BOSTON— Half of Generation Z workers earn hourly wages, a pay structure that exposes many to income instability and makes it harder to manage monthly expenses, according to new research from PYMNTS Intelligence.
The findings appear in the November edition of Income Instability Is Redefining the Paycheck-to-Paycheck Economy, part of the firm’s New Reality Check series. Gen Z — born after 1996 and now totaling about 71 million people — is more dependent on hourly work than any other generation, the report said. Three in four Gen Z employees hold non-salaried jobs, and 51% — roughly 36 million people — are paid by the hour, PYMNTS reported.
“Hourly workers often face unpredictable schedules, fluctuating hours and shifting business demand, all of which contribute to income volatility,” the report states. “Even when hourly workers earn wages comparable to salaried peers, the lack of fixed pay makes budgeting and saving more difficult.”
Additional Findings
The report, based on a survey of 2,117 U.S. adults, found that 43% of workers overall rely on hourly wages, including 37% of millennials, 45% of Generation X and 48% of baby boomers. Hourly workers are more likely to live in rural areas than in suburban or urban communities.
As PYMNTS explained in releasing the data, federal rules classify hourly workers as “non-exempt,” meaning they earn less than $684 a week, or $35,568 a year. Their minimum wage remains $7.25 an hour — unchanged since 2009 — though states such as California require higher rates. Employers may pay tipped workers as little as $2.13 an hour if tips raise earnings to the federal minimum, a threshold a Texas court kept in place after blocking a Labor Department proposal to increase it.
A Key Factor
Income type is a key factor in whether people live paycheck to paycheck. Two-thirds of U.S. consumers fall into that category, PYMNTS said. Among those struggling to pay monthly bills, 51% rely primarily on hourly wages and another 22% depend on other non-salaried income.
While some consumers live paycheck to paycheck by choice, most non-salaried workers do so out of necessity, the report found. About 76% of those who struggle financially earn income outside of salaried positions, compared with 57% among those who say the lifestyle is a matter of preference.
