May 29, 2019 -- More Americans are grappling with unpredictable incomes. What’s more, they’re doing so without additional support from employers or the financial services industry at large. In surveying more than 2,700 Americans, Netspend found approximately one in five individuals dealt with monthly income fluctuations. However, only 6% of respondents said their employers provide tools to help mitigate financial instability.
The prevalence of income volatility may surprise most Americans. But, with the gig economy expanding and self-employment rates increasing, a larger, more diverse group of people are experiencing frequent changes in income. Offering a fixed payment structure is mutually beneficial for both business owners and employees. With the high costs associated with employee turnover, organizations prioritizing financial wellbeing have a better chance of coming out on top in the fight for talent and skilled workers. But providing tools and resources to ease the burden of income volatility doesn’t have to be a heavy lift. Technology solutions like DailyPay and PayActive as well as platforms such as KeyBank’s Key@Work and SmartDollar are examples of innovative solutions and programs employers can use to differentiate themselves to potential employees.
While the term income volatility often carries a negative connotation, Netspend found mixed levels of satisfaction from those with financial unpredictability. Some respondents indicated they struggle to meet daily financial commitments. Others equated financial fluctuations with higher annual incomes and more comfortable lifestyles. Results showed 58% of people would forego a predictable income if it meant a larger paycheck. Meanwhile, 57% would choose predictability over job satisfaction, and 56% would choose it over flexible hours.
A significant amount (59%) of those surveyed said it was either difficult or very difficult to save money given regular income fluctuations. Additionally, nearly half of respondents were unable to contribute to their future retirements. Other common challenges we identified included affording vacations or paying for an unexpected medical bill. When looking into how people approach the challenges brought on by income volatility, 50% of respondents said they prioritize maintaining a lean budget.
Cutting unnecessary expenses is one of several ways people can feel more confident in their financial status and save for the future or emergencies. However, more needs to be done to help the growing number of Americans struggling with inconsistent incomes. What role can financial service providers and employers play in addressing this issue? What does income volatility look like in today’s economy? For insights into these topics and more, download the full Netspend Income Volatility Report here.