By Kelly Maue
The nation is divided on many issues, but most people can agree on one thing: there is an affordability crisis.
Stagnant wages aren’t keeping up with the rising cost of essentials like housing, healthcare, childcare, groceries, gas, and utilities. Americans are feeling the stress, and nearly half can’t cover the essentials to live securely. Consumer confidence is low while prices and interest rates are high, leaving many waiting – and hoping – for things to improve.
These factors seem at odds with the American Dream, the concept that anyone can achieve success, prosperity, and upward mobility through hard work.
One common goal, home ownership, has become increasingly out of reach for many. The housing market took a bad turn during the pandemic when sellers pulled their homes off the market. The Fed responded by slashing interest rates to help prop up the economy. Then inflation spiked, and interest rates did too. Prices have continued to climb and today the median price of a single-family home has reached a new high of over $500,000. And while lenders want buyers to spend no more than 30% of income on housing costs, these high prices contribute to the fact that the median age of a first-time home buyer is now 40 years old – up significantly from prior decades.
Housing faces more problems. Builders are wary because of mortgage rates, construction costs, and overall economic uncertainty. And rent has also grown at an aggressive pace. All things considered, a lack of affordable housing is driving prices up.
But It’s much more than housing. Healthcare costs have affected millions of Americans. Cuts to Medicaid and other government programs have left many with little or no coverage. And Affordable Care Act (ACA) marketplace health insurance premiums rose significantly after the premium tax credits expired.
The cost of living includes childcare and education. Today the average cost of daycare for an infant in the US is almost $10,000 annually. For adults who further their education, the price of college is about $35,000 each year, including expenses like room and board. Tuition has risen faster than other household costs since the mid-1980s, rising on average 5.8% each year. And for those paying back student loans, recent changes just went into effect that force aggressive repayment programs. More than 2/3 of borrowers say they can’t afford their new payments.
Across the board, groceries are over 30% higher than pre-pandemic prices while utility bills are up 32%. Gas prices are volatile due to the conflict in the Middle East, hovering around $4 per gallon. Imposed tariffs cost the average American household more than $2,000 each year in higher prices for food, electronics, and other goods. All of this while wages remain stagnant. The federal minimum wage has been stuck at just $7.25 per hour since 2009.
No one should have to choose between necessities like food, housing, and healthcare. But when the cost of living rises faster than wages, people fall behind. It’s not a spending problem; the math simply doesn’t work. And the cost of living doesn’t include savings or other wealth-building, like homeownership or retirement contributions.
Americans say that affordability is their number one issue. And it goes deeper than numbers on a balance sheet. Hard work should lead to stability, a promising future, and dignity. Measures like raising income, indexing it to inflation, and lowering costs are part of the formula to get there.
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