Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2006

November 2007
EBRI Issue Brief #311
Paperback, 36 pp.
PDF, 1,034 kb
Employee Benefit Research Institute, 2007

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Executive Summary

Latest Census data: This Issue Brief closely examines the level of participation by workers in public- and private-sector employment-based pension or retirement plans, based on the U.S. Census Bureau’s March 2007 Current Population Survey (CPS), the most recent data currently available.

Sponsorship rate: About 56 percent of all working-age (21–64) wage and salary employees work for an employer or union that sponsors a retirement plan. Among full-time, full-year wage and salary workers ages 21–64 (those with the strongest connection to the work force), just over 60 percent worked for an employer or union that sponsors a plan.

Participation level: Among working age full-time, full-year wage and salary workers, 53 percent participated in a retirement plan.

     --> Trend: This is down from approximately 55 percent in 2004. Participation trends increased significantly when the labor market was tight in the late 1990s, and decreased when unemployment went up in 2001 and 2002. With a more stable job market in 2003 and 2004, the participation trend flattened out. But even with the stable job market in 2005 and 2006, the retirement plan participation level declined; therefore, it appears a much tighter job market may be needed to push participation trends upward.

     --> Age: Participation increases with age (60.1 percent for wage and salary workers age 54–64, compared with 29.3 percent for those 21–24).

     --> Gender: Among all workers, men had a higher participation level than women, but among full-time, full-year workers, women had a higher percentage participating than men (54.4 percent for women, compared with 51.4 percent for men). Female workers’ lower probability of participation in the aggregate results from their overall lower earnings and/or lower rates of full-time work in comparison with males.

     --> Race: Hispanic wage and salary workers were significantly less likely than both white and black workers to participate in a retirement plan. The gap between the percentages of black and white plan participants that exists overall narrows when compared across earnings levels; among workers earning $30,000–$39,999, black and white workers had a virtually identical level of participation. A key factor in Hispanic participation levels is whether the worker is native-born or nonnative-born; native-born Hispanics have participation levels closer to other minority groups.

Geographic differences: Wage and salary workers in the South, West, and Southwest had the lowest participation levels (Florida had the lowest percentage, at 40 percent) while the upper Midwest and Northeast had the highest levels (North Dakota had the highest participation level, at just over 64 percent).