Financial stress is a huge work distraction for Millennials in debt and it’s costing the American economy billions. The statistics on student loan debt in this article have been updated as of February 20, 2020.
Millennials are now the largest generation in the American labor force and they’re distracted by an overwhelming amount of debt. Human resource departments are overwhelmed with solving new issues around financial stress that Millennials are bringing to the office every day.
Around 44.7 million out of 171.3 million American adults have student loan debt and the total amount of outstanding student loan debt passed $1.5 trillion in 2020. The average monthly student loan payment is nearly $400 and roughly 10 percent of borrowers have defaulted on their student loans.
Most millennials have nothing saved for retirement and of those that do, research from E-Trade revealed that 60 percent have already taken an early withdrawal from their 401(k). Nearly half of them use credit cards for monthly necessities they couldn’t afford otherwise.
Millennials are also falling behind when it comes to major life events like getting married and buying a home. All of this affects their work performance, including productivity, retention and turnover, unexplained absences, and presenteeism.
According to a PwC study, almost 60 percent of millennials are financially stressed. Money is a huge issue for them. Bank of America found they spend an average of 4 hours a week on personal finances at work. Close to 20 percent of them have missed days at work due to financial stress.
The American Psychological Association found that financial stress is responsible for 40 percent of turnover and 60 percent of workplace accidents. More than 20 percent of Millennials have changed jobs in the past year (a number 3x higher than those outside that demographic) and Gallup estimates Millennial turnover costs the American economy close to $30 billion per year. It’s advantageous for employers to help employees reduce financial stress to take back productivity and reduce absenteeism, turnover and workplace accidents.
One thing experts agree on: Millennials want help navigating their financial futures. Over 90 percent of Millennials surveyed by Bank of America say they would participate in a financial education program provided by their employer. In the same survey, roughly 80 percent of Millennials say their employer was influential in getting them to save for retirement. According to Willis Towers Watson research, employees are looking for financial wellness tools to track spending, saving, assess their financial position, and set financial goals.
With an extremely tight labor market, employers have become highly motivated to address their Millennial employees’ desire to gain financial wellness. What the early adopters of best-in-class financial wellness programs have begun to see is that greater employee financial wellness also improves productivity and retention, and helps them stay competitive in a tight labor market.
As part of a larger financial wellness program, some companies have instituted a student loan benefit and the IRS approved tax-free employer matched 401(k) contributions for student loan repayments in 2018. The Society of Human Resources (SHRM) reported over 50 percent of U.S. companies offered financial wellness programs in 2019, more than doubling the less than 25 percent who did so in 2015.
Even though more employers are offering financial wellness programs it doesn’t mean employees are using them. In other words, if you offer a financial wellness program that isn’t sophisticated, mobile-first, in the cloud, that offers different kinds of assessment tools and personalized information and solutions, it may well get overlooked in the sea of other benefit paperwork that has to be reviewed and managed.
For increased employee engagement select a financial wellness program, like Best Money Moves, that has the tools, information, and functionality your employees need. Best Money Moves is a mobile-first service that offers budgeting, resource articles, confidential counseling, free credit score, and personalized information and solutions for employees to use to measure and dial down their financial stress.
All of which will help your employees settle down and get back to work.
If you want to learn more about how Best Money Moves can bring financial wellness to your company download our whitepapers and sign up for a demonstration here.