These are some key findings from a research project that I worked on in the summer of 2015 with the Corporation for Enterprise Development (CFED) about Financial Wellness At Work.

The American worker is financially stressed. Although the U.S. economy continues to improve, finances remain a major source of stress for many Americans. Increasing debt, rampant predatory lending practices and low retirement savings continue to be issues for a majority of households. This increase of financial stress affects worker productivity and reduces financial stability for households.

Moreover, employee stress levels have an impact on business’ bottom-line. One study found that “stress is one of the leading causes for the loss of employee productivity in the US.” Indeed, as many as 15 percent of workers are stressed to the extent that their productivity is suffering. Studies also find that stressed workers are more likely to skip days of work.

  • Some employers are beginning to recognize that financial stress is a problem and are attempting to respond with services. According to a survey by the Society for Human Resources Management (SHRM), a little more than half of employers offer at least some type of financial education to those on their payroll.
  • Most employer financial assistance programs are directed at retirement. However, there is also a need for more short-term savings products in the workplace. Low- and moderate-income workers are especially vulnerable to falling into a cycle of debt due to unexpected financial emergencies. CFED found that if the financial assistance program doesn’t address short-term stress, it won’t be effective.
  • Still, it’s not clear that most American companies are ready to act. The CFED project found few examples of employers creating effective workplace programs. In fact, some of the best examples of action have come from programs that are initiated by government. Delaware’s Stand By Me Project is a great example. It includes customized personal coaching in addition to financial education programs, and has a track record of success.

Workers may not even want their employers to address this issue. Some survey data indicated that workers don’t want their HR managers to have access to their financial information (for privacy reasons). This suggests that a workplace-based model may not make the most sense.

The Obama Administration is looking at this issue. Both the Consumer Finance Protection Bureau and the Treasury Department have done extensive research into best practices and are supporting pilot projects to reduce financial stress of American workers. I hope that these agencies will continue their important work on this issue.

You can read more about this research project here.