Income volatility is an emerging, critical issue for understanding financial security today. American households seem to be facing increased instability and unpredictability in their financial lives. Despite the efforts of scores of researchers, there is no consensus on the extent of volatility and how it affects individual well-being, especially among vulnerable low- and moderate-income populations. For that reason, the Aspen Institute Financial Security Program (FSP) is devoting the inaugural year of its new knowledge-synthesis initiative, the Expanding Prosperity Impact Collaborative (EPIC), to income volatility. EPIC aims to be an evidence-based, neutral forum for gaining clarity about the nature of the problem, its evolution, its significance, and our options for responding.

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The Expanding Prosperity Impact Collaborative (EPIC), an initiative of the Aspen Institute’s Financial Security Program, will target a consequential consumer finance issue to explore in depth for a defined period of time. In its inaugural year, EPIC is focusing on income volatility. EPIC’s purpose is to synthesize insights to build a more accurate understanding of how income volatility impacts low- and moderate-income families and how best to combat the most destabilizing dimensions of the problem. The EPIC process includes identification and synthesis of data, convenings of cross-sector experts, surveys of a broader group of experts and leaders, and dissemination of issue briefs. EPIC’s look at income volatility will conclude with a set of concrete recommendations for moving forward.

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While research on month-to-month income volatility is still emerging, a number of indicators point to scheduling instability – fluctuations in hours worked – as one of the key drivers of this phenomenon:

• Of those who self-reported volatile monthly incomes in a recent survey, 40% blamed an irregular work schedule for the swings.

• An analysis of banking records found that, for nearly one in four jobs...

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There is wide consensus that income volatility—particularly intra-year volatility—is a pervasive problem for American households. Estimates vary. For example, JP Morgan Chase Institute finds that 41% of consumers experience month-to-month fluctuations in earnings of more than 30%, while the Federal Reserve (SHED) finds 32% of households report experiencing occasional to frequent monthly variations.

The key challenge for families experiencing income volatility is how to maintain liquidity and avoid financial instability.

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This brief on payroll innovation is part of a series that explores highly promising solutions to income volatility. Our hope is that this brief will push financial service providers, employers, and governments to consider ways to update and improve how workers get paid, and in the process, give households a new tool for achieving financial stability.

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EPIC has identified shortfall savings as a key tool in the toolbox for achieving financial stability. Without resources to tap into when in- come drops or expenses rise, families are left with few options for making ends meet. This brief explores the ways in which governments, for- and non-profit financial service providers, and employers can help low- and moderate-income households build savings for the short-term, which will help them smooth out the inevitable spikes and dips in their income and expenses.

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This new EPIC research brief by Daniel Schneider (UC Berkeley) and Kristen Harknett (University of Pennsylvania) enhances our understanding of the connections between income swings and family outcomes for hourly retail workers.

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This brief focuses on wage insurance, a potentially high-impact opportunity to help families avoid the serious long-term consequences of job loss or reduced wages.

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This brief reviews the current research on how income shocks associated with job displacement impact families’ financial security in the short- and long-term. It discusses the performance of current UI programs and a range of reform proposals. The brief also explores specific reforms that would enable UI programs to serve a broader base of workers and buffer more effectively against employment-related negative income shocks. It also considers the roles of key institutions – governments, employers, and financial services providers including insurers—in supporting UI reforms, and identifies specific opportunities for private-sector leadership.

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This is the first in a series of briefs produced by a partnership between the Aspen Institute’s Expanding Prosperity Impact Collaborative (EPIC), Washington University’s Center for Social Development (CSD), and the Intuit Tax and Financial Center. It highlights new data on the prevalence of income and expense volatility in low- and moderate-income households. The second brief will focus on the downstream consequences of volatility and how it impacts financial behavior.

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Since the Expanding Prosperity Impact Collaborative (EPIC) launched our investigation into income volatility in early 2016, much has been learned about volatility’s destabilizing effects on American families. Now that EPIC’s focus on income volatility is coming to a close, we wanted to recap some of the field’s most notable research achievements, as well as recommend what we see as important and needed opportunities for further work.

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This paper will help grantmakers understand the enormous challenge income volatility presents in our country and will present an array of strategies for philanthropy to leverage both investments and leadership to empower families to protect themselves from volatility’s worst effects. Drawing on 18 months of research, convenings, expert surveys, and stakeholder engagement, this brief identifies the constellation of the most promising solutions that need champions, resources, and acceleration. Because of the complexity of income volatility, there is a unique role for philanthropy to deploy not only investments, but also to leverage its influence and convening power.

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This is the second in a series of briefs produced by a partnership between the Aspen Institute’s Expanding Prosperity Impact Collaborative (EPIC), Washington University’s Center for Social Development (CSD), and the Intuit Tax and Financial Center. The first brief highlighted new data on the prevalence of income and expense volatility in low- and moderate-income households. This brief will focus on the potential consequences of volatility and how it relates to financial behavior.

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