Economic Growth is an Affordability Strategy

Throughout the last election cycle, one word seemed to dominate every campaign speech, television advertisement, and policy proposal: affordability.

Candidates from both parties promised to make life more affordable. But most candidates were content with identifying the problem and didn’t offer any meaningful solutions.

Families across Indiana and throughout the country feel squeezed between rising expenses and household budgets that never seem to stretch far enough. The concerns about rising costs are real.

But Grocery prices are influenced by global supply chains, commodity markets, transportation costs, and labor shortages. Gasoline prices are driven largely by world energy markets. Mortgage rates are shaped by Federal Reserve policy. Childcare costs are shaped largely by labor costs, staffing ratios, regulatory requirements, and the supply of available childcare slots.  Prescription drug costs are also heavily influenced by federal regulations and the healthcare system.

State and local elected officials have remarkably little direct influence over most of those prices.

The problem with most affordability discussions is that they focus almost entirely on lowering prices while spending very little time addressing income. Yet for working families, the most sustainable path to affordability isn't making everything cheaper. It is ensuring people have access to better-paying jobs and stronger economic opportunities.

Simply put, affordability improves when people earn more.

Here in St. Joseph County, the numbers tell the story. Living costs are approximately 11% below the national average, but average wages are 26.4% below the U.S. average. While our average hourly wage has increased nearly 30% over the past five years, reaching $30.83 per hour, it still trails the nation ($41.35), the state ($33.90), and peer counties such as Elkhart ($32.95), Allen-Ft. Wayne ($32.42), and Marion-Indianapolis ($44.73). Lower costs help, but they do not fully offset lower incomes.

That does not mean our elected officials are powerless. It means they should focus where they can make the greatest difference. The most effective affordability strategy available to local and state leaders is creating an environment where businesses invest, expand, and create higher-paying jobs.

When a community attracts an advanced manufacturing facility, technology company, healthcare employer, or professional services firm, it does more than create jobs. It raises the earning potential of an entire region as employers compete for workers, wages rise, and career opportunities expand.

This is why communities across the country compete aggressively for investment and development projects. They understand that prosperity is not measured solely by the cost of living. It is measured by the relationship between income and cost.

Indiana has long benefited from a relatively low cost of living. Yet affordability concerns persist because housing, childcare, healthcare, and other necessities have risen faster than many household incomes. The challenge is not simply that things cost more. The challenge is that income growth has not always kept pace.

The answer is not to stop pursuing growth. The answer is to pursue more growth, particularly the kind that raises wages and creates opportunities for advancement.

That means investing in workforce development, aligning education with employer needs, supporting entrepreneurship, improving infrastructure, and welcoming responsible business investment. It also means increasing housing supply.

Ultimately, affordability is about purchasing power. Families care whether they can buy a home, save for retirement, pay for childcare, and meet everyday expenses. Those goals become more achievable when paychecks grow, and economic opportunities expand. The greatest threat to affordability is not growth. It is stagnation.

Communities that resist development often discover that costs continue to rise anyway. The difference is that residents are left with fewer opportunities to increase their incomes. Communities that embrace investment, attract talent, and create quality jobs give their residents a better chance to keep pace with a changing economy.

Affordability should remain an important public policy goal. But if we are serious about helping working families, we should spend less time searching for ways to manipulate prices and more time creating the conditions that allow people to earn more.

In the end, the most effective affordability program is a good job, a growing economy, and the opportunity to build a better future.