In a stark reflection of the current economic climate, a shocking 80% of Americans are living paycheck to paycheck, a new survey by PayrollOrg reveals. The annual "Getting Paid in America" survey, which included over 38,600 participants, discovered that a staggering 78% of individuals would face financial hardship if their paycheck was delayed by just one week – a significant 6% increase from the previous year.
The survey findings mirror a broader sentiment of financial insecurity among American households, who are increasingly pessimistic about their economic prospects. The New York Federal Reserve Bank’s August 2023 Survey of Consumer Expectations indicates a general decline in optimism regarding income growth and access to credit. Moreover, the Federal Reserve’s Economic Well-Being of U.S. Households report in 2022 found that over a third of Americans could not afford an unexpected $400 emergency expense, further highlighting the precarious financial situation many find themselves in.
Living Paycheck to Paycheck: A Rising Issue Among Americans
In a recent survey by PayrollOrg, it was revealed that an overwhelming 80% of Americans are living from paycheck to paycheck. This significant increase from the previous year emphasizes the growing financial insecurity among the US population.
Financial Struggles and Economic Pessimism
The annual “Getting Paid in America” survey, conducted by PayrollOrg, collected responses from over 38,600 participants. It uncovered that 78% of participants would face difficulties in meeting their financial obligations if their paychecks were delayed by a week, a 6% increase from last year. Reflecting this hardship, the New York Federal Reserve Bank’s August 2023 Survey of Consumer Expectations noted a general decline in optimism about financial situations, particularly in terms of income growth and credit access.
Alarmingly High Financial Insecurity
Adding to the alarming situation, the Federal Reserve’s Economic Well-Being of U.S. Households report in 2022 found that more than a third of Americans are unable to cover a $400 emergency. This only accentuates the rising financial insecurity among American households.
The Growing Demand for Early Wage Access
In the same PayrollOrg survey, it was identified that 34% of people would prefer to access their wages before their regular payday, marking an increase of 13% from 2022. This has led to the growing popularity of Earned Wage Access (EWA) – a service that allows employees to receive their paychecks earlier than their scheduled pay dates. However, some EWA programs charge fees for this early access, adding another layer of financial burden on the employees.
The Call for More Accessible Wages
Theo Curey, head of Money Network at Fiserv, highlighted the importance of organizations ensuring their employees are paid accurately and promptly. He also emphasized the need for programs that enhance access to earned wages, given the financial struggles most people face.
While the rise in economic pessimism and financial struggles among Americans is concerning, it also opens up opportunities for financial institutions to introduce more flexible payment options. These could include earlier wage access and other financial support measures, which could go a long way in helping households manage their finances better. However, it is important that these solutions do not impose additional financial burdens on the already struggling employees.