Middle Class Economics: Obama Offers Workers a Helping Hand; Opponents Say Plan DOA

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We can do itIn his State of the Union address Tuesday night, President Obama continued his recent efforts to help restore an endangered species in America. No, not the spotted owl; the working middle class.

It’s no secret that blue collar workers have taken it on the chin since the dawn of the new millennium—indeed over the last 4 decades. According to a report last year from the Economic Policy Institute, executive pay has risen dramatically over the past 35 years, by 937% to $15.2 million for the top 350 U.S. firms. By way of contrast, wage earnings have remained relatively flat when adjusted for inflation over the past 15 years. The result is that CEO-to-worker compensation is now 295-to-1!

What is to be done? President Obama offered a program designed to give the middle class a helping hand up, albeit one that on its face would do very little to close the widening gap between rich and poor in this country. First and foremost, the President proposed that the government pay for two years of community college for each student. Studies repeatedly show that college grads earn more money than those with only a high school diploma. The President pointed out, unbeknownst to probably most of us, that Tennessee and Chicago already offer such programs.

Unfortunately, such plans are not a panacea. As other observers have pointed out, the plans do not cover food, transportation, books and child care, all necessary ingredients for success. President Obama tries to address that issue to some extent by proposing a tax credit that would cover the cost of child care up to $3000 per child per year for families with incomes under $120,000 per year. That’s helpful—but if you’ve got kids like me, you know that paying for child care costs more than $60 a week. During World War II, we actually had a successful universal child care program to encourage women to work — but no one seems to want to replicate that program.

For those already in the workforce, President Obama made four proposals. First, he again called upon Congress to raise the minimum wage, which has not risen on the national level in over five years (though 29 states have done so on their own, including Maine, although only by .25 cents). Second, he proposed letting workers earn up to 7 paid sick days, a concept supported by almost 75% of American workers even if it would reduce their wages, and paid maternity leave. The President correctly stated that New Guinea is the only other country in the world which does not provide paid maternity leave. Third, he proposed a $500 tax break for families with two working parents. Finally, President Obama pressed for equal pay for women; however, the Paycheck Fairness Act, which would help achieve that end, has been rejected by Republicans, including Sen. Collins, as anti-competitive and likely to lead to litigation.

Coming home from work Wednesday night, I heard Speaker Boehner essentially pronounce the President’s plan dead on arrival. That doesn’t surprise me; Washington has been gridlocked for years, and the election of a strong Republican majority in both houses understandably has emboldened the opposition. So, once again, who takes it on the chin? The vanishing middle class. RIP.