Contextual Inequality in the Performance Costs of Financial Precarity

Abstract

A substantial proportion of the workforce experiences financial precarity, which is defined as persistent concern about one's personal financial welfare. Research suggests that financial precarity often harms performance at work. In this paper, we investigate whether characteristics of the work context disproportionately occupied by people at the lower rungs of the socioeconomic ladder (low autonomy, high routinization, high interdependence, low social support) heighten the detrimental impact of financial precarity on performance. Drawing on role stress theory, we propose that these characteristics alter the degree to which the cognitive resources appropriated by financial precarity interfere with the resource requirements of a person's work role. Our predictions are tested using experience sampling data covering 8 consecutive observation days for 956 individuals in the United States (k = 7,015). Analyzing daily observations allows us to distinguish financial precarity from the day-to-day experience of transient financial events. We observed that financial precarity significantly undermined the quality of one's work during a given day, but this relationship was driven by those working in contexts with low levels of autonomy, routinization, and coworker support. This pattern was only observed for those experiencing financial precarity, not those only exposed to a negative financial event in a given day. The research demonstrates that specific characteristics of the work environment can lead to inequality in who bears the performance costs associated with financial precarity.