Changes to cost California retirement savers $1.2 billion
By Suzanne Potter, Public News Service, California
September 5, 2017 (Washington D.C.) -- Just days before Labor Day, the Trump administration announced two policies that consumer advocates say hurt the average worker and favor Wall Street and big business.
On Wednesday, the Labor Department announced it is delaying by 18 months’ enforcement of key parts of the Obama-era Fiduciary Rule, which requires financial advisers to put clients' interests above their own when recommending investments.
Ed Mierzwinski, consumer program director with U.S. PIRG, said the president is simply carrying water for Wall Street.
"They've been taking an estimated $17 billion a year out of retirement savers' pockets by giving advice that rewards them with higher fees and commissions instead of rewards you with the best plan,” Mierzwinski said.
A study by the Economic Policy Institute estimated that California retirement savers would lose out on $1.2 billion in returns over the next 30 years, as the result of bad advice given during the 18-month delay in the fiduciary rule. The Trump administration has said the rule places an unnecessary burden on financial advisers and makes them less willing to take on small-dollar investors.
Meanwhile, Trump on Tuesday moved against an Obama-era equal-pay measure that was supposed to go into effect on Friday. The Office of Management and Budget announced it will not require companies to report data on how much various classes of workers are compensated.
Heidi Shierholz, senior economist and director of economic policy at the Economic Policy Institute, said this shows that the president is not concerned with the persistent wage gap for women and minorities.
"One of the key things that has contributed to unequal pay is just a lack of transparency - people not actually knowing what people in their group are paid relative to other groups,” Shierholz said.
Statistics show that women still only make 80 cents on the dollar compared with white men, and it's even worse for single moms and women of color. Business groups applauded the move by the president, saying the reporting requirement would create unnecessary red tape.