To design policies that ensure justice for all, we need tools for estimating not just a proposal’s price tag but its fairness. Part of a set of demonstration analyses that use the Equity Scoring Initiative’s dimensions of equity improvement to structure equity assessments, this report shows the potential impact of the Setting Every Community Up for Retirement Enhancement 2.0 Act (SECURE 2.0) for different groups. It discusses how equity scoring can inform the design, debate, and implementation of access- and intermediary-oriented policies, especially those focused on improving retirement security.
Why This Matters
Historical retirement and employment policy has inadvertently and, at times, intentionally and unfairly advantaged certain groups over others, leading to disparities in a host of outcomes that contemporary policy must repair. This report conducts an equity assessment of SECURE 2.0, a policy that has been described as the “most extensive set of changes to retirement law in the last 15 years”. Our findings are pertinent to the ongoing implementation of SECURE 2.0 and the design of future employer-focused retirement security policy proposals. Beyond the implications for policymakers and advocates, this report extends the topical and technical reach of equity assessment.
What We Found
We project that SECURE 2.0 would significantly improve access to retirement savings overall, from 39.8 million workers with access to employer-provided retirement plans before SECURE 2.0 to up to 64.6 million workers with access after SECURE 2.0 (assuming optimistic 80 percent employer adoption). The general increase remains true for each specific group studied: millions of part-time, full-time, small-employer, and large-employer workers will benefit from newly expanded access to employer-provided retirement plans. Gaps in access among workers at small employers compared with large employers would shrink because of SECURE 2.0 provisions that enhance access for workers at small employers (a historically disfavored group).
However, we also find that SECURE 2.0 would likely generate greater absolute gains for full-time workers, who have been disproportionately favored when it comes to employment benefits, than for part-time workers, thereby widening the gap in retirement savings access between those groups. And although all racial and ethnic subgroups could benefit under SECURE 2.0, workforce composition suggests that Asian and Hispanic economically insecure workers would disproportionately benefit from the additive effects of both full coverage of auto-enrolled retirement plans and full implementation of small business tax credits.
Based on the mixed results, we find that SECURE 2.0 would not improve equity across all three of our dimensions. Our analysis shows that even access-oriented policies still have much room for improvement—especially when the policy is incentivizing an external or intermediary organization, such as a private or nonprofit employer, to extend access.
How We Did It
We focus on select provisions of SECURE 2.0 related to increasing workers’ access to an employer-sponsored retirement benefit. We use the nationally representative 2014 Survey of Income and Program Participation Wave 1 data and the 2014 Social Security Administration Supplement data. We also use pre-SECURE and SECURE 2.0 data points as a reference point to project the potential impact after the rollout of SECURE 2.0. In addition, we focus on equity improvements between part-time and full-time workers and between workers at small and large employers in terms of the output of access to an employer-sponsored retirement savings account. And we examine SECURE 2.0 across three dimensions of equity improvement: within group improvement for disfavored groups as well as for all groups and between-group improvement for disfavored groups.
