Abstract
“Is anyone dealing with hungry employees?” the woman across the table asked the small group of human resource and benefits professionals who had gathered to network and share ideas around supporting the health of their employees. The honesty of the question caught us all a bit off guard. The attendees were from various manufacturers based in Southeast Michigan, the hub of auto-manufacturing in the United States. It was February 2018. State and national unemployment rates were historically low, and the fight for talent was red hot. She went on to share that the average wage of the workers in their facilities was $13/h and that she knew through a variety of experiences that employees were cash strapped and hungry. Working within the space she could influence, the manager shared her current solution to the challenge—a couple of days a week, she purchases loaves of bread and peanut butter and jelly to makes sandwiches for employees to grab in the break room of the small automotive parts manufacturer that employs approximately 300 on multiple shifts. From there, the conversation evolved and other attendees shared their experiences of low-wage workers struggling with basics such as reliable transportation and childcare.
The field is increasingly recognizing the role that financial health plays in overall well-being. I admit however that, until that day, I hadn’t been thinking deeply enough—beyond retirement preparation and student loan repayment programs—to strategies that include addressing the financial challenges a significant portion of the US workforce face. A recent government survey reported just two-fifths of nonretired adults believe their retirement savings are on track, and a quarter have no retirement savings or pension whatsoever. Four in 10 adults, if faced with an unexpected expense of $400, would either not be able to cover it or would pay for it by selling something or borrowing money. 1 If the objective of organizational health and well-being strategies is to enable employees and their families to thrive, then addressing the complete reality of financial well-being from multiple angles is critical.
What Is Thriving?
If you asked 100 CEOs if their goal was to lead a thriving organization, the vast majority would likely respond affirmatively. Given that the definition of thrive is to grow vigorously, gain in wealth or possessions, or to progress toward or realize a goal despite or because of circumstances, organizational and employee thriving feel naturally interdependent. 2 It is difficult to grow a bountiful crop in poor soil. Thriving organizations rely upon a healthy and thriving workforce. 3 -6
Psychologist Abraham Maslow hypothesized human thriving is dependent on fulfillment of basic needs—food, water, shelter, and rest. Only when those needs are satisfied can individuals have the desire or capacity to direct attention toward higher order needs. 7 Ability to purchase food and affordable housing and having time off from work to rest all contribute to fulfillment of basic needs. Moving beyond physiological needs, steering clear of predators and other stressors that threaten safety and security are also fundamental to survival. In modern terms, these threats might come in the form of work or family stressors or job security concerns.
With basic physiological and safety needs consistently met, individuals may be able to focus more attention on higher human needs such as love, belonging, and contributing to something greater than oneself. If thriving at work is defined as growing, developing, and feeling energized to take on more, enabling individual capacity to do so is dependent on removing obstacles that inhibit one’s ability to meet basic needs. 8 Fulfillment of basic needs rests heavily on financial ability and stability. Comprehensive financial well-being initiatives in the workplace can play a significant role in addressing basic needs and helping employees and organizations thrive.
What Is Financial Well-Being?
A challenge with many names—financial security, insecurity, fragility, distress—financial well-being can mean different things to different people. With that in mind, the Consumer Financial Protection Bureau (CFPB) conducted research which led to defining financial well-being as a state of being wherein a person: Has control over day-to-day, month-to-month finances; Has the capacity to absorb a financial shock; Is on track to meet financial goals; and Has the financial freedom to make the choices that allow him or her to enjoy life.
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Financial health became a focus of organizational well-being strategies as organizations moved away from defined retirement benefit plans and efforts to increase 401(k) participation grew. As younger workers joined the workforce, talk of significant college loan debt impeding an employee’s ability to save for retirement gained attention and expanded the focus of financial well-being to include programs that support loan repayment along with retirement preparation. Although these are important elements of financial well-being, according to the CFPB definition, this focus is based on the assumption that there is room (freedom) in a budget for reorganization and maximization. For a portion of the population in the United States, this might be true. However, a large group of the US working population deemed by the United Way as ALICE (Asset Limited, Income Constrained, Employed) would benefit from resources to support basic financial well-being. In simple terms, these individuals live in a household where the combined income is more than the federal poverty level, but less that the basic cost of living in their area. 10 Asset limited, income constrained, employed live paycheck-to-paycheck and may be in ongoing financial crisis or just 1 small shock—an unexpected bill or illness—away from crisis.
A majority of jobs in the United States are low-wage jobs. 11 Thirty-seven percent of the workforce earned less than $15 per hour in 2017. For a full-time employee, gross pay would equate to $31200—not enough to afford necessities such as housing, child care, food, health care, and transportation. Figure 1 outlines the cost of 5 basic household necessities, taxes, and miscellaneous costs in 13 states highlighting the challenge many employees would have making ends meet if they are low paid or carrying a significant amount of college loan debt. 12
Average Household Survival Budget by State, 2014 (Monthly Expenses for a Family of 2 Adults with 2 Children in Child Care).
The aim of many organizational health and well-being strategies is to offer an environment and resources that nurture employees and empower them to work with a high level of energy, focus, and engagement. This is a challenging aspiration if employees must focus valuable physical and psychological energy on making ends meet and fulfilling basic needs for themselves and their families.
