A Strong Middle Class Blog

  • Where We Are and Where We Were

    Along with a massive snowstorm, Friday brought a blizzard of new info on the job market.   From the perspective of our work at the White House, two points stand out, one about where we are and the other about where we’ve been.

    First, while there are encouraging signs regarding jobs, they are early signs and must be viewed with care.   The job market is clearly doing better than it was but the level of unemployment is miles north of where it needs to be.  Unemployment fell significantly last month, which is good, but a) it’s a one month data point and not yet a new trend, and b) it fell from 10% to 9.7%, and that's still an unacceptably high rate of joblessness.

    Second, today's data release has new, revised information on just how bad this recession has been in the job market.  Here a chart is worth a lot of words.
    The chart plots the course of payroll employment over the last four recessions, including this one.  In each case, we index jobs at the start of the recession to 100%, and the x-axis shows the number of months from when the recession began. 

    By setting it up this way, you get a lot of useful, comparative information across different downturns.  For example, you see how much longer it took to regain the lost jobs in the 1990 and 2001 recession compared to the 1981 version. 

    But the main point is how severe this recession has been on job loss.  There are two lines in the graph for the current recession because last week's data provided a revision based on more complete data.  We knew it was bad, but it turned out to be even worse.  We thought we were losing an unprecedented 690,000 jobs per month in the first quarter of last year.  It turned out to be 750,000.  In the four months between December 2008 and March 2009, we lost more jobs than during the last two recessions combined.

    That's where we were.  Where we are, as noted, is better but not good enough.  Last month, we lost 20,000 jobs and that's not an outlier—it's another data point in an improving  trend moving towards net job gains, which we expect to be seeing in a few months.  But the job market won't be in recovery until those small negatives turn into big positives.

    Job Recovery After Various Recessions

    Here's what comes out of all this: our policies, most notably the Recovery Act, have helped move us from a situation where we were losing a nightmarish 750,000 jobs per month to one in which we've pulled back from the economic abyss and are moving a lot closer to adding jobs, on net, on a regular basis.  But we can't kick back and wait for that moment.    There's too much pain out there, too many families struggling with a job market that’s simply not providing the opportunities they need to get back on their feet.

    So we have to hasten the arrival of more robust job growth with a set of initiatives targeted at the factors holding back job creation.  The House passed a targeted jobs bill in December that included some of these priorities, including upgrading transportation and infrastructure, and aid to states to keep teachers, cops, and firefighters on the job.  The Senate’s actively working on proposals with some of those same components.

    Last week the President announced an initiative to help credit flow more freely to small businesses that want to expand their operations and payrolls but can’t access the capital.  Both the President and Congress have been working on a new hiring tax credit targeted at the business owner who is considering adding workers but needs a nudge (and you can see employers dipping their toes in the labor pool—temp work has increased in each of the past four months). 

    Another idea in the mix right now is investment in infrastructure to help offset the continuing job losses in construction, a sector that took another big hit last month.  And another is help to state and local governments facing tight budget squeezes and the resultant layoffs in folks like teachers, down 10,500 last month at the local level.

    GDP is growing and growing pretty solidly.  The employment data show employers cutting a lot less but not yet adding a lot more.  Unemployment moved in the right direction last month, and we need to build on that positive movement.  

    But as the figure above shows so clearly, we've got a huge hole to fill.  That hole wasn't dug overnight, and it's going to take some time and some smart, targeted policies, to fill it up.  Now there's a shovel-ready project worth taking on.

    Jared Bernstein is Chief Economist to Vice President Biden, and Executive Director of the Middle Class Task Force

  • A Budget That Helps Middle Class Families

    Last week the Middle Class Task Force previewed a series of initiatives in the President’s FY 11 budget aimed at costs -- like child care costs, care-giving, paying for college and retirement – that are squeezing middle class family budgets. These are costs that -- along with health care -- have risen dramatically for families at a time when their incomes have not.   

    Today the President’s FY 11 budget is out – with greater detail about what we’re proposing and additional initiatives that will help middle class families get ahead. In coming weeks the Middle Class Task Force is going to focus on making the case for action on these issues. You can check out the details on our Supporting Middle Class Families fact sheet.

    Terrell McSweeny is Domestic Policy Advisor to the Vice President

  • Helping Middle Class Families with Soaring Child Care Costs

    This week, the Middle Class Task Force unveiled a series of initiatives in the President’s FY 11 budget aimed at helping families with soaring child care costs, balancing work with caregiving, paying for college and saving for retirement.   These are costs that have risen dramatically for families at a time when their incomes have not. 
    Arguably no one is more familiar with the strain on family budgets than families paying for child care. The two-thirds of families headed by either two working parents or a single working parent know all too well that child care costs can be higher than rent or a house payment. The cost of child care has grown twice as fast as the median income of families with children since 2000.  Full time infant care often costs more than $10,000 per year – or higher.   Of course, the price of child care varies depending on where you live, the number of kids you have in care, and the type of child care your kids receive – in-home care is generally less expensive than day care; care for older kids is usually less expensive than care for infants.  But the average yearly costs are still hefty - ranging between $4,000 and $15,000 for infants, and $4,000 and $11,000 for 4-year-olds.  In 39 states, child care fees are higher than a year’s tuition at a four year public college.

