WHAT DIFFERENCE DO JOB CHARACTERISTICS MAKE TO LOW-INCOME EMPLOYEES?

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1 WHAT DIFFERENCE DO JOB CHARACTERISTICS MAKE TO LOW-INCOME EMPLOYEES? James T. Bond and Ellen Galinsky Families and Work Institute November 2012 This report is funded by the Ford Foundation as part of its efforts to understand and address the situation of low-income employees in the United States. The reader is referred to a companion report that provides extensive background information about employees from low-income families: Bond, J.T. and Galinsky E. (2012) Low-Income Employees in the United States. New York: Families and Work Institute. The research findings presented here are drawn mainly from the 2008 National Study of the Changing Workforce (NSCW) conducted by Families and Work Institute (FWI). The survey sample was randomly selected to represent the entire U.S. workforce. This report looks only at wage and salaried workers (N=2769) who are employed by someone else. For purposes of this report, the sample is weighted to the Current Population Survey on various factors. 1 This report compares the jobs and workplaces of employees who live in low-income families with those of employees from higher-income families. It also examines numerous outcomes both on and off the job that are of concern to employers as well as well as employees and their families. In the final section, we consider whether job and workplace characteristics, which are largely under the control of employers, are related to outcomes. DEFINITIONS 2 Family income includes all income of the employee and his or her spouse or partner from any source. We define low-income as annual family income below 200% of the federal poverty threshold. Families with annual incomes of 650% or more than the federal poverty threshold are defined as high income for purposes of this report, while families in the middle range between 200% and 650% of the federal poverty level are defined as middle income. 1 The March 2007 Current Population Survey provided control totals for calculating sample weights that is, sample proportions were adjusted to CPS proportions. The weighting algorithm included the following demographic factors: number of eligibles in household, gender, education level completed, race/ethnicity (non-hispanic White; non-hispanic Black; Hispanic; other) and age. 2 These definitions are developed more completely in a companion report: Bond, J.T. and Galinsky, E. (2012) Low-Income Employees in the United States. New York: Families and Work Institute. 1

2 Table 1 shows the median hourly earnings of employees in each income group, and Table 2 shows the median annual income. It is important to note that we do not use the terms income and earnings interchangeably. Rather, we follow the formal distinction made by economists, defining earnings as the wages or salary earned by an individual from paid work and income as the total income from all sources of a family or household unit, which might be an individual living alone. Table 1 only reports the hourly earnings for the person interviewed. Since many respondents are married or living with someone as a couple, total household earnings are often higher and sometimes much higher than the earnings of respondents alone. Overall, 53% of respondents have an employed spouse or partner 21% of low-income employees, 56% of middle-income employees and 80% of high-income employees. It is interesting to note that many employees earning low wages do not actually live in low-income families. Indeed, 40% of employees earning in the bottom 25% (bottom quartile) live in middle-income families, while 4% live in high-income families. The reason for this apparent contradiction becomes evident if we think, for example, of a middle-income couple one of whom is a software engineer while the other (the one interviewed, in this case) is a full-time student earning very low wages from a part-time job. As in this example, not all low-wage employees are economically disadvantaged and in need of special public or private initiatives on their behalf. However, it should be noted that the earnings of many low-wage employees are absolutely vital to family wellbeing and, when combined with even modest earnings of a spouse or partner, sometimes lift their family from poverty to middle-income status. Table 1: The Median Hourly Earnings of Low, Middle and High-income Employees in 2008 Low Income: less than 200% of the $8.76 per hour poverty threshold (N=601) Middle Income (N=1,482) High Income: 650% or more of the poverty threshold (N=567) $17.57 per hour $32.04 per hour Source: 2008 National Study of the Changing Workforce. There is a substantial amount of missing data on earnings and income data such that the Ns reported above do not add to the total wage and salaried sample size of 2,769. 2

3 Median annual family income is reported in Table 2 for the three income groups. Although our specific definitions of low, middle and high income can be debated, they seem reasonable for purposes of this report. Few would argue that a family income of $15,600 is relatively low or an income of $140,000 relatively high. Moreover, our definition of low income as less than 200% of poverty and high income as 650% or more of poverty in 2008, conforms to a widespread distinction made in policy research and debate. Our low-income group falls roughly in the bottom 20% (bottom quintile) of family income distribution and the high-income group in the top 20% (top quintile). Table 2: Median Annual Family Incomes of Low, Middle, and High-income Families in 2008 Low Income: less than 200% of the $15,600 poverty threshold (N=601) Middle Income (N=1,482) $62,400 High Income: 650% or more of the poverty threshold (N=567) $140,400 Source: 2008 National Study of the Changing Workforce, Families and Work Institute. Family income data are missing for 4% of respondents, thus the Ns reported above do not add to the total wage and salaried sample size of 2,769. It is disturbing to many that the income difference between families in the top 20% and those in the bottom 20% is not only large, but also growing steadily. Actually, growth in real income stalled for the bottom 20% some years ago, while income growth for the top 20% has accelerated resulting in extreme and increasing income inequality in the United States. As discussed in the companion paper to this report 3, the U.S. economic situation was deteriorating rapidly as the NSCW survey got underway in late 2007 and remains much worse today than before the so-called great recession officially began in December Unemployment, long-term unemployment and underemployment (as measured by involuntary part-time work) are still very high by historical standards, and the size of the wage and salaried workforce has actually shrunk by about 4% since the onset of the recession. In addition, median family income growth has stalled, poverty rates are up and income inequality is more pronounced than it has been since the roaring twenties. In short, the socioeconomic status of many employees and their families has 3 Bond, J.T. and Galinsky, E. (2012) Low-Income Employees in the United States. New York: Families and Work Institute. 3

