Selected policy challenges for the American middle class
The American middle class has shrunk in size since 1970 according to most definitions.
This “hollowing” out of the United States income distribution could result in disillusionment,
diminished political engagement, and declining trust in institutions. The American
middle class faces two major challenges, among others. First, child care costs in
the United States are high and availability is low. Improving enrolment in child care
has the potential to reverse the fall in female labour market participation since
the financial crisis and result in improved well-being and economic growth. Public
funding for child care programmes should be raised, and programme eligibility should
be widened to benefit middle-income parents. Second, the climate transition will entail
major changes to middle-class lifestyles. Reductions in US household emissions from
housing and transportation will be key to achieving the overall emission reduction
targets, and may prove costly. Workers in carbon-intensive sectors of the economy
and households living in regions that rely on carbon-intensive activities will be
affected as resources shift to greener sectors. A national climate strategy should
be developed that explicitly takes into account emissions inequalities and the redistributive
effects of climate policies. Active labour market policies will be key to achieving
a just transition, and existing home weatherisation programmes should be expanded
to cover the middle-class.
Published on February 28, 2023
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