A Bill to Let Workers Save Like Members of Congress

America is facing a looming retirement crisis. With wages stagnant and the costs of basic needs like housing, education and child care rising rapidly, it’s already difficult for low- and middle-income Americans to save. And to make matters worse, 68 million Americans currently do not have access to a retirement savings plan through their employer.

Contrast that with Congress, where every Member and millions of federal employees are able to take advantage of what is known as the Thrift Savings Plan (TSP). The TSP helps ensure a secure retirement through automatic enrollment; simple, easy-to-understand, investment options; and low fees—all of which are proven to increase retirement savings.

If federal workers can have this plan, then why can’t American workers? Giving every worker who lacks an employer-provided retirement savings plan access to a plan like the TSP is a no-brainer.

That’s exactly why one of us, Senator Merkley, recently unveiled the American Savings Act, a major new piece of legislation that is based on the effective TSP model and mirrors many policy recommendations from the Center for American Progress Action Fund. It would ensure that if an employer doesn’t already offer a retirement plan, each of its workers automatically would be given his or her own American Savings Account (ASA). Initially, the employer would put 3 percent of a worker’s earnings into the account with each paycheck, but individuals could choose to adjust the contribution or to opt out entirely. Employers would simply send employees’ ASA savings to the federal government alongside employee tax withholdings. Americans who are self-employed would have the option to open an ASA at any time.

If federal workers can have this plan, then why can’t American workers?

These accounts would also benefit workers by featuring the same sensible investment options that are offered to federal employees. Workers would control their own accounts directly through a website, and an independent board of directors would manage the investment of the funds.

This legislation would make a big difference in the lives of millions of Americans who are currently struggling to save for retirement, which is why it is endorsed by groups representing seniors, workers and small businesses—including AARP, UNITE HERE, and the Main Street Alliance. The Center for American Progress Action Fund found that a worker saving under a similar plan would be more than twice as likely to have a secure retirement than a worker contributing the same amount to a typical 401(k) plan—to say nothing of the difference between a worker with this kind of plan and one with no retirement savings at all.

That’s not to say that expanding access to retirement plans is a silver bullet solution to the retirement crisis. We also need to strengthen Social Security. But Social Security was never intended to be the sole source of income for retirees, which is why we need to also make it easier for Americans to set aside and build savings that can supplement their Social Security income.

When workers do not have access to a retirement plan at their workplace—either because their employer doesn’t offer one or because of the nature of their work—they are unlikely to save for retirement. Expanding access in the manner called for under the American Savings Act would help shore up our retirement system—which, ever since the decline of private-sector pensions, has increasingly failed to meet the needs of a significant part of our workforce.

It shouldn’t matter whether you’re a Member of Congress, or you work part-time or full-time for a huge corporation or a small business: every American worker deserves access to a financially secure retirement.


First Person

Living in Poverty Amid Affluence

As income inequality grows among Americans, so does the tension it fuels.

As one of millions in this country struggling to make ends meet, I am weary of inequality and poverty—not only from my own personal hardship and the financial hurdles that exhaust me each day, but also because of the differences in treatment I experience compared to the more affluent.

Case in point: Denver, my hometown—one of the fastest growing cities in the United States. In Denver, the poor and the well-off are practically on each other’s doorsteps. On the 16th Street Mall in Downtown Denver, young professionals walk past homeless individuals daily. Recent college graduates hit the bar scenes in posh Cherry Creek or the exploding RiNo District as minimum wage workers prepare customers’ food and clean their homes—just one of the two or three jobs they likely juggle. At the King Soopers in Stapleton, one customer pays for groceries with a Platinum MasterCard and the next with an EBT card. And in areas like Park Hill, while the majority-black side of the neighborhood struggles with poverty and gang violence, middle and upper class families—mostly non-minorities—live in architecturally ornate homes valued at over a half-million dollars.

These inequalities are more than visual—they add to the huge burden that already weighs on those of us who face economic hardship. Research has demonstrated that inequalities in the housing market drive up rents, and Denver is no exception. While I am grateful that my children and I have been able to live in a two-bedroom apartment for eight years, my rent went up by 11 percent this year and it has been a struggle to meet that increase every month. At this point, I cannot afford a three-bedroom rental (which would be helpful to accommodate my growing children), let alone secure the money to put down a deposit.

