THE AFFORDABILITY CRISIS Part 4

The U.S. affordability crisis is multifaceted and has been growing for 45 years, caused by low pay and high prices. Many factors have been depressing workers’ pay including the failure to raise the minimum wage, the weakening of unions, globalization, gig work, and reduced competition for workers.

(Note: If you find a post too long to read, please just skim the bolded portions. Thanks for reading my blog!)

(Note: Please follow me and get notices of my blog posts on Bluesky at: @jalippitt.bsky.social. Thanks!)

The U.S. affordability crisis is multifaceted and caused by low pay and high prices. (Previous posts have discussed the reasons for high prices.) This post will discuss the factors leading to low pay.

Over the last 45 years, workers’ pay has barely kept up with the increase in prices (i.e., inflation). And the pay increases there have been, have gone disproportionately to high earners. A study by the Economic Policy Institute found that between 1979 and 2019 the annual wages (adjusted for inflation) of the lowest-income 90% of workers increased by 26%, while the wages of those in the top 1% rose by 160%. The next richest 4% of workers saw their wages increase by 75%. CEOs now make about 300 times what their typical employee makes, while in 1960s they only made 20 times as much as the typical worker.

Good, middle-class blue- and white-collar jobs have been lost to globalization, while the compensation for the remaining jobs has declined due to the purposeful undermining of unions and global pay competition. The result is a crushing affordability crisis for many current and formerly middle-class households, as well as for lower income households.

According to a Brookings Institute analysis, 43% of American families can’t afford to pay for housing, food, health care, child care, and transportation. This figure is 59% for Black families and 66% for Latino families. The shift in income from workers to executives and investors has been dramatic: in 1947 workers received 70% of total national income, while today they get only 59%. Unlike the previous 35 years, after 1980, workers did not receive wage increases that were in line with their increases in productivity: from 1979 to 2025 workers’ productivity increased by 87% but their compensation only increased 33%. According to a Rand Corporation analysis, in 1975, the 90% of workers at the bottom of the income spectrum received 67% of national income, while in 2019 (the latest data it had) they received just 47% of national income. This highlights again the skewing of income to the top 10%. It calculated that if, in 2023, the 90% of workers with the lowest incomes had received 67% of national income (as they did in 1975), they would have earned an additional $4 trillion or, on average, each worker would have made $28,000 more than they did. Over the period from 1975 to 2023, if these workers had received 67% of national income, they would, in aggregate, have received $79 trillion more in income. [1]

There are many factors that have been depressing workers’ pay. They include:

Failure to raise the minimum wage. The federal minimum wage of $7.25 an hour is only 29% of a typical worker’s wage today; in 1968, it was 53% of the typical wage. If the minimum wage had been raised at the same pace as productivity growth since the late 1960s, it would be over $24 an hour today.
Dramatic weakening of unions by the emasculation of pro-union government policies and of the enforcement of labor laws, as well as by the monopolistic power of huge employers. These have resulted in a huge shift in power from workers to employers over the last 45 years. Union membership has declined from roughly a third of workers in the 1950s to under one-tenth of workers today and only one-sixteenth of private sector workers.
Globalization, which shipped jobs overseas and put downward pressure on the pay for the remaining jobs.
Gig work and the misclassification of workers as contractors and not employees, which reduces wages, removes the protections for employees that are in labor laws, and typically means they get no benefits (e.g., health insurance, sick or vacation time, and retirement benefits). A 2021 study estimated that nine million American workers, from Amazon and FedEx delivery personnel to Uber and Lyft drivers, earn between 15% and 30% less than they would as employees.

The gig work-based companies, using AI with vast amounts of personal data and tremendous computer processing power, can tweak the pay of gig workers instantaneously so each worker gets the minimum pay for which they’re willing to do a job. For example, Uber pays drivers based on their past behavior. If a driver is hungry for work, perhaps because they badly need the income, and therefore always grabs the first job that is offered, Uber will pay them less because it knows they’ll take the job. On the other hand, Uber will offer more to a driver that waits for a better paying option.
Reduced competition for workers among employers due to fewer, very large employers and the widespread use of non-compete clauses in workers’ contracts (which prevent workers from moving to similar work for another company, down to and including other franchisees of the same fast-food chain). The Federal Trade Commission under President Biden banned non-compete agreements but the Trump administration undid this.

