Americans who fall outside of the categories of rich or wealthy are entangled, trapped in a vicious cycle of debt, lack and poverty. Despite working hard, and ‘doing the right thing,’ economic and financial security continues to elude millions of Americans who are nominally considered middle class.
The United Way released recent data offering a troubling snapshot of where the United States stands since the 2008 recession ended. The data compiled over a 10-year period and called the ALICE (Asset Limit, Income Constrained, Employed) Project, shows that almost 51 million Americans make less than what’s needed to survive in the modern economy. Stephanie Hoopes, the project’s senior researcher, said that number includes 16.1 million households living in poverty, as well as the 34.7 million families that fall under the ALICE classification.
That translates to what she said is a staggering 43 percent of American households that can’t afford basics such as food, child care, health care, transportation, and a cell phone.
“There are many different ALICE stories. Some people are in different situations because of health problems, natural disasters and a number of other issues,” Ms. Hoopes told The Final Call. “Usually people who are in this field totally understand the magnitude of this problem.
The cause is a mismatch between basics of the household budget and what people are making. Housing, childcare, food, transportation and health care are rising faster than inflation overall and faster than wages. Increasing wages would help to offset fluctuating wages, unpredictable hours and work hours incompatible with childcare.
“ALICEs are crucial to maintaining our workforce and infrastructure. The change in politics has made our work more important but we don’t make any policy recommendations. This is factual, unbiased, just cold, hard facts.”The cause is a mismatch between basics of the household budget and what people are making. Housing, childcare, food, transportation and health care are rising faster than inflation overall and faster than wages. Increasing wages would help to offset fluctuating wages, unpredictable hours and work hours incompatible with childcare.
Dr. Elise Gould, a senior researcher at the Washington, D.C.-based Economic Policy Institute (EPI) said research conducted by EPI experts, scholars and researchers corroborates the United Way findings.
“There are a lot of people working who are still in poverty,” said Dr. Gould, whose areas of expertise include wages,poverty, jobs, healthcare and economic mobility. “We put data out a day ago (titled “50 Years after the Poor People’s Campaign, Poverty Persists Because of a Stingy Safety Net and a Dysfunctional Labor Market”) which shows that a number of Americans living in poverty who may be in school or retired, but two-thirds are otherwise employable. Of those, 63 percent are working and 45.5 percent of them work fulltime,” said Dr. Gould.
“People need more jobs, jobs that have more hours and the pay needs to be higher. What people are earning is simply insufficient. We also need a better safety net for caregivers and students. It seems like people are working really hard and low-income workers are more educated than ever before but the data make it clear that millions of people who are active participants in the labor market are unable to make ends meet, either due to insufficient hours or low wages.”
When asked, Dr. Gould said there’s no evidence that the economy is at full employment, as some economists have argued.
“If the economy was at full employment, you would see higher wages,” she said. “A lot of people not being counted are coming back into the workforce,” she said. “And the Black unemployment rate and the youth unemployment rate is still high. In the late ‘90s and 2000s, we saw wage growth for high school and college students and Black and White workers. We’re not seeing that now.”
While middle class Americans in general are affected by the crush of insufficient wages and rising prices, economists, social scientists and other experts say Black Americans, by virtue of racism, discrimination and structural inequities are more deeply affected financially than their White and Latino counterparts.
Young professional businesswoman and communications consultant Brandi R. Richard said she knows well the reality of being in the place where she makes too much to get assistance from the government but not enough to bridge the gap between what she makes and being able to comfortably take care of herself and her family.
“In my mind, I’m a single parent still struggling to make it. It’s terrible. The most challenging part for me was ensuring that I could cover the basics and have emergency funds too,” said Ms. Richard, the principal at BR Communications. “There were times when I was begging police officers not to give me a ticket. There are people where one bad decision wipes you out. If it had not been for my family who supported me and cared for my daughter, I don’t what I would do,” she shared.
“It’s more expensive to live, buy food, even put kids through school. You have to make sacrifices. Most people are required to have multiple jobs because rent and housing expenses outpace salaries. People are suffering from depression which compounds the problem. But people are still trying to move ahead. I don’t think the policy makers are having these issues because their friends don’t have those problems or challenges.”
Middle class Americans have been caught in an economic vice spurred by decades of stagnant wages, minimum wages for fast food and service jobs; unemployment; the spiraling cost of food, medicine, and rent; gentrification; foreclosures; and the paucity of affordable housing.
Beverly Hunt, a Washington, D.C.-area resident for more than 20 years, said significant health care challenges threaten to bump her from her middle class perch. The communications and public relations veteran said she has been living an increasingly precarious existence since discovering that she has breast cancer four years ago.
