"Paycheck-to-paycheck" and five other popular myths

The other day, Bernie Sanders released yet another statement in which he declared, in passing, that “60% of Americans live paycheck-to-paycheck”:

Although I do think that Democrats should focus on pocketbook issues, it must also be said that Bernie Sanders’ favorite economic factoid is a complete and total myth.

The claim that “60% of Americans live paycheck-to-paycheck” comes from a survey by the fintech company LendingClub. The company refuses to release its survey methodology, but we can get a general idea from its website, which says: “For those Americans, [living paycheck to paycheck] means that they need their next paycheck to cover their monthly financial outflows.” So what LendingClub is probably claiming is that around 60% of Americans don’t have enough cash in their bank accounts to live off of for one month.

But LendingClub’s survey is probably just flat-out wrong about this. The Federal Reserve does a very careful annual survey called the Survey of Household Economics and Decisionmaking, or SHED. 1 This survey asks whether people have a “rainy-day fund” sufficient to cover at least three months of expenses. And it pretty consistently finds that over half of Americans do have such a fund. This is from the Fed’s 2024 report:

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