Stretched and Struggling: One-Fourth of Americans Live Paycheck to Paycheck

America is the land of opportunity, but can every American take advantage of that opportunity? That’s debatable as a shockingly high number of U.S. households live paycheck to paycheck in 2025.

Bank of America’s latest study found that more U.S. households are living paycheck to paycheck, largely because lower-income earners spend the majority of their money on  housing, gasoline, groceries, and other essentials. Alarmingly, nearly 24% of all households in the U.S. are living paycheck to paycheck this year as their immediate earnings are being spent on basic necessities.

Furthermore, the Bank of America study concluded that the “number of lower-income households (especially Millennials and Generation X) living paycheck to paycheck continues to rise.” At the same time, there is “almost no increase in the number of higher- and middle-income households.”

Without a doubt, the lack of available jobs has something to do with this problem. According to ADP data, the U.S. only added an average of 3,000 private-sector jobs per month over the last three months.

Courtesy: @charliebilello

This represents the slowest pace since the 2020 recession. For context, only a year ago, America was adding more than 200,000 private-sector jobs per month.

The situation is even more desperate for lower-income households, 29% of which are currently living paycheck to paycheck. That figure is up from 28.6% in 2024 and from 27.1% in 2023, so evidently the trend is getting worse.

Here's where it gets interesting, though. Even as lower-income households struggle to make ends meet, Bank of America reports that there’s been little to no increase in the share of middle-income or higher-income households using their immediate income to cover only basic expenses.

Why did the researchers only observe an increase in lower-income households living paycheck to paycheck? “In our view,” they wrote, “it’s likely due to slowing wage growth for this cohort.”

Bank of America reported that wages for lower-income earners have been lagging behind those of their higher-income counterparts since the beginning of 2025. Yet, this wage disparity has undoubtedly been going on for more than just a year. 

Courtesy: @KobeissiLetter

Certainly, a lack of earnings among the largest U.S. corporations isn’t the culprit here. Indeed, corporate earnings are booming with S&P 500 quarterly earnings growth up 18% year over year in Q3 2025, the fastest growth rate since Q3 2021.

All of these data points support the notion of a K-shaped economy in which wealthy earners continue to prosper while all too many middle-class Americans get the short end of the stick. As B. Riley Wealth chief market strategist Art Hogan explained, "It's very bifurcated, and I think that's reflective of what we're seeing in the economy and consumers in general."

Despite the weak job market and slowing wage growth for low-income workers, the Federal Reserve, led by Chairman Jerome Powell, remains reluctant to ease interest rates. Persistently high borrowing costs could continue to impact businesses, hiring managers, and job seekers across all economic strata.

As desperate as the situation is, I definitely don't recommend waiting around for the government or central bankers to come up with solutions. In a time when the wealth gap is only widening, self-reliance will be the key to financial survival and advancement for the remainder of the 2020s.