Where there is stark hardship in close proximity to wealth, there will be unrest and desperation.

And there are also psychological impacts that arise from these inequalities. A 2010 study highlighted this phenomenon when it revealed that countries with high levels of income inequality face high rates of mental illness. In no country was this more evident than in the United States, where income inequality is associated with heightened risk of depressive symptoms and anxiety disorders. This also applies to Denver—I’ve seen firsthand that where there is stark hardship in close proximity to wealth, there will be unrest and desperation.

There are times when I struggle with envy, wishing that I could simply afford a bigger place to live that was closer to the kids’ schools, my evening and weekend jobs, and our friends. My children and I are frugal and enjoy everything we can on a minimal budget—which means not going to full-price movies more than two to three times a year, rarely visiting museums or attending events that cost money, and avoiding vacations. In fact, last summer my kids and I took our first vacation in years—and it was 48 hours long. While we appreciate all that we are able to do and what we do have, it only exacerbates our hardship when we struggle to make rent month after month, and then look across the street to see a manicured lawn, two nice cars, and a double- or triple-sized garage attached to the five bedroom house that holds a family of four.

To make matters worse, my daughter’s friends started excluding her from their plans, saying, “There wouldn’t be a problem if you just had an iPhone.” My child was distraught, telling me, “They don’t understand because their parents haven’t lost their jobs, they’re not on food stamps, and they live in nice homes and drive nice cars.”

The inequalities don’t stop there. We can’t afford to live close to school so my kids spend a significant chunk of their after-school time in the car and with me at work. When other kids are benefiting from enrichment activities outside of the classroom (and have nannies to facilitate the process), my kids go without because I am not always able to be there at drop-off or pick-up time due to my unusual work schedule, and I cannot always afford the fees. It’s these kind of income-based differences in afterschool participation that fuel the widening achievement gap between rich and poor.

And then there are health issues. I haven’t been to a dentist in years because it has been a major challenge to find one who still accepts Medicaid—it’s generally more cost-effective for doctors’ offices to accept private insurance, which more and more Denver residents are able to afford. Unfortunately, the same principle applies to mental health care. And when those in poverty or on the brink of it cannot afford care, mental health needs often go untreated. Meanwhile, those who can afford a therapist or psychologist get the help that they need and it positively impacts their health.

The fact is that how much money you have relative to others matters: from the level of health care you can afford, to the quality of your kids’ education, to where you can live. And as the gap widens between those who have enough and those who are barely making it, it threatens to divide us as a country and as a society.



What Second Graders Can Teach Us About Inequality

Two of the most widely cited statistics on inequities within the American labor market are that the average woman earns just 79 cents for every dollar earned by a man, and that the black unemployment rate is typically double that of whites. While these statistics are partly accounted for by differences in occupation or education, gender pay inequities persist even among men and women in the same job, and the two-to-one unemployment disparity exists even for blacks and whites with the same level of education. What this means is that even among otherwise socioeconomically similar individuals, we can still observe differences in pay or employment that arise from discrimination.

Although the explicitly discriminatory policies and practices that created these disparities are now illegal—thanks in part to Title VII of the Civil Rights Act of 1964, which outlawed employment and pay discrimination on the basis of race, color, religion, sex or national origin—the inequities persist. That’s because many of the channels through which opportunity is passed, like social networks, are shaped by biases based on race and gender. Regardless of whether these biases are conscious or subconscious, patterns of old-fashioned segregation stand in the way of eradicating them.

Recently, I gained some profound insight into this phenomenon from a most unlikely place: a second-grade music class.

The fact that it was a music class in a racially, ethnically, and socioeconomically diverse elementary school offered a powerful symbolism. Here were kids from two different classrooms, with distinct cultures, family backgrounds, and personalities blending their voices together in harmony. Yet, even with the freedom to sit almost anywhere they chose, the students self-segregated by race and gender to a large degree. This seemed innocent enough at first. After all, it’s human nature to gravitate toward those we share more in common with or with whom we feel most comfortable. However, the broader implications of this tendency became more evident as the class went on.

Halfway through the period, the kids began an exercise in which one student would bounce a ball to the rhythm of the song the class was singing. Each time they finished a verse, that student would pass the ball on to someone else to continue the song. After a few rounds, one of the girls in the class spoke up about the fact that the boys were only passing the ball to other boys. When the teacher asked if other people had noticed the same thing, every girl and even a few boys in the class agreed. After enlisting the students to come up with a solution to make the game fairer to those who had been excluded, the exercise resumed under the new rules. Shortly after, another student mentioned that only students from one classroom were getting the ball. By the time they worked through that problem, time had run out for them to complete the exercise.

