There is growing evidence that Americans are struggling to keep up with crushing inflation.
Nearly three in four (71%) employees say the cost of living exceeds their wages and salaries, according to a Bank of America-sponsored survey first shared with CNN on Tuesday. This is an increase from 58% in February.
The survey — which was taken in July and asked people who participate in 401(k) plans — reported that half of employees said they have taken steps to cope with financial strain in the past six months.
Among those taking action, 21% say they use emergency savings to pay the bills, 21% work extra hours, 20% look for a higher-paying job, and 6% resort to a 401(k) withdrawal. investigation found.
The Bank of America survey found that despite being employed, 62% of workers are stressed about their finances.
“The biggest contributor to that stress is inflation,” said Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America.
The results paint a picture of a workforce that is under significant economic pressure – despite evidence of a booming job market and robust consumer spending.
Persistently high inflation erodes paychecks and darkens consumer sentiment. Although gasoline prices have fallen in recent months, prices for food, rent and utilities remain high.
Overall, consumer prices rose 8.3% year over year in August, according to the Bureau of Labor Statistics. That’s not far below the 40-year high of 9.1% set in June.
The labor market, on the other hand, is booming, at least now. The unemployment rate fell to 3.5% in July, the lowest level since 1969. Hiring remains high and layoffs are relatively rare. Yet even the Federal Reserve warns of job losses ahead attempt to combat high inflation with massive interest rate hikes.
The percentage of employees who feel financially well off fell to 44% in the Bank of America survey. This is the lowest level in five years and significantly below February’s level of 57%.
The deterioration was more pronounced among minorities. Only 32% of black workers said they are doing well financially, down from 50% in February. One in three Hispanic employees said they are doing well financially, down from 47% in February.
Sentiment about financial well-being among younger Americans has worsened the most. Gen Z and Millennials (aged 18 to 44) experienced a 15 percentage point drop, compared to 10 points for those aged 55 and over.
Against this background, many Americans have considered quitting their jobs.
The Bank of America survey found that 21% of employees considered changing jobs and 9% did so. The main reasons for quitting were compensation, burnout and work-life balance.
The economy is likely to be a key issue in the fall midterm elections. Only one in four Americans say the economy is in “good” or “excellent” shape, according to a Washington Post/ABC News poll released over the weekend. About three in four Americans say the economy is either “not so good” or “bad.”
High energy prices continue to cast a shadow over the economy.
Americans have suffered sticker shock as high natural gas and coal prices, along with high demand amid heat waves, drove up utility bills this summer.
A separate Bank of America report showed that the average monthly payment for utilities rose 16.3% year-over-year in August.
Utility bills have risen so much that some families are finding it difficult to pay. A Bank of America survey of consumers found that 17% of households had either missed or made a late payment on utility bills. That number rises to 25% for those earning less than $50,000.
If utility prices remain high, Bank of America warned, these households “could come under pressure to cut their other expenses to keep the lights on.”