Why Your Morning Coffee Costs More and What It Means for Most of Us

After listening to the rain last night, the cats woke us up early this morning. Coffee was made. Cats were fed. Dogs are taken outside during a brief break in the water falling from the sky. Noticing that we are almost out of coffee, I checked for the various prices at local supermarkets. Yep, it’s gone up anywhere from $1.60 to $5.00 or more, depending on the kind you’re getting and where you shop. Looks like we’re going with lower quality and price of our early morning mug of wake-up juice. That’s not the only place there’s a problem, though.

That daily pinch felt at the grocery store, the wince when filling the gas tank, the anxious calculations before paying the utility bill – these are not isolated incidents. They are individual data points in a much larger, and increasingly troubling, national picture. A recent analysis confirms what many Americans feel in their bones: the gap between what they earn and what they need for even a basic, secure standard of living is widening, pushing the foundational tenets of the American Dream further out of reach for a vast majority.

The Reality Beneath the Headlines: LISEP’s Stark Findings

The Ludwig Institute for Shared Economic Prosperity (LISEP), a research organization dedicated to understanding and improving the economic well-being of lower and middle-income Americans, released a sobering report in May 2025. Its findings cut through the often-optimistic sheen of headline economic indicators like Gross Domestic Product (GDP) or national unemployment rates, which, according to LISEP Chairman Gene Ludwig, “don’t reflect the lived reality of most Americans.”

LISEP’s analysis utilizes a “Minimal Quality of Life” index. This isn’t just about covering bare necessities like food and shelter; it encompasses a broader “basket of American dream essentials.” These include the technology tools now indispensable for work and education, the ever-increasing costs of higher education itself, comprehensive health and child care, professional clothing needed for employment, and even basic leisure activities that contribute to well-being and social participation.

The conclusion is stark: for the bottom 60% of U.S. households, this minimal quality of life is financially out of reach. In 2023, these households, earning an average of $38,000 per year, would have needed an income of approximately $67,000 to afford the items LISEP tracks. “The middle class has been declining — we just haven’t recognized it fully,” Ludwig told CBS MoneyWatch. “It’s really dangerous because it’s the kind of thing that leads to social unrest, and it’s not fair. The American dream is not that it’s given to you — it’s that if you work hard, you have a chance to get ahead and achieve the things in life that you want to achieve. It’s not living in a tent, not having to steal.”

The LISEP report further details that between 2021 and 2023, the cost of affording this basic level of economic security effectively doubled. Housing and healthcare costs surged dramatically. Perhaps most alarmingly for future prospects, the savings required to attend an in-state public university skyrocketed by 122% in just those two years. Meanwhile, for the bottom 60% of earners, median earnings, when adjusted for the cost of LISEP’s indexed goods, actually fell by 4%. Their income growth limped along at a mere 0.37% per year, less than half the rate seen by the top 40% of earners. Ludwig bleakly predicts this gap will continue to widen, as the costs for these essential goods and services are inflating faster than wages for those in the lower and middle brackets.

The True Cost of Living: A Tale of Three Cities

The findings from LISEP are powerfully corroborated by tools like the MIT Living Wage Calculator, which provides geographically specific data on the income needed to meet basic needs. A look at three major U.S. cities, including our own Indianapolis, illustrates the chasm between the federal minimum wage of $7.25 per hour and the reality of daily expenses (all figures are pre-tax, based on early 2025 MIT data):

• Indianapolis (Indianapolis-Carmel-Anderson, IN metro area):
  • A single adult with no children needs to earn approximately $21.54 per hour (about $44,804 annually).
  • A household with two adults (both working) and two children needs each adult to earn $28.17 per hour (a combined household income of about $117,194).
• Atlanta (Atlanta-Sandy Springs-Alpharetta, GA metro area):
  • A single adult with no children requires $26.28 per hour (about $54,656 annually).
  • For two adults (both working) with two children, each must earn $27.44 per hour (a combined household income of about $114,160).
• Houston (City of Houston, TX):
  • A single adult needs $36.10 per hour (about $75,088 annually).
  • Two working adults with two children in Houston need a combined annual income of $175,219.

