SQUEEZING THE MIDDLE CLASS
So everyone knows that the Middle Class has been squeezed dry, wrung some more, taxed to exhaustion and worked into late old age, yet the perception that folks are worse off than they were, say, five to ten years ago, persists. Financially, 42% of Americans consider their situation good/excellent, a 10% point drop from 9 years ago. There is ample evidence – including current gas prices at the pump – that the financial situation is about to get meaner.
Interestingly, across all parties – even perhaps the Rent Is Too D*** High Party of New York – only 20% of individuals making less than $30,000 a year rate their personal finances as excellent/good. For good measure, the Federal Poverty Levels show that a family of 6, at 100% of the federal poverty level, will make about $29,990 in 2011. The median household income for the US is located in the $43,000 range, give or take a few hundred dollars, which the oil companies will definitely get from you the Middle Class-er.
The recession and the subsequent job losses left most of the middle class reeling, with nationwide consequences that have somewhat began abating. Among those are the many foreclosures, driving home prices down, outsourcing and off shoring of jobs, retrenchment, retraining and general disruption of stable livelihoods. To add insult to injury, defaulting to the social welfare system almost always requires an applicant to exhaust all their resources including savings, stocks, 401k and any other resource one might count upon.
The middle class gets squeezed from all sides – from the top, by IRS, the non-tax-paying millionaires and the likes of General Electric – and from the bottom, because they have to support the welfare state. Ah, the welfare state. That forgotten section of society, which exists just out of sight of most policy discussions, unless it is in the budget discussions and the Republicans are wielding a machete, and Democrats are ‘defending the poor’. But how much do individuals on the welfare programs make? I recently wielded a pen and found interesting figures.
A single, mid-30’s individual, in excellent health, visiting the doctor once a year for a recommended annual check-up, incurs about $100 per month premiums in health-care. Taking a family of four, with two kids (nothing personal here, but kids do see doctors more often and those co-pays pile up), such a family will be looking at $6000 in healthcare costs. Rent/mortgage for a 3-bedroom house in a somewhat decent part of town will leave the renter $1000 to $2000 in the hole; bringing the annual cost to – at $1500 – about $18,000. There are other costs, such as transportation, and if you don’t own three gas guzzlers, we could assume $200 a week for the whole family, adding another $10k to the bill. Utilities, water, trash and such other costs may add another $2,000 annually – excluding, of course cable and other entertainment options like an annual Busch Gardens trip.
There are other numerous costs – entertainment, ballet, soccer practice, annual vacation – necessary, small costs that make America’s way of life coveted all over the world. But imagine for a minute, you computed these ‘base costs’; you would come up with a figure of about $35,000.
So we turn to a source of ‘squeezing the middle class’ – one that might not immediately come to mind – welfare recipients. No, they are not literally squeezing the middle class; in fact, you barely see the squeeze, except as federal and state taxes on a paycheck. So while you fork out tons of money for food, gas, housing, medical costs and other such matters of existence, a four-member family on welfare could be subsidized and pay anywhere from $8 – $50 per month. Make that $600 in housing costs, to your $18000. Granted, the neighborhoods might look different…
The same family might get state assistance in food-stamps, worth about $500 a month. Their medical costs are absorbed by Medicaid, and often, departments of Social Services will provide transportation assistance – gas vouchers or bus passes, further reducing the burden on such a family. In addition, families might chalk up to $320 a month in TANF payments – another $4000 annually.
Of course these figures might be significantly off given individual circumstances and may not necessarily be standard across families and situations. However, the reader can begin to see – that a 4-member family receiving public assistance might get all those breaks that the middle class pays for, and eventually, calculated as income, add up to almost $45k each year.
The next time you shake your fist at those elected to manage affairs of government, it might be a good idea to think of how the Middle Class is under siege – from above and below – and how making $45k a year, tax-free, might contribute to one not wanting to get a real job.
Statistics quoted here can be obtained from: Gallup and the Foundation for Health Coverage Education websites