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<h1 itemprop="headline">Contributory Retirement Saving Plans: Differences Across Earnings Groups and Implications for Retirement Security</h1>
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<div id="hByline">by <span itemprop="author">Irena Dushi, Howard M. Iams, and Christopher R. Tamborini</span><br>Social Security Bulletin, <abbr title="Volume">Vol.</abbr> 77 <abbr title="Number">No.</abbr> 2, 2017 (released May 2017)</div>
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<p id="synopsis" itemprop="description">This study examines how earnings levels affect workers' access to, participation in, and contributions to defined contribution retirement plans. To what extent do these outcomes improve with higher earnings? Did the relationships change between 2006 and 2012? We match a nationally representative sample of Survey of Income and Program Participation respondents to data from their <span class="nobr">W-2</span> tax records. We find that access, participation, and contributions increase as earnings increase, even after controlling for key socioeconomic and labor-market covariates. Low earners are less likely to be offered a plan and to participate when one is offered, and they tend to contribute a smaller share of their earnings when participating. We also find that the earnings gradient changed little between 2006 and 2012, despite changing economic conditions.</p>
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<div class="eightypercent">
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<p>Irena Dushi is an economist with the Office of Policy Evaluation and Modeling, Office of Research, Evaluation, and Statistics (<abbr class="spell">ORES</abbr>), Office of Retirement and Disability Policy (<abbr class="spell">ORDP</abbr>), Social Security Administration (<abbr class="spell">SSA</abbr>). When this article was written, Howard Iams was a senior research adviser to <abbr class="spell">ORES</abbr>, <abbr class="spell">ORDP</abbr>, <abbr class="spell">SSA</abbr>. Christopher Tamborini is a research analyst with the Office of Retirement Policy, <abbr class="spell">ORDP</abbr>, <abbr class="spell">SSA</abbr>.</p>
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<p>Contents of this publication are <a href="/policy/accessibility.html">not copyrighted</a>; any items may be reprinted, but citation of the <i>Social Security Bulletin</i> as the source is requested. The findings and conclusions presented in the <i>Bulletin</i> are those of the authors and do not necessarily represent the views of the Social Security Administration.</p>
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</div>
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<h2>Introduction</h2>
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<div class="abbrtable">
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<table role="presentation">
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<caption>Selected Abbreviations</caption>
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<colgroup span="1" style="width:25%"></colgroup>
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<colgroup span="1"></colgroup>
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<tbody>
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<tr>
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<td><abbr class="spell">DB</abbr></td>
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<td>defined benefit</td>
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</tr>
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<tr>
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<td><abbr class="spell">DC</abbr></td>
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<td>defined contribution</td>
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</tr>
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<tr>
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<td><abbr class="spell">OLS</abbr></td>
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<td>ordinary least squares</td>
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</tr>
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<tr>
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<td><abbr>SIPP</abbr></td>
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<td>Survey of Income and Program Participation</td>
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</tr>
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</tbody>
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</table>
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</div>
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<p>In the United States, workplace pensions are a primary mode of retirement saving (Hardy and Shuey 2000; Herd 2009; O'Rand 2011; Poterba 2014; Shuey and O'Rand 2004; Warner, Hayward, and Hardy 2010). Because Social Security monthly benefits typically replace around 40 percent of monthly preretirement earnings, workers who wish to maintain their current standard of living after retiring must accumulate resources by other means; yet studies document low retirement saving levels (Fisher and others 2009; Knoll, Tamborini, and Whitman 2012). Estimates based on the 2013 Survey of Consumer Finances indicate that 41 percent of American households headed by individuals aged <span class="nobr">55–64</span> have no savings in retirement accounts. Even more striking is the sharp variation by household income. The proportion of households headed by individuals aged <span class="nobr">55–64</span> that have any retirement savings ranges from 9 percent in the lowest income quintile to 68 percent in the middle quintile and to 94 percent in the top quintile (Government Accountability Office 2015, Tables 1 and 3).</p>
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<p>In recent decades, the dominant type of private pension offering shifted from traditional defined benefit (<abbr class="spell">DB</abbr>) plans to defined contribution (<abbr class="spell">DC</abbr>) plans such as the familiar <span class="nobr">401(k).</span> <abbr class="spell">DC</abbr> plan contributions today represent the primary means of private retirement saving among American workers. In this context, it has become increasingly important to understand who has access to <abbr class="spell">DC</abbr> retirement plans, who participates in them, and how much the participants contribute to them (Shuey and O'Rand 2004; Ekerdt 2010; Dushi and Iams 2015; Miller 2015; Tamborini and Purcell 2016).</p>
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<p>In this article, we attempt to advance the understanding of how <abbr>U.S.</abbr> workers prepare for retirement by examining how <abbr class="spell">DC</abbr> pension savings vary across the earnings distribution and whether those patterns have changed in recent years. Specifically, we investigate the extent of an earnings gradient in access to, participation in, and levels of contribution to <abbr class="spell">DC</abbr> retirement plans. Do these three outcomes increase at the upper levels of the earnings distribution? This question is important because the connection between earnings and pension savings is likely to be a key factor influencing retirement resource accumulation during one's working life. Further, the increasing prevalence of <abbr class="spell">DC</abbr>-type plans is likely to have broadened the relationship between earnings and pension savings. In contrast with <abbr class="spell">DB</abbr> plans, which are generally mandatory and funded mainly by employers, <abbr class="spell">DC</abbr> plans are voluntary and require workers to decide what portion of their earnings to contribute; that is, to decide how much of today's consumption to give up for consumption in retirement. Consequently, a worker's earnings level is likely not only to be a major determinant of access to a <abbr class="spell">DC</abbr> plan but also to influence participation and contribution decisions.</p>
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<p>Although a rather extensive literature examines why people save and how saving affects retirement wealth (for example, Poterba, Venti, and Wise 1998, 2000; Venti and Wise 1999), few studies have analyzed the extent of an earnings gradient in contributory retirement plans. Most research has addressed earnings as a control variable (for example, Butrica and Smith 2014; Knoll, Tamborini, and Whitman 2012) rather than as a central pathway to accumulation of retirement resources. In one of the few direct assessments of differential outcomes by earnings level, Dushi, Iams, and Tamborini (2011) find a positive earnings gradient in <abbr class="spell">DC</abbr> plan participation but pay little attention to the multiple pathways through which the gradient can arise, such as plan access and take-up.<sup><a href="#mn1" id="mt1">1</a></sup> Other studies have found that earnings differentials contribute to variations in pension outcomes between women and men (Hardy and Shuey 2000), across educational-attainment groups (Tamborini and Kim 2017), and in retirement timing (Raymo and others 2011).</p>
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<p>We also examine whether the relationship between earnings levels and <abbr class="spell">DC</abbr> pension outcomes changed between 2006 and 2012. The Pension Protection Act of 2006 may have led to increased <abbr class="spell">DC</abbr> plan participation and contributions because it incorporated automatic enrollment and default contribution rates. However, the Great Recession initiated a countervailing trend, with decreases in participation and contribution rates between 2007 and 2009 (Dushi and Iams 2015). The economy had largely recovered by 2012; did <abbr class="spell">DC</abbr> plan participation and contribution patterns change relative to prerecession years?</p>
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<p>To explore these questions, we use a unique data set that matches a nationally representative sample of respondents from the 2004 and 2008 panels of the Survey of Income and Program Participation (<abbr>SIPP</abbr>) to individual-level earnings and contribution data from Internal Revenue Service Form <span class="nobr">W-2</span> tax records. The <span class="nobr">W-2</span> linkage reduces the measurement error that is common to self-reported data, especially in terms of <abbr class="spell">DC</abbr> plan contributions (Dushi and Iams 2011; Dushi and Honig 2015; Kim and Tamborini 2014). These matched data enable us to provide robust estimates of differentials in <abbr class="spell">DC</abbr> pension access and participation according to workers' position in the earnings distribution. We examine differences at the earnings-decile level of detail to provide a fine-grained analysis.</p>
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<p>This study advances the understanding of variation in <abbr class="spell">DC</abbr> pension outcomes by workers' earnings levels. Our findings also provide insights into the possible significance of increasing earnings dispersion (Autor 2014; Kim and Sakamoto 2008) for the accumulation of retirement resources during working years. Earnings gradients in retirement savings, if sustained over the life course, can compound over time and help explain how and why retirement resources differ from one individual (or family) to another (Crystal, Shea, and Reyes 2016).</p>
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<h2>Background</h2>
