Even before the pandemic, economic prospects for many Colorado families were dwindling into stagnation. COVID-19 has only further widened the gulf between working families and Colorado’s wealthiest. As our state looks to recover (and recover better than before), new evidence published by the Bell Policy Center supports what we have seen throughout American history — targeted public investments are critical for economic mobility.
Economic mobility is the quintessential measurement of the American Dream. It measures one of America’s core aspirations — that all children have a chance at economic success, no matter their background. As a nation, we are watching that dream fade away. In 1940, a time of much greater public investment, 90% of children grew up to earn more than their parents. That has decreased in every decade since, to a point where only half of children earn more, with the largest losses being felt by middle class families.
In 2018, the Bell Policy Center and researchers from the University of Colorado School of Public Affairs documented the shrinking of Colorado’s middle class. The report shows a trend both of our economy not lifting up families, and inadequate public investments failing to help those families meet the increasing costs of living here.
New research done for the Bell by Colorado State University economists Anita Pena and John Singleton adds more saddening news to Colorado’s larger picture: Attaining a middle class lifestyle in Colorado is becoming even harder. As more Coloradans obtain college degrees, they find themselves struggling to provide for their families, often with longer term economic mobility out of sight. Millions of Coloradan families are constrained by their economically precarious position — not below the federal poverty level, but not earning enough to be self-sufficient, often one tragic event away from falling into poverty.
As the costs of child care and housing have dramatically increased over the past two decades, the average total family income for low-income Coloradans has decreased by 10% between 2005 and 2018 after accounting for inflation. The decreasing value of work has created an ever-growing gap between income earned and the amount needed to afford basic costs in Colorado.
For those who say these Coloradans should just bootstrap themselves through harder work or education, those paths are not enough. Our report finds more and more college-educated Coloradans are in poverty or just above poverty levels. Similar research from the Colorado Center on Law and Policy finds Colorado workers are nearly 70% more productive per hour than they were in 1980, yet hourly compensation has barely increased during that period, stagnating for most Coloradans.
Examining over 20 years of data, the Bell’s new report shows increased public investments in health care, K-12 education, and higher education have an impact on reducing poverty and increasing access to wealth for Coloradans, particularly for communities of color. Investments in these areas also increase the chances of Coloradans owning homes, a significant builder of wealth.
But increasing public investments alone is not enough: What we fund and how we target those funds matters significantly. Greater investments in corrections decrease economic mobility for communities of color, while investments in judicial services increase economic mobility. The why is hopefully not surprising: Investments in judicial programs that reduce the need for incarceration and provide for adequate representation can help to overcome the systemic racism that exists within our legal system. Also, merely investing in other areas such as higher education will not produce economic mobility, those investments need to be directed to the students and communities that have been historically excluded from those opportunities.
Colorado cannot merely aspire to return to our pre-pandemic society: It was failing the vast majority of us. Middle- and low-wage workers have seen the greatest job losses and the slowest recovery, while high earners have been relatively unaffected. Among those most impacted, the pandemic has hurt women and Black, Indigenous, and Coloradans of color much more severely. A return to the past also means continuing our outdated and inadequate mechanisms for raising revenue, ones that cause middle- and low-income Coloradans to pay more as a percentage of their income in state and local taxes than the richest among us.
Our legislature and governor can work to correct some of the unfairness in the tax code by closing loopholes and can better target funding to better address equity gaps between communities, but larger systemic reform is also needed to raise revenue in a fair manner. Colorado cannot remain near the bottom in state revenue (45th), K-12 funding (37th), and higher education (47th) if we hope to recover better.
We must ask wealthier Coloradans to pay their fair share in income taxes and develop a structure that raises revenue without further burdening low- and middle-income families. We also must ensure work pays and worker standards that have been in place for a century are strengthened, not diminished in the name of apps.
For Colorado to be competitive in the future and a state where all of our children can actually live the American Dream, we need to commit ourselves to finding solutions to increase public investment and targeting those investments to the areas that drive economic mobility.
Tyler Jaeckel is director of policy and research at The Bell Policy Center.
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