Capitalism in the U.S. is out of control. Competition has been stymied and monopolistic power is widespread. This has happened because of the failure to enforce antitrust laws for 45 years (except for four years under President Biden).This means the invisible hand of a market economy and the economic “rules” of supply and demand do not work to give fair compensation to workers. The rules of the economic game have been rigged to favor large employers. One indicator that clearly confirms this is that corporate profits are at very high levels in terms of percentage of revenue. In 1980, 80% of corporate income was paid to workers; in 2025, that percentage was under 72% with the difference largely going to profits.

Regulators have been compromised (aka captured) by the large employers through the political influence garnered by campaign spending and lobbying, as well as the revolving door of personnel between government regulatory positions and private industry jobs. As a result, many aspects of corporate behavior have undergone deregulation, which allows companies to increase profits by, for example, blocking increases in the minimum wage, shipping jobs overseas, gig work, breaking existing unions, blocking union organizing, failing to negotiate in good faith with unions, and frequently preventing new unions from ever getting a contract. In 2018, 63% of new unions, each of which had been voted for by a majority of workers, failed to get their employer to agree to a contract within a year. Amazon workers at a New York City warehouse voted decisively for a union in April 2022, but as of December 2025, Amazon had refused to even begin contract negotiations with them. This reflects a lack of effective labor laws and a lack of enforcement of them.

My next post will discuss steps to take to tackle the affordability crisis.

[1] Meyerson, H., 12/3/25, “The $79 trillion heist,” The American Prospect (https://prospect.org/2025/12/03/79-trillion-heist-worker-pay/)

THE AFFORDABILITY CRISIS Part 3

The affordability crisis in the U.S. is multifaceted and has been growing for 45 years, due to low pay and high prices. Many factors are pushing up prices well beyond normal inflation, including premiumization of markets, profit-taking middlemen, and the failure to enforce antitrust laws. The Trump administration is doing nothing that affectively addresses the affordability crisis, while many of its actions exacerbate it.

(Note: If you find a post too long to read, please just skim the bolded portions. Thanks for reading my blog!)

(Note: Please follow me and get notices of my blog posts on Bluesky at: @jalippitt.bsky.social. Thanks!)

My last post discussed profit-taking by middlemen and privatization of public goods and services as drivers of high prices. The previous post presented an overview of the affordability crisis in the U.S., its 45 year history, and discussed monopolistic price gouging, tariffs, and personalized (aka surveillance) pricing as factors leading to high prices.

This post will discuss:

The premiumization of markets, meaning that products and prices target consumers with high incomes.
Efforts to reduce pharmacy benefit managers’ (PBMs) inflation of drug prices.
The failure of the Trump administration to enforce antitrust laws, which allows unjustifiable increase prices by Live Nation / Ticketmaster and others.

The so-called premiumization of markets is happening because high economic inequality leads to consumer spending patterns that make things more expensive for everyone. Consumer spending represents roughly 70% of all economic activity in the U.S. and therefore drives the economy. However, given the high levels of economic inequality, the wealthiest 10% of Americans are now doing almost half of all consumer spending. As a result, retailers target their products and prices to those high-income consumers. Products often become more upscale and their prices go up. Lower priced options tend to disappear, or their prices go up because key consumers can afford to pay more. Sometimes the higher prices are “justified” by adding frills or fancier packaging. Sometimes those with money bid up the price of goods or services with a limited supply, such as housing, raising prices for everyone.

Moreover, the middle class, striving for upward mobility (or at least the appearance of it) and to “keep up with the Joneses,” feels coerced into spending like the top 10%. Fancy clothes and cars, expensive parties and weddings, and so forth are what some feel they need to buy to maintain their status with peers. Easy access to debt, including buy now, pay later (BNPL) plans, facilitate living beyond one’s means. For example, a quarter of BNPL consumers have used BNPL to pay their rent, a third have used it to pay for medical or dental expenses, and nearly 40% have used it to pay off another debt, such as a credit card. [1]

One example of premiumization is the market for workout gyms and health clubs. The market is bifurcating in many locations and the middle-priced facilities are disappearing. The remaining options are the bare bones gym at $15 to $50 a month, which is often quite crowded at peak times, and the upper-end health clubs at over $200 a month, featuring plush locker rooms, personal trainers, and sometimes jacuzzies, saunas, and a spa. [2]

