Middle Class

The Middle Class in America Isn’t Happy
by Kelly on July 23rd, 2008
There has been a lot of talk about which presidential candidate has the best tax plan for “middle class” America. It’s an interesting question because I’m not sure that anyone can actually define “middle class” anymore - my readers seem to feel that it’s all over the place.

Middle class - as it’s widely defined - is generally defined as those families who are in the middle of income brackets. That can be confusing. Based on 2005 Census Bureau reports, 40% of Americans earned less than $36,000 a year (the bottom 20% earn less than $19,000). The next 40% - the so-called middle class - reported betwen $36,000 and $91,705 of earnings. The top 20% of earners, making $91,705 or more, earned 50% of the income reported in the US.

[Kelly’s geeky note: From a math perspective, that’s pretty interesting: while the richest 20% took in nearly 50% of income, the middle class (representing 40% of Americans) earned a fairly representative proportion of total income (37.5%).]

So there you have it, statistically you are middle class if you earn between $36,000 and $91,705 (adjusted for inflation since 2005) per year. Easy, right?

Not so fast.

There are a lot of factors that pure numbers don’t take into consideration including the size of your family and the cost of living in your geographical location. Lots of folks who make more than $75,000 per year may live comfortably in some areas of the world - but that kind of money won’t take you very far in areas like New York City or San Francisco where housing costs alone can easily reach $1 million for relatively modest homes.

The reality is that almost everyone thinks that they’re middle class, though of course, you can’t be. And realistically, you don’t want to be right now. Here’s why.


Elizabeth Warren, professor at Harvard Law School, just testified before the Joint Economic Committee in Congress that the middle class is suffering. How much so? Adjusted for inflation, median household income for middle class families has dropped by $1,175 between 2000 and 2007 - that represents a significant decline. While income is dropping, expenses are rising. The average family is spending $4,655 more each year on basic expenses, such as gas, food and health insurance.

Let’s talk the bane of my existence (as most working parents): child care costs. Families with children under the age of 5 spend $1,508 a month more on child care costs (yes, do the math, that’s more than $18,000) - older children cost about half that much. You don’t escape during the teens, either: the cost of sending a child to college has more than doubled over the last 20 years, far outpacing increases in income.

Also in the news these days are those folks who cannot afford housing. The proportion of families who spend more than 35% of income on housing has quadrupled in a single generation - a disproportionate number of middle class families spend nearly half of their income on housing. Two “middle class” Americans earning an average salary could not afford to pay the mortgage of a median-priced home in 2/3 of the nation’s metropolitan areas including my own Philadelphia (which is reasonably priced, I might add). In addition to the increased costs of housing stock, real estate taxes have also increased. Most municipalities have not tweaked their systems to account for a disproportionate increase in property “value” (albeit somewhat artificial) - this means that taxpayers are often paying too much (for reassessed properties at historic rates) or too little (for properties that have not been reassessed) in real estate tax from neighbor to neighbor. The high costs, as much as $10,000 in some middle class neighborhoods, are hitting folks in the pocketbook.

According to Warren, if you include real estate taxes, along with Medicare and other taxes, the total tax burden for a two income family today is 38% more compared to one income families a generation ago. And yes, I realize in a progressive tax system, that was bound to happen. It’s not so much that it happened that’s surprising, it’s what it means. It means less money in the pockets of middle class Americans at the end of the day.

Income is decreasing and expenses - including taxes - are increasing. So what are people doing? Charging up a storm. Credit card debt for middle-income families rose 75% between 1989 and 2001, according to Demos, a non-partisan public policy organization. Warren’s report claims that 10% of total disposable income in the United States goes to paying off credit cards. This, of course, jives with much of what you told me you would do with your economic stimulus check.

There has been a clamoring for a second stimulus package to offer some relief. Despite the rumors to the contrary, no such package has yet been seriously proposed. Jared Bernstein, senior economist with the Economic Policy Institute, has advised that a package should rely on getting funds together for the states, particularly for infrastructure projects, and not into the hands of taxpayers. Infrastructure means jobs - this was made abundantly clear when Congress thought about tinkering with the gas tax.

Second stimulus package or not, it’s clear that something needs to change. What is the breaking point before the middle class is no longer middle class?

Tags: America, cost of living, Economic Policy Institute, economic stimulus, economy, Elizabeth Warren, gas-tax, middle-class, second stimulus package
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Boomers' Second Careers Include Social Causes

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By Carol Hazard
Tens of millions of Baby Boomers are interested in second careers that combine income and personal meaning with social impact, according to a national study. As many as 9.5 percent of Americans ages 44 to 70 are in encore careers.

