What is the real cost of living for middle Americans? An expert weighs in
Jun 27, 2023, 9:30 PM | Updated: Jul 3, 2024, 8:37 am
A study by Bankrate has found the average American needs to make $233,000 a year to feel financially comfortable. Photo: Getty Images
SALT LAKE CITY — The cost of living in the United States continues to trend upward.
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And that leads to the question of how affordable is life in America. It’s a complicated question with many different answers depending on who you ask. A study called the Cost of Thriving Index released a report earlier this year that says the cost of being middle class has soared through the roof in the past few decades.
Scott Winship, a senior fellow and the director for the Center on Opportunity and Social Mobility at the American Enterprise Institute, tells KSL NewsRadio that people shouldn’t read too much into that report.
Winship says the report claims that it took the average male worker, in 1985, up to 40 weeks to afford five key goods and services. The report says that increased by 22 weeks between 1985 and 2022, according to Winship.
The five goods and services included in the study are food, housing (based on typical rent in Raleigh, North Carolina), healthcare, transportation and higher education.
“Now, your listeners may note that they’re only 52 weeks in a year,” Winship said to KSL NewsRadio’s Boyd Matheson. “So, it takes 62 weeks. That’s a big problem.”
Winship, along with a colleague, found a couple of significant mistakes with the study, including taxes.
“We accounted for taxes because you pay your costs out of after-tax income,” Winship said.
Cost of living for all workers
In research of their own, Winship and his colleague included all full-time workers, including women and younger people working full time.
“We actually argue that earnings after accounting for the increase in the cost of living,” Winship said. “That earnings are up by 53 percent between 1985 and 2022.”
Winship says another problem he sees with the report is how things change over time.
“It doesn’t account for the fact that the goods and services he’s looking at in 1985,” he said. “Aren’t as good as the goods and services he’s looking at in 2022.”
He says homes and apartments are bigger and nicer in 2022 than they were in 1985.
Additionally, Winship says items such as clothing, household furnishings and entertainment were not included in the Cost of Thriving Index report.
“These are things that have gotten cheaper compared to paychecks over time,” he said. “And so, to exclude those, your kind of, you’re sort of cherry picking a little bit.”
Listen to the entire segment.
Inside Sources with Boyd Matheson can be heard weekdays from 1 p.m. to 3 p.m. on KSL NewsRadio. Users can find the show on the KSL NewsRadio website and app.