Pharmacy Benefit Managers (PBMs) were supposed to reduce drug costs, saving insurers and consumers money, but they have morphed into rapacious profit makers. (See this previous post for more details.) Three huge, monopolistic PBMs (Cigna’s Express Scripts, CVS Health’s Caremark, and United Health’s Optum RX) manage 80% of the prescription drug business in the U.S. It’s estimated that 42 cents of every dollar paid for prescription drugs now goes to a PBM. [3] The spending bill passed by Congress in early February includes an effort to rein in PBMs and reduce drug prices. Starting in 2028, PBMs will be paid a flat fee rather than a percentage of a drug’s price, which will eliminate the incentive to push high-priced drugs even when cheaper alternatives are available. Increased disclosure by PBMs will be required and kickbacks from drug manufacturers will have to be passed back to the PBMs’ customers. [4]

As with the PBMs, other monopolistic middlemen can manipulate the market to make unjustifiably large profits. As this previous post highlighted, Live Nation (parent company of Ticket Master) is a prime example of a monopolistic middleman. [5] It handles the ticket sales for over 80% of the country’s prime concert venues, owns or controls over 330 venues, and manages over 400 top-of-the-line artists. However, the Trump Department of Justice (DOJ) appears to be about to agree to a lenient settlement of the antitrust case against Live Nation. This is happening despite Trump’s executive order in 2025 supposedly cracking down on price gouging for event tickets. And even though 40 state Attorneys General are also parties to the suit against Live Nation / Ticketmaster. Some of them are likely to continue the suit, but the federal settlement will make it harder. By the way, the Federal Trade Commission also sued Live Nation last September for deceptive ticket pricing. [6]

Trump-connected lobbyists have apparently overpowered the DOJ’s own antitrust division and gotten Trump and Attorney General Bondi to overrule the antitrust division once again. As a result, the head of the antitrust division, Gail Slater, resigned a few days after her second in command, Mark Hamer, had resigned. Back in August, the previous number two person, Roger Alford, was fired for resisting sweetheart settlements of antitrust cases. Trump friend, Mike Davis, is the lobbyist for Live Nation and he had previously gotten a $1 million “success fee” for getting the DOJ to drop its challenge to Hewlett Packard’s merger with Juniper Networks. (Several state Attorneys General are challenging the approval of this merger.) He also earned at least $1 million for getting the DOJ to approve the merger of the country’s two largest real estate brokers, Compass and Anywhere Real Estate, over the objections of antitrust division lawyers. Senator Elizabeth Warren (D-MA) said the settlements of these antitrust cases “looks like corruption. … MAGA-aligned lawyers and lobbyists have been trying to sell off merger approvals … to the highest bidder.” [7]

The Trump administration’s failure to enforce antitrust laws allows monopolistic companies to increase prices, overwhelm small businesses, and put a damper on innovation. Overall, the Trump administration is doing nothing that affectively addresses the affordability crisis, while many of its actions exacerbate it.

My next post will discuss the income side of the affordability crisis and the factors that lead to low pay.

[1] Janssen, E., 12/1/25, “Selling the poor on spending like they’re rich,” The American Prospect (https://prospect.org/2025/12/01/premiumization-plutonomy-middle-class-spending-gilded-age/)

[2] Fonseca, C., & Hecht, B., 2/13/26, “Slimmer pickings on midrange gym options,” The Boston Globe

[3] Curry Wimbish, W., 12/5/25, “Meet the connectors,” The American Prospect (https://prospect.org/2025/12/05/meet-the-connectors-middlemen/)

[4] Abelson, R., & Robbins, R., 2/5/26, “Congress looks to diagnose cause of high drug prices,” The Boston Globe from The New York Times

[5] Dayen, D., 4/30/24, “Live Nation strikes up the band in Washington,” The American Prospect (https://prospect.org/2024/04/30/2024-04-30-live-nation-strikes-up-band-washington/)

[6] Dayen, D., 2/12/26, “Trump Justice Department poised to preserve Ticketmaster monopoly,” The American Prospect (https://prospect.org/2026/02/12/trump-justice-department-ticketmaster-live-nation-monopoly/)

