Media and Politics

The ‘Save Our Social Security Act’ Proves Conservatives Lost the Social Security Fight

Earlier this summer, lawmakers introduced a bill to “save” Social Security that reads like a desperate attempt to appeal to the growing movement to expand the program. The proposal, introduced by Rep. Reid Ribble (R-WI), is called the “S.O.S. Act”—short for the “Save Our Social Security Act of 2016” (get it?).

The new legislation includes many of the stealth benefit cuts that conservatives have been pushing for years. It calls for increasing the retirement age from 66 to 69. Even a one-year increase in the retirement age is equivalent to a 7 percent cut in benefits for all retirees, so raising the full retirement age to 69 would cost millions of Americans thousands of dollars in benefits. It would also have a disproportionate impact on low-income workers, who get a larger share of their income from Social Security.

The bill also includes the now-infamous “chained CPI”—a measure of inflation that would chip away at Social Security benefits over time. In the long run, the new formula would cut earned benefits by an additional $1,000 a year.

But the new proposal does more than just cut Social Security—it includes something few Congressional Republicans were advocating just a few years ago.

Section 2 of the bill—titled “Increase Contribution and Benefit Base”—calls for raising the cap on the payroll tax that funds Social Security benefits from $118,500 to $308,750. In other words, the wealthiest Americans would be asked to contribute a little bit more to fund the program. The bill also increases benefits for the oldest beneficiaries, and creates a minimum benefit for beneficiaries who are at or near the poverty level.

These—albeit modest—concessions underscore just how far the Social Security debate has moved under President Obama.

These—albeit modest—concessions underscore just how far the Social Security debate has moved under President Obama. In 2010, with post-recession deficit concerns still running high, President Obama created a “National Commission on Fiscal Responsibility and Reform” (often referred to as “Simpson-Bowles,” after its co-chairs) that proposed an increase in the Social Security retirement age and a new, more meager measure of inflation. Future House Speaker Paul Ryan’s budget plan that year went a step further: He not only put forward massive cuts, but set up private accounts that would bankrupt the program over the long haul.  Then in 2011, the White House offered cuts to Social Security and Medicare in “grand bargain” negotiations with Republicans.

The shift that followed the failed attempt at a “grand bargain” is now well-known. Progressives, led by groups like Social Security Works, organized labor, and the Congressional Progressive Caucus, shifted from defense to offense. In 2013, New America released a comprehensive plan to expand Social Security. Last year, one of the program’s staunchest advocates, Massachusetts Senator Elizabeth Warren, rallied all but two Senate Democrats to support a resolution to “expand and protect” Social Security. And in June, the President publicly endorsed expansion.

The “S.O.S Act” is nowhere close to the emerging progressive consensus around Social Security. In addition to benefit increases, it includes many of the same cuts proposed in Simpson-Bowles. And, since the Republican author of the bill is retiring at the end of this Congress (along with three of the bill’s original cosponsors), any progress should be viewed with a healthy dose of skepticism.

But for the first time, conservatives are cloaking benefit cuts with the rhetoric of “strengthening” Social Security. The center on Social Security policy has moved—and conservatives don’t know how to catch up.

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Safety Net

The Wealth Gap Between Black and White Families Is Getting Worse

The U.S. Constitution was ratified a full 228 years ago.  The cutting edge technology that year was the steamboat, and the country had not yet even had a presidential election.

If 228 years seems like a really long time, that’s because it is. But if current trends continue, that’s how long it will take for the average black family to reach the level of wealth the average white family has today.

Source: Corporation for Enterprise Development and Institute for Policy Studies
Source: Corporation for Enterprise Development and Institute for Policy Studies

The average Latino family fares slightly better—if the current trend continues, it would take them a little more than 80 years to amass the same amount of wealth white families have today.

Racial discrepancies in income and wealth are nothing new in this country. The troubling thing is that they aren’t improving. A new report by the Corporation for Enterprise Development (CFED) and the Institute for Policy Studies (IPS) compares data on white, black, and Latino households over the past 30 years to see just how big the gap is—and the findings are staggering.

Between 1983 and 2013, the average black family saw their wealth grow by a little less than $20,000. Latino families saw a bump of about $40,000. Meanwhile, the average white family’s wealth spiked by more than $300,000.

