Though many Americans live paycheck to paycheck, some posts inflate the stat

Faced with increasing prices for groceries and other necessities due to rising inflation, Americans are paying careful attention to their bank accounts. 

And while some may not have much financial security, a social media post paints things as more dire than they are.

"Most Americans’ average income is $3,200 per pay period, per paycheck. $3,200 a month," said a woman in a TikTok video that was shared to Facebook on April 28. "So we have 76% of Americans living paycheck to paycheck, meaning they are one paycheck away from poverty." A text overlay on the video also claimed that "76% of Americans are one paycheck from poverty." 

The post was flagged as part of Facebook’s efforts to combat false news and misinformation on its News Feed. (Read more about our partnership with Facebook.)

Many Americans are living paycheck to paycheck, meaning the money they make each pay period is used on necessary expenses such as rent, groceries or health care without additional savings. But the video on Facebook inflates the most recent available data.

The video itself gives numbers for income that are well above the poverty line. The federal poverty line in 2022, which is used to determine eligibility for certain federal programs and benefits is $13,590 for a single individual or $27,750 for a family of four. A person making $3,200 a month would have an annual income of $38,400 — well above the federal poverty line for a single individual. That income would only be below the federal poverty guideline if it were supporting a household of seven. The median household income in the U.S. is $64,994 per year, and the average income is $91,547 annually, according to 2020 census data. Based on those values, the claim that the average American earns $3,200 per month is incorrect.

It appears the "paycheck to paycheck" claim from the video might come from a 2013 survey released by Bankrate.com, a personal finance website. That survey found that 76% of Americans were living paycheck to paycheck with little or no money saved for emergencies, according to CNN Money. 

PolitiFact found more current statistics that report a smaller number — but the meaning of "paycheck to paycheck" can also depend on the survey.

A January survey conducted by MagnifyMoney, a website about personal finance, found that 50% of Americans say they live paycheck to paycheck and have no money left after all their expenses are paid. An additional 15% of Americans say it varies.

An October 2020 survey conducted by Highland Solutions, a digital product consultant, found that 63% of Americans said they had been living paycheck to paycheck since the onset of the pandemic. 

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In December 2021, PYMNTS and LendingClub reported that 61% of American consumers were living paycheck to paycheck, which was an increase of 7% since May 2021. In that report, those living paycheck to paycheck were further divided into two categories: 39% reported they were able to pay their bills easily, while 22% said they struggled to cover their expenses each month.

Gary Burtless, an economist and senior fellow at The Brookings Institution, cautioned that the phrase "living paycheck to paycheck" has no precise definition. For example, people can report they live "paycheck to paycheck" even if they’re making high salaries, depending on how responsibly they manage their finances and what they’ve deemed as necessary expenses.

"I would be skeptical of statistics that are based on this concept, unless there is a very clear definition with a precise link to hard facts about the relationship between a family’s monthly income sources and its basic consumption needs," he said.

Burtless pointed to the December 2021 survey that found 42% of people making more than $100,000 a year reported living paycheck to paycheck. With that in mind, he said he was "reasonably confident that a sizeable percentage of folks ‘living paycheck to paycheck’ own the home they live in, have accumulated some savings in a retirement plan, and live fairly comfortable lives compared with that of their grandparents’ generation."

As for the question of whether living paycheck to paycheck can be accurately summarized as being "one paycheck away from poverty," Burtless said that’s complicated.

If, for example, a household relies solely or overwhelmingly on the after-tax income of one breadwinner who quits or is dismissed from their job for cause, that household may indeed be just one paycheck away from poverty, he said. 

In most states, a person who quits or is fired from a job for cause is ineligible for unemployment insurance benefits. 

Burtless said in that situation, many families could be eligible for other assistance such as "food stamps, Medicaid insurance, and perhaps a modest allotment of cash public assistance, but a sizable percentage will find the combined income from these programs will leave the family with a below-poverty-line income."

People who lose their jobs in a typical layoff are often entitled to up to six months of unemployment insurance that can help keep a person out of poverty, Burtless said. And many households have an additional breadwinner who can help keep a family out of poverty. 

A video shared on Facebook claimed that "76% of Americans (are) living paycheck to paycheck, meaning they are one paycheck away from poverty."

Different surveys yield different figures, but PolitiFact found no recent data that put the figure as high as 76%. It’s possible the TikTok user pulled the statistic from a 2013 survey. More recent data shows that somewhere between 50% to 63% of Americans report living "paycheck to paycheck," but there is no clear cut definition for that phrase, which makes the concept difficult to quantify. 

We rate this claim Mostly False.