New LISEP Study Highlights Erosion of Purchasing Power Impacting More Than Just Blue-Collar Jobs

By Ludwig Institute for Shared Economic Prosperity

Cover Image Attribute: Image by Ichigo121212 from Pixabay

It's not just a blue-collar or low-wage job phenomenon: the majority of occupations in the U.S. saw a decline in buying power over the last 20 years when adjusted for the rising cost of basic necessities, according to a study released by the Ludwig Institute for Shared Economic Prosperity (LISEP).

The analysis included a review of median salary and wage levels for more than 60 professions in the U.S. from 2001 to 2021, adjusted based on LISEP's True Living Cost (TLC) Index. In contrast to the Consumer Price Index (CPI), the TLC is a measure of price changes of the minimum adequate needs required to maintain a basic standard of living, while the CPI is based on a diverse basket of more than 80,000 items. Many of these items – such as rental cars and hotel rooms – are of little or no relevance for most households. The TLC focuses on the basics: housing, food, healthcare, childcare, transportation, technology, miscellaneous personal care, and household items – the expenditures that consume nearly the entire budget of most American families.

For most observers, it may come as no surprise that, on the median, secondary school teachers and nurses have lost ground in terms of salaries over the period: adjusted for the rising cost of living, secondary school teachers lost about 13% of their income (roughly $9,000 in 2021 dollars) and nurses about 6% ($4,000 in 2021 dollars) during the period. But white-collar professions were not immune. Accountants, engineers, architects, and even doctors and lawyers saw their effective buying power erode, some by up to 20% of their income, according to LISEP.

"It's important to note that the hit to buying power is not just a blue collar problem, it is not just a problem among low-wage earners – it's an issue for practically every household, from low-income to upper-middle income families," said LISEP Chairman Gene Ludwig.

Of the eight broad occupation categories analyzed – business and professional, construction and labor, education and social services, food service, healthcare, personal care, public safety, and retail and sales – all saw an overall decline in median real wages for individual professions, except for healthcare, where seven of the 11 health-related job categories posted gains, led by podiatrists, who saw TLC-adjusted wages rise from $85,806 to $144,231 over the period.

Overall, an overwhelming majority of professions saw declines, according to LISEP. Occupations with the largest percentage drop include firefighters, with their adjusted wages falling about 12%, from $80,444 to $70,000, and dental assistants with a 16% drop, from $35,587 to $35,000. Those with the biggest gains are CEOs and legislators/public administration, jumping 56% from $77,316 to $120,150; dentists, with a 40% increase from $89,381 to $125,000; and podiatrists.

An obvious conclusion from the study, Ludwig said, is that the income gap is real and growing, has been growing for more than two decades, and practically no one is immune.

"We now see that even among professions that are considered high-paying and stable, households are losing buying power, and it has been progressing for more than two decades," Ludwig said. "It's no longer 'somebody else's problem."

A full interactive graph of LISEP's findings is available here, or at lisep.org/tlc.

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