How many Americans live ‘paycheck to paycheck’?
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Hello, and thanks for downloading the More or Less podcast. We're the program that looks at the numbers in the news, and I'm Charlotte MacDonald. Today, we're looking at a stat that keeps cropping up in US media.

a number that gained attention across the political spectrum. Here's left-wing Senator Bernie Sanders talking to reporter Dana Bash on CNN last month. We are living in an economy today, Dana, where the people on top are doing phenomenally well, while 60% of our people are living paycheck to paycheck.

And here's Republican Nikki Haley, earlier this year, also on CNN. I mean, right now you've got 60% of American families living paycheck to paycheck. And they're not the only ones. 60% of Americans are living paycheck to paycheck. Americans are living paycheck to paycheck. And how to find some relief? Surveys have found that up to two-thirds of Americans feel they're living paycheck to paycheck. Bernie Sanders has called this oft-repeated statistic an economic reality for the U.S. Is it?

Not according to US journalist Ben Krause. He says it's an economic myth. But if so, where did the myth stem from? So there's like a variety of surveys out there. But the one that's like referenced is by this financial services company called The Lending Club. And they do like an annual survey called the Paycheck to Paycheck Report. Paycheck to Paycheck. OK, so we're hearing that phrase a lot. But what does it actually mean?

That's kind of the core question of it is like, what does it mean? It's entirely subject to personal interpretation because this is a self-reported survey. We tend to assume we're talking about people who are really struggling financially and eking out their income to cover the basics. Are the majority of Americans in that position? No, says Ben.

But it turns out living paycheck to paycheck means different things to different people. And so then you get a situation like someone making $150,000 a year who has a monthly expense that includes a mortgage that's a couple thousand, everyday expenses that's a couple thousand, a car payment that's a thousand.

and then they could put the rest of the money into a retirement account. That person could technically rely on their next paycheck to sustain their lifestyle. There's a difference between a woman who's cleaning houses in Detroit and is really struggling to get by and would benefit from probably greater government assistance and...

You know, imagine a kid, you know, he's living in New York City, he's 25 years old. He has a really lucrative job in finance and he rents an apartment that's outside of his means. He spends lavishly on meals that are outside of his means. Again, these are two people that are both living paycheck to paycheck.

In its survey, Lending Club reports that four out of ten high-income earners, those making more than $100,000, are living paycheck to paycheck. Ben points out that some of them could be facing genuine financial hardship due to structural issues in the economy, such as high childcare costs.

But, he says, the statistic fails to distinguish between those struggling and those who are financially comfortable but make lifestyle or investment choices that reduce the amount of money in their current and savings accounts. Paycheck to paycheck has a lot of emotional resonance for people. A lot of people do feel like they're struggling to pay for things like, you know, higher education, for health care.

it does feel like many of us would say that we need our next paycheck to keep up with our financial commitments, whatever they may be. It's self-interpretation. I

I am an early career journalist. I love my job. I am not raking it in to the point where I'm making a lot of money. But I'm fine. I'm meeting my expenses. I'm living paycheck to paycheck. But I also don't think I need more government assistance. The government shouldn't be financially concerned about me. The rest of my Americans should not be financially concerned about me. Even though if the lending club called me up and asked me if I lived paycheck to paycheck, I'd say, yeah.

And then I'd say, quit promoting this really bad survey. And they'd say, how do you know about the survey? And I'd say, you called one of the few people that you probably shouldn't have called. So back to that survey's small print. Out of the survey's 4,000 respondents, 60% declared themselves as living from paycheck to paycheck.

We asked the lending company for more information on the specific question they asked. The survey asked consumers to report their financial lifestyles in one of three ways. 1. I live paycheck to paycheck and have no issues with paying my monthly bills. 2. I do not live paycheck to paycheck and have no issues paying my monthly bills. 3. I live paycheck to paycheck and have issues paying my monthly bills.

So, firstly, the word issues also feels somewhat vague and open to interpretation. And secondly, looking at the numbers here, we can see that they've reached the top line 60% figure by combining two answers. Those who live paycheck to paycheck with issues paying bills and those who live paycheck to paycheck without issues paying bills.

One of these situations is not like the other. Politicians like to use and abuse statistics all the time. That's OK. We're used to that. Well, it's not necessarily OK, but it's something we're used to. But I would say the biggest problem is that reputable news sites like CNBC, Forbes, CBS, these are websites I've seen use it. And they report it completely credulously. They don't question where the statistic came from, what it means, what...

you know, the exact wording of the statistic is. They just report it. But negative economic information drives a lot more clicks than positive economic information. And this is, you know, something that researchers, journalists are all kind of contending with. So are there any other stats out there that offer a better indication of how Americans are living and potentially struggling?

For this, Ben suggests looking at numbers from the Federal Reserve, the US central banking system. This is an institution that is very credible. And they released an annual survey called the Report on the Economic Wellbeing of US Households. This last one came from data back to May of 2024. The Federal Reserve survey suggests that 54% of adults have cash savings sufficient for three months of expenses.

It also suggests that the median American household has a net worth of $193,000. The median household network figure is important because I think it highlights the distinction between assets and liquidity. So it's certainly true that Americans can't just access their $193,000 in place of their paycheck. But it does point to a greater level of economic security than the paycheck-to-paycheck figure implies.

And again, that doesn't mean it's a rosy picture for all Americans. It doesn't mean that people's concerns about their economic well-being are misguided. It just is a reminder that the United States is not an economic dystopia where 60% of people are struggling to get by. It's a place where most Americans are still at least middle class, have comfortable living standards, along with a social safety net that keeps millions out of poverty.

And so I think the biggest problem with the stat is that it implies a financial hardship that is just not prevalent in American society. Interestingly, if you dig deeper into the original survey that started this all, you can find a figure that

that could be more useful. If you actually dig deeper into the Lending Club survey, you'd find that 18.5% of that 4,000 in their original survey sample say that they struggle to pay their bills each month. Again, this is self-reported data, but if you want a statistic that I think actually reflects the percentage of Americans who are in a difficult financial position, 18.5% seems a lot closer to the truth than the 60% figure we hear so frequently.

So what can be done for those who are struggling? I think we just had an election that was decided by inflation. Like I just said, it's undoubtedly true that problems like housing affordability, you know, the price and the premium of a higher education, increased healthcare costs, it has fractured the middle class dream, I'd say, for many Americans. And you can pursue policies that will make the cost of these major expenses more affordable, will make economic opportunity more equitable in this country without

promoting kind of dubious economic statistics to justify that. Thanks to Ben Krause. You can read more from him on the news blog, Slow Boring. That's all we have time for this week. As always, keep your questions and comments coming in to moreorless at bbc.co.uk. Until next time, goodbye. Yoga is more than just exercise. It's the spiritual practice that millions swear by.

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