High earners join ranks living paycheck to paycheck

The share of Americans who say they live paycheck to paycheck climbed last year, and most of the new arrivals in that category were among the country’s higher earners, a new study shows. Some 64% of U.S. consumers — equivalent to 166 million people — were living paycheck-to-paycheck at the end of 2022, according to the survey by industry publication Pymnts. com and LendingClub.

That’s an increase of 3 percentage points from a year earlier, or up about 9.3 million Americans. And out of that group, some 8 million were people who reported earning more than $100,000 a year. More than half of that income cohort said they lived paycheck-to-paycheck in December, up 9 percentage points from a year earlier.

“Prospects for consumer spending are cloudy,” said Lydia Boussour, senior economist at EY Parthenon. “Elevated prices, eroded personal savings and increased reliance on credit point to weak consumer spending this winter. These dynamics will be exacerbated by negative wealth effects from lower stock prices and declining home values.”

Other indicators also point to some level of financial stress. A recent University of Michigan survey showed that consumer sentiment, while having climbed recently, remains far below pre-pandemic levels. Fourthquarter economic growth data published Friday highlighted a slowdown in household spending. Inflation-adjusted disposable incomes remain below levels at the start of the pandemic in 2020, indicating consumers have seen no real income gains in the past three years, according to the Bureau of Economic Analysis.

The LendingClub report didn’t define its basis for living paycheck-to-paycheck, which typically means people rely entirely on their monthly incomes to meet basic obligations and would be in immediate difficulty if the income were interrupted.

The label doesn’t necessarily mean residents are having trouble staying current on debt payments, but the survey suggests that a growing number are. It found that 24% of respondents had issues paying bills in December.

Among those earning more than $100,000 and living paycheck-to-paycheck, the share rose to 16% from 11% a year earlier.