Fewer workers living from paycheck to paycheck

The percentage of U.S. workers living from paycheck to paycheck has declined from 46% at the height of the financial crisis in 2008, to 36% today, CareerBuilder LLC reports.

The figure for 2013 was four percentage points lower than in 2012 (40%).

The survey, carried out by Harris Interactive, involved nearly 3,000 full-time, private sector U.S. employees. They were interviewed from May 14th to June 5th, 2013.

The survey found that 24% of employees never have to live from paycheck-to-paycheck, while 40% said they occasionally have to.

In 2012, 80% of employees said they were able to get by financial each month during the previous twelve months. The percentage improved to 82%.

Over the past year:

  • 1 in 5 employees has missed payments
  • 16% said they missed payments on smaller bills
  • 4% said they had not managed to meet payments on mortgages and other large obligations

Rosemary Haefner, vice president of human resources at CareerBuilder, said:

“The financial situation for many households remains a struggle, but year-after-year fewer workers report living paycheck to paycheck — a sign that job security and spending power may be on the rise as the labor market continues to improve.

More workers are saving their earnings on a monthly basis than last year, and 70 percent feel they are more fiscally responsible post-recession. As more workers join the ranks of the gainfully employed, we expect these positive trends to continue.”

Savings and Retirement

Twenty-five percent of all workers said they did not set aside anything each month for savings, compared to more than 27% in 2012.

Ten percent said they saved at least $1,000 per month while 31% reported saving more than $250 every month.

In 2012, sixty-seven percent of workers reported participating in a 401(k), IRA or other equivalent retirement plan, compared to 65% this year. However, only 17% of employees had to scale down their contributions, personal savings or retirement plans compared to 20% in 2012.

Most Valued Expenses

Thirty-six percent of workers have stopped eating out, 49% have cut back on leisure activities, and 34% said they used their cars less in order to help balance their budgets in the last twelve months.

Despite attempts to save more and spend less, there are some expenses employees say they refuse to give up, no matter what their finances are like:

Expenses that workers refuse to give up:

  • 55% – internet connection
  • 40% – driving
  • 36% – pet
  • 29% – smart phone
  • 24% – cable
  • 10% – travel
  • 9% – eating out

Smart phone usage became a higher priority than cable this year, showing how media preferences are changing.

Paycheck to Paycheck by Sex, Age and Salary

The percentage of workers living from one month’s pay to the next differs according to segment and demographics.

Gender – a higher percentage of female workers live from paycheck to paycheck, compared to males. This has been the case since surveys began. However, despite declines for both genders, the gap is widening.

In 2012, thirty-one percent of men and forty-one percent of women lived from one month’s pay to the next, compared to 36% and 44% in 2013, respectively.

Age – fewer people close to retirement age struggle from one month to the next, compared to the other age groups.

Percentage of workers living paycheck-to-paycheck according to age group:

  • Age 25-34 – 37%
  • Age 35-44 – 37%
  • Age 45-54 – 39%
  • Age 55+ – 32%

Salary – as expected, fewer employees with higher incomes have to live from one paycheck to the next.

Eleven percent of those earning at least $100,000 usually or always live paycheck-to-paycheck in 2013, compared to 12% in 2012 and 17% in 2010. For those earning $50,000-$99,999 the figure is 31%, and 53% for workers earning less than $50,000.