Steady jobs, but unsteady pay and hours
Mirella Casares has what used to be considered the keystone of economic security: a job. But even a reliable paycheck no longer delivers a reliable income.
Like Casares, who works at a Victoria’s Secret store in Ocala, Fla., more and more employees across a growing range of industries find the number of hours they work is swinging giddily from week to week — bringing chaos not only to family scheduling, but also to household finances.
And a new wave of research shows that the main culprit is not the gig economy, but shifting pay within the same job.
This volatility helps unravel a persistent puzzle: why a belowaverage jobless rate — 4.4 percent in April — is still producing an aboveaverage level of economic anxiety. Turbulence has replaced the traditional American narrative of steady financial progress over a lifetime.
“Since the 1970s, steady work that pays a predictable and living wage has become increasingly difficult to find,” said Jonathan Morduch, a director of the U.S. Financial Diaries project, an in-depth study of 235 low- and moderate-income households. “This shift has left many more families vulnerable to income volatility.”
Ever-changing schedules at Victoria’s Secret, for example, make it difficult for Casares, 27,
to find care for her 2year-old and 6-year-old, and to cover the bills. “The lowest hours I’ve gotten is 15 and the highest I’ve gotten is 39,” said Casares, who started in October, earning $10 an hour. The schedule is usually posted a month in advance, she said, but frequently, there are last-minute changes.
Stability is worth a lot to workers. On average, employees are willing to give up a fifth of their weekly wage to avoid a schedule set by an employer on a week’s notice, according to a field experiment where workers were offered a range of alternative hours at different pay levels.
“That is totally the story,” said Morduch, who watched household incomes in his study rise and fall. “And that instability and insecurity are increasingly a part of middle-class life, too.”
In the course of a year, for example, the monthly income of a California family with one child that Morduch’s team tracked jumped to $5,279 from as low as $1,175. The husband supplemented his steady $400-a-week salaried construction job with extra remodeling work that could add from $323 to $1,588 a month to his total. His wife brought in up to $1,824 a month from babysitting and from selling jewelry, clothing and flowers.
Monthly expenses can pendulum as much as income, but the two do not necessarily move in tandem. An analysis of 250,000 bank accounts by the JPMorgan Chase Institute, a nonprofit research arm of the bank, found that roughly 80 percent of households had an insufficient cash buffer to manage the mismatch between income and expenses in a given month.
Few people can comfortably ride out the inevitable financial bronco ride. “Only households that earn $105,000 or more a year are secure against the volatility they are exposed to,” said Diana Farrell, the institute’s president and CEO. “It’s not just about the unemployed or the poor.”
Middle-income households, for example, saw their monthly expenses deviate by nearly $1,300, the equivalent of a month’s rent or mortgage payment. And one uh-oh expense — usually in the form of a medical, tax or car repair bill — can wreck a family’s balance sheet for a year or more.
Even a single month’s volatility can have a cascading effect. One month, a family copes by using the money earmarked for, say, the utility bill to cover the cost of replacing a busted water heater. The next month, it is the telephone company that goes unpaid as the family struggles to make up the missed utility bill plus late fees and interest — and so on.
Emergencies are not the only source of expense spikes. So are bridal showers, Christmas gifts and outgrown winter coats.
May turned out to be an expensive month for Tomika Waggoner, 44, a nursing home aide in Newport, Ky. Her daughter was graduating from high school, and she needed a few hundred dollars to pay for her cap and gown, commencement fees, a prom ticket and a dress.
Waggoner’s work schedule depends on her ability to find care for her 15-year-old son, who has epilepsy. So sometimes she works a weekend at $17 an hour and sometimes three $15-anhour weekdays.
For the Waggoner family, and many others with low and moderate incomes, a tax refund offered a once-a-year lifeline. That $700 check and a contribution from her mother covered most of the graduation costs and helped pay off the debt on some furniture. (Doctor’s visits and medical payments are frequently scheduled to coincide with tax refunds, according to the JPMorgan Chase Institute.)
“I also went to a couple of food pantries,” Waggoner added. “We ate a lot of bologna.”
Rather than causing jolts in income, the gig economy is, for many people, what smooths them out. Only about 0.5 percent of the labor force is working in the gig economy. And while bonuses, extra commissions and overtime bump up a worker’s average income, unwelcome reductions in hours, particularly at the lower end of the income ladder, more often shrink an expected paycheck.
“Stable, predictable work schedules are essential to economic security,” said Susan Lambert, a professor at the University of Chicago who is studying new data supplied by the General Social Survey, a respected national survey that began asking in-depth questions about work schedules only last year.
The latest data show that 41 percent of all hourly workers say they are not given more than a week’s notice of their schedule; nearly half have little or no say on their work hours.
“It’s not just service, or female-dominated jobs, but some of the most challenging schedules are production and construction jobs,” Lambert said.
The ubiquity of the phenomenon has frequently been masked by annual measures of income and spending or one-time snapshots of savings and debt that fail to capture fluctuations week to week or month to month.
Casares said that when she had to turn down an inconvenient shift at Victoria’s Secret, like staying until midnight to close, her schedule the following week would suffer. “I would be facing fewer hours,” she said.
To supplement the light weeks, Casares started picking up a shift as a part-time server at Olive Garden ($5.39 an hour plus tips).
The number of Americans living comfortably or doing all right financially has grown since the recession. Still, the new Fed report found that 30 percent — roughly 73 million adults — say they are finding it difficult to get by financially, or are just getting by.
To Morduch and his co-author, Rachel Schneider, the rise in income volatility is an indication of how businesses in an era of advancing technology and global competition have shifted risk onto employees.
Consider the cost of saving for retirement and medical care. When health insurance premiums for employers soared between 2003 and 2013 (before the Affordable Care Act went into effect), workers picked up 93 percent of the extra cost.
Asked whether her job at Victoria’s Secret provided benefits, Casares said it did: “We’re given three bras and a bottle of Bombshell, their No. 1-selling perfume.” Health or retirement contributions are not part of the package.
“Since the 1970s, steady work that pays a predictable and living wage has become increasingly difficult to find.” Jonathan Morduch, U.S. Financial Diaries project