The Increasing Need for Financial Wellness Benefits That Support the Hourly Workforce
It’s been about a year since COVID-19 was first confirmed in the US, upending industries and lives across the country. And no segment of the workforce has been more impacted than hourly employees. Spanning a range of industries from healthcare to retail and food service, hourly workers make up nearly 60 percent of the U.S. workforce with over 80 million employees.
From managing an influx of patients to adapting to regional regulations, hourly workers had to rapidly respond to evolving circumstances. Available hours would ebb and flow, but the vast majority saw a decrease in income. A March 2020 survey from Branch found that only 28 percent of hourly employees were maintaining the same level of pay, while 59 percent saw a decrease in income.
Financial relief for this essential workforce has remained uncertain, with just two stimulus checks in the last year. Workers were vulnerable prior to the pandemic, but are in even more challenging financial situations now. That’s why it’s increasingly important for employers to understand the challenges this workforce has faced throughout the past year and incorporate financial wellness into their benefits to support their hourly employees.
Living paycheck to paycheck
Even with a tight labor market and high demand for hourly workers before the pandemic, the majority of the hourly workforce was living paycheck to paycheck and had limited savings for an emergency. In a 2019 survey of over 3,000 hourly employees, over 75 percent of respondents reported less than $500 saved for their emergency funds (75.8%), with 40 percent of total respondents admitting they had $0 saved for an emergency. Basic living costs, such as home affordability (58.4%) and utilities (47.1%), were their main concerns. Workers had limited resources to handle day-to-day emergencies—let alone a pandemic that would impact their earnings.
Pandemic devastates savings
Throughout the pandemic, hourly workers’ financial situations had been exacerbated by the uncertainty around regulations and additional stimulus. In our June 2020 survey, 80 percent of hourly workers had less than $500 saved for an emergency. The percentage of hourly workers who had $0 saved increased 12 percent from last year to 52 percent. Even with stimulus checks, 76 percent had already delayed or missed a bill payment, with another 10 percent expecting to because of the coronavirus.
Most workers, even if they’re still employed, had seen their hours reduced by December. Over two-thirds (68.1%) of hourly workers surveyed have had or anticipated their hours to be impacted by regional COVID-19 restrictions. Some had to quit work due to school shutdowns and lack of childcare. This disproportionately impacted female workers, as over 80 percent of female hourly workers would expect to quit their jobs to supervise their children. The fluctuation in hours has already led hourly workers to add or look for another job to supplement their income (55.8%). In contrast to June, groceries have surpassed home/rent affordability and increased from 54 percent to 68.9 percent.
The need for financial wellness
Intertwined with overall work stress is financial stress, which in turn impacts physical health. Financial wellness and physical wellness go hand in hand. For many workers, financial wellness means not being stressed about finances and not having to worry about having enough money to manage unexpected expenses.
But workers are less likely to proactively seek financial wellness before an emergency. Research has found that about half (50.12%) of workers said that they’d seek help during a financial crisis, rather than a life event or when making an important financial decision. Employees need benefits that can help them assess their financial situations before emergencies arise and have contingency plans for the unexpected. Employers can provide a critical role in helping them anticipate and handle these events by offering accessible, easy-to-use financial wellness benefits.
And not all financial wellness benefits are created equal. Employers should keep in mind that their employees enter at various levels of financial health. It’s critical that if they offer longer-term benefits like a 401K, they should also offer benefits that help employees meet their short-term needs, such as building an emergency savings fund or budgeting. Tools should also be easy to use and understand, so that employees are more likely to adopt them. Earned wage access (EWA) has become an increasingly popular benefit as employees can easily access the benefit from their phones and use it to meet short-term financial needs, such as covering groceries and rent. Employers have been increasingly offering fee-free banking as another financial wellness perk that can not only help employees eliminate fees, but also help them eliminate payroll costs of paper checks and fee-laden paycards.
Financial wellness resources are one of the most important benefits an organization can offer their workforce during this time and will only become more critical over the next few years.
Atif Siddiqi is the founder and CEO of Branch, the only Employer Payments Platform that helps businesses accelerate payments and empower working Americans. Learn more about Branch in the UKG Marketplace.