Seattle Mayor Tim Burgess says the city should move ahead with a plan to set up retirement-savings accounts for as many as 200,000 private-sector workers.
Mayor Tim Burgess will propose Monday that the city move to set up retirement accounts for the estimated 200,000 Seattle workers whose employers don’t offer them.
Under his plan, employers without retirement accounts would need to automatically enroll their employees in the city’s system. Burgess is including some early startup money for the plan in the 2018 budget that he’s submitting Monday to the City Council.
It’ll be up to the council to decide whether to approve the plan and the funding.
About 40 percent of Seattle-area workers lack access to a workplace retirement-savings plan, Burgess says, citing the Pew Research Center. The percentages are higher for people of color and for employees of small businesses, he says.
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“Workers who don’t have retirement savings will get them,” the mayor said in an interview. “It’ll be a huge win for workers and for business and it makes sense for economic stability. People who have adequate resources during retirement participate in the economy more than people who are struggling to make ends meet.”
Burgess was a council member until last week, when his colleagues selected him to serve as temporary mayor until late November. The council had to pick someone after Ed Murray suddenly resigned and Council President Bruce Harrell turned down the job.
When results of the Nov. 7 election between Cary Moon and Jenny Durkan are certified, one of them will take over as mayor and Burgess will leave City Hall.
Burgess has been working for quite a while on what he refers to as the Seattle Retirement Savings Plan. As a council member last year, he and counterparts in New York City and Philadelphia successfully lobbied President Barack Obama’s Department of Labor for a rule change that gave cities clear legal authority to set up such plans.
He was disappointed in March, when Republicans in Congress narrowly won a battle to repeal the Obama administration change. The vote in the Senate was 50 to 49.
At the time, Burgess called the repeal a death blow. But not anymore. Even without the clarity that the rule change briefly provided, he now says the city can move ahead.
“We’ve worked with City Attorney Pete Holmes. We’ve worked with outside counsel in Seattle and New York,” he said, as well as with counterparts in other cities and states. “Based on further legal review, we think there’s a path for Seattle to do this.”
The mayor declined to explain that new analysis in detail. “I’m not an expert on the legal interpretations. I don’t want to say too much,” Burgess said, noting that Seattle would be the first city to set up such a retirement system for private-sector employees.
Oregon has been developing a state system that could launch next year, he said.
The U.S. Chamber of Commerce and the Securities Industry and Financial Markets Association have opposed efforts by cities and states to set up such plans. And Seattle has been sued in recent years over groundbreaking measures, including a minimum-wage law, a tax on gun sales, a law to help Uber drivers unionize and a city income tax.
But none of those measures have yet been struck down in court, and “I don’t think the city will be sued,” Burgess said, over the Seattle Retirement Savings Plan.
Under his plan, employers not offering retirement accounts would need to enroll willing employees in the city plan and deduct money from their paychecks.
The employers wouldn’t need to contribute any of their own money, and the employees would be able to opt out at any time, according to the mayor.
The deductions would go into the employees’ retirement accounts, with the city outsourcing administration of the accounts to a private company, Burgess says.
The accounts would be held by the employees, so they would be portable; workers would be able to keep their accounts when moving from one employer to another.
Employers that already offer retirement accounts wouldn’t be affected by the plan.
The city would create a special board next year to conduct a market-feasibility study, perform additional legal analysis and select a company to serve as the administrator.
Enrollment could begin as soon as Jan. 1, 2019, according to the mayor’s plan.
Burgess wants the 2018 budget to include $200,000 for the startup work. Fees paid by account holders would reimburse the city and would pay for the system’s operation.
The system’s large number of account holders would keep fees low, Burgess says.
People without retirement accounts at work can open Individual Retirement Accounts on their own, but many don’t, Burgess says, calling his plan a “nudge.”
The mayor expects “more than adequate support” for this plan from his former colleagues on the council. He hasn’t discussed it with Moon or Durkan, he said.