The cost of basic living—shelter, food, healthcare, and transportation—has risen dramatically in recent years, making these necessities increasingly unaffordable for millions of people in both Canada and the United States. This affordability crisis, driven by stagnant wages and inflated living costs, is not just an economic issue—it’s a psychological one. When people can no longer meet their basic needs despite working full-time, something inside begins to erode. As therapists, we see this play out every week: anxiety with no off-switch, shame around scarcity, and profound fatigue that isn't about sleep. If minimum quality of life is out of reach, then Houston, we have a problem.

Economic Indicators: Canada and U.S. Comparison

To ground the discussion in current realities, here is a comparative snapshot of economic data between Canada and the U.S. as of May 2025:

Sources: Statistics Canada (2025a), U.S. Bureau of Labor Statistics, Numbeo, Expatistan

This data shows that while U.S. cities may have slightly higher nominal costs, Canadians face a similar rent burden relative to income, particularly in major cities like Toronto and Vancouver (Frost, 2023). The average monthly expenses for a single adult in Canada now exceed CAD 3,000, while a family of four requires between CAD 6,800 and CAD 7,800 to meet basic needs (Spergel, 2025). In the U.S., a single adult typically requires approximately USD $2,500 per month, and a family of four needs USD $5,000 to USD $6,000 (LivingCost.net, 2025).

To live above the poverty threshold:

• Canada: Individuals require a gross annual income of at least CAD $45,000–50,000; families need a gross annual income of CAD $100,000–115,000.
• U.S.: Individuals require USD 38,000–42,000; families need USD 75,000–90,000.

These estimates reflect not luxury but the basic conditions for a stable, non-precarious life.

Psychological Fallout: The Mental Health Toll of Financial Stress

Financial stress does not remain confined to budgets and bank accounts—it seeps into the body, the mind, and the very sense of self. As the cost of living continues to outpace wages, the emotional and psychological burden on individuals is growing at an alarming rate. This fallout is not hypothetical. It is increasingly appearing in daily therapy sessions, community health clinics, and crisis intervention lines. The research confirms what many clinicians already know: financial distress is a profound and multifaceted mental health risk factor.

Chronic Stress and Depression

The connection between financial strain and mental health outcomes is robust and well-documented. Individuals facing economic hardship are significantly more likely to experience persistent anxiety, depressive symptoms, and even suicidal ideation (Richardson et al., 2013; Sweet et al., 2018). Norström et al. (2022), in a meta-analysis, found that financial hardship is a powerful predictor of depressive symptoms, particularly among low-income populations and those experiencing long-term insecurity. The stress of not being able to meet basic needs becomes a form of chronic trauma, activating the sympathetic nervous system in a sustained way, disrupting sleep, cognition, emotional regulation, and social connection.

This isn’t stress that goes away after a vacation or some deep breathing. It is a form of persistent distress that wears down the nervous system over time. People begin to live in a state of constant vigilance, worry, and fatigue. Over time, this may erode their internal sense of stability and emotional safety, undermining even the most resilient individuals.

Shame and Internalized Failure

One of the most painful and psychologically corrosive effects of economic hardship is the internalization of systemic failure. Clients often say things like, “I work hard, I do everything right—why can’t I get ahead?” This question is not just logistical—it is existential. When people do not understand why their efforts aren't translating into stability or progress, they often turn on themselves.

This results in a toxic loop of self-blame and shame. Instead of seeing structural forces—such as wage stagnation, unaffordable housing, and a lack of public infrastructure—they see laziness, incompetence, or personal inadequacy. This shame becomes isolating. People stop reaching out for help because they believe their situation is the result of a character flaw rather than a systemic failure. In therapy, this might show up as low self-worth, perfectionism, or hopelessness masked by over-functioning. Without intervention, this internalized oppression can become a source of depression and disconnection.

Learned Helplessness and Cognitive Collapse

For others, the primary emotional response isn’t anxiety but collapse. After repeated efforts to secure a better future lead to disappointment or setback, people may enter a psychological state known as learned helplessness—a concept first introduced by Seligman (1975). In this state, individuals stop trying to change their circumstances because they have come to believe that nothing they do will make a difference. It is not apathy—it is protective withdrawal born from exhaustion and demoralization.

