Research by Dr. Alexei Alexandrov on Why Economic Averages Mask Affordability

<>

Affordability pressures depend heavily on household ownership and expenses rather than national wage averages alone, according to research by economist Dr. Alexei Alexandrov. The study, highlighted by the Consumer Bankers Association, shows that while real household incomes rose following 2019, uneven asset ownership and persistent cost shocks leave many families feeling financially squeezed.

Real Incomes Rise While Wage Growth Slows

Data compiled by Dr. Alexandrov indicates that real earnings increased across the board since 2019. Depending on the metric, real earnings grew by about 3 percent for the average private-sector worker, 4.6 percent for the median worker, and over 6 percent at the first quartile of the wage distribution, the Consumer Bankers Association reported.

However, that recent wage growth has slowed considerably. Real wage growth remained essentially flat over the twelve months preceding the September 2026 research release, leaving wages barely keeping pace with inflation.

Housing Status Affects Real Income Gains

Official inflation statistics obscure how individual households experience the economy based on what they own. Dr. Alexandrov reconstructed inflation metrics using actual out-of-pocket housing costs, revealing stark differences among families with identical nominal earnings.

For a median worker experiencing a roughly 34 percent nominal earnings increase since 2019, the real gain adjusts differently depending on housing status. Renters saw a real gain of roughly 3 percent, existing homeowners experienced an 11 percent gain due to fixed mortgage rates and asset appreciation, and prospective homebuyers faced a negative 7 percent change.

Healthcare Costs Limit Household Financial Cushions

Healthcare expenses act as a primary driver of affordability challenges alongside housing, food, and transportation. Bureau of Labor Statistics figures show that in June 2026, private employers spent an average of $46.89 per hour on employee compensation, with $32.82 allocated to wages and salaries and $14.07 to benefits.

Rising employer healthcare costs can lead to slower wage growth, reduced hiring, or higher out-of-pocket expenses. This dynamic means a portion of healthcare inflation remains hidden directly inside employee paychecks.

Federal Reserve Rate Decision Impacts Credit Costs

Financial resilience depends on a household’s ability to absorb unexpected cost shocks, which roughly 75 percent of American families experience annually at an average amount of about $5,000. Lower-income households often lack savings to cover these emergencies, forcing reliance on short- or long-term borrowing.