Most Americans don’t earn enough to afford basic costs of living, analysis finds

The economic divide in America is widening, as a recent report from the Ludwig Institute for Shared Economic Prosperity (LISEP) reveals. This analysis goes beyond the basic necessities of food and shelter to consider the costs associated with achieving a “minimal quality of life,” including technology tools for work, higher education, and healthcare expenses.

According to LISEP, the bottom 60% of U.S. households are struggling to afford this minimal quality of life. The average annual income for these households in 2023 was $38,000, but they would need to earn $67,000 to cover the essential items tracked in the index. This includes not only basic needs but also professional clothing and leisure activities.

LISEP Chairman Gene Ludwig emphasizes that traditional economic indicators like GDP and unemployment rates do not accurately reflect the economic reality for most Americans. While the economy may appear to be thriving on the surface, many middle- and low-income families are not reaping the benefits of their hard work.

From 2021 to 2023, the cost of achieving economic security doubled, driven by soaring housing and healthcare expenses. The cost of attending a public university also skyrocketed by 122%. Meanwhile, median earnings for the bottom 60% of income earners declined by 4% when adjusted for the rising cost of goods and services included in the index.

Income growth for lower earners has also been sluggish, increasing by only 0.37% annually, compared to the top 40% of earners. This widening gap between income and the cost of living is expected to continue expanding, further straining low-income families.

In conclusion, the report underscores the urgent need for policies that address the growing economic disparity in America. Without intervention, the American dream of upward mobility and financial stability will remain out of reach for many. It is imperative to recognize and address these underlying economic challenges to ensure a more equitable and prosperous future for all Americans.