The Blubber

A growing number of Americans are unable to earn enough to meet the costs of a basic standard of living, according to recent findings from the Ludwig Institute for Shared Economic Prosperity (LISEP).

The report goes beyond traditional necessities like food and housing to include broader essentials such as access to technology for work, higher education, health care, and child care. LISEP’s analysis aims to offer a more complete view of economic well-being than common indicators like GDP or the official unemployment rate.

LISEP uses what it calls a “Minimal Quality of Life” index to track how much income is required to afford what it describes as a “basket of American dream essentials.” This includes not only core expenses but also costs associated with maintaining employment and achieving modest upward mobility.

“We don’t just measure dollar amounts — we look at what families genuinely need to live with dignity and opportunity,” the organization explains in its methodology.

The results are sobering: for the bottom 60% of American households, achieving even a basic standard of living is financially out of reach. The group emphasizes that this points to a quiet erosion of the middle class.

“We're facing a decline in the middle class that hasn't been fully acknowledged,” LISEP Chairman Gene Ludwig told CBS MoneyWatch. “That’s dangerous — it leads to societal instability and undermines fairness. The promise of the American dream is not about handouts. It’s about having a fair shot at a better life through hard work — not ending up homeless or desperate.”

LISEP also challenges the official unemployment rate of 4.2%, arguing that it significantly underrepresents economic hardship. When accounting for individuals stuck in low-wage work or unable to find full-time jobs, the real rate of what LISEP calls “functional unemployment” is over 24%.

Digging Deeper

According to LISEP, many Americans are falling short of what's needed for a modest, stable life. For example, households in the lowest income bracket earned an average of $38,000 in 2023. But to afford the full range of goods and services included in the group’s index — including work attire and basic leisure — those households would need to bring in $67,000 annually.

“The headline numbers suggest the economy is booming,” Ludwig said. “But they don’t capture what most people are actually experiencing. Americans are working harder than ever, yet too many aren’t seeing the benefits of that effort in their daily lives.”

The cost of achieving economic security has doubled since 2001, LISEP’s report shows. Key expenses like housing and health care have risen sharply, and the savings needed to attend a public, in-state college have jumped by 122%.

Meanwhile, median income for the bottom 60% of earners has dropped 4% when adjusted for inflation based on LISEP’s index. From 2001 to 2023, these workers saw annual income growth of just 0.37% — significantly below the growth rate enjoyed by the top 40% of earners.

And the situation appears to be worsening.

“This gap is only growing,” Ludwig said. “The essential goods and services needed for a basic quality of life are increasing in price faster than wages are rising.”