Residents of Europe and America have difficulty making ends meet
The whole world is going through difficult times – and they are making themselves felt in different parts of the world. Including in those Western countries that previously enjoyed a reputation as such “blessed havens”. Surveys — and life itself — show that Europeans and Americans are fully aware of the decline in living standards.
Seventy-three percent of Europeans believe their living standards will decline during 2024, according to a recent Eurobarometer survey released this morning. Almost half (47%) of Europeans have already experienced a decline in their standard of living, while 26% have not yet but expect this figure to decline over the coming year.
The study found that 37% of Europeans are experiencing difficulties paying bills sometimes or most of the time.
When asked “during the last twelve months, would you say that you had difficulty paying bills at the end of the month”, 36% of Greeks answered “most of the time”, while 50% of Greek respondents answered “sometimes” . And 14% answered “almost never.”
In Sweden, on the other hand, 93% of respondents said they “almost never” have difficulty paying bills.
But then again, according to a study by the EU statistics agency Eurostat, which launched an annual survey of satisfaction between 2013 and 2022, unhappy Germans were the second most complaining about life in the EU as their economy edged into recession and the government faced budget crisis
The Daily Mail reports that Germans are among the least happy people in Europe, reporting the biggest shocking drop in life satisfaction of any EU country over the past 10 years, according to Eurostat data.
< p>The Eurostat study asked Europeans to rate how they were doing on a scale of zero to 10. And it found that the sharpest downward shift occurred in Germany, where the self-reported average was 7.3 in 2013 compared from just 6.5 last year as Germany heads into a deeper recession, making Germans the second unhappiest on the European continent as a whole.
Just in October, the International Monetary Fund predicted that Germany would be the largest economy with worst performer this year, will be hit hard by high inflation and slumping output and is expected to contract 0.5% year on year.
Germany is also now facing an alarming budget crisis as Olaf Scholz's ruling coalition struggled to agree a deal aimed at plugging a roughly €17 billion shortfall in next year's spending plans.
The Germans reported a significant decline overall satisfaction between 2013 and 2022. As of 2022, they self-reported the second lowest rate overall among the 29 countries for which data was available.
Only Bulgarians reported lower life satisfaction scores — 5.6, writes the Daily Mail. The difference is that Bulgaria has seen an upward shift from 4.8 in 2013.
However, most EU countries believe they are better off today than they were five years after the global financial crisis, and only Finland, the Netherlands, Norway, Denmark, Sweden, Luxembourg, France and Germany reported being worse.
From the data, the Daily Mail points out, it was unclear why these countries felt more depressed than others, although many had previously reported much higher rates in good times.
In 2020, the World Happiness Report concluded that citizens of northern European countries live better lives due to quality institutions, benefits, low levels of corruption, autonomy and freedom — among other factors. Germany, for its part, ranks low on corruption and high on freedom, but is experiencing troubling economic trends in the wake of the pandemic. This is compounded by a growing fuel crisis, not helped by the over-reliance on energy imports from Russia since the start of the Ukrainian conflict, followed by hasty efforts to find alternatives while forcing reliance on coal combustion.
Germany also risks deindustrialization as high energy costs and government inaction to address other chronic problems threaten the opening of new factories and high-paying jobs in other countries, Christian Kuhlmann, CEO of major German chemicals company Evonik Industries AG, said earlier in 2023.
The loss of cheap Russian natural gas needed to power factories «has caused painful damage to the business model of the German economy,» Kuhlmann told the Associated Press: «We are in a situation where we are being greatly affected — harmed — external factors.»
Unemployment in Germany also began a steady downward trend around 2013, falling from 2.95 million to 2.27 million by the end of the decade. But by the 2020s, the situation had changed in the opposite direction, and, according to Statista, 2.7 million people became unemployed in subsequent years.
