Making Our Middle Class Stronger

7/31/2019 Making Our Middle Class Stronger

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Making Our Middle Class Stronger

35 Policies to Revitalize Americas Middle Class

David Madland August 2012

www.americanprogress.o


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Making Our MiddleClass Stronger35 Policies to Revitalize Americas Middle Class

David Madland August 2012


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Contents 1 Introduction and summary

11 Lower the costs of college

17 Reduce costs and barriers to job training

21 Raise workplace standards

31 Reduce the costs of getting sick or losing a job

37 Make it possible for workers to also be caregivers

for children and elderly parents

41 Boost retirement security

45 Stabilize the costs of housing

51 Reduce energy and transportation costs

55 Create middle-class jobs

59 Focus policymakers on the middle class

61 Conclusion

62 About the author and acknowledgements

63 Endnotes


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Itroductio ad suar | www.aericaprogress.

Introduction and summary

Te American middle class is in rouble. Incomes are sagnan or alling, while he

coss o lies necessiies coninue o rise, and he risks o alling behind grow. Te

weakness o our middle class is a problem no jus or hose who are sruggling

bu also or all Americans because a srong middle class is essenial or a vibran

democracy and a healhy economyand or our

concepion o wha America is all abou.

Tis repor describes 35 policies developed byhe Cener or American Progress ha would

srenghen our middle class by helping address

he challenges Americans ace in achieving and

mainaining a middle-class sandard o liv-

ing. Tis repor does no ackle every issue o

concern o he middle class or address every

problem in our economy. Raher, i ocuses

on he cenral pockebook issues acing he

middle class: he nancial squeeze Americans

ace because hey are caugh in a vice beween

sagnan incomes and weak job prospecs on

one hand and rising coss and growing risks o

paying or middle class basics such as healh

care, reiremen, housing, and a college educa-

ion or heir children on he oher.

Te 35 policies deailed in he main pages o his repor are he kinds o bold,

aggressive acion ha Americans have been waiing or (see summary able sar-

ing on nex page) such as lower college educaion coss, workplace sandards hamach he needs o 21s-cenury dual-income amilies, he creaion o more well-

paying middle-class jobs, and reliable and susainable reiremen income securiy.

Why is acion needed? Mos Americans see he answer o ha quesion every day.

Bu wha hey see is also reeced in numbers.

FIGURE 1

Share of nations income going to the middle classhas been declining for decades

40%

42%

44%

46%

48%

50%

52%

54%

Share of income going to the middle 60 percent of population

1968 1973 1978 1983 1988 1993 1998 2003 2

: "

Sources: US Census Bureau, Share o Aggregate Income Received by Each Fith and Top 5 Perceno Households


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2 Ceter or Aerica Progress | makig Our middle Class Stroger

More han 12 million people are unemployed, and he unemploymen rae has

been higher han 8 percen or hree years, he longes susained period o high

unemploymen since he Grea Depression.1

Even or hose wih jobs, he economy has, or he mos par, ailed o deliver.

Income or he ypical household has sagnaed over he pas ew decades andhas acually allen over he pas 10 years: Median income or working-age house-

holdsmeaning hal o he populaion makes more and hal makes lessell by

1.9 percen during he supposedly good economic recovery o 2001 o 2007 and

ell by anoher 4.6 percen during he Grea Recession o 20072009.2

As a resul o sagnan incomes or he middle class and rising incomes or he

rich, he share o he oal naional income earned by he middle 60 percen o

households has been on he decline or decades. oday i is near is lowes level

since he governmen began keeping rack o he saisic in 1967.3

A he same ime ha incomes have sagnaed, coss and risks or middle-class

amilies have increased dramaically. According o he Senae Commitee on Healh,

Lower the costs o college

The key to lowering college costs or middle-class amilies is to

change the way colleges do business while also making it easier

or amilies to nance education. We can help make colleges more

ecient by creating incentives or colleges to keep costs down,

by providing better inormation to middle-class amilies to inorm

their college choices, by ostering cost-based competition between

schools, and by encouraging colleges to give credit or online courses

and other nontraditional, less-expensive ways o learning. The costs

or amilies o nancing higher education can be kept under control

by letting the repayment o loans vary depending on how much the

graduate is earning and by providing lower-cost loans or attending

schools that keep their costs down. Heres how:

Ensure that college is aordable to students and parents by creat-

ing an incentive or colleges that limit their net price to 15 percent

o a amilys income

Save tuition costs or students by awarding them college cred

proven knowledge and skillswhether acquired through tra

tional or nonconventional means

Universal college nutrition labels to provide students and th

amilies with key inormation about colleges such as costs, de

loads, and likely job prospects

Promote the use o ree or low-cost textbooks that are alread

use by many colleges

Automatically connect student loan repayments to post-colle

pay levels or new college graduates

Reduce costs and barriers to job training

Job training programs are critically important or making sure

American workers have skills that employers value. Unortunate

high costs and other barriers have restricted access to these pro

or many Americans, especially those with less education who c

A summary of our 35 policies to strengthen our middle class


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Educaion, Labor and Pensions, beween 1970 and 2009 he coss o gas wen up

by 18 percen, healh care by 50 percen, college by 80 percen, and housing by 97

percen, ne o overall inaion.4 Te percenage o Americans who los ground

economically by eiher experiencing a major loss in income or incurring large ou-

o-pocke medical expenses has rapidly increased over he pas wo decades, rising

o 20 percen in 2010, he las year complee daa are available, rom 14 percen in1986, according o research by Yale poliical scienis Jacob Hacker.5No surpris-ingly, Americans haven been able o pu enough away or reiremen, and he risk o

alling behind in reiremen increased signicanlyhe percenage o working-age

households ha are a risk o being unable o mainain heir prereiremen sandard

o living in reiremen rose o 51 percen in 2009 rom 32 percen in 1983, according

o he Cener or Reiremen Research a Boson College.6

Finally, i is becoming harder or Americans o join he middle class. According

o research by Bhashkar Mazumder o he Federal Reserve Bank o Chicago,

he likelihood ha a child born poor will rise ino he middle class has declinedsignicanly over recen decades.7 As a resul, he Unied Saes has less economic

mobiliy han oher developed economies.8

benet the most. To ensure that Americans who want to upgrade

their skills are able to do so, we propose making it easier to take time

o or training, increasing the fexibility and availability o training

unding, and dramatically ramping up apprenticeship programs that

create career ladders. Specically, we recommend:

Increasing mid-career training by providing workers the right to

request time o rom work or training

Encouraging adult workers to enroll in career training by creating a

fexible Pell Grant or these workers

Enrolling 1 million more workers into apprenticeship programs

in high-growth and emerging industries by partnering with the

private sector and increasing unding or existing programs

Raise workplace standards

To help boost incomes, workplace standards need to be strengthened

and updated to give workers a solid wage foor to negotiate ro

tools to help capture a reasonable share o the economic gains

help produce. To help workers do well when companies do wel

need to increase the use o broad-based incentive pay, allow wo

to join unions, make the government a better consumer, and st

link worker compensation to CEO compensation. To raise the w

foor, we need to increase the minimum wage to the level it wa

the 1960s beore its value was allowed to erode and to crack do

workplace raud that denies workers the wages and benets th

owed. Our proposals include:

Helping ensure workers do well when companies do well by

promoting employee ownership and broad-based prot shar

through a grant program and an oce o inclusive capitalism

Continued on next page


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Te weakened sae o he middle class hurs all o us by siing our counrys

economic growh and undermining our democracy.9

A srong middle class is a prerequisie or robus enrepreneurship and innovaion

a source o rus ha makes business ransacions more ecien and a source o

susainable demand ha encourages businesses o inves. A srong middle class alsopromoes ecien delivery o governmen services, greaer poliical paricipaion,

and orward-looking public invesmens in educaion and inrasrucure.10

Te issues addressed in his repor are cenral o he srengh o he middle class.

Wih such high levels o unemploymen, millions o people are alling ou o

he middle class, and wages are being orced urher downward. Ye his repor

goes well beyond immediae job-creaion policies because long beore he Grea

Recession sared, he middle class was signicanly weakened by he problems o

sagnan wages, rising coss and risks, and declining mobiliy. Long aer unem-

ploymen reurns o more normal levels, he middle class will sill ace hese samebasic problems unless we ake he kinds o acions recommended in his repor.

