The Covid-19 health pandemic and resulting financial crisis have unfortunately most severely impacted the financially vulnerable workers in our societies. This includes self-employed workers, those working in sectors most economically hard hit and those not financially prepared for the unexpected.
In a recent article for Make A Difference News, financial wellbeing was defined as: “A sense of security and feeling as though you have enough money to meet your needs. It’s about being in control of your day-to-day finances and having the financial freedom to make choices that allow you to enjoy life.
PwC’s 9th annual Employee Financial Wellness Survey released in May 2020 tracked the financial and retirement wellbeing of working U.S. adults nationwide. The data collected (in January 2020) revealed which American workers were already financially vulnerable prior to Covid-19 taking hold, and the reasons why—predictive of those whose financial wellbeing we’re now seeing as most compromised.
The most financially vulnerable workers
PwC’s study found that overall employees were already unprepared for an extended economic downturn or recession, many being in a fragile financial state and unprepared for short-term cash needs.
It was found that more than one-third of full-time employed Millennials, Gen Xers, and Baby Boomers, had less than $1,000 saved to deal with unexpected expenses–pre-Covid-19. Gen Zers were the least prepared with 67% of respondents having little to no emergency savings.
It also found women at even greater risk. If out of work for an extended period only half as many women as compared to men would be able to meet basic expenses.
When asked what caused workers the most stress, 54% stated financial challenges ahead of their job (18%), relationships (12%) and health concerns (11%). Knowing this, unsurprisingly now 48% of people say their financial wellbeing has declined compared to six months ago, giving an indication of the exacerbated Covid-19-related financial stress workers are facing (as we reported earlier this month).
For those unprepared for sudden financial stress or strain, some will risk even more uncertainty for their financial futures in order to endure the crisis.
The impacts of short-term financial relief
More than half of Millennial and Gen X employees reported to PwC that they would likely use money held in their retirement plans for something other than retirement. The majority saying this would be for unexpected expenses—circumstances Covid-19 has now perpetuated for Americans facing reduced household salaries, redundancies or any number of other unexpected crisis-induced financial hardships. Those who withdraw retirement savings now may need to increase their savings rate in the future in order to get back on track for their retirement goals, PwC reported.
Acknowledging that many employees will look to their retirement plans to address cash shortfalls, the CARES Act (a national disaster relief plan) passed by the U.S. Congress late March 2020 thankfully provides some support. The CARES Act has a provision that waives the 10% early retirement withdrawal penalty for distributions up to $100,000 for Coronavirus-related purposes from qualified retirement accounts.
Employers addressing a top source of financial stress can provide relief
In terms of financial responsibilities U.S. workers are unable to meet due to Covid-19 forcing them to tap into retirement accounts, debt repayments for student loans are high on this list. Especially amongst the age groups PwC reported as least prepared for financial setback. According to recent figures from the Federal Reserve in the first quarter of 2020, about 45 million people in the U.S. have student loan debt, totaling more than $1.6 trillion.
And American student loan debt is a problem crossing generations. For example, Generation X’s average student loan debt is $39,584, Baby Boomers’ average is $34,703 and Millennials face $33,000 on average still owed.
Facing debt, as PwC reported, was already placing stress on people pre-Covid-19 and such stress is only amplified during a crisis. Fortunately, another provision included in the CARES Act addresses employer contributions to paying off employees’ student loan debt—if employers opt into this.
PwC as a progressive global employer committed to supporting staff wellbeing
Unsurprisingly, PwC has already signed up to offer the CARES Act employee student loan repayment programme to employees encumbered by education debt in the U.S.. PwC has long been seen as one of the most pioneering global employers when it comes to promoting and supporting employee wellbeing.
As Sally Evans, UK Wellbeing Lead at PwC in the UK, shared with us in a recent profile interview about the firm’s global strategy, “The wellbeing programme at PwC has evolved to become a globally applied ‘brand’ called ‘Be Well Work Well’, with wellbeing having been established as a ‘people priority’ across the global network of over 276,000 people. Now wherever in the world you work at PwC, you will experience Be Well, Work Well.”
Michael Fenlon, PwC Chief U.S. People Officer, has said of the firm’s recent decision to sign up for the CARES Act student loan repayment programme, “Even employees with no student loan debt tell us they are proud of the pioneering benefit. They are proud the firm is taking on such a complex, important issue in our society, especially one they see negatively affecting their own friends, family, and colleagues.”
The benefits to employers of putting their people first
Employees want to be proud of where they work. It supports their wellbeing to look forward to going to work every day and to feel supported. Discovery Surveys finds that employees who are proud of their companies are more engaged in their work and will stay with the organisation longer.
With all the challenges and uncertainties employees are facing today, knowing our companies have got our backs and are willing to go the extra mile to help us cope with financial burden will undoubtedly contribute to the sense of loyalty we feel toward our employer, and our wellness at work.
Based on the PwC Employee Financial Wellness Survey, it’s undeniable the importance, and the case for employers to invest in supporting staff financial wellbeing.
Anticipating employee financial wellbeing vulnerabilities by following the latest public research and also listening directly to the feedback of your workforce are great ways to keep your finger on the pulse. And taking the next step, investing in benefit offers which will help ease financial burdens is another.
It’s the little things that can go a long way in these rocky times for staff members. Forward-thinking companies who recognise how indispensable their human capital is to drive business—and thus who prioritise investing in employee wellbeing—will be arguably better positioned to endure the crisis.
Read PwC’s full report here.
About the author
Heather Kelly is the founder of Aura Wellbeing, a consultancy providing workplace wellness strategy, coaching and training services to employers. She’s also Content Director for Make a Difference Summit US and Online Editor for Make a Difference News. Heather led the development and operation of the Workplace Wellbeing Index, during her time working for the UK’s largest mental health charity, Mind. In her earlier career she worked as a photographer, a journalist and a senior manager in the insurance industry. She’s passionate about inspiring more empathy and awareness in workplaces toward normalising mental health and in her spare time Heather teaches photography to teens as part of a charity projects in London and Spain, she’s an avid runner and experimental chef for recipes promoting healthy minds.