There were at least three important takeaways from this simple example that can be applied to the way we perceive and address race and gender inequities in this country.

  • The costs of inequality and discrimination may be more heavily born by those who have been discriminated against, but they are problems that belong to all of us—as such, individuals in leadership have a responsibility to listen to, acknowledge, and pursue solutions to these problems. For example, due to racial and gender biases, industries and jobs with a higher concentration of women and people of color tend to have lower pay—often minimum wage. As a result, these workers are more likely to earn poverty-level wages and need to turn to public assistance, which means that American taxpayers essentially subsidize the employers who pay inadequate wages. But policymakers can take action to rectify some of this. According to a recent report by the Economic Policy Institute, raising the minimum wage to $12 an hour by 2020 would not only lift wages for 35 million workers, many of whom are people of color, but it would also save $17 billion in public assistance spending annually.
  • Ending discrimination requires moving beyond a basic acknowledgement of the problem to honest, inclusive, and constructive engagement on the causes and solutions. For example, in order to target enforcement of equal pay laws and gain better insight into discriminatory pay practices, the Department of Labor and the Equal Employment Opportunity Commission recently announced a proposal to annually collect summary pay data by gender, race, and ethnicity from businesses with 100 or more employees. If implemented, this would be an important first step towards identifying bad actors and holding them accountable.
  • Segregation exists in nearly every area of American life, including in our neighborhoods, schools, workplaces, and places of worship. Regardless of intent, the result is often exclusion and marginalization of people outside our immediate social circles. In the end, this limits the full range of what could be available to all of us. Historian Richard Rothstein has painstakingly documented the history of racially explicit federal, state and local policies that have segregated African Americans into isolated slums across the country. These policies have created a legacy of racial injustice that has garnered national attention in cities like Ferguson, Baltimore, Chicago and Flint.

I was heartened to see a second-grade teacher address biases within her classroom. Now it’s time for more of our political and business leaders to follow suit.



How the Felony Drug Ban Keeps Thousands of Americans Hungry

With 2.2 million people locked up in prisons and jails, it’s fair to say America has a culture of incarceration. Our nation’s criminal justice system is so pervasive that Sesame Street now provides tools to help children cope with having an incarcerated parent.

But mass incarceration is not the end of the story. Each year, more than 600,000 individuals are released from lock up and return to their communities. And then America proceeds to punish them for having been punished.

In the 12 states that impose the lifetime ban, an estimated 180,000 women are impacted.

The felony drug ban is just one example. Adopted by Congress twenty years ago, the ban imposes a lifetime restriction on the cash assistance program known as Temporary Assistance for Needy Families (TANF) and nutrition assistance (SNAP) for anyone convicted of a state or federal drug felony, unless states opt out. In states where the ban applies, a person released from a long prison sentence could be denied basic assistance at a time of extreme vulnerability and risk.

A study by The Sentencing Project found that in the 12 states that impose the lifetime ban, an estimated 180,000 women are impacted. If we include the other 24 states that impose a partial ban, the number of people affected is significantly higher. And because drug law enforcement is conducted with racial biases, people of color are disproportionately denied assistance.

The felony drug ban can be traced back to the 1990s, when politicians of both parties sought political gain by getting “tough on crime.” Senator Phil Gramm (R-TX), the sponsor of the ban, argued that “we ought not to give people welfare benefits who are violating the nation’s drug laws.”  After just two minutes of floor debate, the measure was adopted by unanimous consent as part of the 1996 welfare “reform” legislation.

The felony drug ban was consistent with other efforts in Congress to get tough on formerly incarcerated individuals.  In the early 1990s, Congress began to erect barriers and cut services for people struggling to reenter society. First, Pell grants were barred for incarcerated individuals, ensuring that most could not receive a college education prior to release. Then restrictions were enacted to deny people with drug convictions access to welfare benefits, public housing, and financial aid for higher education. Largely missing from the debate was any discussion of whether such post-incarceration punishments are effective or even counterproductive.

