6 Ways to Boost the Middle Class

Pro-Middle Class Policies That Won’t Cost the Government Anything

In this era of painful spending cuts, it often feels like there’s little political space to get much done to help the middle class — or anyone else. Fortunately, that doesn’t have to be the case. Our Center for American Progress colleagues put together six pro-middle class policies that won’t cost the government anything.

Here’s the short version and a few charts:

  • Increase the Minimum Wage

Since 1968 the inflation-adjusted value of the minimum wage has declined by 31 percent.The minimum wage would be more than $10.50 per hour today if it had kept up with inflation. This decrease has occurred even as workers have become more productive. Over the same period of time, productivity—the measure of output per hour of work—increased by 124 percent.

  • Make Saving for Retirement Easier, Cheaper and More Secure

An increasing number of households are at risk of seeing their standard of living decline in retirement due to a lack of sufficient retirement savings.

In order to help the middle class retire with dignity, we need to expand retirement coverage and improve the quality of retirement plans available. We can achieve these goals and improve the current retirement system by creating a new hybrid retirement plan type—the Secure, Accessible, Flexible, and Efficient Retirement Plan, or SAFE Retirement Plan, a hybrid between a traditional pension and a 401(k) plan—and opening the federal Thrift Savings Plan, the 401(k) for federal employees, to the public.

  • Lower Monthly Housing Costs by Providing Homeowners with Principal Foregiveness

Although housing markets are beginning to recover from the collapse of the housing bubble, more than one in five homeowners are still “underwater” on their loans, meaning that they owe more on their mortgages than their loans are worth. Not only does this threaten individual homeowners, but the more than $600 billion in negative equity also significantly hampers economic recovery.

  • Let All Workers Earn Paid Sick Days

Paid sick days should be available to all U.S. workers. Implementing this policy would provide greater job security to millions of Americans, reduce worker turnover, and ultimately strengthen the middle class.

There are currently no federal laws guaranteeing workers the right to earn paid sick days. Nearly 40 percent of workers in middle-income families and more than 55 percent of workers in low-income families do not have access to paid sick days. Twenty-three percent of adults report either being threatened with losing a job or being fired for taking time off when they or a family member have been sick.

  • Make Sure That Workers Who Want to Form a Union Can Do So

Unions help strengthen the middle class by enabling workers to negotiate for fair wages and benefits and helping ordinary citizens get involved in the political process.

But as unions became weaker over the past four decades—due in part to an unfair union election process—they became less able to perform these functions. The middle class has withered as a result, with the share of income going to the middle class falling alongside the percentage of workers in unions. (see Figure 5)

  • Require Colleges to Provide Consumer Information Via College Scorecards

Two-thirds of students with four-year bachelor’s degrees finish their studies with student-loan debt, and the average amount of debt per student is nearly $25,000. (see Figure 6) Yet average debt loads at schools can range from $950 or less to $55,250, and graduation rates range from0 percent to 91 percent. Many students, however, are unaware of these differences.

The federal government should require colleges and universities to do a better job of providing pertinent information to prospective students concerning their likelihood of graduating, finding employment, and paying off student debt. Schools should be required to direct students to this information on all promotional materials to allow students to easily compare schools.

For all of the wonky details, check out the full report HERE.

BOTTOM LINE: Instead of continuing the painful austerity spending cuts we’re currently living under, we can and should make needed investments in the middle class, such as expanding access to preschool and child care, as part of a package that reduces the deficit over the longer term.  And there’s also no reason not to immediately put in place a set of pro-middle class, pro-growth policies that won’t require any additional federal spending.

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Advocacy Team