Rising Wages Not Enough to Keep Pace With Higher Living Costs Across Most Major U.S. Metro Areas, According to Ludwig Institute Analysis

San Jose tops, Fresno trails in new LISEP ranking of economic well-being across America's largest metro areas

WASHINGTON, Oct. 27, 2026 /PRNewswire/ -- Rising wages weren't enough to keep pace with higher living costs across most of the nation's largest metropolitan statistical areas (MSAs) in 2024, according to a new analysis released today by the Ludwig Institute for Shared Economic Prosperity (LISEP).

LISEP's Local Analysis evaluates and ranks the nation's largest metro areas based on how they perform for middle- and lower-income households, finding that in 2024 spending power declined in 61% of markets despite nominal wage gains. The San Jose-Sunnyvale-Santa Clara, CA MSA ranked first overall, while the Fresno, CA MSA ranked last.

The report focuses on the nation's 56 largest MSAs (population 1 million or more) using 2024 data, the most recent year for which complete localized data are available. The rankings are based on a composite score derived from four proprietary metrics designed to provide a more complete picture of economic conditions for middle- and lower-income households:

• True Living Cost (TLC): A cost-of-living metric that tracks cost changes for essential goods and services (housing, food, childcare, etc.);
• True Weekly Earnings (TWE): A calculation of median weekly earnings of all members of the workforce—including the part-time and jobless who are seeking work (the U.S. Bureau of Labor Statistics only counts full-time workers);
• True Rate of Unemployment (TRU): A measure of the functionally unemployed, defined as the jobless, the involuntarily part-time, or those earning below $25,000 in 2024 dollars annually before taxes;
• True Rate of Unemployment Out of the Population (TRU OOP): A measure of the percentage of the population unable to find functional employment, providing a broader view of workforce participation.

"Too often, we talk about 'the U.S. economy' as though it were one place. It isn't," said LISEP Chair Gene Ludwig. "America is made up of hundreds of local economies, each with its own strengths and challenges. Looking beneath the national averages gives us a much clearer understanding of where economic prosperity is being shared and where it is not."

The San Jose MSA ranked first overall, driven by one of the nation's lowest levels of functional unemployment (17.9%, second lowest among the 56 MSAs) and one of the fastest-growing median wages since 2005 (up 11.2%, third highest). Despite the high cost of living (highest overall), the strength of the median wage placed the region with the 10th highest rate of leftover income after necessities and before taxes and transfers for median earners.  Other MSAs ranking in the top five include Jacksonville, FL; Nashville-Davidson-Murfreesboro-Franklin, TN. (tied for second); Washington-Arlington-Alexandria, DC-VA-MD-WV; and Raleigh, NC.

At the other end of the rankings, Fresno was near the bottom on nearly every measure. It had the nation's worst leftover income ranking, the third-highest True Rate of Unemployment (28%), and the fourth-largest decline in spending power since 2005 (down 11%). At $759 a week, Fresno also had the nation's lowest TWE—22% lower than the national median. As a result, the median worker in the region falls short of covering living expenses for even a single-person household. In 2024, only 34% of adults aged 25 and over held a post-secondary degree in Fresno (second lowest) compared to 46% in the US overall and 63% in San Jose (highest).

Other MSAs in the bottom five include Urban Honolulu; Riverside-San Bernardino-Ontario, CA; Orlando, FL; and Memphis, TN-MS-AR. Analyses of individual MSAs are available here.

Overall, the cost of living across the nation's 56 largest MSAs increased 4.7% in 2024, compared with an average annual increase of 3.2% since 2005. The annual TLC increase ranged from 1.3% in the Pittsburgh MSA to 7.9% in the San Diego–Chula Vista–Carlsbad, CA  MSA. Across the largest 56 MSAs, the median nominal TWE increase was 4.3% in 2024 compared to 3.1% nationally, but after adjusting for the TLC change in living costs, the median change in spending power was a 1.3% decrease compared to a 1% decline nationally. Functional unemployment, as measured by the TRU, averaged 23.5% for these largest MSAs, lower than the 24.4% national average.

Housing, childcare, and healthcare were the primary drivers of cost increases overall, with rent increasing an average of 4.3% annually since 2005 (vs. 4.2% nationally) and up 11.7% (10.6% nationally) in 2024 alone. Since 2005, rent has risen fastest in the Seattle (6.3% annually) and Denver (6.2%) MSAs, and increasing more slowly in the Cleveland (2.8% annually), Detroit–Warren–Dearborn, MI and Milwaukee-Waukesha, WI MSAs (3.0% each).

Childcare costs increased 7.6% on average in 2024, while medical care costs rose 2.9%. Annual living costs for a minimal standard of living for a single adult ranged from $34,400 in Cincinnati to $58,300 in San Jose. Notably, in none of the 56 metropolitan areas did annualized median weekly earnings cover the True Living Cost for a single adult with one child.

"This analysis reminds us that rising wages, by themselves, don't tell us whether people are actually better off," Ludwig said. "What matters is whether incomes are keeping pace with the cost of living. Looking at those trends at the local level gives us a much clearer picture of where economic opportunity is growing—and where it isn't."

About LISEP

The Ludwig Institute for Shared Economic Prosperity (LISEP) was created in 2019 by 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 a managing partner of 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 also the founder of the Promontory family of companies. He 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. His new book, The Mismeasurement of America, was published September 2025 and is now available online or wherever books are sold. On X: @geneludwig.

SOURCE Ludwig Institute for Shared Economic Prosperity