More than six in 10 American workers say their paychecks have not kept up with rising household costs over the past year, the highest share in four years, according to Bankrate’s latest Pay Raise Survey. That figure is up from 59% in 2024, highlighting increasing consumer pressure to make ends meet.
Although average hourly wages are up 3.7% year over year (as of August) versus inflation of 2.9%, many households still feel squeezed. Wages have not recovered losses from earlier inflation surges: since January 2021 they lag behind cumulative price growth by about 1.2 percentage points. That gap means consumers still have less purchasing power than they did four years ago.
Employment momentum that once gave workers leverage has cooled. Only 57% of workers have seen any pay increase in the last 12 months, which represents the lowest share since Bankrate began reporting in 2022. Forty-three percent of workers received no raise at all. Meanwhile, job switching as a path to better pay is weakening: just 13% secured a new, higher-paying job in 2025, down sharply from prior years.
Complementing Bankrate’s findings, Primerica’s Q3 2025 Middle-Income Financial Security Monitor shows long-term erosion in the finances of working households. Among middle-income Americans (annual incomes between $30,000 and $130,000):
- 69% now say their income is falling behind the cost of living, up from 50% when the survey began in 2020.
- Only 29% of households report paying off their credit card balances in full each month — a drop from 44% in 2020.
- Emergency funds are under strain: 58% have a fund covering $1,000 or more, but half of those respondents tapped into those reserves during the past year.
- Confidence is waning: just 18% believe they are saving enough for retirement, down sharply from 31% in 2020.
This data signals growing fragility in a sector once seen as relatively resilient. As debt levels rise and buffers shrink, more households may slip into delinquency or default.
What this means for collections
- Elevated stress ahead. With wages failing to keep pace and job mobility slowing, many consumers are under greater strain. The industry should monitor indicators like credit card late payments, missed installments, and upward movement in bucket-aging on portfolios.
- Pressure on middle-income borrowers. The Primerica data is especially concerning for lenders whose book is concentrated among low-income consumers. These borrowers are showing signs of rollover balances, tapping emergency funds, and losing confidence in their financial futures.
- Shifting operating assumptions. Models built on historical wage growth may overestimate consumers’ resilience in today’s environment. Risk teams should reexamine affordability thresholds and stress-test against scenarios of persistent wage stagnation.
- Opportunity in proactive engagement. Early outreach to struggling consumers, whether through payment plans, forbearance, or incentives to stay current, may reduce forced delinquencies. Lenders and servicers that act early may limit losses and preserve customer relationships.
