America is home to billionaires, some research shows. However, that means nothing to most people who live in the United States.
The median household income of Americans rose to $83,730, adjusted for inflation, last year, up very slightly from 2023. This takes people back to what the number was in 2019, based on purchasing power. Many Americans cannot live on that. Among people below this median, some Americans can barely live at all, particularly in many expensive cities.
It is fair to total, at least, the basic daily costs of living together to see where people who live on the median household income cannot afford. The components include transportation (which varies widely from city to city), food (the cost of which is still increasing, the Consumer Price Index shows), housing (home prices have hit all-time highs, and New York City rents are at a record), utilities (in some areas, electricity costs have jumped because of artificial intelligence), health care (the cost of which could rise as much as 4%), and apparel (with prices rising because of tariffs on China).
Most Expensive Cities
GoBankingRates keeps a list of cities where the cost of living requires a median income of over $115,000. This varies somewhat based on whether people rent or buy homes. Home prices continue to put a house out of reach for many people. The median price of a home for sale in the United States is above $400,000. Mortgage rates are at about 6%, which is a multiyear high.
Seattle, Colorado Springs, Atlanta, Boston, San Jose, New York City, Arlington, Honolulu, San Diego, and Los Angeles are on the GoBankingRates list of cities where people cannot live comfortably on the U.S. median household income. That does not seem like a lot of cities. However, mostly because the list includes New York and L.A., the combined population of these cities is as high as 20 million.
The problem could get worse. Even lower interest rates may not unlock the housing market. This is particularly true in big metros where the median price of a home is above $600,000.
And Inflation
Inflation is not just creeping up. The Consumer Price Index shows that the cost of some items has gone up very little in the past year. Gasoline prices have come down. However, the cost of food is soaring again. Coffee, chocolate, and beef prices are all up by double-digit percentages year over year.
In 2023, the cost of health care per capita in the U.S. was over $14,000 per year. That is over 15% of the American median income. Healthcare costs are expected to rise 6% this year.
Leave aside median income and go lower down the income scale. People who live on Social Security alone have total incomes of about $30,000. The national poverty level for a family of four is just above $32,000. To many of these people, those who make $83,000 seem rich.
While $80,000 may seem like a lot of money, it is not.
What Income Level Is Considered Middle Class in Your State?
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