Mariel Beasley is Senior Applied Researcher at the Center for Advanced Hindsight and Co-Director of the Common Cents Lab at Duke University. Her behavioral economics research focuses on financial decision-making of low- to moderate-income households. Here, she shares insights on how to address the income volatility that many of these households face.

By Mariel Beasey

One of the most important things that we could do to reduce income volatility for contingent workers and workers with ever-changing schedules would be to build on San Francisco’s scheduling law requiring more predictable hours. In addition to predictable hours, people need more consistent schedules, with a contractually set number of work hours on specific days and times, and more consistent income.

Giving workers at least two weeks’ notice about their schedules helps, but it does not do enough to help workers mitigate the variability in their income and schedules. Having a steady schedule—working 15 hours every Monday and Wednesday, for example—enables you to plan for child-care needs only once, work out a schedule for a second job, and know what your weekly income will be.

Then, if a worker is scheduled for less than the 15 hours, underemployment insurance or wage insurance would make up the difference in pay. Like other social-insurance models, employers and workers would pay into a pooled fund that could be required for employers above a certain size.

In tandem with this, workers need greater ability to easily and successfully exercise their “right to request” hours, which is part of the San Francisco law. Most employees do not request specific hours, potentially due to procrastination, limited attention, or fear of potential retaliation, so it’s an unusual person who asserts their rights in the workplace. Employers and other people who regularly interact with employees could ask workers during the hiring process or on a regular basis if they have scheduling requests. This could be tested with willing employers before requiring it for all employers.

While the long-term, national goal is to increase consistency and predictability in scheduling and income, an alternative short-term approach would be to redesign credit products and build more automated savings programs for people with volatile incomes. So, instead of making fixed monthly loan payments, workers could make payments based on their earnings, with higher payments in high-deposit months. Lower-income months could be offset with a peak-month savings product, into which money from higher-earnings months would be automatically deposited, or through variable monthly EITC payments.