4 deteriorated since the data underlying this report were collected. Nonetheless, we believe that the conclusions we reach are significant and remain valid. FINDINGS 4 Employees, regardless of their socio-economic status, are very much affected by the conditions under which they work. This paper first examines the characteristics of jobs and workplaces of low-income employees compared with their higher-income counterparts, then evaluates how these factors are related to various outcomes in employees lives on and off the job. For brevity of presentation and emphasis upon the findings of greatest interest, we rely heavily upon analyses of 16 multi-item scales that are derived from 75 interview questions. Although these scales are named to describe their contents, we strongly urge readers to examine the actual items that are included in each scale which are presented in Appendix A. What Are the Jobs and Workplaces of Low-Income Employees Like? All employers want to have employees who are competent, who like their jobs and their employer, who are engaged and productive at work and who intend to continue making positive contributions to the organization in the future. To achieve these goals, all employers make some level of effort beyond paying wages and salaries to create jobs and workplaces that attract, motivate, develop and retain the employees they need to achieve their missions. The 2008 National Study of the Changing Workforce (NSCW) asks numerous questions about the characteristics of employees jobs and workplaces including the fringe benefits they receive, the degree of autonomy they have in doing their jobs, the learning opportunities and challenges they have at work, the support they have from supervisors and the flexibility they have managing their work lives and lives off the job. As might be expected, the average low-income employee tends not to be treated as well on the job as more advantaged employees. 4 Percentage distributions do not always add to 100 because of rounding error. Because of the relatively large sample sizes of the income groups and the large number of statistical tests conducted for this report, findings are only considered statistically significant when they reach significance at p <.01 or better that is, when the finding would occur by chance less than one in 100 times. Tests of relationships between ordinal scale variables are conducted using measures of linear association, specifically Mantel-Haenszel chi-square. 4

5 Fringe Benefits First, we take a look at fringe benefits. Although fringe benefit offerings have historically been determined by employers alone and/or by employers together with labor organizations, government has played an increasing role over recent years. For example, retirement benefits are now subject to various federal regulations designed to protect employees; employees who leave their employers are guaranteed access to continued health insurance coverage under COBRA; some states require insurance coverage for temporary disabilities; the federal FMLA requires unpaid job-guaranteed family and medical leave for many employees; and the new federal Affordable Health Care Act has far-reaching implications for benefit packages. Recently, there have been policy debates about requiring a minimum number of paid sick days and paid family and medical leave. Despite the growing involvement of government in determining the content of fringe benefit packages in the private sector, the generosity of benefits offered to employees still varies widely across employers. Although paid vacation days, holidays and sick leave (for self and children) are generally treated as fringe benefits, we view these benefits as central to providing flexibility in the workplace, and, rather than include them here, we have elected to include these forms of paid time off among our measures of flexibility. All forms of paid time off help employees manage their work and personal/family responsibilities without having to forego pay or jeopardize continued employment. Only health insurance coverage and retirement plans which contribute to the economic security of employees are considered here as fringe benefits. Major fringe benefits offered to employees in the three income groups are described in Table 3. It is clear from the findings reported there that the benefits available to lowincome employees through their employers are much less generous on average than those offered to higher-income employees: 5

