Carol is a high school graduate who works as a cook at a nursing home in central Pennsylvania. Kate is a college graduate who teaches reading in the Midwest. Carol is a member of the working poor, and Kate is a member of the middle class. Yet Carol and Kate aren’t as far apart as one would think.
When high winds and torrential rains hit central Pennsylvania on the back of Hurricane Irene last year, Carol's basement flooded. She closed the gap by taking on more credit card debt. Prior to the flood, Carol and her family were living paycheck to paycheck. Now they’re losing ground.
Last year, Kate's son was diagnosed with liver disease. She has health insurance, though her out-of-pocket costs continue to rise. For the moment, she and her husband have enough to meet their basic expenses. If one of them were to lose their job, the family would have a hard time staying afloat.
What Carol and Kate are experiencing is a predominant condition affecting all but the wealthiest Americans—ongoing financial insecurity.
The rise of financial insecurity is a problem that affects both the working poor and the middle class. As documented in the recent Demos report, “Millions to the Middle,” many of the same policies that can help the working poor climb into the middle class – investments in education, good jobs, and asset building – can also enable those who have already achieved middle-class security to stay there.
For the working poor, financial insecurity means that their ability to move upward economically is not only stunted—it's cut off. For the middle class, it means an ongoing susceptibility to unexpected financial shocks and an inability to adequately prepare for the future by saving for their children's education and for their own retirement.
In an August survey conducted by Pew, 85 percent of middle-class adults reported that it’s now more difficult to maintain their standard of living than it was just a decade ago. Three-quarters of Americans do not have the recommended six months of emergency savings in their bank accounts. More than 50 percent of Americans do not have sufficient income to maintain their current living standards in retirement.
About one in three American adults say that if they lost their job they would not be able to afford their housing, mortgage, or rent payment for even a month. About one in four Americans say they have no emergency savings at all and would have to beg or borrow from family and friends if faced with an emergency car repair, medical bill, or job loss.
This pervasive trend of financial insecurity is exacerbated by the decreasing mobility, increasing inequality, and drastic changes in the job market that continue to pound away at economic opportunity.
We have to help Americans realize that the working poor and middle class share the same interests, and that those interests revolve around restoring access to financial stability for everyone who works hard. The great chasm between the needs of the working poor and those of the middle class exists because we allow it to persist in perception.
In order to help all Americans transition to financial security, we must reverse these misperceptions. The media attention surrounding Governor Romney's comments in a closed-door event about the 47 percent of Americans "who are dependent upon government, who believe that they are victims, who believe that government has a responsibility to care for them, and who believe that they are entitled to healthcare, to food, to housing" only draws attention to perceptions about the widening chasm between the working poor and the middle class.
All Americans should have the ability to realize their potential through education. Everyone should have the opportunity to work hard at a job that supports a family. Hard work should result in financial stability. No one believes that only some Americans deserve these things.
This vision can be extended to all, but only through a better approach to public policy. First, we must focus on making affordable, high-quality childcare and preschool available. We can do this by reconsidering how the K-12 and federal financial aid systems operate with a focus on enabling college completion.
Second, we should establish a foundation for sustained private sector growth and the creation of American jobs. Those jobs should be good jobs, meaning they meet basic standards of decent employment in pay, benefits, and worker protections.
Third, we must also create new options to help Americans build and secure their assets for the long-term.
These are long-term solutions, but they all require an immediate agreement. We can make great strides if we simply get on the same page about a simple sentiment: it's not economic opportunity for the poor versus economic opportunity for the middle class—it's about agreeing that we really want economic opportunity for all.
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Jennifer Wheary is a senior fellow at Demos.
The views expressed in this commentary are those of the author or authors alone, and not those of Spotlight. Spotlight is a non-partisan initiative, and Spotlight’s commentary section includes diverse perspectives on poverty. If you have a question about a commentary, please don’t hesitate to contact us at firstname.lastname@example.org.