Limiting the tax deductibility o executive pay to the 25 times the

national median annual earnings

Requiring companies that oer their CEOs golden parachutes

in their contracts to also oer strong severance packages to theirother employees in the event o layos

Encouraging the ederal government to do business with com-

panies that provide middle-class jobs by reorming government

contracting policies

Reorming our international corporate tax system to end the over-

seas outsourcing bias and promote investment in the United States

Raising the minimum wage to $10 and linking it to hal o the aver-

age wage to ensure that hard work pays a decent wage

Ensuring workers get the pay and benets they are owed by pre-

venting employers rom misclassiying employees as independent

contractors and by making more workers eligible or overtime pay

Allowing workers to join unions i they want

Reduce the costs o getting sick or losing a job

Middle-class amilies have a high risk o alling deeply behind i t

get sick or lose a job. Indeed, 62 percent o all personal bankruptc

were due to health care costs in 2007.18 Eorts to ensure workersquality, aordable health care, access to paid sick days, and a stro

unemployment insurance system are the keys to minimizing unn

sary economic risks or middle-class amilies. This means we need

Ensure middle-class Americans have access to quality, aordab

health care by ully implementing Obamacare and pursuing ad

ditional measures to reduce the price o health care and insura

premiums such as competitive bidding, bundling payments, an

reducing administrative expenses

Pass legislation allowing workers to earn paid sick days so tha

workers dont lose their jobs or incomes i they get sick or hav

care or a sick child
http://www.americanprogressaction.org/issues/2011/11/middleclass_education_spending.htmlhttp://www.americanprogressaction.org/issues/2011/11/middleclass_education_spending.html


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Indeed, or he pas decade ha Gallup has been asking Americans abou heir

bigges nancial concern, hose in he middle class have consisenly said hey are

mos worried abou no earning enough money, he high cos o livingespecially

paying or healh care, housing, and collegeand risks such as mainaining a decen

sandard o living in reiremen and losing heir job.11 Sadly, Americans have also

been elling pollsers or he pas several yearseven beore he sar o he GreaRecessionha hey hink heir children will be worse o han hey are.12

Recommendaions cover a wide range o issues, including higher educaion, job

raining, workplace sandards, reiremen, healh care, housing, gas prices, child

care, and inrasrucure.

Mos o he policies in his repor have muliple benes and address more han

jus one aspec o he challenges acing he middle classincluding high unem-

ploymen, sagnaing incomes, rising coss, increased risks, and declining mobil-

iy. Our policies o reduce he coss o college, or example, do ar more han juslower expenses or middle-class amilies. Tey also reduce he risk sudens will

emerge rom college saddled wih excessive deb levels and help more people gain

Improve the unemployment insurance system so it is nancially

strong and provides a reasonable wage replacement to those who

have lost their jobs through no ault o their own and who continue

to seek employment without success

Make it possible or workers to also be caregivers or

children and elderly parents

With 71 percent o all women who have children working,19 two-

earner amilies the norm, and hal o older Americans receivingcare

rom their children or children-in-law,20 modern middle-class amilies

bear large costs to care or young children and provide services or

elderly parents. Unortunately, current policies have not ully adapted

to the times. To help modern amilies deal with the high costs o care,

we propose providing paid amily and medical leave to all workers,

just as all other industrialized countries do, as well as signicantly ex-

panding access to preschool and increasing the child and dependent

care tax credit. Doing so would:

Ensure that middle-class amilies economic security is not th

ened when they welcome a new baby or need time away rom

work to care or an aging parent, by providing paid amily and

medical leave insurance to workers Reduce expenses or middle-class amilies by signicantly ex

ing access to high-quality, public preschool programs or 3-y

and 4-year-old children

Help middle-class amilies dealing with the high cost o child

and caring or aging parents by expanding and reorming the

and dependent care tax credit

Boost retirement security

Our private retirement system is ailing. Hal o all workers dont

retirement plan at work, and many o those who do are not on t

save enough or retirementin large part because most plans h



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he income benes o higher educaion. Similarly, our reiremen proposal would

reduce he cos o saving or reiremen, as well as provide greaer income securiy

during reiremen. Expanding access o preschool or 3-year-olds and 4-year-olds

will reduce coss or child care, boos childrens educaion and laer-lie experi-

ences, and creae eaching jobs.

Even policies ha may no seem o obviously address more han one problem ac-

ing our middle class oen do. Reducing healh care coss no only helps amilies

cu down on expenses bu also can boos worker income because he high cos o

healh care has caused many rms o diver money away rom wage increases and

oward healh benes.13 Policies ha can direcly boos incomes such as inclusive

capialism, which rewards workers when rms do well, are also associaed wih

greaer job sabiliy and ewer layos during economic downurns, providing a

buer agains risks.14 Reorming unemploymen insurance will no only help pre-

ven amilies rom alling ou o he middle class bu will also boos spending and

creae jobs.15 And rehabiliaing oreclosed properies as renal homes can helpcreae jobs, as well as lower renal coss in cerain markes.

high ees and are inecient. To ensure that everyone has more and

better options to save or retirement, we recommend creating a new

kind o retirement plan that is more ecient and more secure than

basic 401(k) plans. We would also open to the public the 401(k) plan

or ederal employees. Our plan:

Creates a new collective, dened-contribution plan to cut the costs

o saving or retirement in hal, compared to a traditional 401(k),

while providing greater security

Opens up the Thrit Savings Plan, the 401(k) or ederal employees,

to the public so that everyone has the option o saving in a 401(k)

plan with very low ees and smart investment options

Stabilize the costs o housing

Rapidly rising housing prices ollowed by the bursting o the housing

bubble and the subsequent wave o oreclosures deeply harmed our

middle class. Home ownership is a key source o middle-class wealth,

but the median value o primary residences ell by 18.9 percent rom

2007 to 201021dramatically reducing the wealth o the midd

class, leaving millions owing ar more than their homes are wo

and trapping people in bad nancial situations that threaten to

ther deteriorate the housing market. We must help re-establish

ownership as a ladder to building middle-class wealth rather thanchor that holds amilies back. This requires several steps to st

the housing market, including establishing a large-scale renan

ing initiative, rehabilitating and renting out government-owne

closed homes, responsibly winding down the two mortgage n

giantsFannie Mae and Freddie Macnow under governmen

conservatorship, and implementing mortgage principal reduct

through shared appreciation. Specically, we call or:

Establishing a large-scale renancing initiative to help credit

homeowners with little or negative home equity take advant

todays historically low interest rates

Stabilizing hard-hit communities and expanding aordable h

ing by rehabilitating and renting out government-owned or

closed homes


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Each individual policy in his repor would be a big help o he middle class

creaing a signican number o jobs, boosing incomes or a large percenage

o he populaion, meaningully cuting coss or middle-class necessiies, and

considerably lowering he risks o alling behindand would go a long way

oward rebuilding he ladder o opporuniy. ogeher, our 35 policies approach

he scale necessary o sar reciying he income, cos, and risk problems aced byAmericans. Our policies will help:

Ensure middle-class amilies pay only 15 percen o heir income o send heir

children o college Reduce he cos o saving or reiremen by nearly hal, compared o a ypical

401(k) plan Lower morgage paymens or millions o amilies by an average o $2,600 a year Resore 500,000 eaching jobs Creae more han 2 million jobs rebuilding and upgrading our inrasrucure Guaranee workers access o paid sick days and maerniy leave Increase access o higher educaion and job raining

Ensuring a liquid, stable, and aordable U.S. mortgage market by

responsibly winding down Fannie Mae and Freddie Mac, both o

which are now under government conservatorship

Providing deeply underwater homeowners a ghting chance o

staying in their homes through mortgage principal reductions withshared appreciation

Reduce energy and transportation costs

Middle-class amilies have been hard hit by rising yet extremely

volatile prices or gasoline and home energy. The solution to prevent

amily budgets rom being strained by prices that go way up, then

down, and then back up again is to help amilies reduce energy use,

give people more and better alternative transportation and energy

choices, and reduce commodity speculation that contributes to

energy price volatility. We can achieve this by:

Helping middle-class amilies reduce their energy costs by making

their homes more ecient through a nationwide HomeStar program

Fighting rising gas prices by helping consumers spend less o

by placing limits on oil speculation, and by instating a revised

or clunkers program, as well as increasing investments in alt

tive uels and public transportation

Reducing the cost and volatility o home energy prices throuresidential clean energy standards

Create middle-class jobs

The private sector has now created jobs or the past 28 straight

months, but we are not creating enough jobs to return our eco

to ull employment anytime soon. Spurring the kind o job crea

the economy needs will take bold actions that boost demand

many o the policies in this report doas well as more direct

interventions to jumpstart hiring. Direct interventions to create

should rebuild our crumbling inrastructure, put teachers back

classrooms, and incentivize work sharing to save jobs and prov



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Ensure ha workers receive he overime pay and benes hey deserve Help non-college-graduaes gain credenials ha boos pay by as much as