6 Table 3: Fringe Benefits on the Job Fringe Benefits % offered personal health insurance on job Who pays for health insurance? 5 Premium paid entirely by employer Partly by employer and partly by employee Paid entirely by employee Insurance not available on job Actual source of personal health insurance? Own job Other source None % offered family health insurance on job Who pays for family health insurance? 4 Premium paid entirely by employer Partly by employer and partly by employee Paid entirely by employee Insurance not available on job Parents only: % whose children are covered by health insurance on job % with any employer contribution to either a defined-benefit or defined-contribution retirement plan Overall generosity of fringe benefits at work: 6 High Moderate Low Income Group Low-Income Middle-Income High-Income (n=595) (n=1481) (n=522) 65% 87% 92% (n=548) (n=1454) (n=557) 10% 18% 20% (n=601) 35% (n=578) 54% (n=555) 7% (n=308) 29% (n=572) 44% (n=590) (n=1482) 70% 22 7 (n=1461) 83% (n=1422) 8% (n=683) 59% (n=1467) 72% (n=1480) (n=568) 75% 23 <2 (n=561) 90% (n=550) 12% (n=188) 67% (n=564) 78% (n=567) Source: 2008 National Study of the Changing Workforce, Families and Work Institute. Statistical significance: ** = p <.01; = p <.001; ns = not statistically significant. Only 65% of low-income employees are offered health insurance coverage by their employers versus 87% of middle-income employees and 92% of high-income employees. 32% Low-income employees who can least afford it are much less likely (54%) to have all or part of their personal health insurance premium paid by their employers (Figure 1) compared with others (81% and 91%, respectively). 58% % Sig. 5 The % with personal health insurance on job is correctly represented in the first row. The seeming discrepancy in %s reported in the second row is due to considerable missing data resulting from low-income respondents not knowing whether or how much their employer contributes toward premium payments. The same applies to family coverage. 6 The index of overall generosity of fringe benefits on the job is the average of (standardized) responses to five questions. The distribution of scores is broken as nearly as possible into three levels: the bottom 25%, the middle 50% and the top 25% representing low, moderate and high generosity. The component items/questions are presented in Appendix A. 6

7 Figure 1: Income Status by Employer Contribution to Personal Health Insurance 80% 70% 60% 50% 40% 30% 20% 10% 0% 10% 18% 20% Premium paid in full by employer 63% 71% 44% 46% Premium paid in part by employer 19% 9% No employer contribution Low-income Middle-income High-income Source: 2008 National Study of the Changing Workforce, Families and Work Institute They are also much less likely (35%) to actually be covered by personal health insurance from their jobs than are middle- and higher-income employees (70% and 75%, respectively). Very likely, this is because of the high cost of premiums that are passed on to employees in full or part. Moreover, 22% have no personal health insurance from any source compared with only 7% and less than 2% of higher-income employees. In addition, low-income employees are much less likely (54%) to be offered family health insurance coverage on the job than higher-income employees (versus 83% and 90%, respectively). And when family coverage is offered, their employers are much less likely (41% versus 70% and 81%, respectively) to subsidize its premiums. Only 29% of low-income employees who are parents use health insurance for their children that is offered by their employers, compared with 59% of middle-income parents and 67% of high-income parents. Again, the high cost of premiums is the likely cause. Whereas some low-income employees and their children are currently eligible for publicly subsidized health insurance programs for themselves and/or their children, many are not; and without employer-subsidized health insurance, they cannot afford coverage at market rates. 7

8 Health insurance coverage is the most costly fringe benefit for employers as well as the single most important benefit for most employees who have it, and 2010 federal legislation to reform health care in the United States promises to increase access to affordable health care. The full impact of this legislation on employers and employees remains to be determined. For example, what exactly it means for the many low-income employees who do not work enough hours to qualify for employer-provided group insurance plans as currently configured is not clear. Although the situation of lowincome employees may improve substantially in the next several years, for now, access to affordable health care remains a significant problem. Our 2008 data paint a picture of the starting gate for employee access to health care, prior to reform. As shown in Table 3 (above), low-income employees are also less likely to have retirement benefits: Low-income employees are much less likely (44%) than others (72% and 78%, respectively) to have employers who make any contribution to a defined-benefit or defined-contribution retirement plan. Lastly, Low-income employees have far less generous fringe benefits overall. Having less generous fringe benefits than others places low-income employees at even greater economic disadvantage and makes them more vulnerable to life events that threaten their own well-being and that of their families than they would otherwise be. Fringe benefits on the job represent the private-sector safety net upon which American workers rely heavily. These benefits impose direct costs on employers and have in varying degrees cash-like value for employees, in some cases increasing their disposable income. Other Job and Workplace Characteristics In addition to whether or not they receive particular fringe benefits at work, there are many other characteristics of jobs and workplaces that can also make a big difference to employees. Unlike fringe benefits, other characteristics of jobs and workplaces reported by employees in different income groups do not consistently favor one group over the other. Table 4 below presents findings for measurement scales based upon 8

