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Report: More Than 60% of Households Now Living Paycheck to Paycheck

Isaac Nuriani    |
Aug 12, 2022
  • A large number of Americans seem to be hanging on by a financial thread
  • The number of higher earners living paycheck to paycheck has jumped
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Those who view the health of the economy in terms of the strength of the labor market were thrilled to learn the nation added more than a half-million jobs in July and that the unemployment rate dropped to 3.5%.[1] For context, it should be noted the unemployment rate has never been lower than 3.5% in the last 50 years.[2]

That sounds pretty good. Surely an unemployment rate this low means at least the majority of Americans are in great financial shape, yes?

Not necessarily. There may be a lot of citizens who have a job to go to each day. But it turns out the mere fact they have a job is no assurance of personal financial viability.

The latest piece of evidence to that effect comes in the form of a just-released report compiled by financial services company LendingClub. Titled “New Reality Check: The Paycheck-to-Paycheck Report,” the research reveals nearly two-thirds of Americans are living paycheck to paycheck these days. Especially notable is the fact that a surprising number of higher earners now are included in that group.

The report paints an especially concerning picture of American households and their financial strength – or, more accurately, lack thereof. And it’s another compelling piece of information that punches holes in the idea the economy is actually strong and that those who say otherwise are doing so merely because they have a political axe to grind.

There are a lot of people working. But it seems a whole lot of them are in the financial fight of their lives right now. And that underscores the importance for consumers and retirement savers to look beyond headlines and sound bites to ferret out the real truth about the nation’s economic health.

We’re going to go through the grim data of how many Americans are living from one week to the next. And for those of you who might be confused about why so many Americans are hanging on by a thread amid the lowest unemployment rate in the last half-century, we’re going to see if we can help clear that up, as well.

You’ll find it’s not difficult to understand. The dots actually connect rather easily. But to get to the point where you can even begin the dot-connecting, you have to be willing to question what you’re told about the health of the economy by those you want to presume have your best interests at heart.

We’ll get to that a little later. Let’s first discuss the eye-opening LendingClub data.

Number of Higher Earners Living Paycheck to Paycheck Is Growing

According to LendingClub’s report, it appears a lot of Americans fit the definition of what it means to be the “working poor” these days.

“Working poor” is another way to refer to those who live paycheck to paycheck. And while it might not be the most flattering term, it conveys a truth about just how constrained so many of our fellow citizens are these days.

The data says that 61% of Americans – nearly 160 million of us – lived paycheck to paycheck in June. That’s a noticeable increase above the 58% of Americans who said the same thing just the month before. In June 2021, the percentage of Americans who said they were living paycheck to paycheck was 55%.[3]

Beyond the “headline” paycheck-to-paycheck number, what is especially telling in my view are the recent increases in the number of higher earners who find themselves reliant on their paychecks to stay above water.

According to the same report, the percentage of consumers who earn between $100,000 and $150,000 per year and live paycheck to paycheck jumped from 41% in May to 52% in June. And while 30% of consumers who earn at least $200,000 per year lived this way in May, that figure climbed to 36% in June.[4]

These numbers suggest a fragility about American households that casual observers may not consider when hearing about such seemingly “robust” metrics as an exceedingly low jobless number. However, it’s clear this fragility not only exists but is downright prevalent, as you can tell from the percentage of the country now living paycheck to paycheck.

So here’s the question: In an economy supposedly at full employment, why are so many people struggling? 

Variety of Economic Data Explains Household Struggles

At the root of that question is what I believe to be deceivingly positive messaging about the economy, including the narratives surrounding employment and consumer spending. What’s deceiving about the messaging is that it is, in my view, woefully – and willfully – incomplete.

Here’s what I mean:

Take the ultra-low unemployment rate. For one thing, it’s a function of the lowest labor force participation rate in the previous 45 years (excluding the pandemic).[5] For another, the sound of “a half-million jobs added in July” has a bit of a different ring to it when you note that the number of individual workers increased by just 179,000 last month.[6] The apparent discrepancy can be explained in part by the fact that many of those jobs seem to have gone to people who already are working. In other words, these are folks who already have jobs and decided they needed another.

Indeed, one of the more disquieting pieces of data is the number of people in the country who currently have two full-time jobs. There now are 433,000 Americans working two full-time jobs. That’s the highest number of multiple full-time job holders since the Bureau of Labor Statistics began tracking this measure back in 1994.[7]

And what do we make of the continued resilience in consumer spending? Treasury Secretary Janet Yellen has been referring to this recently in her public pushbacks against the idea the nation could be in a recession.[8] But here again, the positive messaging also appears to be incomplete messaging.

