The Wall Street Journal reported on new research from the Pew Research Center and Gallup that affirms what many Americans are experiencing: Today’s middle class is precariously perched on the precipice of financial ruin. What once was considered a staircase to the American Dream–education, hard work, and persistence–now looks like an escalator going down.
The article points out:
The median family had net worth of $135,400 in 2007, adjusted for inflation, according to the Federal Reserve. But the recent housing crisis caused many of those families to take an enormous hit. As of 2013, the median family’s wealth was $81,200, a decline of more than 40%.
The recent economic crises–caused largely be corrupt housing lenders–pulled many more members of the middle class into the “teetering class.” Facing too much month at the end of their money, they teeter from one paycheck to the next, trying to stay one step ahead of collection notices, overdraft fees, and utility cutoff schedules.
This situation is not limited to a specific income bracket. Whether people are living on $75,000 in a major city or $15,000 in a small town, whether they are older blue-collar workers or have white-collar jobs and a family to raise, many are finding, after years of hard work and sacrifice, they’re making less than before. In particular, those whose $75,000 or $100,000/year jobs were stripped away by the recession have found in the new job market that they now have to settle for jobs paying $40,000 to $50,000/year.
Today, with 76 percent of all Americans living from paycheck to paycheck, and with more than 60 percent of American gross domestic product driven by consumers, we are effectively starving our chief economic engine–the American middle class and those aspiring to join them. If we fail to address these issues, we’ll find ourselves a second-tier nation, focusing all our time, energy, and ever-decreasing resources on surviving at home rather than thriving around the world.
To win back our prosperity, my nonprofit organization, Operation HOPE, is using a three-prong strategy to help stabilize and support America’s teetering class.
1) Financial literacy - Every one must learn the language of money. Only one-third of Americans age 50 and over are financially aware. Young Americans are even less financially capable. Americans are woefully unprepared to participate in capitalism Across America, 26 states have no financial literacy requirements in their K-12 education. Only four states mandate that students take a personal finance class in high school.
We need widespread programs to teach Americans to become better, more responsible future capitalists. As an appointee to President Obama’s Advisory Council on Financial Capability for Young Americans, I am committed to putting innovative approaches into practice to build financial empowerment. Toward this goal, Operation HOPE is reaching hundreds of thousands of students through “Banking On Our Future” financial literacy courses. In addition, our 2015 HOPE Global Forum just convened in Atlanta showing “hundredaires” how to become billionaires.
2) Job creation - When economists describe the need for new job growth, most people envision big business swelling to absorb an expanded workforce. But, of the 26 million business entities in America, less than 1,000 employ 10,000 people or more. Remarkably, 50 percent of all jobs in America come from businesses with 100 employees or less.
To nurture small businesses, start-ups, and “shoot ups”–the businesses responsible for most job growth–we need to rekindle a spirit of entrepreneurism. We must spark a new generation to innovate, to collaborate, to turn a buck into a billion as so many young entrepreneurs have done in previous generations. Operation HOPE’s “Business in a Box Academies” are designed to dramatically increase business role models and mentors.
3) Access to banking - Keeping an estimated 40 million Americans underbanked, and 10 million unbanked households outside of the mainstream banking system, is punitive to them and to our national economic health. In addition to exposing them to unscrupulous providers of nontraditional financial services, the lack of a bank account carries a host of other consequences. For instance, many Hurricane Katrina survivors could not receive FEMA payments because they didn’t have a bank account to accept funds. Today, participation in the new Affordable Care Act requires either a bank account or some other acceptable form of mainstream financial access.
Providing universal banking services will directly link financial literacy with financial capability for every American. Through an extensive network of bank-based financial centers–we call them HOPE Inside locations–people can receive free one-on-one counseling in personal credit score management, budgeting, responsible banking and borrowing, and small business development.
Let’s teach all children and adults the power of business and how to generate wealth. Join with us as we open new doors to financial dignity for struggling Americans and create a new national prosperity.
This article was syndicated from Business 2 Community: Median Income Plummets 40 Percent: Strategies for Restoring America’s Prosperity
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