This shutdown state is also neurological. Research by Mani et al. (2013) demonstrated that the cognitive load of poverty reduces mental bandwidth, impairing executive functioning, planning, attention, and decision-making. In essence, the more one is forced to juggle scarcity, the harder it becomes to think clearly and act effectively. Future orientation shrinks. The horizon narrows to survival.

Clinically, this may manifest as procrastination, indecision, self-sabotage, or emotional numbness. Significantly, these behaviors are often misinterpreted as resistance or lack of motivation when, in fact, they are the logical outcomes of being overwhelmed and emotionally depleted by systemic hardship.

Clinical Implications for Therapists

Therapists play an essential role in buffering clients from the psychological toll of financial insecurity and economic injustice. In a world where full-time employment no longer guarantees a stable life, psychotherapy must evolve to meet the realities of clients living in chronic precarity. This calls for a trauma-informed, justice-conscious approach that understands economic stress not as a personal failing but as a structural issue with deeply personal consequences.

A foundational task is to validate clients’ lived realities. It is critical to name and normalize the pain, fear, and exhaustion that come with trying to survive in an inequitable system. Too often, clients internalize societal failures, believing their inability to “thrive” is a reflection of personal weakness or inadequacy. Naming the external pressures at play—low wages, unaffordable housing, lack of public supports—can be profoundly relieving and de-shaming.

Therapists must also help clients disentangle shame from identity. When systemic barriers are misinterpreted as individual deficits, people can spiral into self-blame, which undermines both self-worth and motivation. Psychotherapy becomes a place to deconstruct those narratives and rebuild a compassionate, accurate understanding of one’s circumstances. This deconstruction is not about absolving responsibility but about reclaiming dignity and perspective.

Stabilizing the nervous system is also essential. Chronic financial stress is not just cognitive—it’s somatic. Clients often live in a state of hyperarousal, vigilance, or shutdown. Therapeutic interventions, such as grounding, breathwork, sensory tools, and somatic resourcing, can help restore a sense of felt safety. Emotion-focused and regulation-based approaches can help contain overwhelm and foster internal coherence amid external instability.

Additionally, therapists can support clients in building connections and accessing resources. This includes providing psychoeducation around food security programs, housing supports, and referrals to financial counselors or legal advocates. Sometimes, the most meaningful intervention is helping a client feel resourced enough—emotionally and practically—to apply for rental assistance or attend a community food market without shame.

Ultimately, clinicians must strive to preserve hope and agency, even in subtle and nuanced ways. When clients feel powerless, even minor actions aligned with their values—reaching out to a friend, setting a boundary, or exploring a creative pursuit—can interrupt despair and reestablish momentum. Therapy, then, becomes a place where dignity is restored not through grit alone, but through attuned support and meaning-making.

Notably, therapy should not perpetuate individualistic blame models. Healing in this context means resisting cultural narratives that suggest people should be able to “resilience” their way out of poverty. Instead, therapy becomes a space where individuals can grieve, reflect, and reclaim agency while naming the systems that harm them.

Policy and Societal Solutions

While individual support is essential, it is insufficient without structural change. The psychological suffering rooted in economic insecurity cannot be fully addressed in therapy alone. What is needed is bold policy reform that tackles the root causes of the affordability crisis head-on.

To begin, governments must raise the minimum wage to align it with actual regional living costs. Wages that do not cover rent, food, transportation, and healthcare are not merely insufficient—they are unjust. A living wage should be the baseline, not a political aspiration.

There is also a dire need to invest in non-market, deeply affordable housing. Relying on private markets to address housing shortages has failed. Governments must re-enter the housing sector with long-term commitments to building, maintaining, and subsidizing homes that meet the needs of diverse populations.

Universal access to mental healthcare must also be expanded. The burden of distress caused by poverty is showing up in therapy rooms across the continent. Accessible, culturally responsive, and trauma-informed services must be available without long waitlists or financial gatekeeping.

Innovative programs, such as basic income pilots , offer another promising avenue. A guaranteed income can reduce stress, increase well-being, and provide financial stability for individuals and families navigating volatile economic landscapes. Pilot programs in both Canada and the U.S. have shown positive outcomes that deserve further exploration and scaling.

