Consumers Could Amass a Collective
$52 Billion in Cash Payments Related
to Active Side Incomes Each Month
SAN
FRANCISCO, March 27, 2023 /PRNewswire/
-- LendingClub Corporation (NYSE: LC), the parent company of
LendingClub Bank, America's leading digital marketplace bank, today
released findings from the 20th edition of the Reality Check:
Paycheck-to-Paycheck research series, conducted in partnership with
PYMNTS. The Supplemental Income Edition examines how U.S. consumers
are turning to alternative sources of income to supplement what
they receive from regular full-time employment to improve their
financial standing.
Today's Paycheck to Paycheck
Landscape
Sixty-two percent of adult U.S. consumers live paycheck to
paycheck as of February 2023.
Although this represents a slight rise from 60% in January,
year-over-year the share of consumers living paycheck to paycheck
has remained steady.
When looking at the two categories of paycheck-to-paycheck
consumers — those who can pay their monthly bills without
difficulty and those who struggle to do so — the data shows recent
shifts in financial lifestyle that indicate consumers have adjusted
to inflationary pressures, finding ways to better manage their cash
flows. For example, fewer consumers overall reported struggling to
pay bills in February 2023. Moreover,
fewer low-income consumers report living paycheck to paycheck with
issues paying their bills than did so one year ago, and the share
of those living without difficulty has increased slightly.
"While consumers have adjusted to inflationary pressures by
budgeting and spending less, many have turned to supplemental
income with a side job or alternative income sources to improve
their financial standing," said Anuj
Nayar, Financial Health Officer at LendingClub. "A vast
majority of consumers became used to working from home during the
pandemic, and after returning to work, many kept flexible hours and
turned to alternative income streams to expand their earning
potential beyond a 9-to-5 job."
Consumers Are Supplementing Their
Employment Income
Sixty percent of consumers surveyed say they are employed, with
nearly half of this group also holding a side job or earning some
other form of supplemental income. In fact, 27% of high-income and
26% of middle-income consumers say they have side jobs. One point
of differentiation among consumers is that high-income consumers
are more likely than average to receive supplemental income that
does not derive from a side job: 24% do so, while only 17% of all
consumers receive other supplemental income.
For consumers not living paycheck to paycheck who had a side job
in the last six months, 70% said they opted for the side job
because the income was easy to earn and 56% said their motivation
was enjoying doing the job. Furthermore, more affluent consumers
are likely to have side jobs or earn income from informal tasks or
selling artisan or used products. These alternative income sources
are often accessed via online marketplaces, such as Etsy and eBay
for artisan or used products, or in the case of informal tasks, via
mobile apps like TaskRabbit.
In contrast, struggling consumers are the financial lifestyle
most likely to report that the reason they have a side job is that
their current income is not enough to pay all their bills (46%).
They are also the most likely to say that they earn income from
informal tasks or selling artisan or used products because their
current income is not enough to pay all their bills (35%).
Supplemental income tends to come from active engagement (such
as selling used items or selling artisan products) and 22% of
employed consumers received supplemental income in the last three
months. Approximately one-tenth of workers cited receiving passive
income or some form of financial aid. Consumers that do not live
paycheck to paycheck are more likely to receive passive incomes
from investments and rental properties, and paycheck-to-paycheck
consumers struggling to pay their bills are the most likely to turn
to friends and family for financial aid.
Why Supplemental Income
Matters
According to the data, consumers could be amassing a collective
$52 billion in cash payments each
month related to active side incomes. In the last three months, 55%
of respondents who received supplemental income for at least one
year have seen its share increase compared to their total monthly
income. Consumers living paycheck to paycheck with issues paying
bills and those earning more than $100,000 annually are significantly more likely
to have a growing supplemental income, at 62% each. Tips and
product resales are the activities most associated with cash
payments, with up to 50% made this way. Moreover, some consumers
may prefer cash because they think they can shelter it from taxes:
28% of consumers said their alternative sources of income are
undeclared.
The data shows that across all supplemental income streams
tracked, consumers have received these funds for an average of just
15 months. Not surprisingly, consumers not living paycheck to
paycheck have received all forms of supplemental income for an
average of 17 months, with retirement benefits, income from rental
properties, and profits from investments the sources these
consumers held the longest. In contrast, paycheck-to-paycheck
consumers struggling to pay bills have received all supplemental
incomes for an average of 12 months, meaning their supplemental
income is generally newer. While these paycheck-to-paycheck
consumers have received some sources of supplemental income for
longer periods of time, such as government benefits for an average
of 19 months and money from relatives or friends for an average of
16 months, they are just starting to receive supplemental income
from active sources, such as receiving profits from selling used
items for an average of 10 months.
The data suggests that supplemental income will continue to gain
importance moving forward, as 51% of those who have not received a
supplemental income in the last three months are at least somewhat
likely to seek another income source in the next 12 months.
"As pandemic-related financial benefits were pulled back by the
government, more and more people turned to alternative income to
make ends meet and manage their cash flow," continued Nayar. "What
is clear: no matter your income bracket, having supplemental income
greatly impacts financial stability and can often mean the
difference between living without difficulty and living paycheck to
paycheck and struggling to pay monthly bills," continued Nayar.
To view the full report, visit:
https://www.pymnts.com/study/reality-check-paycheck-to-paycheck-side-jobs-supplemental-alternative-income/
Methodology
New Reality Check: The Paycheck-to-Paycheck Report — The
Supplemental Income Edition is based on a census-balanced survey of
4,125 U.S. consumers conducted from Feb. 7
to Feb. 23, as well as analysis of other economic data. The
Paycheck-To-Paycheck series expands on existing data published by
government agencies, such as the Federal Reserve System and the
Bureau of Labor Statistics, to provide a deep look into the core
elements of American consumers' financial wellness: income,
savings, debt and spending choices. Our sample was balanced to
match the U.S. adult population in a set of key demographic
variables: 51% of respondents identified as female, 31% were
college educated and 36% declared incomes of more than $100,000 per year.
About LendingClub
LendingClub Corporation (NYSE: LC) is the parent company of
LendingClub Bank, National Association, Member FDIC. LendingClub
Bank is the leading digital marketplace bank in the U.S., where
members can access a broad range of financial products and services
designed to help them pay less when borrowing and earn more when
saving. Based on more than 150 billion cells of data and over
$80 billion in loans, our advanced
credit decisioning and machine-learning models are used across the
customer lifecycle to expand seamless access to credit for our
members, while generating compelling risk-adjusted returns for our
loan investors. Since 2007, more than 4.5 million members have
joined the Club to help reach their financial goals. For more
information about LendingClub, visit
https://www.lendingclub.com.
CONTACT:
For Investors: IR@lendingclub.com
Media Contact: Press@lendingclub.com
PYMNTS Contact: information@PYMNTS.com
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SOURCE LendingClub Corporation