The very nature of the service and gig economies can be both a blessing and a curse. Whereas many workers value the autonomy such work affords them, they also bemoan the volatility of work, and therefore of income.
Research from Harvard reveals that this inherent unpredictability leaves service employees vulnerable to predatory lenders, which can saddle people with unreasonably high-cost debt.
Uncertain work
Service sector workers are a common sight in sectors such as grocery, retail, and hospitality, as well as in the delivery and fulfillment roles that underpin so much of our economy.
“The experience of schedule volatility is pretty common among service sector workers,” the researchers explain. “We found that the more schedule volatility people experienced, the more likely they were to take out expensive loans, such as those from pawn shops and auto-title lenders—or they use credit cards in ways that are problematic.”
The researchers trawled through data from the Shift Project, which contains survey responses from around 40,000 service sector workers operating across the United States. While many of the workers in the sample operated in low-paid positions, there was also a number with incomes over $75,000.
Schedule unpredictability
Traditionally it is thought that the use of high-cost loans is associated with one’s income, but the research reminds us that schedule unpredictability is also a crucial factor. Indeed, the data suggests that those with schedule unpredictability were more likely to use high-cost loans regardless of their income levels.
“We really found little evidence that this is a story only about money. There is a time component that’s independently important,” the researchers explain.
While the data didn’t provide an explanation for this, the researchers believe that a fluctuating schedule can impact both our physical and mental health, which can in turn impair our decision-making capability. What’s more, an unpredictable schedule forces many to rely heavily on family and friends for support with things like childcare, which if this support is no longer available for whatever reason leaves them with few places to turn.
Add in the fact that the often irregular and nonstandard hours can make accessing public assistance or even mainstream financial support and high-cost loans, which are often accessed incredibly quickly, become a tempting option.
Lack of support
While there has been a degree of support offered to service sector workers, the researchers believe that neither hardship loan programs nor government aid has done much to curb the reliance on high-cost debt, due in large part to the difficulty in accessing them.
A better approach might be for both policymakers and employers to look at ways to ensure that people have greater control over their time. The researchers highlight a number of cities that have mandated that workers know their schedules at least two weeks in advance.
At a time in which many service-sector employers are struggling to attract the talent they need, this control over one’s schedule might be a more attractive enticement than raising pay, and is something that employers should seriously consider offering.
“We tend to think that more money will solve all issues. It may solve most but not all of them,” the authors conclude. “There is this more invisible vulnerability that we need to think about in terms of quality of life, decisions and relationships, that money alone can’t solve. It is more about the importance of time.”
