The Blubber

A growing number of Americans are falling behind on what it takes to maintain a basic standard of living, according to a new report from the Ludwig Institute for Shared Economic Prosperity (LISEP).

The report goes beyond measuring whether people can afford essential items like food and shelter—it also factors in access to things like technology needed for work, higher education, health care, and child care. LISEP argues these are all core parts of what it calls the "basket of American dream essentials."

To track these pressures, LISEP uses its Minimal Quality of Life index, which it says paints a more accurate picture of Americans' economic conditions than traditional indicators like GDP or the unemployment rate. The index measures year-over-year changes in the actual costs faced by low- and middle-income households striving for basic economic stability.

“We analyze these components not just in terms of financial figures but as crucial elements that shape a family's capability to achieve a desirable standard of living,” the group wrote in a paper outlining its methodology.

The findings are sobering: for the bottom 60% of U.S. households, achieving a “minimal quality of life” is now financially out of reach.

“The middle class has been declining — we just haven’t fully acknowledged it,” LISEP Chairman Gene Ludwig told CBS MoneyWatch. “That’s dangerous. It leads to social unrest, and it’s not fair. The American Dream isn’t about being handed success — it’s about having the chance to earn it. That doesn’t mean living in a tent or having to steal to get by.”

LISEP also challenges the official U.S. unemployment figure. While the government reports a jobless rate of 4.2%, the institute argues that the true number is much higher when including people stuck in low-wage jobs or those unable to find full-time work. According to LISEP, the “functional unemployment” rate stands above 24%.

Falling Short of a Basic Living

Under LISEP’s metrics, low-income households are falling well below the income required to meet even minimal living standards. In 2023, the bottom 60% of earners made an average of $38,000 a year. But to afford the items included in the institute’s index—including work-appropriate clothing and some basic leisure—they would need $67,000 annually.

“Traditional economic headlines like GDP and unemployment suggest the economy is booming, but they don’t match the day-to-day experiences of most Americans,” Ludwig said. “People are working harder than ever, powering our economic growth, but they’re not seeing those efforts turn into upward mobility.”

Between 2001 and 2023, the cost of basic economic security—what LISEP considers a minimum standard of living—doubled. Housing and health care expenses have surged, and the cost of saving for in-state public college jumped 122% during that time.

Meanwhile, real earnings for the bottom 60% of workers have dropped by 4% when adjusted for the cost of living tracked by the index. Income growth in these households has also lagged significantly, increasing by just 0.37% annually—less than half the pace seen among the top 40% of earners, LISEP’s research shows.