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<p><abbr>U.S.</abbr> retirement income is often described as a three-legged stool supported by Social Security benefits, employer-provided pensions, and personal savings and assets. After Social Security, employer-provided pensions are the most important source of retirement income (Shuey and O'Rand 2004). </p>
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<p>Since the 1980s, employer-provided pensions have undergone a dramatic transition from consisting primarily of <abbr class="spell">DB</abbr> plans to consisting primarily of <abbr class="spell">DC</abbr> plans (Ekerdt 2010; O'Rand 2011). In <abbr class="spell">DB</abbr> plans, employees are enrolled automatically<sup><a href="#mn2" id="mt2">2</a></sup> and the pension is funded mainly by employers. Covered employees do not have to decide whether and how much to contribute; consequently, they may not view the employer's contributions as a deduction from their paycheck. The <abbr class="spell">DB</abbr> pension benefit formula accounts for years of service and (usually) for earnings in only the last 3 to 5 years of work, which for many workers are the highest-earning years. Benefits are paid as a lifetime annuity.</p>
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<p>By contrast, <abbr class="spell">DC</abbr> plans are generally voluntary and require workers to decide not only whether but also how much to contribute—and where to invest those funds.<sup><a href="#mn3" id="mt3">3</a></sup> Because these contributions are deducted from gross pay, workers are likely aware of the direct link between retirement contributions and current consumption. In this context, a person's earnings level is likely to affect participation and contribution decisions.</p>
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<h2>Relating Earnings to <abbr class="spell">DC</abbr> Pension Outcomes</h2>
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||
<p>Our analysis explores three pathways likely to underlie an earnings gradient in <abbr class="spell">DC</abbr> pension savings. The first pathway is through a positive relationship between earnings level and plan access. To participate in a <abbr class="spell">DC</abbr> plan, an individual must be offered one by his or her employer. Studies of nonwage labor compensation have noted that employers face a competitive labor market for high-skill workers, making them more likely to offer pension plans—particularly at large firms (Dushi, Iams, and Lichtenstein 2015). Thus, if high earners are more likely to have access to a <abbr class="spell">DC</abbr> plan, then differential access by earnings level may be one source of the gradient in retirement savings.<sup><a href="#mn4" id="mt4">4</a></sup></p>
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||
<p>The second pathway is a positive relationship between earnings level and retirement plan participation (Butrica and Smith 2014; Copeland 2013). Low earners with tighter budget constraints may find it more difficult to divert current income toward retirement savings. Low earners may also have less incentive to save, in part because Social Security's progressive benefit formula will provide them with higher preretirement-income replacement rates. In addition, earnings level may shape a person's social networks and peer interactions (DiMaggio and Garip 2012), which in turn may influence saving decisions involving <abbr class="spell">DC</abbr> plans (Koposko and others 2015).</p>
|
||
<p>The third pathway in an earnings gradient involves the relationship between earnings level and <abbr class="spell">DC</abbr> plan contributions (Pattison and Waldron 2008). Among plan participants, both the dollar amounts and the percentages of gross earnings contributed to a <abbr class="spell">DC</abbr> account (up to the annual contribution limit) rise as earnings levels increase. This may reflect high earners' desire to replace a higher proportion of preretirement earnings, combined with greater budgetary latitude and greater tax benefits. Conversely, low earners may contribute less because of greater budgetary constraints, lower tax benefits, and a higher replacement rate from Social Security benefits. Hence, the marginal utility of reducing current consumption to fund future consumption is lower among low earners.</p>
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||
<p>Prior research has assessed the determinants of <abbr class="spell">DC</abbr> retirement plans outcomes, but to date, studies either have examined earnings level as a control variable or have examined its influence on only one outcome. A recent study using representative data highlights the positive relationship between earnings level and <abbr class="spell">DC</abbr>-plan participation and contributions among <abbr>U.S.</abbr> workers in 2004, but it does not examine access or <span class="nobr">take-up</span> rates (Dushi, Iams, and Tamborini 2011). Studies that examine factors besides earnings level have found evidence linking plan participation to a worker's family structure (Knoll, Tamborini, and Whitman 2012; Tamborini and Purcell 2016), education (Hardy and Shuey 2000; Tamborini and Kim 2017), and race/ethnicity (Kuan, Cullen, and Modrek 2015), as well as to employer firm size (Dushi, Iams, and Lichtenstein 2015). In addition, longitudinal research has shown that earnings and employment shocks influence participation and contribution decisions (Dushi and Iams 2015; Tamborini, Purcell, and Iams 2013).</p>
|
||
<p>In this article, we explore the earnings gradient not only in <abbr class="spell">DC</abbr> plan participation (the most studied dimension to date) but also in plan access, <span class="nobr">take-up,</span> and contributions based on <span class="nobr">W-2</span> data. This attention to multiple outcomes, along with the use of matched administrative data, allows us to capture the earnings-level differentials in workplace retirement savings more fully than in prior research. In addition, our analysis examines the earnings gradient over a span of recent years reflecting different economic conditions and prevailing pension offerings.</p>
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||
<h2>Data</h2>
|
||
<p>The data for this study come from the 2004 and 2008 panels of the <abbr>SIPP</abbr>, a nationally representative household survey administered by the Census Bureau, matched to <span class="nobr">W-2</span> tax records. In a given panel, two types of questionnaires are administered: Core and Topical Modules. The Core Module collects a common set of demographic and labor-market information, whereas each of a rotating set of Topical Modules covers a given topic in depth.</p>
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||
<p>We focus on the survey waves that include the Topical Module on Retirement and Pension Plan Coverage, which provides information about respondents' employer-sponsored retirement plans. To test for changes in the relationship between earnings levels and <abbr class="spell">DC</abbr> plan outcomes in 2006 and 2012, we use data from wave 7 of the 2004 panel, with interviews conducted from February to May 2006; and from wave 11 of the 2008 panel, with interviews conducted from January to April 2012.</p>
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||
<p>We link the <abbr>SIPP</abbr> data with respondents' tax records from employer-reported <span class="nobr">W-2</span> forms, which are available in <abbr class="spell">SSA</abbr>'s Detailed Earnings Record file. These records provide information on annual wage-and-salary earnings and tax-deferred contributions to <abbr class="spell">DC</abbr> retirement plans for all jobs since 1990. We use <span class="nobr">W-2</span> information for calendar years 2006 and 2012.<sup><a href="#mn5" id="mt5">5</a></sup></p>
|
||
<p>Our study population consists of <span class="nobr">full-time</span> wage and salary workers aged <span class="nobr">25–59</span> at the time of the interview.<sup><a href="#mn6" id="mt6">6</a></sup> From this sample, we remove marginal earners by excluding workers with annual earnings totaling less than the equivalent of four quarters of Social Security coverage ($3,880 in 2006 and $4,520 in 2012). The study population is further restricted to <abbr>SIPP</abbr> respondents with linked <span class="nobr">W-2</span> tax records. For brevity, we refer to this sample as <span class="nobr">full-time</span> workers (or, simply, workers) hereafter. The <span class="nobr">W-2</span> match rate is high: around 80 percent for the 2004 <abbr>SIPP</abbr> panel and around 90 percent for the 2008 panel. Potential bias because of nonmatched respondents is minimal (Czajka, Mabli, and Cody 2008; Davis and Mazumder 2011); nevertheless, we adjust the survey weights for nonmatches to preserve the national representativeness of our sample.<sup><a href="#mn7" id="mt7">7</a></sup> We pool the data from both <abbr>SIPP</abbr> panels; our final matched sample contains 35,558 persons, of which 20,320 are from the 2004 panel (providing data for 2006) and 15,238 are from the 2008 panel (providing data for 2012).</p>
|
||
<h2>Analysis</h2>
|
||
<p>As noted above, we focus on three key indicators related to <abbr class="spell">DC</abbr> retirement savings plans: (a) access, (b) participation, and (c) contribution levels. A binary measure of access (zero/one) indicates whether the worker was offered a <abbr class="spell">DC</abbr> retirement plan by her or his employer. We define <abbr>SIPP</abbr> respondents who report that their employer offered a <abbr class="spell">DC</abbr> plan as having access to a plan. In addition, respondents with a positive contribution to a <abbr class="spell">DC</abbr> plan according to their <span class="nobr">W-2</span> tax records for the survey year are defined as having access to a plan, regardless of their <abbr>SIPP</abbr> response.</p>
|
||
<p>The second indicator is participation in a <abbr class="spell">DC</abbr> retirement plan. We define a worker as a plan participant if her or his <span class="nobr">W-2</span> record shows a tax-deferred contribution to a retirement account. We examine the participation rate among all <span class="nobr">full-time</span> workers as well as that for the subset of workers who are offered a <abbr class="spell">DC</abbr> plan and elect to take it up.</p>
|
||
<p>The third indicator is annual contributions to a <abbr class="spell">DC</abbr> retirement plan among participants. Contribution amounts are from the <span class="nobr">W-2</span> records; we adjust the contribution amounts in 2006 to 2012 dollars. Based on this information, we calculate the contribution rate, defined as the percentage of total annual wages that a worker contributes to a <abbr class="spell">DC</abbr> account.<sup><a href="#mn8" id="mt8">8</a></sup></p>
|
||
<p>We employ both descriptive and multivariate regression analysis to assess the earnings gradient for each outcome (access, participation, and contributions) while controlling for key covariates as described below. More specifically, we use a standard probit model to estimate the probability of having access to a <abbr class="spell">DC</abbr> plan and, separately, of participating in a plan.</p>
|
||