9 multiple related items. Thirty-four specific questions are reflected in these summary scales 7. Although we have tried to label each scale in a way that is descriptive of its contents, we urge the reader to look at Appendix A for a complete list of the specific questions included in each. Table 4: Other Job and Workplace Characteristics* Job and Workplace Characteristics Measured by Multi-Item Scales Degree of job autonomy* High Moderate Low Learning Opportunities and Challenges on Job* Many Some Few Supervisor support for job success* High Moderate Low Supervisor support for meeting personal/ family needs* High Moderate Low Respect / acceptance at work by peers and managers* High Moderate Low Overall workplace flexibility* High Moderate Low Income Group Low-Income Middle-Income High-Income (n=600) 13% (n=601) 19% (n=520) 43% (n=516) 27% (n=601) 25% (n=601) 18% Source: 2008 National Study of the Changing Workforce, Families and Work Institute. Statistical significance: p <.01; = p <.001; ns = not statistically significant. * The questions constituting each of the scales in Table 4 are described in Appendix A. (n=1479) 14% (n=1481) 25% (n=1334) 31% (n=1320) 23% (n=1479) 28% (n=1481) 23% (n=568) 20% (n=567) 31% (n=499) 35% (n=492) 23% (n=568) 20% (n=568) 37% Sig. ns ns ns Low-income employees score significantly lower on average than their higher-income counterparts on three of the six scales: Low-income employees have significantly less control over how they get their jobs done (job autonomy) than employees in higher wage and income groups. 7 Analyzing multi-item scales rather than responses to individual questions has two major advantages. First, and most obvious, the presentation of findings can be much briefer. Second, and more important, such scales, when properly constructed, provide more robust measures of their underlying constructs by relying upon the convergence of multiple measurements. 9

10 Likewise, they have significantly fewer learning opportunities and challenges on the job than others. Low-income employees, as well as their middle-income counterparts, have less flexibility on the job to manage the demands of work with the demands of their personal or family lives off the job overall workplace flexibility than high-income employees (Figure 2). Figure 2: Income Status by Overall Workplace Flexibility 60% 50% 49% 52% 46% 40% 33% 37% 30% 20% 26% 17% 18% 23% 10% 0% Low flexibility Moderate flexibility High flexibility Low-income Middle-income High-income Source: 2008 National Study of the Changing Workforce, Families and Work Institute Flexibility to manage work and personal or family needs workplace flexibility received early attention as a response to the needs of female employees with competing child care and elder care responsibilities. However, it is now recognized that all employees men and women, single and married, both with and without dependent care responsibilities, in fact whatever their age and life cycle stage value and benefit from workplace flexibility. Moreover, flexibility can also benefit employers. For example, flextime not only helps employees manage their work and personal/family responsibilities, but can also be orchestrated by employers to expand operating hours without having to hire additional employees as some employees start their workdays earlier and others work later. And enabling employees to work at home rather than at the business site may serve to reduce space-related overhead costs. Furthermore, providing employees with the option to work part time or part year can reduce labor costs for employers while also meeting the scheduling needs of employees who are in 10

11 school, have dependent care responsibilities or other demands on their time. 8 At FWI, we view flexibility as something that should benefit both the employee and the employer rather than one at the expense of the other. Our measure of overall workplace flexibility is constructed from responses to 18 different questions 9 described in Appendix A: Item-level differences among income groups on overall workplace flexibility are summarized here. No differences by income groups were found on five of 18 items, while differences favored low-income employees on two items: being able to arrange part-year work if not already working part year and less often being asked to work overtime on short notice. Differences on 11 of 18 items favored higher-income employees: having traditional flextime (periodically being able to set own schedule within a range); being able to change one s work schedule on short notice; being able to do paid work at home; having more control over one s schedule in general; being more able to take time off during the workday to attend to personal and family matters; having paid vacation days; having paid holidays; having at least five paid days per year for personal illness; and being able to take at least five days off each year to care for a sick child without having to lose pay or use vacation time. No statistically significant differences (p <.01 or better) were found on the three other multi-item scales examined in Table 4 (above): Perceived support from supervisors for job success Perceptions of how responsive supervisors are to personal and family needs Feeling respected and accepted in the workplace by peers and managers Although the findings presented in Table 4 do not suggest that higher-income employees have better jobs in every respect, all statistically significant differences do favor higher-income employees. Further summarizing job and workplace characteristics, we created a single index of Workplace Effectiveness by averaging the six scales analyzed in Table 4 (above) with the index of overall generosity of fringe benefits analyzed in Table 3 (above). As with other multi-item scales, we divided the distribution of index scores into three parts 8 Note, however, that low-income employees are least able to afford part-time, part-year work, and fully 44% would like to work more paid hours. 9 Responses to these 14 questions were dichotomized then reversed as necessary before being averaged to construct the flexible workplace scale. 11

