CNN
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When you consider who lives paycheck to paycheck, households with six-figure incomes or more likely aren’t the first to come to mind. But as it turns out, about a fifth of American households earning more than $150,000 a year are in this situation.

That’s according to a new Bank of America analysis of US customers’ anonymous bank account and spending data.

The review authors define people living paycheck to paycheck as those who spend more than 95 percent of their household income on necessities, which include gas, groceries, utilities, internet, public transportation, childcare and housing costs.

Across all income levels, households making less than $50,000 a year had the highest share, around 35 percent, of people living paycheck to paycheck so far this year. But at higher income levels, the share of households living paycheck to paycheck declines slowly. For example, the share of households living paycheck to paycheck earning between $50,000 and $75,000 is only a few percentage points higher than households earning more than $150,000.

Conventionally, it seems reasonable to assume that people who earn more would have more money to make non-essential purchases compared to those who earn less. So why doesn’t that seem to be the case?

One of the reasons given by the authors of the analysis in their report is that “households with higher incomes may have bought larger, more expensive homes and consequently have larger mortgages. And often with bigger homes come higher insurance costs, property taxes and utility bills.”

Another flip side is that people with higher incomes might take out larger mortgages “with the expectation that they’ll get raises and promotions,” David Tinsley, senior economist at the Bank of America Institute, told CNN. It may also be that higher-income households are under greater financial stress at this time because they have many younger children, but once they reach school age, their spending on needs such as childcare could go down, Tinsley said.

But importantly, Tinsley and his team did not make a distinction between different levels of necessity spending. So, for example, someone spending a lot to send their child to an elite preschool was still marked as a necessity expense in the analysis. All Tinsley’s team sees is that a payment was made to a childcare provider, he said.

Still, Bank of America’s analysis underscores the sting inflation continues to have on consumers across all income brackets. Even though the pace of price increases has slowed significantly over the past two years, Americans are paying about 20% more for everything now compared to before the pandemic in February 2020.

At the same time, Americans are seeing slower wage growth as the labor market has cooled. Americans’ average hourly wages rose 4 percent in September from a year ago, while two years ago wages rose more than 5 percent from a year earlier, according to Labor Department data.