The work I’ve been doing on the middle-class squeeze is for a hearing to be held by the Senate Health, Education, Labor and Pensions Committee on Thursday at 10. (Webcast: http://help.senate.gov)
Interestingly, most of the folks who are testifying are “real people” struggling with all the stuff I’ve been blogging about. I think it’s great that in the midst of all this mishegoss on the debt ceiling, budget, deficits, stimulus, the committee is taking the time to look at the longer term challenges that middle class families have been struggling with well before the recession took hold.
There are so many dimensions to this squeeze. Take, for example, retirement security. The figure below highlights the complete reversal in pension coverage from defined benefit pensions (a fixed guarantee) to defined contribution plans (like a 401(k) plan), where your pension benefit varies with market returns. It’s a classic risk shift, a change that shifts the risk of income adequacy in retirement from employers to workers and their families. The figure reveals a complete reversal in share of coverage between a guaranteed and variable pension benefits. And of course, many in the middle class don’t have even variable benefit pension plans.
Here’s what Sen. Tom Harkin said today in announcing this hearing:
“…even people who have spent their whole lives playing by the rules are seeing the future they dreamed of slip out of reach. People’s paychecks aren’t rising, but the costs of essentials like gas, health care, and college education are soaring. With this squeeze on family finances, the hope of a middle class lifestyle with a house, a car, and a secure retirement is fading for far too many Americans…it’s time to recognize that this is not the way things have to be. Our economic recovery as a nation depends on rebuilding the middle class, the backbone of America. It’s time we showed the backbone to defend it.”