Will Obama’s plans help the middle class?
Presidential policies aim to tackle average Americans’ widening insecurity.
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Biden said the task force would look to set policies that will improve basic benchmarks: “Is the number of these [middle-class] families growing? Are they prospering? President-elect Obama and I know the economic health of working families has eroded, and we intend to turn that around.”Skip to next paragraph
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The task force identified five areas for new policies:
•Expanding education and lifelong training opportunities.
•Improving work and family balance.
•Restoring labor standards, including workplace safety.
•Helping to protect family incomes.
•Protecting retirement security.
Policies on health insurance, another middle-class concern, will be crafted by Obama’s Health and Human Services secretary, Tom Daschle.
Similarly, the job-creating stimulus plan – expected to involve massive government spending – isn’t being crafted by this task force.
“The task force has a different target. It’s less about job quantity than job quality,” says Jared Bernstein, an Obama-Biden adviser who will be on the task force, in an e-mail interview. “Its goal is to make sure that once the economy begins to expand again, middle-class families will reap their fair share of the growth, something that hasn’t happened in recent years.”
Obama has called for middle-class tax cuts and for higher tax rates on Americans making more than $200,000 a year – those whose incomes have been rising the fastest in recent years.
It’s not that middle-class incomes have stopped growing. Overall compensation per hour of work, including benefits, has continued to rise generally in recent decades. But from the 1970s on, “median incomes have lagged way behind economic growth,” says Mr. Kenworthy.
Researchers cite several reasons for the pay trend and the climate of insecurity.
The declining clout of labor unions and a minimum wage that hasn’t kept pace with inflation are two examples on the domestic front. Then there’s the fact that consumers have borrowed more than ever before – with much of a 40-year rise in household debt occurring just in the current decade. The recent housing and stock market downturns have eroded family assets relative to debt.
Pay is now based more on performance – and more income seems to be flowing to “superstars” like top celebrities or CEOs.
The opening up of the global economy – not just trade in goods but also immigration and communications-based outsourcing – has also played a big role.
Government policies can help on some fronts, but in other ways workers and firms will bear the burden of adjusting to this new era.
“Tell me: How are you going to bring back the premium [pay] that was geographically insulated?” he asks. “You cannot turn back the clock.”
That may be why education is listed first in the task force’s to-do list. The future of the middle class depends a lot on raising skill levels and nurturing the creation of high-skilled jobs.