Financial stress is a huge work distraction for Millennials in debt and it’s costing the American economy billions.
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.
There are 30 million student loan borrowers under 40 responsible for $844 billion of the staggering $1.5 trillion student loan debt. More than a third of those borrowers are behind in their monthly student loan payments.
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 recently approved tax-free employer matched 401(k) contributions for student loan repayments. The latest benefits report from the Society of Human Resource Management (SHRM) showed a dramatic (84 percent) rise of organizations financial wellness programs over the past 5 years.
Even though more employers are offering financial wellness programs it doesn’t mean employees are using them. MarketWatch recently reported on how many financial wellness programs are missing the mark by failing to address the specific needs of employees. In other words, if you offer a financial wellness program that isn’t sophisticated, mobile-first, in the cloud, that offers different kinds of assessments 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.
Best Money Moves will be at the 2018 HR Technology Conference in Las Vegas this September 11-14. Stop by booth #753 to learn how you can improve your company and your employees’ financial health.