Pay Flexibility Rises as More Workers Earn Variable Income

As inflation, layoffs and uneven wage growth continue to strain household budgets, millions of Americans living paycheck to paycheck are relying on side hustles and gig income to stay afloat, even as those earnings introduce new volatility into already fragile finances.

The paycheck-to-paycheck economy remains deeply entrenched. As of October, 66% of U.S. consumers lived paycheck to paycheck, as PYMNTS Intelligence has found, a figure that has remained stubbornly high despite a slight month-over-month dip. More concerning is the growing share of consumers doing so out of necessity rather than choice. Forty-two percent of consumers now live paycheck to paycheck because they have no other option, up sharply from earlier in the year.

This shift reflects mounting economic pressure. Layoffs, federal spending cuts and tariff-related uncertainty have disrupted income stability across industries, particularly those exposed to trade and public funding. Rising housing and utility costs have further stretched budgets, leaving less margin for error when income fluctuates.

Income Instability Drives Gig Work

Income volatility sits at the center of this dynamic. Six in 10 U.S. consumers now earn their primary income outside of a fixed salary, with hourly wages, gig platforms and contract work making up a growing share of take-home pay. Among consumers struggling to pay their bills, more than 7 in 10 depend on nonsalaried income sources.

The data underscores a critical distinction: Paycheck-to-paycheck living today is less about discretionary spending behavior and more about how income is earned. Fixed-salary workers remain the least likely to struggle with monthly bills, while those relying on variable earnings face significantly higher financial stress.

Who Relies on the Gig Economy

Demographics help explain why gig economy income is so closely linked to financial strain. Gen Z consumers are the most likely to earn hourly wages or gig income as their primary source of earnings, with 51% paid by the hour compared to 43% of the overall population. These workers are also more likely to live in rural areas and to be single parents, groups that often face higher financial vulnerability.

Among those living paycheck to paycheck out of necessity, 76% earn their primary income from nonsalaried sources, compared to 57% among those living that way by choice. Gig workers, in particular, stand out. They are more than six times as likely as financially stable consumers to live paycheck to paycheck and struggle to pay their bills.

Contract and consulting work presents a more nuanced picture. While it lacks the predictability of a fixed salary, it often corresponds with higher skill levels and earning potential, making it less tightly linked to financial distress than gig platform or hourly work.

The report stops short of declaring gig work the cause of paycheck to paycheck living. Instead, it points to income structure as a critical mediator. Volatile earnings make it harder for households to plan, save and absorb shocks, increasing the likelihood that even modest disruptions push them into financial precarity. In this sense, gig economy income is both a response to instability and a contributor to ongoing strain.

What Providers Can Do

The read-across for platforms and providers is clear. As nonsalaried income becomes more common, tools designed around predictable pay cycles are misaligned with consumer reality. Products that help smooth cash flow, provide faster access to earned wages or offer real-time visibility into income variability can help mitigate the effects of volatility without assuming reckless spending behavior.

As the gig economy continues to expand, addressing income instability will be central to improving financial resilience among consumers.