The Common Good
February 2007

Building the Grand Alliance

by Tamara Draut | February 2007

Collaboration between low- and middle-income people is one of the keys to rebuilding the broken American Dream.

Thirty-six million people living in poverty; almost 47 million people without health insurance; 2 million households declaring bankruptcy—that was the United States in 2006. The opportunity ladder is in splinters for tens of millions, and as many more are teetering on the edge. Only a bold, comprehensive vision for reform will help us start to properly address this crisis in the world’s wealthiest nation.

The challenge to end poverty and improve economic opportunities for low-income households must be linked to the broad economic insecurity plaguing America’s middle class. As the concentration of income and wealth has reached historic proportions, Americans at the bottom and the middle of our income distribution have suffered the consequences. Rising costs of essentials—health care, housing, energy, college—are a shared anxiety. A reliance on high-cost debt, risky home finance (and refinance) deals, and the proliferation of predatory lending threaten to strip the working poor and the middle class of the few assets they can claim.

For many advocates of the poor, standing up for the middle class is seen as abandoning the most vulnerable of our population. But the fates of these two groups are inextricably linked. Those living in poverty are not just aspiring to surpass some arbitrary threshold of income; they are striving to work their way into the security of the middle class. They’re toiling in the hopes of being able to send their kids to college, so they in turn can get jobs with health care, afford homes in safe neighborhoods with good schools, and if they’re lucky earn a paycheck that allows them to save for retirement. Today, these qualities that we associate with being “middle class” are all under attack.

According to analyses by Jacob S. Hacker in his book The Great Risk Shift, the average middle-class family is much more likely to experience substantial drops in their income than a generation ago. In households that find themselves downsized or off-sourced, the typical decline in income is around 40 percent, up from 25 percent three decades ago. Today’s long-term unemployed are more likely to be older and better educated and to be professionals than are the unemployed as a whole. The notion of middle-class security is rapidly becoming an anachronism.

Unless we build a broad coalition around a shared agenda for the bottom 60 percent of the income distribution chart, it’s very likely that the next generation will indeed be worse off than their parents.

There are telltale signs that the decline has in many ways already occurred. One in three 18- to 30-year-olds has no health insurance. The majority of young men and women today are making less than their counterparts a generation ago. Today, the typical earnings for a male between 25 and 34 with a high school diploma but no college are 29 percent lower (inflation-adjusted) than they were in 1974. Earnings for young college grads have remained flat over that same period. Today, going to college has become necessary for getting into the middle class, but that status is far less stable than it was for their parents. And this generation has paid a big entry price: $20,000 in student loan debt, on average. One out of five people who borrow money for their education will drop out in debt, but with no degree.

As more Americans have absorbed the risk and responsibility for their health care, education, and retirement, their ability to afford them has eroded. Instead of economic and social policies that temper the harsher-edged capitalism wrought by globalization and technology, our nation has retrenched from its social contract. And, it seems, Americans are saying “enough.”

As history tells us, when corporations become too powerful and elected officials stack the deck in favor of the wealthy, a backlash is not too far behind. The outcome of the midterm elections may well signal the beginning of a new era of progressive reform—one defined by action on behalf of the common good. For advocates of the poor, the burgeoning debate about the economic struggles of the middle class and the declining living standards for average workers offers an opportunity to support a broader set of reforms that challenge our direction as a nation.

So what would an agenda look like that would help both the aspiring middle class and those already there?

First, the agenda needs to be rooted in the values Americans cherish. No policy or program ever rallied a nation; rather people respond to and demand reform when they’re inspired by ideas. It’s one of the reasons why the living wage movement, for example, has been so successful. These campaigns are harnessed by a strong call for fairness and based on the principle of just reward for hard work.

These major, local successes stand out in a national economic climate that is fundamentally out of sync with key American values. This package of articles provides a set of actionable, forward-looking policy ideas—all of which would go a long way to improving the opportunities and quality of life for low-income households. But the call for reform must reach beyond any one policy by calling for nothing less than the freedom for individuals to fulfill their aspirations, as individuals, as parents, and as citizens. The call must motivate the public’s thirst for fairness and opportunity, and for a government that works effectively on behalf of the people—all of us. The calls for reform and the policies for which we fight must address the struggles of the majority of Americans. It must be broad, and it must be bold.

Tamara Draut is director of the Economic Opportunity Program at Demos and is the author of Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead (Doubleday, 2006).

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