FREE NEWSLETTER
Go to main Forum page »
If 78% of Americans were truly living paycheck to paycheck – implying no money except for basic necessities, the economy would be at a standstill. No purchases at retail store sales, no entertainment venues, no travel – unless, of course it’s all on credit. Only utilities, food markets and insurance companies would be in business- maybe a McDonalds of Chick-fil-A or two.
The reported percentages are based on surveys. People don’t always give honest answers in surveys. Surveys themselves report that most people (around 80%) say they answer truthfully. However, that number might be a little inflated, since people might not want to admit to lying!
Even if the survey answers are truthful, defining paycheck to paycheck may be viewed differently. My bank account is virtually the same at the end of the month as at the start. In other words, I spend all of my net pension. However, I save a little, fund 529 plans, give to charity, go out to eat, etc. Is that paycheck to paycheck living? No way, but I could honestly answer yes to the question.
There are two parts to the equation, income and spending. Hearing someone is living paycheck to paycheck may be perceived as low income, but that is not always the case. Most income levels can spend all their income if they choose, as unwise as that may be.
Yes, there are some Americans living paycheck to paycheck with no choice doing so, but 78%? Nope! My guess is is that no more than 40% can claim that financial unpleasantness.
I think this depends on each person’s definition of “living paycheck to paycheck.” An acquaintance who is paid monthly at her job mentioned to me that as the end of the month nears, she runs out of money and is in a state of anxiety for a few days as she waits for her next paycheck to be deposited. She said, “If I want to buy a new pair of shoes, or go see a movie and eat out, I have to do earlier in the month while I still have money.” So your premise (that the economy would stand still if 78% of Americans were living paycheck to paycheck) misses the point that many people who are living “paycheck to paycheck” are spending everything they earn, and they’re spending it on luxuries and new purchases as much as they are on basic living expenses.
That is the point, just because a person spends all their net income doesn’t not meet a valid definition of P to P. So, in fact they are not living P to P, but might say so in a survey, because to their way of thinking, they are.
It’s a topic that generates interest to sell advertising, I assume, just like the People magazine cover I saw in Rick’s hair salon this morning. It featured a deceased quasi-celebrity from a sad 30-year-old story. In each case, I guess there’s enough interest to keep the businesses going. When my daughter was younger, we were encouraged to “just let her read anything. Any reading is good!” We didn’t agree. We wouldn’t let her fill her body with junk food, so why would we let her fill her mind with junk information? She seems to have developed into a healthy consumer on both fronts. I should be just as discerning about my own consumption. To return to your point, Dick, thanks for pointing out that not all “news” is newsworthy.
I know a guy who makes 40k as a janitor but still manages to fully fund his IRA every year. I know a married couple with 1 college age kid who earn about 80k, they have no debt and are taking advantage of tuition credits to send the boy to our local university, where he will graduate without any student loans. I also remember a couple who made 200k and didn’t know where they were going to get 2k for the balance due on the tax return.
So I would opine that a very large percentage of the paycheck to paycheck folks suffer from self inflicted wounds.
This is not to disparage people who are in financial straights through no fault of their own.
Self inflicted is a good way of putting it.
The survey, I suspect, is total junk:
https://www.prnewswire.com/news-releases/survey-reveals-six-percent-increase-in-americans-living-paycheck-to-paycheck-in-just-one-year-301928853.html
It says 38,605 folks took the survey, but there seems to have been no attempt to get a representative sample of the U.S. population and, indeed, the 2024 survey is offering a financial incentive to participate:
https://www.nationalpayrollweek.com/npw-survey/
At some point — the early 2000s, if I recall correctly — conducting a survey became the go-to way for organizations to garner publicity. At the WSJ, we were discouraged from using such surveys in our articles.
A significant portion of the U.S. population struggles financially, both because of economic conditions and because of their own self-inflicted financial wounds. But I suspect, Dick, that your estimate is about right — it’s probably around 40% of the population, still far too high, but certainly not 78%.