Transcripts For ALJAZAM Real Money With Ali Velshi 20140204

I am ali velshi. This show marks the beginning of Al Jazeera Americas yearlong conversation about americas middle class rebuilding the dream. Nine out of 10 americans identify themselves as already being in or aspiring to be in the middle class. And most americans agree that the middle class is in crisis, squeezed by years of job losses, rises costs and stagnant wages. Over the next hour, i will introduce you to people like yourselves, people with real world pressures in their daily lives, people like the sabino family of new york, the maddox family of oregon. I will speak to americas foremost experts that follow problems americans face. Robert reich, Teamsters Union James Hoffa Suzie hormann and robert schiller. We will identify why the middle class is crucial to a thriving economy. Who is in the middle class . The pressures they face and what it will take to keep the dream from slipping away from millions of americans. While 90 of americans aspire to be in the middle class, when you dig deeper, you will find only 44 of americans today say they actually belong to the middle class. And thats down from 53 who identified themselves as middle class in 2008 when the recession hit. While there is no accepted definition of what the middle class is, economists often define it by income. For the purposes of our conversation now, we will define americas middle class as households with total incomes of anywhere between 40 and 100, 000 a year. Based based on our analysis that encompasses middle americans across america diversity who have similar dreams and aspirations for families, a secure job, owning a home, access to good healthcare and a College Education for your children. Add to that, some time off to go on vacation and ability to save enough to live comfortably during retirement of for many middle class families, these things are harder to achieve. For context, Median Household Income in the United States was 51,371 a year in 2012. Thats not an average. Median means half of all of households earned more and half earned less. Thats 7 lower than it was in 2008. In fact, adjusted for inflation, Median Household Income in 2012 was no higher than it was in 1995. Thats a setback of 17 years. The median number is problematic for this discussion because it doesnt take into account the big geographical differences between the cost of living in communities like new york where i am now and, say, mississippi where some of you may be. Focusing on income alone doesnt take into account how the middle class behaves. So we are confident in our definition but i am going to spends the year figuring this out. Either way, rebuilding the American Dream is important for us all because the most important part of a robust economy is its middle class. Spending by middle class families creates strong consumer demand. Without a strong middle class, americas economy will factor. Todays middle class is under pressure. Starting now, we are going to shine a light on that problem and look for solutions that help us all to prosper. The sabino family in long island new york really wants to prosper but like many middle class families across america, the sabinos say every month involves a balancing act. You start feeling suffocated within your marriage and within your home, all because of you cant get ahead. Phil and diane sabino couldnt afford a honeymoon when they married in 1989 but they would if they worked hard and saved money, they would some day live the American Dream. To achieve the American Dream right now, its very difficult. Turn into a nightmare actually. Yes. Cereal, buy one, get one free. Coupons are not the only things they cut out. They rarely go away on vacation, eat out, or buy new clothes. That would be nice. Yeah. Phil works the midnight shift at ups. Diane has two jobs, at the School Cafeteria and the ymca. Together, they earn more than 90,000 a year, enough to put them close to the head of the class, the middle class, but thats not how they feel. I feel like i am on a treadmill, like i am sweating and there is no where to go. One little set back here or there, and you are both going to sink. 90,000 may sound like a lot of money, but long island is one of the most expensive places in america. The sabinos property taxes have more than doubled to over 12,000 a year since they bought their modest home . You cant afford the utilities, the taxes. Its outrageous. Its, you know, i am worried. Even if we moved out of state, our salary goes down . We have family here if we have family here, maybe we would, you know, recalculate. The sabinos say theyer just one step away from Economic Disaster. Every month involves a balancing act. They want to replace their oil heater with a more economic cal one but they cant afford the 7,000 it would cost. There are more immediate concerns like the car. That car is on borrowed tires, you know. Its like, please, another year, at least six months, to see what we can do. And that is how daytoday worries become concerns about the future. He has retirement from his job. I dont have a retirement. But when an emergency comes up, i have to take from that. Thats something you never want to do. Despite their struggles, the sabinos try to remain positive . We appreciate what we do have. Yeah. The sabinos worry about Financial Security like many middle class families, they say they are feeling squeezed. Joining us in their home in linden hurst new york are diane and phil sabino and their son and daughter, laura and anthony sabino. Diane, whats the speed on that treadmill that you are talking about being on right now . How are you feeling . I am still running. Still running and now the car that i spoke about is done. The engine cracked. And we are working on one car, and now he has to get another car. And we are in trouble with that. Well, phil, you said something to our producer, and that is that the tires on that car were going to need to cost you 600 bucks and you were hoping it would last you several more months but even if it did, where would you get that 600 bucks . Now you have a problem. This is a typical problem i