Fans of the TV show Modern Family may remember the episode where Cameron’s fundraising event was ruined because Mitchell forgot to send out the invites. Mitchell says, “I was going to mail the invitations, so I put them in the back of the van, but I put my gym bag on top. I feel terrible. I haven’t been to the gym in six weeks. And I ruined Cam’s event.”
That is how I felt the other night when I found out my ride-sharing driver did not know about an important benefit his employer made available to him. The driver was telling me about how his wife was on the verge of losing her car. She’d been out of work for a year, and now, having secured a new job, she feared she couldn’t get to it because her car was about to be repossessed. My driver needed $437.59 for car payments immediately, and he didn’t know what to do.
First, I was struck by how close that number is to a much quoted financial wellness statistic: According to Federal Reserve data, about a third of workers say could not generate $400 out of a rainy day fund to cover expenses in case of sickness, job loss, economic downturn, or other emergencies.
EBRI actually finds an even more dire picture than this. When calculating how much liquid savings families actually report is available to cover such expense levels, we calculate that of all families with working heads, only 20.1 percent had liquid savings of more than three months of their family income. Even if the threshold is reduced to 75 percent of three months of family income, only 25.7 percent of families with working heads had liquid savings in excess of this amount.
Employers and contractors, such as ride-sharing services, are taking note. According to EBRI’s recent Issue Brief, “2019 Employer Approaches to Financial Wellbeing Solutions,” employer assistance in creating emergency funds or meeting liquidity needs is on the rise. More employers with at least 500 employees and some interest in employee financial wellness initiatives reported offering payroll advances in 2019 than in 2018 (17 percent and 12 percent, respectively). More than a quarter reported offering emergency funds or employee hardship assistance. Nearly half (44 percent) offered an employee relief or compassion fund, 36 percent offered part-time donations or leave-sharing, and 35 percent offered matching contributions to employees’ personal accounts. Among those that already offer an emergency fund, the average number of such benefits offered was 2.5.
Unfortunately, these programs may be well-kept secrets. When I asked my driver if he was aware that his employer offered an app that would allow him to access his pay in real time, he was surprised. The app allows drivers to snap a photo of their electronic timesheet to show they worked and then allows them to cash out instantaneously, with the app depositing the earnings into their bank accounts. In other words, it was the perfect benefit for the situation in which my driver found himself, and yet he had no idea it existed. What a missed opportunity.
I know. Retirement professionals are groaning right now. Having such immediate payroll access could certainly have a bad effect on saving. But the reality is that if employers feel the need to provide emergency savings assistance of this type, they probably have evidence that their workers really need this help, and it would be useful if those who worked for them were aware of it.
The 2019 Retirement Confidence Survey suggests that poor communication about available financial education and help may be common. According to the survey, just a quarter of workers say they use their employer as a source of info, even though a majority say they would find workplace educational or financial wellbeing programs helpful.
I asked EBRI’s Financial Wellbeing Research Center members how they would recommend that employers communicate financial wellness initiatives effectively to employees. They had a lot of ideas:
- Effective communication works in three directions: 1) top-down through executive support; 2) side-to-side with affinity groups and peer-to-peer; and 3) bottom-up with champions.
- Use technology to learn more about your work force, and target your communication based on what you learn.
- Meet employees where they are: generally speaking, electronic communication for tech-savvy workers or Millennials; group communication for Gen Xers and women; personal communication for Boomers and blue-collar workers.
- Treat your communication like marketing or advertisement: Use emotions such as humor to make it memorable, use repetition to make sure the message sinks in, and use multiple channels to have the message reach as many people as possible.
- Measure what is working and what is not working and adapt your communication strategy accordingly.
While EBRI’s recent Employer Financial Wellbeing Survey showed little consensus about what constitutes employee financial wellbeing, what approaches should be used, and even how success is measured, there can be no disagreement that to be effective, the programs need to be communicated. And by the way, we can all also probably agree that it is a good idea to hit the gym more than once every six weeks.