Part 4: CFED: Financial Security at Work

Financial Security at Work: Where Do We Go From Here

This week we’ve reviewed our preliminary findings (see below) from our Financial Security at Work Initiative, sponsored by the Prudential Foundation, which is the culmination of a literature review, field scan and interviews with expert from the field. There is great promise in tapping into employer-based programs as a way to expand access to financial capability services.

But what are the key drivers in making that happen and what barriers exist? The questions we’re posing below will help inform our next phase as an organization and shape the conversations we will have with the field.

Have we made a case that drives employers to action? Nonprofits, social service agencies and frontline workers see every day that people who work still struggle financially. However, while we have some interesting isolated examples, the overwhelming majority of employers are not yet taking action to offer financial capability services to employees. Is it because we aren’t making the case to businesses, despite a growing mound of evidence that addressing financial issues leads to an improvement in employment-related outcomes? What is the compelling story we need to tell? As we mentioned previously, quantitative and cost-benefit data may be difficult to collect, leading us to question whether a large-scale research initiative it is the right path forward. Furthermore, will this data be compelling enough for employers to start offering these services or will a policy action be needed that will incentivize employers as a group?

Do workers want these services to be provided by their employers? Although the workplace is a tantalizing delivery model—because it’s where people get paid, after all, and because it dovetails with other financial benefits they may be receiving—questions still remain about whether employees want their employers to offer more extensive financial capability programs and products. Some believe that a third-party outside of the employer—similar to Delaware’s $tandByMe program, which places financial coaches on the job site—might be best to help create the sense of an arm’s-length relationship (even if the employer is paying for the financial coach, in the case of $tandByMe). Worker preferences, financial services needs and marketing messages all need further testing and refinement in order to better design workplace-based programs.

What is a quality job? As we grappled with this work over the last few months, there has been a big elephant in the room: wages. We heard the same sentiment over and over again: “if employers want to give their low- and moderate-income workers more financial stability, then why don’t they just pay them more?” We are also seeing the rise of the “1099 economy,” in which workers are relying freelance jobs, patching employment opportunities together with no benefits to fall back on. We recognize that it takes a livable, stable wage in order to start saving and planning for the future. However, research from the Institute on Assets and Social Policy shows that workplace benefits have a direct impact on a household’s ability to build wealth and achieve financial security over time. Additionally, many employers are looking at benefit packages as a way to entice and keep employees rather than with wage increases. Younger workers, too, are showing preferences for better benefits packages as part of their total compensation analysis. This work needs to be folded into the broader national conversation around what makes a quality job, including a livable wage.

What does financial capability programming look like in different sectors? We recognize that people interact with their employers in vastly different ways across sectors. A home health care worker’s touch points with an employer are vastly different than a fast food worker. A Head Start teacher has a different structure to her job than a bike messenger. Employers in these different sectors face different productivity and retention challenges with their employees as well. What are the models we put in place that help deal with these differences across sectors?

How do financial needs change across the lifecycle? As people progress from early career on to eventual retirement, they will need different products and services to address student debt, housing, childcare, emergency expenses, health care and retirement planning. In addition, different generations are facing financial issues in distinct ways; twentysomethings today have different financial needs than twentysomethings of the 1990s. Employers need to think through customizing their approach to financial capability services to address these different needs in the lifecycle and generational differences.

Who are the influencers? Sooner rather than later, CEOs, Chief Human Resources Officers (CHRO) and people who make benefits decisions need to be at the table with us to discuss the path forward. How do we best reach those individuals? What sources do they trust, and how do we begin to engage in their decision-making processes? How do we ensure we’re talking to benefits consultants who create benefits packages for large companies? How do we deploy the concept of shared value—where corporations create business value by addressing social issues—in tackling employee financial well-being? Are we addressing the problems that keep a CHRO up at night? These are all ways we need to think about the messages of employee financial stability and how to use them effectively to increase action among employers.

What is the role of policy? Policymakers have focused recently on retirement security, with great progress being made by Treasury with the new myRA product, and states like Illinois and California taking automatic-IRA initiatives forward. Beyond retirement security, what is the role for policymakers and advocates in moving other financial capability products and programs forward? Should every state codify their Office of Financial Empowerment and provide a financial coaching infrastructure, like Delaware? How can we build better protections for 1099 workers that provide enhanced financial security? Can we build incentives into the tax code to get more programs to offer financial capability and empowerment programs? Can we ensure new legislation, like WIOA, thinks about career pathways and employer partnerships that link new and old employees to quality financial products? CFED’s policy team will continue to keep an eye out for potential leverage points to expand financial capability programs in the workplace.

Moving Forward

Clearly we still have a lot of questions to answer. At CFED, as we move forward in our Financial Security at Work Initiative, we’ll be diving deeper into each of these to see what progress we can make. We want to engage with new and diverse stakeholders interested in the topic—reach out with your ideas and comments! Please share your thoughts with us using the #AJobIsNotEnough on Twitter and email us with any questions. We look forward to facilitating a productive conversation on this topic as we continue our work.

Acknowledgments

With gratitude to Terry Gillen, who helped pull together this collection of information and resources. Thanks also to expert informants: Justine Zinkin (Neighborhood Financial Trusts), Ken McDonnell (Consumer Financial Protection Bureau), Leigh Phillips (San Francisco Office of Financial Empowerment), Mario Avila (Emerge Financial Wellness), Mary Dupont ($tand By Me), Nicole Smith (New York City Office of Financial Empowerment), and Sameera Fazili- who brought us great insights and information about the workplace as a platform for financial capability services. Any opinions or views stated by the interviewees are their own and may not represent the views of the organizations where they are employed.

For more from this series, check out Part 1: Why We Need to Think About Financial Security at Work, Part 2: Financial Capability Programs: What Works in the Workplace and Part 3: Looking Ahead: Promising Practices for Financial Wellness at Work.