The recent use of “middle class economics” references a number of executive initiatives to address issues that jeopardize financial security for US families, including the high costs of college, the high costs of childcare, and lack of paid sick leave or family leave. The federal government may not be able to pass these initiatives; the Healthy Families Act will almost certainly fail in Washington. However, the push from the White House is intended to spur state and local governments into local solutions for their residents. In anticipation of local initiatives, the federal government is making pools of funds available to states for these purposes.
Why is this important?
Political writers argue about a recent article in the Washington Post, which reveals that 51% of children in US public schools are living at or on the line of poverty, determined by the number that qualify for anti-poverty initiatives such as the National School Lunch Program. Their debate is based on the federal poverty guidelines: is a 4-person family living on $23,850/ year “in poverty” or just very close to it? The poverty measurement tool (established in 1955) may itself be outdated as it was developed around a family with one stay-at-home parent, no childcare costs, and different percentages of income devoted to basic living expenses. Read more about the development of poverty measures here.
Of course, ideas of “adequate living standards” and “cost of living” vary. In a recent analysis of the shrinking middle class, Bill Moyers suggests that a two parent, two child family in New York City requires $94,676 to maintain an adequate living standard. He suggests that number is closer to $64, 673 for the same family living in St Louis.
Fast facts: Child care costs are typically 7.2% of family income, according to US national average. In low income families, child care costs can represent up to 39.6% of family income (according to a Pew analysis of census data). The Washington Post has observed that in 31 states, the cost of daycare is higher than tuition and fees at a public college in that state. The average annual cost for childcare for one toddler, in New York county, is $13,260.
The U.S. lags behind peer countries in terms of paid sick time and family leave. Nearly every other industrialized economy offers paid family leave. This gap in pay creates a potential pitfall for working families, which would be corrected by the Healthy Families Act, which would allow workers to earn up to 7 paid sick days per year for short term illnesses. The White House is making a big push for approval, but Congress is likely to reject the act, as they did with the former iteration. The Huffington Post urges parent bloggers to get more political, as pressure could encourage the development of state initiatives. President Obama signed into law paid sick leave for federal workers, as it is within his jurisdiction and does not require congressional approval.