Consider an employer with 1,000 employees who earn an average of $50,000. Most of those employees are probably doing fine with their personal finances. They are getting through life paying their bills on time, saving cash for emergencies, and putting away money for retirement. However, some of those employees are experiencing financial worries. Over twenty years ago such an employer typically had 150 of their 1,000 workers who were experiencing various degrees of personal financial distress that impacted their employer’s bottom line. The employer was losing money due to an average of a very conservative 10% loss in productivity.
This amounted to $5,000 ($50,000 X 10%) in annual losses per financially distressed employee. Thus the total loss every year for the employer of 1,000 workers averaging $50,000 in annual income was $750,000 (150 X $5,000). New national research by Price Waterhouse Coopers (Employee Financial Wellness Survey, 2018 Results, www.pwc.com/us/financialeducation) reveals that nearly half (47%) of employees today report that they are stressed dealing with their financial situations. Further, 25 to 40 percent of workers who are stressed about their financial worries say that their productivity at work has been negatively impacted by financial issues, including missing work occasionally and spending three or more hours each week dealing with issues related to their personal finances. Using the more conservative percentage of 25 percent (rather than the 40 percent above), the loss to the employer of 1,000 workers earning $50,000 each is $12,500 ($50,000 X 25%) or $1,875,000 (150 X $12,500). That is a lot of money!
The good news: A full 35% of employees in the national PwC study say that their employer offers services to assist them with personal finances and two-thirds (65%) say they’ve used the services sucessfully. And fully half of employees believe their employer cares about their personal financial well-being.
What are the employees’ biggest worries? They are concerned about not having enough emergency savings for unexpected expenses and not being able to retire when they want to. These are financial challenges that empowered employers can readily offer employees through workplace financial education programs and advice. The results of these types pf programs are improved employee financial wellness and decreased employer losses caused by stresses associated with employees’ financial worries. Thirty to 40 percent of employees in the national PwC survey report that their employer financial wellness program has helped them get their spending under control, prepare for retirement, and pay off debt. There is a positive and growing future for quality employee financial wellness programs in corporate America. They only need support from top management and quality financial wellness materials.
E. Thomas Garman, Professor Emeritus, Virginia Tech University, and senior author Personal Finance, 13th edition, CengagePublications.