Andrew Prevost, senior vice president of retirement at NFP, shares why workers have difficulty saving money and why it’s in employers’ best interest to help them.
On December 10, 2017, Shayron “Shay” Trostel was driving her 1994 Jeep when another car collided with hers at 55 miles per hour, sending her into a spin — literally and figuratively. Trostel’s doctors continue to assess the damage to her knee and back, and her car was totaled. She lost 10 days of work as a bartender, server, trainer and bookkeeper at BJ’s Restaurant and Brewhouse in Arlington, Texas, missing out on an estimated $175-$250 per day, she said.
To help their employees in times of need, BJ’s has a Give A Slice program, which employees fund through $1 from each of their paychecks. After filling out extensive paperwork, getting approval from managers and submitting proof of their emergency, employees can receive a handwritten check from the corporate office. Trostel received $800 and a personalized note. “I was extremely surprised and so appreciative of the support that BJ’s gave us, not just from a manager level but from a corporate level,” Trostel said. “It was really nice.”
While this financial assistance program was not part of her decision-making process when taking the job more than a year ago, she said their help in her time of need “absolutely” impacts her performance and loyalty to the company.
Given the low unemployment rate in the United States and competition for talented, committed workers, companies are offering financial wellness initiatives that include traditional benefits like health insurance and 401(k)s, assistance with student loans, and even nontraditional benefits such as pet insurance. According to BJ’s careers site, the company offers many of these, including life insurance, pet insurance and identity theft insurance.
Given the lengthy hours spent at work, and with medical insurance and retirement savings being mainstays in corporate life, the prevalence of financial wellness programs is another example of employers becoming the financial home of employees, said Jeff Oldham, senior vice president of global and institutional markets at Benefitfocus, a benefits management software provider based in Charleston, South Carolina. Because the majority of employers are offering similar medical and retirement benefits, employers have to look above and beyond those to attract and retain core employees, he said.
Beyond retention and talent attraction, financial wellness tools aim to help employees’ physical health. Early stages of the financial wellness space began with physical wellness programs, Oldham said. While physical wellbeing initiatives remain popular and important, it’s nearly impossible for employees to feel healthy if they have a burden of a lack of financial stability, he added.
This lack of stability becomes increasingly apparent with student loan debt sitting at $1.4 trillion and the average American lacking substantial savings. One-third of all employees get distracted by their situation, causing 46 percent of them to spend at least three hours per week at work thinking about or handling finances, according to PwC’s “2017 Employee Financial Wellness Survey.” Additionally, those who are stressed by their financial situations cite health problems from said stress at a rate 15 percent higher than those who are not stressed. Finally, employees with financial stress are more likely to delay retirement, the survey said.
One result from this is that people work long after they want to in order to pay bills, said David Stedman, CEO of BrightDime, a financial wellness software provider based in Charlotte, North Carolina. While there is value for older workers in the office, they tend to carry higher costs in terms of health care and wages than young employees. It’s a win-win for both employers and employees if people retire when they are ready, rather than when forced to, Stedman said.
In the age of stagnant wages and increasingly high costs of living, employees could benefit from more money in general. However, if everyone suddenly earned more, the prices of goods would go up and thus make new wages effectively stagnant, said Sarah Newcomb, behavioral economist at Morningstar Inc., an investment research firm based in Chicago. Additionally, people earning six-figure salaries can also have credit card debt; they can still be spending too much and losing sleep at night if they haven’t mastered the fundamental financial competencies of keeping track and being conscious of emotions and motivations around money, she said. Newcomb believes there is often room to become financially well without a raise.
How to Do Financial Wellness
While financial wellness itself is extremely important, how people access it and improve their financial footing is secondary in importance, she said. Wherever employees feel safe learning about these topics is fine, whether that’s through their banks, employers or anonymous online forums; people simply need to know they won’t be shamed when asking questions, as money is a vulnerable topic, she said.
Many programs, credit counselors and apps aim to help people improve their financial situations, but Newcomb still finds that those who are at the most risk for financial crises and debt tend to not take the abundance of help available. “Even if offered for free, they are the least likely to take advantage of it.” This self-selection bias could be from a lack of free time or energy to seek out programs, or it could be on the financial institutions to better market their services.
