Fun on the Run: Basic Recreation Beyond Most Family Budgets, LISEP Research Shows

Minimal ‘basket’ of quality of life activities growing unaffordable, new Ludwig Institute index shows

February 8, 2023

For Immediate Release

WASHINGTON, D.C. — From a holiday celebration to a family road trip or even a meal at the local diner, most middle- and lower-income families may find it necessary to take on debt just to enjoy even the most basic quality of life activities, according to new research by the Ludwig Institute for Shared Economic Prosperity (LISEP).

“A trend of stagnant wage growth accompanied with accelerating inflation has pinched middle- and lower-income families to a level where even the most meager quality of life expenditures have been squeezed out of the household budget,” said Gene Ludwig, LISEP chairman. “Forget a family vacation — family pizza night is a stretch for most American families.”

Today LISEP released the white paper “The First Rung Up the American Dream Ladder: An Analysis of the Cost of Basic Recreational Activities for American Families” with the announcement of LISEP’s new Minimum Quality of Life (MQL) Index. The MQL identifies seven basic common recreational activities and tracks their cost over time, weighted by family type and size. Costs are based on government and industry-reported data, with activities selected based on historical preferences of American families, or to serve as proxies for similar activities. The MQL index includes a budget for eating out, a television subscription, basic adult sports equipment, children’s school sports, Minor League Baseball tickets, a three-day family vacation, and an end-of-year holiday budget.

LISEP found that the cost of these minimal recreational activities has increased 38% between 2001 and 2021 for the average American family, and more than 50% for a family with three children. The Consumer Price Index (CPI) for recreation grew by 19% in comparison during the same period. Effectively, this means a typical family at the median income level would not be able to afford core necessities and the most basic level of recreation in any of the last 20 years.

LISEP determined that for a two-parent, two-child family, the minimal cost for recreational activities in 2021 would be $4,911. Based on LISEP’s research for the development of the True Living Cost (TLC) Index, the cost for basic necessities (housing, food, etc.) has grown 45% faster than the CPI indicates. When the cost of basic necessities is combined with MQL’s recreational basket, the budget would top out at $79,466 — significantly beyond the median household income of $70,784 for a two-parent, two-child family.

“In simple terms, this means that the average American family struggles just to make ends meet, putting even the most basic quality of life expenditures out of reach,” Ludwig said.

By MQL category, from 2001 to 2021 the cost of children’s sports jumped the most (82%), primarily due to school participation fees. This is followed by family vacations (up 60%), eating out (57%), a minor-league baseball game (29%), winter holiday budget (13%), and adult sports equipment (7%). But the cost of a television subscription service is actually down 32% over that time, primarily due to the recent proliferation of more affordable online streaming options.

“A society cannot collectively grow and thrive if a majority of the population struggles with basic needs — and cannot even consider the basic wants,” Ludwig said. “This is one area where the private sector can, and should, step up, and it is very much in their best interest to do so. Some companies have recognized this and offer a monthly stipend for gym memberships, sports equipment, and other health and wellness expenditures. Encouraging a better quality of life makes good business sense, with the result being a healthier, happier society and a more productive workforce.”

Fun on the Run: Basic Recreation Beyond Most Family Budgets, LISEP Research Shows

Minimal ‘basket’ of quality of life activities growing unaffordable, new Ludwig Institute index shows

‍Jim Gardner

February 8, 2023

For Immediate Release

Additional Resources

Historically, systemic barriers have disproportionately hampered Black farmers’ ability to retain land ownership.

Despite this tragic history, there is still time and economic incentive to set some of the inequities right.

In 2021, working mothers with children under 18 earned just 61.7 cents for every dollar a father made. Much wider than the overall gender wage gap, this difference highlights both the motherhood penalty and the fatherhood premium.

Female-dominated, low-paying, part-time occupations are overrepresented among informal workers who also have a formal job.

We need to create an economic environment where companies can hire these workers as employees and pay them a living wage. There are steps policymakers can take to change the gig economy dynamic.

Dependency on tips over base pay is growing because of actions taken by gig companies to institute tipping.

Even for those lucky enough to be making what amounts in many states to the poverty wage of $15 per hour, many will get nothing but a week’s notice before being out on the street.

One study shows that consistent involvement in extracurricular activities increased a child’s likelihood of attending college by a whopping 400% compared to not being involved at all.

Studies have found that both men and women are paid less if they work in “nurturant” occupations.

Since 2015, the correlation between LISEP’s functional employment to population ratio and the inflation rate was more than four times as strong as the BLS’s employment to population ratio, which is depicted in the graph below.

The employment to population ratio settles the discrepancy between what we see around us and what the data says.

The NBER paper defines employment using the traditional BLS U-3 rate. However, the often-used U-3 number fails to capture the quality of jobs.

Among states with stricter COVID-19 policies, reducing unemployment benefits had little to no effect. The average effect of increased employment seems to have occurred only in those states with looser COVID protocols.

“In simple terms, this means that the average American family struggles just to make ends meet, putting even the most basic quality of life expenditures out of reach,” Ludwig said.

Press Contact:

‍Jim Gardner

press@lisep.org

(573) 680-1822

Additional Resources:

About MQL

In announcing the new Minimal Quality of Life (MQL) Index, LISEP issued the white paper “The First Rung Up on the Ladder: An Analysis of the Cost of Basic Recreational Activities for American Families.” The methodology can be viewed here. The MQL determines the basic cost of a minimal “basket” of family recreation items and tracks them over time. The MQL and supporting data are available on the LISEP website .

About TLC

In announcing the debut of the True Living Cost (TLC) metric, LISEP issued the white paper Determining More Accurate Living Cost for Median- and Lower-Income American Families (abridged version here). TLC assesses a set of minimal adequate needs that a household requires to function: housing, medical care, transportation, food, childcare, technology, and miscellaneous (e.g., clothing, personal care, and household items) that takes into account household size (the eight household sizes range from one to two adults and zero to three children) and the relevant census region (Northeast, Midwest, South, and West). The TLC tracks the change in price for these needs over time. By contrast, the Consumer Price Index (CPI) focuses on a diverse basket of more than 80,000 items that are less representative of the day-to-day household costs LMI Americans routinely face.

About LISEP

The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by Gene Ludwig and his wife, Dr. Carol Ludwig. The mission of LISEP is to improve the economic well-being of middle- and lower-income Americans through research and education. LISEP’s original economic research includes new indicators for unemployment, earnings, and cost of living. These metrics aim to provide policymakers and the public with a more transparent view of the economic situation of all Americans, particularly low- and middle-income households, compared with misleading headline statistics. On X: @LISEP_org.

About Gene Ludwig

In addition to his role as LISEP chair, Gene Ludwig is founder of the Promontory family of companies and Canapi LLC, a financial technology venture fund. He is the founder and CEO of Ludwig Advisors, which counsels financial firms on critical matters. Ludwig is the former vice chairman and senior control officer of Bankers Trust New York Corp. and served as the U.S. Comptroller of the Currency from 1993 to 1998. He is also author of the book The Vanishing American Dream, which investigates the economic challenges facing low- and middle-income Americans. On Twitter: @geneludwig.

Please Note:

The Ludwig Institute for Shared Economic Prosperity continuously revises and updates its data. As a result, data presented in this release may no longer reflect the latest estimates. Find the most current data at lisep.org.