Middle-class and working-class families enjoy the highest standards of living in some of America’s most expensive cities, according to a new economic analysis.
In San Francisco, people with incomes under $100,000 considered low incomebut new analysis A study by the Ludwig Institute for Shared Economic Prosperity (LISEP) found that the higher cost of living in these regions is offset by higher-than-normal wages.
In fact, an analysis of the 50 largest U.S. cities found that the Bay Area is the best-performing region for middle-class and working-class families, despite the very high cost of living in San Jose and San Francisco.
Still, about six in 10 Americans are unable to meet their basic needs, with an average income shortfall of almost $14,000 in 2022, LISEP said. This highlights the hardship many households are facing after two years of rising inflation that has driven up the cost of everything from food to rent.
“We’re not doing very well for middle- and low-income Americans anywhere in the country,” LISEP Chairman Gene Ludwig told CBS MoneyWatch.
Ludwig noted that it’s important to examine the intersection of wages and cost of living at a local level because “we all live locally.”
Although the cost of living in the Bay Area is among the highest in the United States, the region offers a greater variety of jobs than other cities, including upper-middle-income jobs. . However, cities with lower median household incomes have fewer opportunities.
In cities like Las Vegas and Fresno, Ludwig said, “that means there are more low-wage, middle-income jobs than there are high-wage, middle-income jobs.”
The analysis was based on city-specific data, including household living costs, including necessities like housing and food, as well as incomes of full-time and part-time workers and unemployed people looking for work.
The unequal impact of inflation
Ludwig, a former Comptroller of the Currency and founder of Promontory Financial Group, launched LISEP in 2019 to track economic indicators of the welfare of middle-class and working-class Americans, such as wages and unemployment. was founded.
The U.S. government tracks such data, but Ludwig argues that the measures often do not accurately reflect the economic situation of millions of American households, including the effects of inflation. are doing. Where it hurts For many Americans, it came after two years of terrible price increases.
Inflation has hit America’s lower and middle class especially hard, but the consumer price index, the nation’s measure of inflation, doesn’t capture that, Ludwig said. That’s because the CPI, a basket of goods and services, doesn’t accurately reflect middle-class families’ experiences because it tracks items that are less relevant to their lives, he added. Ta.
House prices as measured by the CPI increased by 54%, while those in Mr. Ludwig’s group increased by 54%. analysis We found that typical rents for low- and middle-income households have soared to 149%, nearly three times that level.
“For the past 20 years, the inflation rate for middle- and low-income Americans has been higher than the inflation rate for high-income Americans,” Ludwig said. “We’re worse off than we were 20 years ago because wage growth hasn’t kept pace.”
Sharing the wealth generated by America’s growing economy is essential to maintaining a middle class and building a stable society, he added. This will allow middle- and low-income Americans to “share the American dream,” Ludwig said. “Unfortunately, it’s going in the wrong direction.”