These figures, representing just a living wage for basic necessities (not even the “comfortable living” metrics which are higher still), are two to five times the federal minimum wage. They also far exceed the $38,000 average earnings that LISEP identified for the bottom 60% of households, graphically illustrating the daily financial pressure millions face.

Stretched Thin: The Rising Tide of Household Debt

When income doesn’t cover essential costs, families are often forced to make impossible choices or turn to borrowing to stay afloat. Recent data on U.S. household debt, as reported by the New York Federal Reserve for the first quarter of 2025, signals increasing strain:

Total household debt climbed by $167 billion, reaching a staggering $18.20 trillion. While credit card balances saw a slight seasonal dip in Q1, they remained 6.01% higher than the previous year, standing at $1.18 trillion. More concerning are the delinquency rates. About 4.3% of all outstanding debt was in some stage of delinquency. The rate of serious delinquencies (90 days or more past due) surged, particularly for credit cards and student loans. Credit card serious delinquencies reached their highest levels since 2011 for some metrics, with one measure hitting 12.3%. For younger consumers under 30, this rate was 10.3%. Student loan serious delinquencies also saw a dramatic rise, largely due to the resumption of reporting after pandemic-era pauses.

The Federal Reserve Bank of St. Louis has confirmed this broad, continuing rise in delinquent U.S. credit card debt since late 2022, noting it particularly impacts lower-income areas. This recourse to debt, and the subsequent struggle to manage it, is a clear indicator of an economy where, for many, wages are simply not keeping pace with the cost of maintaining even a minimal standard of living.

Political Choices, Real-World Consequences: The Budget Debate

This growing crisis of affordability doesn’t exist in a vacuum. It is profoundly shaped by political decisions and budgetary priorities. Recent analyses (early to mid-2025) of House Republican budget proposals by organizations like the Center for American Progress and the Center on Budget and Policy Priorities (CBPP) outline a fiscal direction that many experts warn could exacerbate these hardships.

These proposals generally aim for substantial tax cuts, primarily benefiting corporations and the wealthiest Americans, totaling an estimated $4.0 to $5.3 trillion over the next decade. To help finance these cuts and meet budget reconciliation targets, the plans call for historic reductions in funding for crucial social programs:

• Medicaid and CHIP: Proposed cuts of at least $600 billion could strip health coverage from over 8 million vulnerable Americans.
• SNAP (Food Stamps): Proposed cuts exceeding $290 billion (nearly 30%) could take food assistance away from millions, including children, potentially by shifting costs to states or increasing work requirements.
• Higher Education Aid: An estimated $350 billion in cuts would impact programs designed to make college more affordable.
• Other Safety Nets: Significant reductions are also eyed for Temporary Assistance for Needy Families (TANF) and the Social Services Block Grant (SSBG), impacting child care and essential family support.

Critics argue that such cuts, aimed at programs that provide a lifeline for struggling families, would inevitably increase out-of-pocket expenses for healthcare, food, and education, further squeezing households already identified by LISEP and MIT data as unable to afford a basic standard of living. This approach, some economists warn, represents a “triple threat”—tax cuts for the wealthy, devastating program cuts for those most in need, and the potential for increased costs via tariffs—that would disproportionately harm low- and moderate-income families and communities of color.

The Fraying Edge of the American Dream

The convergence of these factors—stagnant real wages for many, rapidly increasing costs for essentials, rising household debt, and proposed cuts to social safety nets—paints a concerning picture. People will, as a natural instinct, try to hold onto their standard of living for as long as possible, often by taking on debt. But this is a temporary fix, not a sustainable solution.

The longer-term social implications of this sustained economic pressure are significant. It can lead to increased stress, poorer health outcomes, reduced opportunities for children, and a growing sense of disillusionment. As LISEP Chairman Gene Ludwig warned, such conditions can foster social unrest and erode faith in the foundational promise of the American Dream: that hard work and fair play lead to a chance to get ahead.

The humble cup of coffee, now a more considered purchase, serves as a daily reminder. While its rising price is a small symptom, it points towards a much larger challenge: ensuring that the economy works not just for a select few but provides a pathway to a secure and dignified life for all who contribute to it. The question remains whether the current trajectory, and the policy choices that shape it, will shore up the foundations of that dream or allow them to continue to crack.

Are we going to let this slide continue? Impeach. Convict. Remove. That’s the only way to have a fighting chance.