How many American workers benefit from employer retirement programs?

For most American workers, retirement savings come either from individual contributions to a retirement account or from employer-sponsored programs that encourage saving. But according to economic data, although both options are present, people generally don’t save for retirement unless their employer offers a plan at work.

A new study by economist John Sabelhaus of the Wharton School at the University of Pennsylvania pulls together data from multiple datasets and finds that 47.7% of workers are not covered by a workplace pension plan. The data also shows disparities based on race, gender and education – 76% of workers with less than a high school diploma are not covered, as well as 63.6% of Hispanic workers and 53.2 % of black workers.

Marketplace’s top economics contributor, Chris Farrell, spoke with “Marketplace Morning Report” host, David Brancaccio, about how numbers like this help explain the large gaps in wealth accumulation between white workers and minority workers. The following is an edited transcript of their conversation.

David Brancaccio: So why focus on workplace pensions, because we could just save ourselves?

Chris Farrell: Right. But here’s the thing, most workers get their benefits through their employer, right? And the data is very clear, David, you know, if you have an employer-sponsored pension plan at work, you’re going to save for retirement. And if you don’t, you’re not saving for retirement. Of course, if you have a traditional pension, you will also have income during retirement. But these traditional pension plans are becoming increasingly rare, especially for workers in the private sector.

Brancacio: Okay, so key question: How many workers in America aren’t covered by a pension plan, at work, by their employer?

Farrell: You would think it would be easy to find an answer, but there is no comprehensive database. And it’s really frustrating. And that’s why economist John Sabelhaus pulled together several well-known data sets to arrive at detailed estimates for the AARP Public Policy Institute. He finds that nearly 48% of workers are not covered by a workplace pension plan.

Brancacio: And what does that data look like when you break it down by race or education?

Farrel: The results are depressing, but not particularly surprising. For example, workers without a high school diploma, three quarters. Three-quarters are not covered by an employer pension plan. Among Latinos, [about] 64%. Black, [about] 53%.

Brancacio: And the study also looked state by state, and it found differences.

Farrel: It did, it was way more than I thought. And that’s Florida and Pennsylvania; these are the ones that were highlighted in the study, states of similar size. 59% are not covered in Florida, while the comparable figure in Pennsylvania [is] 41%. Now even more striking among Latinos in Florida – 69% are not covered, compared to 55% in Pennsylvania.

Brancacio: All right, I’m going to give you a new opportunity. We’ve talked a lot about it here, Chris, ideas for bringing uncovered people into something like an employer-sponsored retirement plan. What are some ideas?

Farrel: Currently, a number of states like Oregon have stepped in with these IRA-like plans for uncovered private sector workers. And they are usually employed in small businesses. And by the way, David, economic research indicates that state-sponsored pension plans work. So I think part of the motivation behind the study is to convince more states to adopt these types of plans.

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