Even

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Description

By ANAND GIRIDHARADAS:

"Even’s “product” is an app, still in beta testing, that smooths the irregular, up-­and-­down paychecks of hourly workers into the steady flow of a simulated salary. On good weeks, when users outearn their Even salary, the company banks the surplus into a separate, Even-­managed savings account. On bad weeks, when users fall short, they still get their salary, thanks to past surpluses or to interest-­free credit from Even. The app won’t do anything for the 25 million Americans who, according to the Federal Deposit Insurance Corporation, have no bank account, nor will it help any of the many Americans who are simply too broke to get by even in the good weeks. Yet the Even founders have become something rare: innovators for the less fortunate in a Bay Area technology scene full of people who variously ignore America’s historic level of inequality, worsen it with their real ­estate purchases or “leverage” it when they realize that the losers of the new world order they’re building can at least be their Uber drivers, Instacart grocery deliverers and Homejoy toilet scrubbers.

The company’s founders believe that the stress of poverty flows more from the irregularity of income than from its dearth — from the inability to make and keep plans." (http://www.nytimes.com/2015/05/03/magazine/want-a-steady-income-theres-an-app-for-that.html)

Discussion

On Income Volatility

By ANAND GIRIDHARADAS:

"Income volatility has been called America’s “hidden inequality.” The economists Karen Dynan, Douglas Elmendorf and Daniel Sichel estimated in a Brookings Institution paper that American household incomes became 30 percent more volatile between the early 1970s and the late 2000s, and that in recent years, more than one in 10 American households took in half the annual income that they did the previous year. The Federal Reserve found in 2014 that nearly a third of American households experienced significant income swings. The volatility is hardest, of course, on the poor, who don’t just earn less than the better-­off but also earn their lower incomes more choppily, the money coming in irregular bursts, surging in some weeks, vanishing in others, always making a mockery of plans. Many poor people earn more each year than they spend, but on a given day, they don’t have the cash to handle the expenses due. Payday loans, pawn shops, credit cards, overdraft fees and such fill the vacuum and make things worse, levying a vast toll in interest, fees and stress.

The Federal Reserve study found that the principal cause of income volatility is irregular work hours. Employers increasingly use cutting-­edge scheduling tools like Kronos to calculate the profit-­maximizing head count for every hour and adjust schedules accordingly, week to week or even day to day, sometimes with scarcely any notice. Other factors contribute to growing volatility: the rise of the sharing and freelance economies, and thus the growing ranks of workers making benefits-­free livings as Uber drivers or graphic designers; the absence of paid sick leave, which can turn a single day lost to illness into a financial crisis; the way employers like Staples order employees not to exceed the number of weekly hours that would give them full-­time status and entitle them to benefits; the migration of salaried people to hourly work when hard times bring what the people in suits call “right-­sizing.” (http://www.nytimes.com/2015/05/03/magazine/want-a-steady-income-theres-an-app-for-that.html)