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Department of Commerce Issues Report for Vice President's Middle Class Task Force

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FOR IMMEDIATE RELEASE

Monday, January 25, 2010

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Department of Commerce Issues Report for Vice President’s Middle Class Task Force

Report shows it harder to attain and maintain middle class status today than in 1990

The Commerce Department’s Economics and Statistics Administration today issued a new report for Vice President Biden’s Middle Class Task Force: Middle Class in America. The report, which identifies what it means to be middle class in America today, uses a host of measures to show that it is more difficult today to both attain and maintain a middle-class lifestyle than it was two decades ago. The full report can be seen here:

http://www.commerce.gov/NewsRoom/PressReleases_FactSheets/PROD01_008833

"This report highlights the gravity of the economic realities facing American families aspiring to a middle-class lifestyle," Commerce Secretary Gary Locke said. “It brings into sharp relief the ‘why’ of so much of what this administration has tackled since taking office – whether it’s fighting for health insurance reform, expanding credit for small businesses or taking on the unfair practices of the credit card industry.

“The American dream is attainable, but if we don’t attack the big problems today, whether it’s health insurance, education, childcare or housing, it will be harder for more and more American families to reach the middle class.”

The report argues that middle-class families are defined by their aspirations more than their incomes. Middle-class families and those who aspire to be middle class want economic stability, and that means the ability to own a home and a car for each adult, the ability to afford needed medical care, the ability to save for college for their children and for retirement, and the ability to take an occasional family vacation. Unfortunately, for many, these middle class goals remain out of reach.

As the report documents, while family incomes rose during the 1990s, they were stagnant or falling in the 2000s. At the same time, the prices of some of the key elements of a middle-class lifestyle—housing, college education, and health care—rose ose much faster than the overall rate of inflation. This means that it is harder to achieve a middle-class lifestyle in America today than in the past.

Even when you account for inflation, since 1990, families have seen:

  • Housing prices rise 56 percent;
  • Healthcare-insurance premiums and out-of-pocket expenses rise 155 percent;
  • And the price of a four-year, public college rise 60 percent

The report shows that families at a range of income levels can achieve a middle-class lifestyle, although lower-income families will face more limited choices. For many families, however, high housing prices, the lack of employer-provided health care or higher-than-average expenses for child care or transportation will mean having to settle for a diminished idea of middle-class status, or that it’s out of reach altogether.

Middle Class in America presents no specific policy recommendations; however, it concludes that, if American families are to realize their middle-class aspirations, the nation must have a healthy economy, a responsible private sector that offers decent jobs with benefits and an effective public sector that provides high-quality schools for all children.

Report