One of the hottest topics in corporate boardrooms and among HR professionals these days is financial wellness. There is now a wealth of evidence that employees who feel financially secure are more engaged and productive. The opposite is also true – financially stressed workers are much more likely to take days off and be distracted and unproductive when in the office. At the extreme, stressed out workers who are truly disengaged can have a toxic impact on others.
Despite the improvements in the economy over the last few years, employees who feel at least some anxiety about their personal finances are now more the norm than the exception. This is especially true of millennials, who today make up the majority of the workforce. For senior executives who are baby boomers or even Gen Xers, it’s important to understand that your millennial employees are facing powerful financial and economic headwinds, the likes of which we haven’t seen in decades.
Does that sound like an exaggeration? Journalist Michael Hobbes makes a convincing case in his piece “FML: Why millennials are facing the scariest financial future of any generation since the Great Depression.” A convergence of many long-term trends, particularly the skyrocketing costs of education, housing and health care, combined with a deterioration of job security and the social safety net, has resulted in millennials becoming the first generation in modern American history that will likely be poorer than their parents.
The statistics Hobbes cites are shocking. For example:
- For boomers, 309 hours of minimum wage work was all it took to pay for four years of public college. For millennials, it had grown to 4,459 hours.
- In 1973, the author’s father bought his first home at age 29 for $124,000 in today’s dollars – which back then was equal to only 20 months of his salary. A similar home in 2018 is $730,000, equal to 10 years of the author’s salary.
- 25-34 year olds lack health insurance more than any other cohort and millennials have more medical debt than their parents.
The result is that many millennials live with a near-constant feeling of anxiety.
“Some days I breathe and it feels like something is about to burst out of my chest,” says Jimmi Matsinger. “I’m 25 and I’m still in the same place I was when I earned minimum wage.” Four days a week she works at a dental office, Fridays she nannies, weekends she babysits.
Even workers with steady jobs are experiencing high levels of financial stress as a result of large student debt burdens, spiraling credit card balances, and for those in major cities, increasingly high rents. These stresses are evident in PriceWaterhouseCoopers 2018 Employee Financial Wellness Survey. Of the millennials among the 1,600 working professionals in the survey, 41 percent find it difficult to meet their household expenses each month, 59 percent constantly carry balances on their credit cards, and 44 percent of those are using credit cards to pay for monthly necessities they would not be able to afford otherwise.
As you can imagine, PwC found that 53 percent of all millennials, more than any other cohort, said they were stressed about their finances. For those carrying burdensome student loans, this number increased to 76 percent! Financial issues were found to cause more stress than job issues, personal health, or relationships. This financial related stress has a major impact on worker engagement and productivity. More than one-third of all millennials and 55 percent of those with student loans surveyed said personal finance issues were a distraction at work, compared with only 16 percent of baby boomers.
So what does financial wellness really mean for today’s workers? It’s not about the 401(k) or preparing for retirement. It’s about finding more financial stability, reducing anxiety, and feeling capable of dealing with an uncertain world. Especially for millennials, financial wellness means, quite simply, being debt free. Seen in this light, companies should provide benefits that have an immediate impact on workers’ stress levels.
One such benefit is an emergency fund. Many workers, especially younger ones, have not saved any money for a rainy day. With increasing deductibles and out of pocket costs, they are one major accident or health issue away from personal bankruptcy. Companies can provide matching funds to encourage workers to lay away a few thousand dollars that they won’t touch except in an emergency.
The other benefit they can provide is student loan assistance. More than any other benefit, student loan assistance provides a tangible emotional return on investment, as workers get to see their debt burdens shrink every month. It’s striking that only 4 percent of companies in the US are now providing this benefit. For CEOs and HR leaders in firms that do not, especially those with a high percentage of younger workers, the evidence should be clear. If you want to do more than talk about financial wellness, start by offering student loan repayment assistance.