In a year where there was more of a spotlight on inequity and efforts to be more inclusive, the financial situation of the most vulnerable populations has become even starker, according to a new report published by Salary Finance. “Inside the Wallets of Working Americans, the 3rd Annual Salary Finance Report” reveals the findings from more than 3,000 American workers - about 2,700 of whom work for companies with more than 500 employees as well as about 500 unemployed workers - and includes questions on ethnicity, sexual orientation, and disability status for the first time. In many instances, the data is troubling and demonstrates the widening chasm between groups:
- At least 50 percent of women, LatinX people, people identifying as LGBTQ, and people with disabilities report feeling financial stress. Similar to last year, 42 percent of the general working population are experiencing financial stress. Fifty-four percent of people reported that COVID-19 negatively impacted their finances.
- Only 35 percent of Black or African-American and 37 percent of LatinX people have at least three months’ worth of expenses saved. Close to 50 percent of the general working population reported having this amount of money saved.
- Over half of Black or African-American employees (55 percent) and 45 percent of LatinX employees say they are unhappy with their level of savings (vs. 37 percent of the general population). This was a common theme that emerged from the survey: the most vulnerable communities have become increasingly more vulnerable during the COVID-19 pandemic.
Financial stress continues to quietly wreak havoc on employee productivity. Workers dealing with financial stress are nine times more likely to have sleepless nights, four times more likely to have their stress affect the quality of their work, five times more likely to not finish daily tasks, and four times likely to have troubled relationships with coworkers. It’s a recipe for disaster for employers, who have a tremendous opportunity in front of them to act in the best interest of their people and put the programs and benefits in place to help them with their financial plight.
Saving more money emerges as top financial priority
As accommodations from creditors and lenders expire over the coming months, Americans are in dangerous territory when it comes to their savings buffer. In 2020, less than 50 percent of workers didn’t have any emergency savings. This year that percentage skyrocketed to nearly 70 percent. Further accelerating the problem: the percentage of people who don’t consistently save money doubled, from 14 percent in 2020 to 28 percent this year. With that in mind, it should come as little surprise that getting better at savings was next among improvements employees are striving to make. Nearly 50 percent of respondents selected it.
Financial wellness benefits correlated to higher satisfaction and engagement
In the wake of events that took place in 2020, including the COVID-19 pandemic and racial justice movements, many employers took action to demonstrate that they value their employees’ health and wellbeing. Financial wellness benefits grew in popularity, with savings and earned wage access cracking the top ten most offered benefits in our survey. We also found a correlation between employee satisfaction and financial wellness benefits being offered: employer-level Net Promoter Score (NPS) was about 1.5 - 2 times higher on average when the employer provided access to benefits such as salary-linked savings or loans, earned wage access, or hardship funds.
We asked respondents which employee benefits they were most interested in getting access to that they weren’t already being offered. Of the financial wellness benefits we included, the most employees were interested in salary-linked savings, with 58% of employees saying it would be of value to them. Among potentially vulnerable populations, that percentage increased further, with 67% of Black or African-American employees, 65% of employees with disabilities, 64% of LGBTQ employees, and 62% of Hispanic or Latino employees expressing interest.
Employees were also interested in benefits that would help them pay down or avoid high-cost debt (31% of all employees), and those that would help them understand their money options and manage their cash flow better (29% and 28% of employees, respectively).
As businesses commit to the mission set forth by diversity, equity, and inclusion governance and put into place programs that support those at-risk populations, it’s my sincere hope that a year from now we are beginning to see a course correction. We cannot afford to continually overlook at-risk populations and it falls on all of us to do our part for change.