5 Easy And Effective Ways To Rebuild The Middle Class
This chart released by the Congressional Budget Office in October of 2011 — just weeks after the Occupy Wall Street protests began — made the income inequality crisis crystal clear: The poorer you were, the lower your income growth — even before the Great Recession began.
The disparity between the upper-middle class — whose income grew 65 percent — and the poorest Americans, who only saw an 18 percent increase, was substantial.
But it was the richest Americans — the now infamous “1 percent” — who saw their incomes explode by 275 percent, thanks to government policies.
Since our recent recovery began, the problem has only intensified. The top 1 percent took in 95 percent of all income gains from 2009-2012.
But awareness of the problem has grown as well. This video, which illuminates how unaware Americans are of the massive wealth disparities that exist in this country, has been viewed over 12 million times.
As Occupy Wall Street has evolved into movements addressing foreclosures and debt forgiveness, former labor secretary Robert Reich released the film Inequality for All and new websites, movements and think tanks are focusing on solving what President Obama called on Wednesday “the defining issue of our time.”
On a political level, the re-election of President Obama cemented some of the achievements of his first term that promise to help those at the bottom of the economic ladder. The Elizabeth Warren-inspired Consumer Financial Protection Bureau advocates for borrowers, the Bush tax breaks for those earning over $400,000 have ended and the Affordable Care Act is, after a serious bit of website trouble, being fully implemented. These policies are promising but the president himself admits that they are not even close to enough.
Inequality was created by elected officials acting on behalf of the very richest. And it can be reversed by new policies that benefit 99 percent of America, creating a more stable and productive country for all Americans. Here are five ways to begin that change today.
“Refusing to allow people to be paid less than a living wage preserves to us our own market,” Eleanor Roosevelt said when testifying in front of Congress in 1933. “There is absolutely no use in producing anything if you gradually reduce the number of people able to buy even the cheapest products. The only way to preserve our markets is an adequate wage.”
Establishing a minimum wage was a goal of the former First Lady’s from the early 1910s and even after her husband died, she continued to battle for what she called a “living wage.”
The arguments for raising the minimum wage are clear: It keeps people off public assistance, giving the people most likely to spend their paycheck more to spend without hurting the job market. More than 7 out of 10 Americans are in favor of the increase.
But it remains controversial among one key group — Republican lawmakers.
In his last State of the Union address, President Obama proposed raising the lowest rate an adult who is not a trainee can be paid for an hour of work from $7.25 to $9. More recently, he backed congressional Democrats who want to raise the rate to $10.10 over the next few years. Democrats also want to tie the standard to inflation.
Organized labor-backed Fight for 15 is seeking a $15-an-hour living wage for hourly employees of major retailers and fast-food chains, which they say is what they need to meet their basic needs. First organized in Chicago, the group is intentionally trying to focus the public on the issue of wages.
Most new jobs being created in America are low-wage positions. While the minimum wage is often thought of as a starting wage, those working in positions at the bottom of the pay scale increasingly are older Americans.
Several localities have passed laws providing for a living wage for municipal jobs. Statistics show they’ve helped working families, increased productivity and reduced turnover.
As profits test new highs and wages test new lows, raising the minimum wage would help workers keep up. A living wage would actually reduce inequality.
Photo: Mikasi via Flickr
Expand Medicaid In All 50 States
President Obama pointed out on Wednesday that one of the most significant things he can do to fight inequality is implement the Affordable Care Act. And the part of the law that does the most to help those at the bottom of the economic ladder is expanding Medicaid.
Despite the fact that the federal government is covering all the costs of the expansion at the beginning, tapering down to 90 percent by the end of the decade, 25 red states have turned down the expansion. The at least $35 billion allocated to cover more than millions of Americans earning just over the poverty level will remain in the hands of the federal government.
Not only are states rejecting new jobs that come from the new coverage, they’re depriving hospitals of funding they need to remain in operation.
Without Medicaid expanding to 138 percent of the poverty level, Republicans are encouraging those in poverty to stay there, costing taxpayers billions.
And though Obamacare is controversial, polls continue to show that majorities even in red states support Medicaid expansion.
Universal pre-kindergarten is another proposal from the president’s State of the Union address that would drastically improve life for those who have been punished most by the Great Recession.
Neuroscience shows that a child’s brain is largely shaped by the first few years of his or her life. Early childhood education not only prepares kids academically but gives them the skills to function in an academic environment.
The president’s proposal is based on examples of schools that have showed amazing results for disadvantaged kids. Oklahoma has implemented pre-k for all kids and the positive results are stronger for kids in low-income families than those who hail from the middle class.
“Research suggests that children who attend pre-k fare better later in school and in their careers,” wrote The Atlantic‘s Jordan Weissman. “By making early childhood education contingent on parents’ wealth, we’re giving rich kids a big leg up while also making it more difficult for low-income parents to work.”
Photo: Leslie Gottlieb via Flickr
Student Loan Forgiveness
Education is such a consistent predictor of success in America that it’s enough to make you question free will. The more education your parents have, the more education you’re likely to have. The more schooling you finish, the higher your likely wages and the lower your chances of being out of work. Of course, your results may vary based on the degree you pursue.
A college education is a growing necessity in our economy. It’s also increasingly tied to unbearable student loan debt. The average graduate leaves college with $29,400 in loans. This obligation has forced many into jobs that may restrict their eventual success and even career paths that do not match their desires. And the Great Recession combined with a Bush-era law that made student loans non-dischargeable in bankruptcy have resulted in more than $1 trillion in debt and record defaults.
The ever-increasing cost of college increasingly prices out those from poorer families.
Student loan forgiveness programs that do exist for the armed forces, teachers, social workers and emergency personnel are underutilized, something Consumer Financial Protection Bureau chairman Richard Cordray is trying to fix.
This is a case where there is a bipartisan bill that goes even further than the forgiveness President Obama has proposed. Reps. Tom Petri (R-WI) and Jared Polis (D-CO) have authored the ExCEL Act, which would eliminate loan debt after 20 years of income-based payments for those in the private sector and 10 years for public service.
New Ways To Tax Millionaires
In 2011, President Obama appeared with billionaire Warren Buffett, who was asking that his taxes be raised so he would no longer pay a lower tax rate than his secretary.
Republican nominee Mitt Romney was a walking commercial for the so-called Buffett Rule. Because the businessman had earned most of his money by running a private equity firm and from investments, all of his income was taxed as capital gains, which was then only 15 percent. The rate has since been increased to 20 percent and will edge slightly higher on income over $250,000 to help pay for Obamacare. But Romney will still likely pay a lower rate on his income than an experienced nurse.
If 95 percent of income gains are going to those who have the most disposable income, taxing the richest Americans makes perfect sense — especially if you want to pay for programs that could reverse the disparities low taxes on the richest have helped create.
Forget taxing the poor rich, those who earn under a million a year — or even just a few million. You could focus on the rich rich, the .01 percent, the 16,000 Americans who make over $10 million a year — a group that enjoys more concentrated wealth than the barons of the 1920s.
If you’re afraid that you may drive them — or their money — out of the country, you can slap a Robin Hood tax on their favorite toy — Wall Street.
Forget the trickle-down myths, says billionaire Nick Hanauer in the video above. We raised taxes on the rich this year and the job market is better than it has been since before the Great Recession. The economy we’ve built since 1979 has been designed to transfer wealth to the richest. The least we can do is try to direct some of it back to the other 99.9 percent.