Americans are seeing their paychecks stretched thinner as rising debt payments eat up a growing share of their income gains, according to new research from progressive, nonpartisan think tank The Century Foundation and consumer advocacy group Protect Borrowers.
Where Your Money’s Going
A typical one-earner household gained an estimated $109 in inflation-adjusted monthly take-home pay between late 2022 and early 2026. But during the same period, monthly debt payments went up by $57, meaning 52 cents of every additional dollar went toward servicing debt, the analysis found.
For two-earner households, researchers estimated that increased debt payments consumed the entire gain in inflation-adjusted income and more, CNBC reported.
The report shows how credit card balances, auto loans, student loans, and other borrowing can leave workers with less money to save, invest, or cover everyday expenses, even when their earnings increase.
Researchers analyzed credit records for millions of working-age Americans ages 25 to 64, alongside Census Bureau income data. The analysis found inflation-adjusted debt payments jumped nearly 15 percent over roughly three years, while household income grew less than 2 percent.
“Even though it shows that workers’ wages are getting eaten up by debt payments at a tremendous level,” the findings represent “perhaps the rosiest analysis that we could have done using the data,” Angela Hanks, chief of policy programs at The Century Foundation, said in the report.
Separate Federal Reserve data points to a similar trend. The Fed’s Survey of Consumer Finances found that 8.6 percent of families spent more than 40 percent of their income on debt payments in 2025, up from 6.5 percent in 2022. That was the highest share recorded since the 2013 survey.
Inflation is adding to the strain. Consumer prices rose 3.7 percent year over year in September 2026, according to the Labor Department, with gasoline, clothing, and airfares among the categories becoming more expensive. Higher prices can push households to depend on credit cards and loans to cover necessities when paychecks fall short.
And, payments can become difficult to manage when borrowers take on more debt than their budgets can support or stretch repayment over longer periods.
Consumers should also review interest rates, fees and repayment terms before taking out loans. Understanding why they are borrowing and how much the debt will ultimately cost can help prevent monthly payments from consuming future raises.