    To help these families, the Middle Class Task Force is proposing an expansion of the Child Care and Dependent Care Tax Credit. For families making more than $43,000 a year, this tax credit currently covers only 20 percent of either $3,000 in expenses for one child or $6,000 in expenses for two or more children.  So the maximum credit is $1,200.  The credit has only been increased once in 28 years and is not indexed for inflation. We’re proposing to increase the credit to 35 percent of child care expenses for all families making between $43,000 and $85,000. So now, the families above would get $2,100 instead of $1,200.   Families making between $85,000 and $115,000 would see a credit increase as well, as the rate is phased down from 35 percent to 20 percent. 

    Here’s how it will work for most families – when they file their income taxes they will be able to use the credit against their tax liability. For those who pay taxes directly out of their paycheck, the tax credit may count toward a tax refund.  

    Because the credit is not refundable, if you don’t have any tax liability then you won’t get it. That’s why the Middle Class Task Force is also recommending $1.6 billion in child care funding for the Child Care and Development Fund, which provides direct assistance to working families who need help paying for child care. The increase will allow the program to serve an additional 235,000 children
    As Mark Ginsberg, from the National Association for the Education of Young Children noted, “Together, these budget requests provide an economic as well as education benefit to individual children and society as a whole.” Data shows that quality early childhood education substantially increases children’s readiness for school.

    Heather Boushey and Ann O’Leary of the Center for American Progress called the Middle Class Task Force announcement “a critical first step toward job stability for the millions of American workers who are one step away from losing their job due to breakdowns in family care arrangements.”

    We recognize that these investments in child care address only part of the very real challenges of balancing work and family – and that more, such as paid sick leave and greater flexibility, will also help. The Task Force plans to continue to work on these issues in the coming months. 

    Terrell McSweeny is Domestic Policy Advisor to the Vice President

  • Caring for Caregivers

    This week the Middle Class Task Force unveiled a series of initiatives in the President's FY 11 budget that are aimed at helping families with soaring child care costs, balancing work with caring for elderly relatives or people with disabilities, paying for college, and saving for retirement.  These are costs that – along with health care – have risen dramatically for families at a time when their incomes haven't.   Some people call this "squeeze" because of the pressure these costs put on family budgets.  But for many families it just seems like it is impossible to get ahead.

    This is particularly true for the so-called "sandwich generation" – people who are caring for children (or grandchildren or adult children who are struggling financially) and their parents.   The Vice President often speaks very personally about his experience caring for his parents and in-laws.  And almost all of us know someone who has juggled caring for a parent or relative who can’t get along completely on their own.  Millions of Americans provide unpaid care to aging relatives – including approximately 23 million caregivers with jobs and 12 million who are also caring for their own children.   That's why the Middle Class Task Force’s "squeeze" initiative includes help for family caregivers. 

    These caregivers play a vital role in helping seniors stay in their communities or at home.  But too often they don’t have the support they need to balance caregiving with work and family responsibilities.  As Elinor Ginzler of AARP put it:

    "AARP is grateful that the Middle Class Task Force has drawn attention  to an issue that is deeply important to our members—the critical role of family caregivers and what we should be doing to help them.  Approximately 65 million Americans provide care to a loved one, giving more than $375 billion worth of unpaid care each year—often at their own financial and emotional expense.  Increasing support to these invaluable individuals would be an important step to help those who do so much to help others."

    The nearly $103 million investment proposed by the Middle Class Task Force will support more respite care, counseling, training, referrals, and adult day care.  As Sandy Markwood, CEO of National Association for Area Agencies on Aging explained:

    "Vice President Biden’s Middle Class Task Force’s recommendation to increase funding for the National Family Caregiver Support Program and Lifespan Respite, along with strengthening supportive services through Title III-B of the Older Americans Act, represents a huge investment in community-based programs that support the independence of older Americans and their caregivers. These funds will enable them to access and get the critical services that they need while avoiding unnecessary and more expensive institutional care or spending down to Medicaid.  We applaud the work that has been done by the Administration that serves to strengthen long term living options through home and community-based services."

    The extra funding proposed by the Task Force will allow nearly 200,000 additional caregivers to be served and 3 million more hours of respite care to be provided.  It adds funding to programs that provide transportation help, adult day care, and in-home services including aides to help bathe and cook.  Some have said these things are modest.  And, to some extent, they are. But sometimes it is these small things that add up to make all the difference.

    Eric Hall, President and Chief Executive Officer of the Alzheimers Foundation of America is well aware of the vital help these services give families:

    "Family caregivers who struggle each day with practical and financial challenges have been anxiously waiting for this issue to be brought to the national stage and for relief in their own homes and communities. For these families, assistance at any level can help delay nursing home placement and enhance caregiver well being. The proposed initiatives represent a welcome change in direction, from minimal or flatlined funding to amounts that will make a difference for hundreds of thousands of American families."