One issue could be that many programs treat financial wellness as if there’s only math involved, when there’s actually many emotional and social factors as well, Newcomb said. Money management should be compassionate, nonjudgmental and nonmathematical.
Context is also important. “One of the biggest disconnects that I’ve observed in the financial advice industry is that a lot of times it’s people who have always had money and privilege and security trying to give advice to people who never have,” Newcomb said. In defense of its low wages, McDonald’s in 2013 created a budget for its workers that fell short on some basic understandings of how people spend their money; the budget lacked groceries, child care, realistic health care costs, clothing and more.
“C-suite people need to check their privilege a bit and if they’ve come from lower down the [economic] ladder, try to remember what it was like. If they haven’t, put the leadership in the hands of those who have,” Newcomb said.
To get the most out of financial wellness programs, BrightDime’s Stedman added that business leaders should make sure their initiatives follow five criteria:
- Make sure advice is holistic and personalized. “It’s tough to provide pinpoint advice unless you know the holistic picture of a person’s financial situation,” he said.
- Ensure there is continued engagement. Financial wellness needs to be a lifestyle in order to have long-term effects. If engagement is low, companies need to improve communication and marketing of their offerings.
- Measure and show data on the effects of initiatives and third-party providers.
- Keep the information aggregate. Privacy is important, so there should never be information about individual employees.
- Finally, be sure vendors don’t have hidden agendas, such as wanting to sell other products. This will impact engagement among employees.
While there are many ways to help employees become financially well, Stedman emphasized that one size does not fit all. By helping each worker with their individual needs they will become more productive, creating a winning situation for employees and employers. “When they help their employees in this way, they’re also helping the company,” he said. But the reasons to help workers go a step further: “From a moral standpoint, I think there’s a great responsibility for all of us to help.”
Lauren Dixon is a senior editor at Talent Economy. To comment, email email@example.com.
“] Agni Skafidas loves the flexibility of being a freelancer but hates the fact that she doesn’t get any kind of health or retirement benefit.
Skafidas has a three-month gig with a company in the auto industry. Because she is in human resources, she is well aware that the rate she is being paid is the same as a full-time employee but without the benefits.
“For them it’s a great deal because I don’t cost them anything in benefits,” she said. “It’s so comical if you think about it. I’m trying to live by my values [by freelancing], and yet I’m being penalized.”
A growing number of workers are leaving their traditional 9-to-5 jobs and are becoming freelancers in the gig economy. Nearly 40 million Americans work in a part-time or a freelance basis according to an October 2017 study by Guardian Life Insurance. By 2020, half of the workforce is expected to be freelancing.
While gigs allow these workers to live a flexible lifestyle, many give up the security of having benefits at a full-time position. Only 1 in 4 of these workers has medical insurance through their contracted company, and only 1 in 3 has access to a retirement plan, Guardian’s report showed.
The future of work is changing with the rise of contract workers, experts agreed, and many of these freelancers are trying to build a career path in the gig economy. Because of this shift, traditional benefits will not hold up in the future, several corporate benefit leaders said, speaking at the American Benefits Council’s 50th anniversary symposium in Washington, D.C.
“We see in this world of gig work or freelance work that it is largely cash-based,” said Fred Thiele, general manager of global benefits for Microsoft Corp. at the December symposium. “Benefits are not usually part of the equation. We are being challenged in this regard.”
Phil Scarfi, founder of Pioneer Mobile Applications, said it’s hard for start-up companies like his to offer benefits. He and his four full-time employees don’t have corporate benefits; neither do the four freelancers he is using.
“It’s a matter of having consistent income on my part to offer this,” he said. “It’s in my plan to offer benefits at some point.”
For now, Scarfi offers perks — annual subscriptions to Spotify or gift cards to help freelancers to feel valued.
“At the end of the day, we want good freelancers to stick around and join the team as an employee down the road when the funds are there,” he said.
