Financial Wellness & Productivity: State of Financial Security 2020
Each month, Financial Wellness and Productivity (FW&P) explores recent research and historic data on the links among personal finance, individual wellness, and organizational productivity.
I. Recent Research: The State of Financial Security 2020
What: The Aspen Institute explores the precarious financial situation of millions of people in the U.S. and what to do about it in The State of Financial Security 2020: A Framework for Recovery and Resilience. Aspen Institute follows the Consumer Financial Protection Bureau in defining financial security as “a state of being wherein a person can fully meet current and ongoing financial obligations, can feel secure in their financial future, and is able to make choices that allow them to enjoy life.” It is a state TrustPlus works with clients to achieve, every day.
Background: Low- and moderate-income workers face dual pressures of stagnant real wages and rising household expenses. Public and private benefits do not fill the gap. The result of this mismatch is too much debt and too little savings. Today, fewer than half of American adults — 47 percent — can cover three months of expenses in the event of job loss, sickness, or another one of life’s surprises.
“A stunning 53 million Americans between the ages of 18 and 64–44 percent of all workers — qualify as “low-wage,” with median hourly wages of $10.22 and median annual earnings of about $18,000. The prevalence of low-wage work in the United States is due at least in part to a shift away from salaried to contract work. The rise of the gig economy, coupled with increases in hourly and seasonal work, means that many Americans are grappling with inconsistent and unpredictable income.”
Looking ahead: The health and economic fallout of the ongoing COVID-19 pandemic is strangling poor communities nationwide, especially communities of color. A June survey by Aspen FSP of more than 160 experts identified high and increasing costs of housing and child, adult, and elder care as “sleeper” financial issues that are largely under the radar but likely to be a huge threat to household financial security. Against this backdrop Aspen Institute offers three essential building blocks of financial security:
- Positive cash flow to cover expenses and allow for savings.
- Personal financial resources to support household resilience, wealth, and well-being.
- Public and private benefits that can provide a functioning safety net to fill in gaps in the current economic system and protect individuals against financial catastrophes.
If you are an employer then we, as a private benefit, want to support your workers and strengthen your business through personal finance coaching from TrustPlus. Contact us today.
II. Historic Data: “Employee Financial Wellness Programs: A Review of the Literature and Directions for Future Research”
Why is TrustPlus smart business for employers? Don’t take our word for it. Well, do, but also rely on verifiable data. A thorough Center for Social Development at Washington University in St. Louis working paper sums up the benefit to employers of Employee Financial Wellness Programs (EFWPs) as follows:
“At the foundation of most EFWPs lies an investment in employees. Studies by Boxall (2003) and Lambert (2000) provide theoretical evidence on the advantage of investing in human resources. Considerable research documents the benefits of human resource investments by firms in the manufacturing sector, but Boxall (2003) found that such investments in the service sector might provide an even greater competitive advantage.”
Internationally recognized for contributions to financial inclusion and asset-based social policy, The Center for Social Development seeks to advance a just and inclusive society through interdisciplinary engagement. The paper goes on to cite how financial wellness has been linked to:
- improved productivity (Center for Credit Union Innovation, 2002; Stanford Center on Longevity, 2014);
- reduced distractions (PricewaterhouseCoopers, 2015);
- increased engagement; and
- enhanced organizational commitment (Kim & Garman, 2003; Stanford Center on Longevity, 2014).
Talk to TrustPlus about how we can bring the benefits of financial wellness to your business and employees today.
Written for human resource professionals and business leaders, FW&P explores the links among an employee’s personal finance, individual wellness, and organizational productivity. FW&P offers a window into the financial lives of low- and moderate-income workers, discusses the latest research on the connection between financial wellness among employees and the bottom line, and shares what TrustPlus is learning every day from our clients: financial health boosts productivity and wellness.
TrustPlus is offering financial coaching services for free to small businesses and their workers, as well as providing critical resources to protect workers and families impacted financially by COVID-19. Learn more about our relief efforts.
