Feeling the squeeze? Paycheck pinch hitting more workers

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If you’re stressed out about making ends meet, you’re not alone. Two out of three workers say prices are still rising faster than their wages despite inflation having cooled considerably over the past year, a new survey finds. Companies are also in a tight spot, and a separate survey shows US employers are planning smaller pay raises and fewer promotions in 2024.

WHAT’S HAPPENING?

• 67% of employees say the cost of living is outpacing growth in their salary and wages, according to a Bank of America survey shared exclusively with CNN. It’s a 9-point jump from February 2022, even though inflation has cooled considerably since then.
• Among older Millennials (those aged 35 to 44), 80% report feeling stressed about money.
• High inflation is a major reason why just 42% of employees say they feel financially well, the survey finds. That's the lowest percentage in the 13-year history of the survey.?

PRICES ARE STILL GOING UP, JUST SLOWER

• Everything from eggs and car rentals to a night out at a restaurant is significantly more expensive than before the pandemic.
• Consumer prices increased by 3.7% in August from a year earlier, according to the Bureau of Labor Statistics. But that’s down from 9.1% in June 2022 when gas prices spiked above $5 a gallon for the first time. Those numbers mean prices are now rising at a slower rate, but they’re still climbing.
• Meanwhile, the latest jobs report shows that average hourly earnings grew at a monthly pace of just 0.2%, or 4.3% annually in August. Wages only started outpacing prices earlier this year after two years of rocketing inflation.
• The unemployment rate rose to 3.8% in August from 3.5% in July, signaling that the job market is normalizing , according to economists. Labor Secretary Marty Walsh tells CNN, "It’s a sign that a lot more people are looking for work, which is a plus, given the extraordinary lengths to which employers are going to recruit and retain workers in a labor market with 11.2 million job openings.”?

DON’T BANK ON A BIG RAISE

• Compensation budgets for merit increases are expected to grow by an average of 3.5% in 2024, down from 3.8% this year, according to a new survey from human resources consulting firm Mercer.
• While the expected pay increases are lower , relative to this year, they are still higher than they typically were before the pandemic.
• Employers surveyed say they also plan to promote fewer people — just 8.7% of their staff, on average, down from 10.3% this year.
• A Mercer analyst says if the labor market continues to stabilize and inflation cools further, compensation pressures are likely to decline. In short, employers could further trim their planned pay increases.
• Don’t panic: Budgets for next year won’t be finalized until December or even January, and a lot can change between now and then.

BOTTOM LINE

• Credit card debt has surpassed $1 trillion for the first time ever. More Americans are falling behind on credit card and auto loan debt.
• The number of Americans tapping their 401(k) accounts because of financial distress has also surged, as we told you about in the PM Plug-In last month .
• Women in particular are under financial pressure: Nearly one in four women say financial stress is keeping them up at night, compared with just 5% for men, according to Bank of America.
• 39% of women surveyed say they had to look for additional employment to keep up with rising costs – more than twice as many as men

How has the higher cost of living affected your budget? Do you think employers are paying enough attention to workers’ financial and mental health? Share your thoughts in the comments.?

Here are some other stories we're following today:

North Korea expels American soldier: Army Pvt. Travis King is back in US custody after spending weeks in North Korea. Prior to that, Travis had been detained in South Korea after discipline for assault and was set to be removed from the US military in July — but he ducked an Army flight home and then slipped over the border during a civilian tour of the DMZ. He’s expected to go to the same US military hospital in Texas where Trevor Reed and Brittney Griner were taken to acclimate back to normal life after they were detained in Russia.

Target tires of theft: The retail giant says it is closing nine locations in major cities across four states due to crime. Target says it tried adding more security and anti-theft tools before deciding to close the stores.

Monthslong strike ends: The Writers Guild of America leaders voted to authorize its members to go back to work . The tentative agreement that was reached Sunday between union negotiators and Hollywood's studios and streaming services includes pay increases, better benefits, protections against AI, and guarantees for streaming compensation.

Return to Earth: NASA astronaut Frank Rubio is finally back home after spending a record-setting — and unexpected — year in space. Rubio and his two Russian crewmates were slated to spend only six months aboard the International Space Station, but a coolant leak in their original ride left them in a space jam and delayed their return. Rubio set a new record for the longest a US astronaut has ever spent in microgravity.

Government shutdown watch: The House and the Senate are taking different roads to pass new funding bills, but neither will likely avoid a government shutdown . The Senate is pursuing a bipartisan short-term bill that includes more Ukraine aid — anathema to some House Republicans — while House Speaker Kevin McCarthy says he'll hold a vote on a conservative stopgap bill that might not have enough votes to pass his chamber, let alone the Senate. After today, Congress will have three days to approve the additional money needed to keep government agencies open and federal workers on the job.

More vaccination hesitation: Only about 1 in 4 American adults say they definitely want to get the updated Covid-19 vaccine, according to a new survey from the nonprofit health policy group KFF . Injecting a different take, 33% of adults say they definitely do not plan to get the new vaccine, and another 19% say they probably won't. Hesitance toward the Covid-19 vaccine also extends to new shots for children: Only about 40% of parents say they intend to get the new vaccines for their kids and teens.

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