When you think about living "paycheck to paycheck," what comes to mind? You might be surprised to find out that according to a recent survey, 64% of U.S. adults currently live paycheck to paycheck—and 48% of people who earn six figures live paycheck to paycheck, too. It's clear that people of varying income brackets are dealing with financial challenges, struggling to pay their bills, and coming up short on savings. What are the root causes of this far-reaching financial instability? And how can we solve it?
Obviously, inadequate pay plays a huge role in the financial instability of many Americans. Yes, wage growth may be high by historical standards right now—but it’s simply no match for the soaring cost of living, which is increasing at the fastest annual pace in nearly four decades.
Companies need to offer competitive wages to keep talent—specifically for jobs that have been considered frontline and essential throughout the pandemic. But higher wages alone won’t solve the labor crisis. Workers are demanding to be treated more fairly, both with higher wages and better benefits. You need to offer competitive pay and additional tools that help them gain financial stability.
Inflation recently soared to 7.9%—a level not seen since January of 1982. And it’s far outpacing wage growth. While people of all income brackets are affected, low earners are more likely to feel the pinch of rising costs in things like rent and gas prices.
On the other hand, those with higher salaries also often have higher expenses. As the cost of living goes up across the board, it’s becoming harder to maintain the same standard of living for the same cost. In fact, consumer confidence among high earners dropped by 7% in March according to the Morning Consult/Axios Inequality Index.
The pace of pay
Since six figure earners are also susceptible to paycheck-to-paycheck living, it isn’t just about how much money people are earning, it’s about how fast they’re getting paid. The traditional two-week paycycle isn’t enough to keep most people afloat amid today’s economic challenges. That’s why solutions like earned wage access, instant cashless tips, and instant contractor payments are so crucial. They improve people’s cash flow, giving them access to their own money faster, so they can pay their bills on time and have less financial stress and worry.
It turns out that living paycheck to paycheck is an ever-growing problem that’s affecting more and more Americans. What can we do to improve the financial wellness of all workers, helping them overcome the stress and anxiety that comes with just skating by? Offering faster payments improves cash flow and opens up new possibilities. It can help people deal with unexpected bills, prevent late fees or overdrafts, and even create the potential to start saving.
Click below to learn more about how Branch can boost the financial wellness of your workforce by offering instant payments.