Reach Out to Workers Living Paycheck-to-Paycheck

Higher pay would be welcome; financial management advice also can help

By Stephen Miller, CEBS Sep 7, 2016
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Roughly 3 in 4 workers in the U.S. say a delayed paycheck would have an immediate impact on their financial well-being, indicating that they are living paycheck-to-paycheck.

The survey, conducted in spring 2016 among 2,000 full-time and contract workers, revealed "the precarious financial position of many American workers in 2016," said Brent Warrington, CEO of San Francisco-based Hyperwallet, a provider of payee account services and the survey's sponsor.

Half of respondents reported that they would have to stop buying nonessential items and delay payment on important bills in the event of a delayed paycheck, according to the firm's Payday in America report.

On a positive note, most American workers are satisfied with the way they receive their paychecks, the Hyperwallet survey found, with 82 percent of workers receiving direct deposit and 78 percent indicating that their payments are processed in two days or less.

But  contract workers often wait for payments much longer than their full-time counterparts: About 28 percent of contract workers wait three to four business days for a payment to process, while an additional 15 percent wait more than a week, forcing them to deal with inconsistent payment dates as many struggle to make ends meet.

Not Just Low-Wage Workers

The above findings are in line with other survey results released in August by recruitment website CareerBuilder. This survey of more than 3,200 full-time employees, fielded in May and June, found that:

  • 38 percent of workers said they sometimes live paycheck-to-paycheck.
  • 23 percent said they always do so.
  • 15 percent said they usually do so.

It's not just minimum-wage workers who are struggling, CareerBuilder found. While the likelihood of living paycheck-to-paycheck decreases for workers with higher salaries, a lack of savings was found among all salary ranges:

  • 9 percent of workers making $100,000 or more feel they usually or always live paycheck-to-paycheck.
  • 23 percent of workers making $50,000-$99,999 feel the same.
  • 51 percent of those making less than $50,000 agree.

Further, 68 percent of all workers say they're in debt, CareerBuilder found, and among those workers only 46 percent say their debt is manageable. That's having an effect on their retirement savings, the findings suggest:

  • 36 percent of all workers do not participate in a 401(k) or comparable workplace retirement plan, or in an individual retirement account (IRA) outside of work.
  • 25 percent have not set aside any savings each month over the last year.
  • 16 percent have reduced their 401(k) contribution and/or personal savings in the last year.

Better Savings Habits

An Aug. 29 online post by Christina Lavingia, an editor at the personal finance website, addresses those struggling to make ends meet and cautions that "sometimes, your income isn't the culprit—it's your financial habits, or lack thereof."

Making common mistakes often leads people to end up living paycheck-to-paycheck, "no matter how big your paycheck is," Lavingia observed. These missteps, which employers can warn against as part of their financial wellness initiatives, include:

  • Paying only the monthly minimum on credit card debt, so that an increasing share of employees' income goes to interest payments.

  • Trying to "keep up with the Joneses" by living a lifestyle beyond what employees and their families can afford.

  • Failing to have a budget, since a budget helps employees to calculate how much money they can allot to food, housing, transportation and personal expenses while still saving for anticipated future expenses (such as college tuition) and developing an emergency fund for irregular expenses (such as car repairs and home maintenance)—without being pushed further into debt.

Related SHRM Articles:

Financial Wellness Success Requires Proactive HR, SHRM Online Benefits, September 2016

Big Companies Are Raising Wages for Lower Earners, SHRM Online Compensation, July 2016

Financial Planning Tackles Gender Savings Gap, SHRM Online Benefits, March 2016

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