![]() This is true whether we consider only earned wages and salary, or if we use a broader definition of pretax, pretransfer income, which also includes some unearned sources of income, such as investment income and alimony payments. More than half of America’s working-age families with children under age eighteen (approximately 20.1 million families) have annual incomes of $60,000 or below. Chapter 3 presents evidence about the relevant set of tax and transfer programs facing the struggling lower-middle class, highlighting how this panoply of programs can inadvertently make the climb into middle-class security more difficult.Ĭhapter 1: A Snapshot of Struggling Lower-Middle-Class Families Chapter 2 focuses on the challenge of food insecurity and provides information about the nation’s most-important and wide-reaching government program focused to address this issue, the Supplemental Nutritional Assistance Program (SNAP). These facts focus on those who are above the federal poverty level, and yet are still quite economically insecure, relying on government transfers, facing high levels of anxiety about being able to feed their families, and facing extremely high marginal tax rates as they try to work themselves securely away from poverty.Ĭhapter 1 describes the group we define as made up of struggling lower-middle-class families. ![]() In this spirit, we offer “A Dozen Facts about America’s Struggling Lower-Middle-Class” to bring attention to who these families are, to highlight two particular challenges facing this broad group of American society, and to set up a framework to consider what policies would be appropriate for strengthening their economic security and well-being. ![]() This principle calls for economic security among a thriving and prosperous middle class, which has been a long-celebrated feature of our nation’s social and economic fabric. Transfer program benefits phase out as family earnings rise, which reduces the return to work and makes it difficult for these families to work their way firmly into a better economic life.Ī founding principle of The Hamilton Project’s economic strategy is that long-term prosperity is best achieved by fostering economic growth and broad participation in that growth. One major problem, highlighted in this paper, is the implicit tax on families who receive reduced benefits as a result of higher earnings. Income support programs undoubtedly improve the economic well-being of families on the cusp of poverty, but they often come with unintended consequences. In fact, more than 20 percent of families (approximately 2.4 million families) relied on food stamps in that year alone.Īn array of tax and transfer programs-including food stamps, Medicaid, and the Earned Income Tax Credit (EITC)-strengthen the resources available to struggling lower-middle-class families and provide a safety net for families in need. In 2012 approximately one in three struggling lower-middle-class families (approximately 3.7 million families) relied on at least one major federal government transfer program. Many of these families also rely on government programs for income support. In 2012 more than 24 percent of struggling lower-middle-class children ages twelve to seventeen (or approximately 1.7 million children) lived in a household identified as being food insecure. For example, these households are often unable to meet the most basic requirement of obtaining a sufficient diet. While lower-middle-class families face many challenges, this policy paper focuses on two pointed struggles-food insecurity and low returns to work due to the design of tax and transfer programs.Ĭompared to families officially living in poverty, these struggling lower-middle-class families have substantially different characteristics: they have higher rates of marriage, more dual-earning spouses, and higher levels of educational attainment, yet they face some of the same challenges faced by families living in poverty. More than half of these families are headed by married couples, and of these families, roughly half rely on two earners to make ends meet. ![]() The struggling lower-middle class encompasses low- and middle-skilled workers whose wages have stagnated in recent decades (Autor, Katz, and Kearney 2008). One major setback could thrust them into economic chaos. Though not officially poor, these individuals and families experience limited economic security. This struggling lower-middle class consists of the 30 percent of working-age families with children who have incomes between 100 and 250 percent of the federal poverty level (FPL), or between roughly $15,000 and $60,000, depending on family composition. Many American families whose incomes are not low enough to officially place them in poverty live in economically precarious situations.
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