After contending with the COVID-19 pandemic for more than two years, many working class people are struggling with personal finances, especially debt. A recent study by the nonprofit Financial Health Network and sponsored by Freedom Financial Network reveals that debt, including mortgage debt, affects productivity and employee retention. To make matters worse, debt-related financial wellness benefits from employers are hard to come by.
The full report, ‘Helping Employees Manage Debt: Designing Debt-Related Benefits to Match Employee Needs and Preferences,’ points out the main stressors consumers are contending with today and how employers can help them manage their debt. One of the key findings of the study points out that a significant portion are struggling to pay their mortgage or rent because of these financial burdens.
"From heightened levels of stress to impaired workplace productivity, the far-reaching effects of personal debt on workers' lives are both startling and concerning," said Sean Fox, president of Freedom Debt Relief and chief revenue officer of its parent company, Freedom Financial Network. "Today, the financial health benefits many employers offer primarily focus on workers' future financial situation, such as planning for retirement. Meanwhile, benefits programs often miss the mark when it comes to helping employees address their present-day financial wellness, or even financial literacy, needs."
One of the key findings from the study is that 32% of all respondents said they had trouble paying their rent or mortgage. Additionally, almost half or 47% of respondents said they were unable to pay all their bills on time at least once in the past 12 months. A third said that they or someone in their household had trouble paying medical bills in the last year — with half of respondents saying they had to reduce spending on basic needs such as food and clothing to pay medical bills.
The stress that comes from high inflation and these financial burdens often spill into the workplace, as nearly 40% of respondents with unsecured debt missed at least one day of work in the last 12 months due to debt-related stress or issues. Moreover, 50% of those with debt spent an average of one hour per week at work dealing with debt-related issues — the equivalent of one whole week of lost productivity over the course of a year.
"Impressively, we saw that at least 40% of respondents who do not have debt-related benefits say they would be somewhat or very likely to use them if offered by their employer," Fox said. "By tailoring debt-related benefits to employee needs and preferences, businesses can leverage these underutilized tools, obtain measurable results, and help employees move forward in creating better financial futures."
