More Americans Are Living Paycheck to Paycheck Amid High Inflation

A customer shops in a supermarket as inflation affected consumer prices in New York City, on June 10, 2022. Andrew Kelly/Reuters

As inflation continues to remain elevated, Americans are struggling to make ends meet and finding that there isn’t much leftover after making monthly payments, according to a recent survey by LendingClub.

As of September 2022, 63 percent of U.S. citizens were living paycheck to paycheck, up 5 percent from 57 percent in September 2021. Last month’s number is close to the historical high of 64 percent hit in March. The survey, conducted among 3,492 U.S. consumers, found that 66 percent of those living paycheck to paycheck have reduced spending, 55 percent have limited spending capacity, and 49 percent have changed their shopping preferences.

“The five percentage-point increase in employed consumers living paycheck to paycheck from last year is an indication of how consumers are not able to keep up with the pace that inflation is increasing,” said Anuj Nayar, LendingClub’s financial health officer, according to a press release on Oct. 24.

“Being employed is no longer enough for the everyday American. Wage growth has been inadequate, leaving more consumers than ever with little to nothing left over after managing monthly expenses.”

Among respondents making more than $200,000 per annum, 28 percent claimed to be living paycheck to paycheck.

Among middle-income earners, the proportion of respondents claiming to be living similarly rose from 57 to 63 percent in a year. Among high-income earners, this number rose from 38 to 49 percent.

One in six Americans who are living paycheck to paycheck and facing issues with paying monthly bills have noted significant increases in the prices of utilities in the past 12 months.

While 62 percent expect the U.S. economy to be in a recession in less than a year, 48 percent believe the country is already in a recession. More than 60 percent are “very or extremely concerned” about current and near-future economic conditions.

Poor Wage Growth

The LendingClub report found that though the average hourly earnings rose by 4.9 percent in the 12 months till September, inflation during the period had grown by 8.2 percent.

As a result, wage growth has failed to keep up with inflation. While 48 percent of respondents said that their incomes have remained unchanged over the year, only 14 percent saw their income grow on par or above inflation.

An Oct. 4 report by the Federal Reserve Bank of Dallas found that more than 50 percent of American workers saw real wages fall between second quarter 2021 and second quarter 2022.

“For the 53.4 percent of such workers in second quarter 2022, the median decline (that is, half of the declines were larger and half smaller) in real wage growth was 8.6 percent,” the report said.

“The average median decline over the last 25 years is 6.5 percent, with real wage declines typically falling in the range of 5.7 to 6.8 percent.”

High inflation and lackluster wage growth have severely affected the lives of American workers. According to a report by Salary Finance, almost a third of workers making more than $100,000 in annual income said they were already in debt before their next paycheck.