HR News & Trends

Survey Says More Workers Are Living Paycheck to Paycheck

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More and more American workers say that they are reliant on their next payday to make ends meet, according to a new CareerBuilder survey.

Some 40 percent of workers report that they always or usually live paycheck to paycheck, a decrease from 42 percent in 2011 and a recession-era low, continuing a downward trend from a peak of 46 percent in 2008 during the early days of the financial crisis.

The nationwide survey by CareerBuilder found that a majority of those currently living paycheck to paycheck (53 percent) were not doing so until 2008. Additionally, some 37 percent of workers say they sometimes live paycheck to paycheck, while 23 percent say they never do. Another 20 percent of workers were unable to make ends meet at least once in the last year.

Even well paid workers not immune

Not surprisingly, even some well paid workers report living on the edge as well, with 12 percent of workers who earn $100,000 or more saying they always or usually live paycheck to paycheck – a trend that is down slightly from 14 percent in 2011 and 17 percent in 2010.

“Making ends meet remains a challenge for millions of households, but the situation has improved for workers who’ve grown more confident with their job security or who’ve taken steps to pay down debt and save more,” said Rosemary Haefner, vice president of human resources at CareerBuilder, in a press release about the survey.

She added: Some “72 percent of workers report they are more fiscally responsible since the end of the recession, and as the labor market continues to improve, we expect more workers will again be able to spend in ways that will drive the economy forward.”

Most valued expenses

A majority (59 percent) of workers said they have cut back on leisure activities since the start of the recession, but for many, the following expenses are too important to give up, regardless of financial concerns:

  • Internet connection – 57 percent;
  • Driving – 44 percent;
  • Pet – 39 percent;
  • Cable television – 29 percent;
  • Mobile phone – 24 percent.

 Savings and retirement

More worrisome is what workers are doing (or perhaps more correctly, NOT doing) when it comes to saving for retirement.

More than a quarter of workers (27 percent) do not save anything each month – the same as last year. Another 30 percent say they save more than $250 and one in ten (10 percent) report that they save more than $1,000.

Some 67 percent of workers contribute to a 401(k), IRA or comparable retirement plan, similar to 2011 (66 percent). Another 20 percent of employees said they reduced their contribution to these plans in the last year, which is also relatively unchanged from 2011 (21 percent).

Paycheck to paycheck by gender and age

The number of those living paycheck to paycheck varies by segment and demographics:

Gender: Consistent with past studies, women (44 percent) are more likely than men (36 percent) to live paycheck to paycheck. Additionally, one quarter (25 percent) of female workers missed a monthly payment at least once in the past year, compared to 17 percent of men.

Age: Compared to other age groups, workers close to retirement (55+) are least likely to report living paycheck to paycheck.

  • 18-34 – 40 percent;
  • 35-44 – 42 percent;
  • 45-54 – 43 percent;
  • 55 plus – 34 percent.

Additionally, workers age 55 and older are more likely than those workers age 25-54 to report saving more than $1,000 dollars a month (13 percent) and most likely to participate in a 401(k), IRA or comparable plan (73 percent).

The CareerBuilder survey was conducted online within the U.S. by Harris Interactive on behalf of CareerBuilder among 3,892 U.S. workers (employed full-time, not self-employed, non-government) ages 18 and over between May 14 and June 4, 2012 (percentages for some questions are based on a subset, based on their responses to certain questions). With a probability sample of 3,892, the overall results have a sampling error of +/-1.57 percentage points.

What this survey tells me is that workers are still struggling to save for retirement and plan for their future. It’s the ongoing fallout from the Great Recession and mediocre recovery, and it tells me that we still have a long way to go until we can say that the state of the economy — and America’s workforce — is truly on the rebound.

John Hollon is Vice President for Editorial of TLNT.com, and the former Editor of Workforce Management magazine and workforce.com. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices. Contact him at john@tlnt.com, and follow him on Twitter at http://twitter.com/johnhollon.