$225,000 more han comparable job seekers during heir lieimes Save middle-class consumers housands o dollars annually on healh care and

limi he risk ha illness will send hem o he poorhouse

Reduce he cos o parens o qualiy preschool

Cerainly here are a number o oher policies ha would also be o grea help

o he middle classnoably he Resore America Ac inroduced by Sen. om

Harkin (D-IA) and Rep. Rosa DeLauro (D-C), as well as dozens o oher ideas

on he Cener or American Progress websie and elsewhere.16

Bu our 35 policies, i enaced, would make a meaningul dierence in he lives

o all Americans. Te pages ha ollow describe hese 35 policies. Many o he

policies are new; many have no been previously discussed by he Cener or

American Progress; and mos are no ye par o he dominan poliical conversa-ion. Bu all o hem should be.

the fexibility that employers and employees both are seeking. We

propose that the ederal government:

Enable public schools to rehire all the teachers that have beenlaid o because o the Great Recession and its atermath, putting

500,000 teachers back in the classroom

Make needed investments in highways, energy, transit, rail, water,

and other inrastructure to create more than 2 million jobs per year

Help save existing jobs and create new ones in the private sector by

promoting work sharing through tax incentives and revamping the

unemployment system

Focus policymakers on the middle class

Helping rebuild our middle class needs to be a central ocus or poli-

cymakers. Yet the state o the middle class has not always received

the attention it deserves. We propose several institutional reorms to

ensure that the middle class is at the top o the agenda and a k

o the day-to-day discussions o policymakers. We suggest:

Requiring a middle-class impact statement or major pieceslegislation so that a bills eect on the middle class is part o

debate

Creating a bipartisan commission on the middle class and re

a vote on its recommendations so that the middle class recei

same level o attention we place on the ederal budget dec


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In order o succincly presen such a large number o recommendaions, we

only briey describe he core conceps o he 35 policies. In he near uure we

will release individual bries describing he major new policies in greaer deail.

We provide cos esimaes, where available, or hose policies wih a signican

budgeary impac bu do no specically describe how o pay or hemheir

coss are consisen wih previous plans we have released o achieve long-ermscal balance by invesing now in growh- and prosperiy-generaing policies,

while working o lower our naions ederal budge decis over ime.17 Tis se o

middle-class policy proposals is o vial imporance o he uure our counry and

should be a op prioriy or policymakers.

FIGURE 2

Median household income has declined over past decade

Had stagnated or previous twenty years

: .

Median household income (2010 dollars)

$40,000

$45,000

$50,000

$55,000

$60,000

$65,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Source: Economic Policy I nstitute analysis o US Census Bureau Data, shaded bars indicate recession.


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Lower the cost o college | www.aericaprogress.o

Lower the costs of college

Earning a college degree is one o he mos eecive ways o join he ranks o he

middle class, as college graduaes have a subsanial wage advanage over nongrad-

uaes.22 Bu he cos o college has been rising dramaically. Te cos o atending a

public universiy has increased by 368 percen over he pas hree decades, while

median amily income has increased by only 14 percen during he same period.23

Tis huge increase in college coss poses a barrier ha is oo high or some middle-

class amilies and creaes a large nancial burden or many more middle-classamilies. Tese amilies have been orced o make grea nancial sacrices o pay

or heir childrens educaion, while a generaion o graduaes has been saddled

wih burdensome suden deb loads, oo.

Approximaely wo-hirds o sudens wih our-year bachelors degrees nish

heir sudies wih suden loan deb, and he average amoun o deb per suden

is nearly $25,000.24 en percen o borrowers owe more han $54,000.25 oal su-

den deb now exceeds $1 rillion.26 Many middle-income parens, who on average

conribue 37 percen o heir childrens cos o college, are also being orced o

ake on addiional loans o cope wih hese rising coss.27

Such high levels o suden deb are a burden on individuals and he economy.

Tis deb is causing young aduls o delay or eliminae purchases o big-icke

iems such as a car or a home,28 or o pospone imporan decisions such as geting

married and having children.29

In order o ensure college is a ladder o opporuniy o he middle class, we need

o ge college coss under conrol and reduce he amoun ha amilies have o pay

or i. Te key o lowering college coss or middle-class amilies is o change heway colleges do business a he same ime ha we make i easier or amilies o

nance educaion. We can help make colleges more ecien by creaing incen-

ives or colleges o keep coss down, providing beter inormaion o middle-class

amilies o inorm heir college choices, and encouraging colleges o give credi or


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oher nonradiional, less-expensive ways o learning. We can help keep borrowing

coss manageable by leting he repaymen o loans vary depending on how much

he graduae is earning and by providing lower-cos loans or atending schools

ha keep heir coss down.

Limit college costs for middle-class families

Te ederal governmen should incenivize colleges and sae legislaures o

limi he ne price o college o 15 percen o a amily s income. Te ederal

governmen can do his by providing zero-ineres loans o sudens atending

insiuions ha implemen

policies o keep heir ne price

down o his level. Tis would

have an immediae eec on

holding down overall collegecoss because:

Middle-class amilies would

inuence he college marke

by shiing heir atendance o

schools ha limi heir coss

and oer access o no-ineres

suden loans.

Colleges and universiies

would use heir considerable

markeing power o publicize

heir plans o cap college

coss a 15 percen o a am-

ilys income and he ac ha

sudens are eligible or no-

ineres loans.

Sae legislaures would be orced o mainain public suppor or higher educa-ion o ensure ha in-sae sudens are eligible or no-ineres loans.

No-ineres ederal suden loans should be available o amilies wih incomes up

o $150,000. Tis policy would signicanly lower he cos o suden loans or

FIGURE 3

The costs of important middle class goods and services have grown

rapidly

20%

40%

60%

80%

100%

120%

Growth in price, net of overall inflation (1970-2009)

0Food

budgetGas Rent and

utilitiesHealth

expenditures1 year of

publiccollege

MedianHomeValue

1 year ofprivatecollege

: " :

' " .

2%

41%

50%

80%

113%

18%

97%

Source: Senate Committee on Health, Education, Labor, & Pensions, Saving the American Dream: The Past, Present, and UncertainFuture o Americas Middle Class, 2011.


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sudens who atend schools ha keep heir coss down. Moving o no-ineres

loans could save sudens rom middle-class amilies nearly $10,000 in ineres

paymens over 10 years.30

Give credit for prior learning

Enrepreneurial learners should be able o save money and ime by earning college

credi hrough he expanded use o so-called prior learning assessmens, which

ake ino accoun wha a suden has learned ouside o he radiional classroom.

In addiion, miliary veerans should bene rom a sreamlined process ha rans-

laes heir axpayer-unded miliary raining ino relevan college credi.

Prior learning assessmens measure wha a suden has learned ouside o college,

evaluae wheher ha learning is college level, and hen deermine he equiva-

len number o college credis. Tese assessmens are closely ied o he learningoucomes one would expec rom an equivalen college course. According o he

Council or Adul and Experienial Learning, prior learning assessmens can resul

in savings ha range rom $1,600 o $6,000 or a ypical suden or veeran who

earns 15 college credis hrough he assessmens.31

In addiion, prior learning assessmens also help sudens o earn heir degrees or

occupaional credenials in a shorer period o ime. Te Council or Adul and

Experienial Learning nds ha 56 percen o adul prior-learning-assessmen su-

dens earn a degree wihin 7 years, compared o only 21 percen o adul sudens

who do no uilize prior learning assessmens.32 Tis is why he ederal govern-

men should implemen he ollowing our policies o expand he use o prior

learning assessmens:

Te Deparmen o Educaion should oer compeiive grans o saes o

develop saewide sysems o prior learning assessmens. Saewide sysems

oversee porolio assessmen and sandardized ess, and award credis ha are

ranserable o any school in he sae sysem.

Sudens should be able o use ederal suden aid such as Pell Grans, SaordLoans, or Pos 9/11 GI Bill benes o pay or an evaluaion course hrough any

saewide sysem o prior learning assessmen, as long as subsequen credis are

acceped a all public colleges and universiies in he sysem.


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As a prerequisie or receiving Pos 9/11 GI Bill benes, colleges and universi-

ies should be required o oer college credi o veerans wih miliary raining

ha mees college sandardsas deermined by a ederally recognized indepen-

den organizaion.

Te ederal governmen should require accrediors o consider he availabiliy oprior learning assessmens as par o heir accrediaion sandards.

Require colleges to provide consumer information via college

nutrition labels

Average deb a schools can range rom $950 o $55,250 and graduaion raes

rom 6 percen o 92 percen.33 Ye many sudens are unaware o hese di-

erences in par because colleges are ree o deermine he inormaion hey

provide o sudens, which means hey are likely o exclude embarrassing inor-maion ha may reec poorly on he school.

