Category Archives: Middle Class

Movin’ On Up: Reforming America’s Social Contract to Provide a Bridge to the Middle Class

Source: Shawn Fremstad, Rebecca Ray, Liz Chimienti, and John Schmitt, Center for Economic and Policy Research, February 2008

From the press release:
At least 48 million Americans in working families lack the income needed to gain a toehold in the middle class, according to a new report released by the Center for Economic and Policy Research.

“Movin’ On Up: Reforming America’s Social Contract to Provide a Bridge to the Middle Class” synthesizes recent research by CEPR on job quality, economic security, and unionization, and outlines a set of national policy reforms that would make it possible for more struggling families to join the middle class.

Decent Work and Public Investment: A Proposal

Source: Helen Lachs Ginsburg and Gertrude Schaffner Goldberg, New Labor Forum, Vol. 17 no. 1, Spring 2008

With the 2008 election likely to lead to Democratic control of the legislative and executive branches, it is time for a bold new vision of the economy–one that will reduce the increased inequality that has grown in tandem with our national wealth. It is time to take a big step toward shared prosperity. … The National Jobs for All Coalition is proposing a major program called the Drive for Decent Work. It simultaneously attacks economic inequality and our often unacknowledged but crippling double deficits–the chronic shortfall of decent jobs and the gaping hole in public investment. The Drive for Decent Work is a win-win solution that could put the nation back on the path it started to take after World War II.

How Much Does the Federal Government Spend to Promote Economic Mobility and for Whom?

Source: C. Eugene Steuerle, Gillian Reynolds, and Adam Carasso, Economic Mobility Project, February 4, 2008

Today, the Economic Mobility Project released a report on the federal government’s investment in economic mobility. The report, authored by C. Eugene Steuerle and Gillian Reynolds of The Urban Institute and Adam Carasso of the New America Foundation, finds that while the federal government makes a significant investment in economic mobility ($746 billion or 5.7 percent of GDP in 2006) the majority of that investment goes to middle and upper income households. Less than one-third (27 percent) of federal mobility spending goes to lower income households. While these households do benefit from many other federal programs, those programs generally are not aimed at promoting mobility and sometimes even discourage it. Between 2006 to 2012, under current law programs targeted to lower income households would decline as a percentage of GDP, while those targeted to the rich would increase over the same period.

Key Findings

Analyzing Affordability In Metropolitan Housing Markets: An Examination Of Affordability For Middle-Income Households

Source: Daniel Melser & Celia Chen, Moody’s, January 28, 2008

As we begin 2008, the U.S. housing and mortgage markets are in the midst of what now accurately can be characterized as a housing bust. Mounting anecdotal reports from metro areas across the country – both recognized housing hot spots and slow-growth markets – indicate that middle-income households are the hardest hit by this ongoing crisis. But it is wrong to assume that the dramatic downturn is easing the housing-cost burden on middle income families either in the short-term or over the long-term. This report shows that these families remain unable to access affordable homes in their communities under current market conditions, and that policy solutions focused on this crisis will only be successful if they are implemented in tandem with a long-term strategy for keeping our communities affordable.

The Erosion of Middle-Class Economic Security after 2001

Source: Christian Weller, Challenge, Vol. 51 no. 1, January-February, 2008
(subscription required)

This economist presents a variety of ways of measuring how security has been reduced in the 2000s. How well can middle-class Americans withstand financial emergencies–a bout of unemployment, for example, or a medical emergency? He finds that the gains in security of the late 1990s were eroded entirely in the 2000s.

The Importance of Accounting for Job Quality: Charting U.S. Economic Performance with Alternative Labor Market Indicators

Source: David Howell and Mamadou Diallo, Challenge, Vol. 51 no. 1, January-February, 2008
(subscription required)

These authors argue that traditional measures of employment and unemployment are not adequate. In the traditional data, a low-paying job counts as much as a high-paying one. The authors create new indicators to determine how well Americans are doing. They show that a strikingly low percentage of American workers have what the authors define as adequate jobs, although the rate has improved since 1979. Serious job-quality deterioration has occurred, however, for those, especially men, who have at least a high school diploma but no more than two years of college.

The Decline of Good Jobs: How Have Jobs with Adequate Pay and Benefits Done?

Source: John Schmitt, Challenge, Vol. 51 no. 1, January-February, 2008
(subscription required)

This economist defines good jobs as those that pay a reasonable minimum and also include health care and pension benefits. The share of such jobs in the economy has declined since 1979. For men, the decline is especially sharp. Given that the workforce is better educated and more experienced, a decline is all the more an indication that the labor market is failing the American worker.

Economic Mobility of Families Across Generations

Source: Julia Isaacs, Economic Mobility Project, Pew Charitable Trusts, 11/13/2007

“Doing better” than one’s parents has long been a key element of the American Dream. The story embedded in our history suggests any person can start from humble beginnings and achieve great wealth, or at least reach the middle class. But are Americans today better off than their own parents were? How much does their eventual success depend on their family background?

2007-2008 Assets and Opportunity Scorecard

Source: Corporation for Enterprise Development, 2007

From the summary:
The 2007-2008 Assets and Opportunity Scorecard contains evidence that even profound and enduring ownership patterns can change and change fast. In the two years since the release of the 2005 Scorecard, median net worth jumped 20% nationwide, while it jumped 68% for women and more than doubled for minorities. Most of these gains have come as a result of increasing homeownership and home values, and are therefore at risk that as interest rates rise and grace periods end, foreclosure rates will also rise. The results underscore the efficacy of housing finance and credit innovation and the need for policing and reigning-in predatory lending.

Yet, the most important message of the 2007-2008 Scorecard, like its two predecessors, is the disparity in asset ownership – and, consequently, economic opportunity–among states, and by race, gender and income.

Guide to the Scorecard

The Alternative Minimum Tax: Assault on the Middle Class

Source: Leonard E. Burman, Urban Institute, October 29, 2007

From the abstract:
In a tax code with no shortage of ironies, the alternative minimum tax (AMT) stands out. Created by Congress in 1969, it was aimed at millionaires, but relatively few millionaires pay it. It is billed as a low-rate levy, but most of its victims face higher taxes because of it. It undermines two widely lauded reforms of the income tax–restoring both bracket creep and the marriage penalty. And though nobody favors keeping this Frankenstein alive, it will be very difficult to kill. Welcome to the tax policy twilight zone.