The gulf between those who will enjoy their golden years and those who will struggle is growing. An ever larger number of American workers will have to make large and painful cuts in their standard of living after they stop working. The retirement crisis comes on the heels of declining defined-benefit (DB) pensions. Riskier and costlier defined contribution (DC) accounts such as 401(k)s and IRAs have taken their place. At the same time, the workforce has changed as non-white workers make up an ever greater share of workers. Yet they are less likely to have a DB pension than whites do. Just as the demographics of the labor market changed, the quality of retirement benefits fell, contributing to a widening racial wealth gap.

The two trends are only correlated, overlaid by larger economic changes. The decline of union membership, greater power for CEOs and stock holders to squeeze workers, the rise of contingent workers such as temporary workers, independent contractors and contract workers, globalization, and more corporate concentration are just some of the main reasons why workers nowadays are less likely to have a DB pension than in the past. And inefficient savings incentives that handsomely reward high-income earners but offer little to lower-income ones contribute to more wealth inequality among those with retirement savings accounts than is the case for people.

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