The notion that America’s affordability crisis is a direct result of tariffs and trade wars has been a persistent narrative among politicians and pundits. However, a closer examination of the data reveals a far more complex and entrenched issue.
In recent years, the term ‘Unaffordability Five’ has gained traction to describe the escalating costs of five fundamental necessities: housing, food, healthcare, child care, and energy. Despite the media focus on tariffs and the Trump administration’s trade policies, the data suggests that these costs were rising long before the trade war began.
According to a report by the Economic Policy Institute (EPI), the costs of housing, food, healthcare, child care, and energy have been steadily increasing over the past four decades. The EPI analysis found that between 1979 and 2019, the costs of these essential goods and services rose by an average of 250% — far outpacing wage growth and median household income.
The housing market, in particular, has been a major driver of the affordability crisis. The median home price in the United States has more than tripled since 1979, while the number of affordable housing units has declined significantly. This has led to a vicious cycle where rising housing costs force individuals to spend more on housing, often at the expense of other essential expenses.
The cost of food has also become a significant concern for many Americans. Between 1979 and 2019, the cost of food increased by 143%, with the lowest-income households experiencing the greatest burden. This has significant implications for food security and nutrition, particularly for vulnerable populations such as the elderly and young children.
Healthcare costs have also been a persistent issue, with the average American family spending approximately 10% of their income on healthcare expenses. This has led to a significant financial burden on households, as well as a growing reliance on debt and other forms of financial assistance.
Child care costs have become increasingly prohibitive, with the average cost of center-based care exceeding $10,000 per year for a single child. This has forced many parents to either reduce their workforce participation or seek alternative forms of child care, often at the expense of their own financial stability.
The cost of energy, particularly utilities and gasoline, has also been a significant contributor to the affordability crisis. The EPI analysis found that the cost of energy has risen by 170% since 1979, with the lowest-income households experiencing the greatest burden.
So, what are the underlying causes of this crisis? One key factor is the decline of unionization and collective bargaining, which has led to a significant erosion of workers’ bargaining power and ability to negotiate for better wages and benefits. Another factor is the rise of the gig economy and the decline of traditional employer-provided benefits, leaving many workers without access to essential services like healthcare and paid time off.
Furthermore, the increasing concentration of wealth and power among a small elite has led to a significant widening of the income gap, with the top 1% of earners capturing an ever-larger share of national income. This has resulted in a decreased ability for the middle and lower classes to access affordable goods and services, exacerbating the affordability crisis.
In conclusion, the affordability crisis in America is a complex and multifaceted issue that cannot be attributed to tariffs and trade wars alone. While these policies may have contributed to the problem, they are merely a symptom of a deeper structural issue that requires a more comprehensive and nuanced solution.
What to Watch Next:
- The Biden administration’s efforts to address the affordability crisis through policy reforms and investments in affordable housing, education, and job training programs.
- The ongoing debate over the merits of a universal basic income and its potential to alleviate poverty and financial insecurity.
- The growing popularity of cooperative ownership models and community land trusts as alternatives to traditional homeownership and renter-occupied housing.
Conclusion:
The affordability crisis in America is a pressing issue that requires a thoughtful and multifaceted response. By understanding the underlying causes of this crisis, policymakers and stakeholders can develop targeted solutions that address the root causes of the problem and provide meaningful relief to those who need it most.