<p>We note that the estimates from the probit model of participation would not be accurate if the unobserved characteristics that affect the probability of being offered a plan were correlated with the unobserved characteristics that affect the probability of participating in the plan. In other words, the unobservable characteristics of workers whose employers do not offer a plan may differ from those of workers whose employers do offer a plan, and the latter workers may be more likely to participate for reasons unrelated to having received a plan offer (for example, because of their preference for saving). Probit estimates that do not control for that type of selection will likely be biased. To account for that possibility, we also estimate a bivariate probit (or Heckman selection) model. For identification purposes, in the bivariate model, we use two variables as exclusion restrictions in the plan offer equation; those variables measure the proportion of medium- and small-size firms in the respondent's state of residence. The exclusion restrictions are correlated with the probability of being offered a plan but not with the probability of participation. In addition, if the error terms (or unobservable characteristics) in the offer and participation equations are correlated—in technical terms, the <i>rho</i> coefficient—and the <i>rho</i> is statistically significant, then bivariate probit estimates are more appropriate than standard probit estimates. Finally, we use ordinary least squares (<abbr class="spell">OLS</abbr>) regression models to estimate contribution amounts and rates.</p>
|
||
<p>The main independent variable of interest, total annual earnings, is obtained from the <span class="nobr">W-2</span> records. To explore an earnings gradient, we sort workers by decile based on the earnings distribution in each study year. To test whether the earnings gradient changed from 2006 to 2012, the regression analyses use the pooled samples and include interaction variables between earnings deciles and year. Hence, the coefficients of earnings deciles give estimated effects for the reference year (2012), and the year-dummy and interaction terms give the additional effects for year 2006.</p>
|
||
<p>Our models also include controls for socioeconomic and labor market characteristics (based on <abbr>SIPP</abbr> data) that are expected to affect access to, participation in, and contributions to <abbr class="spell">DC</abbr> plans. These explanatory variables include sex, age <span class="nobr">(25–39,</span> <span class="nobr">40–49,</span> <span class="nobr">50–59),</span> whether married, educational attainment (less than high school, high school graduate, some college, bachelor's degree), and race/ethnicity (non-Hispanic white, non-Hispanic black, non-Hispanic other, Hispanic). Dichotomous labor-market variables indicate the respondent's class of work (private versus public sector), firm size (fewer than 25, <span class="nobr">25–99,</span> and 100 or more employees), occupation (five broad categories), industry of employment (seven broad categories), and whether the employer matches <abbr class="spell">DC</abbr> plan contributions. We also control for household income and homeownership status. All reported estimates use sample weights adjusted for the probability of match to <span class="nobr">W-2</span> records.</p>
|
||
<h2>Results</h2>
|
||
<p>In this section, we discuss the results of our analysis. We address each of the three <abbr class="spell">DC</abbr> plan outcomes in turn.</p>
|
||
<h3>Access to a <abbr class="spell">DC</abbr> Plan</h3>
|
||
<p>Table 1 shows that the overall percentage of <span class="nobr">full-time</span> workers who were offered a <abbr class="spell">DC</abbr> plan was 68.8 percent in 2006 and 73.1 percent in 2012. In both years, access differed significantly by earnings decile, increasing monotonically with higher earnings. For example, in 2006, 31.8 percent of workers in the lowest earnings decile were offered a <abbr class="spell">DC</abbr> plan by their employer, versus 91.5 percent of workers in the highest earnings decile—a statistically significant gap of nearly 60 percentage points. For those in the middle (5<sup>th</sup>) earnings decile, the offer rate was about twice that of workers in the lowest decile in both 2006 and 2012.</p>
|
||
<div class="table" id="table1">
|
||
<table>
|
||
<caption><span class="tableNumber">Table 1. </span><abbr class="spell">DC</abbr> retirement plan offer, participation, and <span class="nobr">take-up</span> rates for <span class="nobr">full-time</span> wage and salary workers aged <span class="nobr">25–59</span> in 2006 and 2012, by earnings decile</caption>
|
||
<colgroup span="1" style="width:8em"></colgroup>
|
||
<colgroup span="6" style="width:6em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th rowspan="3" class="stubHeading" id="c1">Decile</th>
|
||
<th colspan="2" rowspan="2" class="spanner" id="c2">Offer rate <sup>a</sup></th>
|
||
<th colspan="4" class="spanner" id="c3">Participation rate <sup>b</sup> among—</th>
|
||
</tr>
|
||
<tr>
|
||
<th colspan="2" class="spanner" id="c4" headers="c3">All workers</th>
|
||
<th colspan="2" class="spanner" id="c5" headers="c3">Workers offered a plan <span class="nobr">(take-up</span> rate)</th>
|
||
</tr>
|
||
<tr>
|
||
<th id="c6" headers="c2">2006</th>
|
||
<th id="c7" headers="c2">2012</th>
|
||
<th id="c8" headers="c3 c4">2006</th>
|
||
<th id="c9" headers="c3 c4">2012</th>
|
||
<th id="c10" headers="c3 c5">2006</th>
|
||
<th id="c11" headers="c3 c5">2012</th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
|
||
<th class="stub1" id="r1" headers="c1">Total</th>
|
||
<td headers="r1 c2 c6">68.8</td>
|
||
<td headers="r1 c2 c7">73.1</td>
|
||
<td headers="r1 c3 c4 c8">49.4</td>
|
||
<td headers="r1 c3 c4 c9">51.9</td>
|
||
<td headers="r1 c3 c5 c10">71.8</td>
|
||
<td headers="r1 c3 c5 c11">71.0</td>
|
||
</tr>
|
||
<tr class="topPad1">
|
||
<th class="stub0" id="r2" headers="c1">1st (lowest)</th>
|
||
<td headers="r2 c2 c6">31.8</td>
|
||
<td headers="r2 c2 c7">37.5</td>
|
||
<td headers="r2 c3 c4 c8">13.7</td>
|
||
<td headers="r2 c3 c4 c9">17.2</td>
|
||
<td headers="r2 c3 c5 c10">43.0</td>
|
||
<td headers="r2 c3 c5 c11">45.8</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r3" headers="c1">2nd</th>
|
||
<td headers="r3 c2 c6">48.8</td>
|
||
<td headers="r3 c2 c7">55.1</td>
|
||
<td headers="r3 c3 c4 c8">26.4</td>
|
||
<td headers="r3 c3 c4 c9">30.9</td>
|
||
<td headers="r3 c3 c5 c10">54.1</td>
|
||
<td headers="r3 c3 c5 c11">56.1</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r4" headers="c1">3rd</th>
|
||
<td headers="r4 c2 c6">58.6</td>
|
||
<td headers="r4 c2 c7">64.9</td>
|
||
<td headers="r4 c3 c4 c8">36.2</td>
|
||
<td headers="r4 c3 c4 c9">38.6</td>
|
||
<td headers="r4 c3 c5 c10">61.8</td>
|
||
<td headers="r4 c3 c5 c11">59.5</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r5" headers="c1">4th</th>
|
||
<td headers="r5 c2 c6">65.6</td>
|
||
<td headers="r5 c2 c7">71.8</td>
|
||
<td headers="r5 c3 c4 c8">43.1</td>
|
||
<td headers="r5 c3 c4 c9">44.9</td>
|
||
<td headers="r5 c3 c5 c10">65.6</td>
|
||
<td headers="r5 c3 c5 c11">62.6</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r6" headers="c1">5th</th>
|
||
<td headers="r6 c2 c6">68.7</td>
|
||
<td headers="r6 c2 c7">74.9</td>
|
||
<td headers="r6 c3 c4 c8">45.8</td>
|
||
<td headers="r6 c3 c4 c9">48.2</td>
|
||
<td headers="r6 c3 c5 c10">66.6</td>
|
||
<td headers="r6 c3 c5 c11">64.4</td>
|
||
</tr>
|
||
<tr class="topPad1">
|
||
<th class="stub0" id="r7" headers="c1">6th</th>
|
||
<td headers="r7 c2 c6">74.6</td>
|
||
<td headers="r7 c2 c7">78.1</td>
|
||
<td headers="r7 c3 c4 c8">51.7</td>
|
||
<td headers="r7 c3 c4 c9">54.9</td>
|
||
<td headers="r7 c3 c5 c10">69.3</td>
|
||
<td headers="r7 c3 c5 c11">70.3</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r8" headers="c1">7th</th>
|
||
<td headers="r8 c2 c6">76.8</td>
|
||
<td headers="r8 c2 c7">82.5</td>
|
||
<td headers="r8 c3 c4 c8">56.9</td>
|
||
<td headers="r8 c3 c4 c9">60.3</td>
|
||
<td headers="r8 c3 c5 c10">74.1</td>
|
||
<td headers="r8 c3 c5 c11">73.1</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r9" headers="c1">8th</th>
|
||
<td headers="r9 c2 c6">82.6</td>
|
||
<td headers="r9 c2 c7">84.2</td>
|
||
<td headers="r9 c3 c4 c8">64.3</td>
|
||
<td headers="r9 c3 c4 c9">66.3</td>
|
||
<td headers="r9 c3 c5 c10">77.8</td>
|
||
<td headers="r9 c3 c5 c11">78.7</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r10" headers="c1">9th</th>
|
||
<td headers="r10 c2 c6">89.2</td>
|
||
<td headers="r10 c2 c7">89.3</td>
|
||
<td headers="r10 c3 c4 c8">74.1</td>
|
||
<td headers="r10 c3 c4 c9">75.4</td>
|
||
<td headers="r10 c3 c5 c10">83.1</td>
|
||
<td headers="r10 c3 c5 c11">84.4</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r11" headers="c1">10th (highest)</th>
|
||
<td headers="r11 c2 c6">91.5</td>
|
||
<td headers="r11 c2 c7">92.6</td>
|
||
<td headers="r11 c3 c4 c8">81.9</td>
|
||
<td headers="r11 c3 c4 c9">81.9</td>
|
||
<td headers="r11 c3 c5 c10">89.5</td>
|
||
<td headers="r11 c3 c5 c11">88.3</td>
|
||
</tr>
|
||
<tr class="topPad1 shaded">
|
||
<th class="stub0" id="r12" headers="c1">Sample size</th>
|
||
<td headers="r12 c2 c6">20,320</td>
|
||
<td headers="r12 c2 c7">15,238</td>
|
||
<td headers="r12 c3 c4 c8">20,320</td>
|
||
<td headers="r12 c3 c4 c9">15,238</td>
|
||
<td headers="r12 c3 c5 c10">14,259</td>
|
||
<td headers="r12 c3 c5 c11">11,253</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="firstNote" colspan="7">SOURCE: Authors' calculations using data from <abbr>SIPP</abbr> 2004 Panel (wave 7) and 2008 Panel (wave 11) matched to Form <span class="nobr">W-2</span> tax records.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="note" colspan="7">NOTES: Samples consist of respondents who were <span class="nobr">full-time</span> wage and salary workers with matched <span class="nobr">W-2</span> records and who had earnings that qualified for four quarters of Social Security coverage (at least $3,880 in 2006; at least $4,520 in 2012) and who contributed to (or participated in) a <abbr class="spell">DC</abbr> plan.
|
||
<div class="newNote">Sample sizes are unweighted. Estimated offer and participation rates are weighted using <abbr>SIPP</abbr> complex survey weights, which are adjusted to account for respondents without a match to <span class="nobr">W-2</span> records.</div>
|
||
</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="note" colspan="7">a. Percentage of sample members who either reported in <abbr>SIPP</abbr> being offered or participating in a <abbr class="spell">DC</abbr> plan or whose <span class="nobr">W-2</span> records indicated contribution to a <abbr class="spell">DC</abbr> plan.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="lastNote" colspan="7">b. Percentage of sample members whose <span class="nobr">W-2</span> records indicated that they made any tax-deferred <abbr class="spell">DC</abbr> plan contributions in the given year. The total amount of tax-deferred contributions is recorded in Box 12 in the <span class="nobr">W-2</span> record.</td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<p>Table 1 shows a slight improvement in the share of workers with access to a <abbr class="spell">DC</abbr> plan over the study period, particularly in the lower half of the earnings distribution. For example, the share of <span class="nobr">full-time</span> workers in the 2<sup>nd</sup> decile with access to a <abbr class="spell">DC</abbr> plan increased from 48.8 percent in 2006 to 55.1 percent in 2012. However, substantial shares of workers still were not offered a <abbr class="spell">DC</abbr> plan in 2012, particularly in the first three deciles. In the lowest earnings decile, about 62 percent of workers did not have access to a <abbr class="spell">DC</abbr> plan.</p>
