Sticker Shock: The American Way of Thrive Reflects in US Incomes

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They say the US is a place where luxuries come cheap and necessities are expensive. While many Americans have easy access to goods like TVs, computers, and cell phones, affordable housing, healthcare, and childcare, which are considered crucial for a thriving middle-class life, are becoming harder to attain.

A recent Pew survey indicates that more Americans are feeling pessimistic, despite the country’s economic indicators suggesting prosperity compared to the past. Oren Cass, a conservative public policy commentator, argues that traditional benchmarks like gross domestic product can be misleading and proposes a cost of thriving index.

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Cass’s cost of thriving index focuses on the American middle class, typically including tradespeople, small-business owners, and skilled factory workers. He compares the median income of men with the costs of essential expenses like food, housing, college tuition, transportation, and health insurance.

In 1985, a man earning the median wage of $443 a week could support a family of four by working just 40 weeks. However, in 2022, earning a higher weekly median wage of $1,219, the same person would need to work 62 weeks to afford the same things, including a nutritious diet, a three-bedroom dwelling, a family health insurance plan, a car, and state university tuition.

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Cass’s index suggests a 36% decline in quality of life over four decades. Although the index can help businesses define and target customer groups, it has flaws in its current form. It exclusively focuses on the median male worker and fails to consider the rise of female employment and two-income households.

Furthermore, healthcare costs include both employee and employer contributions, and the same goes for higher education. The index overlooks the fact that few students pay the full tuition price. A counter study argues that after adjusting for these factors and lower taxes, the median man is actually between 4% to 34% better off.

While wage stagnation and rising living costs are real issues, the COTI methodology needs refining. Nevertheless, its core message remains valid: middle-class Americans are feeling financially strained.

The Lex team is interested in hearing more from readers. Please share your thoughts on the cost of thriving index in the comments section below.