•Press Release COVID-19 Debt Jobs and Wages Wage Inequality
A new study of income volatility shows that workers who do not have consistent incomes are more likely to struggle with healthcare affordability and debt.
The paper, by Julie Cai and Emma Curchin of the Center for Economic and Policy Research (CEPR), analyzes data on workers’ income volatility before and after the onset of the COVID-19 pandemic. It also breaks down how workers experience volatility by region, industry, and race/ethnicity.
The paper – “Before and After the Pandemic: Income Volatility, Health Care Affordability, and Debt” – found that even for those with similar ages and family makeups, the chances that a worker has trouble affording medical care increased by 7 percentage points when experiencing income instability. While 26 percent of workers say they have been unable to afford certain medical care, 35 percent of workers with income stability report having the same issues. A similar gap exists for insurance; 88 percent of workers sampled have health insurance, while just 80 percent of those with income instability do.
Workers with unstable incomes were also 3 percentage points more likely to have unsecured debt – which the study defines as medical debt or credit card debt that cannot be paid in the next billing cycle.
While the paper finds that month-to-month income variability is an issue for workers at every income level, there are some notable patterns. During the pandemic recovery, Black and Hispanic workers (36 and 38 percent, respectively) are more likely to experience income volatility, which tends to be more prevalent in the Southern region that includes Arkansas, Louisiana, Oklahoma, and Texas. The numbers also reveal disparities; despite improved conditions in the recovery period, Hispanics, for example, are still overwhelmingly represented among those with unstable income. The same is true for younger workers; seven percent of the sample are between the ages of 18 and 24, but this group comprises 11 percent of those with income instability.
“Understanding Income volatility helps us understand the lived experience of many workers across the US economy, often in ways that are not captured by other survey data,” said Julie Cai, an economist at the Center for Economic and Policy Research. “Workers whose income varies have more trouble affording health care and are more likely to carry high-interest forms of debt. This is an area where public policy can make a difference; lawmakers should support efforts that would require employers to adhere to more consistent scheduling practices, which would greatly benefit workers who are most likely to experience the destabilizing effects of income volatility. And given Hispanic children’s relatively high poverty rate, restoring the monthly Child Tax Credit is also vital to ease parental income instability.”
The study is based on pooled data from the Survey of Household Economics and Decisionmaking 2018-2022. Income volatility was based upon respondents’ assessment of their month-to-month income variation.
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