Exploring Income Volatility And Financial Health Among Middle-Income Households

Mina Addo, University of Pennsylvania


Income volatility has been rising since the 1970s and reflects a decline in economic security among middle- and low-income households. This paper presents results from a mixed-methods study of middle-income households whose month-to-month income varied within the previous year. A sample of middle-income workers was recruited in partnership with SaverLife, a non-profit fintech organization. Median financial health scores revealed a study population that was showing signs of economic vulnerability, with female participants were worse off than their male counterparts. Qualitative findings show that income volatility can be both an indicator of and response to economic insecurity when workers depend on multiple income streams to supplement insufficient wages from a primary job. Household financial health is influenced by low wages relative to the cost of living, substantial student loan and credit card debt, and costly medical care. Overall, the results show a need for higher wages and more robust public and private social welfare benefits to protect middle-income households against common economic risks and enable them to invest in their financial futures.