• A Pew Research survey found only 47% of middle-income earners could save money in the past year.
• Lower-income earners are also having a hard time saving and affording necessities.
• Inflation moving in the wrong direction doesn't help the affordability situation.

America's middle earners are feeling the squeeze.

A new analysis from the Pew Research Center examines how Americans' finances are faring, an especially salient topic in a midterm season where affordability is very much on the ballot.

America's middle earners — those who make between $50,700 and $152,000 after adjusting for their family sizes and the cost of living in their areas — increasingly don't have enough saved for an emergency. Just over half of middle-income Americans say they don't have rainy-day funds that would cover expenses for three months in the event of an emergency.

Meanwhile, 47% of middle-income earners — and a measly 24% of lower-income earners — reported being able to save money in the past year. Across all income tiers, the majority of respondents said they had cut back spending on extras like eating out or streaming services.

Those dwindling emergency funds and sacrifices might be due to rising costs, which often take a particularly large bite out of lower-earners' wallets.

It could be getting worse; inflation is moving in the wrong direction. In September, the consumer price index inflation rate rose from 3.4% to 3.7%, just above the 3.6% forecast. Plus, inflation-adjusted wages have been falling for six months.

Today's economy is still more difficult for those at the bottom of the earnings ladder. Fifty-one percent of lower-income respondents said they can pay all of their bills in full in the 2026 survey, down from 56% in 2020. For middle-income respondents, the share dropped from 81% in 2020 to 78% in 2026, while the share of upper-income respondents held steady at 93%.

Pew also found 71% of lower-income US adults struggled with at least one kind of basic necessity, like affording medical care or paying their rent or mortgage, in the past year, compared with 39% of middle-income and 13% of upper-income Americans.

But the latest survey marks another sign that middle-income earners are increasingly aligning with their lower-earning peers, a dour sign for the health of the middle class. A separate report from the Urban Institute found that, even as lower-income renters were the most likely to report issues paying the rent, middle-income renters were increasingly likely to report struggling to pay.

Similarly, middle-income earners' consumer sentiment has switched from mirroring their higher-earning peers to more closely aligning with lower earners — another sign that the middle class is falling on harder economic times.

"Working people are living on the edge, working longer and harder than ever for less money," said AFL-CIO President Liz Shuler. "They're angry every time they fill the tank. They're terrified of what their heating bills will look like this winter."

• Have you gotten a raise over the past couple of years? Inflation has likely eaten it away.
• Inflation-adjusted hourly earnings, which had risen after Donald Trump first took office, are now declining.
• And there are ominous signs that inflation could get worse.

If you've gotten a raise over the last two years, almost all of those gains have now been eaten by inflation.

That is, if you're the average wage-earner, considering the latest statistics released this week showing that prices were rising at a faster clip than expected.

It's more evidence that affordability challenges in the US economy aren't going away. It also means that average hourly pay, which had risen after Donald Trump took office in January 2025, is now right back to where it started, when taking inflation into account.

The average hourly wage was $35.84 in January 2025, according to federal statistics, or $37.79 in today's dollars, adjusted for inflation. The average hourly wage last month was $37.81 — basically unchanged over the past 20 months.

Wednesday's consumer price index inflation report from the Bureau of Labor Statistics came in hotter than expected, with prices up 3.7% over the year in September. Economists had expected a 3.6% increase, and the rate was well above August's 3.4%.

"We read the September CPI report as another piece of evidence that the US is facing a persistent inflation problem," economists at BNP Paribas said in a note to clients.

That problem means high prices — including gasoline that was up 9.1% in September compared to the previous month — are gobbling up pay increases you might get at work.

Heather Long, chief economist at Navy Federal Credit Union, underlined that consumer price growth since 2025 has eroded nearly all wage gains, citing the impact of the war in Iran, which began at the end of February, on Americans' wallets.

"This is a very different picture from President Trump's first term when wages were up over 15%, well above about 8% inflation," Long said. "It helps explain the frustration many households feel right now with the economy."

Higher prices are adding to a general sense of malaise about the economy. The University of Michigan's consumer sentiment index dipped to 46.3 in October, down from 71.7 in January 2025.

Joanne Hsu, the director of the survey, said higher gas prices driven by the Middle East conflict have added to the ongoing cost-of-living pressures over the past several years.

Higher prices and inflation outpacing wage growth can be especially tough for Americans who are on tight budgets or living paycheck to paycheck. "When we look at the majority of the US workforce, people who are middle- and lower-income households, higher costs in things like gas and groceries take up a larger share of their income," said ZipRecruiter economist Nicole Bachaud.

It's important to note, there is more than one way to read the wage numbers as they relate to inflation — and in some ways, workers have actually come out ahead.

For example, average weekly earnings have grown faster over the last year than average hourly earnings, as the number of hours the typical worker works has edged up.

The Trump administration, when asked for comment, highlighted annual earnings. "Under President Trump, private sector workers have seen their wages continue to outpace inflation, with average annual earnings growing by more than $600," said White House spokesperson Matthew Middleton.

Inflation will play a role in the midterms

The midterm elections are in just a few weeks, and affordability will likely be a key concern.

An Economic Innovation Group and Echelon Insights survey in September asked people what elected officials should prioritize most to make life better for workers. The survey said that 45% of American workers wanted officials to prioritize reducing the cost of everyday essentials, and 23% wanted them to focus on making housing more affordable.

Long, at Navy Federal, said the "modest increase" in grocery prices is a silver lining in the latest consumer price index report. Food at home, which includes groceries, rose at a slower pace than April's 2.9%, with prices increasing 1.8% year over year in September.

"But it's inevitable food prices will likely rise in the months ahead as higher diesel and transport costs are passed along to consumers," Long said.

There are other ominous signs that inflation could worsen. Thursday's producer price index report showed that final demand prices rose 1.3% in September, the highest since 2022.