The Middle-Class Squeeze 

Georgia lawmakers get set to turn the screws

Wages are stagnant. Bread-and-butter expenses, from tuition to transportation, are outpacing inflation. Housing costs have skyrocketed. And health insurance is so expensive that many Georgians see their finances ruined for life because of one illness.

Years ago, the safety net under the poor began to tatter. Now, the middle class -- families earning $35,000 to $75,000 a year -- is falling through the gaps. At big bankers' behest, Congress made it more difficult in 2005 for hard-hit families to seek bankruptcy protection. Not surprisingly, foreclosures -- which are far easier here than in other states -- have zoomed upward. And the state is making it increasingly difficult for children in hard-hit families to receive Medicaid coverage.

In Washington, Congress' new leaders plan to deal modestly with a handful of everyday family problems. The House of Representatives, for example, approved a minimum-wage increase and should vote for a cut for college-loan interest rates any day now.

In Atlanta, however, help isn't on the way. Georgia's elected leaders began the state legislative session with few hints that they plan to ease the middle-class burden. Indeed, they seem more likely to make things harder.

This week, CL takes a look at five big issues -- transportation, tuition, health insurance, child care and taxes -- and what your lawmakers aren't doing to deal with them.



Tuition

We don't need (or rather, can't afford) no education

click to enlarge HOPELESS: Ivan Ramirez fell into debt and had to drop out of Georgia State University. - JOEFF DAVIS
  • Joeff Davis
  • HOPELESS: Ivan Ramirez fell into debt and had to drop out of Georgia State University.

Ivan Ramirez is the 25-year-old owner of a landscaping business in Lawrenceville. When he lost his HOPE scholarship, his plan to finish college in four years dissolved.

During my senior year, my options were between University of Georgia and Georgia State. I got accepted to UGA, but I was in love. That was my first mistake. I ended up going to Georgia State. I'm still currently trying to finish. First, I was pre-med. I wanted to be a doctor for the money, you know how it is. Then after two-and-a-half years, I decided to do business. I'm kind of more like a businessman.

I got a HOPE scholarship because I had a 3.4 GPA in high school. I used it for the first two-and-a-half years no problem. But then I lost it. I didn't take enough hours one semester because I started to work more at Pike Nursery. I was working 40 hours, sometimes a little bit more. See, I got myself into a little bit of credit-card debt and I had to pay that off. Six thousand dollars in debt is a lot to a college student. I partied a lot, took a trip to Cancun on that card. I got carried away.

At first I took a full load, but then I dropped out of some classes because I didn't want to fail. I was working so much I fell behind in a bunch of classes. It hurt me at the end of my junior year because I didn't have enough credit hours to continue getting HOPE. It wasn't because of my grades. I didn't have enough hours.

It really bothers me because one of my goals was to finish school right away. It's the thing I didn't get to accomplish in the time frame that I wanted to. When I lost the HOPE my parents couldn't pay for the last year.

Right now, I have my own landscaping company. So far it's good. The first year you got to buy a lot of stuff. Hopefully next year I can finish school because then I'll be able to pay for it. It's not worth trying to get HOPE again. I only have a year left. There's not enough time to go through the application process. So I'm saving money for it. Then I'll be able to sit back and enjoy the perks of being a business owner.

The issue: The cost of tuition in Georgia -- and across the nation -- has skyrocketed, while the number of grants available to college students has dwindled. According to the National Center for Education Statistics, two-thirds of all college students now leave school in debt.

Though Georgia offers HOPE scholarships to students with a B average or higher, it doesn't cover room and board, or any increase in mandatory fees over the course of a college career. On top of that, there's absolutely no need-based aid in the state. In a national study of college affordability released in September, Georgia received an "F."

Legislators also cut HOPE grants for workers seeking to upgrade their skills beyond two certificates, which means people losing jobs in an unstable market will have greater difficulty trying to advance their training.

Telling facts: According to the National Center for Public Policy and Higher Education, 19 percent of a Georgia middle-class family's income is needed to pay for a four-year, public college and 48 percent to pay for a four-year, private college.

Georgia jerk-around: Last month, Gov. Sonny Perdue asked legislators to craft a bill that would limit where lottery money is allocated. Perdue would like to channel the dough solely to HOPE scholarships and pre-kindergarten, instead of spending it on things such as satellite dishes and metal detectors. That should help stabilize HOPE funding. But his budget this year is expected to put more pressure on the University System to keep raising tuitions. And plans for income-based student aid or to extend HOPE scholarships to other student expenses aren't being seriously considered.

Compare it: Georgia is one of only four states that doesn't offer need-based tuition. Other states, including North Carolina and Virginia, invest 38 percent in need-based financial aid when compared with the federal investment. Georgia offers zilch.


Health Insurance

Take your chances in the ER

Tammy Osborne is a 46-year old secretary who lives in Fair Oaks and hasn't had health insurance since her husband died.

My husband worked at Lockheed Martin for 23 years. He was an aircraft structural machinist. He worked on the F-22, and not everyone gets to work on that. You've got to be good.

