Middle Class Families Thrive in Pricy Cities: Middle- and working-class families flourish in high-cost U.S. cities, but challenges remain.The Ludwig Institute for Shared Economic Prosperity (LISEP) revealed that middle- and working-class households in some of the nation’s most expensive places are living better, shockingly. San Francisco’s low-income threshold is under $100,000, although above-average wages offset high living costs.
The Bay Area emerges as the top-performing region for these demographic groups, even amidst the exorbitant living expenses in San Jose and San Francisco. However, the report from LISEP highlights that nearly 60% of Americans still fall short of meeting basic needs, with incomes averaging a deficit of almost $14,000 in 2022. This underscores the ongoing challenges faced by households, exacerbated by two years of escalating inflation impacting everything from food to rent.
Gene Ludwig, the chairman of LISEP, acknowledges the struggles faced by middle- and lower-income Americans across the nation, emphasizing the importance of examining the interplay between wages and living costs at the regional level. Despite the Bay Area’s reputation for high living expenses, its diverse job market, including a range of upper-middle-income opportunities, sets it apart. In contrast, cities with lagging median household incomes present fewer prospects.
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Cities like Las Vegas and Fresno, according to Ludwig, exhibit a surplus of low-wage and middle-income jobs compared to higher-paying middle-income positions. The LISEP analysis, relying on city-specific data encompassing living costs, essential items, and earnings for full- and part-time workers, underscores the unequal impact of inflation.
Established by Gene Ludwig in 2019, LISEP focuses on tracking economic well-being measures for middle- and working-class Americans, challenging the adequacy of conventional government measures. Ludwig contends that these measures often fail to accurately depict the economic realities for millions of U.S. households, particularly in the context of inflation’s impact.
Low- and middle-class Americans have been disproportionately affected by inflation, which the CPI fails to reflect. The CPI shows a 54% increase in housing expenditures, but LISEP found a 149% increase in typical rent for middle- and lower-income households.
Ludwig stresses the importance of sharing U.S. economic growth’s riches to preserve the middle class and promote stability. He feels this is key to letting middle- and low-income Americans live the American dream. Ludwig worries that the trajectory is going in the wrong direction.