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Posts Tagged ‘middle class’

Capitalize Workers!

April 7th, 2014

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Raising the minimum wage has justifiably captured policy makers’ attention, but if the goal is to materially raise living standards for every American worker, we should also be calling for a minimum pension. Done right, this would not only create real wealth for the middle and working classes, it would use the power of financial markets to reduce wealth disparity instead of widening it.

There is a vast difference in the way the wealthy and the rest of Americans earn their money. In 2010, 60 cents of every dollar earned by those in the top 1 percent came from investments and businesses they owned. For the middle class, it was 6 cents.

For decades, the returns to capital have far outstripped the returns to labor. Before the mid-1980s, worker salaries constituted 65 percent of national income. In 2012, they were 58 percent. Economists rightly fret over how this contributes to wealth inequality. Well, if you can’t beat ’em, join ’em. If all working people, whatever their wage, could get a piece of these gains, it would improve their financial well-being exponentially. This is where the minimum pension comes in.

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The Middle Class Gets Wise

October 21st, 2013

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Perhaps we underestimate ourselves. Five years after the Lehman collapse triggered the deepest recession in eight decades, the middle class may be solving the vexing problems of income inequality and stalled wages on its own.

Faced with unemployment and dim job prospects, Americans made one significant change that should alter their fortunes and those of the middle class for decades: they went back to school. During the recession, there has been a sharp surge in the number of Americans who are getting a college degree. Read the rest of this entry »

Trade: Boosting Exports to China

June 11th, 2013

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Twenty years ago, American businesses flocked to China with vague but ambitious plans to sell its billion consumers everything from toasters to telephones. But in a market that had no meaningful middle class, they found few takers. In the years since, China has successfully tapped into foreign investment and know-how to build a powerful, export-oriented economy—and a rapidly expanding middle class—largely by selling to America’s middle class. Its success has stoked American concerns about trade deficits and the loss of middle-class jobs to low-cost foreign competition.

But China’s ongoing transformation points to a potentially different future: one in which America expands its exports, achieves fairer trade, creates good jobs, and strengthens the middle class—by increasingly selling to China’s burgeoning middle class.

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A Bipartisan Opportunity in Advanced Energy Manufacturing

March 27th, 2013

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Our nation’s history is proof that manufacturing jobs lead to middle-class growth. At roughly the same time manufacturing’s share of the total workforce dropped from 20% to 9%, the middle class has shrunk from 61% of the U.S. population to 51%. While the U.S. manufacturing sector has recovered 500,000 jobs since early 2010, a major opportunity is surfacing in the clean energy sector. A $7 trillion clean energy market is developing around the world, and clean energy manufacturing provides an opportunity to renew and modernize our manufacturing sector.

The Obama Administration is already moving to help companies seize the clean energy opportunities. The Department of Energy is launching a new Clean Energy Manufacturing Initiative (CEMI), focused on growing American manufacturing of clean energy products. Led by Office of Energy Efficiency & Renewable Energy, the initiative includes modern analysis of the global clean energy manufacturing supply chain to inform the Department’s future funding decisions. This is a program that will empower companies to use our nation’s competitive advantages for their and America’s gain. It is ensuring our government is the most-well-informed government in the world and can help American companies out-compete the likes of China, South Korea, or Germany.

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Next Steps: Health Care Cost Savings and Coverage for the Poor

June 28th, 2012

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The Supreme Court ruling on health care re-affirms the President’s goal of stable and secure coverage for the middle class and the nation. It is time for the Republicans to drop their fight against the law and join forces with Democrats against a common enemy: rising health care costs.  Both parties should take full advantage of the key role that states play in health care, an important topic the Supreme Court also ruled on today.

Today’s ruling affects the expansion of health care coverage to the poor under Medicaid. As a quick refresher: the Affordable Care Act required states to expand coverage to all the poor under Medicaid. Today, one-third of the poor have no coverage under Medicaid, through a job, or any other source.

The Supreme Court affirmed the federal funding for that coverage, but said states should be free to choose whether to accept it for expanding Medicaid. From the start of the expansion in 2014 through 2016, federal funding covers 100 percent of the costs of expanding Medicaid, but after that, the states will start splitting the cost with the feds. The state’s costs are capped at 10% of the total, far less than their typical share, which averages 32% across the states.

What does this mean?

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Faith in Math

February 21st, 2012

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Nate Silver makes a meticulous mathematical argument that President Obama would be better off gaining downscale whites even if it costs him many upscale white voters (“Why Obama will embrace the 99%”). But for his math to add up, he has to make a giant leap of faith: that populism will win over working class whites. But where’s the compelling evidence for this populist proposition?

In our surveys of this same group of voters, there is certainly anger directed toward Wall Street, Congress, and special interests, yet we keep hearing a much more resonant emotion: anxiety.  These and other swing voters are deeply concerned that the country is in decline. They fear that they, and especially their children, may not be able to successfully swim against an ebbing tide of American greatness. They don’t know what America does or makes anymore that represents a solid chance for opportunity and growth for themselves and their communities.

Among arguably the most important swing block of the electorate – those who voted for Obama in 2008 but switched to the Republicans in 2010 – this anxiety about America is palpable. In our 2011 survey we asked them to imagine that the world economy were the Olympics, and only one-third said that America would earn the gold 10 years from now. An equal amount said we would not be on the medal stand at all. Michael Ford, who directs the Center for the Study of the American Dream at Xavier University, found that middle income Americans overwhelmingly believe “the future is being created elsewhere” and that the middle class has lost faith in every major institution in America except the military. A pessimistic populism focused mainly on fairness, income inequality, and anti-corporatism does not speak to, much less answer, these profound anxieties.

Whether he runs as a populist or centrist, President Obama may be reelected no matter the rhetorical framework. As Mr. Silver notes, the economy is improving, bin Laden is dead, and al Qaeda is in tatters. And let’s not discount the fractured primary on the Republican side. But ultimately, an anger-based “people versus the powerful” argument has been tried, time and again, in the modern political era – by Mondale, Gore, Kerry, and Edwards, among many others – and it always comes up short. What voters along the income spectrum want is a leader who eases their anxieties and speaks to their aspirations, not one who echoes their anger. If Nate Silver has persuasive evidence to the contrary, he didn’t include it in his mathematically astute piece.