Rising costs and tight budgets strain Americans ahead of midterm elections

Stacy Eichel, an empty nester in Florida, spent years balancing two jobs. One was in healthcare; the other was her own venture: a small business making custom-branded merchandise for corporate clients, such as coffee mugs and T-shirts that companies hand out at conferences and holiday parties.

For Eichel, the business was more than a paycheque. It was a side hustle for a woman who couldn’t sit still, who was always hungry for the next opportunity. It was the kind of business that thrived when companies had a little extra to spend on small branded trinkets to make an otherwise mundane corporate conference something memorable.

In September 2025, Eichel lost her job in marketing for a healthcare company after a merger. Suddenly, the business she had run on the side had to shoulder more of the burden of supporting her. Yet just as she needed it to provide more, the market for her products was shrinking.

Faced with uncertainty over trade policy and tariffs, alongside the growing use of artificial intelligence across the economy, companies have been tightening their spending. Custom-branded merchandise was becoming one more expense they could do without.

“The economy is such that fewer people are buying custom-branded swag because it’s more of a luxury item. When they have extra money in the budget, that’s what they’ll use it for, but now their budgets are very tight,” Eichel, who has cut back on her expenses, told Al Jazeera.

Eichel’s experience reflects a broader strain in the US labour market, where a paycheque does not necessarily translate into financial security. The headline unemployment rate captures people actively looking for work, but it does not tell the whole story of people who are working fewer hours than they want or juggling jobs that do not provide enough income.

The Department of Labor documents this through what is called the U-6 rate, a broader measure of unemployment and underemployment. It stands at an elevated 7.6 percent. While that’s down from 8.1 percent a year ago, having a job does not necessarily mean Americans are getting ahead financially.

The U-6 measure includes people who are working part-time because they cannot find full-time jobs, as well as those who want to work but have stopped looking for a job recently.

Wallet strains

Even people who are employed full-time are finding that their earnings do not stretch as far as they once did. An estimated 4.5 million Americans were working part-time because they could not find full-time work. Meanwhile, nine million Americans held multiple jobs, accounting for 5.5 percent of all employed workers, according to the most recent jobs report.

“Underemployment is one of the most misunderstood economic problems in America because it doesn’t always look like unemployment. It looks like a college graduate working retail despite having a degree, a former executive accepting a position paying half their previous salary, or a parent working two jobs because neither provides enough hours, benefits or income to support their family,” Tara Furiani, a workforce strategist based in Richmond, Virginia, told Al Jazeera.

Average hourly wages rose 3 percent over the past year, while consumer prices increased 3.7 percent, according to the latest Consumer Price Index (CPI) report released by the US Labor Department.

That means prices have risen faster than wages, leaving many workers with less purchasing power. Overall, prices rose 0.6 percent from the previous month, while average hourly wages increased by just 0.1 percent, adding to the financial pressure on households like Eichel’s.

Eichel has cut back on expenses and scaled down some of her usual spending, including dining out and takeout, and dropped her cable service.

“I never used to think before ordering in, and now we cook everything,” Eichel said.

With the midterm elections approaching, the cost of living is becoming a greater concern for voters. A Reuters/Ipsos poll found that the cost of living was the most important issue for voters, leading the next-closest issue by a double-digit margin, at 47 percent compared with 22 percent for “democratic norms and values”.

A separate Washington Post–ABC News–Ipsos poll found that voters trust Democrats over Republicans to handle the economy, 40 percent to 33 percent, marking the first time in 12 years that Democrats have held an advantage on the issue.

This comes as 44 percent of Americans said they had struggled to pay for at least one basic necessity over the past year, including transportation, rent or mortgage payments, medical care and food, according to a Pew Research Center poll released earlier this month.

Twenty percent of respondents said they had received food from a food bank or pantry over the past year.

Joshua Teicher, a New York City-based video producer in the advertising industry, said work began drying up after the COVID-19 pandemic, with opportunities dwindling further in recent years as companies tightened their budgets. Even the slow trickle of work has nearly dried up entirely.

Teicher told Al Jazeera that his financial circumstances have changed so significantly that he is now on Medicaid, government-subsidised healthcare for people in lower-income brackets. He said he is struggling to afford prescriptions and food.

“I’m having to go into my savings. Specifically, sometimes I don’t want to get a second cup of coffee because it’s like five bucks for an espresso or something like that. It’s also been harder to eat healthy. Grocery shopping, apples are just ridiculous. I find myself walking a couple of extra blocks to a cheaper store because they have cheaper apples, those sorts of things,” Teicher said.

He told Al Jazeera that his tight budget also prevents him from affording the knee surgery he needs. Cartilage in both knees has worn down. He was able to undergo surgery on his right knee to correct the problem, but cannot afford the same procedure on his left. As a result, one leg is now slightly longer than the other.

Petrol prices are another expense weighing on consumers. The average price for a gallon of gasoline (3.78 litres) on Monday was $4.29, according to the American Automobile Association (AAA), which tracks fuel prices daily. By comparison, the average price was $2.98 when the US and Israel first struck Iran in late February, leading to ongoing disruptions in the global market.

Market pressures

Even for Americans who have jobs, finding a better-paying position can be difficult. Although some industries have continued to add jobs, uncertainty about economic policy has contributed to what economists call a “low-hire, low-fire” labour market.

Employers are pulling back on hiring even as layoffs remain relatively low. The latest Job Openings and Labor Turnover Survey (JOLTS) from the Bureau of Labor Statistics showed that job openings and the number of workers quitting their jobs were largely unchanged.

“I have seen highly qualified people who have not been able to find a job for 12-18 months,” Babak Hafezi, a professor of international business at American University, told Al Jazeera.

With fewer opportunities available, workers who already have jobs may be reluctant to leave them, even if they are unhappy or want higher pay. Those looking for work face more competition for available positions, while people who are already employed may have less leverage to negotiate better salaries. That can make it harder for workers to improve their financial situations as everyday expenses continue to rise. This is leading some people who already work full-time to add on part-time jobs.

“We have people come in all the time who are teachers looking for a part-time job, or who are in other fields asking, ‘Do you know anyone hiring part-time? I just need 15–20 hours a week to make ends meet.’ At what point does this end?” Debbie Louis, who owns a coffee shop in Brooklyn, New York, told Al Jazeera.

Although industries such as hospitality and healthcare have added jobs over the last year, Hafezi said that growth could slow or reverse over the next year. He pointed to the potential impact of the Big Beautiful tax legislation, which could reduce funding for programmes that support rural hospitals, as well as immigration policies that have discouraged international travel to the US over the past year, hitting businesses that benefit from those revenues.

At the same time, US consumers are also dealing with the reality of reduced purchasing power.

“Tariffs and economic pressures from high inflation are affecting Americans’ purchasing power. As prices increase, unit consumption decreases [they buy less as] their paycheques don’t go as far,” Hafezi said.

“This ultimately leads Americans to feel poorer and less able to consume. That is the environment that many Americans in the ‘K-shaped’ economy are in.”

In a so-called K-shaped economy, wealthier US consumers continue to prosper while lower- and middle-income households fall behind. The Conference Board’s most recent consumer confidence report found that higher-income households, often supported by investment gains and greater financial reserves, are more optimistic than those in other income brackets.

“Ahead of the midterms, policymakers and employers should be examining not simply how many Americans are working, but whether available employment provides adequate wages, sufficient hours, predictable schedules, benefits and genuine opportunities for advancement. Because a paycheque and economic security are, again, not the same thing,” Furiani, the workforce strategist, added.