think a lot of people face, expense you didnt need and now you have got. Tell me how you deal with that. Well, i would just have to sacrifice from another bill i would pay unfortunately, or dip into my retirement, sell some stock or something. Thats all i can do. Laura, you are 19 years old. Yes. You are ready to embark on your life . Yes. How do you how do you look at the situation and what do you want to do differently . I dont go to college right now. I dont go because i dont have a main focus. The money that my parents put into it and if i dont use that in my future, then i feel like its its a waste. Phil, what do you think holds you back . Whats the thing you would like to see change that would help you finally, after 25 years of trying to get this right, help you get ahead . Well, like i said before, my taxes are half of my mortgage. Its pretty outrageous. They keep going up and up and up. Its a struggle. Its i cant keep up with it. I just cant keep up with it. Its outrageous. Property taxes. Your property taxes. Way over board. Quite a bit. Phil and diane, you have made a go of it this long. I suspect you will continue. Thank you for telling us your story and kick off our coverage of the struggles of the middle class in america. Phil and diane sabino and anthony and laura joining us from lindenhurst, long island lets drill down. Robert reich served during the Clinton Administration and spent decades studying pressures that the middle class in america faces his book after shock, the next economy in americas future is the basis for the film, inequality for all which explores the widening income gap between the classes in the u. S. Contrary to popular mythology, globalization and technology havent reduced the number of Jobs Available to americas. These transformations have reduced their pay. Its not just that wages are stagnant. But when you take into consideration rising costs, the riding cost of rent or homes, dramatically increasing costs of healthcare, the riding costs of child care, and, also, the riding cost of higher education, rising much fat earn inflation. Robert reich joins us from the university of california, berkeley where he is a professor of Public Policy. Good to see you. You heard us speak with the sabinos. Income, getting loans, general upward economic mobility, i dont think thats in dispute but close the circle for my viewers about why a weakening or dwindling or fragile middle class is a problem for all of us. It is a problem in several respects, ali. Number one, you need a large and buoyant middle class in order to maintain enough purchasing power in the economy so that there are jobs, so that the economy is growing. You know, this economy depends on the spending of the middle class more than almost any other economy. If the middle class doesnt have enough money, if its actually sinking, then it cannot turn around and keep the economy going on its own, which is one reason why this recovery has been so anemic. Well, you and others often hold up germany as an example of a modern highwage paying nation that also manufactures and exports and maintains a healthy middle class. What does germany do right, and is there something there that america can use as an example . Well, i am always reluctant to point to another nation and say america should follow that nation because, obviously, every place is very different. We had a very successful period, bi y e way in the three decades after the Second World War when we did some things jamie has been doing, investing like mad in education, including technical education, vocational education. Not everybody should have to go to college. No. 2, investing in infrastructure, so that there is the ability of everybody to be far more productive. Number 3, a tax structure that is progressive so that people at the top are actually investing in the Economic Development and the productivity of everything else. And number 4, making sure that the Financial Sector doesnt get too out of control, that the economy doesnt turn into a kind of casino cam tallism where money is exchanging hands but nothing is actually being built or achieved. There are a lot of things that germany is doing that actually generates a high, real income, higher than the United States where the median german worker and, also, not so much income and wealth, concentrated at the top. Instead of over 20 of total income going to the top 1 , thats what we have here in the United States, and in germany, its closer to about 11 of total income going to the top 1 . Okay. You talk about 20 of total income going to the top. Lets talk about inequality for a second. You obviously we aub subscribe to an Economic System which provides insent evidently and opportunities for people to prosper, and many have. You say that the 400 richests americans have more wealth than the bottom 150 million americans. So 400 people in america own more than fully half of all americans combined. Is this part of the problem, or can you have really, really rich people as well as a stable and healthy middle class . Well, you could they aoreti y theoretically. One of the problems, though, of having so much income and wealth concentrated at the top is that you also have more and more political power concentrated at the top because naturally, power follows money and a lot of the wealthy videos and big corporations do exert in the United States a great deal of political power and control which is one reason why marginal income taxes on the top have gone down since the 1970s. We saw a big, big drop in the 80s and a little increase in the 90s and it continued to drop. We also have seen a deregulation, deregulation of wall street. Im sorry on to say starting under the administration i worked for, bill clintons administration. We have seen the very wealthy dont particularly want to invest as much as other companies in education, in job skills, in infrastructure, in a lot of your basic safety nets that so much of the middle class and poor need because there is no job security left in the United States. Its a good conversation. I hope you will join us as we continues to cover it for the next year here on