By Jack Rubin, SVP, Consumer Financial Solutions at DailyPay
Financial stress for employees is not just a problem. It’s an epidemic. And it’s becoming a drain on our economy as a whole. A sobering report from Brightplan’s Financial Wellness Barometer revealed that American workers are losing on average 7.3 hours of productivity each week related to their financial stress, costing American employers nearly $200 billion per year.
This alarming statistic unfortunately shouldn’t come as a surprise. The challenges facing American workers, especially younger employees, are seemingly insurmountable. Consider this – research from the Federal Reserve Bank of Philadelphia shows that over one-third (34.9%) of American consumers said they are concerned about making ends meet, up from 28.7% a year earlier. The data also indicated that younger Americans have considerable angst as it relates to their finances with over 4 in 10 (41%) of those between 18 and 35 years saying they are concerned about making ends meet.
With stubbornly high inflation still at around 3%, hourly workers are continually facing the task of putting food on the table and a roof over their head. Over 3 in 4 (77%) of American households have some form of debt, and, according to the Federal Reserve Bank of New York, total personal debt in the U.S. is at an all-time high of $17.5 trillion. Unfortunately, far too many are missing those monthly payments which is killing their credit scores.
A study from Experian shows that more than one-third of Americans (34.8%) have subprime credit scores, which means their credit scores are lower than what’s needed to get the best interest rates. Building credit is a central goal for so many Americans because good credit unlocks fundamental financial opportunities across apartment leases, car loans, borrowing costs, and more. While unfortunately, a poor credit score has a number of pernicious effects on people’s financial lives.
So, what can HR leaders do to help?
The answer might be a click away on our phones. Fortunately, advancements in technology are empowering American workers to improve their lives in and out of the office.
You see, in the not-so-distant past, traditional HR tech solutions were more aligned to the HR function and processes at work. However, today we can leverage consumer-grade technology to do more for our valued team members. HR Tech is evolving and transforming right before our eyes. In this new space WorkTech (as opposed to HR Tech) is going well beyond HR processes to truly support the day to day needs of the workforce – in and out of the office. And that includes financial wellness tools.
A true worktech platform needs to include relevant, meaningful, easy-to-use financial wellness tools and solutions that can help workers during these challenging economic times. For example, earned wage access has been a proven solution to empower workers to pay bills on time and avoid costly late fees. But EWA is just a start. New products and solutions that address big and pressing needs – such as credit health, savings, financial education, retirement planning, and even cross-border payments to relatives in another country – can propel employees forward on the path to financial security. In many ways, these types of products speak to financial equity and inclusion and can open opportunities that were once not available to many employees because they were mired in debt with bad credit.
The needs of employees have changed. It’s imperative that the worktech platforms we offer adapt to these changing needs. We can’t let our employees be in a constant state of worry of when and how to pay the rent or bills on time. We need to equip them with the tools that allow them to manage their finances, and in turn, bring the best version of themselves to work every day.
Consumer Financial Solutions
DailyPay