He was laid off on Sept. 22, 2005, after a strike over retiree insurance and benefits. A lot of these workers had daddies who taught them how to fight for their rights. The union was going to work it out with Lockheed to get Johnny back on the job. They did work it out, actually. He was going to go back to work the first of the year in January 2006. But he never did go back. Christmas Eve, he was fine. Christmas Day, his leg was paralyzed. His kidneys were hurtin'. We didn't have health insurance. Your insurance expires if you violate company policy. We took him to Emory-Adventist Hospital -- where the poor folks go. At 6 p.m. on Christmas Day, he was dead.

click to enlarge UNCOVERED: Tammy Osborne has health problems but hasn't seen a doctor in a year. - JOEFF DAVIS
  • Joeff Davis
  • UNCOVERED: Tammy Osborne has health problems but hasn't seen a doctor in a year.

The union tried to get me health insurance as Johnny's widow, but they said I had to either be 75 years old or blind in order to qualify. The COBRA coverage they could get me cost $770 a month, and I can't afford it. Some of the workers who went on strike who had pre-existing diseases had to pay between $900 and $1,000 a month for COBRA.

I don't feel well. A lot of it is depression over Johnny. It's been a year since he died and it still hurts. But I have physical health problems, too. I haven't been to a doctor, I wouldn't know.

The issue: If you're fortunate enough to have health insurance, you're still feeling the pain of high costs. Over the last six years, annual premiums rose an average of 11 percent each year. The average annual cost of health insurance for an individual in the South totals $3,950. And you don't just pay for yourself. According to the state Department of Community Health, in addition to shouldering its own health-care burden, an average family of three with private coverage pays about $969 per year in higher premium costs, simply to cover health providers' costs for treating the uninsured.

Telling facts: Some 1.7 million Georgians lack health insurance, according to the Department of Community Health. Two-thirds of them work.

Georgia jerk-around: Key Republicans favor former House Speaker Newt Gingrich's plan to reward businesses that enable employees to create personal health savings accounts. Gingrich's model works great for those who are in good health, and who have the money to set aside for personal savings. But it does nothing to address the high costs that low- and moderate-income families suffer. Its long-term effects could threaten the very structure of group health insurance, which depends on people pooling their risk.

Compare it: Nearly 250,000 men and many more families are currently enrolled in Tennessee's state-sponsored health-insurance program TennCare, which has broader eligibility requirements than Georgia's PeachCare. As a result, only 14 percent of Tennessee's population is uninsured, while 18.2 percent are uninsured in Georgia, according to the Kaiser-Permanente Foundation.


Transportation

We're driving in our cars

Dan Fox is a 45-year-old handyman and former computer professional who lives in Austell with his wife Janet. The costs associated with their cars are equivalent to a second mortgage. Then there's the time factor.

I have to drive all over the place. All of my work is for homeowners. I've painted houses. I've done plumbing. I seal all of the windows and doors to make sure none of the heat gets out. It's a rarity to get a job where you can refurbish a kitchen because folks just don't have the money to put into it. Ninety-nine percent of my business is word of mouth, or they're repeat customers. And so most of the calls I get now are, "Something's broke, I need help now. Can you do it?"

My wife works in the health care field and she has gone to carpooling. She goes into work two hours earlier and leaves work an hour and a half later. She leaves the house at 6:30 a.m. and leaves work between 7 and 7:30 p.m. She has to be there at 8:30 a.m. She rides in with someone who has to be there at 7 a.m.

We have two cars. Before the gas prices went up we paid $30 to $40 a week for gas. Then it went up to $200 a week. That's when she started carpooling. She and her partners split the price. Now we pay $100 a week. That's $400 a month in gas.

click to enlarge GAS GUZZLERS: Dan Fox and his wife, Janet, spend so much time in their car that he wakes up early to see her in the morning  then he takes a nap. - JOEFF DAVIS
  • Joeff Davis
  • GAS GUZZLERS: Dan Fox and his wife, Janet, spend so much time in their car that he wakes up early to see her in the morning then he takes a nap.

Auto insurance costs us $130 per month. We don't have any accidents. There's no way to get it down. We're very good at shopping for a good deal. We've been with the same auto insurance provider for a number of years. There are no discounts or breaks for longevity. The cost is so high simply because we have to drive so far to go to work. The car payment is $300 a month; the truck is $360 a month.

I have stenosis in my back. My back has a bad curve, which is causing my hips to go out of socket, causing my knees to not line up right. Every time I bend my knee it pops. I can't walk upright. This is something you're born with. My hip has lost two-thirds rotation. I can't get my left sock and shoe on. I get up when my wife gets up to go to work, and she does it for me. Then I take a nap with my shoe on until it's time for me to go to work.

The issue: Adequate public transportation is virtually nonexistent, so Atlantans drive. Metro commuters, on average, live about 12 miles from work and spend 60 minutes a day in their cars. The lack of effective land-use planning has created a vacuum, allowing developers and road builders to shape the region into an endless landscape of sprawl. The increased miles that more and more vehicles are traveling on the region's roads have made us one of the nation's most-congested cities.

