With changing economic conditions furthering the need to recalibrate our nation’s approach to housing, an increasing share of American families now find themselves living on the brink. Recent analyses indicate that approximately 24% of U.S. households are living paycheck to paycheck in 2025, a stark reminder of the ongoing affordability crisis. Rising costs are adding fuel to the fire. Unsurprisingly, many people are, and the evidence is that working people are losing ground as wages fail to keep up.
According to Fitch Ratings, the share of subprime borrowers at least 60 days past due on their auto loans has jumped to 6.65%. This supplement was reflected within the October data. This statistic is emblematic of a deeper trend with lower-income groups, further showcasing the ongoing financial struggles that millions of Americans are currently living through.
Escalating Hardships for Individuals and Families
Vanessa Jones, a 65-year-old grandmother, is an unfortunate poster child of this crisis. So two years ago, during the pandemic, she accepted a second nursing job to help pay the bills. Yet she dealt with the burden of increasing costs and the difficulty of raising her two grandchildren. When she couldn’t make ends meet, her only option was to take on more hours. Recently diagnosed with cancer, Jones now faces overwhelming medical debt of $85,000. In order to take hold of her money again, she has declared bankruptcy.
Crappy Jones’s words were pretty crude, but they captured how so many Americans feel these days as they struggle to keep afloat under the weight of rising costs and flatlining paychecks. Her story tells us about the rising tide of people who are living paycheck to paycheck. They are stacking up huge amounts of debt due to medical emergencies and other unplanned occurrences.
Austin is a young professional with a master’s degree in fine arts. He embodies the hurdles that so many Americans face in today’s economy. Despite applying for approximately 1,000 jobs over the past year, he remains unemployed and is living paycheck to paycheck while supporting his partner, a veterinary student. Austin is definitely concerned about his current ability to service his student loan debt in addition to making ends meet on a daily basis.
Economic Indicators and Household Realities
According to the Bank of America Institute, the share of lower-income households who are living paycheck to paycheck has risen significantly. It increased from 27% in 2023 to 29% in 2025. This increase underscores the realities that many Americans face as they navigate an economic environment characterized by rising costs and limited wage growth. Incomes for low-income Millennials have hardly changed, increasing by only 1%. In stark defiance, high-income Millennials have experienced a rather stellar 6% rise in their wages.
Since October, middle-income consumers have enjoyed a slight bump in real after-tax wages, up nearly 2% on an annual basis. At the same time, the broader economic picture continues to feel shaky and fragile. The affordability issue is worsening, noted Gregory Daco, chief economist at EY-Parthenon. He lamented how far too many families around the country are one missed paycheck away from disaster.
A stunning 24% of households say they spend more than 95% of their income on essentials. This trend further constricts budgets, leaving little to no room for discretionary investments. Financial emergencies thus rapidly snowball into insurmountable debt.
Future Prospects Amidst Uncertainty
In fact, this year, the pace of households living paycheck to paycheck has ratcheted down considerably. Yet, as we noted last month, middle- and high-income households have barely budged. To be clear, analysts are sounding the alarm on continuing economic doom and gloom. Bank of America is now putting the odds at 20%-25% that the U.S. unemployment rate rises by at least 0.5 percentage points over the next half-year. As it stands, such an increase would wreak havoc on already vulnerable households.
For folks like Austin and Jones, the anxiety about losing a job or facing an unforeseen expense is always just one step away. As they navigate their financial realities, many express frustration and anxiety over how to maintain stability amidst rising costs and stagnant wages. The threat of accruing more debt hangs heavily over them, creating an added burden to their difficult lives.