If current trends persist, the figures get even starker. By 2043, when people of color are predicted to outnumber white people for the first time in the U.S., the racial wealth gap will double—leaving the average white family with over $1 million more in assets than black and Latino families.

Source: Corporation for Enterprise Development
Source: Corporation for Enterprise Development and Institute for Policy Studies

Wealth is an important barometer of long-term financial stability. It translates into a first home, retirement security, and the countless opportunities afforded by having savings and investments.  Those without wealth lead a precarious existence – they have no cushion to fall back on if tragedy strikes or when they grow old.

So how did wealth become so skewed along racial lines?

The legacy of overtly racist public policy is partly to blame. Redlining, the practice of deliberately blocking non-white families from obtaining a mortgage, had a devastating impact on homeownership for black and Latino families. From 1934 to 1968—the period marking the biggest expansion of the American middle class—only two percent of Federal Housing Administration mortgages went to non-whites. The effects of that kind of discrimination are still reverberating today.

Unfortunately, current policy has exacerbated the problem. Consider, for example, federal tax expenditures. These tax breaks—all $600 billion of them—are designed to help families pay for college, buy a home, save for retirement, and start a business.  The problem is, the people who need the most help tend to get the least. Working families get an average of $174 each year in tax breaks, while the typical millionaire gets $145,000.

The Internal Revenue Service does not collect data on race, but since we know income is heavily skewed towards white earners—four out of five earners in the top the top 20 percent are white—we can be reasonably confident that these tax breaks are disproportionately benefiting white earners.

Wealth is concentrated in very few hands. And those hands are mostly white.

The racial disparity continues to grow at the very top of the economic pyramid. On last year’s famed Forbes 400 list, which enumerates the 400 wealthiest people in the country, just seven people are black or Latino. That’s worth noting, since America’s wealthiest citizens control a tremendous amount of the country’s wealth: the top 100 members of the Forbes 400 list own about as much wealth as the entire African-American population (42 million people), while the top 186 members own as much wealth as the entire Latino population (55 million people).

In short, wealth is concentrated in very few hands. And those hands are mostly white.

But just as public policy played a role in growing the racial wealth divide, it can play a role in shrinking it. An important first step would be to conduct a government-wide audit, launched by an executive order from the next president, to understand the role current federal policies play in perpetuating (or closing) the racial wealth divide.

With that data, we can begin to overhaul inequitable policies and take the steps needed to ensure our nation’s wealth-building system works for all Americans.

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Labor

Dear Wendy’s: I’m Boycotting You, but I’m Not the One You Should Be Worried About

Dear Wendy’s,

In the summer of 1988 I worked in Lowell, Massachusetts painting houses.

The pay was lousy, the heat oppressive, and the work was exhausting.  Many nights I would collapse, fully clothed, on my mattress on the floor of the dingy, mouse-infested apartment I rented.

But before I hit the sack, there was one thing I usually looked forward to: your Superbar (now defunct).  For about $3.00 I could get my fill of salad, fruit, Mexican food, and pasta.

And that’s the only reason I’m writing you today, Wendy’s.  I have nostalgic feelings for your SuperBar, even though I now know it’s tainted.   But I’m offering you a heads up anyway: the Coalition of Immokalee Workers (CIW) is coming for you, and you will lose.

That’s not a threat, it’s a statement of fact.

The CIW is the most effective, winningest anti-poverty group I know.  It was founded in 1993 by a small group of farmworkers in little-known Immokalee, Florida.  They had the audacity to believe that they could take on the state’s agriculture industry—once described by a federal prosecutor as “ground zero for modern slavery”—and fundamentally change the business.

The harsh opposition and backwards thinking that the workers needed to overcome was evident during a hunger strike in 1997, when the farmworkers’ single demand was a dialogue with the tomato growers.  One grower told the CIW, “Let me put it to you like this—the tractor doesn’t tell the farmer how to run the farm.”

The CIW is coming for you, and you will lose.

But ultimately, the farmworkers’ unity and savvy tactics led to most tomato growers in South Florida coming to the table and reforming their practices.  Today, the CIW is internationally recognized for its wins in addressing social responsibility, human trafficking, and gender-based violence.  But nothing epitomizes their work more than the Fair Food Program (FFP), which protects workers by creating real economic consequences for violations of human and labor rights.

