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  • 8th Jul 2020

Using behavioural insights to support low-wage workers

Tips for employers during the crisis

Prior to COVID-19, low wage workers—defined as those with incomes below $36,000 per year—were already in a precarious financial position. Now, data show that “95% of workers in low-income households have either been laid off as a result of the coronavirus (37%) or have seen a loss of income (58%).” At the same time, employers and industries with a large share of low-wage workers (retail, food service, hospitality) are among those hardest hit by the pandemic, where even the largest and most established organisations are at risk for going out of business. At a time when low-wage workers need support the most, employers are in a worse position than ever to be able to provide it.

Behavioral science provides some ideas about how employers can support employees in a way that is impactful, but also feasible and affordable for employers during this difficult time. In this piece we share examples of ideas that may benefit employers and employees alike as the U.S. reopens.

Relieve stress by giving employees more autonomy

Years of research in organizational behavior shows that a sense of control over one’s own work is an important factor in mitigating the stress of a heavy workload. Conversely, studies have shown that a lack of control and autonomy can contribute to exhaustion and cynicism on the job. This is especially relevant for low-wage employees such as service workers who often face “command and control” style management tactics like close monitoring.

While autonomy is limited in some settings by necessity, employers can still find creative ways to provide low wage workers with greater control over their own work without sacrificing quality or consistency. For instance, employers can ask employees to come up with new procedures or refine the existing ones. Wherever possible, employers could allow coworkers on the same shift or team to decide how to divide up the work themselves, rather than providing direct, prescriptive orders. 

Scheduling provides another opportunity to offer meaningful control without compromising operations. Allowing for more flexibility in working hours can lead to an increased sense of employee autonomy and job satisfaction, enabling employees to more easily balance the pressures they face in their personal lives. While the requirements of shift work may seem incompatible with schedule flexibility, small things like allowing employees to trade shifts more quickly can help. Tools like shift swapping software can enable this without compromising employers’ ability to track changes or set parameters for appropriate swaps. Other ideas that employees find helpful include allowing employees to express preferences over their working hours and days, or creating staggered shift schedules and letting employees opt for the schedules that work best for them. 

These changes benefit employers as well as employees. Schedule flexibility is more important now than ever: employees are going to be experiencing unexpected shocks in their personal lives, which will likely create scheduling difficulties, so companies will need to find ways to more easily maintain appropriate staffing in the face of those challenges.

More generally, studies suggest that reducing stress by giving employees more autonomy can lead to more proactive behavior among employees, giving them more confidence to go “off script” and come up with ideas to improve their own jobs or help their customers. As the retail, food, and hospitality industries reopen and need to respond to a new landscape of customer needs and behaviors, this type of bottom-up innovation and empowerment might be exactly what companies need to adapt and regain their footing.

Reduce “cognitive load” by providing financial stability and removing hassles

Most people are likely facing strains on their cognitive bandwidth—their working memory, attention, and executive control—as COVID-19 creates unexpected interruptions in their lives. However, financial scarcity has been shown to exacerbate these effects, leading people to “overspend” time and resources on immediate concerns while neglecting longer-term tasks and decisions. This suggests that finding ways to take unnecessary tasks off the plate of low-wage workers, and providing a sense of financial stability through things like consistent paycheck timing, can reduce stress for employees and help them make better decisions.

For some low-cost ideas to reduce cognitive load, consider reducing the hassle involved in company processes that employees frequently engage in. For example, make sick leave policies easier to use by requiring a medical note only by exception. Streamline vacation or shift swap requests by delegating approval powers to frontline managers or supervisors. For workers in industries such as retail, checklists that simplify repetitive tasks with multiple steps (such as opening and closing-up the store) can be helpful. 

One way to reduce hassle for employees while supporting their financial stability is to “default” them into using direct deposits to receive paychecks. Another more direct approach is to offer small paycheck advances in case of emergencies, or partner with a fintech company (such as DailyPay) to offer interest-free paycheck advances that integrate with payroll systems. 

As with our first example, this approach benefits employers as well as employees. Freeing up employees’ cognitive bandwidth is likely to increase work performance, since juggling multiple things in one’s mind can impede one’s ability to carry out tasks. For example, a study of short-haul truckers found significantly increased risk of preventable accidents when employees were experiencing financial scarcity.

Providing more control and reducing cognitive load are low-cost ways that employers can support the well-being of their most vulnerable workers. They are also mutually reinforcing: employees with more control may find ways to eliminate unnecessary tasks and make their own jobs less taxing on their own; employees with more headspace from a reduced cognitive load may be more creative in identifying new ways to meet the challenges of these times. And while these solutions are intended to support low-wage employees, they should also pay dividends for employers by improving work performance, reducing stress and risk of burnout, and even increasing safety compliance. 


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