Te ederal governmen should require colleges and universiies o provide

perinen inormaion o prospecive sudens concerning heir likelihood o

graduaing, nding employmen, and paying o suden deb. Similar o nuriion

labels on ood, his inormaion should be provided hrough a sandardized college

scorecard ha is used by all colleges and universiies. Schools should be required

o place his sandardized college scorecard on all promoional maerials o allow

sudens o easily compare schools. An adequae college scorecard should include

a sandard orma o communicae easy-o-undersand inormaion on:

Graduaion raesAverage ou-o-pocke coss ne o gran aidAverage suden deb and average monhly paymens o pay o he suden deb

in 10 years Employmen raes and average salary one year aer graduaion or recen graduaes

Te eeciveness o he college scorecard relies upon i being accessible and easy

o nd. While he Obama adminisraion has developed a prooype or he col-lege scorecard, i is no mandaory or all colleges and universiies. Requiring he

college scorecard o be posed on college websies, enrollmen orms, nancial aid

paperwork, and oher promoional maerials will make i visible enough o grab

he atenion o applicans.


21/80


Furhermore, o ensure ha his scorecard can be accessed by he greaes number o

prospecive sudens, he Obama adminisraion should also creae an online, iner-

acive version o he scorecard ha ineraces wih he College Navigaor websie.

Increase the availability of free or low-cost textbooks

Te cos o college exbooks is increasingly prohibiive or middle-class college

sudens. Access o ree or low-cos exbooks can signicanly reduce he bur-

den. Te ypical price o a single new exbook is $175, while he average college

suden spends more han $1,000 per year on exbooks and supplies. According

o he U.S. Public Ineres Research Group, college exbook prices have increased

a nearly our imes he rae o inaion since 1994.34

Forunaely ree or lower-cos open-source digial exbooks are challenging his

radiional high-cos model. Sudens can access an increasing amoun o maeri-als or heir courses a no chargeonly paying or he prin versions o he book

or add-ons such as sudy guides. In addiion, some saes are aking measures o

reduce exbook coss or heir college sudens. Washingon saes Open Course

Library, or insance, provides open educaional resources or 42 communiy col-

lege courses, reducing he cos o as litle as $30 per course.35

Te U.S. Deparmen o Educaion should expand access o ree or low-cos ex-

books and open educaion resources by:

Oering compeiive grans o saes ha commi o pilo programs or ree or

low-cos exbooks a heir public colleges and universiies. Saes could atemp

heir own innovaive programs or commi o replicaing oher saes successul

programs ha are already making college more aordable by bringing down he

cos o exbooks.

Assembling a cenral reposiory or ree digial exbooks modeled on he

Caliornia Digial exbook Iniiaive. Te cenral reposiory would serve as an

online public marke or ree digial exbooks and open educaional resources

ha could be reviewed by millions o proessors, sudens, and public reviewers.Proessors and oher insrucors across he counry would be ree o use hese

exbooks and open educaional resources in heir classrooms.

Average debt

at schools can

range rom $95

to $55,250 and

graduation rate

rom 6 percent

92 percent.


22/80


Make the income-based repayment plan the default option for

federal student loans

Te payo o a college educaion varies, and he nancial rewards o a degree

end o be small in he years ha immediaely ollow graduaion. Ye suden loan

paymens are he same hroughou he repaymen period regardless o wheher agraduae is making $20,000 or $200,000 a year.

Te Deparmen o Educaion currenly oers a beter opion or paying down

loans: an income-based repaymen sysem. Enaced by Congress in 2007, his is a

pay-as-you-earn program in which sudens pay a percenage o heir discreion-

ary income oward heir loans. Te program gives sudens an opporuniy o pay

heir loans back a a rae commensurae wih heir abiliy o pay.

Tis ederal income-based repaymen plan should be he deaul opion or all ederal

suden loans, ensuring ha individuals do no spend more han 15 percen o heirdisposable income in making suden loan paymens. Tis policy sill allows recen

graduaes who would no bene rom he income-based repaymen sysem o op

ou o he deaul plan. Bu reducing loan paymens while new graduaes are young

will help hem beter cope wih paymens in he shor erm, while keeping hem on

rack o pay back heir obligaions over he long erm. Colleges should provide exi

counseling o sudens o help deermine he bes repaymen opion or hem.

Admitedly, paying back a loan under his plan would require repaymen o he loan

over a longer ime period han he sandard 10-year ime rame. Bu he reduced

paymens early in a career will help he young worker and will build a sronger

middle class. In addiion, he Obama adminisraion is shorening he repaymen

period necessary o achieve ull loan orgiveness o 20 yearsve years less han he

original programor responsible borrowers who enroll in he income-based repay-

men plan. Te new imerame becomes available laer his year.


23/80

Reduce costs ad barriers to job traiig | www.aericaprogress.o

Reduce costs and barriers

to job training

Middle-class jobs in he Unied Saes increasingly require some level o educaion

or raining beyond high school. While a our-year bachelors degree is no required

or many o hese middle-skill posiions, advanced raining oen is necessary.

According o he Bureau o Labor Saisics, a worker wih some possecondary edu-

caion bu no degree earns approximaely 13 percen more han a worker wih only

a high school diploma and is 7 percen less likely o be unemployed, while a worker

wih an associaes degree earns approximaely 20 percen more han a workerwih only a high school diploma and is 28 percen less likely o be unemployed.36

Research also shows ha one year o possecondary educaion and an occupaional

credenial can serve as a ipping poin or subsanially increased earnings.37

In addiion, labor economiss esimae ha our workorce will encouner a shor-

age o ve million middle-skill workers by 2018. Tese middle-skill workers are

individuals who have jobs ha pay middle-class wages bu also need some ype o

possecondary credenialypically earned hrough communiy college or work-

orce raining. Te vas majoriy o workers who will ll hese middle-skill jobs in

2018, however, are already beyond our elemenary and secondary school sysems.

According o he Georgeown Cener on Educaion and he Workorce, hree-

quarers o middle-class workers in 1970 had no educaion or raining beyond

high school. By 2007, however, he percenage o middle-class workers wih only

a high school diploma had been cu in hal o 39 percen. And he labor marke

rend is moving urher oward higher educaion, as 97 percen o ne new jobs

being creaed beween 2008 and 2018 are expeced o require some ype o pos-

secondary degree or credenial.38

Unorunaely, our exising workorce raining sysem is no up o he ask. High coss

and oher barriers, especially or working learners who ry o gain skills while holding

ono heir curren job, have resriced access o hese programs or many Americans

even as our economic compeiors ocus on ramping up heir raining eors.


24/80


o ensure ha Americans who wan o upgrade heir skills are able o do so, we

propose making i easier o ake ime o or raining, increasing he exibiliy and

availabiliy o job raining unding, and dramaically ramping up appreniceship

programs ha creae career ladders.

Increase mid-career training by providing workers the right

to request time off from work for training

American workers should have a legal righ o reques ime o or job raining

ha is muually benecial o he worker and heir employer. Tis policy would

encourage workers o upgrade heir skills by shiing he presumpion ha work-

ers should be earul abou asking or ime o or raining o one ha encourages

workers o make ha reques.

Tis would bene boh workersby helping o ensure hey are able oacquire new skills and consequenly boos heir incomesand employers. In a

Massachusets sudy o incumben worker raining programs more han 90 per-

cen o employers repored improvemens in produciviy and compeiiveness;

nearly 50 percen repored giving employees pay raises; and more han 20 percen

repored avoiding layos as a resul o raining.39 In Briain a policy similar o our

proposal enjoys he suppor o business groups and labor.40

Specically, our recommendaion is ha Congress should guaranee all workers a

companies wih a leas 50 employees he righ o reques ime o or job raining.

Workers would have he righ o ge help rom ouside resourcessuch as career

counselors, workplace-learning advisors, union represenaives, or public work-

orce oce sao design heir reques or ime o o enroll in job raining. Te

requesed job raining would need o be relevan o he workers job, workplace, or

business. Employers would no be required o approve workers requess or rain-

ing bu would be required o respond o he reques wihin 30 days.

Each sae, wih suppor rom he U.S. Deparmen o Labor, would creae

an online sysem o rack worker requess and he corresponding employer

responses. Te sysem would creae a plaorm or workers and employers oengage in a dialogue abou he need or job raining and provide ransparen inor-

maion abou an employers suppor or job raining.


25/80

Reduce costs ad barriers to job traiig | www.aericaprogress.o

Create a flexible Pell Grant for adult workers to enroll

in career training

Adul workers who have no nished some ype o possecondary degree or

credenial should be eligible or proessional career counseling services and a

ederally unded career raining accoun. In oher words, we need a more exiblePell Gran or adul workers.