[7] Johnson, J., 2/13/26, “Warren says Trump DOJ ouster of antitrust chief ‘looks like corruption’ as lobbyists, Wall St rejoice,” Common Dreams (https://www.commondreams.org/news/warren-gail-slater-antitrust)

THE AFFORDABILITY CRISIS Part 2

Cost of Living Crisis theme done in a Posterised style. Inflation – Economics, cost, shopping basket, supermarket

The affordability crisis (aka cost of living crisis) in the U.S. is multifaceted and has been growing for 45 years, due to low pay and high prices. There are many factors pushing up prices well beyond normal inflation, including profit-taking middlemen and privatization of public goods and services.

(Note: If you find a post too long to read, please just skim the bolded portions. Thanks for reading my blog!)

(Note: Please follow me and get notices of my blog posts on Bluesky at: @jalippitt.bsky.social. Thanks!)

My previous post presented an overview of the affordability crisis (aka cost of living crisis) in the U.S., its 45 year history, and began a discussion of why prices are so high. It covered:

Monopolistic price gouging,
Tariffs, and
Personalized (aka surveillance) pricing driven by artificial intelligence (AI).

This post will discuss:

Profit-taking by middlemen (aka intermediaries) from ticket sellers to drug benefit managers that increases costs for consumers, often unjustifiably and even illegally.
Privatization and the fraud that often accompanies it leave consumers and taxpayers with higher costs and often degraded quality.

Middlemen, also referred to as intermediaries, are entities that operate between consumers and the producers of goods or services. Ostensibly, they make the market operate more efficiently by linking consumers and producers, while making transactions easier and smoother. However, given their need to make a profit, they often end up more focused on profit-making than helping markets operate efficiently. They add a layer of costs to consumers’ purchases, pushing up prices. [1]

Pharmacy Benefit Managers (PBMs) are a classic example of middlemen. The original intent was to reduce drug costs, saving insurers and consumers money, but that has morphed into rapacious profit making by manipulating the market and increasing drug costs for consumers. PBMs manage drug benefits for insurance companies and largely determine which drugs are available to insurees and how much they will pay for them. There are three huge, monopolistic PBMs that manage the great majority of drug benefits for private insurers, which is a $600 billion global market. They have found that they can be very profitable by negotiating kickbacks from drug manufacturers (that may be half the cost of a drug) for the drugs they include in an insurer’s formulary, i.e., the list of insured drugs and how much consumers must pay for them. They also sign contracts with pharmacies that tend to reward the big chains and make it very hard for independent pharmacies to exist. It’s estimated that 42 cents of every dollar paid for prescription drugs now goes to a PBM. Meanwhile, the PBM industry spends over $10 million a year lobbying the federal government to block regulation. [2]

As with the PBMs, other monopolistic middlemen often find ways to manipulate the market to make big profits by not only increasing prices for consumers but also lowering the prices they pay to producers. Amazon, once it gained monopolistic control of various e-commerce sectors, has shown itself to be a master at squeezing producers to minimize costs, while also figuring out ways to maximize its revenue from consumers.

Live Nation (parent company of Ticket Master) is another example of a monopolistic middleman. It dominates ticket sales for entertainment events and jacks up prices and adds junk fees to boost its profits. It has increased its monopolistic power by also managing thousands of performers and purchasing many entertainment venues. [3]

Middlemen, from Wall St. asset managers and stock traders to real estate agents, eBay, and the apps that deliver food to your door, add their costs and profits to transactions, thereby increasing prices for consumers. Some have been found to engage in illegal or at least unethical ways to increase their profits.

Meat packers are middlemen that buy meat from ranchers and farmers, process it, and sell it to consumer outlets, e.g., supermarkets. There are four giant meat packers that engage in monopolistic practices, both in the buying and the selling of meat. This, and illegal collusion, has led them to be very profitable as prices for consumers have increased dramatically while the prices they pay to meat producers have fallen. In October 2025, the meatpackers settled two separate price-fixing lawsuits for almost $300 million for illegally jacking up the prices of beef and pork.