Yes, consumer spending looks reasonably good given the current circumstances, rising 1.1% in June on a month-to-month basis.[9] But we know – and she knows – year-over-year real wage growth has been consistently negative for over a year, courtesy of chronic high inflation.[10]

So, where’s the spending money coming from?

One place it’s coming from is from personal savings. In December 2021, the personal savings rate was at 8.7% when inflation reached 7%. But that level of inflation seems to have been a breaking point. The next month – January 2021 – inflation was 7.5% and the savings rate dropped considerably, down to 5.8%. And as inflation has continued to climb, the savings rate has dropped steadily. The consumer price index reached 9.1% in June, and the personal savings rate sunk to 5.1%. The last time it was that low is 13 years ago, during the years of the financial crisis.[]

It also is coming from credit cards – in a big way. According to the Federal Reserve Bank of New York, Americans racked up another $46 billion on their plastic in the second quarter. That sum represents a 13% increase year over year, which, in turn, represents the biggest 12-month increase in more than 20 years.[12]

Boots-on-the-ground Washington Post retail reporter Jaclyn Peiser made clear what’s behind this sizable increase in credit card debt – not that there’s much of a mystery:

The increased credit card debt reflects consumers’ struggles to keep up with inflation. Stubbornly high prices on groceries, gasoline and other basic needs have changed how Americans spend their money — forgoing the clothing and technology aisles to afford household necessities.[13]

Savings rates are bottoming, credit card debt is soaring and there are more Americans working two full-time jobs now than at any other time in the last three decades – all thanks to persistent levels of inflation unseen since the era known AS the “Great Inflation.”[14] If it seemed odd at first that so many Americans have minimal financial viability beyond their paychecks, it surely doesn’t now.

My View: White House Efforts at Managing Perceptions Are a Bad Look

The sobering numbers underscore just how profoundly challenging inflation has become for everyone at all income levels. Those with healthier incomes may have been able to largely ignore rising prices for much of last year. Things clearly are different now. As we’ve seen, you don’t have to dig far below the surface of the “positive” data supporting the idea of a still-viable economy to see immediately just how unsound the thriving-economy story really is.

Still, that doesn’t stop those in leadership positions from continuing to claim that all is reasonably well. Just two weeks ago, White House chief economic adviser Brian Deese crowed that “working people and middle-class families have more breathing room. They have more job opportunities, their wages are going up in a stable way, and they’re able to afford the important things in their lives.”[15]

In another time I might have responded, “I’ll take your word for it.” Not now. There simply is too much evidence to the contrary. Yet the nation’s political and economic leaders continue, in the words of Washington Post writer Megan McArdle, “trying to manage perceptions of the economy.”[16] And for as long as they do, I’ll be here doing what I can to help you see things as they really are.


[1] Bureau of Labor Statistics, “The Employment Situation – July 2022” (August 5, 2022, accessed 8/11/22).
[2] Scott Horsley, NPR.org, “The unemployment rate fell to 3.5%, matching its lowest level in the last 50 years” (August 5, 2022, accessed 8/11/22).
[3] LendingClub, “New Reality Check: The Paycheck-to-Paycheck Report” (August 2022, accessed 8/11/22).
[4] Ibid.
[5] Federal Reserve Bank of St. Louis, “Labor Force Participation Rate” (accessed 8/11/22).
[6] Bureau of Labor Statistics, “The Employment Situation – July 2022.”
[7] Federal Reserve Bank of St. Louis, “Multiple Jobholders, Primary and Secondary Jobs Both Full Time” (accessed 8/11/22).
[8] Jeff Cox, CNBC.com, “Yellen says the economy is not in a recession despite GDP slump” (July 28, accessed 8/11/22).
[9] Bureau of Economic Analysis, “Personal Income and Outlays, June 2022” (July 29, 2022, accessed 8/11/22).
[10] Bureau of Labor Statistics, “Real Earnings Archived News Releases” (accessed 8/11/22).
[11] U.S. Inflation Calculator, “Historical Inflation Rates: 1914-2022” (accessed 8/11/22); Federal Reserve Bank of St. Louis, “Personal Saving Rate” (accessed 8/11/22).
[12] Federal Reserve Bank of New York, “Household Debt and Credit Report” (Q2 2022, accessed 8/11/22).
[13] Jaclyn Peiser, Washington Post, “Credit card debt surges as inflation pushes Americans to borrow more” (August 2, 2022, accessed 8/11/22).
[14] Federal Reserve History, “The Great Inflation” (accessed 8/11/22).
[15] Shannon Pettypiece, NBCNews.com, “White House battles recession fears as dismal economic news looms” (July 27, 2022, accessed 8/11/22).
[16] Megan McArdle, Washington Post, “Enough with the ‘is this a recession?’ blather” (July 29, 2022, accessed 8/11/22).
















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