Income Instability Is Redefining the Paycheck-to-Paycheck Economy

The share of United States consumers living paycheck to paycheck dipped slightly but remained high at 66% in October 2025, and the financial strain for many is deepening. More people are living this way out of necessity, not choice—42% of consumers live paycheck to paycheck because they have no other choice, an 18% jump since August.

This surge in financial strain is unfolding against a backdrop of mounting economic pressure. Layoffs, spending cuts and a lackluster job market have likely disrupted income stability for many households. Tariff-related instability has created uncertainty for businesses and workers in trade-exposed industries. Together, these factors are likely contributing to eroded income predictability and pushing more consumers into financial precarity.

Take-home income volatility is a core contributor. Six in 10 consumers earn their primary income outside of fixed salaries. Hourly wages, contract work and gig platforms make up a significant share of livelihoods. Among those struggling to pay their bills, more than seven in 10 depend on non-salaried work. Fixed-salary earners remain the least likely to face challenges paying their bills.

The divide between income stability and financial control is widening. Three in four consumers living paycheck to paycheck out of necessity earn their pay from non-salaried sources, compared to 57% among those living that lifestyle by choice. Taken together, these findings suggest a paycheck-to-paycheck economy that is currently shaped more by income structure and macroeconomic instability than by spending behavior.

As Americans navigate a landscape marked by pocketbook tightening, trade uncertainty and shifting work arrangements, income volatility has become a defining driver of financial insecurity—shaping not only how consumers live but also how they stay afloat.

• Necessity Drives Paycheck-to-Paycheck Living
• Hourly, Gig and Contract Work as Primary Income
• Earnings Type Shapes Paycheck-to-Paycheck Lifestyle
• Conclusion
• Read More
• Methodology

Necessity Drives Paycheck-to-Paycheck Living

The share of consumers living paycheck to paycheck by necessity jumped to 42%, while those doing so by choice fell to 29%.

As of October 2025, 66% of U.S. consumers live paycheck to paycheck, and 22% do so while struggling to pay their bills.

The share of consumers living paycheck to paycheck declined slightly in October, easing from 69% to 66% month over month. While this difference falls within the typical sampling variation, the longer-term trend shows a statistically significant increase compared to early 2024 and late 2023. What once hovered around 58% to 60% two years ago now consistently remains above the mid-60% range.

The share of consumers living paycheck to paycheck by necessity jumped to 42%, while those doing so by choice declined to 29%.

More than four in 10 consumers now live paycheck to paycheck out of necessity than by choice, an 18% increase since August (up from 36%). The share has been rising steadily since early 2024. Meanwhile, the proportion of consumers living paycheck to paycheck by choice has declined to 29%, down from 37% a year ago.

Much of this rise in “necessity” status likely reflects the ripple effects of recent economic pressures. Federal layoffs and spending cuts have weakened income stability for many households, while reduced funding for nonprofits has strained workers in that sector. Tariff-related uncertainty has also disrupted business activity and job security in industries heavily exposed to international trade. Higher prices for rental housing and utilities are pressuring already-strained pocketbooks. These forces have pushed more consumers to rely on income that is stretched further.

Hourly, Gig and Contract Work as Primary Income

Consumers earning an hourly wage are most likely to be Gen Z (51%), live in rural areas (59%) and be single with children (53%).

Six in 10 consumers earn their income primarily outside of a fixed salary, with 43% earning an hourly wage.

U.S. consumers are more likely to earn their primary take-home pay outside of a fixed salary. More than 7% report earning their primary income through contract work, 4.4% through gig platforms and 3.3% through commission-based earnings.

Consumers earning an hourly wage are most likely to be Gen Z (51%), live in rural areas (59%) and be single with children (53%).

Fifty-one percent of Gen Zers earn hourly wages as their primary source of income, compared to 43% of the average population.¹

The demographic makeup of each income group reveals significant disparities by generation, location and marital status. Consumers whose primary income derives from salaried employment tend to be millennials, located in urban areas and married with children. Gen Z is most likely to earn their primary income from hourly wages, gig work and contract work. Single parents are also more likely to earn hourly wages and other types of non-salaried income.

Earnings Type Shapes Paycheck-to-Paycheck Lifestyle

Three in four consumers living paycheck to paycheck by necessity rely on non-salaried income sources.

More than seven in 10 struggling consumers earn income outside fixed salaries, with 51% paid by the hour.

Consumers taking home a fixed salary are the least likely to struggle with their monthly bills. In fact, half of consumers who do not live paycheck to paycheck earn a fixed salary. By contrast, those struggling to pay their bills are twice as likely to rely on non-salaried income as financially stable consumers. The gap is especially wide among gig workers. They are more than six times as likely to live paycheck to paycheck and struggle to pay their bills.

Income from contract or consulting work, however, is more evenly distributed across financial lifestyles. While this type of work lacks the steady predictability of a fixed salary, it often corresponds with higher skill levels, pay levels and earning potential.

Those living paycheck to paycheck out of necessity are most likely to earn their primary income through hourly wages and gig work.

Among consumers living paycheck to paycheck out of necessity, 76% earn their primary income from non-salaried sources—compared to 57% of those living paycheck to paycheck by choice. Hourly wages and gig work are the income types most closely linked to financial strain, while consumers living paycheck to paycheck by choice are far more likely to earn a fixed salary.

This contrast highlights how deeply income type influences financial lifestyles and how the stability of earnings affects a consumer’s ability to make informed spending and financial decisions.

Conclusion

The growing reliance on non-salaried income is reshaping financial stability in the U.S. As hourly, gig and contract work expands, income volatility is becoming a defining factor in consumers’ financial well-being. The shift from choice to necessity among paycheck-to-paycheck consumers highlights how declining income stability limits financial control and resilience. Without steady earnings, even small disruptions can push consumers from managing their finances comfortably to struggling to make ends meet.

Read More

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Methodology

“Income Instability is Redefining the Paycheck-to-Paycheck Economy,” the newest installment of New Reality Check: The Paycheck-to-Paycheck Report, a PYMNTS Intelligence exclusive series, is based on a survey of 2,117 U.S. adult consumers conducted from Oct. 10, 2025, to Oct. 29, 2025. This report examines how income type and stability influence consumers’ financial lifestyles, particularly the growing divide between those who live paycheck to paycheck by choice and those who do so out of necessity. Our sample was balanced to match the U.S. adult population in terms of age, gender, education and income.

^{1. PYMNTS Intelligence uses the following birth dates and approximate age ranges in 2025 for generational cohorts: baby boomers: born in 1964 or earlier and now aged 61 or older; Generation X: born between 1965 and 1980 and now aged 45–60; millennials: born between 1981 and 1996 and now aged 28–44; bridge millennials: born between 1978 and 1988 and now aged 37–47; zillennials: born between 1991 and 1999 and now aged 25–34; and Generation Z: born in 1997 or later and now aged 28 or younger.↩}