- On Capitol Hill
- On Wall Street
- In the Press
- Policy Reform Work
Our projects are designed to empower policy makers to create positive change. With a focus on collaboration and outreach, we provide original, standards-based research on key policy issues.
SCEPA joined with the Economic Policy Institute on Capitol Hill to brief congressional staff and policy experts on tax expenditures, or incentives given through the tax code without scrutiny by Congress.
SCEPA economists are working on the prospects for a more progressive economic order to emerge from the shock of the recession. They have published papers and documents that place current events in a longer-term context as well as policy proposals to deal with short-term concerns. They are also documenting the emerging discussion of how the discipline of economics is reacting to the Great Recession and the questioning of conventional economic analysis.
Lance Taylor, a SCEPA Faculty Fellow, presents an overview of his new book, Maynard’s Revenge, in a Google Tech Talk.
The book, published this November by Harvard University Press, is a timely analysis of mainstream macroeconomics, posing the need for a more useful and realistic economic analysis that can provide a better understanding of the ongoing global financial and economic crisis.
The government spends $143 billion through tax breaks in an effort to expand pension coverage and security. Yet, over half of the American workforce does not have a pension. Retirement insecurity hurts business plans, workers’ lives and retiree well-being. Reform is needed.
SCEPA’s Guaranteeing Retirement Income Project, sponsored by the Rockefeller Foundation and in collaboration with Demos and the Economic Policy Institute, has a plan to guarantee safe and secure retirement income for all Americans.
The New York Times' Kate Taylor raises the issue of New York City's retirement insecurity in her article, As the City's Elderly Population Swells, Concerns Rise Over Lack of Access to Retirement Plans. She documents the decrease in workers' access to retirement plans at work found in SCEPA's research, Are New Yorkers Ready for Retirement?
"According to Ms. Ghilarducci's research, 59 percent of workers in the city do not have either a pension or a 401(k), up from 51 percent a decade ago. Many small businesses do not have the human resources capacity to manage a 401(k). Moreover, Ms. Ghilarducci says, 401(k)'s are less than ideal for workers themselves, since they charge higher fees and have lower rates of return than pension funds, in part because people can withdraw their money at any time."
The solution: "creating a pooled pension fund for private sector workers that the city itself could manage."
The Journal of International Money and Finance, one of the top journals for international finance, published SCEPA economists Christian R. Proaño, Christian Schoder and Willi Semmler's working paper, 'Financial Stress, Sovereign Debt and Economic Activity in Industrialized Countries: Evidence from Dynamic Threshold Regressions.' This paper is an expansion on their policy note, 'The Role of Financial Stress in Debt and Recovery' which studied the change in the sovereign debt and its impact on economic growth. Their study discovered that national debt was insignificant in determining the level of economic growth a country experiences as long as the financial market was stable. National debt was only detrimental to countries if there were high levels of instability and risk in the financial market. These findings explain why austerity policies have failed to promote economic growth, because economic growth depends first on financial market stability, and is only an issue if financial markets are unstable.
On May 21, 2014, SCEPA Director Teresa Ghilarducci testified before the U.S. Senate on Finance Subcommittee on Social Security, Pensions, and Family Policy at a hearing titled, "Strengthening Social Security to Meet the Needs of Tomorrow's Retirees." As a retirement expert, Ghilarducci provided an oral and written statement on how the retirement crisis exacerbates inequality.
The hearing was broadcast online. Below is an excerpt from Ghilarducci's comments.
"The current voluntary, self-directed, liquid, commercial retirement account system relies on generous tax subsidies and is stacked against workers for five reasons.
- Nearly half of workers have no plan at work because the system is voluntary. Only 53% of the workforce have any kind of retirement plan at work, which is down from 60% 10 years ago
- Middle class workers are more likely to take out loans or withdraw money before retirement from their 401(k) or IRA's than the highest income workers. Many workers use their retirement accounts as savings accounts. A 30-year-old who cashes out a $16,000 account will be losing an estimated $470 a month at age 67.
- Tax deductions create inequality in unintended and perverse ways. Two people can save exactly the same amount in their 401(k) plans and IRAs, but the higher earner will get a larger tax deduction and therefore a higher rate of return on their savings. Over just a few years this differential multiplies exponentially so the system unintentionally penalizes middle and lower income savers.
- Lower income workers have more conservative portfolios, which is rational, but those portfolios earn less overtime.
- Middle and lower income savers pay higher fees; they don't enjoy scale economies in fund management."