Understanding what unaffordability means to MD residents

A recent University of Maryland, Baltimore County poll put a number on a feeling. When residents were asked in March what worried them most, affordability and the cost of living came back first, named by 33%, ahead of taxes and government concerns.

The political response has been to reach for a single dial labeled “affordability” and turn it. No such dial exists. A household budget is a stack of separate line items, and each pulls away from wages at its own rate, for its own reasons, and through its own policy levers. Before Annapolis prescribes a fix, it should decompose the gap.

What ‘unaffordable’ actually means in the data

The poll did not find one problem. It found several wearing one label. Asked about specific costs, 72% of residents called groceries less affordable than a year earlier, 71% said the same of gasoline, 69% of electricity, 65% of housing, and 57% of healthcare. Those are five markets with five cost structures, and treating them as a single grievance is satisfying politically and useless analytically: The policy that lowers an electric bill does nothing for a grocery receipt.

Be precise about what affordability measures. It is a ratio, not a price: The cost of a thing against the income available to pay for it. The National Low Income Housing Coalition estimates that a Marylander now needs to earn $39.15 an hour, about $81,434 a year, to afford the average two-bedroom home at fair market rent without spending more than the standard 30% of income on housing. That gap can widen because rent climbed or because pay stalled, and the distinction matters: the two causes call for opposite remedies.

Decomposing the gap, category by category

Housing is, before anything else, a supply problem. When demand outruns the stock, price does the rationing, and Maryland has built too few units for too long. The levers that move the price curve are unglamorous: Permitting timelines, zoning that allows more homes per acre and the construction that follows. Demand-side help such as down-payment aid or broad rent subsidies eases a household’s burden, yet across a tight market it can bid prices higher and partly cancel itself out.

Energy is a rate-and-mix problem, not a poverty problem. Maryland’s residential electricity rates have climbed about 44% since 2020, well above the national average. The state’s instinct has been rebates, and the Lower Bills and Local Power Act sets aside roughly $100 million to send money back to families. A rebate lowers the bill a household receives, not the cost of producing and delivering the power, set by generation supply, grid capacity and fuel mix. One treats the symptom, one the disease, and only the second changes the trajectory.

Groceries and gasoline are largely national markets, and honesty requires saying so. Their prices move with commodity cycles, fuel costs and federal policy far more than with anything a state legislature can pass. Annapolis can trim a gas tax or a sales tax at the margin, real money to a strained household, yet the underlying line item is mostly outside its reach. A policy that promises affordable groceries through state action promises something the state does not control.

Take-home pay is the denominator under all of it, and the gap can be closed from the bottom of the fraction as readily as the top. A dollar of tax relief and a dollar of price relief land in the same place in the budget, so income-side policy belongs in the affordability conversation alongside the price-side measures that dominate it.

Matching policies to the right line item

The recurring error in affordability politics is aiming a policy at the wrong category. A rebate is the clearest example: it feels like affordability and polls like affordability, yet it leaves the cost curve where it was and offsets it for a year. Supply reform is the mirror image, bending the curve durably while showing almost nothing in the first budget cycle, which is why it loses to the rebate in nearly every session. The two do different jobs.

That suggests a simple test for any bill wearing the affordability label. Ask which line item it moves, and whether it moves the price or only the bill. The test does not pick winners; it forces the trade-off into the open, where voters can weigh durability against immediacy.

A scoreboard for the rest of the argument

This is the standard that the next two pieces in this series will apply. Maryland is debating a long list of programs and incentives, and each deserves the same plain question: Does it move the household number it claims to move, and how would we know.

Marylanders are not wrong that the cost of living is the issue of the moment. The mistake would be to treat one word as one problem. The fixes diverge the instant you read down the line items, and a state that wants lower costs has to pick the right lever for each one.

Thomas Young  is an economist who builds models, researches the economy, advises on public policy, speaks at conferences, and enjoys thought leadership.