A new study reveals that 60% of American households fail to earn enough to meet minimum living standards. Soaring costs of essentials and stagnating wages are widening the gap between income and economic security.
Rising living costs in the United States are leaving a majority of working households behind. According to a new analysis by the Ludwig Institute for Shared Economic Prosperity (LISEP), most Americans now lack the income needed to maintain what the group calls a “minimal quality of life.”
The report challenges conventional measures of economic health, pointing to a disconnect between national indicators and people’s day-to-day realities. While GDP and job creation figures may suggest robust growth, many Americans are struggling to afford the fundamental requirements of a stable life.
New Metrics Reveal a Bleaker Economic Picture
The Minimal Quality of Life Index, developed by LISEP, incorporates the cost of a broader range of everyday needs than traditional poverty assessments.
These include not only basic items such as housing and food, but also technology, child care, health services, professional attire and higher education — which the organisation refers to collectively as a “basket of American dream essentials.”
According to the report, in 2023, the average annual income for the bottom 60% of U.S. households was $38,000. To afford a minimal quality of life, a household would require $67,000 — highlighting a substantial income gap. The analysis indicates that rising costs, particularly in housing and healthcare, have outpaced wage growth across this population.
From 2021 to 2023, the cost of maintaining basic economic security doubled. Over the same period, median earnings for the bottom 60% fell by 4% when adjusted for inflation and the cost of goods in LISEP’s index. Income for these households rose just 0.37% annually, compared to significantly higher growth rates among the top 40%.
Decline of the Middle Class and Risks to Social Stability
Gene Ludwig, Chairman of LISEP and former U.S. Comptroller of the Currency, underscored the broader implications of these findings. “The middle class has been declining — we just haven’t recognised it fully,” he told CBS MoneyWatch. Ludwig warned that the disconnect between work and reward could result in growing social instability.
The report argues that traditional economic indicators no longer reflect the lived reality of many Americans. While national data may indicate a healthy labour market, these figures mask a deeper issue: the benefits of economic expansion are not reaching a majority of working households.
LISEP’s findings suggest that the current economic model is no longer supporting upward mobility for millions of workers. As essential expenses continue to rise faster than wages, the distance between aspiration and affordability appears set to grow further.