Research has shown ha access o possecondary educaion and raining sig-

nicanly helps adul workers earn beter wages and ha combining cusomized

workorce raining wih proessional career counseling provides almos $50,000 in

addiional lieime benes per adul worker.41 Unorunaely, here is no enough

job raining being unded by he ederal workorce sysem. Only one-h o aduls

receiving services hrough he Workorce Invesmen Ac Adul and Dislocaed

Worker programs acually receive job-raining services, and only 6 percen earn

credenials wih labor marke value.42

Furhermore, he Pell Gran program is no designed well or aduls wih ull-ime

jobs who wan o ake one course per semeser or obain an occupaional cericae.

Career raining accounsor Pell Grans or adul workerswould be avail-

able o adul workers ages 24 o 55 who earn less han $60,000 annually and do

no possess a college degree, echnical cericaion, or an indusry-recognized

credenial equal o a leas one ull year o possecondary educaion. raining

unds would be limied o 48 monhs rom he rs day o enrollmen in a raining

course. Tese raining accouns should be capped a a oal amoun equal o one

year o a maximum Pell Grancurrenly $5,635.43

o receive a exible career-raining Pell Gran, an adul worker would be required o

enroll in a vocaional raining program hrough heir local public workorce sysem

or communiy college. Te raining program would sar wih a comprehensive skills

assessmen and muliple sessions wih a career counselor or career advisor.

Career counselors would help adul workers in heir eors o pursue cericaes

and credenials in programs ha can be nished in one year o wo years. Careercounselors would limi raining opions o occupaions in high-growh and high-

demand indusries in heir regions and could limi enrollmen o programs wih

proven rack records o success in order o ensure he highes reurn on inves-

men or axpayer unds.


26/80


Expand apprenticeship training to develop 1.5 million

skilled workers

Te workorce raining sysem should increase is suppor o appreniceship rain-

ing and also expand he appreniceship model ino new indusries. Increasing he

number o workers annually enrolled in appreniceship raining programs o 1.5millionrom he curren level o 400,000would creae new pahways ino he

middle class or millions o workers over he nex decade and would help provide

employers wih skilled workers who he marke does no always provide.

According o he Deparmen o Labor, appreniceship compleers earn an average

saring salary o $50,000 and make as much as $225,000 more han comparable

job seekers during heir lieimes.44 Apprenices also don have o wai unil heir

raining program is nished o earn money. A ypical apprenice in carpenry, or

example, sars heir appreniceship a 60 percen o a journeymans salary, and

heir wage is increased by 5 percen every six monhs over he course o he our-year appreniceship program. Ta means an apprenice is learning a valuable skill

ha will lead o a middle-class career, while also earning an income raher han

accumulaing housands o dollars in suden deb.

Specically, we propose an invesmen o $2 billion annually o suppor an

increase o 1 million new apprenices. Tis would enable he Deparmen o

Labors Oce o Appreniceship o work wih sae-and-local workorce boards

o conduc oureach o he privae secor, develop relaionships wih employers in

high-growh and emerging indusries, and allocae nancial aid o culivae newly

regisered appreniceship programs.45


27/80

Raise workplace stadards | www.aericaprogress.o

Raise workplace standards

Over he pas our decades, middle-class incomes have grown very slowlyar

more slowly han produciviy gain would allow or.46 Indeed, since 1979 pro-

duciviy (he measure o oupu per hour o work) increased by 85 percen,47 ye

household income or he middle 60 percen o income earners grew by less han

hal ha, according o Congressional Budge Oce gures.48

Te pas decade has been even worse or workers. Te median income or working-

age households acually ell during he economic expansion rom 2001 o 2007,dropping by nearly 2 percen during his period, and hen ell by anoher 4.6 percen

during he Grea Recessioneven as produciviy coninued o increase.49

Whas more, as middle-class incomes sink, a smaller share o he populaion

makes an income near he mid-level. According o Alan Krueger, head o he U.S.

Council o Economic Advisors, he share o he populaion ha is earning wihin

50 percen o he median income has declined rom 66.1 percen in 1980 o 59.5

percen in 2010, he las year or which complee daa are available.50

As he middle class sruggles, incomes or hose a he very op have skyrock-

eed, ueling a sriking disconnec beween corporaions, CEOs, and heir

workersand more generally beween he ae o he rich and ha o he res

o he counry. Te aer-ax, inaion-adjused income o he op 1 percen o

households grew by 275 percen rom 1979 o 2007.51 A major conribuor o

his rapid increase was he ballooning salaries o execuives. Execuives, manag-

ers, or supervisors a nonnancial rms accoun or 40.8 percen o he op 1

percen o earners, according o one sudy.52

Corporae pros are a record levels10.8 percen o gross domesic producin he rs quarer o 2012, he highes level since he daa was rs colleced

in 1947.53 Esimaes indicae ha CEO pay has risen rom 42 imes he average

worker salary in 1980 o 380 imes he average worker salary in 2011.54


28/80


In shor, he middle class has received very litle o he economic gains hey have

helped creae.

Tere are a number o reasons or his disconnec beween increasing produciv-

iy and sagnaing wages or he middle class, bu a key elemen is ha workplace

sandards have ailed o keep pace wih changes in he economy and no longerhelp balance power in he economy. o help boos incomes, workplace sandards

need o be srenghened and updaed o give workers a solid wage oor o negoi-

ae rom, alongside he ools hey need o help capure a reasonable share o he

economic gains hey help produce.

o raise he wage oor, we need o increase he minimum wage o he level i was

in he 1960s, beore is value was allowed o erode, and crack down on workplace

raud ha denies workers he wages and benes hey are owed. o help work-

ers do well when companies do well, we need o increase he use o broad-based

incenive pay, allow workers o join unions, make he governmen a beter con-sumer, and sar o link worker compensaion o CEO compensaion.

Promote inclusive capitalism

When a company does well, so should all o is workersno jus execuives a

he very op. o help ensure ha workers are rewarded or he wealh hey gener-

ae, he ederal governmen should encourage companies o adop broad-based

sharing programs such as graning workers an ownership sake or a share o pros

based on workers collecive perormance.

Research shows ha his ype o inclusive capialism leads o posiive oucomes or

boh he rm and he workers. Ways o promoe inclusive capialism include every-

hing rom worker cooperaives and employee sock ownership programs o pro

sharing and gain sharing o broad-based sock opionspaired wih a supporive

workplace culure ha includes solid base-wages and benes and a say on he job.

For workers, inclusive capialism is associaed wih higher pay, greaer long-erm

wealh accumulaion, and greaer job sabiliy.55

For businesses, inclusive capialism isoen associaed wih increased produciviy, proabiliy, and he likelihood o long-

erm survival, as well as greaer worker loyaly and eor and lower worker urnover.56

The share o the

population that

is earning within

50 percent o the

median income has

declined rom 66.1

percent in 1980

to 59.5 percent in

2010.


29/80


Congress should do a number o hings o encourage companies o adop broad-

based sharing programs. Firs, i should oer grans o regional inclusive capialism

ceners ha would provide oureach, educaion, and echnical assisance o privae-

secor businesses on adoping sharing pracices and supporive workplace culures.57

Second, Congress and he Obama adminisraion should sop policies ha inhibihe growh o sharing policies. Curren ederal policies, or example, someimes

render employee-owned companies ineligible or governmen conracs ha are

se aside or women- and minoriy-owned rms, even when he employee-owners

mee he program qualicaions. Ta pracice and similar ones should end.

Tird, Congress should creae an Oce o Inclusive Capialismha would increase

awareness abou inclusive capialism by, or example, encouraging business schools o

include inormaion abou hese programs in heir curricula and highlighing exising

laws ha promoe inclusive capialism such as bene corporaion laws, which pro-

vide legal proecions o companies wih inclusive capialism pracices.58

Limit the deductibility of executive pay to 25 times

the national median annual earnings

Currenly, wages or all employees can be deduced rom a corporaions income ax

liabiliy, wih he deducion or execuive compensaion resriced o $1 million per

year or op ocers o public companies. Ye perormance-based pay such as sock

opions and bonuses are no included in he cap or ax deducibiliy. In response,

corporaions have engaged in a orm o compensaion arbirage by shiing com-

pensaion oward perormance pay.59 Tis shi and oher acors have resuled in

ballooning execuive pay and have helped divorce execuive compensaion rom any

reasonable relaionship wih he compensaion o middle class workers.60

Te cap on he ax deducibiliy o execuive compensaion should apply o all

compensaion, including perormance based pay, and should be se a 25 imes

he naional median annual earningsroughly $1 million oday. Te cap would

provide an explici legal link beween execuive pay and middle-class incomes and

may help boos workers wages by saring o change he culure ha has divorcedhe ae o execuives rom heir employees.

o be sure, hese reorms will no oally solve he problem o sagnan middle-

income wages and runaway execuive salaries: Corporaions will be ree o spend


30/80


he same amoun on execuive pay bu would have o pay higher axes on ha

compensaion. Bu a leas middle-class axpayers won be paying or i in he

orm o corporae ax wrie-os, and he reorm would creae an incenive o pay

workers more economywide by seting norms and allowing he ax deducibiliy

o execuive compensaion o rise only i workers wages are rising.

