A newly updated financial index has found a “catastrophic erosion” of middle-class life in America in recent decades.

Cost-of-Thriving Index

The index, termed the Cost-of-Thriving Index (COTI), was designed by the nonprofit organization American Compass. American Compass’ mission is “to restore an economic consensus that emphasizes the importance of family, community, and industry to the nation’s liberty and prosperity.”

COTI measures the number of weeks the typical worker must work in order to cover the major costs for a family of four in middle-class America: Food, Housing, Health Care, Transportation and Higher Education.

According to COTI, in 1985, the typical American worker had to work nearly 40 weeks per year to cover the basic costs of these five categories. Costs totaled $17,586 whereas the average male working full-time earned $23,036.

But in 2022, COTI was 62.1, meaning the typical worker had to work 10 more weeks than there are in a year in order to afford the basics of a middle-class life. Whereas the average man working full time earns $63,388 annually, costs total $75,732.

The organization found that based on COTI, “a typical worker cannot afford to support a family anywhere in the United States.”

The Daily Citizen spoke with Oren Cass, executive director and founder of American Compass, and author of The Once and Future Worker: A Vision for the Renewal of Work in America. Politico has named Cass as one of their Top 50 “thinkers, doers and visionaries transforming American politics.”

Cass said that the purpose of COTI is to measure the actual cost of living in the United States today when compared to the past. This differs than other measures based on the official government published inflation rate.

“What inflation tries to measure is the change in price of the exact same thing,” Cass said. He added that some economists wrongly try to assert that the average man earns roughly what they did in 1985 when adjusted for inflation.

But when they do that, they are “not saying Americans can actually afford a comparable life today compared to what they could afford in 1985. They’re saying Americans could afford the same set of 1985 stuff,” Cass said. “But the reality is, that stuff just doesn’t exist. For example, a 1985 house is not what a starter home looks like today.”

Cass added: “Additionally, being middle class in 2022 doesn’t mean buying a bunch of 1985 stuff. It means buying a bunch of 2022 stuff.”

Regarding American Compass’ findings on COTI, Cass told us that the average American male being able to support their family is a rarity these days.

“For your typical young male worker, that set of things you could all comfortably buy on one income in the 1980s, you just can’t anymore,” he said. “It’s nice to say, ‘Look the house is bigger,’ ‘Look the car is safer,’ but that doesn’t change the fact that you can’t support your family anymore.”

“So, looking at COTI is incredibly important to looking at middle-class security,” he added. Cass pointed out that some economists try to assert middle-class families have never been better off than they are today.

“Then you say, ‘Hey middle-class families, what do you think? Is that true?’ And they’ll say, ‘No, that’s obviously not true.’ And the reason it’s not true is what you see in the Cost-of-Thriving Index.”

American Affordability Survey

In addition to the COTI, American Compass has also released the results of their 2023 American Affordability Survey which found that “rising inequality, stagnating wages, and pressure for a household to have two incomes have all eroded the typical working family’s well-being.”

The survey found that most Americans want to be able to support their family on one income. Over 70% of Americans see that ability as “essential” or “important” to being in the middle class.

According to the survey, Americans recognize several conditions as vitally important to living in the middle-class, including:

  • Affording comprehensive health insurance (86%)
  • Owning your own home (74%)
  • Being able to support your family on one parent’s income (71%)
  • Saving enough to pay for your children to attend college (69%)

In addition, most Americans agree that stagnating wage growth is a large obstacle to middle-class living.

  • 68% agree that rising inequality is a big problem, because some groups of Americans have seen major gains while others have been left behind.
  • 74% agree that stagnating wages for young men are a big problem and help to explain why they are leaving the workforce and marriage rates are declining.
  • 71% agree that families sending two parents into the workforce to make ends meet is a big problem, because many families have lost the choice they want, and once had, to live a middle-class lifestyle on one income.

Cass said that it’s important to distinguish between families having the ability to live off a one-income household and them wanting to do so.

“If a family want to have two parents working, that choice should absolutely be available to them. The question is whether or not they have a choice,” Cass said. “But in fact, most Americans do want to have a parent at home with young children.”

The Impact on Family Formation

According to Cass, all this data has a great impact on falling family formation in the United States.

Cass told us that it’s very important to recognize that marriage is in part an economic institution.

“Raising a family is in part an economic choice that has a lot of economic consequences,” he said. He noted that it’s a compelling choice when individuals can get married, have children, and have the option to live off one income. “But that package is not really on offer in the market anymore,” he added.

“We shouldn’t be surprised, though we should be extremely concerned, that people are responding the way they are, by putting off marriage, by not getting married, by not having kids, by struggling to maintain families intact,” Cass said.

“We should not be surprised that work and marriage and child-rearing hold less appeal – and that fewer men are working, fewer marriages are forming, fewer children are being born – when the basic economic structure that supported those activities has collapsed,” Cass wrote.

As a potential solution, American Compass has proposed The Family Income Supplemental Credit, which would provide a monthly supplement paid to working families to the tune of $800 per month per child. The credit would also incentivize marriage, adding in a 20% marriage bonus for families.

“In a world of stagnating wages … living on a median worker’s income feels a lot like being poor,” Cass wrote. “Restoring the promise that a typical worker can provide middle-class security to a family should be THE focus of our politics” (emphasis in original).

Related articles and resources:

After ‘Dobbs,’ Pro-Family Economic Policies Can Incentivize Marriage and Family Formation

‘It Doesn’t Have to Be This Way’: How to Renew America and Restore a Nation

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