Protection Against the Economic Fears of Old Age: Six Micro and Macro Steps for Bridging the Gap in Retirement Security Between Blacks and Whites
Philip C. Aka, Aref A. Hervani, & Elizabeth Arnott-Hill
Retirement security is financial readiness. It exists when a worker, especially one on the cusp of retirement, subjectively believes that he or she has enough resources to guarantee a standard of living similar to that before retirement—and when in fact, objectively, a full complement of savings in Social Security, employer-sponsored benefits, and personal assets exists to guarantee that pre-retirement standard of living. The economic difficulties of the past decade, signified by the Great Recession of 2007 to 2009 and an accompanying slow recovery, have combined to synergistically inflict a negative effect on many financial investment resources, including Black retirement security. To be sure, the recession did not create the situation that some commentators poignantly liken to a “crisis.” For example, “[f]rom 1979 to 2006, African-American private sector workers saw their overall pension coverage go down” by 8.3%, compared to Whites, who experienced a decline of just 3.7%. However, the economic hard time and its aftermath have exacerbated the retirement unreadiness of many older Americans, notably including Blacks.
We argue that in the aftermath of the economic downturn, retirement security for Black people is predicated on micro steps comprised of changes in the tripod of Social Security, employer-sponsored pension plans, and personal assets, implemented in tandem with macro steps in the form of a reduction in disparities between Blacks and Whites in education, healthcare, and housing. These are three critical areas of American national life; without reducing disparities in these areas, the chances for Black retirement security may be bleak for many years to come. In developing our argument, we did three things. First, we highlighted the shape of the retirement security gap between Blacks and Whites in a discussion that integrates the six variables at the focus of this Article. Second, we presented a historical narrative necessary for proper understanding of our research that, among other materials, draws on President Franklin D. Roosevelt’s model of a right to adequate protection from the economic fears of old age, as part of a bill of economic rights meant to complement the original bill of political rights that the United States adopted in 1791. Third and finally, we zeroed in our attention on the six steps for closing the retirement gap between Blacks and Whites at the cynosure of this work. Of those six steps, we devoted extensive space and analysis to personal assets, commensurate with the threat that this benefit source poses for the retirement security regime, which is indicative of the shift in responsibility for retirement readiness to individual workers over many years that predated the economic difficulties of the past decade.
The micro steps are measures that, by their nature, are not focused on Black people as such because they benefit all United States workers, without subscribing to the amorphous notion of a “rising tide lifts all boats.” In contrast, the macro steps focus more directly on Black people and Black seniors. As the ensuing analysis makes clear, the two sets of steps somewhat overlap. Studies on retirement security focus on United States seniors as a whole. But there are equally many studies on minorities, among them Black people. This Article belongs in the latter category, but at the same time departs from those studies in that it is more specifically focused on Blacks, in an integrated approach that assembles under one analytic bundle the key elements of changes and disparity reduction that we identify as critical for Black retirement security in the aftermath of the Great Recession and its accompanying slow recovery. Blacks and Whites are just two of several races in the United States’ multiethnic society. Accordingly, the measurement or comparison to Whites is a mostly heuristic tool meant to facilitate analysis, focusing on the national government.
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