For the past 40 or 50 years, Americans have lived by a series of unofficial tenets: A good education guarantees a good job, hard work will bring prosperity, and 40 years of 40 hour-a-week work earns a comfortable retirement. Then maybe; now not so much.
Working harder for less money is the new normal for those lucky enough to have a job. Millions of families have reduced expenses they long took for granted. The pinch that many families feel comes from incomes that have fallen while other unavoidable costs have continued to increase. Many people have absorbed pay cuts or taken new jobs that pay a lot less than their previous employment.
When income falls faster than expenses, the first impulse is often to make up the difference by borrowing. But banks and credit card issuers have clamped down on lending, leaving many Americans no choice but to raid their savings, if they have savings, to pay the bills. This has happened at the same time home values have plunged.
The cost of financing and maintaining a home soared by 56 percent between 1990 and 2008. Although the housing bubble has burst, many families that purchased a home near the peak of the market, between 2005 and 2007, still are stuck with property that’s declining in value and in some cases worth less than the mortgage. Foreclosures continue for many families.
Two parent families have maintained their standard of living because both parents work. Between 1990 and 2008, hours worked by both parents in a typical middle-income family increased 5 percent; in a middle-income single-parent family, hours worked increased by 13.4 percent. There is less time for taking care of kids, aging parents, and anything else that needs attention. Additional expenses for paying somebody else to provide needed services are incurred. For example, child care for a toddler and an infant can cost $1,500 a month.
Healthcare costs have been rising unabated. Seniors who are living longer require more late-in-life care, with the costs often borne by their middle-aged children. Healthcare costs rose by 155 percent between 1990 and 2008, according to the White House’s middle-class task force, while median household income rose by only 20 percent. That means medical costs take an increasing share of take-home pay for virtually every family.
To save for college, a typical family with two kids should save about $4,200 per year. College costs have risen about 43 percent since 1990, nearly twice the rise in median income. With state and federal education budgets being axed, public universities are hiking tuition and fees. Many families take out bigger college loans, and students work more to pay for their own education. Students are graduating with substantial college debt at a time of diminished job opportunities. In its most recent survey of college pricing, the College Board reports that a “moderate” college budget for an in-state public college averaged $22,261. A moderate budget at a private college averaged $43,289. This is per year, for the 2012–2013 academic year.
The percentage of Americans who say they are in the lower-middle or lower class has risen from a quarter of the adult population to about a third in the past four years, according to a national survey of 2,508 adults by the Pew Research Center. Not only has the lower class grown, but its demographic profile also has shifted. People younger than 30 are disproportionately swelling the ranks of the self-defined lower classes. The shares of Hispanics and whites who place themselves in the lower class are also growing. The share of blacks in the lower class has not changed in years, one of the few demographic groups in which the proportion in the lower class did not grow. As a consequence, a virtually identical share of blacks (33%) and whites (31%) now say they are in the lower class.
The Pew survey finds that hard times have been particularly hard on the lower class. Eight-in-ten adults (84%) in the lower classes say they had to cut back on spending in the past year because money was tight, compared with 62% who say they are middle class and 41% who say they are in the upper classes.
Those in the lower classes also say they are less happy and less healthy, and the stress they report experiencing is more than other adults. As they look to their own future and that of their children, many in the lower class see their prospects dimming. About three-quarters (77%) say it’s harder now to get ahead than it was ten years ago. Only half (51%) say that hard work brings success, a view expressed by overwhelming majorities of those in the middle (67%) and upper classes (71%).
More children are slipping into poverty. Nationally, the number of children in poverty has been creeping upwards, to 1 in 4.5 by 2010. Wisconsin children are faring better than the national average, but in 2010 almost 1 in 5 Wisconsin children lived in poverty—up from 1 in 6.7 just four years before.
Lower, moderate and middle income families are experiencing an unrelenting diminishment of their economic prosperity and their hopes for their children and the future. But there are ways that you can help…
We Can Defeat Poverty – Together
Couleecap fights poverty and promotes self-sufficiency, economic development, and social justice. We are People Helping People, and everyday our action makes a difference in the lives of people and families throughout the Coulee Region.
- Your TIME to volunteer against poverty in your community.
- Your MONEY to programs and organizations that speak to your heart.
- Your VOTE for elected officials with strong track records voting for anti-poverty legislation.
- Your VOICE as an advocate for affordable housing, a higher minimum wage, educational supports and improved child care assistance so working families can rise out of poverty.
People Helping People
In addition to the many programs Couleecap offers to help low and moderate income families struggling with economic needs, there is a special initiative created by Couleecap called the People Helping People Fund. This fund provides limited financial assistance for additional needs that other program funds cannot pay for. Through Couleecap’s People Helping People Fund, a weatherization client received a gas cook range to replace the current range that had a very bad gas leak. Couleecap staff turned off the gas range due to the leak and advised the family that the stove presented a danger to their health. The range was not repairable and the client did not have the finances to pay for a replacement. With assistance from the People Helping People Fund, the household was able to purchase a new range and is preparing home cooked meals once again.
Ways to Give
You can help! With your support we can continue to make a difference in people’s lives. Your tax deductible gift stays in our community and addresses local poverty needs. Please consider supporting Couleecap with your:
- One time gift
- Annual gifts
- Memorial gifts
- Planned giving
- Endowment gift
For more information regarding the People Helping People Fund or agency programs, please visit Couleecap’s website at www.couleecap.org or call toll free 1-866-904-4507.