Require companies that offer golden parachutes to top executives

to also provide adequate severance to workers

Workers who lose heir jobs oen receive no help rom heir ormer employers as hey

conron a dicul job marke. Ye CEOs who lose heir jobseven in cases o poor

perormance or misconducoen receive golden parachues worh millions o

dollars.61 In he las year or which daa is available, only 20 percen o American work-

ers were eniled o severance.62 As a resul, mos workers who lose heir job mus rely

on unemploymen benes, which are quie modes.63 Ye 78 percen o CEOs havegolden parachue provisions in heir conracs, eniling hem o cash paymens upon

erminaionhe mos common provision pays hree years o compensaion.64

Tis double sandard undermines he American noion o airness in he work-

place. I i makes sense o give golden parachues o highly-paid CEOs, who are

likely o have considerable wealh o cushion agains a loss o employmen, hen

i makes even more sense o oer a leas an adequae level o severance o rank-

and-le employees, who are unlikely o have asses o all back on and who are

requenly laid o hrough no aul o heir own.

Ta is why we propose a nondiscriminaion rule (similar o he rules governing

workplace healh and reiremen benes) requiring ha public companies oer-

ing severance packages o heir op execuives also oer adequae severance o

all oher employees. Specically, we propose ha i a company oers a severance

package o is execuives in excess o he CEOs base pay, hen i mus also oer

a basic severance package o he res o is workers: a leas wo weeks per year o

service. Employees erminaed wihou cause would have a legal righ o severance

benes i he companys execuives have a severance provision in heir conracs

or i hey are given a golden parachue.

Tis policy would enhance economic securiy or middle-class workers agains

he possibiliy o layos. I would also discourage excessive golden parachues ha

wase corporae resources or op execuives personal bene.

More than one-th

o the American

workorce

approximately 26

million workers

is employed by

companies that

have contracts

with the ederal

government.


31/80


Raise federal contracting standards to strengthen the middle class

As a major purchaser o goods and services, he ederal governmen has he

poenial o signicanly inuence he labor marke. More han one-h o he

American workorceapproximaely 26 million workersis employed by com-

panies ha have conracs wih he ederal governmen.65

Unorunaely, millionso ederal conrac workers are paid very low wages, and heir employers oo oen

do no comply wih ederal wage and saey laws.66

By coninuing o do business wih companies ha ail o comply wih he law and

ha pay very low wages, he ederal governmen drives down sandards, makes i hard

or companies wih beter workplace pracices o compee, and conribues o he

weakening o he middle class. Insead, he governmen should leverage is power as a

major purchaser o goods and services o raise workplace sandards. Congress should

enac legislaion o ensure ha governmen sops rewarding companies wih ederal

conracs ha signicanly and persisenly violae he law and insead encouragesagencies o do business wih companies ha provide middle-class jobs.67

More han 140 ciies and one sae (Maryland) have adoped sandards o help

ensure ha governmen conracs help build he middle class, and ha public con-

racors pay heir workorces a nonpovery wage.68 Dozens o ciies and saes have

responsible bidding ordinances ha require prospecive conracors o ceriy

ha hey properly classiy heir workers as employees and comply wih prevailing

wage, workers compensaion, and unemploymen ax laws beore hey are eligible

o bid or public works projecs.69

Saes and localiies have ound ha adopion o such sandards resuls no only

beter wages or workers bu also in higher-qualiy and more reliable services.

Tese conracing sandards also increase compeiion among responsible con-

racors, which in urn reduces projec delays, cos overruns, and monioring,

compliance, and liigaion coss.70

End tax incentives for offshoring jobs

Te U.S. ax code rewards companies or locaing invesmen and jobs in oreign

counries raher han he Unied Saes, which encourages he overseas ou-

sourcing o American jobs and worsens he pressures driving down he wages o

middle-class workers. Americas middle class has a srong sake in ensuring a ax

code ha is no sacked agains hem.


32/80


Despie he ac ha he Unied Saes nominally has a worldwide ax sysem,

U.S. mulinaional corporaions overseas pros are reaed dierenlyand ar

more avorablyhan pros earned in he Unied Saes. Tis sysem o deerral

provides ax incenives or overseas invesmens. In ac, i encourages U.S. compa-

nies o make job-creaing invesmens overseas, even i similar invesmens in he

Unied Saes would be more proable absen ax consideraions. Te increasedcompeiion rom counries where jobs have been ousourced has reduced

employmen and driven down wages or middle-class workers, conribuing o he

sagnaion o middle-class incomes.71

Tere are several ways o reverse he ax codes bias oward oreign invesmen

and o sop rewarding companies or shipping jobs overseas. Firs, a corporae

minimum ax would ensure ha U.S. mulinaional corporaions pay a leas some

ax on heir overseas pros and would reduce he reward or ousourcing jobs.

Furhermore, specic deducions ha promoe overseas ousourcing should be

eliminaed. Corporaions can currenly ake deducions or expenses involved inoverseas invesmens such as relocaion and shipping expenses. Tese deducions

are clear subsidies or shiing American jobs abroad and should be eliminaed.

Te savings creaed by eliminaing hese corporae ax deducions should be

used o provide a ax credi or he coss o insourcing jobshe coss involved

in bringing jobs and business aciviy back o he Unied Saesas proposed by

Sen. Debbie Sabenow (D-MI) and Rep. Bill Pascrell (D-NJ).72

Increase the minimum wage and set it at half the average wage

Te minimum wage should be se and indexed o one-hal o he average wage, or

approximaely $10 oday. Raising he minimum wage enables low-wage workers

o ener he middle class and also causes employers o raise wages or workers

already in lower end o he middle class hrough a spillover eec.73

Over he pas our decades, workers have become much more producive and

our counry much richer, ye we have allowed he value o he minimum wage

o decline signicanly. Indeed, since 1968 he inaion-adjused value o he

minimum wage has declined by 31 percen, even as produciviy (he measureo oupu per hour o work) increased by 123 percen, and he inaion-adjused

average wage grew by 15 percen.74 Indexing he minimum wage o one-hal he

average wage:


33/80


Prevens congressional inacion rom reducing he value o he minimum wage Guaranees ha workers reap some o he economic gains hey help creae Raises living sandards as our naion becomes richer

Eors o index he minimum wage o inaion, while helpul o ensure ha govern-

men inacion doesn erode is value, consign uure minimum-wage workers oodays sandard o living, no mater how rich and producive our counry becomes.

An increased minimum wage would also help our economy by increasing pro-

duciviy hrough higher morale and eor, as well as reducing urnover.75 Some

readers migh be concerned ha an increased minimum wage would be harmul

or job growh. Bu research has ound ha hose ears are unounded.76

Ensure that middle-class workers are paid the wages they are owed

Unorunaely, several relaively widespread pracices preven millions o workers,

many o hem middle class, rom receiving he wages and benes hey are owed.

An esimaed 10 percen o 30 percen o employers wrongly claim heir employees

are independen conracors.77 Tis renders he worker ineligible or overime pay

proecions, orces hem o pay or addiional axes or Social Securiy and Medicare

ha are he employers responsibiliy, and leaves hem wihou coverage under

healh and saey, amily and medical leave, and anidiscriminaion and labor laws.78

Tis law-breaking is no isolaed o low-wage indusries. Sae audi repors have

ound high raes o misclassicaion among consrucion, real esae, and high-

echnology jobs.79

A relaed problem is ha millions o whie-collar workers receive no overime pay

due o exempions or whie-collar workers earning more han $24,000. Tis no

only denies workers some o he wages hey would ordinarily earn bu also can

lead o excessive overime ha hurs work perormance and produciviy and is

associaed wih poor healh and creaes work/amily conics.80

Congress or he U.S. Deparmen o Labor can ensure whie-collar workers receivehe overime hey deserve by raising and adjusing or inaion he minimum

salary ha whie-collar workers mus earn in order o be exemp rom overime.81

Congress should also clariy ha only workers who spend he majoriy o heir


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ime perorming high-level execuive, adminisraive, and proessional duies are

exemp rom overime.

