So-Happy Middle http://www.gothamgazette.com/?id=5627:on-minimum-wage-cuomo-again-finds-the-not-so-happy-middle http://www.gothamgazette.com/?id=5627:on-minimum-wage-cuomo-again-finds-the-not-so-happy-middle cuomo fair pay

Gov. Cuomo pushing his minimum wage hike (photo: @NYGovCuomo)


The middle ground is a particularly familiar place for Governor Andrew Cuomo - and it is where he has put himself in the debate over increasing the state's minimum wage. Cuomo has come under fire this week from electeds and advocates on the left who support a significantly larger increase to the wage than the one Cuomo has proposed and from conservative officials and business groups that oppose any increase whatsoever.

Cuomo and his proxies have toured the state this month promoting a proposal that would increase the state minimum wage to $10.50 an hour and New York City's to $11.50, even touting the support of a variety of labor unions and some city business reps. Cuomo and the Legislature enacted a staggered wage increase in 2013 that is set to culminate with a $9 statewide minimum at the end of this year. But, Cuomo now sees that as insufficient.

"I want to increase the minimum wage in this state, because the truth is the minimum wage is at $9, that's $18,000 a year, and you cannot live in this state and raise a family on $18,000 a year. You can't pay the rent, you can't pay for food, you can't pay for insurance, and you can't buy clothes on $18,000 a year," Cuomo said at a rally in Rochester focused on his upstate agenda.

He continued: "The Assembly wants to raise it to $15 an hour. God bless them—shoot for the stars - that's what they did in the Assembly. The Senate is totally against raising the minimum wage. I think the truth is somewhere in the middle, I proposed raising $9 to $10.50 statewide. Often, the political truth is in the middle."

There may be no better, simpler summation of Cuomo's governing philosophy than that.

The State Senate's one-house budget proposal contains no minimum wage increase while the Assembly's would set New York City's minimum wage independently of the state's and tie it to inflation. Per the Assembly outline, the state's minimum wage would be $10.50 by 2017, $12.60 by 2019 and the city's and surrounding suburbs would reach $12.50, then $15 at those times.

In a statement, new Assembly Speaker Carl Heastie said, "Raising the minimum wage is about the moral obligation we have to help families across the state who are struggling to get by. The current wage floor is not enough to allow full-time workers who put in a 40- hour work week to afford life's basic necessities, let alone achieve financial independence."

Cuomo's proposal shirks promises he made to the Working Families Party last spring in exchange for its endorsement that he would back a plan to allow the city to increase its minimum wage in connection to the rate of inflation. Mayor Bill de Blaiso, who helped broker the deal between Cuomo and the WFP, is still a major supporter of giving the city control of its own minimum wage and linking it to inflation, as are many Democrats in the state Legislature. The mayor has even asked city businesses to start voluntarily paying a $13 hourly minimum.

Despite his public campaigning on the issue, Cuomo has given signals that he is wavering.

"I hope to get it done this legislative session either in the budget, which is April, or at the end of the legislative session in June," Cuomo reportedly said during an appearance in Buffalo. Putting anything out of the budget and into policy negotiations thereafter gives it less weight, but could lead to expanded time for negotiation.

Advocates like Michael Kink of Strong Economy for All say that if Cuomo is serious about the wage increase he will not abandon it in budget negotiations. "I think obviously he has the most leverage in the budget. It is the only time where all three sides have to agree on something so there will always be something in the budget each of the three leaders view as main," Kink said. "They can stomach something they oppose to get a big win. Obviously Cuomo's priority is the privatization of education and charter schools. I'm glad he is working on it (the minimum wage), but the fact that he is going in signaling he is willing let it go is disturbing."

State Sen. Liz Krueger said it was "troubling" to hear Cuomo indicate he could deal with the minimum wage outside of the budget. "This is the place to get this done and this is the one economic proposal that will help everyone across the state."

Kink doesn't feel Cuomo's wage proposal goes far enough. "We want a wage hike that will a make difference in workers' lives," said Kink. "Fastfood workers didn't start fighting for $9.50, they wanted something that would help people pay bills and lead their lives. That's why they started 'The Fight for 15.'"

Meanwhile, a group of business interests, upstate chambers of commerce, and conservative advocacy groups joined together this week to oppose even Cuomo's smaller wage proposal.

"Any attempt to increase the minimum wage before full implementation [of the plan in place] should be rejected," the groups said in a statement. "We strongly urge Albany to continue the progress made in improving New York's economic competitiveness while focusing on pro-growth initiatives as budget negotiations enter this final stretch." Members of the coalition include The Business Council, Unshackle Upstate, The Farm Bureau of NY, and The National Federation of Independent Business.

The groups say that the full impact of the state's last minimum wage hike on businesses is not yet apparent as the $9 wage won't go into effect until the end of the year.

Business groups took offense earlier this month because Cuomo unveiled his "Fight for Fair Pay" campaign while they held their small business lobby day at the capitol.

"Gov. Cuomo's campaign to increase the minimum wage could push struggling small businesses over the edge," Greg Biryla, Executive Director of Unshackle Upstate, said in a statement on March 3. "For employers who are trying to create new jobs and expand their business, another minimum wage increase and an added $69 million in new health care taxes would be a brutal combination. Albany needs to focus on improving the state's business climate – not make it more toxic."

Senate Republicans have not included a minimum wage increase in their budget proposal but some members indicate it is an issue they are willing to negotiate. However, they note that not only is the state's last wage wage increase not fully implemented, but that the Labor Department also just increased the minimum wage for tipped workers in February.

Kink said that Cuomo's public support of a minimum wage increase is "valuable" but also just makes political sense. "This is a tremendously popular issue for voters in both parties," Kink said. "I'd love to see increased aggression from the governor on the minimum wage. I'd like to see him throw the kind of ferocity into the faces of minimum wage opponents that he shows to the groups opposed to his education agenda."

Cuomo's public support of a wage increase isn't exactly typical of the governor. He has been criticized by advocates in the past for not stumping on specific policies.This time Cuomo has been on the road and his office is issuing press releases in support of the increase.

"The sweetest and healthiest success is one that enables everyone to do well together – that is what community is all about," Cuomo said announcing his "Fight For Fair Pay."

"As our economy recovers and our businesses add new jobs, we need to ensure our entire workforce has the opportunity to be part of the economic recovery and new momentum we are seeing in all corners of the State," the governor said. "New York has always been a leader in protecting our workers and building strong communities, and this year we must continue to move forward by fighting for fair pay and raising the minimum wage statewide."

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by David King, Albany editor, Gotham Gazette
@DavidHowardKing

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On Minimum Wage, Cuomo Again Finds the Not-So-Happy Middle Thu, 12 Mar 2015 17:07:54 +0000