Al Jazeera America. Robert reich, the former u. S. Labor secretary, professor of Public Policy at the university of california at berkeley. Good middle class jobs are the cornerstone for americas economy. For millions of americans, that used to mean going to work at a factory . You remember when you first got hired was the greatest time. I remember parking that car and punching in with that card, my first time and it just felt so good. Coming up, filling the gap where americas factories once stood plus what the middle class jobs of tomorrow might look like. You are watching an al jazeera special presentation, americas middle calls rebuilding the dream. Every sunday night, Al Jazeera America brings you conversations you wont find anywhere else. Youre listening because you wanna see what happen. Get your damn education. Talk to al jazeera only on Al Jazeera America oh my. The term middle class means to me being able to own a home being middle class means to be able to own a car and pay a mortgage and pay for your kids to go to school. I think its living a comfortable life but having social consciousness for those who are not as well off as you are. The struggle of americas middle class is in large part a story about jobs. Specifically the deteriorating quality of jobs. This is now an economy that is overwhelmingly geared to providing Services Rather than making things. Think burger flippers versus auto workers. As we heard earlier, technology and globalization eliminated some jobs from america and contributed to declining wages. Nor has the result nowhere has the result taken a higher toll than in americas rust belt. David shuster has the story of how fading for tunes of americas Steel Industry has decimated a Small Community 35 miles east of pittsburgh. Reporter this gate here when i got hired in the mill, they told me this is where i was going to go to work. I was excited. I was a young kids. I had a little brown bag my mother fixed for me. He was born and raised in rearden, West Virginia, a young 7 these years old he started working at the towns steel mill in 1958 when it was in its hey day . Hundreds of guys going in and out. The smoke and the speed, the sign, there was just paint on that sign. It was bright and white. Once one of the Worlds Largest steel producers with nearly 14,000 employees, it was part of a flourishing industrial sector in the post world war ii era that brought Economic Security to families nationwide. As factories and plants thrived, so did the middle class. Productivity grew. Babies boomed, standards of living rose, and a new generation of homeowners created the modern American Dream. They are productivity jobs and enabled people to have upward social mobility for them and their kids. Those oncerith mim furnaces began to go quiet in the 1970s as automation combined with loss of production to countries overseas dealt a devastating blow to themill and u. S. Manufacturing as a whole. The Manufacturing Sector used today provide around 30 of all employment, and now its more like 12 . Economist Lawrence Mitchell said that loss of almost 8 Million Manufacturing jobs from a peak of 20 million in 1979 has been a historic decline for middle class families and towns. A quick glance along the main street only proves the point. Empty store fronts, rundown businesses and a bus terminal where buses no longer stop. This was booming back in them days, the greyhound buses used to stop. This is a place where the guys used to get breakfast in the mornings and gol to work when they finished up at midnight and stop and have coffee. Holy mac recall, my man, delbarta. Now, the cafe mostly serves mil retirees, third and fourth generation steel workers. 15,000 people in the mill down to under a thousand now. It did devastate the town. At its peak in the 1960s, around 30,000 people lived in rearden. Back then, mil workers out of high school could counts on a wage of 16 an hour until they decided to retire. For their children, not even a College Education translates into Financial Independent these days. So grandparents with their small Social Security checks and small pension checks are taking care of those kids because its hard for them to find work around here. Can i get a cup of coffee, please . The towns aging population hovers closer to 19,000, about a third of the towns population lost. Its a story of america. I think our government has forgot the middle class and what the struggles are today. People are struggling today. Not just in this town, but everywhere. The largest employer in the state was the steel mill and now its walmart. Tells a tale. He drives around West Virginia hoping to track things in the state. He says the last three decades have seen middle class wages stag nature as household costs have risen . The wages of a steel worker at rearden in 1979 were higher than the wages of a contemporary walmart worker is today. Just steps away from the memorial honoring fallen mil workers, the walmart has replaced the mils former headquarters. Still, some of the youngest generation in rearden havent given up hope. I always told my mom, my dad, if i could make good money here, i would stay here. 26yearold sean brown, a National Guardsman lives with his wife and high school sweetheart, danielle and their 6 month old baby, maggie may. A few years ago, sean managed to grab one of the rare job openings at the mil. But sean wont plan too far ahead. You just go in, do your job, and take it day by day. The feelings that you remember when you first got hired was the greatest time. Because i remember parking that car, and i remember punching in with that car my first time. It just felt so good. For john beddano, the daytoday has long since pa passed. Only the memories remain. David shuster, al jazeera. James hoffa jr. Is the general president of the International Brotherhood of teamsters, one of the Worlds Largest labor unions with 1. 