Severe Wage Stagnation and Cost of Living Growth Since 1980

An Analysis of Young Americans’ Financial Distress and Potential Policies for Addressal

Abstract

This paper draws from data from various national sources to analyze and properly extrapolate conclusions regarding the United States’ growth in wages in comparison to the growth in prices of multiple significant expenditures for urban citizens throughout the last 44 years. Through this study, the cost of living growth for the majority of Americans is explored with the perspective of real dollar cost indexed to 1980 to show the past 44 years of economic change. Using computer modeling, a linear regression prediction is made to model how these changes will develop in the future if left to continue in their trends, keeping in mind recessions and the volatility of certain expenditures. This paper shows that specific categories of cost, especially the main ones included in the basket of goods and services, as well as widely prevalent and essential costs like health insurance, college tuition fees, groceries, utilities, and housing, have far outgrown and outpaced the wage growth over the same period. This paper also offers potential government solutions in policies to help alleviate the stresses plaguing young citizens that limit economic mobility and widen the income and quality of life disparities between classes.