Work requirements penalize workers in volatile occupations

Congress is currently considering adding or expanding work requirements in means-tested programs with the stated goal of increasing recipients’ work. The focus is on Medicaid and the Supplemental Nutrition Assistance Program (SNAP; formerly known as Food Stamps), the two largest direct-expenditure programs for supporting low-income Americans. This legislation includes adding work requirements to Medicaid and expanding the population subject to punitive SNAP work requirements for so-called ABAWDs (able-bodied adults without dependents who are aged 18 to 54) to adults in households with school-age children—aged 7 to 17—and older adults aged 55 to 64.

One stated motivation for applying work requirements to means-tested programs is that poor families, those eligible for basic needs programs, would have more resources if they worked more. It follows, some argue, that requiring adults to regularly meet work-hours targets in order to receive nutrition assistance or health care would increase family earnings and make families better off. 

Setting aside convincing evidence that work requirements do not increase work, what’s missing in these conversations is acknowledgement that volatility in employment and hours is endemic in the low-wage labor market and not the choice of these workers. The definition of acceptable work effort imposed by policymakers who do not acknowledge or understand this volatility penalizes working families from benefits for which they would otherwise be eligible.

In this analysis, we show that volatility in employment and hours characterizes employment in the service sector.¹ We focus on the service sector because it has become the dominant sector employing struggling families: While 19 percent of all workers are employed in the service sector, the share is 38 percent for workers in low-income households, 39 percent for workers in low-income households with children, and 42 percent among workers in low-income households with school-age children (figure 1).² This reflects massive growth in service employment in the last half century. 

This dramatic change means that program definitions of work hours that center on an image of low-income workers pulling a fixed shift at the local factory are inadequate to capture the work effort of low-income employees today. Rather than factory shift work, a low-income worker today is increasingly likely to be waiting tables or checking out customers, with hours that fluctuate as their manager responds to variable customer demand based on unpredictable outside factors like the weather or local sporting events.

Rigid work-hour thresholds don’t account for volatility

Monthly work hours requirements, such as the 80 hours per month requirement that SNAP currently imposes on many adults not living with minor children and that the House is considering applying in Medicaid, are poorly matched to the nature of employment in the service sector.

Work requirements with a set monthly work-hour threshold will penalize workers with demonstrated strong labor force attachment—that is, workers who meet that requirement on average across the year but who experience volatility in hours. Figure 2 provides illustrative examples for how a person who meets a work requirement threshold on an annual basis could accrue penalties on a month-by-month basis, either by missing the hours threshold (middle panel) or by losing their job and experiencing a period of unemployment (right panel).

Figure 3 summarizes our main findings. Because service work is so volatile, falling below an 80 hour per month threshold is common both among all workers and, notably, among those who meet the threshold on average across the year. This volatility is often driven by circumstances beyond workers’ control: Majorities of these workers, particularly those with living with children, report that irregular schedules are driven by their employers’ needs and that they would prefer to work more hours than they are getting.

Because continuous full-time service work is rare, 64 percent of low-income service workers fell short of 80 work hours in at least one month of 2022. Even among those who worked 80 hours or more on average during 2022, 34 percent fell short of working 80 hours in at least one month, whether due to low hours or a spell of unemployment. In fact, because of endemic volatility among those who were continuously employed and worked at least 80 hours per month on average, 20 percent worked less than 80 hours in at least one month (figure 4). Among low-income service workers in households with children, who experience additional pressures from their care responsibilities, 30 percent of those who worked 80 hours per month on average fell short of that standard at least once; for the continuously employed, the number is one in five.³

Hours volatility threatens workers’ ability to meet required thresholds for those who are continuously employed.⁴ Figure 4 is an interactive that shows the share of continuously employed low-income service workers who experience at least one month in which they do not meet the 80-hour monthly threshold; the interactive shows results based on average monthly hours worked and for workers with and without minor children in the household. Even among those who both work 80 hours per month on an annualized basis and who avoid unemployment, one in five experience at least one month in which they work less than 80 hours below the work requirement threshold, and nearly one in five of those with school-age children experience at least one month in which they work fewer than 80 hours. 

Figure 5 is an interactive that shows the share of low-income service workers who experience at least one month of unemployment. Turnover is high in the service industry: Forty-one percent of low-income service workers experience at least one month of unemployment during the year. For existing and proposed SNAP work requirements as well as proposed Medicaid work requirements, time spent actively seeking work does not count as work effort; therefore, temporary unemployment threatens participants’ ability to meet hours thresholds.

Many workers make up for bouts of unemployment by working well over 80 hours per month in the months when they have a job—so much so that their annual average monthly hours are above what the threshold would require, despite the time spent unemployed. Figure 5 shows that nearly one in nine low-income service workers in households with children who work at least 80 hours per month on an annualized basis would nonetheless fall short at least once in a year due to temporary unemployment.⁵ Strikingly, these numbers capture workers’ experiences in 2022, a year with low unemployment and particularly strong demand for service sector work; it is likely that in a recession even more workers with strong labor force attachment would, if facing monthly work hours requirements that ignore service-work volatility, lose health care or food assistance. 

Even among low-income service workers who live in households with children and work full-time, full-year hours (at least 35 hours per week, or 140 hours per month, averaged across the year), 7 percent spend at least one month unemployed—a number that is roughly the same for households with any child under 18 and households with school-aged children. This unemployment is not due just to the strain of caring for babies and preschoolers: Thirteen percent of workers in households with only school-age children who work at least 80 hours per month on an annualized basis face at least one month of unemployment over the year.

Most low-income service workers with children want more hours and more stable hours

For some adults in households with children, these months with lower hours may reflect a temporary need to cut back on work in order to focus on family responsibilities. However, the data show overwhelmingly that this volatility is driven by employers’ fluctuating needs, not workers’ preferences. Some 65 percent of low-income workers with irregular schedules report that the irregularity is primarily at their employer’s request, including more than three-quarters of service workers in households with children (figure 6). In addition, 57 percent of low-income workers report wanting to work more hours than they are given, including nearly two-thirds of service workers in households with children (figure 7).

Implications

Volatility in employment and hours is endemic in the service sector and driven overwhelmingly by employer demands, as employers vary workers’ schedules in response to customer flows. If work hours requirements such as those under consideration were implemented, large shares of low-income service workers would fail the requirements in at least one month of the year because of this volatility. In 2022, for example, more than one-third of low-income service workers who worked 80 hours per month on average would have failed an 80-hour work requirement in at least one month, including 42 percent of those without minor children (the target of proposed work requirements in Medicaid) and 30 percent of those with minor children (the target of proposed expanded work requirements in SNAP). In an economic downturn, in which the hours offered to service workers would likely fall, that figure could well go even higher.