Some companies that primarily use freelancers, like Lyft, have begun offering certain benefits. Meanwhile, companies like Stride Health cater to these workers by helping them sift through myriad health care options. Gigster, an online site that helps companies find available software engineers, allows freelancers to participate in a bonus program similar to what many full-time workers enjoy.
“It’s one of the ways that we want to create an employee-like situation,” said Lori Williams, Gigster’s vice president for fulfillment. “We want them to feel there is an upside beyond being paid for a gig.”
Microsoft uses a lot of freelancers and wants to become not only the employer of choice, but the gig of choice, Thiele said. It is looking for ways to give gig workers the benefit security they lack, but in order to do that, Washington needs to adapt rules to this contingent workforce. In many cases, contract workers who are offered traditional benefits may be classified as employees.
“If we are stuck with some old rules, we can’t do it,” Theile said at the December symposium.
A 2016 paper, “Portable Benefits in the 21st Century,” by The Aspen Institute, suggested that all workers, regardless of their working status, should have access to portable benefits. That means a worker’s benefit plan is not linked to one job. Companies would pay into a worker’s benefit package; the payment would hinge on certain factors like hours worked or pay rate.
Some Members of Congress have been working on portable ideas that have fizzled. Several states are also working on portable benefit legislation.
“It is a little early. The reg side has to evolve and this doesn’t happen overnight,” Gigster’s Williams said. “This is the future of the gig economy — how we add that kind of value. We are just constrained legislatively right now.”
Patty Kujawa is a writer in the Milwaukee area. To comment, email firstname.lastname@example.org.
New York has a new parental leave law that goes into effect on Jan. 1, 2018, and some companies are more optimistic than others, reports Crain’s New York Business.
Women don’t perceive sexual harassment differently today than previous years; young women are just less likely to put up with the abuse, writes NPR.
Not everyone wants to retire, whether that’s because they miss their colleagues or miss the challenges that their job presented them, reports Kaiser Health News.
Companies such as Nvidia, Amazon and Microsoft share what they do to be good corporate citizens, via Forbes.
VR-enhanced guided meditation and other tools can help support mental health in the workplace, writes The Guardian.
The secret to getting more workers to save for retirement, according to The Wall Street Journal.
Nearly half of Fortune 500 companies were founded by either immigrants or their children, reports Quartz.
Ahead of Brexit, Paris is trying a business makeover in the hope of wooing London-based companies to relocate to the French city, writes The New York Times.
Why the middle class might not even notice the GOP tax cuts in their taxes, according to Bloomberg.
Finally, how digital tools and behavioral economics will help save retirement, from Harvard Business Review.
These were the top Talent Economy stories from the week of August 28-September 1, 2017:
Talent10x: Military Generals as Business Leaders; Uber’s New CEO; Hurricane Harvey: Workforce’s Rick Bell talks with Frank Kalman about Uber’s new CEO, Harvey’s economic impact and why military generals make great business leaders on the latest episode of Talent10x. Listen here or subscribe to Talent10x on iTunes, Stitcher, Google Play or Tunein.
There’s Still a Gender Gap. How It Varies Depends on Who You Ask: According to a survey, there’s a vast space between the views of men and women on workplace equality, writes Talent Economy Influencer Jenna Fisher.
Should Employers Get Out of The Retirement Business?: With workers struggling to adequately save for retirement and the changing nature of the employer-employee social contract, some experts say companies should get out of the retirement business altogether — while others say employers still have a valuable role to play. Associate Editor Lauren Dixon has the story.
These are the top talent stories from around the web that we’re reading for Friday, September 1, 2017:
U.S. employers added 156,000 jobs in August and the unemployment rate ricked up, reports The Wall Street Journal.
Also from The Journal, workers are happier at work — but they also might be settling for less, as employers limit raises and install leaner operating structures.
The list of top schools for tech entrepreneurs shows how clubby Silicon Valley really is, according to Quartz.
A long list of top business executives are protesting the Trump administration to maintain an Obama-era policy to protect immigrants, writes Business Insider.
Finally, these are the ways businesses have helped with the recovery effort in Houston following Hurricane Harvey, according to Inc.