5 Services that Middle-Class Americans Won’t Be Able to Afford in the Next Five Years Due to Inflation

The American middle class has long been considered the backbone of the nation’s economy. However, as inflation continues to outpace wage growth, many families are finding it increasingly difficult to maintain their standard of living.

This article explores five essential services that middle-class Americans may struggle to afford in the coming years, highlighting their growing financial pressures and potential long-term consequences for individuals and society.

1. Cutting the Cord: The End of Multiple Streaming Subscriptions

Gone are the days when cable TV was the primary source of home entertainment. The rise of streaming services has revolutionized how we consume media, but this digital buffet comes at an ever-increasing cost. Netflix, Hulu, Disney+, and various other platforms have become household names, each offering unique content to entice subscribers.

However, subscription fees are rising as these services continue to invest in original programming and acquire exclusive rights to popular shows and movies. A new survey by Deloitte finds that streaming households are now spending $61 per month on four services, up from $48 per month last year.

As inflation pushes these prices higher, many middle-class families will face tough choices about their entertainment budgets. In 2023, almost every primary streaming service raised their prices for ad-free streaming.

This cost surge will likely continue and force consumers to prioritize, perhaps keeping only one or two services and missing out on the diverse content they once enjoyed. The era of streaming abundance may be coming to an end for many middle-class households.

To adapt, some families are already adopting strategies such as rotating subscriptions monthly or opting for ad-supported tiers when available.

While these approaches can help manage costs, they also reflect a shift in how middle-class Americans access entertainment, potentially limiting their exposure to a wide range of cultural content and shared experiences.

2. Health Insurance Premiums: The Rising Cost of Comprehensive Healthcare

Healthcare costs in the United States have been outpacing general inflation for decades, and this trend shows no signs of slowing. The dream of comprehensive healthcare coverage is becoming increasingly elusive for middle-class families, especially those without robust employer-sponsored health plans.

Employer-sponsored health plans

Healthcare insurance premium increases since 2008 and projections in the future:

1. From 2008 to 2018, average family premiums for employer-sponsored health insurance rose 55%, far outpacing wage growth.
2. Between 2008 and 2018, employee premium contributions for single and family plans grew at an average annual rate higher than 4%.
3. From December 2005 to December 2022, the implied total-premium index increased by 77.9%, an average annual increase of 3.4%.
4. In 2020, average health insurance premiums for single coverage were $7,149, representing a 2.5% increase over 2019. This one-year percentage increase was significantly lower than the average annual growth rate of 4.2% for single premiums from 2008 to 2020.
5. More recently, the average per-employee cost of employer-sponsored health insurance rose by 5.2% in 2023 to $15,797.
6. Employers are projecting another sharp increase for 2024.
7. Small employers faced even higher cost increases, with a 7.8% rise in 2023.
8. Prescription drug costs, a significant driver of overall health benefit costs, increased by 8.4% in 2023.

While there is no specific long-term projection, the trend of increasing healthcare costs is expected to continue. Recent data shows acceleration in premium growth, with rates exceeding historical averages.

Factors like healthcare sector inflation and rising prescription drug costs are likely to contribute to continued premium increases in the near future.

The consequences of this trend are already visible. Many middle-class families opt for high-deductible plans to lower their monthly premiums, often resulting in delayed care as people avoid seeking treatment to save money. Others choose less comprehensive coverage, leaving themselves vulnerable to catastrophic medical expenses.

The long-term implications of these choices are concerning. Delayed preventive care can lead to more severe health issues down the line. At the same time, inadequate coverage can result in medical bankruptcy – a leading cause of financial ruin in the United States.

Policymakers and healthcare providers are exploring solutions, such as value-based care models and telemedicine, to help control costs. However, without significant systemic changes, comprehensive healthcare may become a luxury many middle-class Americans can’t afford in the coming years.

3. Education Inflation: College Becoming Out of Reach

Higher education has long been considered a ticket to economic mobility and stability. However, the cost of college education in the United States has been rising at an alarming rate, far outpacing general inflation and wage growth.

According to the College Board, the average published tuition and fees for a four-year private college reached $41,540 for the 2023-2024 academic year. When factoring in room and board, books, and other expenses, the total cost of attendance often exceeds $60,420 per year.

Public universities, while more affordable, have also seen significant price increases.

