Even if someone is employed, they might not be financially healthy.
Some 61% of Americans are living paycheck to paycheck, up from 58% in March of this year, according to a September CNBC survey. About 5.3% of the US workforce holds multiple jobs as of October 2023, according to the Bureau of Labor Statistics, a rise from 4.8% in October 2022.
When employees are stressed about their personal finances—and CNBC data suggests that 74% are—it can result in reduced productivity and higher turnover. In fact, 40% of turnover is related to stress, reported Morgan Stanley, and 78% of employees say money is a source of stress. It can cost an employer an average of 120% to 200% of the former employee’s salary to replace them. The impact to both an employee’s overall well-being and to the organization’s bottom line mean it’s wise for employers to prioritize financial wellness.
“At the individual and family level, finance is hard. But it’s also hard from an employer standpoint,” Petrina Thompson, head of client service for financial wellness benefits provider Brightside, said. “People are not present at work, or they are leaving for 25 cents more an hour. [Finance] not only affects the individual and the family unit, but it impacts the organizational and employer unit.”
Meeting needs. As the workplace has evolved, employees have come to expect more from companies. Three-quarters (76%) of employees expect their employers to be responsible for their financial wellness, providing benefits and wellness tools that can help them improve their economic health, according to a survey by Bank of America.
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One employer that appeared to recognize this need is Amazon. In March 2022, the ecommerce giant partnered with Brightside to pilot a financial wellness program for its hourly customer fulfillment and transportation workers across 12 states. Since its launch, the pilot, which is still ongoing, has helped save those hourly employees $20 million, according to recently released data from Amazon. Through the program, these Amazon employees have access to free financial coaching to help them reduce debt, create spending plans, and plan for short-term and long-term financial goals. They can also open a savings account through Brightside to put money away for unexpected emergencies.
While Amazon has not publicly shared data about its retention efforts, financial wellness programs have a significant and positive impact on turnover. Some 84% of employers say offering financial wellness tools to employees has a positive impact on retention, according to Bank of America research, and 81% say these offerings help attract higher quality talent.
Yet, despite acknowledging the positive impact financial wellness benefits can have for both employees and employers, just two in five employers currently offer social security support and education, Bank of America found.
“Offering comprehensive benefits and wellness programs can be critical for employers looking to reduce attrition,” Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America, said in the company’s report. “[They] can empower employees to take control of their personal finances, and improve employee satisfaction.”