“Americans are experiencing genuinely contradictory trends in the economy,” said John Halpin, Senior Fellow at the Center for American Progress. “Our policy solutions need to help both middle-and low-income families, not either/or.”
Halpin joined an expert panel Tuesday at an event at the Center for American Progress to discuss the shifting economic tides in America. The panel discussed how minority and low- to middle-income families have been particularly affected. They also discussed policy solutions that would help stave off the increasing difficulties Americans have been facing over the last six years.
“We have a run away at the top and income stagnation for everyone else,” said Jeff Madrick, Editor of Challenge Magazine and Director of Policy Research at the Schwartz Center for Economic Policy Analysis. “That tells you it is not an economy of equal opportunity.”
“We have used tax policy since 2001 to really grow this divide,” explained Meizhu Lui, Executive Director of United for a Fair Economy. “Twenty-four percent of workers are in jobs that keep them below the poverty line!”
“We have the economic resources; we just have to make sure that they go to the people who work,” added Christian Weller, Senior Fellow at the Center for American Progress. Weller explained that current policies have left many families without a safety net, and household debt now averages 132 percent of disposable income.
“All gains made during the 1990s, in terms of financial security for families, are gone,” Weller added. “Do families have enough resources to sustain themselves in an economic emergency?”
The panelists agreed that ending the health care crisis would alleviate the chance of such an economic emergency and be a big step toward setting the economy back on track. Financial instability for many families lies in the rising costs of healthcare, housing, and education.
“The most immediate help we can give families is through universal health care,” Weller explained. Madrick added, “We have a seriously inefficient healthcare system, and we need to get what we pay for.”
Madrick also cited the decline of the education system as a major problem. “Higher education in America seems to be creating class rigidity… Class seems to be determining education, education seems to be determining class.”
Lui added that “legislation to reign in predatory lending is critical.” The panel discussed how this is particularly problematic for minority families.
“We think that what needs to be injected into this conversation is a civil rights lens,” said Eric Rodriguez, Deputy Vice President of the Office of Research for Advocacy and Legislation of the National Council of La Raza. While home ownership and participation in mainstream credit cards is up within the Latino community, he said that Latinos were more likely than other Americans to have unmanageable debt and were more likely to have maxed-out credit cards. Rodriguez also explained that many Latinos are at a higher risk of being excluded from the mainstream credit market. Families or individuals with shaky or non-existent credit history are shut out of the mainstream market. “If you have no payment history, that doesn’t mean you’re a bad creditor,” he said. But it does mean that many Latinos are forced into the sub-prime market for mortgages and high-interest-rate loans. He recommended promoting financial counseling services and improving accountability standards for lenders.
“Latinos retain nine cents for every dollar of comparable wealth a white family would have, and that’s inequality,” said Rodriguez. Lui added, “We need to look not just at how these policies close the overall [income] gap; they need to close the race gap.”
Closing the gaps for minorities and low to middle income families needs to be a priority. “We have to tax wealth, not work,” Lui emphasized. “Part of the American dream is turning your own hard work into economic opportunity.”
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