4 million members. Thank you for being with us. You know, we, as people, as consumers, like free trade because it brings down the cost of our goods. How do we protect the rights of workers . You know, we dont want to support higher wages for them because we like the fact that goods are less expensive to us. Well, i dont agree with that. I think whats happened in america is people want to work. And the good jobs have left america. Thats because of naft nafta cafta, the china trade agreement. All of those jobs, millions of jobs have left america. And i could give you names of companies, one after the other like what wereton steel, talk about mr. Coffee, oral b. I could give you 25 names of corporations that have just coldheartedly closed down, moved their material to mexico and laid people off. Thats a coldhearted capitalism we have today. What weve got to do is try to turn that around and bring good jobs back here. And the way to do it is to stop these crazy trade agreements, and weve got to stop that because they are the ones that are letting corporations just move out of this country and they dont care what the con sequences are. Dont they get rewarded dont those corporations get rewarded by their shareholders by cutting costs and their consumers for offering the same product or service for less money than they were when they were being produced in america . And they dont have a conscience. Its exactly the problem. And they can say, i made a few pennies more by laying off americans and then you have this show. What happened to the middle class . Now, the question is what do we do about that . Number 1, lets each elect politicians that are going to reward main street and not wall street. We have got to basically change our tax incentives to say, if you build a factory here, you are going to get in tax a tax incentive. If you build overseas, you will get a disincentive. Will start doing it. The other thing is, lets make these corporations pay their fair share. You talked about the people you are interviewing here, phil and diane, talking about their taxes. Uhhuh. General electric didnt pay any taxes. They are a billion dollar corporation. Can you believe that . And can you believe that hedge funneled ceos make 50 million a year and pay 15 on interest . Other people out there are paying 30 . The answer is the unfairness. What we have got to do is to get these jobs back. The way to do that is the tax system and basically insentencetive eyes american corporations so they can say this makes sense and to stop the madness of moving out of the country. The reason there isnt a ground swell is americans have enjoyed lower prices. We buy shirts, you know, garments made in bangladesh. We buy electronics made in china, micro chips made in taiwan. We like to say we want to buy american but in truth, we buy the cheapest thing we can get . Because the corporations have sold you on that. You know, they can basically open up factories here they are sitting on trillions of dollars right now. And they are not sharing that money. They could about these factories here they might pay a few pennies more and might pay better wages but it would start rebuilding america. You know, they basically dont care about america. They only care about profits, and this show is about what can we do for the middle class . Will they get rewarded for doing that if a Company Comes back . Some are coming back and saying we are going to build products here i think that may be because of political pressure but will americans reward them say i am going to buy this product, this phone, these clothes because they were made in america . I believe they will. Made in america used to be the most important thing. Made in america meant something. Now, we have made in bangladesh or made in vietnam. You know what . I think people if they realized whats going on, they would buy american. Lets go out and talk about that. And lets publicize it and instead of basically having this race to the bottom which is killing everybody. A lot of the folks you represent and have represented in times gone by were able to get good lifelong jobs without a College Education. Is that still going to be a possibility in the future . William, its a possibility if you drive a truck or if you work at ups. You can go out and survive. But we are such a small part of the segment. We are in transportation. We are in manufacturing, and we are very, you know, lucky to organize people that make good wages right now. But we are just part of the whole economy. Its a huge economy, and there are so many people out there struggling right now because they cant find the right job. They are working at. They are working at mcdonalds, working two and three jobs. Thats not the america we believe in. We want somebody to go out and have a good job, make good wages and be able to provide for their family. And thats got to be our goal. James hoffa, thank you for joining us. We hope you as well will continue to join us during the courts of the year in our conversation about rebuilding the america dream. You havent really made it in america until you own your own home. Thats what generations of middle class workers were raised to believe. Coming up, a look at housing in the land of opportunity and whether residenting is a better idea than buying. You are watching an al jazeera special presentation, americas middle class, rebuilding the dream. I believe the characteristics of a middle class are have enough money to have a family and a house and in an area that isnt the most expensive in town, and is also not the most poor. I think the American Dream is working hard and at the end of your working i am working on being middle class. A guy can dream. He is working on it. We are rooting for him. For those of you joining us,ays america is launching a year long conversation about americas middle class, rebuildings the dream. Americas middle class is understand growing pressure and achieving the American Dream is in doubt for many. Starting now, we are going to shine a light on the problem and look for solutions that will help all of us prosper. The value of your home is key to how wealthy you feel. When the Housing Market collapsed in 2008, it set america into a recession that hit the middle class hard. Millions built wealth that you their home found themselves under waters or facing foreclosure. It became harder for middle class americans