Financial stress is a growing problem in the workforce today. Even with 145 million people employed, nearly 63 percent or 90 million of these individuals are among the working poor, according to a survey by personal finance website Bankrate.com. These 90 million individuals have no emergency savings for things such as a $1,000 emergency room visit or a $500 car repair, according to the Bankrate.com survey. This is up slightly from 62 percent last year. The middle class is not immune either. More than 25 million middle class Americans are living paycheck to paycheck, according to Tami Luhby. All workers, irrespective of income level, age, gender and race are susceptible to financial stress.
The inability to save and have financial stability creates significant stress for employees, which leads to loss of workplace productivity. Research shows that 24% of employees are distracted at work due to finances and 71% of employees identify money as a source of stress.
Financial stress in the workplace leads to significant business costs. Some of those business costs include:
Working Americans claim financial stress leads to their inability to sleep well, weight gain, increased illness and emotional challenges such as depression and anxiety, according to a 2013 report by the American Institute of CPAs. Depressed individuals spend an average of $4,000 per year on medical expenses compared to $1,000 by non-depressed individuals.
One in five employees misses work to deal with a financial problem, according a 2014 Consumer Finance Protection Board report. A 2010 Federal Reserve study found that employee financial stress costs employers an average of $5,000 per employee per year in lost productivity.
Personal finance issues can distract employees while at work. In fact, 24% of employees from all generations admit being distracted at work due to finances. Research has also found that dealing with personal financial problems can add up to more than 20 hours per month per employee.
The costs of turnover are quantifiable and significant. For example, if the average salary of an employee in a company is $50,000 annually, and you assume the cost of turnover is 150% of salary, the cost of turnover is $75,000 per employee who leaves. For a mid-sized company of 1,000 employees, with a 10% annual rate of turnover, the annual cost of turnover would be $7.7 million.
According to the report, Employee Financial Stress is Costing Your Company a Bundle– And How You Can Stop It Now!, 60-80% of on-the-job accidents are stress related. Stressed employees can physically injure themselves and coworkers and many claims were found to be tied directly to employee inattentiveness or distractions caused by personal finance stress.
The majority of the nation’s working population could be better prepared for recurring expenses, adequate liquidity, unexpected financial events and retirement if given the appropriate tools. Companies can now implement an employer-sponsored financial wellness program that enables employees to access earned income just when they need funds, and are independently able to build a personal, workable pathway to financial autonomy and savings. Products and services altering the timing of distribution of wages help employees smooth their consumption and better meet their spending needs while avoiding alternative and costly methods of accessing cash.
Our financial wellness program is innovative, fiscally responsible, and enables workers to empower themselves while the company benefits from higher employee engagement resulting in increased profitability. Employer-sponsored financial wellness programs allow employers to incur greater profitability, and curb lost productivity due to absenteeism and/or presenteeism. Employers can also curb high costs of turnover and generate goodwill by addressing financial distress and experience greater retention and loyalty.
When you own or manage a business, your financial focus is likely on the bottom...