LendingClub CEO: Paycheck-to-Paycheck Living is Akin to the Climate Crisis

PYMNTS recently partnered with LendingClub to produce the “New Reality Check: the Paycheck-to-Paycheck Report,” which tracks how Americans are affording the cost of living. LendingClub CEO Scott Sanborn said that more Americans are living paycheck-to-paycheck, as both credit card balances and delinquencies have risen with inflation.

“If you look by vintage, the quarterly [credit] delinquencies are fanning like crazy, and none of them are talking about it,” Sanborn said. “Just compare the first six months of credit cards issued in Q2 of this year versus the first six months in any of the last 5 to 10 years. They look remarkably worse, but nobody’s talking about it.”

The most recent New Reality Check study found that 59 percent of consumers lived paycheck-to-paycheck in July. Though that percentage was down from 61 percent in June, it trended upward from 54 percent in July 2021. Some of those consumers have comfortably handled monthly expenses, but many have struggled to meet rising costs.

Sanborn noted that there is room to interpret living paycheck-to-paycheck, as “discretionary” items vary per household. While transportation and 401k may be discretionary to some, date nights and dining may be discretionary to others, and Sanborn stressed that the perceptions of paycheck-to-paycheck consumers are outdated.

“Yes, the inflation over the last year has been acute, but over the longer arc of the last 20 years, cost of housing, cost of healthcare, cost of education are all going up exponentially, and over that entire 20-plus-year period, wages have only recently in the last two years started to move,” he said.

Sanborn said that the rising numbers of consumers who live paycheck-to-paycheck was a crisis that nobody is talking about.

“We’re all talking about the climate crisis and that’s real,” he said. “This is also a crisis, and it’s also real, and it is also happening. We have this massive bubble of people heading toward retirement that are not going to be able to afford retirement.”