For Immediate Release
March 9, 2022

Ludwig Institute: Rising Prices Hitting Middle, Lower-Income Families Hardest

LISEP’s new metric shows 63.5% increase in basic living costs since 2001 vs. headline 46.2%

WASHINGTON, D.C. — The concern about today’s inflation misses the point, according to a new analysis by the Ludwig Institute for Shared Economic Prosperity (LISEP), which indicates that over the last 20 years, rising consumer prices have hit middle- and lower-income households much harder than the Consumer Price Index suggests.

LISEP today issued a white paper announcing its new True Living Cost (TLC) Index, a measure of price changes of the minimum adequate needs required to maintain a basic standard of living. While the CPI bases its reported rate of inflation on a diverse market basket — including items such as rental cars and hotel rooms, which are of little relevance to middle- and lower-income families — TLC focuses on the basics: housing, food, healthcare, childcare, transportation, technology, and personal care items, the expenditures that consume nearly the entire budget of most American households.

The LISEP analysis revealed that while the CPI remains an excellent measure of overall inflation, it falls short when determining the impact of rising prices on middle- and lower-income families. Since 2001, the TLC rose nearly 1.4 times faster than the CPI, 63.5% compared to the CPI’s 46.2%.

“Rising prices have an impact on each and every household in the nation, but what many policymakers may not realize is that those in the middle to lower end of the income scale have been hit really hard by inflation long before today,” said LISEP Chairman Gene Ludwig. “The CPI only tells part of the story, as the government-reported inflation falls short as a measure of just how much these middle- and lower-income households are suffering. The fact is, the price of bread and milk has gone up much faster than luxury cars in the last 20 years.”

Ludwig went on to note that this understatement of cost-of-living increases over the past 20 years can have serious repercussions for America’s working families, with adjustments in work contracts, retirement benefits, and government payments often tied to the CPI.

“The pandemic and supply chain issues have drawn attention to inflation recently,” Ludwig said. “But in reality, the TLC reveals that the cost of living for working-class families has been increasing steadily over at least two decades. Families with two, full-time middle-class jobs have to take on debt just to meet the most basic standard of living.”

When analyzing just these basic items, LISEP found that since 2001:

  • Housing costs have increased 149%, nearly three times the 54% reported by the CPI housing index;
  • Minimum adequate needs for healthcare is up 157%, compared to CPI’s 90%;
  • The TLC shows that the cost for a family to meet minimal technology needs (phone, internet connection) increased 112% overall, while the CPI reports phone services went down 7% and information services went down 66%.

In one LISEP case study, a single parent household with $47,684 in earnings must take on $6,006 in debt just to meet minimum adequate needs.

“Failing to develop policy that recognizes and addresses the needs of America’s working families will ultimately have dire consequences, both socially and economically,” Ludwig said. “The sooner we recognize the depth and breadth of  how unaffordable life has become in America, the sooner we can do something about it.”

The complete TLC report is available at

About TLC

In announcing the debut of the True Living Cost (TLC) metric, LISEP issued the white paper “Determining More Accurate Living Cost for Median- and Lower-Income American Families.” TLC assesses a set of minimal adequate needs that a household requires to function: housing, medical care, transportation, food, childcare, technology, and miscellaneous (e.g. clothing and personal care items) that takes into account household size (the eight household sizes range from one to two adults and zero to three children) and the relevant census region (Northeast, Midwest, South, and West). The TLC tracks change in price for minimal adequate needs over time.

As a comparison to the TLC, the Consumer Price Index (CPI) measures rising prices. The CPI better serves as an inflation metric rather than a cost-of-living metric due to the inclusion of luxury items and by only including the urban population, among other issues.


The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by Ludwig and his wife, Dr. Carol Ludwig. The mission of LISEP is to improve the economic well-being of middle- and lower-income Americans through research and education, and seeks to advance the dialogue around policy solutions to improve the well-being of all Americans.

About Gene Ludwig

In addition to his role as LISEP chair, Gene Ludwig is founder of the Promontory family of companies and Canapi LLC, a financial technology venture fund. He is the CEO of Promontory MortgagePath, a technology-based mortgage fulfillment and solutions company. Ludwig is the former vice chairman and senior control officer of Bankers Trust New York Corp., and served as the U.S. Comptroller of the Currency from 1993 to 1998. He is also author of the book The Vanishing American Dream, which investigates the economic challenges facing low- and middle-income Americans. It was released in September 2020 by Disruption Books. On Twitter: @geneludwig.


Jim Gardner
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