Question: Do we have an entire class of Americans for whom inflation is pushing household budgets to a breaking point?
I just did a little back-of-the-envelope math to see whether a single parent with 2 children earning $2,500/mo could cover a family’s three primary expenses - rent, food, and gasoline, plus other “incidental” expenses. Unfortunately, my quick review suggests that there simply is very little “discretionary income” left over to cover incidentals like utilities, insurance, taxes, auto maintenance, cell phone, drugs, clothes, school supplies, or anything over and above rent, food, and gasoline.
My figures are as follows:
Income: $2,500/mo or $30,000/year ($15/hour x 40 hours/week x 50 weeks/year)
Rent: $1,000/mo (low estimate for a 2 bedroom, 1 bath apartment)
Food: $700/mo (rough estimate for a family of 3)
Gasoline: $300/mo (rough estimate of 15 gallons/week at $5/gallon)
Discretionary Income: $500/mo left over for all other expenses
Inflation is extremely regressive, meaning that rising prices hit lower-income households worst. The figures I described above suggest that rent, food, and gasoline alone absorb 80% of this family’s gross income.
Based on this back-of-the-envelope math, I reasonably assume that thousands (perhaps millions) of Americans are being forced into either insolvency or poverty as a result of inflation in the form of America’s rising cost of living.
I do not think my figures are wildly exorbitant. However, I welcome correction from anyone who has done a more scientific comparison of single-parent household incomes and costs of living.