Americans in upper-income groups are concerned about their ability to pay bills, with more than 15 percent of this demographic taking up additional jobs over the past year, according to a survey by the Federal Reserve Bank of Philadelphia.
As of April 2024, 32.5 percent of respondents earning over $150,000 annually were worried about making ends meet over the next six months, up from 21.7 percent in April of last year, the June survey showed.
This percentage is higher than for those in the income groups of $100,000 to $149,999, $70,000 to $99,999, and $40,000 to $69,999. Only individuals who earned less than $40,000, the lowest income group, were more worried than the $150,000-plus group.
Among all income levels, the percentage of people anxious about their ability to pay bills was higher in April 2024 compared to a year ago. The share of respondents concerned about making ends meet rose among those already paying their bills on time, with the increase most prevalent among people who are younger, female, or in higher income groups.
In April last year, 20.7 percent of individuals who could pay all of their bills were worried about the next six months. In 2024, this jumped to 26.2 percent.
The various income groups behaved differently in how they handled their tighter financial situations over the past year.
Among the $150,000 group, 15.3 percent took an additional job, the highest among all income levels. This group borrowed the least from formal sources but was the second-highest when it came to borrowing from family or friends.
People earning less than $40,000 ranked at the bottom in terms of taking up an additional job. However, they ranked second-highest in borrowing from formal sources and were at the top in terms of borrowing from family or friends.
Only 8.8 percent of individuals in the $150,000 or more group skipped their monthly bills or debts or made partial payments, the least among all income levels. Those making above $100,000 cut back the least on essential as well as discretionary spending.
The survey shows that while upper-income groups were more worried about higher prices impacting their ability to pay bills, a smaller proportion were forced to cut down on spending compared to their lower-income counterparts.
A June 10 report by the Federal Reserve Bank of New York presented a more upbeat outlook, finding that U.S. households have become “more optimistic” about their future financial condition.
“Year-ahead expectations also improved, with a smaller share of respondents expecting to be worse off and a larger share of respondents expecting to be better off a year from now,” it said.
Inflation Burden
As high-income groups come under increasing inflationary pressures, discount retail chains are reporting an increase in the number of customers from this demographic. In March, Dollar Tree said their outlets saw a traffic uptick from relatively wealthy shoppers last year.
During an earnings call in May, Walmart executives also said that they saw “higher engagement across income cohorts, with upper-income households continuing to account for the majority of the share gains” in the recently reported quarter.
Historically, people with higher incomes have shopped at the company’s stores, said Doug McMillon, Walmart CEO. Such groups have usually been selective in the categories they buy.
“So, if we offer them the right items at the right prices, whether that’s in-store, first party, or marketplace, they'll respond to that. And so, as we’ve been able to expand our assortment online, we can appeal to more people.”
In an August survey by Achieve, a digital personal finance firm, the majority of respondents said they were not anywhere close to reaching their definition of financial freedom.
However, just above half of them were optimistic and believed their journey towards financial freedom was getting better.
“We’re seeing far fewer Americans with the goal of becoming ‘rich’ and many families pivoting to just trying to be able to pay their bills on time. With all of the economic pressures facing American families, financial freedom is currently more about making ends meet,” Brad Stroh, co-founder and co-CEO of Achieve, said.
