Comments Elsewhere

Someone working for $5.15 an hour is not free to save for retirement; they’re spending their whole income on rent and don’t have enough left over for food and heat, let alone savings.

I don’t understand this argument.

People who make $5.15/hour are already forced to turn over 6.2% of their wages to FICA and another chunk to the state and federal government in tax withholding. The FICA withholding is, according to the government’s accounting fictions, “saving for retirement” in the form of funding Social Security and Medicare. So presumably if there were no FICA (or better, no tax withholding at all) they could voluntarily put aside up to 6.2% of their wages for savings in an IRA and be no worse off than they were before.

You might say, “Oh, but if they wouldn’t put aside that money if they’re not forced to, because they have all these other pressing costs that they need to pay now.” There are certainly cases where that’s true, but it doesn’t follow from that that being forced to put the money aside is the best thing for them. Having lived on around $5,000 a year myself (due to a combination of low-paying jobs and long-term unemployment), I can tell you that when you don’t have enough money to spare for savings, being forced to put the money aside anyway has a direct consequence: debt. If (ex hypothesi) I’m being forced to put aside money that otherwise could have paid off current bills, then those bills still have to be paid off somehow, and when I don’t have the money now, that means they have to go on the card. And the debt accumulates a lot quicker than whatever “returns” I’m supposedly getting on my “investment” in Social Security and Medicare.