|
||
<p>Probit model estimates clearly reveal an earnings gradient in the probability of being offered a <abbr class="spell">DC</abbr> plan even after controlling for socioeconomic and labor-market characteristics (Table 2). Holding the covariates constant, workers in the highest earnings decile were 27.8 percentage points (or 37 percent relative to the mean) more likely to be offered a plan than were those in the lowest decile (the reference category). Those in middle of the distribution (the 5<sup>th</sup> decile) were 20.7 percentage points (or 28 percent relative to the mean) more likely to be offered a plan than were those in the lowest decile.</p>
|
||
<div class="table" id="table2">
|
||
<table>
|
||
<caption><span class="tableNumber">Table 2. </span>Probit estimates of probability of being offered and of participating in a <abbr class="spell">DC</abbr> plan among <span class="nobr">full-time</span> wage and salary workers aged <span class="nobr">25–59,</span> 2006 and 2012</caption>
|
||
<colgroup span="1" style="width:17em"></colgroup>
|
||
<colgroup span="8" style="width:6em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th rowspan="4" class="stubHeading" id="c1">Variable</th>
|
||
<th colspan="2" rowspan="3" class="spanner" id="c2">Offer</th>
|
||
<th colspan="6" class="spanner" id="c3">Participation among—</th>
|
||
</tr>
|
||
<tr>
|
||
<th colspan="2" rowspan="2" class="spanner" id="c4" headers="c3">All workers</th>
|
||
<th colspan="4" class="spanner" id="c5" headers="c3">Workers offered a plan (take-up)</th>
|
||
</tr>
|
||
<tr>
|
||
<th colspan="2" class="spanner" id="c6" headers="c3 c5">Standard probit model</th>
|
||
<th colspan="2" class="spanner" id="c7" headers="c3 c5">Bivariate probit model</th>
|
||
</tr>
|
||
<tr>
|
||
<th id="c8" headers="c2">Marginal effect</th>
|
||
<th id="c9" headers="c2">Standard error</th>
|
||
<th id="c10" headers="c3 c4">Marginal effect</th>
|
||
<th id="c11" headers="c3 c4">Standard error</th>
|
||
<th id="c12" headers="c3 c5 c6">Marginal effect</th>
|
||
<th id="c13" headers="c3 c5 c6">Standard error</th>
|
||
<th id="c14" headers="c3 c5 c7">Marginal effect</th>
|
||
<th id="c15" headers="c3 c5 c7">Standard error</th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
|
||
<th class="stub0" id="r1" headers="c1">Earnings decile</th>
|
||
<td colspan="8"></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r2" headers="r1 c1">1st (lowest) (omitted)</th>
|
||
<td class="align2asterisks" headers="r1 r2 c2 c8">. . .</td>
|
||
<td headers="r1 r2 c2 c9">. . .</td>
|
||
<td class="align2asterisks" headers="r1 r2 c3 c4 c10">. . .</td>
|
||
<td headers="r1 r2 c3 c4 c11">. . .</td>
|
||
<td class="align2asterisks" headers="r1 r2 c3 c5 c6 c12">. . .</td>
|
||
<td headers="r1 r2 c3 c5 c6 c13">. . .</td>
|
||
<td class="align2asterisks" headers="r1 r2 c3 c5 c7 c14">. . .</td>
|
||
<td headers="r1 r2 c3 c5 c7 c15">. . .</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r3" headers="r1 c1">2nd</th>
|
||
<td headers="r1 r3 c2 c8">.121**</td>
|
||
<td headers="r1 r3 c2 c9">.013</td>
|
||
<td headers="r1 r3 c3 c4 c10">.160**</td>
|
||
<td headers="r1 r3 c3 c4 c11">.022</td>
|
||
<td headers="r1 r3 c3 c5 c6 c12">.070**</td>
|
||
<td headers="r1 r3 c3 c5 c6 c13">.022</td>
|
||
<td headers="r1 r3 c3 c5 c7 c14">.114**</td>
|
||
<td headers="r1 r3 c3 c5 c7 c15">.021</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r4" headers="r1 c1">3rd</th>
|
||
<td headers="r1 r4 c2 c8">.167**</td>
|
||
<td headers="r1 r4 c2 c9">.011</td>
|
||
<td headers="r1 r4 c3 c4 c10">.230**</td>
|
||
<td headers="r1 r4 c3 c4 c11">.020</td>
|
||
<td headers="r1 r4 c3 c5 c6 c12">.105**</td>
|
||
<td headers="r1 r4 c3 c5 c6 c13">.020</td>
|
||
<td headers="r1 r4 c3 c5 c7 c14">.158**</td>
|
||
<td headers="r1 r4 c3 c5 c7 c15">.022</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r5" headers="r1 c1">4th</th>
|
||
<td headers="r1 r5 c2 c8">.196**</td>
|
||
<td headers="r1 r5 c2 c9">.010</td>
|
||
<td headers="r1 r5 c3 c4 c10">.277**</td>
|
||
<td headers="r1 r5 c3 c4 c11">.019</td>
|
||
<td headers="r1 r5 c3 c5 c6 c12">.127**</td>
|
||
<td headers="r1 r5 c3 c5 c6 c13">.018</td>
|
||
<td headers="r1 r5 c3 c5 c7 c14">.207**</td>
|
||
<td headers="r1 r5 c3 c5 c7 c15">.023</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r6" headers="r1 c1">5th</th>
|
||
<td headers="r1 r6 c2 c8">.207**</td>
|
||
<td headers="r1 r6 c2 c9">.009</td>
|
||
<td headers="r1 r6 c3 c4 c10">.297**</td>
|
||
<td headers="r1 r6 c3 c4 c11">.018</td>
|
||
<td headers="r1 r6 c3 c5 c6 c12">.143**</td>
|
||
<td headers="r1 r6 c3 c5 c6 c13">.017</td>
|
||
<td headers="r1 r6 c3 c5 c7 c14">.223**</td>
|
||
<td headers="r1 r6 c3 c5 c7 c15">.023</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r7" headers="r1 c1">6th</th>
|
||
<td headers="r1 r7 c2 c8">.220**</td>
|
||
<td headers="r1 r7 c2 c9">.009</td>
|
||
<td headers="r1 r7 c3 c4 c10">.345**</td>
|
||
<td headers="r1 r7 c3 c4 c11">.017</td>
|
||
<td headers="r1 r7 c3 c5 c6 c12">.180**</td>
|
||
<td headers="r1 r7 c3 c5 c6 c13">.015</td>
|
||
<td headers="r1 r7 c3 c5 c7 c14">.281**</td>
|
||
<td headers="r1 r7 c3 c5 c7 c15">.023</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r8" headers="r1 c1">7th</th>
|
||
<td headers="r1 r8 c2 c8">.236**</td>
|
||
<td headers="r1 r8 c2 c9">.008</td>
|
||
<td headers="r1 r8 c3 c4 c10">.374**</td>
|
||
<td headers="r1 r8 c3 c4 c11">.016</td>
|
||
<td headers="r1 r8 c3 c5 c6 c12">.194**</td>
|
||
<td headers="r1 r8 c3 c5 c6 c13">.014</td>
|
||
<td headers="r1 r8 c3 c5 c7 c14">.308**</td>
|
||
<td headers="r1 r8 c3 c5 c7 c15">.024</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r9" headers="r1 c1">8th</th>
|
||
<td headers="r1 r9 c2 c8">.240**</td>
|
||
<td headers="r1 r9 c2 c9">.008</td>
|
||
<td headers="r1 r9 c3 c4 c10">.409**</td>
|
||
<td headers="r1 r9 c3 c4 c11">.014</td>
|
||
<td headers="r1 r9 c3 c5 c6 c12">.229**</td>
|
||
<td headers="r1 r9 c3 c5 c6 c13">.013</td>
|
||
<td headers="r1 r9 c3 c5 c7 c14">.370**</td>
|
||
<td headers="r1 r9 c3 c5 c7 c15">.023</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r10" headers="r1 c1">9th</th>
|
||
<td headers="r1 r10 c2 c8">.263**</td>
|
||
<td headers="r1 r10 c2 c9">.007</td>
|
||
<td headers="r1 r10 c3 c4 c10">.457**</td>
|
||
<td headers="r1 r10 c3 c4 c11">.012</td>
|
||
<td headers="r1 r10 c3 c5 c6 c12">.258**</td>
|
||
<td headers="r1 r10 c3 c5 c6 c13">.011</td>
|
||
<td headers="r1 r10 c3 c5 c7 c14">.428**</td>
|
||
<td headers="r1 r10 c3 c5 c7 c15">.025</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r11" headers="r1 c1">10th (highest)</th>
|
||
<td headers="r1 r11 c2 c8">.278**</td>
|
||
<td headers="r1 r11 c2 c9">.006</td>
|
||
<td headers="r1 r11 c3 c4 c10">.481**</td>
|
||
<td headers="r1 r11 c3 c4 c11">.011</td>
|
||
<td headers="r1 r11 c3 c5 c6 c12">.270**</td>
|
||
<td headers="r1 r11 c3 c5 c6 c13">.011</td>
|
||
<td headers="r1 r11 c3 c5 c7 c14">.490**</td>
|
||
<td headers="r1 r11 c3 c5 c7 c15">.026</td>
|
||
</tr>
|
||
<tr class="topPad1">
|
||
<th class="stub0" id="r12" headers="c1">Year dummy (if 2006 = 1)</th>
|
||
<td class="align2asterisks" headers="r12 c2 c8">.000</td>
|
||
<td headers="r12 c2 c9">.017</td>
|
||
<td class="align2asterisks" headers="r12 c3 c4 c10">-.019</td>
|
||
<td headers="r12 c3 c4 c11">.024</td>
|
||
<td class="align2asterisks" headers="r12 c3 c5 c6 c12">-.015</td>
|
||
<td headers="r12 c3 c5 c6 c13">.027</td>
|
||
<td class="align1asterisk" headers="r12 c3 c5 c7 c14">-.047*</td>
|
||
<td headers="r12 c3 c5 c7 c15">.021</td>
|
||
</tr>
|
||
<tr class="topPad1">
|
||
<th class="stub0" id="r13" headers="c1">Interaction terms</th>
|
||
<td colspan="8"></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r14" headers="r13 c1">Year × decile 1 (lowest) (omitted)</th>
|
||
<td class="align2asterisks" headers="r13 r14 c2 c8">. . .</td>
|
||
<td headers="r13 r14 c2 c9">. . .</td>
|
||
<td class="align2asterisks" headers="r13 r14 c3 c4 c10">. . .</td>
|
||
<td headers="r13 r14 c3 c4 c11">. . .</td>
|
||
<td class="align2asterisks" headers="r13 r14 c3 c5 c6 c12">. . .</td>
|
||
<td headers="r13 r14 c3 c5 c6 c13">. . .</td>
|
||
<td class="align2asterisks" headers="r13 r14 c3 c5 c7 c14">. . .</td>
|
||
<td headers="r13 r14 c3 c5 c7 c15">. . .</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r15" headers="r13 c1">Year × decile 2</th>
|
||
<td class="align2asterisks" headers="r13 r15 c2 c8">-.020</td>
|
||
<td headers="r13 r15 c2 c9">.024</td>
|
||
<td class="align2asterisks" headers="r13 r15 c3 c4 c10">-.005</td>
|
||
<td headers="r13 r15 c3 c4 c11">.032</td>
|
||
<td class="align2asterisks" headers="r13 r15 c3 c5 c6 c12">.001</td>
|
||
<td headers="r13 r15 c3 c5 c6 c13">.035</td>
|
||
<td class="align2asterisks" headers="r13 r15 c3 c5 c7 c14">.012</td>
|
||
<td headers="r13 r15 c3 c5 c7 c15">.027</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r16" headers="r13 c1">Year × decile 3</th>
|
||
<td class="align2asterisks" headers="r13 r16 c2 c8">-.020</td>
|
||
<td headers="r13 r16 c2 c9">.024</td>
|
||
<td class="align2asterisks" headers="r13 r16 c3 c4 c10">.019</td>
|
||
<td headers="r13 r16 c3 c4 c11">.032</td>
|
||
<td class="align2asterisks" headers="r13 r16 c3 c5 c6 c12">.028</td>
|
||
<td headers="r13 r16 c3 c5 c6 c13">.032</td>
|
||
<td class="align2asterisks" headers="r13 r16 c3 c5 c7 c14">.054</td>
|
||
<td headers="r13 r16 c3 c5 c7 c15">.027</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r17" headers="r13 c1">Year × decile 4</th>
|
||
<td class="align2asterisks" headers="r13 r17 c2 c8">-.018</td>
|
||
<td headers="r13 r17 c2 c9">.025</td>
|
||
<td class="align2asterisks" headers="r13 r17 c3 c4 c10">.031</td>
|
||
<td headers="r13 r17 c3 c4 c11">.031</td>
|
||
<td class="align2asterisks" headers="r13 r17 c3 c5 c6 c12">.031</td>
|
||
<td headers="r13 r17 c3 c5 c6 c13">.032</td>
|
||
<td class="align2asterisks" headers="r13 r17 c3 c5 c7 c14">.051</td>
|
||
<td headers="r13 r17 c3 c5 c7 c15">.026</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r18" headers="r13 c1">Year × decile 5</th>
|
||
<td class="align2asterisks" headers="r13 r18 c2 c8">-.024</td>
|
||
<td headers="r13 r18 c2 c9">.025</td>
|
||
<td class="align2asterisks" headers="r13 r18 c3 c4 c10">.027</td>
|
||
<td headers="r13 r18 c3 c4 c11">.031</td>
|
||
<td class="align2asterisks" headers="r13 r18 c3 c5 c6 c12">.036</td>
|
||
<td headers="r13 r18 c3 c5 c6 c13">.031</td>
|
||
<td class="align2asterisks" headers="r13 r18 c3 c5 c7 c14">.073</td>
|
||
<td headers="r13 r18 c3 c5 c7 c15">.026</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r19" headers="r13 c1">Year × decile 6</th>
|
||
<td class="align2asterisks" headers="r13 r19 c2 c8">-.011</td>
|
||
<td headers="r13 r19 c2 c9">.025</td>
|
||
<td class="align2asterisks" headers="r13 r19 c3 c4 c10">.011</td>
|
||
<td headers="r13 r19 c3 c4 c11">.031</td>
|
||
<td class="align2asterisks" headers="r13 r19 c3 c5 c6 c12">.004</td>
|
||
<td headers="r13 r19 c3 c5 c6 c13">.033</td>
|
||
<td class="align1asterisk" headers="r13 r19 c3 c5 c7 c14">.051*</td>
|
||
<td headers="r13 r19 c3 c5 c7 c15">.026</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r20" headers="r13 c1">Year × decile 7</th>
|
||
<td class="align2asterisks" headers="r13 r20 c2 c8">-.035</td>
|
||
<td headers="r13 r20 c2 c9">.026</td>
|
||
<td class="align2asterisks" headers="r13 r20 c3 c4 c10">.011</td>
|
||
<td headers="r13 r20 c3 c4 c11">.031</td>
|
||
<td class="align2asterisks" headers="r13 r20 c3 c5 c6 c12">.020</td>
|
||
<td headers="r13 r20 c3 c5 c6 c13">.032</td>
|
||
