7 in 10 workers surveyed say inflation is outpacing their pay

A growing number of Americans say the cost of living is climbing faster than their salary and wage growth amid rising inflation and recession fears, according to a new survey.  

A Bank of America-sponsored survey conducted in July and released Tuesday found that 71 percent of American employees say the cost of living is outpacing growth in their pay, up from 58 percent in February. 

Eighty percent of workers polled say they’re concerned about inflation, and 62 percent are stressed out about their own financial situation, even with full-time jobs. 

The survey, which polled full-time employees enrolled in 401(k) plans, reports a five-year low for employees’ reported sense of financial wellness. In February, the percentage of employees who felt financially well had risen to 57 percent, surpassing the pre-pandemic level of 55 percent in February 2019, but that number dropped to 44 percent in July.  

Half of employees in the July survey reported they had taken action in the last six months to try to deal with financial strain. 

Of those who have taken action, 21 percent have worked additional hours, 21 percent have dipped into emergency savings and 20 percent have searched for higher-paying jobs.  

Six percent of that group said they’ve taken out a 401(k) hardship withdrawal.

Just 56 percent of employees say they feel optimistic about their financial wellbeing outlook over the next 2-3 years.

Nearly all, or 97 percent, of employers report feeling responsible for employee financial wellness, and a growing number say they feel extremely so, according to the February survey.

This comes as the U.S. continues to see high inflation, with food and energy costs spiking.

The Federal Reserve has been raising interest rates to try to tamp down inflation, and talk of a possible recession has been swirling. 

President Biden signed the Inflation Reduction Act into law last month, but while economic analyses suggested the measure could save money for some Americans by lowering prescription drug costs, they found it would have little immediate effect on inflation.

The Bank of America survey, conducted July 5-19, polled 478 full-time employees enrolled in 401(k) plans. The employees were not required to work with Bank of America, and the company was not identified to respondents as the survey sponsor. 

The earlier Bank of America survey, conducted Feb. 3-28, polled 846 employers who offer both a 401(k) plan and have sole or shared responsibility for decisions made in the plan, as well as 834 employees who are working full-time and participate in 401(k) plans.