12 representing low, moderate, and high effectiveness. (See description of index construction in Appendix A.) Not only do more effective workplaces create higher quality jobs, but, as we will demonstrate later in this report, they also result in better outcomes for employers as well as employees. As shown in Figure 3: Low-income employees are employed in significantly less effective workplaces (and jobs of lower overall quality) than high-income employees, with middle-income employees again falling in between. Figure 3: Income Status by Overall Workplace Effectiveness 60% 50% 52% 54% 55% 40% 30% 20% 10% 32% 21% 12% 16% 25% 33% 0% Low effectiveness Moderate effectiveness High effectiveness Low-income Middle-income High-income Source: 2008 National Study of the Changing Workforce, Families and Work Institute Outcomes of Most Interest to Employers In this section of the report, we seek to determine whether and how job and workplace factors that are controlled by employers affect employees job-related attitudes and behavior. Table 5 examines a range of outcomes that are of most interest to employers. However, other outcomes that may be of greater interest to employees and their families (Table 6) can also have an appreciable impact on job performance and, therefore, should also be of concern to employers. 12

13 Table 5: Outcomes of Most Interest to Employers* Outcomes Level of job satisfaction* High Moderate Low Level of job engagement* High Moderate Low Degree of negative spillover from home to work (high=negative)* Low Moderate High Intention to remain with employer for at least next year: High Moderate Low Income Group Low-Income Middle-Income High-Income (n=514) 44% (n=601) 33% (n=600) 29% (n=601) 36% Source: 2008 National Study of the Changing Workforce, Families and Work Institute. Statistical significance: p <.01; = p <.001; ns = not statistically significant. * The questions constituting each of the scales in Table 5 are described in Appendix A. (n=1223) 51% (n=1481) 28% (n=1482) 27% (n=1478) 65% (n=484) 56% (n=568) 22% (n=567) 25% (n=568) 72% 20 8 Sig. ns ns Low-income employees have significantly lower scores than higher-income employees on two of four outcome measures: level of job satisfaction and intention of remaining with their current employer for at least the next year. High job turnover among low-wage employees is frequently cited as a major problem and cost by employers, and lowincome employees are almost always low-wage employees, even though the reverse is not true. 10 Employees in the three income groups do not differ significantly in their scores on the other two multi-item scales: level of job engagement and degree of negative spillover from home to job. Job engagement includes responses to such questions as: how much effort do you put into your job beyond what is required and how often do you think about good things related to your job when you are busy doing something else? Negative home-to-job spillover includes items like: how often has your family or personal life drained you of the energy you needed to do your job and how often has your family or personal life kept you from concentrating on your job? Thus, we see this scale as an indicator of productivity on the job. All questions included in these multi-item scales are described in Appendix A. 10 The exception to this generalization involves the small number of employees who earn higher wages but have large numbers of dependent children who bring family income below 200% of the federal poverty threshold, which takes number of dependents into account. 13

14 Outcomes of Most Interest to Employees and Their Families As noted above, although the outcomes examined in Table 6 (below) may be of most interest to employees, they have important implications for employers as well. For example, just as one s personal or family life can interfere with one s job performance (negative home-to-job spillover), life on the job may give rise to personal or family problems (negative job-to-home spillover) that in turn diminish performance on the job. Negative job-to-home spillover includes such questions as: how often have you not had enough time for your family or other important people in your life because of your job and how often has your job kept you from concentrating on important things in your family or personal life? (See Appendix A for a list of all questions.) Although employees in different income groups do not report significantly different levels of negative job-tohome spillover, the majority of employees in all three income groups experience at least moderate negative spillover from their jobs to their home lives. Moreover, we found (in supplemental analyses) that employees who experience greater negative job-to-home spillover, also report significantly higher levels of negative home-to-job spillover (Table 5) which impairs performance on the job. Negative home-to-job spillover includes such questions as: how often has your family or personal life kept you from doing as good a job at work as you could and how often has your family or personal life drained you of the energy needed to do the job. In short, these supplemental analyses show that what goes around comes around. Low-income employees exhibit poorer health on all measures examined in Table 6. Extensive research 11 strongly indicates that employees who are in poorer health (mental as well as physical) exhibit more absenteeism and less productivity on the job, both of which have negative cost implications for employers. They also generate higher health care costs for employers. Our single question about overall health status reveals that low-income employees are significantly less likely to feel that they are in excellent health. The other measures are indicators of mental health. Historically, mental health has not received as much attention as physical health as reflected in the under-funding of mental health services, the under-diagnosis of mental health problems and the limited 11 See for example: Goetzel, R.Z., Hawkins, K. Ozminkowski, R.J., and Wang, S. (2003). The health and productivity cost burden of the top 10 physical and mental conditions affecting six large U.S. employers in Journal of Occupational & Environmental Medicine, 45(1), pp. 5-14; Davis,K., Collins, S.R., Doty, M.M., Ho, A. and Holmgren, A.L. (2005). Health and Productivity among U.S. Workers. New York: The Commonwealth Fund. 14