<td class="align1asterisk" headers="r13 r20 c3 c5 c7 c14">.067*</td>
|
||
<td headers="r13 r20 c3 c5 c7 c15">.026</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r21" headers="r13 c1">Year × decile 8</th>
|
||
<td class="align2asterisks" headers="r13 r21 c2 c8">.014</td>
|
||
<td headers="r13 r21 c2 c9">.025</td>
|
||
<td class="align2asterisks" headers="r13 r21 c3 c4 c10">.027</td>
|
||
<td headers="r13 r21 c3 c4 c11">.031</td>
|
||
<td class="align2asterisks" headers="r13 r21 c3 c5 c6 c12">.005</td>
|
||
<td headers="r13 r21 c3 c5 c6 c13">.033</td>
|
||
<td class="align1asterisk" headers="r13 r21 c3 c5 c7 c14">.054*</td>
|
||
<td headers="r13 r21 c3 c5 c7 c15">.026</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r22" headers="r13 c1">Year × decile 9</th>
|
||
<td class="align2asterisks" headers="r13 r22 c2 c8">.026</td>
|
||
<td headers="r13 r22 c2 c9">.026</td>
|
||
<td class="align2asterisks" headers="r13 r22 c3 c4 c10">.027</td>
|
||
<td headers="r13 r22 c3 c4 c11">.032</td>
|
||
<td class="align2asterisks" headers="r13 r22 c3 c5 c6 c12">-.001</td>
|
||
<td headers="r13 r22 c3 c5 c6 c13">.034</td>
|
||
<td class="align1asterisk" headers="r13 r22 c3 c5 c7 c14">.059*</td>
|
||
<td headers="r13 r22 c3 c5 c7 c15">.027</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" id="r23" headers="r13 c1">Year × decile 10</th>
|
||
<td class="align2asterisks" headers="r13 r23 c2 c8">.007</td>
|
||
<td headers="r13 r23 c2 c9">.027</td>
|
||
<td class="align2asterisks" headers="r13 r23 c3 c4 c10">.051</td>
|
||
<td headers="r13 r23 c3 c4 c11">.033</td>
|
||
<td class="align2asterisks" headers="r13 r23 c3 c5 c6 c12">.041</td>
|
||
<td headers="r13 r23 c3 c5 c6 c13">.033</td>
|
||
<td class="align1asterisk" headers="r13 r23 c3 c5 c7 c14">.068*</td>
|
||
<td headers="r13 r23 c3 c5 c7 c15">.028</td>
|
||
</tr>
|
||
<tr class="topPad1">
|
||
<th class="stub0" id="r24" headers="c1">Mean estimated probability</th>
|
||
<td class="center" colspan="2">.744</td>
|
||
<td class="center" colspan="2">.503</td>
|
||
<td class="center" colspan="2">.737</td>
|
||
<td class="center" colspan="2">.737</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r25" headers="c1">Pseudo R<sup>2</sup></th>
|
||
<td class="center" colspan="2">.192</td>
|
||
<td class="center" colspan="2">.165</td>
|
||
<td class="center" colspan="2">.105</td>
|
||
<td class="center" colspan="2">. . .</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r26" headers="c1"><i>Rho</i> coefficient</th>
|
||
<td class="center" colspan="2">. . .</td>
|
||
<td class="center" colspan="2">. . .</td>
|
||
<td class="center" colspan="2">. . .</td>
|
||
<td class="center" headers="r26 c3 c4 c11">.665**</td>
|
||
<td headers="r26 c3 c5 c6 c12">.113</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r27" headers="c1">χ<sup>2</sup>(1)=</th>
|
||
<td class="center" colspan="2">. . .</td>
|
||
<td class="center" colspan="2">. . .</td>
|
||
<td class="center" colspan="2">. . .</td>
|
||
<td class="center" colspan="2">17.14</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" id="r28" headers="c1">Probability greater than χ<sup>2</sup>=</th>
|
||
<td class="center" colspan="2">. . .</td>
|
||
<td class="center" colspan="2">. . .</td>
|
||
<td class="center" colspan="2">. . .</td>
|
||
<td class="center" colspan="2">.000</td>
|
||
</tr>
|
||
<tr class="topPad1 shaded">
|
||
<th class="stub0" id="r29" headers="c1">Sample size</th>
|
||
<td class="center" colspan="4">35,558</td>
|
||
<td class="center" colspan="4">25,512</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="firstNote" colspan="9">SOURCE: Authors' calculations using data from <abbr>SIPP</abbr> 2004 Panel (wave 7) and 2008 Panel (wave 11) matched to Form <span class="nobr">W-2</span> tax records.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="lastNote" colspan="9">NOTES: Samples consist of respondents who were <span class="nobr">full-time</span> wage and salary workers with matched <span class="nobr">W-2</span> records and who had earnings that qualified for four quarters of Social Security coverage (at least $3,880 in 2006; at least $4,520 in 2012) and who contributed to (or participated in) a <abbr class="spell">DC</abbr> plan.
|
||
<div class="newNote">Sample sizes are unweighted. Reported estimates are weighted using <abbr>SIPP</abbr> complex survey weights, which are adjusted to account for respondents without a match to <span class="nobr">W-2</span> records.</div>
|
||
<div class="newNote">Model estimates control for demographic characteristics (sex, age, educational attainment, marital status, race/ethnicity); household characteristics (total income and homeownership); occupation, industry, firm size, and sector (public, private, nonprofit) of employment. The <span class="nobr">take-up</span> probit model also controls for whether employer matches contributions.</div>
|
||
<div class="newNote">. . . = not applicable.</div>
|
||
<div class="newNote">* = statistically significant at the 5 percent level.</div>
|
||
<div class="newNote">** = statistically significant at the 1 percent level.</div>
|
||
</td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<p>When we account for the covariates, the coefficient of the study-year dummy shows that there was no difference between 2006 and 2012 in the probability of being offered a <abbr class="spell">DC</abbr> plan. Importantly, the interaction terms were not statistically significant, suggesting that the patterns of differential access by earnings decile were similar in both years.</p>
|
||
<h3>Participation in a <abbr class="spell">DC</abbr> Plan</h3>
|
||
<p>We examine <abbr class="spell">DC</abbr> plan participation—defined as contributing to a plan, according to <span class="nobr">W-2</span> records—by earnings decile, for the entire sample of <span class="nobr">full-time</span> workers and separately for the subset of workers with access to a <abbr class="spell">DC</abbr> plan. Table 1 shows that a large fraction of all workers—around half—did not contribute to a <abbr class="spell">DC</abbr> retirement plan in either year. The gap in participation rates between low and high earners is large, ranging from about 14 percent (in 2006) and 17 percent (in 2012) for workers in the lowest earnings decile to about 82 percent (in both years) for those in the highest decile. This gap is a byproduct of the dual probabilities of whether a worker was offered a <abbr class="spell">DC</abbr> plan and whether, if receiving such an offer, the worker took up (that is, contributed to) the plan.</p>
|
||
<p>Over the study period, the participation rates for all workers increased slightly for every decile except the highest (which did not change). We also see a sharp positive earnings gradient in <span class="nobr">take-up</span> rates, but the differences are somewhat attenuated relative to participation rates for all workers. Overall, about 71 percent of workers offered a plan contributed to that plan in each study year. Unsurprisingly, <span class="nobr">take-up</span> rates increased as earnings levels rose. For instance, in the lowest decile, 43.0 percent of workers offered a plan elected to contribute to it in 2006, compared with 89.5 percent of those in the highest earnings decile. A similar pattern is evident for 2012.</p>
|
||
<p>Table 2 presents probit model estimates of the probability of <abbr class="spell">DC</abbr> plan participation among all workers and among those who were offered one. We find strong evidence of an earnings gradient in participation, even after adjusting for potentially confounding covariates. Among workers overall, those in the 2<sup>nd</sup> decile were 16.0 percentage points more likely to participate than were those in the 1<sup>st</sup> decile (the reference category), whereas those in the highest decile were 48.1 percentage points more likely to participate. Among workers with access to a plan, earners in the 2<sup>nd</sup> decile were only 7.0 percentage points more likely to take up the offer than were workers in the lowest earnings decile, whereas those in the highest earnings decile were 27.0 percentage points more likely to take up the offer. Regression results also reveal that, once we control for other explanatory variables, the earnings gradient in <abbr class="spell">DC</abbr> participation did not change substantively from 2006 to 2012, as indicated by the interaction terms that are not statistically significant. Furthermore, there were no significant increases between 2006 and 2012 in participation rates.</p>
|
||
<p>As noted in the analysis section, we use a Heckman bivariate probit model, which accounts for correlation in the unobserved characteristics, to jointly estimate offer and <span class="nobr">take-up</span> probabilities. Our estimates indicate that the unobservable characteristics in the offer equation are correlated with the unobservables in the <span class="nobr">take-up</span> decision and the <i>rho</i> coefficient is statistically significant. This finding suggests that workers whose employers offer a <abbr class="spell">DC</abbr> plan are more likely to participate and that the marginal effects by earnings decile from the standard probit model represent lower-bound estimates. Furthermore, although the overall pattern by earnings decile is the same for the standard and bivariate models, we find that the magnitude of marginal effects in the bivariate model's <span class="nobr">take-up</span> equation is greater across all earnings deciles, and that the gap between the lowest and the highest deciles <span class="nobr">(11.4–49.0</span> percentage points) is larger. One difference worth noting is that workers in 2006 were less likely to participate (by 4.7 percentage points) than workers in 2012 were, as indicated by the year-dummy variable. Although the bivariate model's interaction terms in the top five earnings deciles suggest a positive additional effect on the probability of participation in 2006, the effect becomes small and insignificant when taking the negative year dummy (−4.7 percentage points) into account.</p>
|
||
<h3>Contribution Rates and Levels</h3>
|
||
<p>Among all <abbr class="spell">DC</abbr> plan participants, the median contribution rate was around 5 percent of annual salary in both 2006 and 2012 (Table 3). Contribution rates generally increased by earnings decile, ranging in 2006 from 3.9 percent in the lowest decile to 7.1 percent in the highest decile. In 2012, the pattern of median contribution rates across earnings deciles was largely similar to that for 2006.</p>
|
||
<div class="table" id="table3">
|
||
<table>
|
||
<caption><span class="tableNumber">Table 3. </span><abbr class="spell">DC</abbr> retirement plan median contribution rates and amounts among <span class="nobr">full-time</span> wage and salary workers aged <span class="nobr">25–59</span> who participated in <abbr class="spell">DC</abbr> plans in 2006 and 2012, by earnings decile</caption>
|
||
<colgroup span="1" style="width:8em"></colgroup>
|
||
<colgroup span="2" style="width:6em"></colgroup>
|
||
<colgroup span="2" style="width:6em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th rowspan="2" class="stubHeading" scope="colgroup">Decile</th>
|
||
<th colspan="2" class="spanner" scope="colgroup">Median contribution rate <sup>a</sup></th>
|
||
<th colspan="2" class="spanner" scope="colgroup">Median contribution amount (2012 $)</th>
|
||
</tr>
|
||
<tr>
|
||
<th scope="col">2006</th>
|
||
<th scope="col">2012</th>
|
||
<th scope="col">2006</th>
|
||
<th scope="col">2012</th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
