Why are so many living paycheck to paycheck?

The labor market finished 2019 with a solid showing. The economy added 145,000 jobs, making December the 111th straight month of job gains, the longest stretch in 80 years of data.

For the full year, employers averaged 175,000 jobs per month, a downshift from the 2018 pace of 223,000, though these numbers will likely change after the Bureau of Labor Statistics releases its annual adjustment to the numbers in February.

Adding to the positive news, the unemployment rate came in at 3.5%, matching the lowest reading since 1969.

Average hourly earnings increased by 2.9% from a year ago, which may not seem all that great, but given that the overall inflation rate remains under 2%, the bump is sufficient to stay ahead of rising prices.

Perhaps the best news on wages is that lower-earning and entry-level workers have been making steady progress over the past couple of years. That's due in large part to municipal and state minimum wage initiatives, which have pushed the effective average minimum wage to nearly $12 per hour.

Despite the labor market's progress, it has been interesting to see a new Twitter hashtag “With my next paycheck I will...” The posts are alternatively funny (“Help a recently exiled Nigerian prince reclaim his throne”) and depressing (“Still be broke”). The trend coincides with reports that an astounding 74% of Americans say that they are living paycheck to paycheck, according to a survey conducted by the American Payroll Association.

Given the upbeat economic news, the big question is: Why are so many workers feeling under pressure? The answer is complicated. While there have been wage gains, they are not spread out across every worker — just ask your friendly millennial or career-switching Boomer about it.

Additionally, averages are just that: average. A recent Bankrate.com report found that half of American workers said they did not get a raise last year, and over a longer term, middle-income workers have been left in the dust.

Government data show that over the past 20 years, median household income has barely budged, after accounting for inflation. Today the median stands at $63,179, a mere 3% increase from 1999's level of $61,526. Add to those figures the weight of $1.6 trillion in student loan debt as well as rising costs for housing in some areas, and you can see how monthly bills take a huge bite out of many workers' take-home pay.

But what accounts for those higherincome people who also say that they are living paycheck to paycheck? I hear from a lot of these folks who consistently struggle to make ends meet.

Not to discount how these people feel, but after a few probing questions, I have found that many of these folks are counting cash-flow items like home equity lines of credit that were used to renovate the kitchen, vacation funds and kids' activities/tutoring as part of their non-discretionary spending.

Regardless of whether you are really scraping by or feeling like you are, the advice is the same: Comb your cash flow to find areas to cut and then automatically redirect those funds to savings.

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at askjill@jillonmoney.com.