Millions to the Middle: Three Strategies to Expand the Middle Class

Millions to the Middle: Three Strategies to Expand the Middle Class

August 30, 2004
|

This report takes a long-term view to expanding the middle class and creating more security among those who do achieve a middle-class life. Looking ahead to where the United States should aspire to be a decade from now, the report advances policy proposals that would be phased in over time and are bold enough to fully meet the challenges at hand. The agenda focuses on higher education, home ownership, and adequate income – three strategies that have historically been pivotal to the expansion of the middle class. Each of these strategies empowers individuals to advance themselves through self-improvement and hard work. The three strategies work in combination with one another to help people to move up the ladder of economic opportunity and, in turn, pass on opportunity to their children.

Top Facts:

• The Contract for College would strengthen the middle class through a dramatic expansion of investments—in partnership with the private and nonprofit sectors—that will give millions of young people a shot at middle-class success by doubling the percentage of college-qualified students from low- and moderate-income families who enroll and complete degrees at 4-year colleges.

• Homeownership and savings have historically been pivotal to securing a place in the middle class. To boost assets for low-income families, this report proposes making the mortgage interest deduction refundable, creating a matching savings program for low-income families, and providing each newborn child with an asset account endowed with $6,000 at birth.

• Closing the gap between wages and the cost of living could be achieved by raising the minimum wage and indexing it to inflation, introducing a Working Families Tax Credit to assure that full-time workers earn enough to provide a minimally decent life, and creating a Federal Office of Living Standards to assess the income needs of households in different parts of the US and set guidelines for policymakers.

• Affording a stronger middle class will require rearranging national priorities. The investments proposed in this paper are not out of line with investments made during the great period of middle-class expansion in the early postwar period. In the long run, these earlier investments more than paid for themselves by helping to fuel decades of dynamic economic growth.