Affordability has become the central economic and political question of the moment. Surging inflation in 2022, higher housing costs, expensive food, rising fuel prices, and impossibly expensive child care leave working families in Wisconsin struggling to cover their bills each month.
For Wisconsin’s low-wage workers, the affordability squeeze is nothing new. For these workers – retail and food service workers, hotel housekeepers and janitors, home health, nursing home, and child care workers – grocery bills, housing costs, child care, and energy bills are always a struggle. Lower-wage jobs often offer low and volatile hours and very weak benefits. In lower-wage jobs, many workers rely on public health insurance and food benefits to make ends meet.
To provide a picture of issues around affordability, we draw on Wisconsin data from United for ALICE. This United Way project identifies the ALICE (Asset Limited, Income Constrained, Employed) in each state. The ALICE Household Survival Budget includes only essential expenses, such as housing, food, transportation, child care, health care, technology, and taxes. The ALICE standard is more conservative than other basic budget standards. (See EPI’s Family Budget Calculator and the MIT Living Wage Calculator for alternative models of the disconnect between wages and costs of living).
The ALICE standard shows that more than one-in-three households in Wisconsin (35% of households) faced financial hardship. Of these households, 11% were below the federal poverty line, another 24% of the state’s households earned more than the poverty-level but still faced considerable financial hardship and did not earn enough to afford a minimal cost of living. This kind of struggle – working people who do not earn enough to make ends meet – is a long-standing problem for working people in the state. Between 32-35% of Wisconsin families have faced financial hardship since 2010.
A1 below shows the costs that a family of four faces and makes clear why so many families struggle to make ends meet. If the adults in that family of four both hold jobs – one as a teller making roughly $40K per year, one as a cook earning $30K per year – they still fall short of the total survival budget for their family.
As energy, food, and housing prices rise, families feel increasingly squeezed. Recent analysis shows that utility bills are growing rapidly: Wisconsin households are paying 19% more today than they were in 2022. The federal approach to tariffs has increased costs for families by $1,100 per year according to the Budget Lab at Yale. The federal budget cuts for health insurance, Medicaid, and food assistance are making life more expensive for working families across Wisconsin. Many of the biggest cuts to Medicaid are yet to come.
While the question of affordability is generally framed as a problem of the cost of living, the problem is equally or even better understood as a problem of suppressed pay. The Economic Policy Institute finds that if workers’ wages had kept pace with economic growth over the last 45 years, paychecks would be 40% larger today. But rather than strengthen labor standards, the federal government is consistently undermining workers’ rights and standards, as demonstrated in this compendium of 47 ways that the Trump Administration is making life unaffordable.
More than one-third of the state’s households are struggling to meet the rising cost of living. Policy solutions include those that make child care, higher education, health care, and transportation more affordable for working families. The federal government is moving away from these sorts of investments.
Equally, raising wages – through increasing the minimum wage and by making unionization more likely – could help with the affordability gap. As we documented in our recent update of Can’t Survive on $7.25, Wisconsin is being left behind as neighboring states raise the minimum wage floor for workers. The affordability crisis will require sustained attention to rising wages and reducing costs for working families.