We keep hearing the good news. GDP growth beats expectations. The stock market hits record highs. Unemployment stays low. Corporate profits soar quarter after quarter. By every traditional metric economists use to measure economic health, the system appears to be functioning exactly as designed.
Yet something feels fundamentally broken. While headlines celebrate another banner year for shareholders, millions of workers watch their paychecks fail to keep pace with rent, groceries, and healthcare. The disconnect between macroeconomic success and lived experience has never been wider. What we're witnessing isn't economic failure but rather economic success that only reaches a shrinking slice of the population.
The Wealth Machine Runs on Different Fuel Now
The American economy generated roughly $27 trillion in GDP during 2023, yet wage growth for typical workers barely outpaced inflation. Meanwhile, the wealth of American billionaires increased by $2 trillion in 2023 alone, according to Americans for Tax Fairness. This isn't a bug in the system. The modern economy has been restructured to prioritize returns to capital over returns to labor.
Consider how productivity and compensation used to move in lockstep. From 1948 to 1973, worker productivity and hourly compensation both grew roughly 97 percent, according to Economic Policy Institute data. Workers produced more, and they earned more. That social contract has been shredded. Since 1979, productivity has grown 64.6 percent while typical worker compensation has grown only 15 percent.
The gap represents trillions of dollars that once would have gone into paychecks but now flow primarily to shareholders and executives. When companies become more efficient or profitable, those gains get distributed upward. Stock buybacks, which were essentially illegal until 1982, now consume roughly $1 trillion annually. That money enriches existing shareholders rather than funding wage increases, capital investment, or research and development.
Housing and Healthcare Devour What's Left
Even workers who manage decent wage growth find themselves running in place, thanks to costs that rise far faster than paycheques. Housing expenses have become particularly punishing. The median home price reached $414,400 in 2025, according to recent Federal Reserve Economic Data (FRED) updates. A household earning the median income of roughly $75,000 would need to spend more than 40 percent of their pre-tax income on mortgage payments for that median home.
Rental markets offer no escape. The average rent for a two-bedroom apartment reached $1,356 per month in 2025, while the National Low Income Housing Coalition found that a full-time minimum wage worker cannot afford a two-bedroom rental anywhere in America. The old rule that housing should cost no more than 30 percent of income has become a relic. For millions of families, housing alone consumes half their earnings or more.
Healthcare costs compound the squeeze. KFF's annual Employer Health Benefits Survey, updated through 2025 reports, shows premiums rising 7% from 2024 levels amid higher utilization and costs, continuing the post-pandemic trend. Deductibles have tripled since 2009. These aren't luxuries. These are fundamental necessities that have been financialized and turned into profit centers. When rent and healthcare alone can consume 60 to 70 percent of a typical paycheck, there's little left for building wealth or weathering emergencies.
The Opportunity Gap Becomes a Chasm
Economic mobility, once the beating heart of the American promise, has stalled. Children born in 1940 had a 90 percent chance of earning more than their parents, according to research by economist Raj Chetty. For children born in 1980, that probability dropped to 50 percent. We've gone from near-guaranteed progress to a coin flip.
Education no longer provides the escape hatch it once did. College graduates from the class of 2023 carried an average of $37,574 in student debt, according to EducationData.org. That burden shapes life choices for decades, delaying homeownership, marriage, and retirement savings. The return on investment for higher education has diminished even as its cost has exploded. Many graduates find themselves overqualified and underpaid, servicing debt in jobs that don't require degrees.
Geographic inequality makes everything worse. Opportunity increasingly concentrates in a handful of expensive cities where the jobs are, but living costs make building wealth nearly impossible. Rural and post-industrial areas offer affordable housing but few prospects for career advancement. This geographic sorting ensures that talent and ambition often aren't enough. Where you can afford to live increasingly determines what you can achieve. The economy works brilliantly for those positioned to capture gains from capital appreciation and asset ownership. For everyone else, it's an exhausting treadmill where working harder just means staying in place.
