How We Can Bring Millions of Americans to the Middle Class

The decline of the middle class was a result, in part, of public policy choices. Today's downward mobility can only be reversed by a range of new choices consciously aimed at helping working Americans regain their financial footing.
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The United States needs to be reimagined. A recent study from the Pew Research Center tells us that in economic terms the middle class "has suffered its worst decade in modern history." It's shrinking.

With jobs scarce, wages declining and the nation's wealth concentrating ever more intensely at the top, the middle class has shrunk in size for the first time since World War II.

This is not a problem that began with the Great Recession, although the recession and its dismal aftermath have caused it to snowball. We've known for many years that despite hard work ordinary Americans have had trouble making ends meet, paying their monthly bills for food, shelter and clothing. It has become ever more difficult for families to find the funds necessary for decent childcare, and to send their children to college, and to prepare for a comfortable retirement. According to Pew, a mere 11 percent of Americans now describe themselves as very optimistic about the country's long-term economic future.

What we're experiencing is nothing less than an historic generational decline in living standards. We've obviously been doing something very wrong.

My colleagues at Demos, a nonpartisan think tank, have been researching and analyzing the economic plight of the middle class and poorer Americans for many years and have come up with a compelling blueprint for turning this disastrous situation around. It is a program that would require a tremendously heavy lift politically, a great deal of shared sacrifice among America's citizens, and a substantial financial investment in our human capital and other resources.

Try to imagine a nation in which there are good jobs for all who want and need to work; a nation in which all students who want a college education would be able to afford it; a nation in which predatory lending is prohibited and banks and other financial institutions are not permitted to charge usurious interest rates; a nation in which the middle class is once again expanding at a rapid rate and the ranks of the poor are vanishing.

Demos's comprehensive report, "Millions to the Middle: 14 Big Ideas to Build a Strong and Diverse Middle Class," not only imagines such a sanguine state of affairs, but offers us a viable route to get there.

One of the most important ideas is a guarantee of at least 16 years of schooling for boys and girls growing up at a time when some form of post-secondary credential is a virtual prerequisite for a middle-class standard of living. Demos's proposed Contract for College would transform the federal financial aid system from one that is predominantly loan-based to one that relies primarily on grants. Millions of young college graduates are now caught in a cruel vise. Not only are decent jobs very difficult to find, but the graduates are shouldering enormous student debt loads that must be repaid. As the importance of a college education has increased dramatically over the past 30 years, public support for colleges has dropped sharply. This doesn't make sense. In response, colleges and universities have jacked up tuition and fees. Tuition at public colleges have tripled since 1980. Demos's proposal, fully implemented, would double the percentage of students from low and moderate-income families who successfully complete college.

As all Americans know, the job market in general is horrendous. What is not so widely recognized is that the nation's employment challenges go much deeper than the normal vagaries of the business cycle. Millions are without work, and many are without hope of finding employment. Millions more are underemployed, working part-time or in temporary jobs, or doing work that is substantially beneath their capabilities.

This is not a temporary cyclical downturn destined to be followed by a robust recovery. Globalization, labor-saving technological advancements and the decline of labor unions has fundamentally changed the nature of work in the United States. Without bold new initiatives the American economy will be unable to come anywhere close to creating enough decent jobs to sustain a healthy middle class and substantially reduce the number of people living in poverty.

Sixty percent of the jobs destroyed since the start of the Great Recession were middle-income positions. Most of the job growth since then has been in low-wage occupations. As the Demos report notes, "The Department of Labor projects that over the coming decade the largest job growth will be in currently low-paying occupations such as home health aides, food service workers, and retail salespeople." That is not the stuff of which the American Dream is made.

The suffering from the employment crisis in the U.S. has been immense and must be brought to an end. The Demos proposal calls for a number of new or expanded initiatives, including:

  • The establishment of a temporary 21st century version of the WPA public jobs program. That would ease the plight of those hardest hit by the employment crisis.
  • A much larger commitment to public investment in infrastructure, such as roads, rail lines, seaports and electrical transmission; and increased investments in the newest clean energy technologies, and in scientific research and development. Such investments would lead to substantial job creation and help make the U.S. far more competitive in the years and decades to come.
  • A concerted national effort to reconstitute the labor movement so that working Americans are again able to band together to halt exploitation and effectively negotiate pay raises and benefits.

This is not pie in the sky. America's proudest creation in the early post-World War II decades was its vast middle class. It did not spring spontaneously into being, like magic. The process was helped enormously by a wide range of public policy decisions that, among other things, established a highly progressive tax code, guaranteed the right of workers to join a union and bargain collectively, made massive infrastructure investments, and offered extensive public support for education, including higher education.

The decline of the middle class was also the result of public policy choices, only this time they were geared to overwhelmingly benefit the very wealthy. Today's downward mobility can only be reversed by a range of new choices consciously aimed at helping working Americans regain their financial footing. Demos's report can be an important guide to that process. The goal is a fairer, more economically just and equitable America.

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