Hearing Calls for Measures to Preserve the Middle Class

With high gas prices and a faltering economy, low-wage American workers are finding it increasingly difficult to meet their every day needs. On July 31, the House Committee on Education and Labor held a hearing to discuss the growing income gap between the American middle class and top income earners, and hear experts’ views on proposed policy solutions

Robert Greenstein, executive director at the Center on Budget and Policy Priorities, told the committee that “the middle class in this country is being squeezed out,” citing data from the Congressional Budget Office (CBO) showing that the wages of the bottom 40 percent of earners declined between 2001 and 2005, while the wages of the top 40 percent of earners rose by 10.4 percent during the same time period.

In a recent poll by The Washington Post, 62 percent of people earning under $27,000 per year have taken on an extra job or worked extra hours to make ends meet, and 51 percent of those workers have postponed medical or dental care.

Jared Bernstein, director of the living standards program at the Economic Policy Institute (EPI), noted the critical role of unions in allowing workers to bargain for higher wages, citing EPI research that a decrease in the number of workers covered by unions accounts for up to half of the increase in the wage gap over the past 25 years.

Workers with less than a college education have been among the hardest hit by the trends toward greater wage inequality, and unions are a valuable bargaining tool for unskilled laborers, especially in an age of globalization.

According to Bernstein, “the inability of most workers to bargain for the value they are adding to our economy is at the very heart [of the problem].”

According to a survey by Peter D. Hart Research Associates, 60 million U.S workers would join a union if they could, but are often confronted with intimidation tactics when they attempt to do so.

Both Greenstein and Bernstein suggested that a good first step in allowing more workers the option to join a union would be for Congress to pass the Employee Free Choice Act (EFCA), which would protect workers from retaliation by their employer if they try to form a union.

Furthermore, Bernstein said, EFCA would increase penalties for “those who violate the rights of workers trying to organize or negotiate a contract.”

Bernstein went on to say that, despite an expanding economy, the paychecks of middle-income workers “are falling behind their families’ needs.”

According to an EPI study, an average family of four would need an annual income of at least $34,732.28 just to meet its basic needs. An employee earning minimum wage (currently $6.55 per hour) would earn only $13,624 per year, lower than the poverty line of $16,705 for a single parent with two children.

Raising the minimum wage to 50 percent of the national average wage would lift 1.7 million people out of poverty, according to estimates by the Urban Institute.

Greenstein noted that there was a need to “preserve the real value of the minimum wage.”

Rep. Phil Hare, D. Ill., suggested that one way to do this would be to tie the minimum wage to inflation, “so that we don’t have to revisit the problem every 8 or 10 years.”

Beyond creating good jobs that pay a decent wage, witnesses highlighted the need for investing in worker training as well as in public infrastructure.

Go to the Leadership Conference on Civil Rights website.