Commonwealth has launched The Financial Benefits Project: Developing a Financial Security Toolbox for the Evolving Workforce, a pilot testing the effects of multiple financial benefits on gig workers’ financial security. This research will provide insights into the financial needs of gig workers and how employers can implement benefits that reduce the impact of income volatility to support a more financially secure workforce, which research indicates benefits employers and workers alike.
A review of recent surveys finds that the share of the national workforce participating in gig work today is between 25 and 35%. When considering low- to moderate-income (LMI) workers, these percentages are likely higher. The LMI gig workers that this research focuses on are also disproportionately Black and Latinx.
Commonwealth’s research found that workers choose these positions for the flexibility that allows them to match their work with their family’s needs, their ability to supplement their income when they choose, and the independence that allows for them to meet their career and financial aspirations. However, these work arrangements generally provide wages that are both low and unpredictable. This creates barriers to financial security for significant segments of the workforce participating in gig work. One way to address these barriers is with emergency cash grants. In past research, these grants were found to have significant positive impacts on both the material and psychological wellbeing of gig worker participants.
Commonwealth is continuing to build on this work through The Financial Benefits Project, a research partnership with GreenDot and the payroll platform Gigwage, to test benefits that employers can use to support the financial security of gig workers. The pilot, which runs from October 2021 to March 2022, will test three different benefits designed to mitigate the impact of income volatility and increase financial security for approximately 80 gig workers:
- Recurring Stipends
The first group of workers will receive a stipend of $80 every week, directly increasing their take-home pay. Research on increasing and stabilizing income through direct cash transfers consistently demonstrates the financial and psychological benefits of this kind of unconditional support.
- Emergency Grants
The second group will have access to an emergency grant of up to $1,000 over the course of the pilot. This intervention is similar to the support provided to gig workers in the Worker’s Strength Fund project.
- Low-interest Loans
The third group will have access to high quality low-interest credit building loans. Unlike the other two interventions, this support would have to be paid back by workers. Testing this intervention alongside grants provides an opportunity to compare the effects of both loans and grants on material financial security and financial and psychological wellbeing.
In addition to testing the effects of these financial interventions, this research also provides an opportunity to test data collection methods for research on LMI populations. Throughout the pilot, biweekly surveys will be administered by either Interactive Voice Response phone calls or via text-based messaging (WhatsApp and Facebook Messenger). Testing the relative effectiveness and response rates for each of these survey methods will provide future researchers with data to decide how best to collect survey data from LMI gig workers.
Next Steps
The research is designed to test the impact of different financial benefits on workers’ financial status, financial wellbeing, and their feelings of agency and optimism, which other Commonwealth research has found to be important for people’s journey to financial security and opportunity. A deeper understanding of how these benefits affect gig workers provides important guidance for gig platforms and employers looking to implement benefits that build a more financially secure workforce.
The first group of gig workers were given access to these financial benefits the week of 10/25. This first cohort is 95% women, and 80% African American or Black. Commonwealth will release design guidelines and preliminary findings in the coming months to inform researchers and practitioners interested in testing similar benefits.
We are actively engaging with innovators, fintechs, financial services firms, industry experts, employers, and policymakers. To learn more about how your organization can partner with us to discover new data, receive expert insights, and strategize to improve the financial security and opportunity, contact us or sign up for our newsletter. We look forward to working together towards a more equitable financial future for people living on low- to-moderate incomes.