to secure a home loan. Those under 35 have showed the steepest decline in homeownership followed by middle age americans, stricter laearni standards and a higher credit score, about 760 is needed to secure the lowest orb best rates. Often you need 25 to 30 down payment and thats more than many can afford. Part of the American Dream is tied up in the idea of onlying a home. Suttles the housing crisis, the number of people owning homes has dropped while the number of people renting has increased. The definition of the america dream is changing. Young people who watch this Economic Disaster unfold before their eyes are increasingly redefining their American Dream, increasingly realizing that the dream of ownership is beyond their reach. Today, on twitter and facebook, i have been asking you should homeownership be a part of the American Dream . Teresa tweets, absolutely. The ability to own a piece of land represents stability, wealth and future wealth and roots says n my opinion, not everyone should own a home. If you dont know the ins and outs of maintaining, buying and selling, you should probably rent. Joining us now is Nobel Prize Winning economist robert schiller. He won the prestigious price for his research on irrational behavior by invest orders can create bubbles in stocks and other marks and he is if the schiller bind the most authoritative source on the the Housing Market. From yale university. Bob, good to see you. Home prices have come back but americas middle across is finding the dream not all the way back but they are coming back. Americas middle class is finding this dream of homeownership harder to maintain. Ross fell in 2013. Thats the lowest level since 1995. My question for you, bob is should homeownership, should the idea of owning a home be a part of the American Dream . As part of the American Dream going back hundreds of years. It used to be more farm ownership. We had an agricultural majority in this country once. And now that industry we have given up. Back down to a few . Now, its the same idea. You used to have a home with an orchard. Now, you have a home with a yard and it may be one apple tree. But its still the same idea. Yeah. There is a feeling of belonging, having part of this country that inspires people. You know, we have looked at this increase in recent. You and i have actually on this show discussed the term renter nation that some people describe america. People have not been able to qualify for homes or cant afford to get in on them. Should renting be an acceptable part of that dream . Thud swell be sending the message out, dont over extend yourself if thats what it would take to own a home . Rent and be happy for the rest of your life . It should definitely be part of the dream. You dont have to own a home. You can own something else. The important thing is you have saving, not whether its in the home or something else. They cou it could be a stockmarket investment, a bond market investment. There are lots of things to invest in. It doesnt have to be a home. It may be more convenient, more flexible, more automatic for your lifestyle to rent rather than own a home this is a good question, though, because many people bought those homes as the central part of their wealth creation, for many americans, it wasnt an extra part. It was the main thing. Should people be thinking homeownership as part of their portfol portfolio . Should they think about it as investment, or should they think of it as shelter . Flu terms of capital gains, homes have not generally aappreciatiated in real terms over the last century. They are kind of stuck we are they were in 1890. So i dont think that people should count on appreciation like the stockmarket keeps going up on average, up and down but generally up. Homes have not done that. I think they are a bit overrated as an investment. You are and it may be this is what happens when you are as smart as you are and you get the nobel prize. You are not going to answer my next question which is which is. If you have a steady job and a good income and you know you are going to stay somewhere and you know you have a good do you know payment and given Interest Rates are going up, should you buy a house right now . I think that the person you describe should probably buy a house. If you really are going to stay in one place, its nice to have stability in terms of your neighbors and your community. And your schools. You know, i have lived in the same house now for 31 years. I know my neighbors. I love them. Its great. Of course you can do that probably in an Apartment Building as well. But its a little bit less secure. It could get sold out from under you. I am not saying there is a strong preference but, yeah, it is is. Its a good life. I am a homeowner. I am happy. I am sure many other people would be, too. But not everybody. Let me ask you this we are seeing with young people struggling, we are seeing a lot of people under the aiming of 35 not getting into homes at the rate that they have done so or not buying homes at the rate they have done so in the past. And we are seeing a lot of multigenerational homes, either granted parents or kids living in the same home. What does that do to the economy if you have got more than one generation living in a home . Well, i think that we are seeing shifts in the wealth distribution. One thing thats happening is that people are less excited nowadays about living in some distant suburb and driving an hour every day into work. So, home prices in the distant suburbs are declining more. And there seems to be maybe more of an urban culture developing among our young people. They dont necessarily want a big mansion out in the country. They kind of like the community of an urban environment. We will see if thats a trend. It does seem at the moment to be a trend. Robert, always good to talk to you. Thank you so much for being with us roberter, 2013 Nobel Prize Winner for economics and finance at yale university. Another key part of the American Dream is a College Education. The push to get ahead ends up putting a lot of people financially behind. I think the odds are stacked against