1. For the 2023-2024 academic year, the average in-state tuition and fees at public four-year universities is $11,260.
2. This represents a $270 (2.5%) increase from the 2022-2023 academic year.
3. For out-of-state students, the average tuition and fees at public four-year universities is $29,150 for 2023-2024

If current trends continue, by 2028, the cost of attending a private college could approach $48,626 per year, with public universities not far behind. These astronomical figures force many middle-class families to reconsider their education plans.

The impact of this education inflation is multi-faceted. Some students choose community colleges or in-state public universities instead of their dream schools. Others are taking on substantial student loan debt, which can have long-lasting effects on their financial future.

According to the Department of Education, data shows that as of March 2024, the average federal student loan debt was about $37,850.

The debate around student loan forgiveness and free college tuition has gained traction recently. Still, concrete solutions remain elusive as colleges continue to raise tuition faster than inflation and loans continue to be issued with no safeguards.

As college becomes increasingly unaffordable, middle-class families may need to explore alternative paths to education and career development, potentially altering the landscape of higher education in America.

4. Childcare Crisis: When Quality Care Becomes a Luxury

For many middle-class families with young children, childcare expenses have become a significant financial burden. Quality childcare costs have steadily risen, often outpacing inflation and wage growth.

According to the Department of Labor data, center-based infant care costs families more than $17,000 annually per child on average in the United States.

In some areas, childcare costs are comparable to or exceed in-state college tuition. For example, some parents in the New York area report paying $1,200 a month per child for daycare, which would amount to $14,400 annually.

As these costs continue to rise, middle-class families are facing difficult decisions. Some parents are reducing their work hours or leaving the workforce entirely to care for their children, a choice that can have long-term implications for career growth and family finances.

Others are turning to less formal childcare arrangements, which may not provide the same early childhood education and socialization level.

The broader economic impact of the childcare crisis is significant. When parents are forced to leave the workforce or reduce their hours, it affects individual families and reduces overall economic productivity and tax revenue.

Some employers are beginning to recognize this issue and are offering childcare benefits or on-site daycare facilities. However, these solutions are not yet widespread.

Without significant intervention, such as increased government subsidies or a national childcare program, quality childcare may become a luxury many middle-class families cannot afford in the next five years.

5. Vacations on Hold: The Disappearing Family Getaway

The annual family vacation has long been a cherished tradition for middle-class Americans, offering relaxation, bonding, and new experiences. However, as inflation continues to drive up the costs associated with travel, this tradition is increasingly under threat.

According to GoGo Charters, a one-week vacation for a family of four can cost $7,936 in 2024.

Forbes Advisor reports that a family of four could expect to spend about $3,600 for a three-night getaway within the United States. This includes flights, hotel, car rental, and meals.

The cost of international trips being double or triple that of domestic trips is possible, especially considering factors like longer flights, potential currency exchange rates, and often higher accommodation costs in popular international destinations.

Inflation is projected to rise significantly over the next five years, affecting everything from airfare and hotel rates to dining and attractions.

The impact of losing affordable vacation options extends beyond mere inconvenience. Family trips provide valuable opportunities for cultural enrichment, stress relief, and strengthening family bonds. They also play a crucial role in supporting the tourism industry, significantly contributing to many local and national economies.

As traditional vacations become less attainable, many middle-class families are adapting their approach to leisure time. “Staycations,” where families explore local attractions or enjoy home-based activities, are becoming more popular. Others are opting for shorter trips or choosing destinations closer to home to save on travel costs.

While these alternatives can provide enjoyable experiences, they may not offer the same escape and exposure to new environments as traditional vacations. The potential long-term effects on work-life balance, cultural understanding, and family dynamics remain to be seen.

Conclusion

The financial pressures facing middle-class Americans are intensifying, and the next five years may bring significant challenges in affording services that were once considered standard aspects of middle-class life.

From entertainment and healthcare to education and leisure, inflation is reshaping the economic landscape for millions of families.

As we navigate these changes, we must consider individual strategies for adapting to higher costs and broader policy solutions that can help alleviate these pressures.

The ability of the middle class to access these essential services affects individual families. It has far-reaching implications for social mobility, economic growth, and the overall health of American society.

While the outlook may seem daunting, it’s essential to recognize that change also brings opportunity. In response to these challenges, innovation in service delivery, new economic models, and shifts in societal priorities may emerge.

By staying informed and engaged, middle-class Americans can work towards solutions that preserve access to vital services and maintain the quality of life that has long been associated with middle-class status in America.