Resource Roundup

Most Americans feel the good life escaping them. Less than half of Americans earn enough to live the way they want, according to a survey by Pew Research Center, and a quarter can’t afford their monthly bills. Inflation is set to largely erase workers’ pay gains over the past two years. Given these figures, it’s no surprise that affordability is the watchword of this election season. 

Wage growth hasn’t kept up with productivity growth for decades. Pre-pandemic wage increases for low- and middle-wage workers outpaced rises in the cost of some basic expenses, like groceries and electricity. But grocery prices spiked during the Covid years and remained high, while electricity prices began to rise much faster than wages, according to research released by Stanford. Following the pandemic, wages and incomes rose neck and neck with the consumer price index, a measure that tracks changes in the cost of everyday goods. In other words, as workers’ pay went up, life just got that much more expensive.

Homeownership and higher education, long mainstays of the American Dream, have been drifting out of reach for decades. Growth in the average earnings of low- and middle-income workers is well below that of housing prices. The median first-time home buyer now makes the purchase at 40 years old, compared with 29 in 1987. And in-state tuition at a public university costs on average twice as much after inflation as it did in 1995. Most Americans no longer think college is worth the cost.  

Finally, the multifront trade war continues to hit wallets hard. Research published by the Federal Reserve Bank of New York found that consumers bear the burden of higher tariffs through price increases. Producers reliant on global supply chains face higher production costs, which mean higher prices when goods hit the market. As companies exposed to tariffs raise prices, pressure on domestic producers to keep prices down lessens, and they in turn hike prices, doubly hurting consumers. 

This edition of Resource Roundup looks at affordability through the eyes of workers. Read new survey data from Pew Research Center on American households’ difficulties making ends meet, hear about low-income workers’ experiences in the economy from Fed Communities, and learn about workers’ growing debt burdens from the Century Foundation.

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Pew Research Center

Many Americans Are Struggling to Afford Basic Necessities

Americans are having trouble finding the money for basic expenses, Pew Research Center has found. Over the past year, more than 40% of all Americans, including over 70% of low-income earners, visited a food bank or struggled to pay for medical care, transportation, or housing. Though Americans tend toward optimism, a sense of being financially stuck is common.

The sentiment that things aren’t going right spans partisan divisions. More than half of those who identify with the Republican or Democratic parties told Pew that they don’t earn enough to live the life they want, and about half say that they don’t have the emergency savings to cover three months of expenses. Given this, affordability may well remain a salient force in American politics for years to come.

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Fed Communities

When every dollar counts: Inside the economic struggles of workers who earn low to moderate incomes

A June report by Fed Communities, an initiative of the 12 Federal Reserve banks, shed light on the squeeze felt by households earning less than the US median, roughly $85,000. In focus groups, workers described pay that didn’t keep pace with the rising cost of living. By the time that the wage increases of recent years reached them, inflation accelerated, stripping away any gains.

Some kept a hopeful eye out for opportunities for upward mobility, but the main focus was on “survival.” Job opportunities were few. And the time and money crunch of getting by day to day put longer-term investment in continuing education and skills development out of reach.

The workers interviewed aren’t expecting to get rich, researchers noted. They simply hope to earn enough to get by.

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The Century Foundation

Half of Every Dollar: How Household Debt Eats Into Workers’ Income Gains

Workers who can’t make ends meet take on debt to fill the gap. An analysis by the Century Foundation and Protect Borrowers, an advocacy group, found that household debt payments have grown almost 15% since 2022, while income grew less than 2%. Debt is highest in states with the lowest household incomes. And when the typical worker gets a raise, the majority of the increase is eaten away by debt payments.

For low-income workers, car payments are the largest burden, accounting for around 45% of consumer debt. The rising cost of new and used cars, compounded by a lack of viable public transit in much of the country, means these workers have little alternative to taking on the expense.

Debt keeps workers stuck in bad quality jobs and makes it hard for them to fight to improve conditions, the authors argue. Threatening to quit or striking provides workers bargaining power. But the bills don’t stop, and workers may worry they’ll lose their jobs if they begin to organize, putting them in a bind.

Given Americans’ rising debt burdens, incorporating these payments into our pantheon of economic indicators could provide a clearer portrait of how workers are faring.