Forex Articles

Income growth in the United States has been anemic in the 21st century. Between 2003 and 2015, salaries have risen only 11%. Moreover, that figure, skewed by large income gains from the richest Americans, is misleading in terms of how it represents the income growth seen by the average worker. Many middle class and blue collar workers have seen their incomes grow little to none in the 21st century, some even making less than they were at the turn of the century.

Sluggish wage growth would be a frustrating yet manageable problem if the prices of things Americans need were rising at a similarly slow rate. Costs of many necessities from housing to food to cars to gasoline have exploded, while income growth has barely trudged forward. Housing prices, which spiked, crashed and have steadily risen again, sit, as of 2015, almost 25% higher than they were in 2003. Gas prices, still under $2 per gallon in 2003, hover between $2.50 and $3 per gallon in 2015.

College tuition and health insurance premiums, both of which have soared in the 21st century, are two specific expenses that many Americans have come to view as necessities. For the 2004-2005 school year, the average in-state tuition and fees, adjusted for inflation, at a public university were $6,448; by the 2014-2015 school year, they had risen to $9,139, an increase of almost one-third.

When factoring in room and board, total college costs become even more prohibitive, having increased from $14,310 in 2005 to $18,943 in 2015 – and that is for only one year of school. A student who finances his four-year education starting in 2015 can expect to incur over $75,000 in debt, graduating into a shaky job market where wages have increased little to none in the last decade.

Rising college costs are especially insidious because, given the ease with which student loans are obtained, students offer little resistance when the price goes up every year. The 18- to 22-year-olds have little to no experience with debt and often have unrealistic expectations about how easily they can pay it off when they graduate and start working.

Because most perceive college as a prerequisite for success, consumers remain in an unenviable position regarding tuition costs. They can either pay what colleges demand, or forgo college and risk a lifetime of lower wages and reduced opportunity.

Another rapidly rising cost that consumers are stuck paying is health insurance. Premiums have risen 60% between 2003 and 2015. Because incomes have increased a tiny fraction of that amount over the same time, health insurance's share of the average American's monthly budget has skyrocketed.

The Affordable Care Act (ACA) has alleviated some of the strain by providing low-income Americans with subsidies to help defray insurance costs and by forbidding insurers from inflating premiums for customers with pre-existing medical conditions. Even with these reforms in place, health insurance costs as a percentage of income are still grossly out of proportion with where they were for much of modern history.

Politicians and industry insiders debate about why health care costs have spiraled and what can be done to reverse the trend, rarely finding even a sliver of common ground. Frequently cited culprits include malpractice and litigation costs, oppressive government regulations, and profit-squeezing hospitals and insurance companies.

One of the ACA's most controversial features is a provision that requires every American to maintain health insurance coverage or else pay a penalty at tax time. Health insurance premiums have historically been able to rise uncontested because the alternative to paying them can be disastrous. For all but the super rich, an accident or illness requiring major surgery means sure bankruptcy for an uninsured person.