Neoliberal Performance-based Wages Linked to Health Problems

The pay volatility of performance-based wages in gig work is linked to worse sleep quality, headaches, back pain, and stomach issues.

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More than four million Americans depend on performance-based pay as their primary income, and the inconsistent nature of working for tips or commissions may be affecting their health.

Researcher and psychologist Gordon M. Sayre posits that pay volatility—shifting wages for reasons outside of a worker’s control—could be linked to insomnia, headaches, and digestive issues. Sayre explains that gig work is becoming more common because it provides safety for employers:

“Organizations are increasingly moving away from stable salary and hourly compensation systems, instead favoring tips, piece-rate pay, commissions, and bonuses. These forms of ‘performance-based pay’ shift risk away from organizations and onto employees, whose pay changes based on factors both within (performance quality, effort, skills) and outside (economic climate, busyness, customer generosity) their control. As a result, employees’ pay fluctuates from one day, week, or month to the next—referred to as pay volatility.”
Courier on bike delivery.
Courier on a bike delivery

A new series of studies by Sayre explores how exposure to pay volatility impacts worker health outcomes. Sayre conducted three studies, all of which were surveys, to ask workers about their health while experiencing pay volatility.

In the first study, 85 people who worked for tips, such as delivery drivers, servers, and maids, answered questions about how much they earned in tips and how they felt. On average, participants received about $35 in daily tips, representing 25% of their total income.

The results supported the researcher’s hypothesis: higher pay volatility was associated with an increased frequency of physical symptoms and sleep problems.

Sayre also theorized that higher pay volatility could be linked to a scarcity mindset. A scarcity mindset is an obsession with a need that is frequently lacking or barely met. As a result of having a scarcity mindset, people are less likely to be able to make long-term investments or exercise self-control as they constantly ruminate on the thing they are worrying about—in this case, money.

In this second study, the 375 participants were people working on Amazon’s Mechanical Turk, a website that invites gig workers to get paid per task (usually academic or commercial surveys) completed. Again, this study’s surveys were conducted over three weeks, and the results supported Sayre’s hypotheses.

The third and final study sought participants who relied on performance-based income for only a portion of their salary. This answered the question of whether or not a scarcity mindset and health problems came into play for people with more stable wages.

Two hundred fifty-two participants answered surveys for three months—this survey now captured monthly income for a higher-income sample of people experiencing pay volatility—and the results demonstrated that pay volatility was less impactful on the health of higher-income employees who had a more consistent stream of income than gig workers who relied more heavily on volatile wages.

Sayre also looked at how mindfulness may or may not have acted as a defense for participants dealing with pay volatility. The premise of mindfulness is that focusing on and living in one’s present moment helps to reduce stress about the future. However, mindfulness did not save participants in this study. On average, those who practiced and engaged in mindfulness did not see an improvement in their health.

These results, while significant, represent correlations, not causations. These surveys support the hypothesis that pay volatility and health problems are connected but do not prove a cause-and-effect relationship.

Because these results have policy implications, more focus on pay volatility in scientific research can help push for change. And, as current legislation in America stands, businesses have authority over how much of employees’ wages are reliant on commission, tips, or gig success. Large companies are unlikely to relent in subjecting millions of American workers to unhealthy and damaging pay volatility if given continuous free reign. Sayre gives credence to unions as a platform through which workers can and have successfully negotiated for wage floors and fair hourly wages.

The totality of the potential consequences of the scarcity mindset experienced by gig workers remains unknown. For instance, the “hustle” or “grind culture” bred by neoliberalism further contributes to the mental harm done to laborers, especially employees who feel that the amount of work they do directly equals the amount of pay and success they will see. This remains true despite overwork itself being linked to psychological distress and abusive power dynamics.

Current scholars argue that capitalism in and of itself is the number one indicator of global health. Meanwhile, the myth of meritocracy continues to appear to affect the well-being of even the youngest generations in America.

Sayre hopes that organizations will give workers reliable and fair wages that could improve their health but judiciously supports unionization and policy change that would force companies to give their employees a less volatile income.

 

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Sayre, G. M. (2022). The costs of insecurity: Pay volatility and health outcomes. Journal of Applied Psychology. https://doi.org/10.1037/apl0001062 (Link)

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Liam G. Bach
Liam graduated from Bard College as a Biology/Psychology double major in 2021 and has a background in ecology and art. Liam brings an interest in attending to how dominant discourses operate to construct broader social issues, including climate change and social justice efforts, as individual problems in need of individual management. He intends to pursue doctoral studies in 2022—in the meantime, he will be reading, writing, drawing, and sleeping.