Built for Operators: The Gym Economics Series: The K-Shaped Economy Is Real — And It’s Already Reshaping Your Gym

By Lee Robinson

I’ve spent 20 years in the fitness industry. I’ve watched recessions come and go. I’ve watched operators panic during COVID and rebuild after. But what I’m watching right now is something different from anything I’ve seen — and most gym owners don’t even know it’s happening. 

We’re in a K-shaped economy. Not a recession. Not a recovery. A split. 

If you’re not familiar with the term, here’s the picture: imagine the letter K. After the pandemic, the economy didn’t bounce back evenly. The top arm went up — higher-income households recovered fast, powered by stock market gains, real estate appreciation, and strong employment in knowledge-economy sectors. The bottom arm went down — lower and middle-income households depleted their pandemic savings, took on more debt, and are now financing daily life on credit. 

This isn’t my opinion. The data is everywhere. 

Credit card balances that are seriously delinquent hit 12.4% — the highest in 14 years. Consumer bankruptcies are at a 5-year peak. The Bank of America Institute published research in February 2026 showing that spending growth for lower and middle-income households is decelerating while higher-income spending remains stable. Their exact words: the gap looks “more like the jaws of a crocodile.” 401(k) hardship withdrawals are up double digits. Student loan delinquencies could see 4 million defaults in the next 12 months. Consumer debt has crossed $1.1 trillion. 

Now here’s the thing. If you own a gym, you’re watching this play out at your front desk every single day. You just might not be connecting the dots. 

📝 Check Out: Year in Review Wellness Watch Report to learn more about what’s impacting the fitness industry.

Your Members Are Living the K 

The fastest-growing demographic in gym membership is 18-to-34-year-olds. They represent 31% of all U.S. gym memberships and 65% of new joins. These are Gen Z and young Millennials. They’re committed to fitness — 73% of Gen Z and 72% of Millennials report actively using their gym memberships. They view working out as a lifestyle, not a New Year’s resolution. 

But here’s the tension: this is the same generation carrying the largest credit card and student loan burden. They’re the ones using Cash App to split rent. They’re paying their gym membership with Chime. They’re buying groceries with buy-now-pay-later. 

And they are absolutely committed to showing up at your gym. When surveyed about what they’d cut from their budget during tough economic times, only 23% said fitness. That’s lower than dining out at 44%, travel at 36%, and entertainment at 29%. Fitness has crossed over from discretionary to essential in this generation’s mind. GLP-1 drugs have created a clinical mandate for strength training. HSA and FSA accounts can now be used for fitness services. Medicare is reimbursing physicians for physical activity assessments. 

So the intent to train is real. The demand is real. The problem is how that demand gets monetized. 

The Billing Gap Nobody’s Talking About 

Here’s what I’ve been learning from our payments team at ABC Fitness, a leading provider of gym payment processing, recurring billing software, and club management systems, and it stopped me in my tracks. 

At one of our large multi-location clients, a third of new members tried to pay with a Neobank at enrollment. A third. These are Cash App, Chime, Venmo, and similar digital-first payment methods. And the ACH return rate — the first-attempt failure rate — on those Neobank transactions averaged 42%. 

Let me put that differently. Almost half the time your Gen Z member tries to pay their gym membership through their Neobank, the payment doesn’t go through on the first try – creating downstream issues for automated gym billing, recurring membership collections, and revenue cycle management for fitness clubs. 

Compare that to traditional ACH from a major bank: 90% first-attempt collection rate. It’s not even close. 

So what do operators do? Some block Neobanks entirely. And that’s where it gets worse. When this same client blocked Neobanks across the board, a third of the blocked members walked out and didn’t join. Do the math: a third tried to pay with Neobanks, a third of those left when blocked. That’s 11% of potential new members who never signed up because the operator didn’t have a smarter way to handle payment methods. 

You can’t block them. You can’t blindly accept them. You have to be intelligent about it – which requires fitness payment solutions with configurable payment rules. 

That’s the K-shaped economy in a nutshell for gym operators. Your fastest-growing, most committed member cohort manages money differently than any generation before them. If your billing infrastructure — your gym management software and recurring billing platform —  wasn’t built for this reality, you’re leaving revenue on the table every single month — and it’s compounding. 

📝 Check Out: Understanding Gen Z.

What the Smart Operators Are Doing 

The operators who are ahead of this aren’t panicking. They’re getting precise. They’re setting up configurable payment rules at enrollment — allowing Neobanks but requiring a traditional bank account as a backup. They’re using data to predict when members are most likely to have funds available and timing their billing accordingly. They’re switching to biweekly billing so the draft amount is smaller and more likely to clear. They’re letting the mobile app handle past-due collection before their front desk staff has to have an awkward conversation. 

In other words, they’re leveraging advanced gym billing automation, membership payment recovery tools, integrated club management software, and intelligent payment retry logic to improve collection rates without damaging the member experience. 

These aren’t big, expensive transformations. These are operational decisions that directly impact how much of the revenue you’re owed actually hits your bank account. 

And in a K-shaped economy where your member base is split between those who can absorb a $30 monthly draft without thinking about it and those who are living paycheck to paycheck on a digital wallet, the difference between an 88% collection rate and a 96% collection rate is the difference between a gym that’s surviving and a gym that’s building real enterprise value. 

The K isn’t closing. If anything, it’s widening. And the operators who adjust to this reality right now are the ones who will still be standing — and thriving — in 12 months. 

📝 Check Out: Data-Driven Success: How Analytics Are Reshaping the Future of Fitness in 2025

I’ll be writing more about this over the coming weeks. Next up: the $60 billion fitness explosion and why the generation that’s driving it is also the generation that’s forcing us to rethink everything about how we run our businesses — from member acquisition to billing, collections, and full-stack gym management technology. 

Ready to transform your member acquisition strategy? ABC Ignite is the growth-driven gym management platform that streamlines your sales, automates member engagement, and provides the insights you need to optimize every strategy in your toolkit. Get a demo today.