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Middle Class by a Thread |
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Nearly everyone but the Bush administration acknowledges America’s middle class has been teetering on the economic edge for some time. Now, a project by the nonpartisan Demos and Brandeis University quantifies the extent to which the nation’s middle class is, as the report’s title puts it, hanging By a Thread.
Here are its key—and chilling—findings:
- Only 31 percent of families who would be considered middle class by income are financially secure.
- One in four middle-class families are at high risk of slipping out of the middle class.
- Nearly four out of five families earning a middle-class income do not have sufficient assets to survive for just three months should their income source fluctuate or disappear.
- Twenty-one percent of middle-class families have less than $100 per week ($5,000 per year) remaining after meeting essential living expenses.
- In nearly one in four middle-class families, at least one family member lacks health insurance.
- More than half of middle-class families have no net financial assets whatsoever.
The picture is even bleaker for middle-class households of color, with only 26 percent of black households and 18 percent of Latino households securely in the middle class. (Demos and Brandeis plan additional reports that will examine middle class security by race, age and income demographics.)
What sets this report apart is the use of a metric to determine the economic strength of the middle class. The report is based on a “Middle Class Security Index” developed by the two organizations that measures the financial security of the middle class by rating household stability across five core economic factors—assets, educational achievement, housing costs, budget and health care. Based on how a family ranked in each of these factors, they were defined as financially “secure,” “borderline” or “at risk.”In a press conference announcing the report today, former Housing and Urban Development Secretary Henry Cisneros noted that over the past century, America’s strength depended on a thriving middle class. The post-World War II middle-class boom was no accident, Cisneros said, listing such crucial government programs as the G.I. Bill that opened access to higher education for veterans, home loan guarantees by the Federal Housing Administration and affordable housing for war veterans.He also could have added another key factor underlying the mid-century growth of the U.S. middle class: an environment in which workers had far more freedom to form unions than they do now.(Check out an August report by the Center for Economic and Policy Research that highlights how union representation is a big step toward moving from low-income to middle-income. The report found that workers in 15 low-wage industries raised their wages, on average, about $1.75 per hour by joining a union. Union workers earned some 16 percent more than their nonunion counterparts. Union workers in these same industries also were about 25 percentage points more likely to have health insurance or a pension plan.)Cisneros and other participants in the press conference agreed that a vibrant middle class is essential for the nation to maintain a competitive edge in the global economy. But as AFL-CIO Chief Economist Ron Blackwell put it, it’s no longer possible for most of us to achieve economic security by working hard and playing by the rules:
All that is under threat today as we enter a new Gilded Age.
Between 1973 and 2005, income for the wealthiest 0.1 percent rose by 353 percent—averaging $1.3 million a year. Meanwhile, wage workers’ productivity grew by 18 percent between 2000 and 2006—but most people’s inflation-adjusted weekly wages rose only 1 percent during that time.
By a Thread: The New Experience of America’s Middle Class emphasizes access to affordable education as the key to ensuring sufficient economic security for working families to not just get by, but get ahead. Only 27 percent of the U.S. middle class have more than a high school education, according to the report, putting their future and their children’s future at risk in a rapidly developing global economy where higher education skills have become fundamental to achieving middle-class status.
Although the middle class is weak, says co-author Jennifer Wheary, there are steps that a government interested in a strong middle class can take to strengthen it (rules out the current administration, of course). The report lists several key recommendations.
Build assets, reduce debt. The United States currently does not have a comprehensive savings and asset-building policy, but rather a scattershot set of policies that when taken together largely benefit households that need help the least. Policies for middle-class families should include helping households save for emergencies, making homeownership more secure and giving families a fair chance to pay down credit card debt.
Make higher education more accessible and affordable. In essence, the core of such an effort must address the weakening of the federal financial aid system, which over the past two decades has shifted away from a grant-based system to a debt-based system.
Address the health care crisis. Prior research by Demos has revealed that even middle-class families with health insurance have problems paying their medical expenses and are using credit cards to meet their health needs. The nation’s health care crisis is so dire, the report asserts that the future security of America’s middle class hinges on whether we can muster the political and public will to markedly overhaul health-related funding and access policy in this nation.
How many days is it again until Jan. 20, 2009?
3 Comments
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President Bush is against the middle class and just likes his rich, corporate buddies. He has done everthing he could to hurt the working men and women in this country.
This is what happens when you have capitalization and privatization going hand in hand without the necessary social programs that any good democratic society needs. If you take away the “social” aspect, you take away democracy, because all you will have is the survival of the fittest (wealthiest), and a subservient class beneath it. This is simplistic, but the idea of a middle class is dependent upon fairness, equality and safety nets; it is dependent upon a social structure that enables and supports the entire population.
The present government does not support this type of democracy, which is why all the social programs are being destroyed, and more and more privatization is taking place. This is a disaster for almost all Americans, and why the middle class is slowly, but surely being destroyed. A good book to read, “The Shock Doctrine” by Naomi Klein, discusses this concept in depth.
Another interesting idea is that if banks would increase the amount of interest they give on regular savings accounts, more people would be encouraged to save, even meagerly, myself included.
My famiily and I are among those “middle class”. We could not last one month if either one of our incomces were lost. I have a college education with post-graduate work yet only earn 30 thou a year. I am an educator in Seattle Public Schools. I am hoping to save enough money for a move to CA where teachers are paid $15 thou more a year, but also are provided a free education for those wishing to obtain a masters and spec ed endorsement among other education related degrees. To do this, I must uproot my family and move down there. I have to now moonlight as a babysitter at night just to earn enough for us to get by. And don’t even start me on taxes. I find it reprehensible that I have to pay the same 20 percent as someone earning a million annually. I think we should raise the earned income credit to 60 thousand for a family of four and then have famlies pay only 10% until they earn 90 grand. Then raise it to 20% until $200 thou and gradually raise it 5% for every 20 grand after. That way the rich are paying the bulk of the taxes and that’s how it should be. I am so tired of having to work two jobs. I’m exhausted most the time now and rarely have time to do things with my own kids as a result.