To the many economists and politicians who wonder why Americans seem so sour on their economic prospects even though median incomes are rising, take a look at this measurement of economic well-being from American Compass.
The conservative think tank crafted a measurement it calls the cost-of-thriving index (COTI), which starts from a simple premise: Americans must prioritize five sets of goods when providing for their family. That includes food, housing, health care, transportation and higher education. Those who can pay for those needs without worry can enjoy some luxuries without risking their children’s future.
COTI is an attempt to measure how the median American family is doing in obtaining that goal. It looks at the cost of those five items in 1985 and today and compares them with the median wage for a man 25 years or older working full-time. It then calculates the number of weeks it would take for that person to pay for the five items.
The news is sobering: In 1985, it took 39.7 weeks of work each year to pay for these things, giving families plenty of room to enjoy other consumer goods and luxuries. But today, it takes 62.1 weeks of work to cover the same expenses. In other words, about 40 years ago, the median American family could enjoy a middle-class life on one earner’s paycheck. Today, it takes two.
Critics Corner with Angela Rachidi
On this episode of Critics Corner, Oren Cass is joined by AEI’s Angela Rachidi to discuss family affordability.
Cost of Thriving Index Tracks Middle-Class Struggles
Spotlight on Poverty & Opportunity highlights American Compass’s Cost-of-Thriving Index
Breaking Points: Americans Drowning in Health Care and Housing Costs
Breaking Points covers American Compass’s Cost-of-Thriving Index