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Many wealthier households are spending almost the entirety of their paycheck on necessities, a Bank of America analysis found. 
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CNN — 
When considering who is living paycheck to paycheck, households with an income of six-figures or more likely aren’t the first to come to mind. But, as it turns out, about a fifth of US households that earn more than $150,000 a year are in that situation.
That’s according to a new Bank of America analysis of anonymized US customers’ banking accounts and spending data.
The authors of the analysis define people who live paycheck to paycheck as those who dedicate more than 95% of their household income to necessities, which include gasoline, food, utilities, internet, public transportation, child care and housing costs.
Across all income levels, households that earn less than $50,000 a year saw the highest proportion, around 35%, of people living paycheck to paycheck so far this year. But at higher income levels, the portion of households living paycheck to paycheck falls slowly. For instance, the share of households living paycheck to paycheck and 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 nonessential purchases compared to people who earn less. So why does that not appear to be the case?
One reason the authors of the analysis offer in their report is that “higher-income households may have bought larger, more expensive, homes and consequently have bigger mortgages. And often along with bigger homes come bigger insurance costs, property taxes and utility bills.”
Another side of it is that higher-income people could be taking out bigger mortgages “on the aspiration that they’re going to be getting raises and promotions,” David Tinsley, senior economist at the Bank of America Institute, told CNN. It could also be that higher-income households are under more financial stress right now because they have a lot of younger children, but once they reach school age, their spending on necessities like child care could fall, Tinsley said.
But, importantly, Tinsley and his team did not draw a distinction between different tiers of necessity spending. So, for instance, someone who spends a lot to send their child to an elite preschool was still marked down as necessity spending in the analysis. All Tinsley’s team sees is that a payment was made to a child care provider, he said.
Nevertheless, the Bank of America analysis underscores the sting that inflation continues to have on consumers across income groups. Even though the rate at which prices are rising has slowed significantly over the past two years, Americans are paying about 20% more for everything nowadays compared to before the pandemic in February 2020.
At the same time, Americans are seeing slower wage growth as the labor market has cooled. Compared to a year ago, Americans’ average hourly wages were up 4% in September, whereas two years ago wages were up more than 5% versus the year before, according to Labor Department data.