15 coverage of costs for treating mental health problems in both public and private insurance plans. Mental health status was measured by the frequency of sleep problems, perceived level of stress and indications of depression as commonly assessed by mental health professionals. Extensive research links mental health problems to physical health outcomes. 12 (See Appendix A where all 10 component items are described.) We also constructed an overall measure of mental health that combined the stress, sleep and depression scales. (See Appendix A for details.) All mental health findings favor higher-income groups. Table 6: Outcomes of Most Interest to Employees* Outcomes Negative spillover from job to home* High Moderate Low Health in general: Poor Fair Good Excellent Level of Stress* Low Moderate High Sleep problems* Few or none Some Many Depression* No indication One indication Two indications Overall mental health* Poor Fair Good Low-Income (n=601) 26% (n=601) 3% (n=600) 14% (n=545) 21% (n=599) 55% (n=601) 40% Income Group Middle- Income (n=1482) 25% (n=1480) 2% (n=1482) 26% (n=1294) 27% (n=1474) 65% (n=1474) 23% Source: 2008 National Study of the Changing Workforce, Families and Work Institute. Statistical significance: * = p <.05; ** = p <.01; = p <.001; ns = not statistically significant. * The questions constituting each of the scales in Table 6 are described in Appendix A. High-Income (n=567) 22% (n=566) 1% (n=567) 33% (n=497) 29% (n=565) 77% (n=565) 17% Sig. ns 12 See for example: Thoits, P.A. (2010). Stress and health, Journal of Health and Social Behavior, November 2010, vol. 51 (1 suppl), pp ; Dimsdale, J.E. (2008). Psychological stress and Cardiovascular disease. Journal of the American College of Cardiology, April 1, 51(13), pp

16 Do Job and Workplace Characteristics Predict Outcomes? In short, the answer is yes. Although causal relationships cannot be confirmed by a cross-sectional survey such as ours, the strength and consistency of predictions as well as commonsense and experience very much suggest causality. Table 7 examines the relationships between job/workplace characteristics and outcomes for low-income employees, while Table 8 examines these relationships for higher-income employees middle- and high-income groups combined. 13 To simplify both the presentation and discussion of findings, only the overall index of mental health is included in the outcome columns of tables. Upward arrows ( ) in the tables indicate statistically significant (p <.01) predictions of positive outcomes. In no instance were positive job characteristics associated with negative outcomes. Indeed, the minority of relationships that did not achieve statistical significance at p <.01 revealed perceptible positive trends, and most statistically significant relationships were quite strong at p < Turning first to findings for low-income employees (Table 7), in only 10 of 56 instances do job and workplace factors fail to significantly predict positive outcomes for the lowincome sample, and even then the direction of relationships is perceptibly positive. The weakest predictor is generosity of fringe benefits an aspect of jobs in which lowincome employees (who are mainly low-wage employees as well) lag notably behind their more advantaged peers. It should be pointed out, however, that low-income employees are disproportionately younger than their more advantaged counterparts: 38% are under 25 years old versus only 8% of middle-income and 3% of high-income employees. Therefore, they tend to have fewer needs for health care, thus health insurance coverage, and less concern about retirement benefits the two forms of fringe benefits included in our measure. The outcome most difficult to predict is overall physical health something that can be affected by genetic background and most certainly by poor living conditions and life style, things over which employers have no direct control. 13 Statistical tests of linear relationship were performed on cross-tabulations of ordinal multi-item scales coded in three levels low, mid, high as described in Appendix A. 14 Relationships reaching statistical significance at p <.001 would be expected to occur by chance less than once in 1,000 times. 16

17 With the exception of fringe benefits: Job and workplace factors are powerful predictors of all outcomes that most interest employers, and even generosity of fringe benefits is significantly predictive of job engagement and intentions to remain with one s current employer (i.e., low job turnover). Our index of workplace effectiveness also a measure of overall job quality is no exception; and the consistent relationship between this measure and positive work outcomes strongly confirms its value as an indicator of how effective different workplaces are. As for those outcomes that are of most immediate interest to employees (and their families), but also with significant consequences for their employers, predictions are spottier. However: Among low-income employees, supervisor support for job success, overall workplace flexibility, and workplace effectiveness predict all three outcomes that are most immediately important to employees and their families, and job autonomy, supervisor support for meeting personal and family needs, and acceptance by managers and peers at work predict all but overall physical health. Again, we note that physical health status is affected by personal living conditions and life style over which employers have no direct control. And low-income Americans employed or not are more likely than others to live in substandard housing, to have poor diets that foster obesity and engage in other behaviors (such as smoking) that pose health risks. In the companion paper to this report, 15 we found that low-income employees tend to be much younger and to have much less education and experience in the labor force. They are also twice as likely (60%) as high-income employees (31%) to want to move into jobs with greater responsibility; and, among low-income employees under 25 years old, the proportion wanting more responsibility on the job rises to 76%. The fact that 46% of these young low-income employees are also enrolled in school or training programs demonstrates that they are not simply wishing for a better life, but are actually doing something to achieve their goals despite the demands of work and very limited financial 15 Bond, J.T. and Galinsky, E. (2012) Low-Income Employees in the United States. New York: Families and Work Institute. 17

