Restoring Opportunity for the Working Class

A new bipartisan report highlights shovel-ready policy solutions

November 27, 2018, WASHINGTON — In a new bipartisan report, Work, Skills, Community: Restoring Opportunity for the Working Class, American Enterprise Institute (AEI) scholars, Robert Doar, Ryan Streeter and W. Bradford (Brad) Wilcox offer budget-neutral recommendations to restore opportunities for working-class communities amid changing demographics and rising polarization.

The report is the work of a group of scholars and policy thinkers convened by Opportunity America and cosponsored by AEI and the Brookings Institution. The authors’ findings were informed by fact-finding trips to working-class communities in Ohio and Michigan. Video highlights from the tour are available here.

The group defines “working class” as people with at least a high school diploma but less than a four-year college degree, with a household income of roughly $30,000 to $69,000 a year for two adults and one child. The new report reveals a dramatically changing working class:

Just 59 percent of the working class is white, down from 83 percent in 1981.
Just 74 percent of working-class men are employed, down from 81 percent in 1980.
Marriage is declining faster among the working class than in any other group of Americans, down from 74 percent in 1980 to just 52 percent today.

Based on this research, the group crafted a broad range of bipartisan policy recommendations. Among its top proposals:

Make work pay. Expand the Earned Income Tax Credit to childless workers and reform the benefit so as not to penalize or discourage marriage (with a proposed budget offset). The report also encourages lawmakers to supplement working-class pay, either with a worker tax credit or a more direct wage subsidy distributed through paychecks rather than a lump sum at tax time.
Reallocate federal financial aid for career education. Make federal financial aid available to college and older students for a much broader range of career education, including short-term and non-degree programs at unaccredited institutions. Instead of grants and loans only being used for traditional academic education, they should be used to teach skills needed to succeed in the workplace.
Bolster Opportunity Zones. A provision in the new tax law creates tax incentives for investors willing to reinvest unrealized capital gains in special financial vehicles that can be used to revitalize poor communities with sluggish job growth. The group’s recommendation: communities that wish to reap the full benefit of incoming funds should supplement them with parallel, coordinated investment in the zone’s human and social capital.
Use public assistance programs to help beneficiaries get back to work. Policymakers should reform unemployment and disability insurance programs that create the wrong incentives for Americans thrown out of work, encouraging many to stay on the rolls as long as possible. Higher wages would likely draw many blue-collar men back into the labor market, but some may also need a nudge from effective policies, and public assistance programs should do more to link disconnected workers to jobs.

Robert Doar is the Morgridge Fellow in Poverty Studies at AEI. Before joining AEI, he served as commissioner of New York City’s Human Resources Administration under Mayor Bloomberg. He was also commissioner of social services for the state of New York.

Ryan Streeter is the director of domestic policy studies at AEI. Before joining AEI, he was executive director of the Center for Politics and Governance at the University of Texas at Austin. He also had a distinguished career in government service, including serving as special assistant for domestic policy for President George W. Bush.

W. Bradford Wilcox is a visiting scholar at AEI. He is also the Director of the National Marriage Project and Professor of Sociology at the University of Virginia.

The full report and list of scholars who participated in the study group is available here.

For media inquiries and interview requests, please contact AEI Media Services at [email protected] or 202.862.5829.

Please join us at the American Enterprise Institute on November 29, 2018 for a discussion of the report findings. Please RSVP here.

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About the American Enterprise Institute
The American Enterprise Institute is a public policy think tank dedicated to defending human dignity, expanding human potential, and building a freer and safer world. AEI operates independently of any political party and has no institutional positions. The conclusions of AEI scholars are fueled by rigorous, data-driven research and broad-ranging evidence.

About the Brookings Institution
The Brookings Institution is a nonprofit public policy organization based in Washington, DC. Its mission is to conduct in-depth research that leads to new ideas for solving problems facing society at the local, national and global level. Research topics cover foreign policy, economics, development, governance and metropolitan policy.

About Opportunity America
Opportunity America is a Washington think tank and policy shop promoting economic mobility — work, skills, careers, ownership and entrepreneurship for poor and working Americans. The organization’s principal activities are research, policy development, dissemination of policy ideas and working to build consensus around policy proposals.