|
||
<th class="stub1" scope="row">Total</th>
|
||
<td>5.2</td>
|
||
<td>5.0</td>
|
||
<td>2,981</td>
|
||
<td>2,717</td>
|
||
</tr>
|
||
<tr class="topPad1">
|
||
<th class="stub0" scope="row">1st (lowest)</th>
|
||
<td>3.9</td>
|
||
<td>3.2</td>
|
||
<td>638</td>
|
||
<td>498</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">2nd</th>
|
||
<td>3.3</td>
|
||
<td>3.2</td>
|
||
<td>827</td>
|
||
<td>786</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">3rd</th>
|
||
<td>3.9</td>
|
||
<td>3.5</td>
|
||
<td>1,192</td>
|
||
<td>1,028</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">4th</th>
|
||
<td>3.7</td>
|
||
<td>3.9</td>
|
||
<td>1,376</td>
|
||
<td>1,371</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">5th</th>
|
||
<td>4.2</td>
|
||
<td>4.2</td>
|
||
<td>1,832</td>
|
||
<td>1,769</td>
|
||
</tr>
|
||
<tr class="topPad1">
|
||
<th class="stub0" scope="row">6th</th>
|
||
<td>4.9</td>
|
||
<td>5.0</td>
|
||
<td>2,385</td>
|
||
<td>2,427</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">7th</th>
|
||
<td>5.2</td>
|
||
<td>5.0</td>
|
||
<td>3,065</td>
|
||
<td>2,894</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">8th</th>
|
||
<td>5.8</td>
|
||
<td>5.2</td>
|
||
<td>4,112</td>
|
||
<td>3,781</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">9th</th>
|
||
<td>6.6</td>
|
||
<td>6.0</td>
|
||
<td>6,039</td>
|
||
<td>5,399</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="row">10th (highest)</th>
|
||
<td>7.1</td>
|
||
<td>6.7</td>
|
||
<td>12,368</td>
|
||
<td>11,902</td>
|
||
</tr>
|
||
<tr class="topPad1 shaded">
|
||
<th class="stub0" scope="row">Sample size</th>
|
||
<td>10,280</td>
|
||
<td>8,020</td>
|
||
<td>10,280</td>
|
||
<td>8,020</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="firstNote" colspan="5">SOURCE: Authors' calculations using data from <abbr>SIPP</abbr> 2004 Panel (wave 7) and 2008 Panel (wave 11) matched to Form <span class="nobr">W-2</span> tax records.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="note" colspan="5">NOTES: Samples consist of respondents who were <span class="nobr">full-time</span> wage and salary workers with matched <span class="nobr">W-2</span> records and who had earnings that qualified for four quarters of Social Security coverage (at least $3,880 in 2006; at least $4,520 in 2012) and who contributed to (or participated in) a <abbr class="spell">DC</abbr> plan.
|
||
<div class="newNote">Sample sizes are unweighted. Estimated contribution rates and amounts are weighted using <abbr>SIPP</abbr> complex survey weights, which are adjusted to account for respondents without a match to <span class="nobr">W-2</span> records.</div>
|
||
</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="lastNote" colspan="5">a. Percentage of total annual wages contributed to a <abbr class="spell">DC</abbr> plan.</td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<p>In terms of amounts (in 2012 dollars), the median annual contribution dramatically increased with earnings level in both study years. In 2006, the median contribution was $2,981, but the differential across earnings deciles was substantial, ranging from $638 in the lowest decile to $12,368 in the highest one. Interestingly, median contribution amounts in 2012 were slightly lower than those in 2006 for all but the 6<sup>th</sup> decile. However, the earnings gradient was similar, with the median contribution amount increasing from $498 in the lowest decile to $11,902 in the highest one. In both years, for the majority (more than 70 percent) of workers contributing to a <abbr class="spell">DC</abbr> plan, the annual contribution level was lower than $3,100, an amount well below annual contribution limits ($15,000 in 2006 and $15,500 in 2012, not including additional “catch–up” contributions that older workers are eligible to make).</p>
|
||
<p>Table 4 presents the <abbr class="spell">OLS</abbr> regression estimates of <abbr class="spell">DC</abbr> plan contribution rates and amounts by earnings decile. The results confirm that a steep earnings gradient exists in both indicators, even after controlling for key socioeconomic and labor-market characteristics. Compared with workers in the lowest earnings decile (the reference group), median annual contribution amounts among workers in the 2<sup>nd</sup> through 4<sup>th</sup> earnings deciles were only slightly higher (from $341 to $776). Among workers in the 5<sup>th</sup> through 8<sup>th</sup> deciles, median contributions exceeded those of workers in the lowest decile by $1,074 to $3,039, whereas workers in the highest earnings decile contributed an average of about $9,864 more than did those in the lowest decile. The earnings gradients in each study year were largely similar, with only one interaction term revealing a significant difference: Compared with workers in the lowest earnings decile, those in the 8<sup>th</sup> decile contributed $630 more in 2006 than did those in the same decile in 2012. The contribution rates of workers in the 8<sup>th</sup> through 10<sup>th</sup> deciles were significantly higher than those of participants in the lowest earnings decile. There were no significant differences between 2006 and 2012 in contribution rates by earnings decile.<sup><a href="#mn9" id="mt9">9</a></sup></p>
|
||
<div class="table" id="table4">
|
||
<table>
|
||
<caption><span class="tableNumber">Table 4. </span><abbr class="spell">OLS</abbr> estimates of <abbr class="spell">DC</abbr> plan contribution rates and amounts among <span class="nobr">full-time</span> wage and salary workers aged <span class="nobr">25–59</span> who participated in <abbr class="spell">DC</abbr> plans in 2006 and 2012</caption>
|
||
<colgroup span="1" style="width:17em"></colgroup>
|
||
<colgroup span="2" style="width:6em"></colgroup>
|
||
<colgroup span="2" style="width:6em"></colgroup>
|
||
<thead>
|
||
<tr>
|
||
<th rowspan="2" class="stubHeading" scope="colgroup">Variable</th>
|
||
<th colspan="2" class="spanner" scope="colgroup">Contribution rate</th>
|
||
<th colspan="2" class="spanner" scope="colgroup">Contribution amount (2012 $)</th>
|
||
</tr>
|
||
<tr>
|
||
<th scope="col">Coefficient</th>
|
||
<th scope="col">Standard error</th>
|
||
<th scope="col">Coefficient</th>
|
||
<th scope="col">Standard error</th>
|
||
</tr>
|
||
</thead>
|
||
<tbody>
|
||
<tr>
|
||
<th class="stub0" scope="rowgroup">Earnings decile</th>
|
||
<td colspan="4"></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">1st (lowest) (omitted)</th>
|
||
<td class="align2asterisks">. . .</td>
|
||
<td>. . .</td>
|
||
<td class="align2asterisks">. . .</td>
|
||
<td>. . .</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">2nd</th>
|
||
<td class="align2asterisks">-.405</td>
|
||
<td>.422</td>
|
||
<td>341**</td>
|
||
<td>113</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">3rd</th>
|
||
<td class="align2asterisks">-.369</td>
|
||
<td>.404</td>
|
||
<td>583**</td>
|
||
<td>117</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">4th</th>
|
||
<td class="align2asterisks">-.200</td>
|
||
<td>.401</td>
|
||
<td>776**</td>
|
||
<td>117</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">5th</th>
|
||
<td class="align2asterisks">-.051</td>
|
||
<td>.393</td>
|
||
<td>1,074**</td>
|
||
<td>122</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">6th</th>
|
||
<td class="align2asterisks">.675</td>
|
||
<td>.413</td>
|
||
<td>1,721**</td>
|
||
<td>141</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">7th</th>
|
||
<td class="align2asterisks">.672</td>
|
||
<td>.403</td>
|
||
<td>2,207**</td>
|
||
<td>147</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">8th</th>
|
||
<td class="align1asterisk">.796*</td>
|
||
<td>.396</td>
|
||
<td>3,039**</td>
|
||
<td>157</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">9th</th>
|
||
<td>1.646**</td>
|
||
<td>.404</td>
|
||
<td>5,175**</td>
|
||
<td>196</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">10th (highest)</th>
|
||
<td>1.038**</td>
|
||
<td>.395</td>
|
||
<td>9,864**</td>
|
||
<td>223</td>
|
||
</tr>
|
||
<tr class="topPad1">
|
||
<th class="stub0" scope="rowgroup">Year dummy (if 2006 = 1)</th>
|
||
<td class="align2asterisks">.666</td>
|
||
<td>.680</td>
|
||
<td class="align2asterisks">156</td>
|
||
<td>119</td>
|
||
</tr>
|
||
<tr class="topPad1">
|
||
<th class="stub0" scope="rowgroup">Interaction terms</th>
|
||
<td colspan="4"></td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">Year × decile 1 (lowest) (omitted)</th>
|
||
<td class="align2asterisks">. . .</td>
|
||
<td>. . .</td>
|
||
<td class="align2asterisks">. . .</td>
|
||
<td>. . .</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">Year × decile 2</th>
|
||
<td class="align2asterisks">-.315</td>
|
||
<td>.764</td>
|
||
<td class="align2asterisks">-7</td>
|
||
<td>154</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">Year × decile 3</th>
|
||
<td class="align2asterisks">-.141</td>
|
||
<td>.742</td>
|
||
<td class="align2asterisks">47</td>
|
||
<td>157</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">Year × decile 4</th>
|
||
<td class="align2asterisks">-.632</td>
|
||
<td>.722</td>
|
||
<td class="align2asterisks">-11</td>
|
||
<td>154</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">Year × decile 5</th>
|
||
<td class="align2asterisks">-.213</td>
|
||
<td>.724</td>
|
||
<td class="align2asterisks">146</td>
|
||
<td>161</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">Year × decile 6</th>
|
||
<td class="align2asterisks">-.709</td>
|
||
<td>.730</td>
|
||
<td class="align2asterisks">-70</td>
|
||
<td>179</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">Year × decile 7</th>
|
||
<td class="align2asterisks">-.147</td>
|
||
<td>.729</td>
|
||
<td class="align2asterisks">209</td>
|
||
<td>197</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">Year × decile 8</th>
|
||
<td class="align2asterisks">.391</td>
|
||
<td>.724</td>
|
||
<td>630**</td>
|
||
<td>212</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">Year × decile 9</th>
|
||
<td class="align2asterisks">.089</td>
|
||
<td>.722</td>
|
||
<td class="align2asterisks">404</td>
|
||
<td>250</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub1" scope="row">Year × decile 10</th>
|
||
<td class="align2asterisks">-.206</td>
|
||
<td>.704</td>
|
||
<td class="align2asterisks">-125</td>
|
||
<td>280</td>
|
||
</tr>
|
||
<tr class="topPad1">
|
||
<th class="stub0" scope="rowgroup">Mean dependent variable</th>
|
||
<td class="center" colspan="2">6.370</td>
|
||
<td class="center" colspan="2">5,016</td>
|
||
</tr>
|
||
<tr>
|
||
<th class="stub0" scope="rowgroup">R<sup>2</sup></th>
|
||
<td class="center" colspan="2">0.124</td>
|
||
<td class="center" colspan="2">0.498</td>
|
||
</tr>
|
||
<tr class="topPad1 shaded">
|
||
<th class="stub0" scope="rowgroup">Sample size</th>
|
||
<td class="center" colspan="4">18,300</td>
|
||
</tr>
|
||
</tbody>
|
||
<tfoot>
|
||
<tr>
|
||
<td class="firstNote" colspan="5">SOURCE: Authors' calculations using data from <abbr>SIPP</abbr> 2004 Panel (wave 7) and 2008 Panel (wave 11) matched to Form <span class="nobr">W-2</span> tax records.</td>
|
||
</tr>
|
||
<tr>
|
||
<td class="lastNote" colspan="5">NOTES: Sample consists of respondents who were <span class="nobr">full-time</span> wage and salary workers with matched <span class="nobr">W-2</span> records and who had earnings that qualified for four quarters of Social Security coverage (at least $3,880 in 2006; at least $4,520 in 2012) and who contributed to (or participated in) a <abbr class="spell">DC</abbr> plan.