Two decades later, there is little evidence that these tough on crime policies have improved public safety.  In general, post-incarceration punishment does little to deter crime, as most people are unaware that a conviction could result in the loss of public benefits.  For example, one study found that of 26 women facing drug charges, not a single one had been aware that she could lose food stamps or welfare benefits as a result of a conviction.

Meanwhile, the felony drug ban is counterproductive to safe reentry. After an individual leaves prison, food and welfare benefits can help meet basic survival needs as she searches for a job and housing.  The denial of such assistance increases the likelihood that formerly incarcerated individuals will return to criminal activity to provide sustenance for their families. And when welfare benefits are not available to offset the cost of drug treatment, it is less likely that former prisoners struggling with addiction will be able to live drug-free and avoid a return to prison. A study by researchers at the Yale School of Medicine even found that denying SNAP to women with felony drug convictions is harmful to public safety.

In recent years, there has been a broad re-thinking of policies that put thousands of people behind bars for long prison terms. States in every region of the country have scaled back harsh penalties that have contributed to mass incarceration.

In Congress, a bipartisan group of Senators has introduced the Sentencing Reform and Corrections Act, which would reduce the impact of harsh mandatory minimum penalties and create rehabilitative programming in federal prisons. The bill would mean fewer people locked up for decades for low-level drug offenses and it would free up funds that could be used for crime prevention and substance abuse treatment.

Federal sentencing reform is indeed necessary to reduce excessive rates of incarceration, which have had diminishing returns for public safety over the years. But along with that should come a reconsideration of post-incarceration punishments that strip former prisoners of the basic assistance they need to get back on their feet. In the past year, Texas and Alabama have taken steps to opt out of the felony drug ban. Until Congress acts to repeal the ban altogether, other states should follow their lead.

It is time to stop punishing people after they have been released from prison—not only to improve the life prospects of people who have served their time, but also as part of a broader effort to strengthen public safety and our communities.



The Evolving Fight Against Concentrated Poverty

Since the early 1960s and the civil rights movement, when urban concentrated poverty began to enter public consciousness, policymakers and neighborhood activists have pursued place-based anti-poverty work in distinct ways.  Back then it proved difficult to address the multiplicity of issues that exist when so many people with low incomes all live in the same zip code. Today, it remains a difficult task—maybe even more so—given the disappearance of good manufacturing jobs, increased concentration of wealth, and political gridlock.  Our country remains stubbornly segregated, and especially given how intertwined race and poverty are, it remains vitally important to focus on place.

Fortunately, we’ve had some new thinking on this front during the last eight years and I am guardedly optimistic that we are moving towards solutions.

I am guardedly optimistic that we are moving towards solutions.

Building on the work of social entrepreneur Geoffrey Canada, President Obama succeeded in funding the Promise Neighborhoods program centered on children in schools and, by extension, on their families. The initiative aims to improve educational and development outcomes for students living in urban and rural communities by providing cradle-to-career educational programs and family supports.  Beyond the importance of the initiative itself is the fact that it opened the door to new approaches to fighting poverty. If a neighborhood revitalization initiative could be anchored in schools instead of the traditional focus on housing and community development, other hubs could serve the same purpose—including community health centers, or early childhood or mental health facilities, or a variety of family services locations.

This past year I visited four places to look at some of the cutting-edge work focused on poverty and place.  The diversity of their theories of change is impressive, and all of them should be on our collective radar as we move into a new presidency.

Minneapolis, Northside Achievement Zone

I started in Minneapolis where I grew up.  The city is perplexing.  While it has a very low overall unemployment rate of 3.1 percent, the African-American poverty rate hovers over 44 percent and the  African-American unemployment rate is about 14 percent (compared to 8.8 percent nationwide).

I visited the Northside Achievement Zone (NAZ), a Promise Neighborhood composed of a 13-by-18 block segment of North Minneapolis that is 84 percent African-American, with poverty above 50 percent, unemployment concomitantly high, and extensive violence.

NAZ was founded in 2011 with a mission to improve educational outcomes for children, including through parental involvement and a commitment to good housing, employment, and community safety.  The heart of NAZ’s modus operandi is “connectors” and “navigators.” Connectors visit families in their homes and then connect them with the help they need.  The connector brings the issue that a NAZ family is struggling with to a navigator who is a specialist in the relevant area—whether it’s related to education, parenting, child care, housing, or some other challenge.

