“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 Ms. Casares, 27, to find care for her 2-year-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 Ms. Casares, who started in October, earning $10 an hour. The schedule is usually posted a month in advance, she said, but there are frequently 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 Mr. 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 Mr. Morduch’s team tracked jumped to $5,279 from as low as $1,175. (Strict ethics protocols prohibit the release of participants’ names.) 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 picked up from zero 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 chief executive. “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’s 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.
Ms. 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-an-hour 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,” Ms. 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.
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