On March 8, CAHS submitted testimony on two bills that embody family economic security: H.B. 5591, creating the Connecticut Retirement Security Program (testimony), and S.B. 221, for Paid Family Leave (testimony). Both would create new programs that would target important disparities in our state and significantly improve economic security in the state.
H.B. 5591 aims to create a statewide public retirement program, similar to a 401(k), for private sector employees who are not offered this option through their employers. The bill aims to close a large disparity on access to retirement savings accounts in the state. Nearly 9 out of 10 families in the top income quintile have retirement savings accounts, compared to less than a fifth in the bottom quintile. This gap is also stark when we break down the numbers by race: 65% of White households have retirement savings, compared to 41% of African-American and 26% of Hispanic. On average, Caucasian workers have five times more savings than African American workers.
The big divide is in access – many workers just don´t work for employers with IRAs, pensions or 401(k)s. This bill will create a retirement plan that would provide access to one, with automatic enrollment. In practical terms, it would make a big difference in closing the retirement wealth gap.
S.B. 221 will have a more immediate effect on Connecticut families. This bill will create a paid family and medical leave insurance system, paid by a small (0.5% of salary) employee payroll deduction. If passed, it would close an embarrassing gap in our safety net. Currently, only two countries in the world, Papua-New Guinea and the United States, do not offer paid maternity and paternity leave. This would finally bring this family-friendly policy to our state, after California, New Jersey and Rhode Island implemented similar policies.
Paid family leave will provide a significant amount of family security to many families, and also help close the large disparities between low- and high-wage workers regarding leave. Currently 25% of employees in the top decile have access to paid family leave, compared to 3% of those at the bottom. White employees are twice as likely to have paid family leave as Hispanic workers.
In addition, paid family leave decreases the probability of women quitting their jobs after having a child (potentially increasing labor force participation rates), and has a significant positive effect on employee retention, productivity and morale. The reduction of costs associated with lower employee turnover can more than offset any associated cost, and help Connecticut attract a qualified labor force.
Both of these bills help low income families by making them more financially secure. Both are good ideas. We will keep you posted on how they fare this legislative session.
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