An additional 44.7 percent are interested in pursuing encore careers, according to the MetLife Foundation/Civic Ventures Encore Career Survey. The foundation was established by insurer MetLife to support educational, health and civic and cultural organizations.

Encore careers, as defined by this study, are predominantly in education, health care, government and nonprofit organizations.

"What is the healthiest, best educated and largest generation going to do for the second half or one-third of their working lives?" said Marc Freedman, chief executive officer of Civic Ventures, a research organization on boomers, work and aging.

They are looking at retirement as an opportunity to do new things and take on new challenges, he said.

The study was based on telephone interviews with 1,063 people, followed by an Internet survey of about 2,500 people. The margin of error for the telephone survey is plus or minus 3 percentage points.

Most respondents interested in encore careers are worried that positions will be hard to find or not flexible enough to meet their needs, the study shows.

Also, the slowing economy may make it more difficult to find jobs, Freedman said in a conference call with the news media.

However, Boomers are interested in careers in sectors projected to have critical labor shortages.

Boomers are responding to a combination of powerful forces, Freedman said. Many need to work longer for income and health benefits. But they also seek a sense of purpose.

The top reason respondents gave for working in second careers was to stay active, productive and challenged, said Allan Rivlin, a partner with Peter D. Hart Research Associations Inc., which conducted the phone survey.

Researchers said they were surprised that so many people were already working in encore careers. They said they expected the number to be in the low single digits, not high.

Also, most of the Boomer trailblazers are working full-time, at least 40 hours a week, and their satisfaction level is high, Rivlin said.

"About a third are deeply satisfied," he said. "They feel appreciated and they see their contributions."

Where They Work
About 8.4 million people ages 44 to 70 are employed in second careers that combine income, personal meaning and social impact. Here's where they work:

Education: 30 percent

Health care: 23 percent

Government agency: 16 percent

Nonprofit groups: 13 percent

For-profit business: 7 percent

Other: 11 percent
What They Want in a Second Career
About 8.4 million people ages 44 to 70 are employed in second careers that combine income, personal meaning and social impact. Here's what they want in a second career:

Advocate for group or issue: 36 percent

Working with children and youth: 32 percent

Working to preserve the environment: 31 percent

Teaching at any level: 31 percent

Working to protect the safety of our communities: 24 percent

Working on poverty: 23 percent

Working with religious, spiritual organization: 23 percent

Working with the elderly: 17 percent

Working in health care: 17 percent
SOURCE: MetLife Foundation/Civic Ventures Encore Career Survey
Contact Carol Hazard at (804) 775-8023 or chazard@timesdispatch.com.

Voice For Quality long-term care

NCCNHR The national consumer voice for quality long-term care
1828 L Street, NW, Suite 801 Alison Hirschel, President
Washington, DC 20036 Alice H. Hedt, Executive Director
202 332-2275 Fax 202 332-2949
www.nccnhr.org
NCCNHR (formerly the National Citizens’ Coalition for Nursing Home Reform) is a nonprofit membership organization
founded in 1975 by Elma L. Holder to protect the rights, safety, and dignity of America’s long-term care residents.
Support the Nursing Home Transparency and Improvement Act!
Congress is considering the most important nursing home legislation in 20 years. Two of Congress’s leading supporters of nursing home reform, Senator Chuck Grassley of Iowa, Ranking Republican on the Finance Committee, and Senator Herb Kohl of Wisconsin, Chairman of the Special Committee on Aging, have introduced S. 2641, the Nursing Home Transparency and Improvement Act. A companion bill is expected soon in the House of Representatives.
NCCNHR worked with congressional staff to develop the legislation, which would increase transparency of nursing home ownership, operations, staffing, and expenditures; improve the consumer complaint process; increase civil monetary penalties; and expand public information about nursing home quality, including penalties and staffing levels. Please inform your members, colleagues, friends, and nursing home residents and their families about the bill:
• Check the NCCNHR website (www.nccnhr.org) for information and updates.
• Download S. 2641 by clicking on [S.2641.IS].
Summary of major provisions in S. 2641
Transparency and accountability in the ownership and operations of nursing homes
Corporations would be required to disclose their owners, operators, financers, and other related parties. Facilities that were part of chains would be required to submit annual audits. Purchasers would have to demonstrate that they were financially able to run facilities.
Disclosure of how Medicare and Medicaid funds are spent
Providers would have to report wage and benefit expenditures for nursing staff on cost reports. Cost reports would be revised to categorize spending for direct care, such as nursing and therapies; indirect care, such as housekeeping and dietary services; capital costs, including buildings and land; and administrative costs, which often include the company’s profits.
Independent monitoring of chains
The federal government would develop a protocol for an independent monitor of chains to analyze their financial performance, management, expenditures, and nurse staffing levels. It would provide for corrective action and collection of civil monetary penalties.
Accurate information about nurse staffing
The government would collect data electronically from nursing homes on the number of RNs, LPNs, and nursing assistants, using payroll records and contracts with temporary agencies as the source. Data would include turnover and retention rates and hours of care per resident provided by each category of worker.
Better

