A growing number of Americans are now living paycheck to paycheck. This is the major effect of rising inflation rates that are outpacing the rate of salary increases.
Inflation Is Pushing Americans To Live Paycheck to Paycheck
Money is tight for many Americans right now, as salaries can’t seem to keep up with rising inflation. As a result, many Americans are reporting that they are now living paycheck to paycheck.
PYMNTS and LendingClub released a new report titled: New Reality Check: The Paycheck-to-Paycheck Report. It surveyed roughly 3,000 U.S. consumers between December 2 to December 14, 2021, about their current financial status.
It reported that 61% of consumers were living paycheck to paycheck. The situation is a growing trend since May 2021. The sharp rise is now approaching pre-pandemic levels.
More Millennials Living Paycheck to Paycheck Compared to Other Generations
However, the problem of living paycheck to paycheck isn’t spread across generations equally. The report found out that 70% of millennials (aged 23-28) are experiencing a financial crunch.
Meanwhile, only 65% of Generation Z (7-22), 60% of Generation X (39-54), and 54% of Baby Boomers (55+) reported the same status.
When the report evaluated data based on income bracket, 42% of consumers making more than $100,000 also said they live paycheck to paycheck.
Meanwhile, 66% of Americans living an annual income between $55,000 to $100,000 said they’ll also live paycheck to paycheck. Among Americans earning below $50,000, 77% say the same thing.
Wage Increases Can’t Keep Up With Inflation
This 2022, companies are setting aside an average of 3.9% of payroll for wage increases. However, inflation rates are outpacing these increases.
This means that even with higher wages, Americans are spending more to maintain their current purchases.
Interestingly, research also showed that even if most millennials claimed living paycheck to paycheck, they also reported the highest savings.
They reported an average of $3,731 in savings even as they struggled to pay the bills. Among Americans who reported living paycheck to paycheck, 39% say they manage to pay their bills. Meanwhile, 22% struggle to do the same.
When asked if they can afford to shell out $400 in emergency expenses, 59% of Gen Xers who said they live on payroll say they cannot afford to do so.
This is consistent with a bigger study that found that less than half of Americans can afford an emergency payment of $1,000.
In addition, those who live on a weekly budget are more likely to sell something, borrow money, or use a credit card to pay expenses.
Those who said they live on a weekly salary but manage to pay their bills are more likely to survive a $1,000 emergency payment.
Inflation Is To Blame
A separate Quinnipiac survey confirmed that most Americans blame Inflation for their financial woes. 27% of their respondents view inflation as America’s most urgent issue.
This is consistent with the Labor Department’s report that prices rose by 7.5% between 2020 and 2021.
Watch The Hill’s video reporting that 70 percent of Americans say they live paycheck to paycheck:
Do you live paycheck to paycheck? In addition, do you have more problems balancing your monthly budget despite getting a raise from work?
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