Fighting inflation isn’t the best way to make life more affordable, some economists say

In the current economic landscape, the conversation around affordability is often centered on the rising cost of living and how to combat inflation. However, some economists argue that the focus on lowering prices is incomplete without addressing the root cause of the affordability crisis: low wages. Heidi Shierholz, president of the Economic Policy Institute, emphasizes that true affordability is not just about reducing costs, but also about increasing wages so that individuals have enough money to afford the essentials.

President Trump has taken steps to address cost-of-living concerns, such as removing country-specific tariffs on imports and discussing the possibility of providing Americans with a $2,000 payment funded by tariff collections. While these measures aim to provide relief to consumers grappling with high prices, Shierholz believes that raising worker wages and providing government subsidies for essential services like child care and healthcare are crucial for making life more affordable.

A recent report from the Brookings Institution highlights that one-third of middle-class families struggle to afford housing and child care. Additionally, the Ludwig Institute for Shared Economic Prosperity found that many Americans are facing challenges in affording expenses beyond the basics, such as higher education and transportation. This shift in affordability is making it harder for individuals to make ends meet with their current income levels.

Economists point out that prices do not typically decrease unless the economy is in a recession, and widespread deflation can be detrimental to consumer demand and economic stability. Shierholz suggests a range of policies to drive wage growth, including raising the federal minimum wage and reforming labor laws to empower workers. Additionally, expanding unemployment insurance benefits and providing a robust social safety net can help alleviate financial burdens for workers and improve their bargaining power.

To address housing costs, progressive economists advocate for policies like freezing rent and incentivizing the construction of affordable housing. Child care costs are also a significant burden for many families, with some cities seeing child care expenses surpassing rent costs. States like New Mexico have taken steps to offer free universal child care, showcasing that progress is possible with political will and investment in social programs.

Overall, tackling the affordability crisis requires a multi-faceted approach that includes raising wages, providing financial support for essential services, and implementing policies to make housing and child care more affordable. By addressing both the cost of living and the earning power of individuals, it is possible to create a more equitable and affordable society for all.