The American Dream Meets Stagflation: High Cost and Low Wages

Published on Friday, April 1, 2011 by Consumer Affairs

Having A Job May Not Be Enough To Make Ends Meet

Millions 'underemployed,' group claims

by Mark Huffman

The nation's unemployment rate dipped slightly in March to 8.8 percent, as the economy added more than 200,000 jobs during the month.

People rely on food banks, like the Community Food and Outreach Center in Orlando, Fla. But despite the improvement, a new report says millions of Americans are struggling to make ends meet, and we're talking about people who have jobs. (Todd Anderson for The New York Times) But despite the improvement, a new report says millions of Americans are struggling to make ends meet, and we're talking about people who have jobs.

A group called Wider Opportunities for Women (WOW) has developed a formula that suggests the average single worker needs to earn $30,012 a year - nearly twice the federal minimum wage - to cover basic expenses. Single parents require nearly twice the income ($57,756) to support two children, while dual-income households with children require $67,920.

A family of four earning $22,050 a year is living below the federal poverty line. And many, in fact, are. Data from the U.S. Census bureau found 14.3 percent of Americans in that category in 2009.

"Too few American families are living in economically secure households, with most workers unable to stretch their incomes over basic expenses and savings," said Joan Kuriansky, WOW's Executive Director. "The American Dream of working hard to support your family is being re-written by the growth of low-paying industries and rising expenses."

Inflation and deflation

In other words, the U.S. is struggling against both inflation and deflation at the same time. Prices of commodities like gasoline and food are rising rapidly. Salaries - at least those outside certain industries like financial services and health care - are going down.

WOW's Basic Economic Security Tables for the United States report includes the comprehensive BEST Index that calculates the monthly income necessary for families to cover their basic expenses, including childcare, housing, health care, transportation, savings and retirement.

The report suggests things won't change anytime soon. The report finds that jobs created in the coming years will not provide economic security wages to the majority of workers who do not have four-year college degrees.

© 2011 Consumer Affairs