|
||
<div class="newNote">Sample size is unweighted. Reported estimates are weighted using <abbr>SIPP</abbr> complex survey weights, which are adjusted to account for respondents without a match to <span class="nobr">W-2</span> records.</div>
|
||
<div class="newNote">Model estimates control for demographic characteristics (sex, age, educational attainment, marital status, race/ethnicity); household characteristics (total income and homeownership); occupation, industry, firm size, and sector (public, private, nonprofit) of employment; and whether employer matches contributions.</div>
|
||
<div class="newNote">. . . = not applicable.</div>
|
||
<div class="newNote">* = statistically significant at the 5 percent level.</div>
|
||
<div class="newNote">** = statistically significant at the 1 percent level.</div>
|
||
</td>
|
||
</tr>
|
||
</tfoot>
|
||
</table>
|
||
</div>
|
||
<h2>Discussion</h2>
|
||
<p>Given the shift from <abbr class="spell">DB</abbr> plans to voluntary <abbr class="spell">DC</abbr> retirement saving plans as the dominant type of employer-provided pension, retirement income in the United States increasingly depends on several outcomes pertinent to <abbr class="spell">DC</abbr> pensions, and earnings level plays an important role in shaping those outcomes. Public policies that seek to improve retirement security should recognize how <abbr class="spell">DC</abbr> retirement plan outcomes vary across the earnings distribution. It is important to understand who has access to <abbr class="spell">DC</abbr> plans, who participates in them, and how much they contribute.</p>
|
||
<p>We find clear evidence of a steep earnings gradient in several <abbr class="spell">DC</abbr> plan outcomes, even after accounting for an array of socioeconomic and labor-market covariates. Access, participation, and contribution levels increase as earnings increase, in most cases monotonically. We find that earners in the bottom half of the earnings distribution are not only less likely to be offered a plan but are also less likely to participate when offered one. According to our estimates using <span class="nobr">W-2</span> records, less than 50 percent of all <span class="nobr">full-time</span> wage and salary workers with earnings below the median participate in a <abbr class="spell">DC</abbr> plan and a substantial proportion of workers with access to a plan (about 29 percent) elect not to participate.</p>
|
||
<p>Our analysis suggests that low earners, and even workers in the middle of the earnings distribution who do participate, save lower dollar amounts and contribute smaller shares of their earnings. Because low earners receive relatively higher preretirement-income replacement rates from their Social Security benefits, one might argue that they have less need to save through <abbr class="spell">DC</abbr>-type plans. However, low earners are more likely to fall into poverty during retirement (Favreault 2009; Munnell 2004), and Social Security may be the only source of income for many of them.</p>
|
||
<p>A worker with low pension savings over long stretches of his or her working life would likely depend primarily on Social Security benefits in retirement and would thus be most sensitive to any future Social Security policy changes. Moreover, even among the majority of workers who save for retirement, the typically low annual contributions, even if sustained for many years, may not yield resource levels in later life that some may expect. For example, the median annual contribution for our sample was around $3,000. Assuming 30 years of contributions at that level and disregarding compound interest, inflation, and preretirement withdrawals, a worker would accumulate <abbr class="spell">DC</abbr> plan savings ranging from about $90,000 (assuming no employer contributions) to $135,000 (assuming 50 percent employer contributions).<sup><a href="#mn10" id="mt10">10</a></sup> If those account balances were drawn down in monthly payments over 20 years, each monthly payment would be between $375 and $562.<sup><a href="#mn11" id="mt11">11</a></sup></p>
|
||
<p>We also find consistency in the earnings gradient in <abbr class="spell">DC</abbr> plan outcomes for 2006 and 2012, despite changes in pension and economic conditions. Regression analysis reveals no statistically significant differences between study years in plan offer rates, participation rates, and contribution patterns.</p>
|
||
<h2>Limitations and Future Directions</h2>
|
||
<p>This study is not without limitations. For instance, our analysis shows the cross-sectional relationship between earnings and <abbr class="spell">DC</abbr> pension outcomes rather than longitudinal patterns. Workers with higher earnings prospects or those with changing earnings levels might alter their <abbr class="spell">DC</abbr> plan saving behaviors over time. We estimated a series of sensitivity tests to explore possible differences across age groups (using age-stratified models), which showed results similar to those presented here. In addition, whether the decision on how to invest <abbr class="spell">DC</abbr> plan savings varies by earnings level is an important issue not addressed in this article. Our analysis also does not explore possible interactions between pension design features (such as employer matching of employee contributions and account withdrawals) and earnings levels. Although we control for important covariates, other unmeasured variables could confound the correlations. The extent to which savings in contributory retirement plans vary by level of household resources (and the role of spousal earnings) is another factor not yet explored.</p>
|
||
<div id="notes">
|
||
<h2>Notes</h2>
|
||
<p> <a href="#mt1" id="mn1">1</a> Plan <span class="nobr">take-up</span> refers to participation among workers who have been offered a plan, as opposed to participation among workers overall.</p>
|
||
<p> <a href="#mt2" id="mn2">2</a> However, employees generally must satisfy a years-of-service requirement (often as long as 5 years) to be vested in the plan.</p>
|
||
<p> <a href="#mt3" id="mn3">3</a> The 2006 Pension Protection Act enables employers to enroll their employees automatically in a <abbr class="spell">DC</abbr> plan at a default contribution rate, from which employees can opt out or change the rate. In <abbr class="spell">DC</abbr> plans, employees bear the risks of investing and managing the account prior to and during retirement; they also bear the longevity risk. In <abbr class="spell">DB</abbr> plans, employers bear the investment and longevity risks.</p>
|
||
<p> <a href="#mt4" id="mn4">4</a> Of course, employees who do not have access to a retirement plan through their employer can save through individual retirement accounts (<abbr class="spell">IRA</abbr>s). However, workers with lower disposable income are less likely to use a nonworkplace saving plan (Holden and Schrass 2017, Figure 5).</p>
|
||
<p> <a href="#mt5" id="mn5">5</a> Access to these data is restricted and based on agreements between <abbr class="spell">SSA</abbr> and the Census Bureau (Davies and Fisher 2009; Olsen and Hudson 2009). The data are accessed at a secured site and undergo disclosure review before they are approved for release.</p>
|
||
<p> <a href="#mt6" id="mn6">6</a> <abbr>SIPP</abbr> defines <span class="nobr">full-time</span> work as 35 or more hours per week; we use the same definition here.</p>
|
||
<p> <a href="#mt7" id="mn7">7</a> Drawing from previous work (Couch, Tamborini, and Reznik 2015), we use logistic regression to estimate the probability of a successful match, controlling for socioeconomic characteristics such as age, education, marital status, and race/ethnicity; we then multiply <abbr>SIPP</abbr> person-weights by the inverse of the match probability.</p>
|
||
<p> <a href="#mt8" id="mn8">8</a> Wages in 2006 are also adjusted to 2012 dollars.</p>
|
||
<p> <a href="#mt9" id="mn9">9</a> We also used a two-stage Heckman selection model to estimate the probabilities of plan <span class="nobr">take-up</span> and contribution amount (or contribution rates) using the functional form for identification and exclusion restriction in the first stage and found that the <i>rho</i> coefficient (the correlation of the error terms in the two equations) was not statistically significant. Hence, <a href="#table4">Table 4</a> presents the standard <abbr class="spell">OLS</abbr> regression estimates rather than the Heckman selection model estimates.</p>
|
||
<p><a href="#mt10" id="mn10">10</a> Assuming 30 years of consistent contributions ignores how employment and earnings shocks affect a person's retirement savings (Dushi and Iams 2015). This example would be consistent with an individual investor whose investment returns keep up only with inflation, which might reflect such common mistakes as buying high and selling low (Malkiel and Ellis 2013, Chapter 4).</p>
|
||
<p><a href="#mt11" id="mn11">11</a> These amounts are consistent with estimates based on Survey of Consumer Finances data (Government Accountability Office 2015).</p>
|
||
</div>
|
||
<div id="references">
|
||
<h2>References</h2>
|
||
<p>Autor, David H. 2014. “Skills, Education, and the Rise of Earnings Inequality Among the ‘Other 99 Percent.'” <i>Science</i> 344(6): <span class="nobr">843–851.</span></p>
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||
<p>Butrica, Barbara A., and Karen E. Smith. 2014. “<span class="nobr">401(k)</span> Participant Behavior in a Volatile Economy.” <i>Journal of Pension Economics and Finance</i> 15(1): <span class="nobr">1–29.</span></p>
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||
<p>Copeland, Craig. 2013. “Retirement Plan Participation: Survey of Income and Program Participation (<abbr>SIPP</abbr>) Data, 2012.” <i><abbr>EBRI</abbr> Notes</i> 34(8): <span class="nobr">2–13.</span></p>
|
||
<p>Couch, Kenneth A., Christopher R. Tamborini, and Gayle L. Reznik. 2015. “The <span class="nobr">Long-Term</span> Health Implications of Marital Disruption: Divorce, Work Limits, and Social Security Disability Benefits Among Men.” <i>Demography</i> 52(5): <span class="nobr">1487–1512.</span></p>
|
||
<p>Crystal, Stephen, Dennis G. Shea, and Adriana M. Reyes. 2016. “Cumulative Advantage, Cumulative Disadvantage, and Evolving Patterns of <span class="nobr">Late-Life</span> Inequality.” <i>The Gerontologist.</i> Advance publication. <a href="https://academic.oup.com/gerontologist/article/57/5/910/2632069/">https://academic.oup.com/gerontologist/article/doi/10.1093/geront/gnw056/2632069/Cumulative-Advantage-Cumulative-Disadvantage-and</a>.</p>
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||
<p>Czajka, John L., James Mabli, and Scott Cody. 2008. <i>Sample Loss and Survey Bias in Estimates of Social Security Beneficiaries: A Tale of Two Surveys. Final Report.</i> Washington, <abbr class="spell">DC</abbr>: Mathematica Policy Research, <abbr title="Incorporated">Inc.</abbr></p>
