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The income and wealth gaps between people of color and white households are wide, but state-run retirement programs are attempting to help workers find parity.
As many as 67% of private-industry workers had access to retirement plans in 2020, according to the U.S. Bureau of Labor Statistics. A significant number of employees, however, remain left out of these programs — and it tends to be workers of color who are missing out.
Indeed, about 64% of Hispanic workers, 53% of Black workers and 45% of Asian American workers have no access to a workplace retirement plan, according to AARP. Small employers are also less likely to offer retirement plans to their workers, with about 78% of those who work for companies with fewer than 10 employees lacking access to a plan, AARP found.
State-facilitated individual retirement account savings programs have stepped in to attempt to close that racial savings gap.
Federal Reserve Board, 2019 Survey of Consumer Finances
“It’s preliminary at this point, but the idea was to close the retirement savings gap for people who are left out, and that tends to be lower-income workers, workers of color,” said Michael Frerichs, Illinois state treasurer.
Sixteen states have enacted new initiatives to help private-sector workers save and 11 of them have auto-IRA programs, according to Georgetown University’s Center for Retirement Initiatives. As of the end of January, there were more than $735 million in assets in these state-facilitated retirement savings programs, the center found.
“An important part of the purpose of the nationwide movement to have states play a supporting role for the private pension system has been this: to narrow the racial and gender and white-collar versus blue-collar savings gaps,” said J. Mark Iwry, nonresident senior fellow at The Brookings Institution.
He coauthored former President Barack Obama’s “auto-IRA” legislative proposal, a push to expand access…
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