And that brings us back to you, Wendy’s.  The CIW announced a national Wendy’s boycott because you are the only major fast food corporation that has not signed onto the FFP—and that matters.

Under the FFP, corporations pay an extra penny per pound for tomatoes in order to support better working conditions for farmworkers.  They also agree to buy only from growers who sign a code of conduct—which forbids things like forced labor and sexual harassment—and is drafted by the workers themselves. There is worker-to-worker education on their new rights, a 24-hour hotline for complaints, and workers monitor their own workplaces. Plus, the Fair Food Standards Council conducts regular audits, investigates complaints, and monitors resolutions at the approximately 17 participating growers; these growers account for 90 percent of the $650 million in annual revenues in the Florida tomato industry.

Human rights and labor violations in the fields have real market consequences.

When major violations occur and aren’t corrected, corporations stop buying from the offending growers, which means human rights and labor violations in the fields have real market consequences: respect for workers is rewarded, abuse leads to significant financial loss.  That’s why the system works, plain and simple, and it’s why the New York Times described it as “the best workplace-monitoring program” in the U.S. The Obama Administration even awarded the FFP a Presidential Medal for “extraordinary efforts in combatting human trafficking.”

At this point, your refusal to sign on simply makes you seem wildly behind the times.  Not only are all of your fast food competitors signatories to the program, but so are major corporations like Walmart, Whole Foods, Aramark, and Trader Joe’s.  Some joined willingly, others put up a fight—but in the end the CIW always got the result it wanted.

And they will with you, too.

Maybe you believe your internal controls are sufficient, as your spokesperson indicated: “We believe that our supplier code of conduct provides important standards in this area, and we will continue to evaluate the best way to promote responsible business practices in our supply chain.”

But that statement rings hollow, especially since you have left the growers in Florida who—through their participation in the FFP—are proving their commitment to ending abuses like forced labor, child labor, sexual assault, wage theft, and other workplace violations.  Not only that, multiple growers say that you informed them that the FFP is the reason you are leaving Florida.  (I would have loved for you to respond to this allegation, Wendy’s, but you declined my invitation to comment.)

Instead, you are now purchasing tomatoes from Mexico.

The Department of Labor (DOL) lists Mexico as one of just three countries where child labor is used in the tomato fields.  And one of the major growers you now do business with—Bioparques de Occidente—has a disturbing history.

As Harper’s Magazine notes, Bioparques workers who were interviewed for an investigative series described “subhuman conditions, with workers forced to work without pay, trapped for months at a time in scorpion-infested camps, often without beds, fed on scraps, and beaten when they tried to quit.”  According to the LA Times, among those trapped in the camps were “two dozen malnourished children.”

You seem almost bizarrely unaware—or unconcerned—with the idea that the truth will out.

And yet you seem almost bizarrely unaware—or unconcerned—with the idea that the truth will out.

Even after the boycott launch, you ran an ad boasting that you purchase beef here in America in contrast to some of your competitors.  That ad includes an image of a juicy burger with bright red tomatoes—which were quite possibly grown on farms in Mexico where gross human rights violations occurred.

But the CIW and its allies are onto you.

So now there are students organizing to kick you off of their campuses, just as they did more than a decade ago when the CIW launched its successful boycott against Taco Bell.  The faith community is mobilizing against you, too.  You were the target of the biggest protest march ever to occur in Palm Beach, Florida, home to Wendy’s largest shareholder, Nelson Peltz.  And next month you will see what solidarity and a powerful, diverse coalition looks like at the Wendy’s Boycott Summit in Immokalee itself.

So yeah, I’m boycotting you, Wendy’s, but I’m not the one you have to worry about.  You can join your competitors, get on the right side of history, and make it easier on yourself.  Or you can keep on refusing to protect farmworkers, tarnish your brand, and then lose.

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Safety Net

One-Third of Americans Have Nothing Saved for Retirement. Here’s How to Fix That.

Big airport restrooms get messy fast. So, the management at Schiphol International Airport in Amsterdam came up with a clever solution: The airport etched an image of a black fly near the drain in the airports’ urinals. According to their measures, cleanliness increased by 80 percent. As New Republic put it, “It turns out that, if you give men a target, they can’t help but aim at it.”