18 resources. Two of the measures included in our index of learning opportunities have particular value for low-income employees who have less education and employment experience specifically, on the job training and financial support for training and education off the job. Supplemental analyses reveal that these employer supports, which increase job advancement possibilities and enhance employability in general, are significantly and positively related to all outcomes of primary interest to both employers and employees. Low-income employees want to improve their lot in life, and employers who encourage and support further training and education are rewarded. Findings for middle- and high-income employees as a single group are presented in Table 8. The results are similar to those for low-income employees. Again, in only 10 of 56 instances do job and workplace factors fail to significantly predict positive outcomes for middle- and high-income employees, and even then the direction of relationships is perceptibly positive. Again, generosity of fringe benefits is the weakest predictor of outcomes. As was the case for low-income employees, supervisor support for job success and support for meeting personal and family needs, as well as acceptance by managers and coworkers, are significantly predictive of all outcomes of greatest interest to employers. Overall workplace flexibility and workplace effectiveness predict all work outcomes except negative home-to-job spillover, an indicator of productivity on the job. Among middle- and high-income employees, all job and workplace factors, except generosity of fringe benefits and learning opportunities on the job, also consistently and significantly predict all outcomes of primary interest to employees and their families. 18

19 Table 7: Job & Workplace Factors Predicting Outcomes for Low-Income Employees (n = 600 +/-) Job and Workplace Factors Predicting Outcomes Greater Job Satisfac -tion Outcomes of Most Interest to Employers Higher Job Engagement Less Negative Home-to- Job Spillover Greater Likelihood of Remaining with Employer Generosity of fringe Benefits Outcomes of Most Interest to Employees Less Negative Job-to- Home Spillover Better Physical Health Job autonomy Learning opportunities and challenges on job Supervisor support for job success Supervisor support for meeting personal & family needs Acceptance by managers and peers at work Better Mental Health Overall workplace flexibility Workplace Effectiveness Source: 2008 National Study of the Changing Workforce, Families and Work Institute. Table 8: Job and Workplace Factors Predicting Outcomes for Middle- and High- Income Employees (n = 2,040 +/-) Job and Workplace Factors Predicting Outcomes Greater Job Satisfac -tion Outcomes of Most Interest to Employers Higher Job Engagement Less Negative Home-to- Job Spillover Greater Likelihood of Remaining with Employer Outcomes of Most Interest to Employees Less Negative Job-to- Home Spillover Better Physical Health Generosity of fringe Benefits Job autonomy Learning opportunities and challenges on job Supervisor support for job success Supervisor support for meeting personal and family needs Acceptance by managers and peers at work Better Mental Health Overall workplace flexibility Workplace Effectiveness Source: 2008 National Study of the Changing Workforce, Families and Work Institute. 19

20 The fact that employees with more generous fringe benefits do not consistently exhibit significantly more positive outcomes should not lead employers to conclude that providing good fringe benefits is a waste of money. Although the cross-sectional nature of the NSCW does not allow us to evaluate the impact that more generous fringe benefits have on the recruitment of talent, our findings do reveal a strong positive relationship between more generous fringe benefits and employee retention for both low-income and higher-income employees. Furthermore, when asked how important good benefits like health insurance would be in deciding to take a new job, 90% of low-income employees as well as 90% of middle- and high-income employees said very or extremely important. Thus, one might conclude that a good fringe benefit package represents a baseline condition for attracting and retaining needed talent in today s labor market, and a necessary, but not sufficient, condition for obtaining positive work outcomes. Although the costs of providing more generous fringe benefits are significant, employers should weigh these costs against costs of recruitment and training resulting from employee turnover. Regarding other job and workplace characteristics, the findings presented in Tables 7 and 8 clearly demonstrate they are associated with a broad range of positive outcomes. Although fringe benefits impose unavoidable direct costs on employers, improving job quality and workplace supports need not. High quality jobs and effective workplaces are the products of well-informed day-to-day management at all levels of the organization that positively affect employees at all pay grades from all backgrounds. Interactions: In supplemental analyses, we looked for possible interactions between income status and job/workplace characteristics predicting outcomes. We did not expect to find, nor did we find, classical interactions in which the relationships between predictors and outcomes were positive for one group but negative for the other. Indeed, all relationships were positive that is, more positive job/workplace characteristics were associated with more positive outcomes for both low-income and middle-/high-income employees in every instance. In a few cases, however, we did find that these predictoroutcome relationships were significantly stronger for one group than the other. The only notable interaction pattern found was that positive job/workplace characteristics were 20