Telling facts: Nearly 5 million people now live in metro Atlanta, and the region's projected to increase by at least 3 million over the next 20 years. Some experts say metro Atlanta already is the nation's most spread-out metro area.

Georgia jerk-around: Many rural and even suburban legislators exult when they can play a role in derailing metro Atlanta's mass-transit plans. In his Eggs and Issues address last week to lawmakers and lobbyists, Gov. Sonny Perdue decried Georgia's transportation mess -- and proceeded to talk exclusively about building more roads. Rep. Steve Davis of McDonough has gained support from Republican leaders in his effort to block spending on commuter-rail projects. With lawmakers' close ties to developers, improving land-use planning this session is out of the question.

There will be a big push in the Legislature to replace the gas tax, which pays for the bulk of Georgia's road projects, with a $1.6 billion sales-tax hike. The tax hike would hit the pocketbooks of people who don't drive, while giving the DOT more money to finance ... you guessed it, more roads.

Compare it: Other metro areas, including many of our southern competitors, are moving ahead of Atlanta when it comes to transit. Charlotte is preparing to open a 9.6-mile light rail line in the spring. Dallas is planning to open 28 miles of rail expansion by 2010, and an additional 18.5 miles by 2013.


Child care

Just turn the paycheck over

Daylynn Quinn, 45, teaches English at a college in Atlanta. Since she's moved here, she's struggled to pay for child care for her now-10-year-old daughter TwoDayy.

My daughter was exactly a year old when I went back to work. It was easy then. We resided with her father in Delaware. I worked the evening at a bank, from five to 10 and he worked the day. Then my relationship dissolved. I moved to Georgia in August 1998.

I put her in a home day care that cost about $200 a month.

When you go to a storefront you got to pay for the storefront. You're paying $85 dollars a week and it works out to $5,000 a year just for somebody to watch them. The teacher, oh my goodness she was awesome. The room looked like a store. Everything you would want a pre-K child to know about numbers and colors and reinforcement, she had available. It was an awesome two years.

By the time she got to grade school, you have to do aftercare. There's always somebody that will keep them for money. Her school has an aftercare that's $12 a day. It's a dollar a minute if you're late. Only once last Christmas I overestimated the time and I was 40 minutes late and I coughed up $40. There was nothing wrong with the school. It was just a little more costly. You look around for safe places, safety's first, then affordability. A lot of times I would just pay the money for the safety until something else came up.

Two summers ago, she stayed at the nursery at the technical college. That was a lot of money and the school didn't give breaks to teachers. They gave it to students, but not to teachers. How dumb.

Now she's with a small aftercare because I really wanted to help a fledging business and it was better for me. She's been there about a year. I might've been the first client. It's much easier to have someone who you can communicate with and is flexible. At huge centers, they can't be flexible.

It's almost a split. You break even. You go work so you can pay for the child care. You're not in the red but there's not much profit, either.

The issue: Around 70 percent of mothers work in Georgia, which means someone has to watch the kids. Quality Care for Children, a group that operates referral agencies in the state, found that the average cost of child care per week in metro Atlanta runs around $140. High child-care costs and a lack of subsidized help -- only about 10 percent of families in the state receive aid -- make finding adequate care a tall order. A single mother with a child has to earn less than $1,700 a month to qualify for subsidized care. And even then, the state requires the mother to fork over between 10 and 15 percent of her weekly gross income for child care.

Telling fact: More than 17,000 kids are on a waiting list for child-care subsidies in Georgia.

Georgia jerk-around: The affordability and quality of child care isn't a top priority for legislators. "There's not a lobby for it that's very strong," says Rep. Kathy Ashe, D-Atlanta. "The Legislature is still made up of folks who don't have to worry about child care. Until we have more folks see it as an issue, it won't rise to the top."

Despite the uphill battle, Ashe will reintroduce a bill that would "grade" child-care centers. Currently, centers can receive national accreditation, which can be a long and costly ordeal, but there's no such state process. A state system could help parents know what type of quality of care a specific center offers for their children.

Compare it: North Carolina touts a state-certified child-care program like the one Ashe would like to propose. Several other states, including Mississippi and North Carolina, have extended their child-care subsidies to families making up to approximately $35,000. Georgia's income eligibility, on the other hand, cuts off at $24,416.

Add it up

Making Ends Not Meet

Average income before taxes for a 2.5-person household in metro Atlanta $59,942

Average housing cost in metro Atlanta $14,346

Average annual cost of group health insurance for a family living in the South $10,507

Average car-related expenses per household in metro Atlanta $7,400

Average annual child-care cost in metro Atlanta $7,280

Undergraduate tuition (excluding room, books and board) at top state universities in Georgia $3,368

Approximate annual undergraduate tuition at private universities $22,000

Sources: U.S. Bureau of Labor Statistics, The Kaiser Family Foundation/Health Research and Education Trust, Surface Transportation Policy Partnership, Quality Care for Children, University System of Georgia, The College Board

Want to learn more?

Click here to read a Q&A with Alan Essig, executive director of the Georgia Budget and Policy Institute.

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