Paid Leave
Paid family leave and paid sick days make it easier for workers to take care of their families and themselves, but millions of workers do not have access to these commonsense policies. Overall access to paid family leave has improved, but only 15 percent of all workers in the private sector have access to the benefit. Seventy percent of private industry workers have paid sick days, but more than 44 million workers in the private industry still do not have access to the benefit, including 27 percent of workers earning the bottom 10 percent of wages.
To fix that, we should pass federal laws requiring businesses to provide up to seven paid sick days to all workers.
And we should create a national Family Medical Leave trust fund, similar to Social Security, where workers can earn paid family leave. To do this right, employers must contribute. Workers should not be forced to borrow against their Social Security benefits and jeopardize their retirement in order to take time off to have children or care for other family members. And all workers should have equal access to the Family Leave trust fund, even those in nontraditional work arrangements.
Employers can no longer be allowed to misclassify workers as contractors instead of employees in order to avoid paying their fair share of workers’ benefits.
We also recognize that raising children or caring for aging parents is work. And to honor that work, we should ensure workers can earn credits toward Social Security when they take time off from traditional employment to work as caregivers.
Retirement
Two-thirds of private sector workers do have access to some type of retirement benefits through work, but largely in the form of defined contribution 401k plans, where more of the burden falls on workers. And because of declining wages, even workers who have access to retirement plans aren’t able to save. In fact, more than half of workers do not participate in a plan, and those who do are unable to contribute much. Median retirement savings for families between 50 and 55 years of age is $8,000. For families between 56 and 61 years of age, it is only $17,000 in total retirement savings. Three out of four African American households and four out of five Latino households have less than $10,000 in retirement savings.
The result for many families is that parents end up caring for grandparents, shortchanging their own retirement or the ability to save to send their children to college. It has become a vicious cycle that leaves working families unable to amass wealth and gain a foothold in the middle class.
The bottom line is that working families need their retirement savings to go further. A $500 fully refundable savers credit in the tax code would match the savings of working households, even if they do not have any tax liability. This credit builds on the proven success of the Earned Income Tax Credit at rewarding work, to reward savings. All workers have value, and saving for retirement should not be rewarded less just because a worker has an employer that does not offer to match their savings.
In that same spirit, we must ensure that every worker has the opportunity to save. For some families that means building up an initial rainy day fund that they can access without any penalty in the event of an emergency. We should bring back the MyRA program that allowed workers to save in accounts run through the Treasury Department. Unlike traditional defined contribution plans, these accounts allow for small dollar contributions, and working families can withdraw from the account without penalty.
Current law must also be changed so that part-time workers that are currently excluded from employer-sponsored retirement plans are allowed to access those plans.
Other workers have the ability to save, but they work for corporations that do not even consider them employees, or for small businesses with owners who are struggling themselves to save for retirement. All of these workers cannot access or afford to access the private retirement savings system. We have to create systems for these small businesses and independent contractors to save in the same way workers at large corporations can. If we allow these businesses and workers to participate in low-cost, high-quality defined contribution plans that large employers offer their workers, it will close the gap.
Finally, we should use the tax code to encourage employers to offer high-quality defined contribution plans where the employer matches a significant portion of the employees’ contributions. The carrot and stick approach of the Patriot Employer Act and the Corporate Freeloader Fee reward employers that provide decent retirement plans with a lower tax rate and levy on fee on those who do not.