the middle class. I feel that you work hard to provide for a family and thence once it comes to higher education, we are just kind of forgotten about. Coming up, we tackle the trillion dollar question, what to do with americas student debt cries whether you owe money or not, it is your problem, too. You are watching an al jazeera special presentation americas middle class rebuilding the dream. I think it is harder to see the American Dream today. I am just coming out of college. It is difficult right now just to kind of advance yourself just because i am just starting out. I am still trying to get a feel for the world. A College Education is practically the price of admission to the middle class in the 21st century, but that price is putting millions of young people deep in debt. Debt is jep dieing their ability to drive Consumer Spending which, as you know, is the engine of Economic Growth in america. The numbers tell part of the story. Total student debt of more than 1 trillion. Graduates with debt burdens averaging 30,000. But the biggest story is the effect of young people saddled with debt and unable to buy new cars or houses or even start a family. Patricia sobgra reports thats what makes student debt a true crisis, one thats hitting members of americas middle class. Brooklyn High School Coach is doing the job she also wanted but finding that dream was no layup for the 28yearold. Nice. I knew that i wanted to teach. So, i knew college was the only way to achieve that goal. A goal her father did everything he could to help her reach. He was a crane operator at the steel mill. He made probably around the 50,000 range. He knew he wouldnt be able to pay for all of my school, which almost like broke his heart. Bader bridged the gap by working through school taking out Student Loans watching every penny. I paid for books outofpocket. Yes take out for living expenses. I did two years at the Community College and tried to pay for all of that up front so i didnt have any debt from that. Bader still graduated with some 25,000 in student debt. Her husband, jeremy, borrowed 30,000 to pay for his college degree. I always knew i wanted to get married but i didnt think being married would take on an extra 30,000 in loan debt, and so together, we are just really struggling to pay 600 a month. Using money they received as wedding gifts, the couple scraped together the do you know payment on their first home before they graduated. Their combined student loan repayments are 600 a month. Their second biggest monthly cost after their mortgage. We dont have car payments. So that definitely helps. But if one of our cars goes, we dont really know what we would do. If we want to go on vacation, its not like we are traveling to europe or anywhere exciting that we had once hoped that we would be able to get to do. We live paycheck to paycheck. They cant even afford to become parents . We actually, a couple of years ago, started trying for a family. And now, we have been trying for about three years, and arent able to get pregnant on our own. And we have had we have had a lot of discussions about starting a family, but we cant adopt because we would be about 30,000 and we cant take out any more loans. There are federal and private aid programs to help pay for college, but many are geared toward students in families earning less than 40,000. Young people like the baders who fall after that cut off are wranging up 11,000 than kids from lower income families. College costs have skyrocketed in the past 20 to 30 years and middle class encloses have completely stagnated. Dartmouth socialologist found students from lower middle class bathrooms graduate with higher levels of student debt than poorer students and those who are better off. They make too much to qualify for the aid but they dont make enough to really keep up with the riding costs of college. So, its these kids who are who face the burden of these rising costs. Gosh. 11,000, i mean thats a new car for my husband and myself. Thats like half of my Student Loans that i 0 currently. Thats a baby really. We are seeing even among these young people who have done everything right. They have gone to college. They have graduated and they have left the nest. We are seeing these pretty massive inequalities in the amount of debt that they owe and we have to think about how thats going to affect their wellbeing moving forward. I think its pretty stacked against the middle class the. I feel we work hard and to provide for a family and then once it comes to higher education, we are just kind of forgotten about. 1, 2, 3. Patricia sogba, al jazeera, brooklyn, ohio. The struggle to pay off student debt has some middle class families doing everything in their power to avoid it all together. Thats the goal, at least, of Kendra Maddox whose daughter karen is a high school senior. The family cannot afford to send her to a private university so they are searching for scholarships to sends her to Community College. From damascus, or gone. Good do see you both. Kendra, tell me what you are doing, where you think you can end up sending karen to college and how you are going to manage the cost of it. Well, we are hoping that some scholarships come through for her from some of the private universities she has applied to. But, you know, its probably going to hopeful not but probably going to end up being Community College transferring to Portland State university. Thats not her first choice, but, you know, it might be, end up being the smart choice. Karen, let me ask you what is it that you want to do with your future. With my future, i really want to become a chiropractor, and that takes a lot of time and money since i have to get a doctor degree in order to do it. So, for me right now, thats just going to Community College and starting there. And hopefully saving money on the class like writing and all of those kind of things so that i have money to pay for those upper level anatomy and biology courses that i need in order to become a chiropractor. Tell me why you want to be a chiropractor. I never asked my chiropractor where they did undergraduate why its important to go