Could your household cope with a $1,000 increase in the annual cost of living?
That’s less than $100 per month.
But the Brookings Institution estimates in a new report that such an increase would mean 3 million more American households could no longer make ends meet, leading some “to forgo rent, utility or debt payments, which can compound into larger financial or health challenges.”
Brookings’ “States of Affordability” report offers a detailed – and sobering – look at the cost of living across all 50 states and across racial demographics at a time when voters say that’s their top concern.
The report takes a long view. Yes, the midterm elections are scarcely 150 days away, but Brookings scanned the affordability landscape back to 2014, giving readers a fuller sense of Americans’ financial health.
The Big Takeaway
Many of them are struggling.
In 2024, 45.5% of all U.S. households did not earn enough to make ends meet, which Brookings defined as enough to cover the cost of necessities. Those include housing, food, child care, transportation and things like utilities.
The problem affects every region – blue states and red states alike.
But it varies widely. In Colorado, the Dakotas, New Hampshire and Washington, D.C., more than 60% of households report making ends meet. (My home state of Vermont comes in at a respectable 56.9%.) But in places like California, Kentucky, Louisiana, New York and Oregon, fewer than 50% say the same. In Hawaii, it’s just 39%, the lowest on the map.
The Long View
While we seem to be talking a lot more about affordability these days – maybe starting with the inflation spike of 2022 – the report makes clear the problem stretches over at least the entire decade.
In nearly every year since 2014, more than 40% of households struggled to make ends meet.
The only exceptions? The post-pandemic recovery of 2021 and 2022, when the federal government unlocked a range of benefits for millions of Americans.
As those benefits expired and costs rose, the proportion of Americans reporting they were making ends meet dove sharply.
“While the share of households making ends meet increased by 2 percentage points over the decade, that share dropped by a full 10 percentage points in just two years following the COVID-19 pandemic, from 2022 to 2024, erasing most of the gains made earlier in the decade,” the report says.
(In a previous professional incarnation, I argued in 2023 that the expiration of so many benefits was the biggest political story of the moment.)
“When costs exceed incomes, families are forced to make painful tradeoffs. They postpone critical medical careforgo healthy food or skip meals, and go further into debt,” Brookings says. “What remains less clear – for families on both sides of the poverty line – is a path to solving the affordability crisis given all its dimensions, from stagnating incomes and declining upward mobility to rising costs for everyday necessities.”
Racial Divides
In 2024, 55% of U.S. households of color reported not being able to make ends meet, the report says. And “over the 2014-to-2024 period, the shares of Black and Latino or Hispanic households making ends meet were the lowest of any demographic group.”
However, in some states, households of color posted larger gains than the state did overall.
In Georgia, for instance, the proportion of households of color reporting they were making ends meet rose seven percentage points from 2014 to 2024 (to 45%). For the state overall, the rise was three points (to 52%).
The Fix?
Affordability is the relationship between income and costs. Raise incomes, lower costs, and it gets easier to make ends meet.
“More affordable lives are within reach,” Brookings asserts. “As of 2024, 37.9 million U.S. households could afford to make ends meet with a raise of $10 an hour. Additionally, if costs declined by $500 per month, another 10 million households could make ends meet.”
A $10/hour raise? It’s not clear that’s politically “within reach” in a country where the federal minimum wage has been at $7.25/hour since 2009.