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Helping the Middle Class: There ARE Real Ways

Helping the Middle Class: There ARE Real Ways

by Jared Bernstein, Senior Fellow, the Center for Budget and Policy Priorities

What Are the Policies That Could Help the Middle Class?

. . . Here, I briefly list a few policy areas that could make a difference.  I offer few specifics and more generally just point out areas worthy of more policy research.

  • Retirement Security: Social Security, a guaranteed pension for retirees, is often the first line of defense in retirement security.  Though it is often mistakenly thought to be unimportant to most seniors, in fact, for recipients age 65 and up on, Social Security is about two-thirds of their income and that share grows with age—for the old-elderly, it’s closer to 70 percent of their income.  For a third of those over 65, Social Security accounts for at least 90 percent of their income.So protecting Social Security benefits is a key component of a retirement security agenda.  Beyond that, increasing access to pension savings through work would help future retirees.  The Obama administration has put forth various proposals to encourage pension participation and incentivize employer participation.  Also, with seniors living longer, presenting retirees with annuity options is also worth a close look.
  • Health Care: The Affordable Care Act was clearly targeted at helping to improve middle-class health care security, by lowering the growth of health care spending and premium costs relative to their expected trend.  Analysis by the President’s Council of Economic Advisors that by lowering the growth rate of health care costs, the real income of middle class families in 2020 will be $2,600 higher than would otherwise be the case.In the near-term debate, however, it is very important to the middle class to protect the Medicaid program against deep spending cuts.  Though Medicaid coverage is generally thought of as serving the low-income population, the program is the primary payer for 64 percent of nursing home residents.  With savings and other insurance, middle-class seniors may be able to initially pay for home health or nursing home services, but over time many spend their savings and eventually need Medicaid to step in, as Medicare provides limited coverage for these services.
  • Support for College Tuition: As noted above, college tuition has significantly outpaced inflation and middle-class income growth.  But the large increase in government tuition assistance in recent years has helped offset these costs for both middle-class (American Opportunity Tax Credit) and lower-income students (Pell Grants).  These measures can lower the net cost of tuition well below the “sticker price,” and in doing so, help relieve income-strained families.
  • Jobs and Incomes: The ability of middle-income families to meet the challenges noted thus far, from saving for retirement, balancing work and family, paying for college and health care, and retirement security, will all depend on quantity and quality of jobs available to middle-class families.  While it is beyond the scope of this testimony to discuss a jobs agenda policy set, the ideas that President Obama outlined in his “winning the future” agenda, including investments in new industries such as clean energy, infrastructure, and education should certainly help generate more opportunities.

But there is much more for policy makers to consider in this area, including manufacturing policy (including aggressive pushback against unfair trade practices), a strong, efficient public sector, a balanced playing field for union organizing, appropriate workplace regulation to protect workers’ safety and basic rights, decent minimum wage levels, and consumer protections.

These types of ideas have the potential to form the basis of a new social contract, one that could once again give the American middle class a fighting chance to loosen the squeeze and regain their economic footing.

You can read the full testimony here.

This post is excerpted from Bernstein’s testimony at the Senate Health, Education, Labor and Pension Committee and first appeared on the CBPP’s blog Off the Charts.

Photo by quinn.anya via Creative Commons

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38 comments

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9:16PM PDT on Aug 17, 2011

This is explained well. Would that the people in charge, the new tea party repubs in the House would pay attention to the long-run, not just the concept of CUT.

6:42AM PDT on Jul 14, 2011

Thanks for the info.

12:14AM PDT on Jun 27, 2011

The very fact that the current system creates and perpetuates classes to sustain itself is evidence of the fact that this is a failed system on all levels. One would think that civilization of man would or should have produced a system that defied classes. If humans are equal to begin with (and there isn't evidence to the contrary) then the whole class system of stratification should have been eradicated like maybe a hundred years ago.

Not only does it exist, it is perpetuated, nurtured, understood and accepted by all as an inherent status quo.

9:24PM PDT on Jun 25, 2011

It all gets pretty confusing. If we help the middle class, how can we be sure that no poor people benefit from it? Where, exactly, do we draw the line to ensure that no help is extended to the millions who fall short of middle class? Then we have the problem of those who insist that they are still middle class, even though they no longer are, since to be poor in America means losing your status as an equal human being. We need an easier way to identify who is deserving, and who isn't.

On the other hand, I believe the middle class has long contended that our poor live quite well, and that there is no poverty in America. So, why do middle class people fear falling into poverty?

8:59PM PDT on Jun 25, 2011

Will R. says "The middle class don't need help! They are already healthy wealthy but not wise.

Oh really? I may be somewhat healthy, but in no way am I wealthy. I don't know what planet you are from, but the middle class is not healthy or wealthy, unless you are talking about the repub middle class which is people making at least $200,000 a year. as opposed to the real middle class, those making less than $200,000 a year, mostly those making $20,000 to $50,000 a year.

10:50AM PDT on Jun 25, 2011

Danny W., Don't you mean pre-REAGAN? His administration started the deregulation and privatization that have continued ever since, also under Clinton, and reached their zenith (so far) under George Jr.

1:29AM PDT on Jun 25, 2011

The middle class don't need help! They are already healthy wealthy but not wise. But they are privileged and selfish and greedy whiny and unsatisfied. Anyway who ar we kidding? These so called middle classes are actually working class people who work damn hard for their upper class bosses. We work like dogs to get that silly label, it distracts us and divides us. What's wrong with being working class? I Would rather be a working class hero any day! And I love my working class roots. I am descended from peasants and slaves. My blood is strong and my hands are hard and my chin is square and tough. I have no desire to rule. A working class hero is something to be.

7:57PM PDT on Jun 24, 2011

Middle class in the US on the way to extinction.

4:38PM PDT on Jun 24, 2011

Pass the paycheck fairness act.
Pass card check.
Eliminate the cap on earnings for Social Security withholding.
Rescind the Bush tax cuts.
Cut military/security spending from $1.1 trillion per year to 600 billion per year.
Government has no business raising the retirement age unless government is guaranteeing that there is employment to be had, not 1 job for every 5 that are looking.
Penalize companies for off-shoring.
Make corporations pay their taxes. As a percentage of federal revenue, they are only contributing 15%. The rate is correct, but the enforcement is not.
Stop beating up on unions. They grew the economy to the largest in the world.

4:10PM PDT on Jun 24, 2011

Or just put everything back to pre-bush days, it wasn't perfect but it wasn't utterly retarded either...

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