to a private university as opposed to a state university. For me going to a private university is t is just like th community thats there. It would be a private, Christian University and for me, thats important. But i realize that that importance doesnt outweigh the cost and just to go there just for that reason or even just for like the slightly better education isnt enough to make the student debt iliac late from going there worth it. Kendra, you are something of an expert at finding scholarships. You have actually done this a lot. How successful do you think youre likely to be in finding a way for karen to go to College Without incurring a lot of debt . Well, we are doing our best. Part of my job as a College Advisor at a high school is to bring opportunities for the kids to try and finance their education, so luckily i am in the know when it comes to Scholarship Opportunities that are in our local area. So, karen has been working really hard for the last four years on her grades. You know, she is a 4. 0 student. She has had a job in the past. And hopefully putting that all together when she meets with different scholarship committees, that will generate some money to help her pay for school. Karen, are you finding friends that are going through these same struggles, or do you find a lot of people your age are not really concentrated on this idea of avoiding college debt . I do find that some of my friends are worried about college cdebt. But some of them are firstgeneration students, so they are the first in their family to ever go to college. And that means there is more scholarships out there for them. So my friends are just as concerned as i am but for some of them, they have more opportunities than i do to get that money. So their concern isnt isnt as well as well put into that as it should be. They have an easier time than i do. I wish you both continued success. I suspect with your tenacity you will val at a solution that is good for you. Karen and kendra mad objection joining us from damascus, oregon. Instead of borrowing you would save ahead of time for that College Education and thats easier said than done. Coming up, we will look at making ends meet in middle clalths america. Who better to turn to for practical solutionsing . Personal finance gure suz gure suze orman. Americas middle class rebuilding the dream. No doubt about it, innovation i think to be middle class is to be right where the average person is, i guess. You are not starving, or you have everything you need. You dont have anything extravagant or anything super extra, but you have just what you need to live. I come from a family, in which i come from a family in which my both my parents have started from nothing. They were raised on the streets. And they both kind of came together, and they started their own business. And they kind of lived the American Dream. Here is a statistic that i will straights the hard reality of the financial squeeze thats felt by middle class americans. The average family after paying bills for everything from food to utilities to healthcare only has 100 left at the ends of the month. So forget about saving much for college or for retirement. The u. S. Government says the average family spends 33 of its income on housing, 20 on food, and 17 on transportation. Those figures have pretty much stayed the same since 2006 except for healthcare costs which have shot up 30 . These dont clue Student Loans or credit cards. About the sent of all americans have some debt. How does the middle class survive under this kind of financial squeeze . In just a moment, we are going to is ask one of the best financial advisors, suze orman, what middle class americans can do to survive the crunch. First, i want to introduce you to the williams, a middle class family who lives outside of chicago. The money they shell out every month looks pretty much like what the government says average families spend on food, housing and transportation. So, they are clearly not alone. But as mary snow reports, the williams feel completely trapped by their financial situation. Its a typical sunday afternoon for stephanie, cara, their four kids, ages 7 to 11 and their dog, mellow. 150. Stephanie is a teacher with a masters degree. Carl works in the health it industry and is just 17 credits shy of getting her masters. No, mommy. Combined, the Williams Family makes 103,000 a year but they live paycheck to paycheck and struggle to make ends meet. I dont have a budget sheet because every time i make one, i am over budget. They have a combined total of 180,000 in student debt, but thats not whats killing their monthly budget. To feed a family of six, generally costs me over a thousand dollars a month. And thats just whith food alon. Of the 55,200 they bring in monthly, more than 900 of it is spent on loans for their two cars. 127 on Student Loans, 595, health insurance, 6 sent on utilities and over a thousand dollars a month on their mortgage. But there is a problem there. The house is upsidedown. Horribly. The house depreciated like 40,000. Since the Housing Market collapsed, their home is worth only around 60,000. But they still owe 98,000 on their mortgage. They want to move their kids to a Better School district but cant. I even tried to refinance, and they were like, no. You can pay this. You are okay. Can you flip that bacon over for me . Since illinois legalized gay marriage in november, stephanie and cara plan on a wedding in june. With the monthly demands on their budget, the wedding will be small. A lot of people are they are expecting an invitation, but they wont get one. They say they feel stuck, and their combined salary puts them outside of any government assistance. Its hard for me to think about the future even though i know i should be. Its really hard for me to make an action plan towards it. Right. Mary snow, al jazeera. Its hard for the williams to think about the future, but they do have to do that. They dont have much of a 401 k . They dont have College Funds for their kids. Personal finance guru suze oman says many are strugglingly. She is the host of the suze orman show and the author of a number