Over the past 12 months, wages have increased
by 4.9% while inflation rose by over 8.2%
81% of households have more than one
breadwinner, yet 4 in 10 have only one significant household source
of income
64% of consumers are very or extremely
concerned about current and near-future economic conditions
SAN
FRANCISCO, Oct. 24, 2022 /PRNewswire/
-- LendingClub Corporation (NYSE: LC), the parent company
of LendingClub Bank, America's leading digital marketplace bank,
today released findings from the 15th edition of the
Reality Check: Paycheck-To-Paycheck research series, conducted in
partnership with PYMNTS.com. The Employment Edition provides an
overview of consumers' employment characteristics, changes and
expectations and how they affect their financial lifestyles.
Today's Paycheck-To-Paycheck Landscape
As inflation continues to outpace wages, the share of consumers
living paycheck to paycheck nears a historic high. Sixty-three
percent of consumers were living paycheck to paycheck as of
September 2022, compared to 57% in
September 2021 and the recent high of
64% in March 2022. Financial strain
is also extending to groups historically used to managing their
budgets comfortably. The share of paycheck-to-paycheck consumers
has spiked among mid- to high-income earners, with 63% and 49%,
respectively, claiming to live paycheck to paycheck, up from 57%
and 38%, respectively, a year ago.
Living Paycheck to Paycheck as an Employee
Sixty-five percent of employed consumers were living paycheck to
paycheck in September 2022 —a 5
percentage point rise from a year ago. Among those of working age,
consumers who live paycheck to paycheck comfortably are the most
likely to be employed. In fact, inactive workers make up a
significant share of those who do not live paycheck to
paycheck.
"The five-percentage point increase in employed consumers living
paycheck-to-paycheck from last year is an indication of how
consumers are not able to keep up with the pace that inflation is
increasing," says Anuj Nayar,
LendingClub's Financial Health Officer. "Being employed is no
longer enough for the everyday American. Wage growth has been
inadequate, leaving more consumers than ever with little to nothing
left over after managing monthly expenses."
Financially struggling consumers are disproportionally
concentrated in the retail and services segments. Twenty-six
percent of financially struggling consumers have more than one
employer. Less than four in 10 consumers think their current jobs
meet their wage expectations. Even high-income consumers are likely
to say their current jobs do not meet their salary
expectations.
Dissatisfaction about wage expectations is a strong
differentiator in willingness to switch. Three in 10 workers are
likely to change their jobs over the next six months. Those
financially struggling evidence the highest turnover rates, with
four in 10 not very or not extremely likely to be at their current
jobs six months from now.
However, while many consumers have switched jobs to upscale
their paychecks in the past, the report shows optimism about
finding a new job that fits both wage demands and an employee's
qualifications is generally low. Regardless of demographic, only
34% of consumers find it very or extremely likely that they will
find such a job in the next three months.
The report also shows the benefits of staying with a job for a
longer period, consumers with more than five years in their current
position are 20% more likely to have above-average credit scores
than the average consumer. Their average savings are 18%
higher.
Inflation v. Wages
Despite the low unemployment rates, average hourly earnings have
failed to match the rate of inflation, increasing by 4.9% over the
12 months preceding September 2022.
Inflation rose by over 8.2% in that same period. Forty-eight
percent of workers state their incomes have remained unchanged over
the course of last year. Just 14% say their earnings grew on par
with or above inflation in that same period. At 11%, women are less
likely to cite such wage increases, while 18% of men do. As little
as 10% of struggling paycheck-to-paycheck consumers cite
inflation-matching wage increases; while 16% of both
paycheck-to-paycheck consumers who are not struggling and consumers
not living paycheck-to-paycheck cite the same.
Regardless of a consumer's financial lifestyle, households are
highly likely to have multiple sources of income and are currently
vulnerable to swings in labor market conditions. While 19% of
respondents stated they were the sole income provider in their
household, 40% of respondents said their income represented
three-quarters or more of their households' total earnings.
Even as the Federal Reserve doubles down on efforts to combat
rising prices, consumers believe it will take until mid-2024 to
tame inflation. Sixty-two percent of all consumers believe a
recession will come in under a year and 48% of all consumers
believe that we are already in a recession. Sixty-four percent
of consumers are very or extremely concerned about current and
near-future economic conditions. With the potential for at least
two more years of high inflation on the horizon, jobs prospects
curbed by the fear of a recession and the additional stress of the
year ending, financial distress could reach an all-time high by the
end of 2022.
"With inflationary pressures not expected to subside anytime
soon, living paycheck to paycheck has become the norm." Nayar
added, "Many are pessimistic about their odds of increasing their
paycheck by switching jobs and some households will become more
vulnerable to swings in labor market conditions. This could cause
many to struggle with the upcoming Holiday season."
To view the full report, visit:
https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-income-budget-inflation-employment/
Methodology
New Reality Check: The Paycheck-To-Paycheck Report — The
Employment Edition is based on a census-balanced survey of 3,942
U.S. consumers that was conducted from Sept.
9 to Sept. 23 as well as analysis of other economic data.
The Paycheck-To-Paycheck series expands on existing data published
by government agencies such as the Federal Reserve System and the
Bureau of Labor Statistics to provide a deep look into the elements
that lie at the backbone of the American consumer's financial
wellness: income, savings, debt and spending choices. Our sample
was balanced to match the U.S. adult population in a set of key
demographic variables: 51% of respondents identified as female, 31%
were college-educated and 36% declared incomes of more than
$100,000 per year.
About LendingClub
LendingClub Corporation (NYSE: LC) is the parent company of
LendingClub Bank, National Association, Member FDIC. LendingClub
Bank is the leading digital marketplace bank in the U.S., where
members can access a broad range of financial products and services
designed to help them pay less when borrowing and earn more when
saving. Based on more than 150 billion cells of data and over
$75 billion in loans, our advanced
credit decisioning and machine-learning models are used across the
customer lifecycle to expand seamless access to credit for our
members, while generating compelling risk-adjusted returns for our
loan investors. Since 2007, more than 4 million members have joined
the Club to help reach their financial goals. For more information
about LendingClub, visit https://www.lendingclub.com.
CONTACT:
For Investors: IR@lendingclub.com
Media Contact: Press@lendingclub.com
PYMNTS Contact: information@PYMNTS.com
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SOURCE LendingClub Corporation