In New York City, activist Jimmy McMillan is famous for his declaration, “The rent is too damn high” — an assertion that renters in many other large urban centers in the U.S. agree with wholeheartedly. But housing isn’t the only thing that has become more and more unaffordable; Americans are also being priced out of everything from health care to child care to higher education, and journalist Annie Lowrey examines the gap between what Americans are making and what they can afford in an article for The Atlantic this week.
Lowrey opens her article with some good economic news — at least relatively good when one compares unemployment in the U.S. in 2020 to unemployment in the U.S. during the worst of the Great Recession. Citing government figures, Lowrey points out that during the 2010s, the United States’ national unemployment rate “dropped from a high of 9.9% to its current rate of just 3.5%.”
But another “economic crisis,” Lowrey asserts, has “metastasized.”
“Let’s call it the Great Affordability Crisis,” Lowrey explains. “This crisis involved not just what families earned but the other half of the ledger too: how they spent their earnings. In one of the best decades the American economy has ever recorded, families were bled dry by landlords, hospital administrators, university bursars and child-care centers. For millions, a roaring economy felt precarious or downright terrible.”
Because the cost of living is so high, Lowrey points out, many Americans don’t have nearly enough in their savings.
“Viewing the economy through a cost-of-living paradigm helps explain why roughly two in five American adults would struggle to come up with $400 in an emergency so many years after the Great Recession ended,” Lowrey observes. “It helps explain why one in five adults is unable to pay the current month’s bills in full. It demonstrates why a surprise furnace-repair bill, parking ticket, court fee, or medical expense remains ruinous for so many American families, despite all the wealth this country has generated.”
Lowrey adds that “fully one in three households is classified as ‘financially fragile,’” linking her article to data by the National Endowment for Financial Education.
Millions of Americans, Lowrey warns, are caught up in a vicious cycle that includes “the rise of inequality” and “the shrinking of the middle class” as well as “the spiraling cost of living.” The Atlantic staff writer observes that while housing costs in New York City and San Francisco are “the most obscene” in the U.S., housing has been becoming less affordable in many smaller cities as well.
“Home prices are rising faster than wages in roughly 80% of American metro regions,” Lowrey warns. “In 2018, housing affordability declined in every one of the 160-some urban areas analyzed by the National Association of Realtors, save for Decatur, Illinois. Rising prices and housing shortages are squeezing families in Reno, Minneapolis and Phoenix. The problem now even extends to rural areas, where income growth has lagged in the post-recession period.”
The Great Affordability Crisis, Lowrey laments, “persists even as President Donald Trump rightly praises the country’s growth, low unemployment rate and rising household incomes…. This crisis looks sure to stay with us for the coming decade, whatever recessions or expansions it may hold.”