of books that tackle the changing face of the american degree including the money clash. Good to see you, my friend . Thank you, ali. You have watched every one of these segments . Yeah. You have something to say. You think everybody can do better starting with the williams we just saw . Im sorry. I look at their budget and what they were spending, and when i see almost a thousand dollars a month in a car payments, i am thinking to myself, what . So many times, we get ourselves into trouble by thinking, we have the monthly income to afford this. So we buy it without looking at the overall picture. They are spending as much on car payments as they are on their mortgage. What is that about . The other thing is this now, we have a problem because if they were to foreclose on their house or leave their home, the new tax laws this year are they will owe income tax on the difference between what they owe and what they sell. They are stuck in the home . They are stuck now. Last year, though, if they had just taken some initiative and if they had decided, i am going to get out of this situation, i am not going to buy new cars. I am going to get rid of this home and i am going to start over, just maybe they would have been in a better situation than now. So do i identify with them, and do i feel bad for them . Of course, i do. But ali, everybody can do something, and they could have done something. What do you think going back to the idea of owning a house versus renting a house . We have Popular Culture and our government by giving you an incentive to take a mortgage has said that owning a home is part of the American Dream and that has hurt a lot of people. Owning a home was part of an American Dream when the American Dream also included a job that you were going to be at for your entire life, a job that was going to give you a pension every single month. Pensions went away when 401 k plans came about. Everybody thought 401 k plans were such a great thing. No. The corporations were simply taking their responsibility of giving you money every month and putting it on your back. Then what happened is the economy has changed. Jobs have changed. Who stays at a job for 30 years anymore . So owning a home may be a hind ranges to you in the longrun if you find you have to move where the job are. Renting should be part of the American Dream. Save your money . Save your money. Rent. Who cares if you own a home. Look. We just had a family on here a second ago, owned a home and they are under water. They owe more than what the house is worth and now they are trapped in their house. Once piece of advice to the Williams Family because you talk talk about weddings. You are going to tell them to keep it simple. I am married. Everybody knows that i am a gay woman. Katie and i got married. Where . In an office of somebody marrying us that cost us zero. Now, we could have had a fancy wedding but why do that . You know, i even saw when you had that other woman on talking about her Student Loans and her and her husband and showed pictures of her at her wedding. How much did they pay for that wedding . So i think everything has got to change today. I think the america dream of having a bedding and spending 25, 30,000 on it, i dont think so. Buying a home, if you can afford it, okay. But if you dont, who cares . The goal of money today is that you need to feel secure. T if you have money in the bank, you will feel more secure than owning a home you can barely faye for. The conversation with james hoffa that we should buy things locally to support industry. As consumers, we dont make that choice. We say we will. People talk about buying american but if we were to look at what we buy and wear, much isnt. I can tell you that people do not like spending more if they can spend less. And for some reason, we have this attitude that we are not the ones that are going to save america. We deserve to be able to buy at walmart versus someplace else and walmart buys from overseas. We deserve to spend less versus having the attitude of, i am not going to buy something unless its made in america and i dont care what it costs me. But thats not the attitude that people take. And why dont they tank that attitude . You saw it in the families. They cant even pay their bills. So why should they pay more when they cant even pay their bills that they have . Is the american middle clalths under more pressure or less in the last few years . Its under more pressure. I have always used this stat with us, that there is a highway into poverty and there is not even a sidewalk out. And there is a term known as sticky. Once you get into poverty, it is very difficult to get out of poverty and, in my opinion, there is there is prosperity and poverty for those people who make money. They almost make more money off of people, the banks, the institution, they make money off of the poor, so they have no desire to get the poor back into the middle class. Suze, my friend thank you for helping us kick this off. State rye there . You bet a. 9 out of 10 americans say they are in or want to be in the middle class. My commitment to covering their struggles will continue throughout the year here on Al Jazeera America. Looking ahead, i am going to bring on more real families who speak for millions when they say, this countrys middle class fields squeezed. I am going to continue to bring on the experts who can offer you the perspective like suze just did on what those families c confront today. More important than all of that, i am going to offer solutions that can help americans in the middle class achieve the prosperity they deserve and that we all need and that our economy absolutely needs to grow. Thanks for joining us tonight. I am ali velshi. Every sunday night, Al Jazeera America presents. Award winning documentaries revealing secrets. Taking chances. Everyone that was involved in the movement, had a code name. Al Jazeera America presents every sunday night, hello, welcome go Al Jazeera America. I am richelle carry in new york. The season digging out from the mega storm gearing up for worse. 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