Misclassicaion can be reduced by improving ransparency, closing ax loop-

holes, and increasing penalies or lawbreakers. Specically, he Labor Deparmen

should require companies o noiy workers o heir saus as an employee or inde-penden conracor and rack conracors hours. For is par, Congress should:

Eliminae ax loopholes ha permi companies o misclassiy some workers82

Srenghen enorcemen by clariying ha i is illegal o misclassiy employees Require employers o provide workers noice o heir saus as an employee or

independen conracor Increase penalies on employers who misclassiy heir employees and commi

oher workplace violaions Provide proecions o workers who are discriminaed agains because hey have

sough o be accuraely classied Encourage saes o srenghen heir misclassicaion prevenion eors83

In hese ways, Congress and he execuive branch can ensure ha workers

hroughou he middle class earn wha hey deserve rom heir employers.

Ensure that workers who want to form a union are able to do so

Unions help make he middle class by enabling workers o negoiae or air wages

and benes and also by helping ordinary ciizens ge involved in he poliical process.

Bu as unions became weaker over he pas our decades, hey became less able o per-

orm hese uncionsand he middle class has wihered, wih he share o income

going o he middle class alling alongside he percenage o workers in unions.84

Indeed, according o Harvard Universiys Bruce Wesern and Universiy o

Washingons Jake Roseneld: Union decline explains one-hird o he growh

in inequaliyan eec equal o he growing sraicaion o earnings by educa-

ion.85 I unionizaion raes increased by 10 percenage poinso roughly he

level hey were in 1980he ypical middle-class household, unionized or no,would earn $1,479 more a year.86

Unorunaely, he curren union elecion process is sacked agains workers who

wan o orm a union. One sudy nds ha 35 percen o he ime ha workers le


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a peiion or an elecion, he elecion does no end up happening.87 o ensure ha

workers who wan o orm a union are able o do so, he ollowing should occur:

Te Naional Labor Relaions Board should help pu an end o needless elecion

delays and modernize he union elecion process by enacing regulaions ha reduce

unnecessary liigaion, sreamline pre- and poselecion procedures, and aciliaecommunicaions via digial communicaions ha workers now depend on.88

Congress should pass comprehensive labor law reorm ha esablishes a air process

or workers o decide on union represenaion; ha expands coverage so more

workers are provided he righ o organize; ha esablishes meaningul penalies and

remedies or workers who are red or discriminaed agains or exercising heir righ

o organize; and ha includes measures o promoe producive collecive bargaining

or rs conracsso ha workers can negoiae or improved wages and benes.89

Congress should also make he righ o join a union a civil righ.90 Tis wouldgive workers who are discriminaed agains in exercising heir righ o organize a

privae righ o sue, jus as workers have a righ o sue i hey ace oher orms o

workplace discriminaion.


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Reduce the costs o gettig sick or losig a job | www.aericaprogress.o

Reduce the costs of getting sick

or losing a job

Middle-class amilies are a high risk o alling deeply behind i hey ge sick or

lose a job. Coss o healh care are high and rapidly rising, while he possibiliy

o going o he poorhouse rom geting sick or losing a job is ever presen.

Obamacare is already saring o provide some relie and will do ar more when

ully implemened, bu geting sick may sill lead o los income or a los job.

We pay ar more or healh care ha ciizens in every oher wealhy counry in he

world$7,960 per person annually, compared o $3,182 per person91 or he aver-age developed counryand coss coninue o spiral ou o conrol. According o

he Senae Commitee on Healh, Educaion, Labor and Pensions, beween 1970

and 2009 he coss o healh care rose 50 percen, ne o overall inaion.

Tese increases are due in large par o ineciencies in our healh care sys-

em bu also because we have all ended up paying or he uninsured, wih, or

example, healh care providers ranserring a porion o he cos o covering he

uninsured o us by increasing premiums by more han $1,000 per year on aver-

age, according o one sudy.92

No surprisingly, because o he exreme coss and risks our healh care sysem

places on individuals, 62 percen o all personal bankrupcies were due o healh

care coss in 2007.93 Geting sick no only imposes high healh care coss on he

middle class, bu even a minor illness can jeopardize a persons job.94 Indeed, 23

percen o adul Americans repor eiher being hreaened wih losing a job or

being red or aking ime o when hey or a amily member has been sick.95

I members o he middle class lose heir jobs, hey should be able o rely on a

srong unemploymen insurance sysem o provide a emporary replacemen opar o heir wages while hey look or work. Ye our unemploymen insurance

sysem ails o cover many unemployed workers,96 and more undamenally he

sysem aces a signican nancial shorall ha jeopardizes he modes level o

coverage i currenly provides.


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In shor, middle-class amilies ace excessive coss and risks i hey ge sick or lose

a job. o help minimize unnecessary economic risks or middle-class amilies, we

need o ensure ha Americans have qualiy, aordable healh care, access o paid

sick days, and a srong unemploymen insurance sysem.

Ensure that middle-class Americans have access to quality,

affordable health care

Te ederal governmen mus do everyhing i can o ensure ha Obamacare is

ully implemened and adop urher reorms o rein in waseul healh care spend-

ing ha raises consumer coss. Tese reorms

will help ensure ha middle-class Americans

have access o qualiy, aordable healh care.

o ully implemen Obamacare, work musbe done o help educae people abou he law.

Saring in 2014, uninsured individuals will

be able o purchase insurance hrough new

insurance markeplaces, called exchanges. And

or many individuals and small businesses, ax

credis will be available o ose some o hese

coss. A ha ime, Medicaid will also cover

more Americans due o a provision in he law

ha expands Medicaid eligibiliy.

As he ederal governmen implemens specic

aspecs o Obamacare, i should seize he oppor-

uniy o advance oher reorms ha will reduce

coss and improve paien care. As he ederal

governmen implemens healh care exchanges o

help people buy insurance, policymakers should use he exchanges marke power o

negoiae wih insurers and exclude plans ha provide low value o consumers. 97 Full

implemenaion o Obamacare will resul in 95 percen o Americans being covered,

and American households on average will be more han $1,500 per year beter o.98

Beyond Obamacare, policymakers can ake addiional seps o conain healh care

coss and increase qualiy by insiuing reorms. Te governmen should under-

ake reorms o:

FIGURE 4

Economic risks have been increasing

for over two decades

Percentage of the population experiencing 25% or greater loss

of disposable income

:

1985

0

5%

10%

15%

20%

25%

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Source: Economic Security Index


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Rein in waseul adminisraive coss by creaing a ederal oce dedicaed o

simpliying healh care adminisraive plans Coordinae similar adminisraive processes by dieren healh care paricipans Embed adminisraive simplicaion rules and sysems ino exising reorm

eors99

New research rom he Cener or American Progress esimaes ha by insiuing

he adminisraive reorms side by side wih Obamacare, he ederal governmen

would shrink hese unnecessary coss by 25 percenor $40 billion per year.100

Also, we need o hasen he ransiion away rom ee-or-service paymens o doc-

ors and hospials ha oen include high-cos ess and procedures and oward

paying or qualiy by bundling paymens o providers so ha he qualiy o care is

he ocus, no he quaniy o care. Finally, expanding he use compeiive bidding

in Medicareinsead o seting prices adminisraivelyo deermine prices or

medical devices and laboraory ess would no only resul in savings or Medicarebu also or beneciaries hrough lower coinsurance and monhly premiums.101

Let workers earn paid sick days

Paid sick days should be available o all American workers. Implemening his

policy would provide greaer job securiy o millions o Americans, reduce worker

urnover, and ulimaely srenghen he middle class.

Currenly here are no ederal laws guaraneeing workers he righ o earn

paid sick days. Fory percen o privae-secor workersmore han 40 million

Americansdo no have access o designaed paid sick days and are orced o

choose beween working sick or orgoing pay and risking losing a job.102 weny-

hree percen o aduls repor eiher being hreaened wih losing a job or being

red or aking ime o when hey or a amily member has been sick.103

Policymakers should guaranee workers he abiliy o accrue up o seven job-

proeced, paid sick days per year o recover rom heir own shor-erm illnesses or

o care or an ill amily member. wo bills beore Congresshe Healhy FamiliesAc and he Rebuild America Acwould implemen paid sick days.104

Selec saes and ciies ha have implemened paid sick days demonsrae ha

such a law can be expanded wihou adversely aecing he economy. San

Forty percent o

private-sector

workersmore

than 40 million

Americansdo

not have access

designated paid

sick days and ar

orced to choos

between workin

sick or orgoing

pay and risking

losing a job.


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Francisco, or example, experienced litle adverse reacion o his policy change,

and is economy acually grew aser han hose o surrounding ciies once he sick

days law was implemened.105

Improve unemployment insurance to stabilize the economy, boosteconomic growth, and assist the unemployed

Unemploymen insurance helps keep middle-class amilies in he middle class

unil jobs become pleniul again by providing a modes income replacemen or

workers who have los a job hrough no aul o heir own and are acively look-

ing or a new job. Recen U.S. Census Bureau daa shows ha nearly 70 percen

o hose who received unemploymen insurance benes in 2010 were in he

middle-60 percen o he income earners.106 Te median annual conribuion o

unemploymen insurance o a amilys income was $6,000 in 2009, which on aver-

age accouned or 11 percen o a amily s income.

