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Saturday, September 30, 2006

Middle Class Suffering

I read a recent article on cnn.com arguing that American middle-class families are struggling more and more due to rising prices for a range of things - including health care, energy, transportation, food and education. The article states "Middle-class families are struggling to pay for a home, health insurance, transportation and their children's college with wages that have not kept pace with higher prices, according to the study by a think tank headed by a former top aide to President Bill Clinton." The articles makes the point that the typical middle class family does not have the ability to save or accumulate wealth, and that less than a third of those families have been able to accumulate savings equal to three months of income. "From 2001 to 2004, the proportion of middle-class families that has saved three months' worth of income dropped to 18.3 percent from 28.8 percent, the study said." This means that a majority of the middle class families have not saved enough wealth even for minor financial setbacks such as a job loss or a medical issue. To maintain day to day consumption, the middle class have taken on a record amount of debt, which the study stated is equal to 126.4 percent of disposable income.

What is most troubling about this article is that the middle -class have arrived at this position financially while the corporate world is raking in record profits. The SEIU Labor Union President Andy Stern stated "Of the total amount of our economy and income, we have the greatest share going to profits in modern history and the least amount going to wages in modern history." In my honest opinion I believe that corporate America should start repaying their middle-class workers. Companies should take into account economic inflation when calculating wage increases. More companies should have profit-sharing programs as well as stock to distribute some of that wealth amongst the middle-class that made it possible. The country needs to find ways to provide the middle-class the ability to save and invest money or watch the middle class families disappear and the standard of living throughout the country decrease.

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