Alice Mollon
More than half of Americans are paid by the hour. They tend to earn less than their salaried counterparts and be more financially vulnerable.
They also routinely face another challenge: large fluctuations in monthly income, suggests research by a team that includes Chicago Booth’s Pascal Noel, Christina Patterson, and Joseph Vavra. They find that for most US workers, take-home pay tends to fluctuate almost every month, even when people keep the same job. Moreover, these ups and downs in income appear to be widespread, economically significant, and disruptive—especially for the lower-income workers who can least afford pay changes.
Research has established that wages are largely stable, but also that annual income can be volatile. To better understand the disconnect, Noel, Patterson, and Vavra—along with University of Chicago’s Peter Ganong and UChicago PhD student Alexander Weinberg—analyzed detailed monthly data. They find that monthly instability is pervasive, even if it’s “masked in the annual income data used most commonly in economics research.”
The researchers obtained 2010–23 payroll records, which covered between 2 million and 4 million workers at any given time, as well as banking data including payroll deposits (all anonymized) provided by JPMorgan Chase. With these, the team was able to break down individual incomes into bonuses, commissions, hours worked, paid leave, overtime, and wages, as well as see how pay affected spending.
They observed large and frequent swings in monthly earnings. In about three-quarters of the months studied, workers received a different amount of money than they had been paid the prior month. The change was 5 percent in the typical (median) month, but it was at least 17 percent a quarter of the time.
Big swings
While base pay stayed the same in most months for US workers, their actual paycheck was often higher or lower than the previous month, according to the research.
A third of the time, workers faced an earnings swing of a dollar amount that exceeded half the typical (median) balance in their checking account. And about 20 percent of the time, the swing exceeded the workers’ entire balance.
These swings most affected hourly workers. While base wages virtually never fell for salaried workers, whose earnings rarely fluctuated, the earnings of hourly workers typically swung by about 9 percent month to month and sometimes much more.
The reason wasn’t vacations, family or medical leave, or childcare, the researchers say.
Rather, the changes in large part reflected shifting demand from employers. When the total hours worked by everyone at a company changed a lot, presumably because the company’s need for workers changed, the income of individual workers tended to move in tandem. About half of the variation in hours was beyond workers’ control, according to the study.
The volatility was tough on workers and prompted them to adjust their spending. This meant cutting back when hours were reduced, and then spending more when money came in.
Workers also quit jobs with high pay volatility more frequently. The researchers’ calculations suggest that the median hourly worker would be willing to forgo 4–11 percent of their pay to get the income stability of the median salaried worker. Lower-paid workers with the highest volatility would be willing to give up even more.
All of this demonstrates that monthly earnings volatility is a significant issue that’s relevant to millions of workers. “Workers face more risk than you would have thought from looking at the annual data,” says Patterson. When people don’t know how much they’ll make in the upcoming month, it becomes difficult to plan, save, or climb the economic ladder.
Peter Ganong, Pascal Noel, Christina Patterson, Joseph Vavra, and Alexander Weinberg, “Earnings Instability,” Working paper, August 2025.
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