Anti-immigration and anti-Europe sentiment have also contributed to a resurgence in the popularity of the far right and populism in Germany — with the Alternative for Germany (AfD) party, unsurprisingly, gaining a growing share of the vote. In regional elections in October, the AfD won 18.4% in Hesse and 14.6% in Bavaria — significant enough to be noticed and causing concern among adherents of liberal democracy both in and around Germany.
The conflict between Israel and Hamas has also given Berlin new challenges to contend with. German authorities outright banned demonstrations organized in support of the Palestinians before steadily retreating as critics called the decision anti-democratic. Germany has also cracked down on climate change protests in recent months and has seen a number of anti-Covid and anti-vaccine demonstrations that have turned ugly.
However, not everywhere is as bad as in Germany. In several European countries, a number of small economies have seen significant increases in prosperity since 2013. The countries with the largest increases over the past ten years were Cyprus (from 6.2 to 7.2), Portugal (from 6.2 to 7), Hungary (from 6.1 to 6.9) and Bulgaria (from 4.8 to 5.6). As a bloc, the European Union reported a slight upward trend from 7 to 7.1.
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Emerging from the shadow of the pan-European home post-Brexit, Britain is not all glory either to God. The Conversation asked: “What income is needed to live well in the UK in 2023?”
As it turned out, you need at least £29,500 to do this — which is much more than many households bring.
New figures from the Trussell Trust show that 1.5 million emergency food parcels were provided to people between April and September 2023. And this is just one piece of evidence of the enormous financial pressure on British households.
The Joseph Rowntree Foundation's recent report on UK need shows that around 3.8 million Britons in 2022 were unable to meet their basic physical needs — to stay in warmth, dryness, cleanliness and satiety — that is, more than twice as much as in 2017.
And the UN special rapporteur on extreme poverty and human rights, Olivier De Schutter, accused the UK government of failing to create a social security system that provides an adequate standard of living for everyone.
But what does it mean to have an adequate standard of living? For the past 15 years, The Conversation has been researching this topic, trying to determine what standard of living every Briton should be able to achieve. This is the Minimum Income Standard (MIS). Unlike poverty measures, which focus on what people lack, whether in terms of income or material goods, MIS establishes what is needed to achieve a certain standard of living and how those needs can be met.
< p>The Conversation spoke to hundreds of groups of people from different backgrounds and household types to determine a minimum standard of living that includes more than just food, clothing and shelter. This minimum requires that you have everything you need to have the opportunities and choices needed to participate in society. As one of the study participants said at the beginning: “Food, clothing and shelter help you survive, but this is not life.”
A good life is more than just survival, it is about being able to participate in the world around you. The minimum income standard details what households need to meet material and non-material needs, creating baskets of goods and services that together provide an adequate standard of living.
From these baskets, it was calculated how much different households would need to spend to reach this level, and the income required to meet these expenditures. It has been estimated that in 2023 a single person would need to earn £29,500 to have an acceptable standard of living, up from £25,000 in 2022. A married couple with two children should earn £50,000, up from £44,500 in 2022.
The latest analysis found that 19.2 million people (29% of the population) in the UK live in households below the minimum income standard and do not have the income they need. This is the result of significant pressure on household incomes and inflation, especially on food and household fuels. And although expenses rose rapidly, the incomes of people, both working and non-working, could not keep pace. One person without a job receives only 30% of what they need to meet the minimum income standard.
Even working full time at the National Living Wage, they only have 73% of what they need , which is significantly below an adequate standard of living. As of April 2023, the total annual salary for full-time work (37.5 hours per week) at the National Living Wage is £20,375.
And The Guardian states that more than a million people in England live in pockets of hidden difficulties. That means they could be missing out on vital aid because their poverty is masked by wealthier neighbors, a new analysis has found.
Hidden hardship affects an estimated 1.3 million people, according to a government-funded research program by geographers at Queen's University Belfast. The most acute examples are in the areas of Aylesbury, London, Oxford and Manchester, the Guardian analysis shows.
Responding to the findings, a spokesman for the Department for Livelihoods, Housing and Communities said: “We are committed to changing our approach to data so that we have the right information to make better decisions and direct money to where it is needed most.”