As with middlemen, the privatization of goods and services typically delivered by government is presented as a way to make markets more efficient. There are many examples such as privatization of Medicare, roads and bridges with private tolls, and electricity, water, and sewer systems operated by private entities. Often, the profit motive leads to increased costs for consumers and decreased quality of the goods or services delivered.

For example, the federal government has allowed the privatization of the delivery of Medicare health care services to seniors through what are called Medicare Advantage plans. They are run by private insurers and are very profitable because they make it hard to get some health care services (especially expensive ones) and because they cheat the federal government. They cost more than traditional, publicly provided Medicare and deliver worse outcomes. It is estimated that Medicare would save at least $75 billion a year by eliminating Medicare Advantage plans. Because taxpayers pay for Medicare, they are driving up the taxes we all pay for Medicare’s health care. [4] (See this previous post for more detail on the Medicare Advantage rip off.)

Another example is Connecticut’s largest water system, which serves over 200,000 homes and businesses, and is privately owned by Eversource, the large New England utility corporation. It’s asking for a 42% rate increase ($88 million a year) or to allow it to be sold for $2.4 billion to a nonprofit, quasi-public entity. Many experts believe such a sale would lead to higher costs for consumers and weaker regulation. [5] This highlights the complexity and risk of having a public good such as water in private hands.

My next post will discuss the premiumization of markets, meaning that products and prices target consumers with high incomes, and factors that are keeping wages low.

[1] Curry Wimbish, W., 12/5/25, “Meet the connectors,” The American Prospect (https://prospect.org/2025/12/05/meet-the-connectors-middlemen/)

[2] Curry Wimbish, W., 12/5/25, see above

[3] Dayen, D., 4/30/24, “Live Nation strikes up the band in Washington,” The American Prospect (https://prospect.org/2024/04/30/2024-04-30-live-nation-strikes-up-band-washington/)

[4] Johnson, J., 1/28/26, “A $1.2 trillion ‘rip off’: Report spotlights massive scale of Medicare Advantage fraud,” Common Dreams (https://www.commondreams.org/news/medicare-advantage-fraud)

[5] Associated Press, 12/18/25, “Connecticut’s largest water company seeking 42% rate increase,” The Boston Globe, Business Talking Points

THE MANY FACES OF THE AFFORDABILITY CRISIS

The U.S. affordability crisis is multifaceted and has been growing for 45 years, driven by low pay and high prices. Many factors push up prices including monopolistic price gouging, tariffs, personalized pricing driven by AI, profit-taking middlemen, privatization, and premiumization of markets.

The American affordability crisis is a multifaceted beast that has been growing for 45 years, driven by low pay and high prices. There are many factors pushing up prices well beyond normal inflation, including monopolistic price gouging, tariffs, personalized (aka surveillance) pricing driven by AI, profit-taking middlemen, privatization, and premiumization of markets.

(Note: If you find a post too long to read, please just skim the bolded portions. Thanks for reading my blog!)

(Note: Please follow me and get notices of my blog posts on Bluesky at: @jalippitt.bsky.social. Thanks!)

The American affordability crisis is a multifaceted beast that has been growing for 45 years. It’s driven by low pay and high prices. Over the last 45 years, many workers’ pay hasn’t kept up with the increase in prices. What pay increases there have been have gone disproportionately to high earners. Good, middle-class blue- and white-collar jobs have been lost to globalization, while the pay for remaining jobs has shrunk due to the purposeful undermining of unions and global wage competition. The result is a crushing affordability crisis for many current and formerly middle-class households, as well as for lower income households. [1]

According to a Brookings Institute analysis, 43% of American families can’t afford to pay for the housing, food, health care, child care, and transportation they need. This figure is 59% for Black families and 66% for Latino families. There’s been a dramatic shift in income from workers to executives and investors: in 1947 workers received 70% of total national income, while today they get only 59%. Unlike the previous 35 years, after 1980, workers did not receive wage increases that reflected their increases in productivity: from 1979 to 2025 workers’ productivity increased by 87% but their compensation only increased 33%. According to a Rand Corporation analysis, in 1975, the 90% of workers at the bottom of the income spectrum received 67% of national income, while in 2019 (the latest data it had) they received 47% of national income. It calculated that if those workers in 2023 had received 67% of national income (as they did in 1975), they would have earned an additional $4 trillion or, on average, each worker would have made $28,000 more than they did. Over the period from 1975 to 2023, if workers had received 67% of national income, they would, in aggregate, have received $79 trillion more in income. [2]

There are many factors that have been depressing workers’ compensation. They range from the failure to raise the minimum wage to the dramatic weakening of unions to the monopolistic power of huge employers. I’ll address these issues in future posts. This post will begin a discussion of why prices are so high.

