Seattle mayor wants all workers to have a retirement plan
Seattle Mayor Tim Burgess will unveil his 2018 city budget Monday.
Most of the work on the budget had already been done before Burgess ascended to the office of mayor last week.
But he’s included some legislation of his own.
Burgess will use the budget to pitch the establishment of a city retirement plan for workers who don’t get one through their employer.
His proposal would require employers who don't offer a retirement savings plan to automatically enroll their employees in a city plan.
Businesses would not have to contribute to the plans and workers could opt out if they choose, according to Burgess.
Currently, people who don't get a retirement plan through work can set up their own. But Burgess said many people don’t do that and need a nudge to start saving for the future.
"Approximately 40 percent of workers in the city of Seattle have no retirement savings plan. They don't have an IRA, they don't have a 401(k), they don't have a pension, and we know sadly that many workers will not be able to live adequately off social security alone," Burgess said.
Burgess has included $200,000 in the 2018 budget for a market feasibility study and legal analysis of a city retirement plan.
The City Council will get the final say on whether to approve the funding and move forward with the plan.
Under Burgess’ proposal, employers would enroll workers in the city plan and deduct contributions from their paychecks. People who choose not to opt-out would contribute to an IRA account that would be handled by an outside firm.
The account would be in the employee’s name and therefore portable when someone moves from one job to another, Burgess said.
The proposal would not impact businesses that already provide a retirement plan.
Burgess estimates some startup costs to the city, but said employee fees would cover the cost of the program moving forward.
And Burgess said the system would not be a burden to local businesses.
"We are coming alongside them and saying, hey, here's this great opportunity for you, at extremely low cost, all you have to do is adjust your payroll deduction to let your employees enroll in this plan," he said.
Burgess has been working on setting up a city retirement plan for about two years.
He was part of a group that lobbied the Obama Administration to create a clear legal path for cities and states to set up such programs.
Republicans in Congress repealed that Obama-era rule earlier this year.
But Burgess said he's worked with other cities and states, as well as with Seattle city attorney Pete Holmes, and he’s confident there's a path forward for a city plan.
“We’ve found a path that allows us to do this and so we’re going to proceed, regardless of what Congress did,” Burgess said.
Burgess said Seattle would be the first city to implement such a plan, but he does not anticipate a lawsuit.
The U.S. Chamber of Commerce has consistently opposed city and state retirement plans for private workers and supported Congress’ decision earlier this year.
But Burgess said it’s important for the city to get involved. An estimated 200,000 workers in Seattle lack access to a retirement savings plan through their employer, with people of color particularly disadvantaged. And Burgess said Social Security isn’t adequate to support many of those workers when they retire.
“It is consistent with our values as a city to help people, it’s very consistent with our desire for economic stability and growth, it is business friendly — especially for small and medium-sized businesses — and it helps workers. That’s a great combination of attributes that I think is worthy of pursuing.”
On a more personal level, Burgess said he knows what it’s like to struggle financially.
“I grew up in poverty. My family struggled when I was young. My parents lost their house when I was 12 years old through foreclosure because they couldn’t make their mortgage payments.”
Burgess said he’s fortunate to have a retirement plan. But he said he’s sensitive to the fact that others may not have the same long-term financial viability.
Burgess said a city retirement plan is relatively easy to implement and makes sense to him.
He said he’ll be asking his former colleagues on the City Council to back his proposal.