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The term "Affordability Crisis" often appears in the news, but I have seen little to define and measure it, before assigning blame. This is my effort to do so.
Let's define Affordability as: your cost to maintain your current standard of living. A decline in your ability to maintain this standard of living defines an "Affordability Crisis". Changes in Affordability can be measured by your increase in wages relative to the cost-of-living increase. Income taxes paid affect Affordability, too. Tax cuts improve Affordability as you keep more of your wages. So, by reviewing wage growth, cost of living increases (inflation), and tax cuts, we can measure changes in Affordability over time periods. Let's do that for the first Trump administration (2017 – 2020), the Biden administration (2021-2024), and the first year of Trump's second administration (2025).
During Trump's first administration, wages grew 17.6%. The cost of living (inflation) increased by 8.6%. By subtraction, we learn that real wages increased by that difference, or 9%. So, Affordability increased by that amount during those four years. In addition, the Tax Cut and Jobs Act of 2017 provided significant income tax reductions for low- and middle-income families. Specifically, according to Bill Shuster, our Congressman at the time, the tax cuts reduced the average household tax bill in his district by more than $2,000, further increasing Affordability.
During the Biden administration, wages grew 19.2%, but the cost of living (inflation) rose 20.7%. By subtraction, Affordability declined by 1.5%. Inflation soared during his administration due to the massive increase in government Covid spending. Too many dollars chasing too few goods. There were no income tax cuts during those years to cushion the cost-of-living increases.
We only have one full year of the second Trump administration to measure, but here are the results. Wages grew 3.8% and the cost of living (inflation) increased 2.7%. By subtraction, Affordability improved by 1.1%. This increase was augmented by significant tax reductions for low- and middle-income families.
Specifically, no tax on tips and no tax on overtime, as well as no tax on social security payments for seniors, improved Affordability where it was needed most, low- and middle-income families.
Therefore, according to the data, Affordability improved during both Trump administrations but declined during the Biden administration. Income tax cuts in both Trump administrations further enhanced Affordability, but none were enacted during the Biden administration. Given the evidence and analysis, we conclude: the Affordability Crisis developed during the Biden Administration and has been moderated during both Trump administrations.
Thus far in 2026, wage growth ranges between 3.4 % and 3.7%, while inflation ranges between 3.4% and 4.2%. So, Affordability has hardly changed this year. Recognize that current gasoline prices are already factored into the data and, despite intense media hype, are hardly anything to panic over. Denying Iran its oil revenue does put temporary upward pressure on oil's price but is a small price to pay to rid the world of a hostile power and its nuclear intentions.