Counting Hours, Counting Losses: The Toll of Unpredictable Work Schedules on Financial Security
Abstract: Financial instability is a pressing concern in the United States, with drivers that include growing employment disparities and insufficient wages. While research typically focuses on financial aspects such as income inequality in precarious work environments, there is a tendency to overlook the time-related aspect of unstable work schedules. The inability to rely on a consistent work schedule not only leads to burnout and conflicts between work and family life but also results in financial shocks that directly impact workers' income and assets. Unforeseen fluctuations in earnings pose challenges in financial planning, affecting decisions regarding savings and spending, and ultimately undermining individuals' long-term financial stability and well-being. This issue is particularly evident in sectors where workers experience frequently changing schedules without sufficient notice. The lack of advance notice disproportionately affects vulnerable groups, including those in the food service and retail sectors, part-time and hourly workers, individuals with lower incomes and education levels, and specific racial groups. These groups are already more financially vulnerable, and the unpredictable nature of their work schedules exacerbates their financial fragility.
Our objective in this study is to understand how unforeseen fluctuations in earnings exacerbate financial fragility by investigating the extent to which individuals' financial management depends on their ability to anticipate and plan for future events. To address this question, we develop an online learning approach in which individuals adapt their consumption strategies over time in response to financial uncertainty and evolving information. This approach forms the basis of our simulation framework, which models how workers manage consumption in the face of variable work schedules and the imperative to avoid financial ruin.
With this framework, we demonstrate both theoretically and empirically how a worker's capacity to anticipate schedule changes enhances their long-term utility. Conversely, the inability to predict future events can worsen workers' financial instability. Moreover, our framework enables us to explore interventions aimed at mitigating the problem of schedule uncertainty and evaluate their effectiveness.
Submission Length: Regular submission (no more than 12 pages of main content)
Assigned Action Editor: ~Taylor_W._Killian1
Submission Number: 4626
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