US workers say cost of living is still climbing faster than their paychecks
By Matt Egan, CNN Business
New York (CNN Business) — The cost of living continues to stress out American workers, even as inflation eases from four-decade highs.
Sixty-seven percent of employees say the cost of living is outpacing growth in their salary and wages, according to a Bank of America survey shared exclusively with CNN on Monday.
That feeling has intensified, rising from 58% in February 2022. That’s despite the fact that inflation has cooled considerably over the past year.
“Yes, the headline numbers on inflation are supposedly going in the right direction. But it doesn’t feel that way,” Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America, said in an interview.
High inflation is a major reason that just 42% of employees say they feel financially well, according to the Bank of America survey. That’s the lowest percentage in the 13-year history of the survey.
Likewise, 64% of employees say they are stressed about their finances. Among older Millennials, those aged 35 to 44, 80% report feeling stressed about money.
And women are much more worried than men.
Consumer prices increased by 3.7% in August from a year earlier, according to the Bureau of Labor Statistics. That’s down from 9.1% in June 2022 when gas prices spiked above $5 a gallon for the first time.
Even though prices aren’t going up as fast as they were in June 2022, they are still going up. Everything from eggs and car rentals to a night out at a restaurant is significantly more expensive than before Covid-19. The average family is spending about $700 more per month on the same goods and services relative to two years ago, according to Moody’s Analytics.
As inflation took off in mid-2021, prices started rising at a much faster rate than paychecks. That means real wages, adjusted for inflation, were essentially shrinking.
However, Bureau of Labor Statistics data show that situation started to reverse earlier this year, with wages finally going up a bit faster than prices.
Poor marks for Bidenomics
The Bank of America survey findings underscore why many Americans don’t seem to like Bidenomics and are giving President Joe Biden poor marks on the economy — even as unemployment remains historically low.
In an ABC News/Washington Post poll released over the weekend, 44% of Americans say they’re worse off financially under Biden, the most for any president in ABC/Post polls since 1986.
The White House is getting more blame than credit for the economy these days.
A CNN poll released earlier this month showed that 58% of the public say Biden’s policies have made economic conditions worse.
Beyond the political polling, other signs of financial stress have emerged.
Credit card debt has surpassed $1 trillion for the first time ever. More Americans are falling behind on credit card and auto debt. And the number of people tapping their 401(k) accounts because of financial distress has surged.
Women in particular are under financial pressure.
23% of women losing sleep over money
Just 38% of women say they feel financially well, according to the Bank of America survey. That’s a five-year low and down from 55% last year.
“That’s a massive decrease. Women are much more stressed about finances than men,” said Sabbia, the Bank of America executive.
Almost one in four (23%) women say financial stress is keeping them up at night, compared with just 5% for men, according to Bank of America. Just over half (54%) of women in the survey worry they won’t be able to make ends meet due to inflation, compared with 32% for men.
And 39% of women surveyed say they had to look for additional employment to keep up with rising costs, more than twice as many as men (17%).
The Bank of America survey also found a wide gap across ethnic groups.
While 61% of Asian employees say they feel financially well, just 44% of White employees, 40% of Hispanic and 35% of Black said the same.
Sabbia said the message for employers is concerning and underscores why it’s critical they arm workers with financial resources such as budgeting tools and advice from professionals.
“There was a time when companies believed it wasn’t their obligation to have employees feel financially well,” Sabbia said. “Companies now realize it has a direct impact on productivity, absenteeism, engagement and loyalty.”
In other words, having workers who are financially stressed out isn’t good for business.
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