Wage Stagnation Has Made “Minimal Quality of Life” Out of Reach for Most in US

The ability to afford basic needs and wants in line with living a “dignified life” in the U.S. is increasingly out of reach, new research finds, naming wage stagnation and soaring prices as factors driving unaffordability.

According to an analysis released by the Ludwig Institute for Shared Economic Prosperity (LISEP) last week, a “minimal quality of life” is out of reach for the bottom 60 percent of American households, or those with incomes of about $100,000 a year or less.

Researchers pinpoint stagnating wages and decreases in workers’ spending power as well as increases in costs as reasons for growing unaffordability. According to the researchers, the minimal quality of life has doubled since 2001, with 2023 seeing the largest single-year increase.

The researchers sought to capture more than just basic needs for their Minimal Quality of Life (MQL) index, looking to demonstrate not just what American households need for basic survival but also what they need to achieve a dignified life. For a household consisting of a couple with one child, for instance, maintaining a minimal quality of life costs $100,000 annually, the researchers found.

The goal, they explain, is “to reflect the real expenses associated with achieving and maintaining a working or middle-class lifestyle, a cornerstone of the American Dream.” They cite academic philosophies that markers of financial stability should also include individuals’ ability to “do or be what one values.”

This means that the MQL index includes things like child care, education, leisure activities, basic entertainment, and the costs of technology on top of costs traditionally included in affordability calculators like minimum nutritional needs and shelter. And for shelter, the researchers included costs like furniture and appliances that make a house “habitable and reasonably comfortable.”

Since 2001, they found, the average cost of eating out — something they recognize is often a necessity for families who don’t have time to cook — has risen by 134 percent. Health care costs have skyrocketed by 178 percent, while housing costs have risen by 130 percent.

These increasing costs are affecting Americans’ decisions to have children or fulfill all of their health care needs.

“Unlike the [Bureau of Labor Statistics’s] Consumer Price Index (CPI), which includes goods that don’t reflect the daily realities of most low- and middle- income Americans, the MQL shines a light on the basket of essential costs, that silently drain wallets and stifle progress for the majority of Americans,” the researchers wrote in a white paper on their findings.

While wages have increased by 11 percent in the past quarter century, the median worker’s spending power has decreased by 4 percent.

Meanwhile, LISEP estimates that 24 percent of Americans are “functionally unemployed,” due to an inability to find full-time employment or working in jobs paying poverty wages — in sharp contrast to the official unemployment rate of 4.2 percent.

LISEP Chair Gene Ludwig explained that the MQL is a way of demonstrating financial realities not captured by less inclusive economic studies or indicators like GDP.

“The middle class has been declining — we just haven’t recognized it fully,” Ludwig told CBS. “It’s really dangerous because it’s the kind of thing that leads to social unrest, and it’s not fair. The American dream is not that it’s given to you — it’s that if you work hard, you have a chance to get ahead and achieve the things in life that you want to achieve. It’s not living in a tent, not having to steal.”