Incentivizing individuals—in this case men—to make slight changes saved millions of dollars in the janitorial budget. This approach, known as “better design” or “choice architecture” came into vogue when social welfare policy took a wide swing into psychology and behavioral finance in the early 2000s. The basic idea—that it’s cheaper to solve large social problems by tweaking public behavior than by changing public policy—is appealing, and it’s seen some success in specific contexts.

Take health care. Many health problems can be solved with lifestyle changes and a second opinion from another doctor. And so, in an attempt to make people healthier with lower costs, employers paid for their employees to access wellness programs and second opinions. But, behavior barely changed. However, when they changed the reward into a penalty for individuals who didn’t participate, many employers saw a surge—up to a 73 percent increase—in wellness programs sign-ups and second opinions.

Now proponents of choice architecture, otherwise known as “nudge economists,” are trying to apply this model to our upcoming retirement crisis. One thousand people are reaching age 65 every day, and at least one-third of Americans have nothing saved. For those who do have retirement accounts, the average amount is about $110,000, which amounts to roughly $250 a month for the rest of their lives. Choice architects are hoping to fill this massive savings gap with auto enrollment pension plans that require individuals to opt-out, rather than have to take the affirmative step to decide and actively opt-in.

Behavioral nudges alone aren’t enough to solve this issue.

However, behavioral nudges alone aren’t enough to solve this issue. Auto enrollment in retirement programs will bring more workers into 401(k) plans, but it likely won’t increase overall retirement savings. What’s more, the nudges to encourage participation are expensive. For example, we currently provide $140 billion worth of tax deductions to incentivize (mostly high paid) employees to voluntarily participate in retirement plans. Given the high cost, it’s troubling that there is little evidence that these deductions actually encourage people to save more—in fact, a tax credit may have a much larger effect on savings.  As a result, this nudge is largely wasted.

What’s worse, focusing on individual behavior in lieu of providing a needed form of social insurance ultimately blames individuals for their lack of retirement savings. Individuals can be blamed for not choosing employers with retirement account plans, for having to take low paying jobs in their late sixties and seventies, and for being poor or near poor in old age.  It is not possible to nudge someone who is encountering these kinds of barriers into saving for retirement.

Instead, we should be looking at large system changes that are designed to meet the needs of all Americans. Just as the Affordable Care Act provides universal health insurance to supplement free clinics and the hospital emergency room, we need universal pensions to supplement Social Security.

The guaranteed retirement plan is a pragmatic solution to ensure that all workers can save enough to retire. The plan creates personal savings accounts for all workers using existing government infrastructure, such as the Social Security Administration account management systems and any large state or federal pension fund system that wants to bid for the job of managing money.

Here’s how it works:  Workers will be required to save 5 percent of their pay in their Guaranteed Retirement Account (GRA). To ease the burden, every worker who contributes to their account will receive a $600 tax credit and households earning up to $40,000 per year—nearly 50 percent of workers—will have their yearly retirement savings fully reimbursed by the government.  Workers would be able to choose how much they will save beyond the minimum, and which manager will invest their money. At retirement the accounts would be paid out as a lifelong retirement security, with annuitized returns that ensure a consistent standard of living for as long as retirees live.

The GRA would be cost-neutral for all Americans earning less than the median salary, because it would draw funding by reducing the regressivity of our current tax system. That starts with closing expensive tax loopholes—such as tax breaks for the highest earners to contribute to retirement plans (which they would contribute to anyway) or mortgages for large houses (which people would live in anyway)—and increasing the tax burden on the wealthiest Americans.

A significant majority of Americans—including those most at risk of retirement insolvency—would benefit from this plan. And, since retirement worries pervade all segments of American society (a stunning 86 percent of Americans believe America faces a retirement crisis), this type of broad change would likely have significant support.

America’s retirement crisis will become a huge political issue if not addressed—and the American people need a real retirement solution, not just a clever new design.

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Safety Net

There’s a Hunger Problem in Every County in America—and It’s Solvable

Loudoun County is a suburban area with colonial roots, nestled about 45 miles northwest of the District of Columbia. It boasts the nation’s highest median household income at nearly $124,000 per year.  It also has 14,000 residents who struggle with food insecurity, or a lack of reliable access to affordable and nutritious food.

