Earning More, Affording Less

Cecilia, a MAF client, told us a few months ago,

“Almost everything has gone up…50%, 100%…”Fuel was $3.20, now it’s $5.00. It doesn’t go down, but [wages] don’t go up at the same rate…”

Cecilia is not alone in her experience. Across the country, low-income families like hers are contending with stagnant wages while facing the disproportionate burden of persistent inflation.

Losing Purchasing Power

Over the last 18 years, MAF has supported more than 15,000 clients through its Lending Circles program. To better understand how inflation is affecting the families we serve, we analyzed the median household income for Lending Circle applicants over the past decade. The results tell a more complicated story than the headline numbers suggest. 

In 2016, the median MAF household earned $36,000 annually. By 2024, that figure had risen to $46,000, designated as “Nominal Income” in the chart below.

However, despite earning $10,000 more, the median household could not afford a better standard of living than it could in 2016.

After adjusting for inflation, the “Real Income” trended downward beginning in 2020, leaving families with slightly less purchasing power in 2024 than they had nearly a decade earlier.

Falling behind 

For the median U.S. household, the story looks very different. Between 2016 and 2024, median household income increased from $59,000 to $84,000. After adjusting for inflation, that translates to nearly a 9% increase in purchasing power. Although the real gain is smaller than the $25,000 increase in nominal income, it still represents an increased ability to afford everyday expenses and keep up with rising costs. 

The Cost of Inflation

The median American household saw its income grow faster than inflation, making it easier to absorb rising costs for essentials like housing, fuel, and groceries. But for Elson’s family, rising costs have meant making difficult tradeoffs:

“Sometimes jobs don’t pay as much as you want. It’s not much, and you can’t save with what they pay you each week… Right now, we can’t eat meat because meat is very expensive.” 

As inflation continues to rise, its day-to-day effects are felt most acutely by those with the fewest financial resources.

Higher-income households are more likely to have savings, appreciating assets, and wages that keep pace with inflation, helping them absorb rising prices.

For a household living on $46,000 a year, however, rising costs consume a much larger share of income, leaving less money for essentials like food and even less flexibility to absorb unexpected expenses.

Meeting the Moment

Despite earning more on paper, low-income families like Cecilia’s and Elson’s are no better able to afford the basics than they were nearly a decade ago. As a result, they are forced to make difficult choices at the grocery store, have fewer opportunities to save for the future, and are less financially prepared to weather unexpected emergencies.

As inflation persists, low-income families risk falling further into financial distress. This reality reinforces MAF’s commitment to providing financial products and services centered on the needs of those at the margins. Lending Circles is one example of that commitment. Through the program, MAF offers 0% interest, credit-building loans that provide a safe alternative to high-cost, high-interest credit, helping families avoid the cycles of debt that predatory lenders so often create. Since its launch in 2008, Lending Circles has provided more than $15 million in credit-building loans and saved households more than $2.7 million in predatory fees and interest.

Every dollar lost to high-interest loans or excessive fees is a dollar that cannot be spent on rent, groceries, transportation, or other basic needs. By partnering with MAF, organizations can help ensure that families like Elson’s and Cecilia’s have access to safe, affordable financial tools that strengthen their financial stability and create pathways to greater opportunity. Learn more about partnering with MAF to bring relevant, community-centered financial products to the people you serve.

¹ Throughout this post, the terms “MAF clients” and “the families MAF serves” refer to applicants to MAF’s Lending Circles program.

² Total savings reflect the difference between what Lending Circles participants actually repaid and what they would have paid under a representative predatory short-term loan (modeled at a 36% annual percentage rate plus a $20 flat fee).