Diedre Melson says she had been working from the time she was 13 years old – until the Great Recession hit and she, as a mother with four children, was laid off from her job as a phlebotomist at the Alpha Plasma Center in Oregon, along with 1,500 other people.
Today, she is employed at 211 Info, a nonprofit information line for those looking for help from their community. She hears the stories of people financially struggling in the wake of the recession. But she is also one of the stories: At her current salary of $13.52 an hour she cannot afford to support her family and has had to rely on the very social service programs she refers others to in order to feed and house her family.
“I have had to take advantage of social service benefits and I am currently on SNAP,” she said, referring to the nutrition assistance program best known as Food Stamps. “I never expected to work a full-time schedule and rely on these services.”
Melson was the first of several witnesses testifying at a Senate hearing on the “State of the American Dream: Economic Policy and the Future of the Middle Class,” called by Sen. Jeff Merkley, D-Ore., chairman of the Senate Banking subcommittee on economic policy. These witnesses were representing middle-class families that had been featured in the documentary film “American Winter,” which highlighted the continued challenges the disappearing middle class in America is facing.
Programs traditionally thought to be only used by the unemployed are now dominated by working Americans who depend on them to meet their needs in these tough economic times. Pundits wishing to cut social services programs often call individuals relying on them lazy and still tout President Ronald Reagan’s “welfare queen” rhetoric. With nearly 20 million people still unemployed and 15 percent of our nation receiving food stamps, people are not abusing the system; they are poverty-stricken and hungry. As Melson put it, people “are not sitting around wanting a handout,” but are still “in over their heads like many of us are.”
Merkley outlined the problem clearly when he stated, “60 percent of jobs we lost in the recession were living wage jobs, and 60 percent of the jobs that are being restored after the recession are not living wage jobs.”
The second witness, John Cox, shared a similar despairing story. Like Melson, when he was laid off from his job as an accountant he was not worried about finding another job because he had been working his entire life. With over $35,000 in savings, a 401(k) and equity in his home, he thought he would be financially secure until another job came around.
That job never came. After a year and a half of looking, he grew tired and applied for unemployment benefits. Cox said he waited so long to apply for benefits because “people on unemployment, that wasn’t [him]. That was the other people.”
Currently he is still unemployed, his savings and 401(k) are depleted, and Wells Fargo is trying to foreclose on his home. Cox can’t work a minimum wage job because he wouldn’t be able to afford a babysitter for his 12-year old son, who has Down syndrome. Until the economy gets better, the only thing they have is their home, which he is fighting to save for his son. “The house isn’t for me, it’s for my 12-year son so he can have a nest egg when I’m gone,” he said at the hearing.
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The third witness, Pamela Thatcher, opened her testimony by asking the committee, “The middle class? What middle class? The middle class is failing.”
Before the recession, Thatcher said she decided to leave her job as a preschool teacher and become a stay-at-home mother because economic times were good. Soon after, her husband was laid off and they were forced to obtain food stamps and welfare assistance to get by. Her husband is now working at a job that pays half of what his old one did and they are barely managing to get by.
In addition to struggling middle-class families, the hearing included several experts. Dr. Atif Mian, professor of Economic and Public Policy at Princeton University, supplied potential solutions to the problems facing the middle class. It is clear that the recession has had a devastating impact on this crucial part of the American economy, but not only the middle class is going to be affected. Consumers are cutting back on spending drastically as they incur more debt. This is turn results in a fall in aggregate demand, which hurts all of our economy. Mian called for restructuring mortgage contracts in ways that would help alleviate this problem of growing debt and foreclosures in the middle class.
Amy Traub of Demos opened her testimony added that this “go-it-alone economic system is creating record inequality.” One of her solutions to these growing problems is to help workers “rebuild the power to organize and join a union.”
Nick Hanauer of Second Avenue Partners said big businesses are heralded as job creators, but that is simply not the truth. The real job creators are the middle class because, as he knows from personal experience as an affluent venture capitalist, “We only hire more people if consumers demand it.”
The essential message we are left with at the end of this hearing is that the old American Dream was, as put by Sen. Dean Heller, R-Nev., “If you work hard, you’ll succeed, if you play by the rules, you’ll be rewarded.” Heller acknowledged that this dream is becoming increasingly difficult for middle-class Americans to realize.
It now seems the American Dream is quickly turning into even more of a fantasy.
Derek Pugh contributed to this post.