Retirement Insecurity

Aug 14 2019

When President Franklin D. Roosevelt signed the Social Security Act on August 14, 1935, one-quarter of the workforce was unemployed and half of all seniors lived in poverty. Since then, Social Security not only has prevented tens of millions of men and women from falling into poverty, it has become the bedrock of retirement security for all Americans.

However, for millions of Americans, the “three-legged stool” of retirement—Social Security, pensions and private savings—is coming apart. Since the late 1980s the percentage who receive traditional pensions has been cut almost in half. Furthermore, less than half of wage earners have defined contribution accounts like a 401(k) or IRA. One-third of near retirees—those ages 55-64—have neither a defined benefit pension nor a defined contribution plan.

As a result, half of American households are at risk of being unable to maintain their standard of living in retirement. Even those who take extraordinary steps—like working until 65 (five years past the current average retirement age), annuitizing all financial assets or reverse-mortgaging their homes—may not be able to maintain their living standards. Worse, forty percent of workers ages 50-60 who are not currently poor would be poor if were they retire at age 62. Women, Blacks and Hispanics are at substantially greater risk of being poor in retirement.


Introductory Letter

I am pleased to share the Joint Economic Committee (JEC) Democratic response to the 2019 Economic Report of the President. The JEC is required by law to submit findings and recommendations in response to the Economic Report of the President (the Report), which is prepared and released each year by the Council of Economic Advisers (CEA).

This year’s Report is substantially different from those of previous administrations, which largely were careful, research-based and data-driven assessments of the economy supported by mainstream economic theory. Instead, the 2019 Report misconstrues wellestablished facts, cherry-picks data, relies on economic theories widely rejected by mainstream economists and entirely omits critical subjects. As a result, it seems motivated more by politics than economics.

The Report, like President Trump, claims full credit for economic conditions that he mostly inherited from his predecessor. It altogether ignores the fact that average monthly job growth was stronger during the last two years of the Obama administration than the first two years of the Trump administration, the period examined in the Report. At the time of the president’s inauguration, the unemployment rate was 4.7 percent and trending down and the economy had added jobs for 76 straight months. The president implausibly has claimed that he has achieved an economic turnaround, a claim that has been refuted by the facts.

Read the report

The 2017 Tax Act, passed by the Republican majority in Congress and signed into law by President Trump, has had a number of unintended consequences as well as strongly negative effects that weren’t clearly articulated at the time of passage. In particular, the nonprofit sector has been hit hard by financial and administrative burdens that have interfered with the ability of the charities to pursue their missions in the fields of health care, education and other human, religious and cultural services.

The Tax Act decreased incentives to donate to nonprofits because of the large increase in the standard deduction, while increasing administrative costs, imposing new taxes on nonprofit employee fringe benefits and excluding nonprofits from the new family and medical leave tax credit.

While the stated intent of some recent legislation has been to level the playing field between nonprofits and for-profit entities, the outcome of the Tax Act is that new burdens are placed on resource-strapped service providers. If Congress does not undo these harms, many nonprofits will be forced to cut back staff and services, and some may have to cease operating. The full effect on the sick, disabled, young and disadvantaged who depend on nonprofit services is incalculable, but this report outlines the dimensions of the new obstacles that have been placed in the way of Americans devoting their lives to keeping their neighbors healthy and whole.

Read the report

Assessment of Economy as it Pertains to the Federal Budget

The Budget Act of 1974 instructs the Joint Economic Committee to provide recommendations to the Budget Committee “as to the fiscal policy appropriate to the goals of the Employment Act of 1946.” The goals set forth in the Employment Act are to ensure that there are jobs available to all who are “able, willing and seeking to work” and to “promote maximum employment, production and purchasing power.” Below are the recommendations of the Democratic staff of the Joint Economic Committee in accordance with these goals.

Fashion is a highly sophisticated, $2.5 trillion global industry. In the United States alone, consumers spent nearly $380 billion on apparel and footwear in 2017. The industry, which encompasses everything from textile and apparel brands to wholesalers, importers and retailers, employs more than 1.8 million people in the United States. 

The U.S. fashion industry has evolved from its roots in manufacturing to new high-value design and other creative jobs. As with many industries in the manufacturing sector, the United States now concentrates on the high-value parts of the apparel global supply chain: research and development (R&D), design and marketing.

The twin forces of technology and globalization have had enormous ripple effects in the fashion industry, similar to many other industries, and has created new trends, challenges and opportunities. The impacts of social media, new business models, advanced manufacturing, and changing demographics are leading to significant changes in all aspects of the fashion industry with the potential to reshape it for years to come.

Read the report