Elizabeth and her daughter, Jennifer, are Loudon County residents that struggle with hunger.  Both women once had full-time jobs, but Elizabeth was let go from her job as a car mechanic when she injured her wrist. Then, Jennifer had to quit her job to help care for Elizabeth’s four-year-old daughter.

Elizabeth and Jennifer’s story is far from unique.  Life is equally tough for Donna of Washington County, Maine.  In an effort to feed herself, the 77-year-old grows vegetables when weather permits but she still has difficulty covering her bills and buying food. And in Bartlett, Texas, Stephen, his wife Victoria, and their 4-year-old son face a similar struggle. For a time, Stephen says, the family was “living the American dream” in a 3-bedroom house with a 2-car garage.  But when Victoria’s mother developed Parkinson’s, the family moved from Lubbock to Bartlett to care for her.  The cost of the move consumed their life savings.  While Stephen hunted for another job, he and Victoria relied on a food pantry about 25 miles away for regular meals.

Food insecurity exists in every county across the country

The U.S. Department of Agriculture reports that more than 48 million people in America—including 15 million children—are food-insecure.  In April, Feeding America released new research that proves that this is not an isolated problem: food insecurity exists in every county in the United States.

For six consecutive years, we’ve conducted a comprehensive study called Map the Meal Gap to improve our understanding of hunger and to fight food insecurity at the local, regional, and national levels.  Our most recent analysis shows hunger’s vast reach.  On average, the food-insecurity rate among the nation’s 3,142 counties is a staggering 14.7 percent (and the numbers are even higher for children).  Food insecurity ranged from a high of 38 percent in Jefferson County, Mississippi to a low of 4 percent in Loudoun County, Virginia.

Source: Feeding America
Percentage of individuals per county who are food insecure (source: Feeding America)

But these numbers don’t tell the whole story.  As Elizabeth, Donna, and Stephen’s experiences suggest, a complex relationship exists between food insecurity and multiple, interconnected factors like unemployment, poverty, and income.

Unemployment drives hunger and poverty

Unemployment is the primary driver of food insecurity.  The average unemployment rate across all counties was 6.3 percent in 2014, compared to an average of 9.2 percent among the top 10 percent of counties with the highest food-insecurity rates.  We also found that the unemployment rate had a statistically significant effect on the rate of food insecurity, a relationship supported by the academic literature.  Simply put, without income that comes from a job, people often lack the resources to purchase an adequate amount of food.

Hunger, poverty, and federal programs

According to the USDA there are 353 counties struggling with “persistent poverty,” where at least one-fifth of the population has been living in poverty for 30 years.  There is also a significant overlap between these counties and those that fall into the top 10 percent for food insecurity nationwide: of the latter, nearly two-thirds suffer from persistent-poverty.

Moreover, hardship doesn’t necessarily stop once someone is above the income eligibility threshold for federal nutrition assistance.  In fact, there is considerable food insecurity among families that are ineligible for the Supplemental Nutrition Assistance Program (SNAP): More than one-fourth of all food-insecure people live in households with incomes above 185 percent of the poverty level, and thus are ineligible for federal food assistance programs.

Consider a man trying to recover from a job loss or a medical emergency that plunged his family into hardship. Over time he cobbles together a number of part-time jobs. A local food agency provides nutritious meals and even helps enroll him and his family in federal assistance programs. Through hard work and frugality, the family saves $10 to $15 every month. They slowly approach self-sufficiency, a precarious tipping point in which they’ll either slide back into poverty or move forward with their lives.  At that very moment, certain federal programs halt because they’ve reached the income threshold.

Earning too much and not enough

Among all people struggling with hunger in the U.S., more than half—56 percent—have incomes above the federal poverty level.

There are now 115 counties where the majority of food-insecure individuals are likely ineligible for most federal nutrition assistance programs based on their household income. Beyond the help of friends and relatives, charitable organizations are often the primary resource available to them.  My organization, Feeding America, serves some 46.5 million people annually through a nationwide network of 200 food banks and 60,000 food pantries and meal programs. But we cannot address hunger without strong federal nutrition programs.

Even after the end of the Great Recession, we continue to witness historically high levels of food insecurity. Many stories illustrate the complicated circumstances that push people into a state of food insecurity and, in many cases, anchor them there for years. But by working together and implementing data-driven solutions, we can move closer to creating a hunger-free America.

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