Living from Paycheck to Paycheck: The Implications of Paycheck Dispersion for Gig Economy Workers

Lindsey Cameron, Management, The Wharton School, and Jirs Meuris, Wisconsin School of Business

Abstract: Despite the prevalence of paycheck dispersion, defined as fluctuations in the amount of pay they receive in return for their labor from paycheck to paycheck, in contemporary employment relationships, we know relatively little about its consequences for organizations. In this paper, we combine an inductive and deductive study to understand how paycheck dispersion affects worker retention. Study 1 uses a series of interviews and a survey with ride-share drivers to uncover the conditions that increase workers’ propensity to exit amidst larger fluctuations amongst their paychecks. From this data, we theorize that the effect of paycheck dispersion on voluntary exit is greater when workers lack control over their outcomes, are more economically dependent on the income, and have unpredictable alternative sources of income in their household. Study 2, thereafter, deductively examines these relationships using unique matched survey and archival data from a sample of truck drivers at a national transportation company. We find that paycheck dispersion increases the likelihood of exit, but consistent with the hypotheses, does so less among drivers with higher self-efficacy, lower economic dependence, and more predictable alternative sources of household income. Collectively, the theory and findings demonstrate that fluctuations in compensation from paycheck to paycheck undermine retention, even when those workers earn more on average.