What’s Driving Living Wage Growth in 2026?

In our last blog post, we shared a first look at the 2026 living wage data. Here, we dig into how living wages have changed in the last year, the different cost burden drivers for working families across the country, and how where you live shapes what you need to cover your basic expenses.

How family budgets have changed since 2025

Between 2025 and 2026, the family-sustaining wage—what one full-time worker needs to earn to support a family of two working adults and two children—grew an average of 2.5%. While some counties saw small decreases in living wages, most counties saw modest living wage growth between 0 and 6%, and counties in Oregon, Montana, and Indiana saw the largest increases. Although living wage growth is largely outpacing inflation, the year-over-year changes are smaller than in recent years, indicating that costs are cooling for some basic needs.

However, not all basic needs in the 2026 living wage basket have cooled. The biggest drivers of local living wage growth in the last year were childcare, health care, and housing. Childcare has been the fastest-growing cost in family budgets over the last five years, and grew 4.5% in the last year alone. Health care costs grew even faster in the last year at 7.6%—driven largely by spikes in health care premiums—though they remain a smaller share of the overall family budget.

And though rental housing costs remain one of the biggest factors in family budgets, rent growth has slowed over the last year. Between 2025 and 2026, rental housing costs grew an average of 3.3%, significantly slower than their peak between 2022 and 2023, when national rent growth hit 12% annually and even higher in many metro areas.

(Un)affordability is a local story

While national trends offer broad context for how affordability has changed, what’s driving cost burdens for working families is a deeply local story. To better tell it, we identified six cost pressure typologies across all 3,144 U.S. counties based on cost composition, five-year growth trends, and recent directional living wage change. We intentionally excluded geography and metro status, letting those patterns naturally emerge from the data rather than imposing them. 

Each U.S. county falls into one of the following typologies:

(1) High-Cost Metros: Housing and Childcare Still Growing: 22% of counties are classic high-cost metros where both housing and childcare costs are still growing and pushing up living wages. These counties are spread across the U.S., but dominate in the Pacific and New England.

(2) Childcare Pressure Easing, But Housing Still Climbing: 5% of counties are seeing easing childcare costs, but that’s countered by growing housing costs. While families in New Mexico, Missouri, and Alaska are getting some childcare cost relief, they are facing new rent pressures.

(3) Housing Peaked: Stabilizing Metro and Suburban Counties: 16% of counties—primarily in metros and their suburbs in the South and Mountain West—reached peak rental housing costs between 2022 and 2023 and are now stabilizing.

(4) Mostly Rural and Small-Town Counties Facing Steady Cost Growth: 40% of counties are facing steady cost growth across multiple basic needs with no single pressure dominating. These counties are predominantly rural and small-town, and are seeing housing, childcare, and health care costs are all slowly growing together.

(5) Fastest-Growing Childcare Costs: 3% of counties saw living wage increases almost entirely driven by the fastest-growing childcare costs. These counties are concentrated primarily in Indiana, where expiring federal funds and state-level policy changes pushed costs far above its previous level.

(6) Rural Counties that Absorbed Massive Childcare Cost Increases: About 14% of counties are rural areas that have absorbed massive childcare cost increases over several years, pushing up living wages. These counties are primarily located in Appalachia, the Deep South, and the Great Plains.

The map reveals both how scattered the typologies are and how they cluster: high-cost metros stretch from Miami to Seattle to Boston, while stabilizing housing markets are largely in the South and Southwest. 

In the posts ahead, we'll take a closer look at each U.S. region and its cost drivers, how communities have been affected, and what it means for families and employers navigating these pressures.