When it comes to employee compensation, can money buy love—i.e., job satisfaction?
Lately, it seems that study after study concludes that employee compensation is not the secret of workplace happiness. For example, in a massive Glassdoor survey of more than 615,000 users, workers prized a workplace culture, quality leadership and career opportunity over pay.
However—and this is key—lower-wage workers consistently valued their pay more than those earning higher salaries.
Of course they did. Money isn’t everything, but when you don’t have quite enough of it, it overshadows everything else. Including your workday.
Fact: Some of Your Workers Have Big Money Problems
More than half of the American workforce—54%—is stressed over finances, according to PwC’s 2017 Employee Financial Wellness Survey. In addition, 64% are carrying student loans and 42% think they’ll need to raid their retirement funds to cover other expenses.
A similar survey by the Center for Financial Services Innovation (CFSI) found that a whopping 85% of Americans are anxious about money—and that it directly impacts their work in the form of lost productivity, increased absences, higher turnover and ballooning healthcare utilization.
So beware, employers: your employees’ financial problems are your problems, too.
It’s Even Worse for Low-Wage Workers
If your company employs low-wage workers, it’s safe to assume that many are living paycheck to paycheck—or worse yet, not making ends meet.
For underemployed workers who don’t make a living wage, a one-day paycheck delay or scheduling change that means fewer work hours could push them over the edge, financially.
Hard to imagine? Walk a mile in your low-wage worker’s shoes: take MIT’s living wage calculator for a spin. It allows you to compare your local minimum wage to its living wage—i.e., the amount a worker must earn to support themselves and their family
It also shows you how local wages stack up by industry. What you find may give you a new level of insight into your low-wage workers’ lives.
Example: Cook County, Illinois
In Cook County, the minimum wage is $8.25 per hour, but the living wage for a single adult is $13.30—and it rises from there for those with dependents. That means a single adult must make a gross annual income of $27,659 to make ends meet.
Now, here’s how typical annual earnings in various fields stack up for low-wage workers in this area:
Type of Worker Typical Annual Earnings
Maintenance worker $27,573
Food service worker $20,840
Healthcare support worker $27,388
None of these workers quite make a living wage, which means many work side gigs just to make ends meet.
When you think about it, isn’t it remarkable that your low-wage workers can function at work at all?
What Employers Can Do: Financial Wellness Programs
Many employers may not be in a position—or be inclined—to change their employee compensation structure. But there is one relatively affordable thing employers can do to make a difference: in addition to the company’s Employee Assistance Program (EAP), institute a financial wellness program.
An effective financial wellness program can help employees at all levels manage their money better, from budgeting, to paying down debt, to creating a savings or retirement plan. Like any worthwhile employee assistance program, the key to a successful financial wellness program is to target it specifically to your employee population.
Consider this: companies with hourly workers are less likely to rate their employees as “very financially literate” than those with salaried workers, according to a Society for Human Resource Management survey. That’s pretty bad, considering that 61% of all HR professionals polled rated their workers’ combined financial health as “fair” or worse.
So how do you make sure your financial wellness program is meaningful? According to a Bank of America Merrill Lynch workplace report, that means:
- Offering workers opportunities to meet one-on-one with financial professionals (as opposed to generic classes).
- Providing programs that give employees specific step-by-step action plans.
- Offering a range of programs targeted to different employee groups, genders and generations.
- Making sure you teach employees about Health Savings Accounts (HSAs), which most workers don’t know how to use properly.
- Measuring the effectiveness of your financial wellness program regularly, taking worker satisfaction into account.
At the end of the day, employee compensation matters tremendously, especially for workers living paycheck to paycheck. You may not be in a position to give them a pay raise, but you can raise their financial wellness IQ.
You want to improve your employees’ financial wellness…we want to help you improve yours. At EPAY Systems, we help employers keep labor costs down, thanks to an innovative workforce management program that cuts costs by 5% or more. And because our HCM system simplifies everyday HR tasks, your HR crew can focus on more important things—your people. Learn more—take our two-minute tour.