A Look at Americans' Financial Health Across 3 Income Groups

What You Need to Know

Americans’ sense of their current financial health has fallen to early pandemic lows across income groups.
Since August, more respondents have been unable to pay some or all of their bills in the past month.
Most say wages have not kept up with inflation, with lower earners falling furthest behind in non-performance-based increases.

The gap between lower and higher earners continues to widen against new affordability pressures, according to research released Monday by Capital One Insights Center.

“Americans believe their financial health has declined to levels not seen since early in the pandemic,” Melissa Bearden, head of consumer intelligence at Capital One, said in a statement. “For those earning the least, the last two years of uncertainty and rapid change are creating worrisome financial realities.” 

The findings are part of the center’s ongoing Marketplace Index survey on the social and economic effects of COVID-19 to date. Since April 2020, the center has conducted studies every four to eight weeks with between 2,000 and 10,000 U.S. respondents covering topics such as job loss, how they used their government stimulus, and their outlook on economic recovery. 

The study divides Americans into three income groups: lower earners making less than $25,000 in household income annually; middle earners making $25,000 to $100,000; and higher earners making $100,000 or more.

The new report trends data first collected in April 2020 to data collected as recently as February, resulting in a two-year retrospective look at the pandemic’s enduring economic effects across lower, middle and higher earners. 

Widening Gap

Two years into the pandemic, the K-shaped recovery continues, with the gap between lower and higher earners continuing to widen against the backdrop of inflation, according to the analysis. 

Since the Marketplace Index’s first data release six months ago, Americans have confronted the omicron variant surge, expiration of key government relief programs and stimulus, and now rising inflation, which have increased pressure on the financial health of millions of Americans, with lower earners facing disproportionately negative effects. 

A comparison of the early months of the pandemic with February 2022 shows that underemployment — working less than preferred or for less money than before the pandemic — has markedly improved. But lower earners have not recovered at the same rate as their higher-earning counterparts. 

For middle earners, rates of underemployment dropped from 21% in April 2020 to 7% in February; for higher earners from 13% to 3%; and for lower earners from 22% to 18%. 

Thirty-three percent of middle and higher earners have reported a decrease in income since April 2020, compared with 35% for lower earners. 

Since last August, there has been a slight increase in Americans who were unable to pay some or all of their bills in the past month across all income groups, with lower earners struggling the most.