1 in 5 Workers are Running out of Money Before Payday

[bjl584]

https://www.cnbc.com/2022/03/30/1-in-5-american-workers-runs-out-of-money-before-payday-survey-finds-.html

PERSONAL FINANCE
1 in 5 workers runs out of money before payday, survey finds


PUBLISHED WED, MAR 30 20228:00 AM EDT

Jessica Dickler@JDICKLER
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KEY POINTS

• As the cost of living rises, some American households are stretched too thin.
• Now, roughly 1 in 5 workers cannot make it from paycheck to paycheck, according to a report.

Inflation climbs 7.9% in February, in line with estimates

From gas to groceries, soaring prices are straining households across the board.

More than three-quarters of working Americanssaid inflation has impacted their finances over the past year, according to a report by Salary Finance.

While wage growth is high by historical standards, it isn’t keeping up with the increased cost of living, which is rising at the fastest annual pace in about four decades.

When wages increase at a slower pace than inflation, paychecks won’t stretch as far.


Now, workers are running out of money faster, Salary Finance found.

Roughly 20% of employees regularly run out of money between paychecks, up from 15% last year, according to the survey of more than 3,000 working adults in February.

As a result, about one-quarter of those polled said it’s harder to afford necessary expenses and one-third are unable to build savings, issues that are particularly problematic for low-to-moderate income workers.


Low earners funnel a bigger share of their budgets to transportation costs and other staples, like food and energy, relative to wealthier households, data show.

Further, people with $50,000 or less in annual income already have thinner margins between the money they take home and what they spend, according to Kayla Bruun, economic analyst at Morning Consult.

While no one is immune to recent price spikes, smaller income households are feeling it most because they have less of a financial buffer, Bruun said.

[disneysteve]

I'm actually surprised the number is that low. Most studies show 60-70% of people live paycheck to paycheck. Inflation definitely hits the lower income folks harder since the cost of many necessities is regressive and they don't have the fat in their budget that they can trim when prices rise.

[Fishindude77]

Not exactly a new phenomenon.

[bjl584]

I'm actually surprised the number is that low. Most studies show 60-70% of people live paycheck to paycheck. Inflation definitely hits the lower income folks harder since the cost of many necessities is regressive and they don't have the fat in their budget that they can trim when prices rise.

This was apparently a survey, so I guess it really depends who you ask and where you ask.
It didn't give that info, but I'd imagine you will get different results if you ask a financial question in Alabama versus New York

I've seen countless stats like these, and almost all of them contradict each other, or at the very least, they don't align very well

[ua_guy]

I think the takeaway is there is a non-ignorable percentage of people who are at-risk financially. Rising prices on necessary goods like food, rent, fuel, send these people over the edge. They have no ability to reduce their spending - everything they make goes towards supporting themselves and their families. And that should be a big concern.

There's also a non-ignorable (probably, even larger) percentage of people who live paycheck to paycheck. But they are better equipped to absorb price increases because a higher portion of their income is discretionary spending. Cutting back on unnecessary purchases can shore up their balance sheet for the month.