Ye he sysem is under hrea, as he Grea Recession has le sae-run unemploy-

men insurance rus unds insolven. Te insolvency means ha saes may have o

reduce bene levels, leaving middle-class amilies wih less income when hey lose

a job hrough no aul o heir own. In order o preserve his imporan middle-class

program, several changes mus be made o he unemploymen insurance sysem.

We propose ha he way o do his is o begin by having he ederal governmen

clear he slae o he deb currenly on he books o saes, while rewarding saes

wih posiive balances. Te rs condiion or clearing he slae is ha moving

orward, saes should be responsible or nancing unemploymen insurance

benes only when heir saes economy is experiencing normal, unelevaed levels

o unemploymen.

Te second condiion is ha in exchange or deb orgiveness and he ederal

governmen aking on he responsibiliy or benes during periods o high unem-

ploymen, saes would have o submi o greaer harmonizaion o heir eligibiliy

and bene levels, which would emphasize increasing eligibiliy and bene levels.

Tese increases would help middle-class amilies more adequaely cope wih hediculies o unemploymen.

Finally, saes ha provided adequae bene levels and have sucienly orward-

unded heir unemploymen insurance rus unds mus be rewarded or doing so.


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We propose allowing saes wih surpluses o keep he surplus unds or oher uses.

Puting he unemploymen insurance sysem back on a solid ooing would insure

he middle class has somehing o all back on when hey lose a job or a reason

ou o heir conrol.


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make it possible or workers to also be caregivers or childre ad elderl parets | www.aericaprogress.o

Make it possible for workers

to also be caregivers for children

and elderly parents

Modern, middle-class amilies mus do wo hings a once: Be in he workorce

earning a living and also provide care or young children and services or elderly

parens. While American amily srucures oday have changed, our policies have

remained suck in he pas.

In he 1960s less han a hird o all women worked.107 oday, women now make

up abou hal o all workers on U.S. payrolls,108 and in nearly wo-hirds o ami-

lies, he moher is eiher he breadwinner or shares ha responsibiliy wih herparner.109 Less han one in hree children now have a say-a-home paren.110 As

a resul, middle-class amilies need o cover a relaively new and rapidly rising

household expensechild and elder careas well as sruggle wih inexible

workplaces when hey oen need ime away rom work o welcome a new baby or

care or an aging paren.111

Te coss o ensuring he care o a child or aging paren are high and coninue o

risecoss ha mus be born in order o reain employmen.112 Approximaely

11 million children under 5 years old are in child care, and Americas amilies are

spending nearly $36 billion a year or privae care or co-paymens or subsidized

early learning programs.113 For example, he average coss o cener-based child

care or 4-year-olds, which can include preschool, cos an average o $10,550 per

year in New York.114 Since 2000 he cos o ha care has increased wice as as as

he median income o amilies wih children.115

When i comes o he care o aging parens, he percenage o adul children aking

care o heir parens has ripled since 1994 o abou 10 million people now doing

so.116 A sudy by he Naional Alliance or Caregiving ound ha ou-o-pocke coss

o aduls caring or an aging paren or dying spouse averaged $5,531 a year in 2007.117

For middle-class amilies, child care and elder care suppor is no only quie cosly,

bu i is also an essenial ingredien o accumulaing he years o an uninerruped

work hisory ha are oen he prerequisie or promoions, raises, and improved


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job securiy.118 Some kinds o care ha require signican ime o rom work such

as o end o a newborn baby or ailing paren require exended leave rom work

ha can srain even healhy amily budges.

In spie o he ac ha all o he aduls in mos amilies are employed, only abou 10

percen o all workers have access o paid amily leave ha includes ime o or care-giving, and his ype o leave ends o be oered as a perk or higher-paid workers.119

o help modern amilies deal wih he high coss o care, we propose implemening a

naional paid amily and medical leave insurance program available o all workers

somehing ha oher indusrialized counries doas well as signicanly expanding

access o preschool and increasing he child and dependen care ax credi.

Enact Social Security Cares, a federal paid family and medical leave

social insurance program

Te governmen should enac Social Securiy Cares o give workers ime o o care

when hey and heir amilies need i mos.120 Te policy would provide up o 12

weeks o paid leave o qualiying workers experiencing he ollowing lie evens:

Te birh o a newborn or he arrival o a newly adoped or osered child Te serious illness o a spouse, domesic parner, paren, or child Te workers own serious illness ha limis heir abiliy o work

Te Family and Medical Leave Ac o 1993 provides unpaid, job-proeced leave or

hese ypes o evens, bu only abou hal o he workorce qualies or his leave,121

and many more canno aord o ake i because i is unpaid. 122 Social Securiy Cares

would provide paid leave insurance o he vas majoriy o U.S. workers, so hey have

access o benes when hey need hem. Using he mos conservaive esimaes,

nearly 80 percen o aduls would be eligible or paid leave, including almos hree-

quarers o women and more han 70 percen o parens wih young children.123

Significantly increase access to preschool for 3-year-oldand 4-year-old children

All American amilies should have access o high-qualiy preschool programs or

3-year-old and 4 year-old children because a high-qualiy preschool educaion


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make it possible or workers to also be caregivers or childre ad elderl parets | www.aericaprogress.o

improves childrens academic achievemen oucomes and laer-lie experiences.

Bu he high cos o qualiy preschool prices ou many middle-class amiliesso

much so ha some children rom middle-class amilies are less han hal as likely

o atend preschool han hose rom more afuen amilies.124

Evidence suggess ha middle-income sudens obain similar imporan benesha low-income sudens do rom preschool.125 In ac, a rigorous evaluaion o

Oklahomas universal preschool program ound ha children making he greaes

gains were rom amilies making nearly middle-class incomes ha in many cases

would be jus high enough o exclude hem rom means-esed preschool programs.126

Expansion o high-qualiy preschool educaion opporuniies requires wo major

changes. Firs, we mus improve he qualiy and coordinaion o exising early

educaion sysems. Te ederal governmen should coninue o:

Encourage saes o align early learning sandards or all programs Inves in sae assessmens and sysems o ensure sandards will be me Improve he qualiy o early childhood educaion workorce

Improving he qualiy o publicly unded programs will likely encourage he pri-

vae providers ha middle-class amilies oen rely on o keep pace.

Second, we need o increase invesmen in preschool programs. Expanding

preschool access o all 3-year-olds and 4-year-olds will cos a leas $16 billion, or

approximaely 8 percen o curren educaion spendinga cos ha should be

born ogeher by ederal, sae, and local governmens.127 o help reach his goal,

he ederal governmen should increase invesmens in Head Sar and provide

maching grans o propel saes o revamp heir nance ormulas, improve pre-

school qualiy, and increase access.

Use the tax code to lower the cost of caring for children

and elderly parents

Te ederal child and dependen care ax credi should do more or middle-classamilies bearing he coss o child care or care or an aging paren.128 Improving he

design o he child and dependen care ax credi would bene many middle-class

amilies who sruggle o balance boh work and amily obligaions. Specically,

Congress should do he ollowing:

In spite o the

act that all o

the adults in

most amilies ar

employed, only

about 10 percen

o all workers ha

access to paid

amily leave tha

includes time o

or caregiving.


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Expand he child and dependen care ax credi o more middle-class amilies by

raising he income hresholds above which he credi is phased ou. Currenly

a $15,000, he hreshold should be raised o $85,000, as Presiden Obamas

Middle Class ask Force has proposed. Ta would subsanially increase he

amoun o he credi or middle-class amilies. Raising he hreshold would

increase he credi or amilies wih incomes beween $15,000 and $115,000,nearly doubling i or amilies earning beween $43,000 and $85,000.

Increase he share o child care and dependen care coss ose by he ederal

ax credi and he amoun o he expenses ha can be claimed. Te share o

he coss ha are ose by he ax credi should be increased o 50 percen, and

he maximum amoun o child or elder care coss or which he credi can be

claimed should be increased rom $3,000 o $6,000 per child and up o $12,000

or wo children and indexed wih inaion.

Tese changes would provide a signican bene o millions o middle-class ami-lies ha rely on ouside care providers. Approximaely 11 million children under

5 years old are in child care and since 2000 all o Americas amilies are spending a

oal o nearly $36 billion a year or privae care or co-paymens or subsidized early

learning programs.129 When i comes o he care o aging parens, he percenage o

adul children aking care o heir parens has ripled since 1994 o abou 10 million

peoplea an average cos o $5,531 per year according o one sudy.130

7/31/2019 Making Our Middle Class St

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Making Our Middle Class Stronger