Financial uncertainty due to COVID-19 is substantial: 48% of highly stressed employees said finances were the reason for that stress.1 In 2021, financial insecurity will likely intensify as employees of all ages face potential furloughs, layoffs or salary reductions, exacerbating the dual financial and mental health crises brought on by COVID-19. And globally, economic anxiety is equal to the significant anxiety of staying healthy amid the COVID-19 pandemic.2
As the global employer community continues to embrace a holistic view of employee well-being, understanding the interconnected nature of financial and psychological stress is critical. A majority of employees who are struggling mentally are also struggling financially. As with mental health issues, shame and stigma are powerful emotions that act as a barrier to seeking help among those struggling. For example, 35% of Americans are ashamed to admit they have credit card debt.1
But all is not lost. Financial well-being programs focused on supportive action have been shown to positively impact employee well-being. This is good news for those caught in a financial and mental health spiral, where financial stress leads to a higher prevalence of negative emotions and mental health issues. This makes it harder to stay on top of finances and work responsibilities, leading to greater negative emotion. With effective financial well-being programs, there are ways to put the downward trend on pause.
What Are Employers Doing to Improve Financial Security During COVID-19?
According to a recent Business Group survey, 24% of employers are adding programs or policies to improve employee and family financial security by:
- Paying for 100% of benefits for furloughed employees;
- Allowing for negative PTO balances and sell back;
- Making it easier to take hardship 401K loans, including making the transaction penalty free; and;
- Assisting with student loan repayment programs.
Employers can also support the financial well-being of their employees in the following ways:
- Offer one-on-one financial counseling and advising. This is one of the most valued financial benefits, yet only 16% of employees know it is available to them even though 52% of employers offer it. Invest in this sought-after benefit and communicate how it can help employees manage uncertainty during COVID-19.
- Explore new financial technology (“fintech”) programs, like payday advances and lower-interest loan options that enable low-income workers to access dollars for emergencies without resorting to payday lenders.3
- Leverage the EAP for financial well-being, as 88% of global employers said they are doing. EAP providers are in a unique position to address concerns of both financial and mental well-being. Employers can inventory available financial and mental health resources and partner with the EAP to promote them.
- Consider the impact of stigma as related to financial insecurity and how that may be a barrier to engaging with financial well-being programs. Taking a lesson from reducing mental health stigma, employers could raise awareness through employee and leader testimonials.
Times of crisis or high need provide employers with a perfect opportunity to build trust and loyalty with employees. Similarly, there is a cost for failing to act; 43% of employees who graded their employer’s response to COVID-19 as a C or below planned to find a new job after the pandemic.4
But the numbers show that more and more employees are taking advantage of the support available to them. Recently, 72% of companies have seen increased use of the financial resources they offer. Importantly, 81% of employees who participate in financial well-being programs said they planned to stay with their company for 5 years.5
Clearly, supporting employees’ financial needs in this time of crisis is a good idea. It presents an opportunity that can pay dividends for years to come.
- Strategies to Support Financial Well-being
- 2020 Employee Well-being Mindset Study
- COVID-19 Pandemic November Quick Survey Results
- Reducing Mental Health Stigma: Employer FAQs
- 1 | Tugman K, Schmitt S, Ruggles J. (2020). Ties that bind: The tight links between mental and financial health. Prudential Financial, Inc. Available at https://www.prudential.com/corporate-insights/the-tight-links-between-mental-and-financial-health. Accessed December 7, 2020.
- 2 | Bareket-Bojmel L, Shahar G, Margalit M. (2020). COVID-19-related economic anxiety is as high as health anxiety: Findings from the USA, the UK, and Israel. J Cogn Ther. Available at: https://www.ncbi.nlm.nih.gov/pmc/articles/PMC7258609/ . Accessed November 19, 2020.
- 3 | Harvard Business Review. (2020). Helping low-income workers stay out of debt. Retrieved November 11, 2020. Available at: https://hbr.org/2020/11/helping-low-income-workers-stay-out-of-debt.
- 4 | Prudential Financial, Inc. (2020). Pulse of the American worker survey fact sheet. Available at: https://news.prudential.com/presskits/prudentials-pulse-american-worker-survey-living-future-work.htm. Accessed December 7, 2020.
- 5 | Webster K. (2020). JBS stresses the importance of financial wellness benefits during COVID19. Employee Benefit News. Available at: https://www.benefitnews.com/news/ubs-stresses-financial-wellness-benefits-during-covid-19. Accessed December 7, 2020.