America’s ever-shrinking middle class is not only feeling pain in their wallet from lower take-home pay. Many are also witnessing a change in the places they live and the schools their children attend that could alter the fabric of our society for years to come.

Politicians have spoken about the existence of “Two Americas” for some time. But statistics are increasingly backing up that rhetorical flourish used by lawmakers. Neighborhoods are becoming more segregated by income and public schools are being filled with more students who are poor, especially in the South.

A study released last week shows the percentage of U.S. families living in middle-income neighborhoods dropped to 42 percent in 2009 from 65 percent in 1970. The percentage of those living in poor neighborhoods, based on U.S. Census data, grew from eight percent to 18 percent during that time.  And that could negatively influence children living in lower-income neighborhoods, researchers from Cornell and Stanford universities stated.

“Suppose that poor neighbors hinder children’s education success because children observe fewer adults in their neighborhood with high educational attainment, and, by extension, fewer adults who have succeeded in school,” they wrote. “Children in high-income neighborhoods observe just the opposite. In this case, income segregation would lead to educational inequality between high- and low-income children because it would produce large differences in children’s access to adult role models.”

Unfortunately, there is already evidence that the U.S. is seeing increased poverty in many of its public schools. A new report shows that a majority of students in 17 states across the South and West attend schools where a majority of kids receive subsidized lunch benefits. Mississippi leads the way with 71 percent of students on free or reduced lunch, followed by New Mexico with 68 percent and Louisiana with 66 percent.  Nationwide, the report identified 48 percent of public school students nationwide in 2011 as low income. And it is only going to get worse.

“Within the next few years,” the report stated, “it is likely that low income students will become a majority of all public school children in the United States.”

Public awareness of the sorry state of the middle class is increasing, thanks to a growing movement of workers who have stood up this year to big business and said enough. Port workers in Southern California as well as those working in the restaurant and retail industries across the country have participated in short strikes to protest low pay and their lack of ability to organize. And a documentary released last month by Robert Reich, labor secretary under former President Clinton, has also played an important role.

An editorial in the Sacramento Bee explains that the system we have in place now isn’t working. “…[S]ince the late 1970s, the United States slowly has become the most unequal of the world’s developed nations in its distribution of income and wealth. Our middle class is shrinking.”

So what can policymakers do to fix it? First, don’t starve the economy by cutting domestic programs. Working Americans are overwhelmingly paying the price for cuts in the budget. That’s not right, especially when the deficit has been cut by more than half during the Obama administration.

If there is a need for additional dollars, lawmakers should look to impose a financial transaction tax on Wall Street trading like the one in place in the U.S. from 1914 to 1966. Such a move could raise hundreds of billions of dollars for the U.S. annually. It would also rightfully be paid for by the same financial institutions that drove the economy into the ground in the first place.

Instead of defending corporate elites, it’s time for Capitol Hill to stick up for the middle class. It needs their help now more than ever.

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