When you’re suffering from constant financial stress — an anxiety-riddled state of being researchers now call “precarity” – you can’t be your best. Your family suffers, your health suffers, and your work suffers.
And if your workers are worried about money, they’re going to make more mistakes on the job. That might seem obvious, but “obvious” doesn’t persuade penny-pinchers in the executive offices. Data does, however. And now we have some. A really important study by Jirs Meuris at the University of Wisconsin-Madison recently put a price tag on precarity. The study should be enough to persuade many bosses that financial wellness is more than a slogan. It’s an essential workplace benefit.
Meuris studied truck drivers and found that cash-anxious truckers had more avoidable accidents on the road. Each of these unnecessary mistakes cost the firm about $100,000. I talk about his study, and much more, in a piece I wrote recently for PeopleScience.com titled “Money stress makes work mess.”
I’ve spent years covering this general topic in my Restless Project series, trying to call attention to the crushing mathematics that many Americans face right now — stuck paying more than 50% of their income on housing, or large student loan payments, or caring for elderly relatives. Meanwhile, the gig economy and the rise of the so-called “contingent” workforce has allowed many companies to let workers twist in the wind, left to fend for themselves for health benefits or consistent paychecks. That’s obviously bad for workers. Now, there’s evidence it’s bad for companies, too.
“Financial precarity came out as a significant predictor of accident rate,” Meuris told me.
The good news is there are solutions. “Pay more” is obvious, but there are others. The trend towards more bonus-laden compensation turns out to be a major contributor to financial stress — it leads to inconsistent pay and trouble budgeting — something Jonathan Morduch and Rachel Schneider called part-time poverty in their book, The Financial Diaries, which I’ve also written about.
Here’s a quick excerpt from the PeopleScience post, but I hope you’ll read the whole piece. I’m proud of it, and I hope it pushes the ball forward on this important conversation.
Another trend that contributes to precarity is variable work schedules, an issue that’s recently attracted much attention – and some local legislation. A recent study found that three-quarters of workers at large retailers get less than two weeks’ notice about their schedules. That screws with sleep schedules, financial planning and critically, child care arrangements. Not surprisingly, there is a link between schedule instability and income instability – two thirds of workers in this group said their incomes vary week to week.
Researchers Daniel Schneider and Kristen Harknett call this “temporal instability” or precarious scheduling practices. In a working paper, “Consequences of Routine Work Schedule Instability for Worker Health and Wellbeing,” the two argue that unpredictable work schedules are an even bigger source of anxiety, and precarity, than money.
“While low wages are also associated with these outcomes, unstable and unpredictable schedules are much more strongly associated,” their report says. Technological leaps that make it easier for companies to optimize “efficient husbandry” of workers have exacerbated the unpredictability.
Predictability matters so much to workers that one study found a set of employees were willing to take a 20% cut to wages in exchange for a job that provided one week of advance notice of work schedules.
When he talks with companies about improving their workers’ financial stress, Meuris focuses on dealing with these feelings of precarity, and why doing so might improve their bottom line.
“When I work with companies I think they are trying to do the right thing. It’s not that they aren’t sensitive to these kinds of issues, not that we are telling them something they don’t know about,” Meuris said. “I’m telling them there’s additional considerations they can think about when making HR decisions that allow people to focus on their work when they are at work.”
Often, when companies set compensation levels, they employ a strict calculation concerning what the labor environment requires. But salary isn’t only about attracting workers, motivating them, or retaining them. There’s also the real-life issue of, “Can they live on what you are paying?” In some situations, it might make sense to pay above-market salaries in order to get better work. It also might make sense to offer more predictable bonuses, or simply some training in effective budgeting.
“My work is to show this is an important consideration. I’m trying to show this is in the company’s best interest. Precarity is affecting your business outcome,” Meuris said. “There is a realization at companies that financial stress among employees isn’t a good thing… This is something we should be paying a lot more attention to. There’s a strong business case for it.