Employers across the United States have a $500 billion problem. Every year, employees spend work hours addressing a financial crisis, looking for new housing, or addressing financial instability. That lost productivity – along with the turnover that often accompanies financial constraints – is the cost of financial stress in the workplace, and it is growing.
Financial Stress in the Workplace is Growing
More than 64% of the US population now lives paycheck to paycheck. People who do disproportionately reside in urban areas with a high cost of living, like those with Major League Baseball stadiums.
The financial reality most employees face is startling. 23% have a hard time paying their bills, and 14% have at least one bill they cannot pay in full each month. More than 1in 10 Americans have no way to pay for an unexpected $400 medical bill, car repair, or other unexpected expense.
It is this last group that is most likely to experience homelessness.
Government-Funded Programs Aren’t Accessible to the Employed
Employees who end up with a bill they can’t handle face a slow spiral into instability. They fall behind in their rent or other bills, late fees and interest accrue and exacerbate the problem, and eventually they must move or face eviction.
Government funding to help people avoid or escape homelessness exists. However, it is limited. As a result, governments prioritize individuals who have extreme or high barriers to gaining stable housing. Employees generally have too much income and too few significant barriers to access services.
This forces a difficult conundrum. They much choose between continued employment and losing their job to gain access to government benefits.
Homelessness Carries a Stigma
Employees often wrestle with a financial crisis for months before losing their housing, their jobs, or both. During that time, they are often reluctant to ask their employer for help. They are embarrassed, and they don’t want to be associated with the most visible form of homelessness: the chronically unhoused adult suffering from serious mental health or substance misuse disorders.
As a result, they wait until the crisis has peaked before they seek help. This is often when they lose their job. Of course, employers have been losing money because of their financial strain all along.
The Cost of Financial Stress in the Workplace Adds Up
Employees who are experiencing financial distress are distracted at work and are twice as likely to spend time job searching. They are also more likely to be absent. According to Employee Benefits News, unexpected absenteeism costs the employer $3,600 per year for each hourly worker and $2,650 per year for salaried employees.
Frustration with their personal life bleeds into their work life, and relationships with co-workers and customers suffer. Employees experiencing a financial crisis are also more likely to see their employer as part of the problem, which may impact the employer’s ability to attract and retain talent. This adds to the cost of financial stress in the workplace.
Raising Wages Won’t Work
Many people argue that raising compensation for all employees to $75,000 or more would improve stability for all employees. Unfortunately, this simply isn’t true. When wages go up for all employees, labor costs also rise. When labor costs rise, so do prices. These prices include rent and other basic expenses paid by employees.
Unfortunately, raising wages for those who need additional compensation poses a significant wage equity issue. That’s why employers can’t provide additional financial assistance to employees they know are in financial distress.
Wellspring Has a Solution
Wellspring Family Services has an innovative new employee benefit offering that saves employers money and prevents employees from slipping into homelessness. The Employee Stability Program provides employees with anonymous access to case management services that are like those offered through government assistance programs. Wellspring’s case management team members are experienced at preventing and addressing homelessness, and specially trained to deliver financial support to employees without the means to address a financial crisis.
We Need Your Help!
Wellspring is a 501(c)(3) nonprofit organization whose mission is to end family and employee homelessness. Wellspring relies on donations to deliver its services, and we need your help as we launch this new program! Please consider pledging to Home Runs for Housing or make a flat donation to Wellspring Family Services through the Home Runs for Housing fundraising site. All donations are tax deductible to the extent provided by law.