Wealth and Health
What role does lack of wealth play in health? Chronic stress impacts physical, social, mental, and emotional health and Americans commonly rank worry over money as the top source of stress. 13 -15 Gallup Well-Being Index data indicate a correlation exists between financial well-being and social relationships: Participants perceived strength of social relationships dropped as financial suffering increased. 16 Low wages have been found to predict higher prevalence of obesity, which is in turn linked to absenteeism and presenteeism. 17 -19 Scarcity of financial resources significantly impacts cognitive functioning and problem-solving ability because more planning is necessary to determine how to allocate limited funds among necessities. 17,20 Preoccupation with financial issues on top of the mental stress and challenges an individual might face navigating public assistance systems, understanding available resources, securing reliable transportation, or childcare may lead those eligible for services to forego or miss out on them altogether.
What Problem(s) Need Solving?
Given the complexity of the drivers of financial insecurity, a continuum of tactics should be considered when developing a financial well-being strategy to fit the needs of the workforce. Understanding basics such as where employees live, how much they earn, and what challenges they are facing financially is essential to ensuring a broad spectrum of issues is addressed. Table 1 outlines suggested data to consider when conducting a needs assessment.
Basic Financial Well-Being Needs Assessment.
Abbreviations: CFPB, Consumer Financial Protection Bureau; HA, Health Assessment.
Building Financial Stability
Opportunities for employers to build financial well-being and resilience run along a continuum from addressing financial concerns that impact ability to afford necessities of living to developing financial planning skills and preparing effectively for retirement. A strong strategy begins with ensuring basic needs that are addressed and then expanding to improve financial knowledge, skills, and support.
Basics First—Address Pay and Connect Employees to Gap Resources
Upon completion of a needs assessment, several organizations including Aetna and Gravity Payments took steps to address the root cause of the issues, beginning with increased salary minimums. 22,23 In 2015, Gravity Payments CEO, Dan Price, decided to increase the minimum wage of his 120-member team to $70 000. After the time spent reflecting on a conversation with a friend who was struggling to make ends meet, Price dug in to find a way to improve wages, which included taking a significant salary cut to fund the pay increases. Since then, the company has continued to grow.
In cases where increasing minimum wages is not an option, employers might consider creating an Employer Resource Network (ERN), a regional partnership of companies that provides wraparound services to vulnerable workers. 24 An ERN feels a bit like an Employee Assistance Program on steroids and epitomizes the idea of synergy: We are more powerful together than alone. Six to 10 small-to-midsize companies come together and purchase “time shares” of a social worker who visits each participating workplace and is available to meet confidentially with employees. The purpose of the social worker, who is referred to as a success coach, is to help employees connect to government and employer-sponsored resources and navigate systems that may help them achieve financial stability. Success coaches also focus on connecting individuals to training and development resources that can expand career opportunities that could lead to improved financial stability. Shares, which equate to 4 hours per week, average $8250 per year—a bargain when considering the impact which is estimated to be 33% of worker salary as measured by reduced turnover. 25
Provide Access to Resources to Enable Employees
The field of financial well-being is growing rapidly. It is a young industry with many providers working to establish themselves as leaders by focusing on addressing one or more of the influencers of financial well-being: knowledge, skills, and motivation to be financially well. Table 2 summarizes the 6 main types of services providers offer. 26
Types of Financial Well-Being Services.
aProviders listed are examples only and not inclusive of all vendors in each category; providers may also offer services in more than 1 category.
Providers in the financial well-being space range dramatically in terms of years of experience delivering service. If partnering with a vendor has potential to meet the needs of your workforce, consider the following when vetting the various vendors in the marketplace:
Are the resources and tools offered accessible to employees in a medium that meets their needs—that is, online, in-person, outside of work?
Does the vendor offer communications that will effectively connect with employees at an appropriate reading level?
Who will do the work to communicate and promote the resource?
Is the vendor able to integrate with other resources and benefits the organization may offer?
What training does the provider require for their staff? Are they licensed and/or registered with the SEC, a state, or the Financial Industry Regulatory Authority? 27
How will success be evaluated? How often will reporting be provided?
Seek to understand the motivation behind the services the provider offers and look for a partner who will make recommendations and referrals that are independent and unbiased. If the services are provided at no charge by a firm, be sure to understand how the services are financed (ie through returns on investments that the vendor may recommend) and the impact this might have on their advice.
Regardless of which strategies and programs an organization chooses to employ, keep in mind that financial well-being can be, much like other areas of well-being, a tough topic to discuss. Many individuals feel a great deal of shame associated with financial distress as well as insecurity and belief that money matters are as private as biometric measures and other personal health indicators. 28 Beginning with awareness-raising techniques, such as sharing national data and statistics, can help employees see they are not alone in their struggles and begin to open them up to the idea that financial well-being is an important component of overall health. Taking steps to build a culture of trust, transparency, and honesty within the organization will help to create norms that enable employees to ask for help without fear of judgment in all areas, including financial issues.
Conclusion
The case for expanding the focus of well-being strategies to include financial health is growing strong as a brighter light begins to shine on the impact employee financial security has on individual and organizational health. Comprehensive support for health and well-being depends on acknowledging the elephant in the room—nearly everyone has financial challenges in their lifetime. Thriving depends on enabling employees to move beyond surviving. Although the root causes of employee financial insecurity are complicated, employers are uniquely positioned to have impact. Gratefully, the conversation has begun to gain momentum and the menu of approaches is expanding.