Can Your Employer Help You Cure Your Money Woes?
Even the most well-paid employee at a fast food joint struggles to pay their bills. While they are a higher-level member in the crew, that alone does not help ease the sting of having to pay off student loans and hospital bills incurred from a car accident years ago.
With all this debt surrounding their employees, what are companies doing to help?
Financial Stress Takes a Toll
It’s no secret that having debt can drag down a person’s mood. There’s no escaping that feeling for any of us, really. And that is something that employers are finally beginning to realize. When their employees are drowning in debt, their productivity takes a hit and their sick days may extend beyond what employers expect.
Out of a group of 1,600 employees surveyed by PwC, over 50% said their finances were a primary source of their stress. This stress, according to human resources company Mercer, costs businesses in the United State more than $200 billion a year.
A survey recorded an alarming 7 out of 10 employees cited debt as the primary financial challenge in their lives.
When it came to helping employees pay back their debt, the first programs to come into existence were those that focused on helping pay off student loans. But that is still far more rare (4 percent) than companies that offer pet insurance, of which there are plenty (11 percent).
Companies that offer the student loan repayment help give an allowance of $100 per month, typically totaling around $10,000 at maximum.
Unum, an insurance company, makes it so employees can put as much as 40 hours of paid vacation toward repaying their student loan.
Startups Focus on Paycheck-to-Paycheck Workers
Student debt has reached such a level, it’s referred to in the United States as the ‘student debt crisis.’ This is part of the reason more employers are becoming familiar with the financial burden sitting atop their employees’ shoulders.
And although they may know a few of their employees are struggling, HoneyBee President and chief executive Ennie Lim says the boss may not know the exact number of workers struggling to pay off their loans.
The government shutdown showed us that even people with the best jobs were not guaranteed financial stability. Lasting a little over a month at 35 days, government employees inadvertently showed the rest of the world just how bad things could get for people at the top as they lined up outside food banks.
“Twenty-two percent of HoneyBee’s borrowers last year earned less than $30,000, while 52 percent made between $30,000 and $50,000 and 26 percent were paid more than $50,000” states Lim. HoneyBee is a loan company that allows their loans to be paid back over time.
Brightside does things a little differently. Instead of giving out loans, the company “trains financial assistants to work with employees who have money issues,” explains Sophie Raseman, head of financial solutions for Brightside. When it comes to loans, the assistants are trains to “discuss the costs, risks and potential benefits of products the company has vetted, as well as alternatives.”
Ignoring Financial Stress is ‘like bailing a leaky boat’
Simply pushing something out of one’s mind will not make it disappear. The biggest problem is the financial stress that student loans and other debts put on employees, but it isn’t the only one. A great deal of work performance may have a lot to do with how an employee is feeling physically.
According to Jennifer Tescher, CFSI president and CEO, “Many employers are focused on improving their workers’ physical health to reduce insurance costs but often ignore the financial stress that’s undermining physical wellness. That approach is ‘like bailing a leaky boat.’”
She also says the best place for debt help and education is at the very place where employees work. It makes sense, Tescher says, because it’s where their check from, where they can save for retirement and take advantage of other possible voluntary benefits.
“Research and experience show that employers offer a ‘right place, right time’ dynamic for workers to deal with money,” she adds.
The unfortunate thing about debt help is how similar it is to acquiring company-provided health insurance. It’s not easy for every employee to get, and some may not even have it available to them.
More companies should be looking into helping their employees pay their debts and help increase their all-around productivity.