About 220,000 Pakistanis and almost 200,000 Bangladeshis are among the most disadvantaged 10% of the population, but do not live in areas currently designated as such. Behind this phenomenon in many areas are waves of gentrification, meaning that the wealth of newcomers masks the reality of cramped housing, poor health, low levels of education and high unemployment for others.
Government officials deciding where to allocate resources to fight poverty have used the Index of Multiple Deprivation (IMD) for decades. The IMD breaks the UK down into thousands of areas and places each one in one of 10 categories from most deprived to least deprived. The IMD was used by the central government to provide school grants and money for disadvantaged families, and by town halls to apply for funding.
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Things are also bleak on the other side of the Atlantic .
According to a recent analysis of government data, the typical American family would have to spend an extra $11,434 a year just to maintain the same standard of living they had in January 2021, just before inflation soared to 40-year highs, cbsnews reports. .com.
Such figures underscore the financial hardships many American families continue to face, even as U.S. inflation is falling and the economy remains strong by many measures, with unemployment at a two-decade low. The analysis, conducted by Republican members of the U.S. Senate Joint Economic Committee, uses government data such as the Consumer Price Index and the Consumer Expenditure Survey to examine the impact of inflation in each state.
Despite this, many Americans say they are not feeling those benefits, and more people reported financial hardship this fall than before the pandemic, according to a CBS News poll. Inflation is the main reason Americans are pessimistic about the economy, despite its positives, which also include stronger wage growth in recent years.
The Biden administration called the analysis «flawed.» Citing federal labor data, a White House official noted that per capita disposable income has risen 16% since December 2020, just before President Joe Biden's inauguration.
To be sure, economists point to a number of issues related to the pandemic as the cause of high inflation, rather than the decisions of any one political party. For example, both Donald Trump and Joe Biden signed spending bills that put stimulus money into the hands of millions of Americans, while global supply chain problems and labor shortages have driven up the cost of goods and services. But even though inflation is now falling rapidly, many consumers say they aren't feeling it, and a new Bankrate survey found that 60% of working Americans say their income has lagged behind inflation over the past 12 months.
Average hourly pay for U.S. workers has risen 13.6% since January 2021, government data shows, although that lags the 17% rise in inflation over the same period. According to the Republican analysis, the top categories requiring consumers to spend more simply to play it safe: food, transportation, housing and energy, which together account for nearly 80 cents of every $1 in additional spending.
“Middle- and low-income Americans are not doing well enough—they are living on the edge,” says Gene Ludwig, chairman of the Ludwig Institute for Shared Economic Prosperity (LISEP), a think tank whose own analysis found that the income needed to cover basic expenses fall short by almost $14,000 on average in 2022.
The state with the highest additional costs to achieve the same standard of living compared to 2021 is Colorado, where a household must spend an additional $15,000 per year. Arkansas residents, meanwhile, have to spend the least to maintain their standard of living — about $8,500 a year.
Differences in costs are due to local economic differences. For example, the analysis found that typical housing in Colorado requires an additional $267 per month compared to January 2021, while other states saw much smaller increases.
However, the higher cost life does not necessarily condemn people to financial difficulties. Some expensive cities offer a better quality of life to working-class Americans, largely due to the higher incomes workers can earn in these cities.
Inflation hits lower-income households harder because, out of necessity, they spend a larger share of their income on necessities than Americans with higher incomes. And until recently, wages for low- and middle-income workers did not keep pace with those of the nation's highest earners.
«Spending on food and basic expenses has risen more than other expenses,» says Jean Ludwig. «Cooking Thanksgiving dinner costs the same if you're a low- or high-income American, but for a low-income American it's a big chunk of your expenses.»
Although inflation is slowing, many consumers may not be feeling much relief since most prices are not falling (one notable exception: gas prices, which are notoriously volatile and are down about 5% over the past year). Consumers are still paying more, albeit at a slower pace, in addition to the higher prices that were recorded during the sharp price increases in 2022 and earlier this year.
