Why Americans Struggle to Keep Their Paychecks

A staggering 40 million households in the US, or 29% of the population, fall under the ALICE category (Asset Limited, Income Constrained, Employed). Despite being above the poverty line, these households struggle to cover basic necessities, and any unexpected expense can push them into poverty. Inflation has exacerbated this situation, disproportionately impacting low-income households who spend a greater share of their income on necessities such as food, rent, and gas. The Federal Reserve’s interest rate hikes have further squeezed these households, making it harder to reduce or change spending habits and rely on savings or investments. As a result, many families are increasingly turning to credit cards, leading to all-time high credit card debt and rising delinquency rates.

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