Finally, we must begin to frame poverty and economic stress as public health issues, not just matters of charity or employment. When millions are one emergency away from homelessness or hunger, we are not facing a marginal problem—we are living in a mass trauma environment. The mental health system must work in tandem with public policy to advocate for upstream solutions.

Without systemic change, we risk perpetuating a cycle where full-time work fails to protect people from poverty, and therapy becomes a holding space rather than a path to flourishing. No amount of grit or resilience training can substitute for affordable housing, food security, and economic justice. The question is not whether we can afford to act—it’s whether we can afford not to.

Conclusion

This affordability crisis is no longer a marginal issue—it is a defining challenge of our time, cutting to the core of health, dignity, and psychological stability for millions. What was once framed as a cost-of-living “squeeze” has become an entrenched structural emergency. In both Canada and the United States, everyday survival—having a stable home, nutritious food, access to healthcare, and moments of rest—is now out of reach for far too many. We are not simply dealing with inflation; we are confronting systemic economic displacement.

The emotional fallout is unmistakable in therapy rooms, emergency shelters, schools, and workplaces. Individuals and families are not just stressed—they are unraveling. Therapists are increasingly holding space for clients who aren't wrestling with existential questions of meaning, but with practical questions like, Where will I live? How do I keep the lights on? Will my children eat this week? These are not clinical dilemmas. They are human rights crises showing up in psychological form.

Without bold, integrated structural change, even the most effective therapeutic interventions risk becoming palliative—mere band-aids on systemic wounds. Emotional resilience alone cannot solve housing insecurity. Mindfulness cannot fill an empty fridge. Cognitive restructuring cannot overcome wage stagnation or the erosion of social safety nets. We must stop asking people to adapt to conditions that are, in many cases, intolerable.

As therapists, policymakers, and citizens, the question before us is not one of ideology—it is one of ethics and collective responsibility. In wealthy nations with abundant resources, the baseline should not be barely scraping by. The baseline must be stability, dignity, and the freedom to imagine a life beyond survival. That is not luxury. That is what it means to live in a just and functioning society.

It is time to stop normalizing scarcity in abundance. Surviving in a prosperous country should not be a lofty aspiration. It should be a given.

References

Economic Policy Institute. (2023, June 20). Wages have stagnated for most Americans. https://www.epi.org/publication/wage-stagnation-in-america/

Frost, D. (2023, August 31). Canadian workers are being crushed between low wages and high rents. Jacobin. https://jacobin.com/2023/08/canada-wages-landlords-rents-cities-affordability-crisis

Government of Canada. (2024). Budget 2024: Chapter 3 – Lowering everyday costs. https://budget.canada.ca/2024/report-rapport/chap3-en.html

Joint Center for Housing Studies. (2023). America’s rental housing 2023. Harvard University. https://www.jchs.harvard.edu/americas-rental-housing-2023

Le Monde. (2024, September 24). Underestimated, poverty in Canada affects one in four people. Le Monde. https://www.lemonde.fr/en/economy/article/2024/09/24/underestimated-poverty-in-canada-affects-one-in-four-people_6727025_19.html

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Mani, A., Mullainathan, S., Shafir, E., & Zhao, J. (2013). Poverty impedes cognitive function. Science, 341(6149), 976–980. https://doi.org/10.1126/science.1238041

Norström, F., Waenerlund, A.-K., Lindholm, L., Nygren, R., & Hammarström, A. (2022). Does financial strain increase the risk of depression? A systematic review and meta-analysis. PLOS ONE, 17(2), e0264041. https://doi.org/10.1371/journal.pone.0264041

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Seligman, M. E. P. (1975). Helplessness: On depression, development, and death. W.H. Freeman.

Spergel. (2025). Average cost of living in Canada. https://www.spergel.ca/learning-centre/general/average-cost-of-living-in-canada/

Statistics Canada. (2025a, January 22). The Daily — Perspectives on affordability and inequality. https://www150.statcan.gc.ca/n1/daily-quotidien/250122/dq250122d-eng.htm

Statistics Canada. (2025b). Research to insights: Perspectives on affordability and inequality. https://www150.statcan.gc.ca/n1/pub/11-631-x/11-631-x2025001-eng.htm

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U.S. Department of Housing and Urban Development. (2023). Worst case housing needs: 2023 report to Congress. https://www.huduser.gov/portal/publications/Worst-Case-Housing-Needs.html