Financial wellbeing crisis: Don’t overlook your middle-class workers

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banking access emergency savings accounts employee benefits employee wellbeing financial wellbeing financial wellness Guest viewpoints shared

One day, while on lifeguard duty at Virginia Beach, I saw a man named Jack and his son swept out to sea, struggling in deceptively calm waters. As he strove for shore while keeping his son afloat, raw panic flashed in his eyes. The beach seemed to recede with each desperate stroke. Jack’s gaze met mine, a silent “HELP ME” radiating across the waves. If they drowned, the fault would be mine.

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How had I let this happen? From my tower, I’d assessed the hundred or so swimmers, categorizing them as either fit and unlikely to struggle or vulnerable and in potential need of help. I’d overlooked a crucial group—those who seemed capable but were ill-equipped to understand the ocean’s deceptive and perilous currents.

Over the past year, I’ve had roughly 300 conversations with HR executives about financial wellbeing. When queried if their company offers a financial wellness program for all employees, the answer is almost always, “Yes.” Further discussion often reveals that they’re referring to free tools and resources from their recordkeeper, which I skeptically call the “Courses, Calculators and Coaches” approach.

Most companies focus on helping their financially vulnerable employees find access to local social services for specialized needs like housing, transportation and food security. However, this has done little to elevate the financial health of their mid-tier workforce. Financial health here is defined by having sustainable short-term and long-term savings, as well as adequate insurance to safeguard against unforeseen events that could financially devastate a family.

Why should your organization care?  According to PwC’s 2023 Employee Financial Wellness Survey, there are three primary reasons you should actively work to financially stabilize your workforce:

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  1. financial stress has a negative impact on sleep, mental health and physical health, all of which impact employee productivity, such as through absenteeism, presenteeism and turnover;
  2. compensation isn’t keeping up with the cost of living, creating further financial precarity; and
  3. financially stressed employees are distracted and less engaged at work.

Back to the beach … 

Where had I gone wrong? I’d underestimated Jack and his son’s susceptibility to the environment. Jack was a fit, attentive dad in his 30s, immersed in the present, enjoying the sun but oblivious to the hidden rip currents drawing them seaward. They seemed fine to me, while the vulnerable waders at the shoreline captured an undue share of my focus.

On the other hand, surfers and boogie-boarders barely registered on my radar; the ocean was their playground, whereas the rest of us might be better off in a pool.

Much like open ocean swimming caters to water athletes, the financial services industry is tailored for those with disposable income—optimized for those who may need guidance, but not actual help. HR executives’ greatest opportunity for fostering financial resilience lies in addressing the challenges faced by the often-overlooked middle-class worker. To achieve this, we need more effective language, products and strategies for cognitive and behavioral growth, safeguarding this segment of the workforce from constant struggle and the looming threat of financial instability.

See also: How employers can ease back-to-school strain on parents

Here are four immediate steps that HR executives can take to materially improve the financial wellbeing of the middle class:

Rethinking financial wellbeing frameworks

In a recent episode of the SECURE podcast with Matt Bahl, vice president and market lead of workplace financial health at Financial Health Network, we called for C-level executives to reconsider their mental models of financial instability. First, we must separate income from financial health; consider that over 20% of Boomers earning above $250K annually live paycheck to paycheck.

A second paradigm to reevaluate is banking access. Traditional categories of unbanked, underbanked or simply banked overlook a critical issue. While we’ve made progress serving the unbanked and underbanked with consumer-focused fintech solutions, we now need to address the plight of those unfairly banked.

Ensuring equitable banking access

The terms unbanked and underbanked ignore the most pressing challenge: creating services for those unfairly banked. This group of employees, defined by credit scores under 650, face high costs to access housing and transportation, live paycheck to paycheck and are often subject to exorbitant fees and rates.

Most conventional banks penalize financially struggling customers—a practice that baffles me. For instance, my regional bank charges $12 a month for balances under $500 and $30 per overdraft. Employers can alleviate this by offering payroll-linked, fee-free accounts.

Addressing short-term financial challenges

With two-thirds of the workforce living paycheck to paycheck, according to Bank of America’s research, unplanned expenses are almost guaranteed, leaving workers with few options besides credit cards. The structure of credit card debt is the financial equivalent of a rip current—you’re likely to feel trapped. The SECURE 2.0 Act addresses this by allowing easy $1,000 withdrawals from 401(k)s, but it doesn’t go far enough. Employers can offer affordable, time-bound credit options, especially crucial for those trying to build savings.

Building easy-to-access emergency funds

The last step is straightforward, assuming the first three are in place. Payroll-connected accounts free from toxic fees, paired with reasonable credit and debt solutions, can provide a stable financial foundation. This allows struggling employees to lower their stress levels, shift out of a crisis mindset and start building sustainable savings. Encouraging employees to establish an emergency savings account as a prerequisite for credit access is a best practice.

Once again, back to the beach… 

By the time Jack’s frenzied eyes met mine, I was already plunging into the water, a bright-red Rescue Can in hand. I had an edge that Jack and his son lacked: an understanding of the rapid, deceptive pull of rip currents. I reached them with relative ease and strategically positioned my Rescue Can between me and their flailing forms. Once the panic subsided, we did what Jack couldn’t figure out in his state of alarm—escaped the rip current by swimming parallel to the shore before heading back. This seems counterintuitive when you’re fighting against a rip current, much like tackling immediate financial issues can be the first step to reducing debt and building savings.

I took away a vital lesson: Never underestimate someone’s struggles based on surface-level assessments, like their physical appearance or income. Assessing an employee’s financial vulnerability involves multiple factors, starting with the realization that it’s hard to distinguish between those who are financially secure and those who merely appear to be. Implement the four action steps outlined in this article, and you’ll be well on your way to ensuring that your middle-class workers don’t find themselves unexpectedly adrift in a sea of financial ruin.

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