by Benjamin Glasner

Far too many U.S. workers—particularly low-income individuals—slip through the gaps in the current retirement system, leaving millions across the country with inadequate savings. New data shows that in 2021, 69 million—or 55.5 percent—of workers lacked any kind of employer-provided retirement plan, a group made up disproportionately of low-income earners. Retirement accounts are the largest source of aggregate fungible wealth for American households and are an important tool to build a nest egg for the future. Unfortunately, access to employer-provided retirement plans remains deeply divided across earning levels and regions of the country.

This data snapshot explores the geographic variation in employer-provided retirement plans using state-level data from the Bureau of Labor Statistics’ Current Population Survey (CPS). [1]

Workers in Florida, Georgia, and Rhode Island have the lowest rates of access to employer-provided retirement plans.

While the lack of access to employer-provided retirement plans is a national issue, there is clear regional and state variation in where the largest gaps in access exist. States with the lowest levels of access, Florida (33 percent), Georgia (37 percent), and Rhode Island (39 percent), all lag significantly behind the best performers, Iowa (58 percent), Idaho (57 percent), and Montana (55 percent). At 49 percent, the Midwest has the highest regional rate of access in the country, 7 percentage points higher than the South, which comes in last at 42 percent.

Across the United States, nearly 41 million people—or one in three workers—earned less than $37,000 in the previous year, the 33rd percentile of wage and salary income. [2] We consider this group the low-income workforce. Only 30 percent of the low-income workforce has access to an employer-provided retirement plan, which means approximately 28 million workers do not. Florida, California, and Connecticut are the worst-performing states, in which less than one-quarter of low-income workers have access. This is particularly consequential in California, where 3.6 million low-income workers lack access to an employer-provided retirement plan—the most in the nation. [3] As a result, low-income workers in one of the highest cost-of-living states have among the worst retirement prospects in the nation. New York (26 percent) and New Jersey (26 percent) round out the bottom five states, spanning a wide range of policy environments and workforce characteristics.

Only 19 percent of all low-income workers participate in an employer-provided retirement plan.

Even when workers have access to an employer-provided retirement plan, there is a 26 percentage-point gap in participation between low-income workers and all others—in 2021, only 37.3 percent of all workers and 19.3 percent of low-income workers participated in an employer-provided retirement plan. This gap holds after controlling for the effect of the age, sex, and race/ethnicity of a given worker. The large and persistent gap in participation points to the difficulties many low-income workers have setting aside savings for retirement even when plans are available to them. Legislation enacted in December 2022 requires firms that offer plans to automatically enroll their workers, but since most low-income workers do not have access to employer-sponsored plans in the first place, those provisions will have limited impact going forward.

Policymakers aiming to close the retirement savings gap must therefore confront a two-pronged challenge: opening up access and increasing participation. Simply encouraging greater access to retirement plans may not be enough to increase take-up among low-income workers, particularly when every dollar is tight.

The bipartisan Retirement Savings for Americans Act is one proposed solution that aims to tackle both challenges simultaneously. It follows recommendations outlined in a research paper by economists Kevin Hassett and Teresa Ghilarducci to enact a retirement savings program aimed at low-income workers by building on proven models like the federal Thrift Savings Plan. Presently, the bottom 20 percent of households receive just 1.3 percent of the benefits from federal subsidies to encourage employer-sponsored retirement savings. Bold action is needed to make the nation’s retirement savings system—one of history’s greatest wealth-creating engines—work better for all workers, especially those who need help building wealth most acutely.


[1] We use the 2022 Current Population Survey’s Annual Social and Economic Supplement (CPS-ASEC processed by IPUMS), which asks respondents questions about their economic circumstances in 2021. For our methodology, we follow Radpour, Papadopoulos, and Ghilarducci (2021). We restrict our sample to all wage and salaried workers over the age of 25 who worked at some point last year and had non-missing income data. We coded individuals as having “access to a plan” if they responded that they either (1) had a retirement plan offered at work, but were not included (i.e. participating) in it, or (2) had a retirement plan offered at work, and were included in it. We coded individuals as “participating in a plan” only if they responded that they had a retirement plan offered at work, and were included in it. While researchers have found biases in CPS’ retirement-related estimates relative to other sources at the national scale, the dataset still provides the only reliable state-level information available.

[2] In 2021, the median annual income among those 15 years or older was $37,522. This calculation does not require that a person is working, or seeking work. This value comes from the CPS 2022 Annual Social and Economic Supplement which asked participants to report their personal income for 2021.

[3] California is one of a handful of states that has recently enacted programs to close the access gap, although it is still too early to evaluate their effectiveness, particularly among low-earners. For its part, CalSavers (California’s program) is still ramping up with the smallest businesses not needing to register until December 31st, 2025. The effect of CalSavers and other state level plans are an important area of future research. However, it is unclear if the CPS-ASEC survey, as currently designed, will pick them up given ambiguities in how retirement plan-related questions are formulated.

Economic Dynamism Retirement SecurityPublic Policy

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