According to two recent reports, the average American income is not enough to live comfortably in 2023. According to the Census, the typical American family earns about $71,000 a year. However, according to a recent Gallup poll, the average American believes that a family needs an annual income of at least $85,000 to survive.
This finding is supported by a recent study from financial technology company SmartAsset, which found that the average American worker requires an after-tax income of $68,499 to live comfortably. (Total income is about $85,000 assuming a 20 percent tax cut.)
American households are feeling the pinch after three years of ongoing economic turmoil. Inflation, a minor factor in recent years, rose to 5 percent in 2021 and 8 percent in 2022. According to federal data for the first quarters of 2022 and 2023, it is now 6 percent, The Hill notes. Rising prices triggered an unprecedented series of interest rate hikes by the Federal Reserve, raising the benchmark federal funds rate from essentially zero to about 5 percent in little more than a year. All this happened against the backdrop of the COVID-19 pandemic, which pushed the country's unemployment rate closer to 15 percent at the height of the quarantine in 2020.
“We're just coming out of this really unusual time where we had pandemic shortages, we were losing jobs. And I think that's kind of a skewed perception of the cost of living, says Peter C. Earle, an economist at the American Institute for Economic Research. “Quarantine has been a bit of an existential experience for a lot of people.”
An April 2023 Gallup poll found that 30 percent of Americans believe a family needs a six-figure income to “survive in your community.” Only 14 percent of respondents said a household could get by on less than $50,000 a year, and even that threshold is $20,000 above the federal poverty line for a family of four of $30,000.
Low-income families earning less than $40,000 a year told Gallup pollsters that the average household needs $66,310 a year to get by. High-income households earning $100,000 or more said that anything less than $100,000 would not be enough.
“There is a lot of other data that suggests that people with relatively high incomes live paycheck to paycheck,” Holtz-Eakin said.
Ten years ago, according to an earlier Gallup poll, the average American believed that a family can live on $58,000 a year. This figure was higher than the median household income at the time, which was $52,250.
The gap between what Americans earn and what they consider sufficient income appears to be growing. The 2013 Gallup figure of $58,000 was about 10 percent higher than the median household income for that year. Gallup's 2023 figure of $85,000 is about 20 percent higher than the current median income.
A lot has changed in a decade. In 2023 in America, the average household can reasonably expect grocery and gasoline prices to rise 5-10% per year and continue to rise indefinitely. The average homeowner can expect mortgage rates to remain in the 5 to 7 percent range for the foreseeable future, after a decade of historically low rates.
So, according to economists, American families would have a strong case for higher your expectations about what is required for a comfortable life.
Salaries do not keep up with inflation. One of the key factors behind the rising cost of living is skyrocketing housing costs. Monthly rents have outpaced inflation. Home prices, meanwhile, rose more than 40 percent in two years, from an average of $383,000 at the start of 2020 to $553,000 at the end of 2022, according to federal data. That figure dropped to $516,500 in 2023 as higher mortgage rates reduced purchasing power. Cars are also becoming luxury purchases. The average price of a new car reached $49,500 at the end of 2022, up from $38,948 three years earlier, according to Kelley Blue Book. Car prices have risen in part due to supply chain disruptions and shutdowns due to the pandemic. Another factor was the demanding American consumer. Buyers have pushed up prices, consistently choosing more expensive SUVs and fancy trucks over inexpensive sedans.
“There's a lot of debate about how much our expectations are fueling inflation,” said Lisa Jennetian, an economist at Duke University. Home buyers are looking for increasingly spacious homes. The average size of a new home grew by 1,000 square feet between the mid-1970s and the mid-2010s, according to an American Enterprise Institute analysis. According to Jennetian, the same principle applies in other areas of family life. An affluent family may consider private school as part of their basic annual budget, while a less affluent family may have difficulty meeting a public school fall schedule.