A New Safety Net for an Era of Unstable Earnings

Source: Andrew Stettner, Michael Cassidy and George Wentworth, The Century Foundation in collaboration with the National Employment Law Project, December 2016

From the press release:
Many part-time or “gig economy” workers are struggling to get by on unstable earnings and wages that vary significantly from week to week or month to month. New data on earnings instability and income volatility in the years during and after the Great Recession reveal that the problem is much worse than commonly understood, according to a new report published today by The Century Foundation in collaboration with the National Employment Law Project. ….

…. The report, A New Safety Net for an Era of Unstable Earnings, takes a deep-dive look at earnings in the years during and after the Great Recession, with an original analysis of census data from the Survey of Income and Program Participation. The analysis focuses on month-to-month earnings of primary earners (breadwinners) in a representative sample of U.S. households. It finds:

• Primary earners in three out of five families experienced a month-to-month earnings drop of at least 50 percent at some point between 2008 and 2013.
• A typical worker’s earnings were extremely variable during this period. The average month-to-month variation for an individual earner was $2,300 to $2,600.

The analysis goes further with a first-ever use of the Gini coefficient (typically used to measure inequality between families) to instead measure the extent to which an individual’s own earnings are unequal from month to month. It finds:

• Earnings volatility is strongly related to household hardship. Workers with the most volatile earnings are 31 percent more likely to experience poverty than those with stable earnings, and holding other factors constant, are 14 percent more likely to need some form of means-tested public assistance.
• Those broadly working in the nonstandard workforce or “gig economy” have earnings that are nearly two times more unequal than standard workers. ….
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