POLITICS - Middle Class Families Living on the Edge

There is a very interesting article in Harvard Magazine, "The Middle Class on the Precipice" by Elizabeth Warren.

In part:

Every day, middle-class families carry higher risks that a job loss or a medical problem will push them over the edge. Although plenty of families make it, a growing number who worked just as hard and followed the rules just as carefully find themselves in a financial nightmare. The security of middle-class life has disappeared. The new reality is millions of families whose grip on the good life can be shaken loose in an instant.

Although my own work, on bankruptcy and credit, has focused on the specifics of families’ household finances, I cannot help but think that their changed circumstances during the past generation have larger echoes for public policy.

During the same period, families have been asked to absorb much more risk in their retirement income. In 1985, there were 112,200 defined-benefit pension plans with employers and employer groups around the country; today their number has shrunk to 29,700 such plans, and those are melting away fast. Steelworkers, airline employees, and now those in the auto industry are joining millions of families who must worry about interest rates, stock market volatility, and the harsh reality that they may outlive their retirement money. For much of the past year, President Bush campaigned to move Social Security to a savings-account model, with retirees trading much or all of their guaranteed payments for payments contingent on investment returns. For younger families, the picture is not any better. Both the absolute cost of healthcare and the share of it borne by families have risen — and newly fashionable health-savings plans are spreading from legislative halls to Wal-Mart workers, with much higher deductibles and a large new dose of investment risk for families’ future healthcare. Even demographics are working against the middle class family, as the odds of having a frail elderly parent — and all the attendant need for physical and financial assistance — have jumped eightfold in just one generation.

From the middle-class family perspective, much of this, understandably, looks far less like an opportunity to exercise more financial responsibility, and a good deal more like a frightening acceleration of the wholesale shift of financial risk onto their already overburdened shoulders. The financial fallout has begun, and the political fallout may not be far behind.

The above is a good summary of the situation at this time. The article also contains a bargraph that emphasizes that the "fixed cost as a share of family income" has more than doubled while the discretionary income has dropped. Yes, the total family income has risen, but the fixed cost of living have also risen and family income has not kept pace.

When you here the Republicans, the Whitehouse, and Conservatives tout their economic policies keep the above in mind. Conservative economics only serve the upper classes, people that already have more money than they can need to live. They protect big-money investments and big business. Such policies have never been about providing the same protections to the middle class family, and definitely not the lower class families. By the way, I have nothing against being rich (boy, would I like to be rich) but to enact policies that protect only the rich is not ethical nor moral.