Subsidized housing

Business Services IndustryAging Subsidized Housing Residents: A Growing Problem in U.S. Cities
Journal of Real Estate Research, The, Oct-Dec 2003 by Gibler, Karen M
E-mail Print Link Abstract Many low-income elderly live in subsidized housing in central cities. These aging tenants need adaptive physical structures and supportive services in order to age in place, but lack the resources to pay for them. The responses to the AHEAD Wave 2 survey are used to compare the housing conditions of elderly subsidized housing residents with unsubsidized tenants. Results indicate subsidized tenants have greater health and physical limitations. They are likely to have physically appropriate housing, but unlikely to have access to supportive services that would allow them to age in place, creating a problem policymakers must address.

As wealthier Americans migrated to the suburbs, many low-income residents were left behind in the inner city. There they have aged in place, growing old with their homes and neighborhoods. A number of the lowest income elderly left in the central city live in subsidized housing. These elderly tenants by definition have fewer financial resources to support themselves in old age than those who do not quality for housing subsidies. They may also be at a disadvantage in terms of health and social resources. Thus, the older Americans with the greatest needs may be those with the fewest resources to satisfy those needs.

The burden to provide for the housing and service needs of aging subsidized tenants falls to local, state and federal government agencies working in conjunction with charitable and community organizations. However, recent public policy trends toward dispersing subsidized housing tenants into privately owned geographically scattered facilities poses a significant problem for aging residents whose housing requirements are intertwined with supportive service needs.

Most of the research in the United States about housing the aging population focuses on market-rate seniors housing being constructed in suburban and destination retirement locations with supportive services and amenities designed to attract moderate- to high-income residents. These developments do not address the needs of the low-income elderly aging in the central city with insufficient income or assets to pay for market-rate seniors housing and limited family support to help them age in place. To expand our knowledge about the housing and service needs of this segment of the seniors market, this article uses data from the 1995 AHEAD Wave 2 survey to explore the topic of elderly subsidized housing. It will compare subsidized tenants to elderly renters living without housing subsidies in terms of resources, constraints and whether their housing adequately provides for their needs.

Background

Aging Americans

The U.S. population will continue to age and become more diverse in the coming decades. While the rate of growth of the elderly segment of the population has recently slowed as the smaller cohort born during the Depression reached retirement age, the leading edge of the baby boomers will reach retirement age in 2010, doubling the population age 65 and older by 2030. In addition, more people are living longer. By 2030, Americans age 75 and older are expected to comprise 9% of the population. Females make up a majority of the elderly. In 1995, 64% of people age 75 and older and 72% of persons age 85 and older were women. Only 37% of all persons age 75 and older and 22% of women were married and living with a spouse. The proportion of racial minorities is expected to grow to 16% and the proportion of Hispanics to 11% of the 75 and older population by 2030 (Siegel, 1996; U.S. Department of HUD, 1999; and U.S. AOA, 2001).

With increasing age often come health problems. Researchers assess elderly health and functional ability in three ways: self reported overall health, presence of chronic conditions, limitations to activities of daily living (ADLs) and instrumental activities of daily living (IADLs). ADLs include bathing, dressing, eating, getting out of bed, walking/getting around inside and using the toilet. IADLs include more complex tasks such as managing money, preparing meals, shopping, doing laundry, using the telephone, doing housework, getting around outside and traveling.

In the mid-1990s, 28% of persons age 65 and older reported their health as fair or poor, with poor health ratings more common among the oldest old, Hispanics and Blacks. Some 18% of noninstitutionalized people age 70 and older were visually impaired and one-third were hearing impaired. Almost four-fifths reported at least one chronic condition. The most common chronic conditions, as shown in Exhibit 1, are arthritis, hypertension, heart disease and cancer. One-third of these older Americans had difficulty performing and one-fourth was unable to perform at least one of nine physical activities such as climbing a flight of stairs, walking a quarter of a mile, stooping, crouching or kneeling. Similarly, 20% of noninstitutionalized persons age 70 and older had difficulty performing at least one ADL and 10% had difficulty with at least one IADL. These physical and health problems are more prevalent among women, the oldest old and minorities. In addition, the likelihood of severe disability increases with age from 1 in 30 for those aged 65 to 74 to 1 in 10 for those aged 75 to 84 to 1 in 3 for those aged 85 and older (Kramarow, et al., 1999; and Stucki and Mulvey, 2000).
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