For Austin H., a 34-year-old millennial, dreams of buying a house and starting a family are looking increasingly unattainable as he struggles to make ends meet in an economy where nearly one in four U.S. households are living paycheck to paycheck.
Austin, who would not share his last name with CNN, said he isn’t able to save much money, given the high price of essentials.
Further, he will soon be unemployed because the family-owned construction business he works for is shutting down, leaving him with no job and “no safety net.”
“To be 34 and living paycheck to paycheck with no savings, things are pretty crappy right now,” he said.
A Bank of America Institute analysis released this week found that an estimated 24% of American households are living paycheck to paycheck.
Using internal data, the bank’s researchers found that 24% of households spend more than 95% of their income on necessities like housing, gas, groceries, child care, and utilities.
Austin told CNN that he has applied to approximately 1,000 jobs in the past year, in fields ranging from teaching to construction, and had no luck getting hired.
He has a master’s degree in fine arts and told the outlet that he worries how he and his veterinary student partner will be able to pay off student debt in addition to other expenses.
“We want to own a house and start a family, but I don’t know how we will ever get our feet under ourselves,” he said.
The Bank of America report reveals a K-shaped economy, where higher-income earners are faring better than those in lower-income brackets.
According to the analysis, the rate of increase in households living paycheck to paycheck has slowed significantly this year but the share of lower-income households living paycheck to paycheck has climbed from 27% in 2023 to 29%.
There was little change this year for middle- and high-income households.
“Higher income and lower income households are living in two different worlds,” Joe Wadford, economist at the Bank of America Institute, told CNN.
The problem, the institute found, is that paychecks among lower-income households have largely not kept pace with prices.
Among middle-income earners, after-tax wages increased around 2% in October year over year, while inflation, as of September, was sitting around 3%.
For lower-income Americans, the wage growth problem is even more acute. After taxes, their wages increased only 1% year over year.
On the other hand, high-income wages grew 4%, outpacing the cost-of-living increase.
The gap in wage growth between high- and low-income Americans has not been this disparate since 2016, Wadford said.
For millennials, the gap is even wider. Wages have ticked up for low-income millennials by just 1%, while high-income millennials have seen their wages climb 6%.
Additionally, the percentage of subprime borrowers who are at least 60 days late on their car payments rose to 6.65% last month, according to Fitch Ratings — the highest since the credit rating agency began tracking in the early 1990s.
Historically, car loans are the last payment that Americans are willing to miss.
Bank of America also found that the number of households making just the minimum credit card payment is also increasing — but so is the share of credit card holders paying off their entire balance each month.
“There is a mixed bag,” Wadford said. “There are some signs of consumer health, and yet, within the minority of people experiencing financial stress, pressure is mounting.”
Nicole Weatherholtz ✉
Nicole Weatherholtz, a Newsmax general assignment reporter covers news, politics, and culture. She is a National Newspaper Association award-winning journalist.
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