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As daily life gets more expensive, workers are having a harder time making ends meet.
While wage growth is high by historical standards, it isn’t keeping up with the increased cost of living, which is growing at the fastest annual pace in about four decades.
“Wages are up 5.1% over the past year, which is trailing the pace of inflation,” said Bankrate.com senior economic analyst Mark Hamrick. “Indeed, surging prices are stealing the show on the minds of consumers.”
When wages rise at a slower pace than inflation, those paychecks won’t go as far at the grocery store and at the gas pump — two areas of the budget that are getting particularly squeezed.
At the start of 2022, 64% of the U.S. population was living paycheck to paycheck, up from 61% in December and just shy of the high of 65% in 2020, according to a LendingClub report.
“We are all seeing the cost of everything shooting up,” said Anuj Nayar, LendingClub’s financial health officer. However, paying more for gas and groceries is hitting households particularly hard, he said.
“You’ve got to eat, you’ve got to commute; these are not discretionary expenses.”
Even among those earning six figures, 48% said they are now living paycheck to paycheck, up from 42% in December, the survey of more than 2,600 adults found.
“Depending on here you live, $100,000 may not get you that far,” Nayar said.
In San Francisco, for example, a family of four with a household of under $120,000 is considered low income. (Here’s a breakdown of how much you need to earn to afford to live in the country’s most popular cities.)
Americans now say they need to be making roughly $122,000 a year, more than double the current national average salary, to feel financially secure, according to a separate report from financial services website Personal Capital.