When Jobs Disappear or Become Unstable: Income Dynamic and Economic Well-Being Among Urban Households

Background: Employment instability, or job churning, may have distinct consequences for households’ economic well-being. Yet, while scholars have increasingly focused on income instability, fewer studies have examined the economic consequences of employment instability. This study examines associations of household members’ employment trajectories with (1) household income, (2) poverty status, and (3) material hardship, paying particular attention to whether social welfare benefit receipt buffers adverse financial consequences of unstable employment.

Methods: Data are drawn from 5 waves of pooled data from the first two cohorts of the New York City Longitudinal Survey of Wellbeing collected at 3-month intervals over 12 months (N=2630). We compare 5 household-level employment trajectories over the observation period: always employed; always unemployed; experienced job gain only; experienced job loss only; and experienced both job gain(s) and loss(es). By comparing patterns of association of these trajectories between pre- and post-tax and transfer income, we are able to assess how social welfare programs (taxes and benefits) buffer associations between employment instability and household economic well-being. We also examine associations between these trajectories and poverty status and material hardship (food, housing, bill payment, medical, and financial insecurity) at one-year follow-up. We use ordinary least squares and logit regressions to estimate these associations and limit our analyses to prime working-age respondents, aged 25 to 64.

Results: Results suggests that employment instability is common and has implications for economic wellbeing. While approximately 37% of New York City residents age 25 to 64 year experienced consistent employment over the 12 month observation period, 13% experienced consistent unemployment, 21% experienced only a job gain, 11% experienced only a job loss, and 18% experienced both gains and losses. On the whole, consistent unemployment was most strongly associated with low-income and poverty. However, employment instability—both gains and losses—was negatively associated with economic wellbeing, particularly material hardship. Findings also suggest that social welfare transfers buffer these associations.

Conclusions: This study suggests that governmental transfers have a meaningful role in the reduction of financial consequences from employment instability. Yet, beyond the short-term buffering effects of state transfers, additional long-term policies and integrated social service delivery systems should be considered to help reduce employment instability and/or help unstably employed families cope with other domain of daily life circumstances.