The effects of inflation and high gas prices are hitting hourly workers hard, according to a new survey.
Eighty-one percent of these workers report that rising gas costs have reduced their ability to pay for other things. Seventy-seven percent say financial stress is impacting their health – and 22% say they are turning to payday loans this year to fill in the gaps.
These are “really striking findings,” said Emerson Sprick, a political analyst at the Bipartisan Center who helped oversee the investigation. during a Yahoo Finance Live interview on Thursday. He added that gas prices “force people to make real trade-offs on what they spend, between gas and groceries, between auto repair and health care.”
The most recent data from the American Automobile Association finds prices just below $5 a gallon Across the United States Survey respondents report that the overall inflationary environment has led to difficulty paying a wide range of daily expenses like groceries, gas, utilities and rent.
Data comes from a new Harris poll released this week commissioned by DailyPay and Funding Our Future, an alliance of organizations dedicated to making possible a secure retirement for all Americans, partner of Yahoo Finance. This survey was conducted in May among 2,032 American adults, 654 of whom said they were hourly workers.
The results show how the recent economic downturn has exacerbated the financial fragility long felt by many Americans. An oft-cited 2018 study of the Federal Reserve found that 40% of adults, “if faced with an unexpected expense of $400, would not be able to cover it or would cover it by selling something or borrowing money”. More recent research found that a third of working adults worry about their ability to pay for a financial curve such as car repairs.
Meanwhile, in May, the US savings rate hit its lowest level since 2008drying up as inflation outpaces wage increases.
This week’s survey also shows greater challenges to saving for the future. Four in 10 hourly workers with household incomes under $100,000 say they save less than a year ago or not at all. And 39% of all women on an hourly wage say they save less than last year.
“Women bear the brunt of many of these labor market dynamics,” says Sprick. “They’re forced to balance work and other chores in a way that, on the whole, men just aren’t.”
Make ends meet
The survey also offers clues about where many of the poorest Americans turn to make ends meet. Twenty-two percent of hourly workers say they have taken out a payday loan this year, a figure that jumps to almost a third when looking only at 18-34 year olds.
Survey organizers say employers can do more to offer benefits like pay-as-you-go to help their workers avoid payday loans, which can charge exorbitant interest rates and have consequences long-term detrimental to a family’s financial health.
“To dispel a fairly common misconception, it’s not about paying people upfront,” Sprick notes. “It’s just about paying people in a timely manner, making sure people have access to their salary as they earn it.”
DailyPay, one of the organizers of the survey, offers employers on-demand payment products.
Washington lawmakers are also trying to push forward ideas to help Americans put money aside in an emergency savings account. However, these provisions are still being negotiated and their effects are unlikely to be felt until 2023 at the earliest.
Ben Werschkul is a writer and producer for Yahoo Finance in Washington, DC.