The Poorest U.S. Households Spend 95% of Their Income on Basic Needs

Lower-income U.S. households are spending almost all of their pre-tax income on basic necessities like food, housing and child care, according to new research. The findings highlight the growing financial pressures facing families — and the particular burden that is being placed on women.

The analysis, conducted by the National Women’s Law Center (NWLC), found that lower-income households spent the equivalent of 95% of their pre-tax income on housing, transportation, groceries, health care and child care in 2024, up from 87.5% two decades earlier.

The data is based on the NWLC’s analysis of the Bureau of Labor Statistics Consumer Expenditure Surveys from 2004 to 2024. Lower-income households are defined as those in the bottom third of the income distribution, which, in 2024 meant households with a total income below $46,700.

Over the 20-year period, inflation-adjusted median incomes for these households rose by just 5.5%, while spending on essential categories increased by 14.5%.

Higher-income households, meanwhile, experienced the opposite trend: Incomes rose 18.2%, compared with a 6.7% increase in spending on basic needs. The proportion of income going toward essentials consequently fell from 40.2% to 36.3%, pointing to a widening divide in the financial breathing room available to households at opposite ends of the income spectrum.

According to NWLC, the financial squeeze has particular implications for women, who continue to shoulder a disproportionate share of caregiving responsibilities. Child care, for example, is one area where rising costs can directly affect women’s ability to work. And costs for child care, as well as for  preschool, have nearly doubled over the past two decades, according to the report.

When affordable care is unavailable, the organization says, women may be forced to reduce their working hours or leave employment altogether — further reducing household income.

Another major source of pressure is housing. Lower-income households spent the equivalent of 49% of their pre-tax income on housing in 2024, up from 42.3% in 2004. Groceries accounted for another 19.2% and transportation 14.3%.

Against this backdrop, NWLC is calling for a slew of policy changes, including raising wages, expanding refundable tax credits, reversing cuts to SNAP and Medicaid, and investing in affordable housing, public transportation and universal child care.