Yahoo Finance 5 Basic Necessities the Middle Class Is Struggling To Afford in 2024
As the cost of living continues to outpace income growth, many Americans are finding themselves in an untenable squeeze. Rising income inequality, inflation, record corporate profits and the end of pandemic aid programs have resulted in a shrinking middle class, with Pew Research Center classifying 50 percent of households as middle class in 2021, down from 61 percent in 1971.
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Yet even that percentage doesn’t provide a complete picture of the financial strain many American families are currently facing. When polled by The Washington Post on the benchmarks that determine a middle-class lifestyle, U.S. adults identified the top criteria as secure employment, access to health insurance, and both the ability to pay bills on time and withstand a $1,000 emergency expense — standards that are increasingly out of reach for American families.
As Fast Company detailed: “‘People who had expectations of being middle class are finding that they can’t meet the basic expenses of a middle-class life paying for food, rent, and childcare all at the same time,’ says Joan C. Williams, Sullivan professor and director of the Center for Worklife Law at the University of California, College of the Law in San Francisco.”
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Basic Necessities Increasingly of Reach
At the end of 2023, CBS News reported that the average American family needed an additional $11,400 to maintain the same standard of living as the year prior. Since 2017, the purchasing power of the U.S. dollar has fallen by 20 percent, according to the Oklahoma Council of Public Affairs. Consequently, jobs that were previously considered middle class now fall below the threshold that families need to survive financially.
Here are 5 basic necessities that are quickly becoming out of reach for many middle-class families in America:
Rent and Housing
In the last decade, rent inflation has outpaced the inflation of currency by 40.7 percent, according to Doorloop. From 2023 to 2024, median rent prices increased by double-digit percentages in many U.S. states, with some large metro areas seeing significant hikes. For example, per Construction Coverage, the greater Indianapolis market saw a 27.1 percent year-over-year increase, while the greater Chicago area saw a rise of 19.8 percent.
With many Americans paying more than one-third of their income for housing, an increasing number of middle-class families are being priced out of homeownership or even housing security in general. As homelessness in the U.S. has reached an unprecedented height of 650,000 individuals unsheltered in 2023, as Security.org indicated, even being an employed member of the middle class doesn’t guarantee families won’t end up homeless.
Childcare
With a majority of parents spending $18,000 or more annually for childcare, a 2023 report from Care.com found that for 67 percent of parents, this amounts to 20 percent or more of their household income (an increase from 51 percent of parents the prior year).
However, according to the U.S. Department of Health and Human Services (HHS), childcare should cost families no more than 7% of their household income to be considered affordable. For a family earning $100,000 per year, this means annual childcare costs would need to decrease by more than 61 percent to meet this criteria.
Transportation
Transportation is the second-highest household expenditure behind housing, with American families spending an average of 16 percent of their total income in this category. Further, individuals falling in the lower end of the middle-class income bracket likely spend even more than this share.
Additionally, data from Experian suggests that short supply during the pandemic caused the price of new vehicles to surge, topping out in April 2023 at a 19 percent increase compared to 2021. Fortunately, as new vehicle inventory has recovered, used vehicle prices have dropped by 13 percent from their all-time high in January 2022 — but still remain 34 percent higher than pre-pandemic prices in 2019.
Climbing interest rates for both used and new cars have also presented a significant financial burden for many buyers.
Healthcare and Medication
The new year ushered in long-awaited price drops for insulin from top drug manufacturers looking to avoid paying millions of dollars more in Medicaid rebates as part of the American Rescue Act, as well as decreases on other prescription drugs — a move labeled as “unprecedented” by 46brooklyn Research, Becker’s Hospital Review reported.
However, more than 450 other prescription drugs saw price increases in January 2024, on trend with overall rising healthcare costs. According to Bureau of Labor Statistics Consumer Price Index data, the cost of medical care (which includes services, insurance, medical equipment and drugs) increased by 114.3 percent from 2020 to 2023, outpacing inflation for all other consumer goods and services by more than 33 percent.
Food
The cost of groceries and dining out are one area where consumers may be feeling increases the most. In 2024, annual inflation for food ran at just over 2 percent. However, this follows many years of massive inflation on groceries in years prior (3.9% in 2020, 6.3% in 2021, 10.4% in 2022, and 2.7% in 2023), reflecting high prices across most grocery categories. Many middle-class Americans are being forced to tighten their budgets ever further.
Increases in these five areas help explain why (at least in part) nearly 70% of people believe the American Dream no longer holds true, according to a recent ABC News/Ipsos poll.
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This article originally appeared on GOBankingRates.com: 5 Basic Necessities the Middle Class Is Struggling To Afford in 2024