21 more strongly related to diminished negative spillover among low-income employees than among middle- and high-income employees. This differential effect involved both negative spillover from home to job and negative spillover in the opposite direction, from job to home. As pointed out previously, negative job-to-home spillover is not only a problem for employees and their families, it rebounds to the workplace in the form of increased negative home-to-job spillover that reduces productivity. IMPLICATIONS The findings reported here clearly and very strongly indicate that employers who create more effective workplaces i.e., workplaces that offer more support and provide higher quality jobs are rewarded for their efforts by employee attitudes and behavior that promote business success whether employees are lower or higher income. We remind readers that although some outcomes may be of greater interest to employees than to employers, these outcomes are also very likely to affect employers. For example, negative spillover from job to home that causes higher stress and disruption of personal and family life can not only have a negative direct impact on employees, but it can also make it more difficult for employees to function effectively at work. And poorer health and mental health is not only of concern to employees themselves, but can also result in higher costs to employers for health insurance, greater absenteeism and less productivity on the job. 21

22 APPENDIX A Multi-Item Scales Measures based upon answers to multiple questions that are conceptually related can provide more valid and reliable measures of theoretically important constructs than answers to a single question. All of the multi-item scales analyzed for this report were constructed by averaging the responses to component questions. Prior to averaging, variables were transformed as necessary by standardization or dichotomization to create measures with common metrics. Response scales were also reversed when necessary to produce averages with directional meaning. Although questions were first grouped theoretically as indicated by other research, the inclusion or exclusion of specific items was guided empirically by factor analyses, which substituted mean values for missing data to preserve sample size. Lastly, Cronbach s coefficient alpha was calculated for each scale to measure its internal consistency. Our objective was to achieve a minimum alpha of 0.70 for each measure. In order to maximize sample sizes for calculated averages, despite missing data for some questions, averages were based on all available non-missing values when at least 2/3 of component items were nonmissing. To create scales for simplified analyses using cross-tabulations, we divided the distributions of values for each scale as accurately as possible into three parts the bottom 25% (bottom quartile), middle 50% (middle two quartiles), and top 25% (top quartile). In a few cases, appreciably higher or lower proportions of employees than intended fall into particular intervals as a result of skewed response distributions. Overall generosity of fringe benefits: Five items; alpha =.90 Personal health insurance available through main job Personal health insurance paid partly or entirely by employer Family health insurance coverage available through main job Family health insurance paid partly or entirely by employer Employer makes contribution to pension/retirement plan 22

23 Degree of job autonomy: Three items; alpha =.77 I have the freedom to decide what I do on my job. It is my own responsibility to decide how my job gets done. I have a lot of say about what happens on my job. Learning opportunities and challenges: Six items; alpha =.70 My job requires that I keep learning new things. My job requires that I be creative. I get to do different things on my job. I have the opportunity on my job to develop my own special abilities. Employer offers training/education opportunities. Employer pays for job-related training/education off the job. Supervisor or manager support for job success: Four items; alpha =.82 My supervisor or manager keeps me informed of the things I need to know to do my job well. My supervisor or manager has expectations of my performance on the job that are realistic. My supervisor or manager recognizes when I do a good job. My supervisor or manager is supportive when I have a work problem. Supervisor or manager support for personal or family needs: Five items; alpha =.86 My supervisor or manager is fair and doesn t show favoritism in responding to employees personal or family needs. My supervisor or manager is responsive when I have family or personal business to take care of. My supervisor or manager is understanding when I talk about personal or family issues that affect my work. I feel comfortable bringing up personal or family issues with my supervisor or manager. My supervisor or manager really cares about the impact of work on my personal and family life. 23

24 Acceptance/respect at work by peers and managers: Six items; alpha =.78 I can be myself on my job. My managers seek information and new ideas from employees. On my job, I sometimes have to do things that go against my conscience. I can trust what our managers say. My managers deal honestly and ethically with employees and clients. Feel a part of the group of people work with Overall workplace flexibility: Eighteen items; alpha = 0.72 Receives paid vacation days Receives paid holidays Allowed to take off at least five days per year to care for sick child without losing pay, using vacation days, or having to make up an excuse Allowed at least five paid days per year for personal illness Employer offers on-the-job training/education Employer pays for job-related training/education off the job Allowed to chose own starting and quitting times within some range of hours Able to temporarily change starting and quitting times on short notice when special needs arise Allowed to work part of regular paid hours at home Could arrange to work part time, if currently full time, or full time, if currently part time, in current position Could arrange to work only part of year in current position Has work schedule flexibility needed to manage personal and family responsibilities Allowed to work compressed workweek or all or part of year Work schedule or shift meets needs High overall control in scheduling work hours Not difficult taking time off during workday to take care of personal/family matters Employees at workplace who ask for time off or schedule changes to meet personal//family needs are no less likely to get ahead in jobs/careers Less often required to work paid/unpaid extra hours with little or no notice 24