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<p>Davies, Paul S., and T. Lynn Fisher. 2009. “<a href="/policy/docs/ssb/v69n2/v69n2p1.html">Measurement Issues Associated with Using Survey Data Matched with Administrative Data from the Social Security Administration</a>.” <i>Social Security Bulletin</i> 69(2): <span class="nobr">1–12.</span></p>
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||
<p>Davis, Jonathan M. V., and Bhashkar Mazumder. 2011. “An Analysis of Sample Selection and the Reliability of Using <span class="nobr">Short-Term</span> Earnings Averages in <abbr>SIPP</abbr>-<abbr class="spell">SSA</abbr> Matched Data.” Center for Economic Studies Paper No. <abbr class="spell">CES</abbr>-<span class="nobr"><abbr class="spell">WP</abbr>-11-39.</span> Washington, <abbr class="spell">DC</abbr>: Census Bureau.</p>
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<p>DiMaggio, Paul, and Filiz Garip. 2012. “Network Effects and Social Inequality.” <i>Annual Review of Sociology</i> 38: <span class="nobr">93–118.</span></p>
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||
<p>Dushi, Irena, and Marjorie Honig. 2015. “How Much Do Respondents in the Health and Retirement Study Know About Their Contributions to Tax Deferred Contribution Plans? A Cross-Cohort Comparison.” <i>Journal of Pension Economics and Finance</i> 14(3): <span class="nobr">203–239.</span></p>
|
||
<p>Dushi, Irena, and Howard M. Iams. 2011. “<a href="/policy/docs/ssb/v70n1/v70n1p45.html">The Impact of Response Error on Participation Rates and Contributions to Defined Contribution Pension Plans</a>.” <i>Social Security Bulletin</i> 70(1): <span class="nobr">45–60.</span></p>
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||
<p>———. 2015. “The Impact of Employment and Earnings Shocks on Contribution Behavior in Defined Contribution Plans: <span class="nobr">2005–2009.</span>” <i>The Journal of Retirement</i> 2(4): <span class="nobr">86–104.</span></p>
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||
<p>Dushi, Irena, Howard M. Iams, and Jules Lichtenstein. 2015. “<a href="/policy/docs/ssb/v75n2/v75n2p41.html">Retirement Plan Coverage by Firm Size: An Update</a>.” <i>Social Security Bulletin</i> 75(2): <span class="nobr">41–55.</span></p>
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||
<p>Dushi, Irena, Howard M. Iams, and Christopher R. Tamborini. 2011. “<a href="/policy/docs/ssb/v71n2/v71n2p67.html">Defined Contribution Pension Participation and Contributions by Earnings Levels Using Administrative Data</a>.” <i>Social Security Bulletin</i> 71(2): <span class="nobr">67–76.</span></p>
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||
<p>Ekerdt, David J. 2010. “Frontiers of Research on Work and Retirement.” <i>The Journals of Gerontology, Series B: Psychological Sciences and Social Sciences</i> 65B(1): <span class="nobr">69–80.</span></p>
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||
<p>Favreault, Melissa M. 2009. <i>A New Minimum Benefit for Low Lifetime Earners.</i> Washington, <abbr class="spell">DC</abbr>: Urban Institute. <a href="https://www.urban.org/sites/default/files/publication/30201/411853-a-new-minimum-benefit-for-low-lifetime-earners.pdf">http://webarchive.urban.org/uploadedpdf/411853_anewminimumbenefit.pdf</a>.</p>
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<p>Fisher, Jonathan, David S. Johnson, Joseph T. Marchand, Timothy M. Smeeding, and Barbara B. Torrey. 2009. “Identifying the Poorest Older Americans.” <i>The Journals of Gerontology, Series B: Psychological Sciences and Social Sciences</i> 64B(6): <span class="nobr">758–766.</span></p>
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||
<p>Government Accountability Office. 2015. <i>Retirement Security: Most Households Approaching Retirement Have Low Savings.</i> <span class="nobr"><abbr class="spell">GAO</abbr>-15-419.</span> Washington, <abbr class="spell">DC</abbr>: <abbr class="spell">GAO</abbr>. <a href="https://www.gao.gov/products/gao-15-419">http://www.gao.gov/products/GAO-15-419</a>.</p>
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||
<p>Hardy, Melissa A., and Kim Shuey. 2000. “Pension Decisions in a Changing Economy: Gender, Structure, and Choice.” <i>The Journals of Gerontology, Series B: Psychological Sciences and Social Sciences</i> 55(5): <span class="nobr">S271–S277.</span></p>
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||
<p>Herd, Pamela. 2009. “The Two-Legged Stool: The Reconfiguration of Risk in Retirement Income Security.” <i>Generations</i> 33(3): <span class="nobr">12–18.</span></p>
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||
<p>Holden, Sarah, and Daniel Schrass. 2017. “The Role of <abbr class="spell">IRA</abbr>s in <abbr class="spell">US</abbr> Households' Saving for Retirement, 2016.” <i><abbr class="spell">ICI</abbr> Research Perspective</i> 23(1). <a href="https://www.ici.org/system/files/attachments/pdf/per23-01.pdf">https://www.ICI.org/pdf/per23-01.pdf</a>.</p>
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||
<p>Kim, ChangHwan, and Arthur Sakamoto. 2008. “The Rise of Intra-Occupational Wage Inequality in the United States, 1983 to 2002.” <i>American Sociological Review</i> 73(1): <span class="nobr">129–157.</span></p>
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||
<p>Kim, ChangHwan, and Christopher R. Tamborini. 2014. “Response Error in Earnings: An Analysis of the Survey of Income and Program Participation Matched With Administrative Data.” <i>Sociological Methods & Research</i> 43(1): <span class="nobr">39–72.</span></p>
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||
<p>Knoll, Melissa A. Z., Christopher R. Tamborini, and Kevin Whitman. 2012. “I Do…Want to Save: Marriage and Retirement Savings in Young Households.” <i>Journal of Marriage and Family</i> 74(1): <span class="nobr">86–100.</span></p>
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||
<p>Koposko, Janet L., Helen Kiso, Douglas A. Hershey, and Paul Gerrans. 2015. “Perceptions of Retirement Savings Relative to Peers.” <i>Work, Aging and Retirement</i> 2(1): <span class="nobr">65–72.</span></p>
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<p>Kuan, Kai Yuan, Mark R. Cullen, and Sepideh Modrek. 2015. “Racial Disparities in Savings Behavior for a Continuously Employed Cohort.” <abbr class="spell">NBER</abbr> Working Paper No. 20937. Cambridge, <abbr title="Massachusetts">MA</abbr>: National Bureau of Economic Research.</p>
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||
<p>Malkiel, Burton G., and Charles D. Ellis. 2013. <i>The Elements of Investing: Easy Lessons for Every Investor.</i> New York, <abbr title="New York">NY</abbr>: John Wiley & Sons.</p>
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||
<p>Miller, Mark. 2015. “Pushing Aside <span class="nobr">401(k)</span>'s for Mandatory Savings Plans.” <i>New York Times,</i> December 11.</p>
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<p>Munnell, Alicia H. 2004. “Why Are So Many Older Women Poor?” Just the Facts on Retirement Issues No. 10. Chestnut Hill, <abbr title="Massachusetts">MA</abbr>: Center for Retirement Research at Boston College. </p>
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<p>Olsen, Anya, and Russell Hudson. 2009. “<a href="/policy/docs/ssb/v69n3/v69n3p29.html">Social Security Administration's Master Earnings File: Background Information</a>.” <i>Social Security Bulletin</i> 69(3): <span class="nobr">29–45.</span></p>
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<p>O'Rand, Angela M. 2011. “The Devolution of Risk and the Changing Life Course in the United States.” <i>Social Forces</i> 90(1): <span class="nobr">1–16.</span></p>
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<p>Pattison, David, and Hilary Waldron. 2008. “<a href="/policy/docs/rsnotes/rsn2008-03.html">Trends in Elective Deferrals of Earnings from <span class="nobr">1990–2001</span> in Social Security Administrative Data</a>.” Research and Statistics Note <abbr title="Number">No.</abbr> <span class="nobr">2008-03.</span> Washington, <abbr class="spell">DC</abbr>: <abbr class="spell">SSA</abbr>.</p>
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<p>Poterba, James M. 2014. “Retirement Security in an Aging Population.” <i>American Economic Review</i> 104(5): <span class="nobr">1–30.</span></p>
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<p>Poterba, James M., Steven F. Venti, and David A. Wise. 1998. “Implications of Rising Personal Retirement Saving.” In <i>Frontiers in the Economics of Aging,</i> edited by David A. Wise, <span class="nobr">125–167.</span> Chicago, <abbr title="Illinois">IL</abbr>: University of Chicago Press.</p>
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<p>———. 2000. “Saver Behavior and <span class="nobr">401(k)</span> Retirement Wealth.” <i>American Economic Review</i> 90(2): <span class="nobr">297–302.</span></p>
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<p>Raymo, James M., John R. Warren, Megan M. Sweeney, Robert M. Hauser, and Jeong-Hwa Ho. 2011. “Precarious Employment, Bad Jobs, Labor Unions, and Early Retirement.” <i>The Journals of Gerontology, Series B: Psychological Sciences and Social Sciences</i> 66B(2): <span class="nobr">249–259.</span></p>
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<p>Shuey, Kim M., and Angela M. O'Rand. 2004. “New Risks for Workers: Pensions, Labor Markets, and Gender.” <i>Annual Review of Sociology</i> 30: <span class="nobr">453–477.</span></p>
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<p>Tamborini, Christopher R., and Patrick Purcell. 2016. “Women's Household Preparation for Retirement at Young and Mid-Adulthood: Differences by Children and Marital Status.” <i>Journal of Family and Economic Issues</i> 37(2): <span class="nobr">226–241.</span></p>
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<p>Tamborini, Christopher R., Patrick Purcell, and Howard M. Iams. 2013. “The Relationship between Job Characteristics and Retirement Savings in Defined Contribution Plans During the <span class="nobr">2007–2009</span> Recession.” <i>Monthly Labor Review</i> 136(5): <span class="nobr">3–16.</span></p>
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<p>Venti, Steven F., and David A. Wise. 1999. “Lifetime Earnings, Saving Choices, and Wealth at Retirement.” In <i>Wealth, Work, and Health: Innovations in Measurement in the Social Sciences,</i> edited by James P. Smith and Robert J. Willis, <span class="nobr">87–120.</span> Ann Arbor, <abbr title="Michigan">MI</abbr>: University of Michigan Press.</p>
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<p>Warner, David F., Mark D. Hayward, and Melissa A. Hardy. 2010. “The Retirement Life Course in America at the Dawn of the Twenty-First Century.” <i>Population Research and Policy Review</i> 29(6): <span class="nobr">893–919.</span></p>
|
||
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