    And here’s what Gail Hunt, CEO of the National Alliance for Caregiving who represents family caregivers said:

    "The National Alliance for Caregiving is proud to support the Middle Class Task Force and their efforts to support family caregivers. This is a wonderful addition to the National Family Caregiver Support Program and it is a perfect way to recognize these caregivers who on average spend 18 hours a week providing care.  The funding for transportation, adult day care and other services under Title III b will also help family caregivers by assisting the older adult they are caring for. We are grateful to the Middle Class Task Force for bringing much needed public awareness to the family caregiver."

    The caregiver initiative won’t magically alleviate all the strain on caregivers and their families – but it is an important first step toward providing more support for families and caregivers and the vital services they are performing.

    Terrell McSweeny is Domestic Policy Advisor to the Vice President

  • The President and Vice President Together on Easing Burdens for the Middle Class

    Ed. Note: Don't miss the new report (pdf) from the Commerce Department's Economics and Statistics Administration issued for the Middle Class Task Force: "Middle Class in America."

    President Obama and Vice President Biden held a Middle Class Task Force meeting during which they discussed key initiatives for middle class families. Topics of discussion previewed the major themes of the President's State of the Union address, which include creating good jobs, addressing the deficit, changing Washington, and fighting for middle class families.

    After travelling across the country and hearing from struggling parents, students, and workers, Vice President Biden and the Task Force proposed several policy initiatives to help middle class families, including:

    • Nearly doubling the child and dependent care tax credit for families making under $85,000
    • Limiting a student's federal loan payments to 10 percent of his/her income
    • Creating a system of automatic workplace IRAs
    • Expanding tax credits to match retirement savings
    • Expanding support for families balancing work while caring for elderly relatives

    Vice President Biden, emphasizing first and foremost that getting jobs back on track was the highest priority, explained why these measures are also of tremendous importance in remarks after the meeting: "We give them the tools, the flexibility, even just a chance to succeed, we're not only going to rebuild this economy, we're going to offer millions of Americans to build a future that they hope and still believe is available to them."

    Vice President Biden at Middle Class Task Force Year One Wrap-up

    Vice President Joe Biden discusses the administration’s economic initiatives for struggling middle class families at a meeting of the Middle Class Task Force at the White House January 25, 2010. (Official White House Photo by Lawrence Jackson)

    President Obama closed his remarks with the over-arching principle guiding his Administration during these times:

    None of these steps alone will solve all the challenges facing the middle class. Joe understands that; so do I. So do all my members of the Cabinet and our economic team. But hopefully some of these steps will reestablish some of the security that's slipped away in recent years. Because in the end, that's how Joe and I measure progress -- not by how the markets are doing, but by how the American people are doing. It's about whether they see some progress in their own lives.

    So we're going to keep fighting to rebuild our economy so that hard work is once again rewarded, wages and incomes are once again rising, and the middle class is once again growing. And above all, we're going to keep fighting to renew the American Dream and keep it alive -- not just in our time, but for all time.

    The Task Force's final report will be released in February, in the meantime read the full transcript of the meeting or the White House background for more information.

  • Support for Working Families: Paid Leave and the Healthy Families Act

    Last week Vice President Biden hosted a panel of experts to highlight the unique challenges facing the middle class in our 21st century global economy. One thing we heard over and over again is that work-family balance is a real challenge for most middle class Americans.

    For the millions of American workers who lack paid sick leave, personal leave or family leave, being able to take time off is a matter of economic security. This is especially true for the 3.7 million working adults with children under 14 and no other adult or older child to share child care responsibilities.

    The stakes are even higher when the worker or a family member is coping with a contagious illness – like 2009 H1N1 - given that the consequences of an employee’s decision to go to work when ill or to send a sick child to school can adversely affect many others.

    Unfortunately, current law does not protect the economic security of workers in these situations. Full economic security requires two assurances.  First, workers who take leave because they or their children become sick must not lose their jobs or risk some other form of disciplinary action by their employers.  Second, workers must have a source of income while they are temporarily on leave.

    The Department of  Labor testified on Capitol Hill Tuesday in support of the Healthy Families Act, which would provide the security that workers need, allowing millions more working Americans to earn up to 56 hours per year of paid sick time to care for themselves or their families. It assures them job security when they take leave and provides short-term continuation of workers’ incomes while they recuperate from illness or provide needed care to a family member. 

    At the Department of Labor, we are striving for good jobs for everyone. And one of the key components of a good job is having the flexibility to meet caregiving as well as workplace responsibilities.  We believe that work-life balance includes policies such as paid leave, flexible work schedules and telework options, employee assistance programs, and access to child care and elder care support.  

    Thanks to the leadership of Vice President Biden we are proud to work with our colleagues in the Cabinet and the Middle Class Task Force to improve work-life policies, and efforts are underway to see how we can better meet the needs of modern working families. The Department’s testimony in support of the Healthy Families Act pointed to one important step in that direction.

    Hilda Solis is the Secretary of Labor