Why the Labor Economy Turns to Credit to Keep Spending

The U.S. Labor Economy may sit at the lower end of the wage scale, but it punches far above its weight in economic impact. Roughly 60 million workers earning less than $25 an hour account for about 15% of total U.S. consumer spending, making their financial stability essential to GDP growth and the health of local economies. When pay or hours fluctuate for this group, the effects are felt quickly across retail, food service, transportation and other consumer-facing sectors.

Inflation, Wage Volatility and Household Pressure

Those pressures are mounting. The November 2025 edition of the “Wage to Wallet Index: Wage Volatility’s $14B Consumer Spending Gap” shows that average hourly wages for Labor Economy workers dipped 0.81% month over month in October, translating into an estimated $14 billion annualized pullback in consumer spending. At the same time, personal job-security sentiment among these workers fell sharply, dropping 6.7 points in a single month. Inflation compounds the strain, eroding purchasing power just as hours and earnings become less predictable.

Despite these headwinds, spending cannot simply stop. The report, produced by PYMNTS Intelligence in collaboration with Ingo Payments and WorkWhile, underscores that the Labor Economy is a stabilizing force for GDP precisely because its spending is tied to everyday necessities. Pullbacks among this group ripple outward, reducing demand in categories that rely on consistent foot traffic and repeat purchases. As wages wobble, maintaining spending becomes less about confidence and more about necessity, especially for households with limited savings buffers.

Credit as a Cash-Flow Tool

That is where credit enters the picture. The research shows that more than one-third of Labor Economy workers, 33.8%, always or usually carry a revolving credit card balance, compared with less than one-quarter of the broader population.

Average outstanding card balances for these workers exceed 22% of annual income, highlighting that credit is being used to manage timing gaps between pay and expenses rather than to fund discretionary purchases. The Labor Economy’s average credit score of 677, versus 722 for non-Labor Economy consumers, also means many face higher borrowing costs.

Why They Use Credit and Where It Goes

They use credit to smooth cash flow when hours fall short or pay is delayed, allowing households to cover essentials without missing bills.

They rely on credit to offset inflation in everyday categories where spending is difficult to defer, such as food, transportation and utilities.

They turn to credit to avoid abrupt cutbacks that would disrupt work and family routines, even as balances rise.

They spend most heavily in local, necessity-driven categories including groceries, fuel, food service and basic retail.

They also use credit for transportation and job-related expenses that enable continued participation in the workforce.

The Labor Economy is a distinct economic bloc that amplifies macroeconomic shifts. As wages soften and job-security sentiment declines, credit becomes the bridge that keeps spending moving and GDP growth intact, at least in the short term. The Wage to Wallet Index shows that reliance on credit is rising not because of excess, but because of fragility. The Labor Economy’s financial resilience is not just a household issue, but a prerequisite for stable consumer demand and broader economic growth.

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