It now takes up to 66 weeks to pay for 52 weeks of middle-class basics

The cost of a middle-class life exceeds a year's income for typical workers

Although the U.S. economy is riding high by some measures, notably an unemployment rate hovering near a 50-year low, millions of Americans don't feel they are getting a lift. One reason: The gap between what most workers earn these days and the income they need to enjoy a middle-class lifestyle.

The typical male worker must now work 53 weeks — or more than a year — to make enough to cover what American Compass Executive Director Oren Cass calls the annual "cost of thriving," the earnings required to pay of a basket of essentials such as health care and housing. By comparison, in 1985 that same typical employee needed to work 30 weeks to cover those same costs, found a recent analysis from American Compass, a newly formed conservative economic think tank. 

Women these days need about 66 weeks — or 13 more weeks than men — to afford the same basket of basics, given that they on average earn less than men. But like the typical male worker, they've also lost ground since 1985, when the average female employee could cover her basics after 45 weeks of income. 

With the cost of life's necessities rising in America, many families are having to take steps such as adding a second job and cutting back on spending to retain their perch in the middle class. But those moves, too, can contribute to a sense of growing financial pressure and of skating on the economic edge that many people report.

"One thing I want [Americans] to take away is that they are not crazy," Cass told CBS MoneyWatch. "People who feel like the trends they are feeling in the economy are posing real challenges to households are correct. To an economist who says, 'Who are you going to believe, my statistics or your lying eyes,' they should have confidence that what they are seeing in the world is happening."

Gauging the "cost of thriving" 

Cass, a former senior fellow at the conservative-leaning Manhattan Institute, said he developed the Cost of Thriving Index to better measure the gap between existing economic statistics, such as the Consumer Price Index, and the real financial pressures people face.

"The cost of living is the standard measure that gets talked about a lot, but there is a difference between living and thriving," he said. "Thriving implies a richer conception of what we believe we are achieving, rather than just living." 

The Consumer Price Index — a standard measure of inflation — focuses on the cost of food, clothing, housing and other basics that families require. But that doesn't necessarily reflect the challenges of paying for things you need to flourish in American society today, such as the ever-rising cost of keeping a roof over your head or going to college.

Two years after Trump's tax reform, middle-class incomes aren't keeping up

Meanwhile, consumer expectations and tastes have changed over the decades, as well as the quality of products available to them. Comparing a 1970s phone to a modern landline telephone isn't the correct comparison, since Americans now rely on smartphones to remain connected to each other.

Instead of using a broad range of basics, the Cost of Thriving Index focuses on four components: the cost of a three-bedroom house, health insurance for a family, one semester at a public college and the expense of operating a car. Those costs have become "difficult for a household budget to accommodate," Cass said.

In other words: In 1985 a male worker would be able to afford housing, health insurance, college and a car after working 30 weeks, leaving 22 weeks of annual income to cover food, entertainment, clothing and so on. Ttoday he'd need 53 weeks of income to cover his 52 weeks of basic housing, health, college and car costs. 

To be sure, some experts have questioned Cass' model, pointing out that most Americans still don't attend college, for example.

"There are very fair criticisms about what I include and don't include," Cass said. But even after constructing an index that aims to capture the financial needs of a typical family, "You would end up with the same view," he added. "Things that were plausible for the typical family in the past have become much harder" to afford.

A "disconnect" 

"There is a real problem that when the economy doesn't generate widespread gains — then you can get this kind of disconnect," Cass added. "The cost of things are going up at one rate and the ability to pay for them are going at another rate."

Economic reforms that could raise wages for typical workers are "really important," Cass said. But rather than the proposals put forth by some Democratic candidates, such as Senator Bernie Sanders's plan for free college, another option would be to invest in other pathways to a good wage.

"We also have this problem we said everyone should go to college but not everyone is becoming a college grad," he said. "Having an education system that meets people where they are and provides an entry to the workforce would set them up to earn better wages."

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