NAZ works with partners of all kinds – including neighborhood-based organizations, businesses, education groups, and philanthropic organizations.  In all, it has 43 ongoing partners and dozens more that it partners with when there is a specific need. It’s too early to draw any conclusions beyond the fact that NAZ’s work is promising, but if there is a second generation of Promise Neighborhoods—and I hope there is—we should keep an eye on NAZ and the work of connectors and navigators.

Chicago, Logan Square Neighborhood Association

The next stop for me was the Logan Square Neighborhood Association (LSNA) in Chicago, in business since 1962.  Originally, the LSNA served mostly Polish Americans, but today it primarily serves Latino families.  The LSNA engages its people in legislative advocacy and does a lot of community building as well.  Its long list of activities includes: affordable housing and foreclosure prevention, education programs for children and adults, investing in green development, and addressing immigration issues, among others.  There is no one place to find money for all of that work, so the LSNA stitches together its budget from dozens of sources—government at all levels, philanthropic, corporate, and individual.

I visited LSNA because of its parent mentor program, which operates in nine local public schools and directly impacts more than 3,800 students.  LSNA recruits parents (usually immigrants) of children in kindergarten to come to school as semi-volunteers—they receive a small stipend at the end of each semester.  The parents are nurtured into mentor roles, including by obtaining a GED.  Finally, they graduate to employment—at LSNA, the school where they volunteered, or elsewhere—or they further their education.  The women involved in the program successfully lobbied the state legislature for an appropriation.  That’s good stuff.  Put it on the agenda for national attention.

Los Angeles, Youth Policy Institute

The third stop was the Youth Policy Institute (YPI) in Los Angeles.  This one is special for me because its CEO, Dixon Slingerland, worked for Robert Kennedy’s dear friend (and mine), David Hackett.  Among other things, Hackett founded YPI and helped establish what we now know as AmeriCorps Vista.  When he retired in 1996, Hackett passed the mantle to Slingerland.  He died about 5 years ago, and I know he would be very proud of the work YPI is doing today.

You have to catch your breath at the size of what Slingerland and his colleagues have built.  YPI’s budget has grown to $57 million.  It has 1,600 staff serving more than 100,000 youth and adults at 125 program sites.  YPI is the lead agency for a Promise Neighborhood, a Byrne Criminal Justice grantee (to reduce neighborhood crime and increase safety), and a lead partner for a Promise Zone.  It operates five schools of its own and partners with 90 more, 83 public computer centers, and runs afterschool programs at 78 schools.

YPI is an example of what the nonprofit sector can do by marshaling public and private funding to help children and families at scale.  I visited two of YPI’s non-school sites and talked to many staff members and even more consumers of the products.  They serve children ranging from early Head Start, to older students in after school and gang prevention programs.  They also offer teen pregnancy prevention, job readiness, and job placement services.  YPI works with families on parenting skills, financial planning, and computer literacy.  They help day laborers and teach community agriculture.  Nonetheless, Dixon is very clear that for all the help YPI extends to individual children, youth, and families, the strategic point is to change things on a large scale as well.  I think the lesson here is that YPI and similar organizations must have public and private investment for what they do, and that their ultimate goal is to move the needle on poverty.

New Haven, MOMS Partnership

Finally, I visited New Haven and the New Haven Mental Health Outreach for Mothers (MOMS) Partnership, an innovative collaboration of city agencies and institutions that was spearheaded by Megan Smith, a faculty member of the Yale School of Medicine.  This is a relatively young endeavor but it has already received national attention and funding from the university, foundations, the state of Connecticut, and the federal government.

The exciting thing about the MOMS Partnership is its focus on mental health.  The entry point to get women involved is by addressing the extra stress that comes with living in poverty and near poverty.  With decentralized locations in the community, Smith’s staff—who are themselves mostly residents in low-income neighborhoods—do outreach to their neighbors and offer an 8-week stress management course to address chronic and toxic stress.  Participants also have the opportunity to take skill-building and job readiness classes.  The MOMS Partnership is currently branching out, and is especially expanding its effort to help participants find employment or job training.

These four diverse initiatives are representative of innovation that is occurring throughout the country.  Attacking the many issues that confront people who live in low-income neighborhoods is a longtime challenge.  It is vital that we support these and other efforts so we achieve a scale large enough to make a measureable difference in the fight against poverty in America.