There are many factors pushing up prices well beyond normal inflation. They include:

Monopolistic price gouging by huge companies due to a lack of antitrust enforcement, a lack of regulation, regional concentration, and other factors.
Tariffs. The best estimates are that they have added about 1% to the inflation rate so far.
Personalized (aka surveillance) pricing driven by artificial intelligence (AI) algorithms that squeeze every dollar possible out of consumers.
Profit-taking by middlemen (aka intermediaries) from ticket resellers to drug benefit managers.
Privatization and the fraud that often accompanies it.
Premiumization of markets, meaning that products and prices target consumers with high incomes.

Capitalism is out of control in the U.S. Competition has been stymied and monopolistic power is widespread in the U.S. economy. This means the “invisible hand” of a market economy and the economic “rules” of supply and demand do not work to keep prices down and quality up. The rules of the economic game have been rigged to favor large corporations, financial manipulation, and wealth. One indicator that clearly confirms this is that corporate profits are at historically very high levels in terms of percentage of revenue.

Many sectors of our economy are dominated by a small number of large companies that have monopolistic power, especially when the companies serve different, concentrated geographic areas. This has happened because of the failure to enforce antitrust laws for 45 years (except for four years under President Biden). This has allowed dominant companies to buy up competitors or put them out of business, often using illegal business practices that weren’t stopped or punished.

Regulation has been compromised (aka captured) by large companies through their political influence garnered by campaign spending and lobbying, as well as the revolving door of personnel between government regulatory positions and private industry jobs. As a result, many aspects of corporate behavior have been deregulated, allowing companies to increase profits through, for example, price gouging, high interest rates on loans and credit cards, high fees for overdrafts and late payments, and junk fees on entertainment tickets, hotel rooms, and airline fares (among other things).

Companies with monopolistic power (sometimes through illegal collusion with the few other large companies in an industry) can raise prices almost at will, generating abnormally high profits. They can also degrade service and product quality because there is no competition that can offer consumers a better deal. For example, Amazon, through extensive surveillance of both buyers’ and sellers’ behaviors, can manipulate the market to extract high prices from consumers and low prices from suppliers, generating huge profits for itself. HP (and others) won’t let you use replacement parts (such as ink cartridges) made by a competitor. Companies from Apple to John Deere to car makers won’t let third parties repair their devices or machines. And Monsanto won’t let farmers save seeds from their crops to use for planting next season; it requires them to buy new seed from it.

Technology companies and others, using AI with vast amounts of personal data and tremendous computer processing power, can tweak prices instantaneously so each consumer pays the maximum they’re willing or able to pay at a specific moment in time. For example, Uber will charge you more when it knows your phone is running low on battery power and you need to quickly accept your ride. It will also charge you more based on your past behavior: for example, if you always grab the first option that is offered. If it knows you’re a shopper and will wait for a better offer, it will offer you a better price to get your business. It may even charge you more if it knows you recently had a pay day. It also pays drivers differing amounts based on a similar calculus. If a driver always grabs the first job that shows up, it will pay them less than a driver that waits for a better paying option.

Airlines have engaged in some degree of individualized pricing for some time, e.g., the person sitting next to you probably didn’t pay the same price you did. Hotels have been found to offer different prices depending on where you’re located – more if you’re in a pricey suburb than if you’re in a lower income city neighborhood or rural community – assuming your location is an indication of how much you’re able and willing to pay.

My next post will discuss the effects on prices of profit-taking intermediaries, privatization and related fraud, and premiumization. After that, I’ll discuss the factors keeping workers’ pay low.

[1] Kuttner, R. 12/1/25, “Sources of America’s hidden inflation,” The American Prospect (https://prospect.org/2025/12/01/sources-of-americas-hidden-inflation/)

[2] Meyerson, H., 12/3/25, “The $79 trillion heist,” The American Prospect (https://prospect.org/2025/12/03/79-trillion-heist-worker-pay/)