“I was very blessed when I was diagnosed with cancer because I had a good job and good insurance with an 80-20 split, meaning 20 percent of the costs are borne by me,” said Ms. Hunt, a Howard University graduate who has been in her career field for 30 years. “I was paying $200 a month for four whole years to one doctor.”
“This has affected everything with me … it’s scary. Even though I have a great insurance, I still had to pay cash. Acupuncture is no longer covered and I haven’t even begun to figure how to pay for radiation. I’m thinking I may wait for the full seven years when my credit is clear and start from there,” she added.
“It’s certainly taken a toll on my standard of living. I know so many friends with no insurance and the consequences for them have been so much worse. What they’re dealing with has knocked people out of the middle class. One serious illness, being unemployed for several months a year, or us Baby Boomers not being hired—all this affects one’s ability to stay in the middle class. What I see among my peers is that they are jammed up, deciding whether they are going to eat or pay bills.”
It is clear ordinary Americans cannot rely on the Republican-dominated Congress to enact policies to ease their financial and economic woes. President Donald Trump recently signed into law a tax bill voted on by Republicans in Congress that is slated to transfer $5.7 trillion over the next decade from the middle class to the wealthiest one percent. Republican lawmakers promised that regular workers would see pay raises and better wages but only 15 percent of employees around the country have seen any improvement in their wages and salaries, while corporations are enjoying substantial tax breaks and have largely used the windfall for stock buybacks.
The depth of disparities between America’s rich and poor is stark. It is estimated that the top one percent of this nation’s wealthy controls 40 percent of America’s wealth, income and resources.
A 2016 report published by EPI shows that CEOs in Fortune 500 and other top companies make more in two days than an average employee does in a year. Chief executives at 350 companies made $15.6 million on average in 2016—271 times what the typical worker earns. And even though CEO compensation has fallen slightly in the past few years, it has increased by more than 930 percent since 1978. The report notes that CEO pay has grown faster than the stock market or the wages of the top 0.1 percent.
The Institute for Policy Studies quotes Doug Smith, a former partner at the McKinsey Management Consulting Firm, who in an article about the yawning pay gap between CEOs and employees, argues that the economic costs of huge pay gaps go far beyond the problems of low employee morale and high turnover.
“Instead of building a real economy beneficial to all,” he said, “these unethical pay practices spread outsourcing, offshoring, tax avoidance, downsizing, and the substitution of good-paying permanent jobs with temporary, precarious employment.”
Mega-corporations like Amazon illustrate the perverse nature of the current economic system: Owner Jeff Bezos is the richest man in the world with a net worth of $132 billion but his company and others like Walmart and McDonalds, pay their employees so little that they’re often forced to rely on food stamps, Medicaid, and other public assistance to make ends meet.
Florida A&M University Associate Professor of Law Dr. Cori Harvey said although she’s an optimist, she fears that the steady hollowing out of the middle could lead to its collapse. She said conditions will improve— but only after they get worse.
“The working class, middle class and the poor are collapsing in,” she said. “At the top, these are all the same people who hang out together, eat steak dinners, go to the same schools and marry each other. Most of them would drop dead where they stand if their daughter brought a policeman or fireman home,” noted Dr. Harvey.
“They’ve created distractions and left those at the bottom fighting against each other and divided. The enemy is not horizontal, the enemy is not working class Black people,” said Dr. Harvey, a graduate of Spelman, Columbia and Rutgers universities and a former Philadelphia public defender.
“The poor and working class should align on income not on race. These groups need to come together. Republican working-class Whites vote outside of their class interests. When police officers vote Republican, I scratch my head.”
Dr. Harvey said one aspect that’s often overlooked is what exactly constitutes the middle class.
“I think first we need to be very honest about the problem,” she explained. “One thing is that there are poor and working-class people who think of themselves as middle class, maybe we need to be clear about who and what constitutes the middle class.”
Among scholars and economists, there is no clear consensus on who is a member of the middle class. In a 2015 study by the Pew Research Center, when polled, fully a third of respondents whose households brought home incomes below $30,000, identified themselves as middle class. Yet 51 percent of people making more than $100,000 also said they are the middle class.
Outside of that though, Dr. Harvey said that significant numbers of Americans, especially Black Americans, are hurting.
“I think that when people are ‘robbing Peter to pay Paul,’ which a lot of us are familiar with, we make bad short-term decisions that are catastrophic in the long run— such as cutting out insurance payments which can be ruinous,” she explained. “Specifically, with Black families, the erosion of the middle class cuts deeper because they have fewer layers of protection and support networks and less equity to pull out of their homes.”
It is incumbent on Black Americans to change their habits and behaviors; to start watching news programs and read about how to make money; to make good choices and prioritize their spending; and to get involved politically and to vote wisely, Dr. Harvey added.