The 30 million Americans collecting unemployment checks at the moment are living on the brink, with their future benefits caught in a political debate. But in the midst of the pandemic, even working-class families with jobs are now facing new headwinds in the form of reduced wages, depleted savings, health-care bills, and increased child-care burdens. A Pew Research Center survey found that “the impact is falling more heavily on lower-income adults, a group that was feeling significant financial pressure well before the current crisis.” Indeed, “Having a job far from guarantees financial stability,” the Urban Institute said in a report last year.
What can employers do to help? For one thing, several retail giants including Amazon, Best Buy, Target and Walmart have all increased their minimum wage in the U.S. to $15 an hour. Beyond wages, some companies have considered additional ways to reduce the financial insecurity of their workers, including improving benefits like sick leave and providing tools to help workers with personal budgeting and financial literacy. Doing so is in the company’s best interest as well, since workers with financial struggles often have problems on the job, including absenteeism and lower productivity.
In a recent From Day One webinar, “Pay With a Shared Purpose,” several experts in the field of benefits explored ways for employers to provide better financial security for workers. Moderated by Lydia Dishman, reporter and editor at Fast Company, here are some notable takeaways:
Adopting Flexible Benefits for Uncertain Times
What the pandemic has taught us is that employee health is on the line, which means that employers have been motivated to increase or expand healthcare coverage. Marina Vassilev, director of compensation, executive HR and mobility at BASF Corp., the giant chemical producer, said when the pandemic hit the U.S., her company was willing to make adjustments. BASF immediately implemented paid leave for employees infected with COVID-19, as well as those with a family member struck by it.
Suzanne Usaj, who oversees North America benefit & retirement plans and global employee-program strategy for Live Nation, said that her company has a health-care benefits package in place that’s based on a percentage of income, so that lower-income workers pay smaller premiums than higher-income employees. The company has an on-demand, health-care concierge team as well, which can guide workers through their benefits. “In a time of pandemic, all these things that are built in there for them already turn into an actual tool or resource for them once they need to use it,” Usaj said. In terms of unexpected health-care costs for workers, “I think we're heading it off at the pass.”
Helping Employees Achieve Better Financial Literacy
Many people, especially those from underserved communities, may lack information on how best to utilize newly obtained resources and take advantage of provided benefits. But such information can be crucial during a personal crisis (pandemic-induced or not) helping to facilitate better decisions.
“One of the things I’ve always focused on in my career is building programs that enhance communication at the time of the compensation events [like pay raises]. That includes total rewards and benefits education,” Vassilev said. “We tend to be very specific around salary and bonuses, etc. But it’s the bigger picture [that’s vital], and building that knowledge over time really pays off for employees.”
Jon Schlossberg, founder and CEO of Even, a digital payroll platform that helps employees plan their finances, said that if employees can focus on paying down debt–through financial assistance or appropriate budgeting, along with better financial literacy–greater equity will follow.
“The average white family has roughly $150,000 of household wealth and the average black family has roughly $25,000 of household wealth,” Schlossberg said, a gap as wide as it was in the 1960s. “When you eliminate student debt, that number closes significantly. So helping folks eliminate their debt is, I would say, the longest lever that you as an employer can pull. Unfortunately, the gap is so wide, that is not the only lever that we need to pull if we want to actually solve the problem. But that’s where I would start.”
Being More Transparent About Equity
Employers should address inequities in compensation as well, in which women and people of color suffer a pay gap. Greater transparency is one of the solutions. Leaders could conduct “pay-equity assessments” by an external auditor, particularly to explore unfair gaps across demographics and ways to close them, said Kilolo Kijakazi, a fellow at the Urban Institute who coordinates partnerships that help tackle economic and social issues.
“A lot of employers think they have their hearts in the right places,” noted moderator Dishman, “but without those internal audits really sort of scrubbing the data and looking at it very carefully, it's hard to tell,” she said. “It’s challenging for somebody coming in, who’s historically underpaid. Even if they get promoted and get a raise, they’re still not earning what a counterpart who happens to be a white dude would be earning.”
“If employers sincerely want to improve financial stability for workers, they need to eliminate the structural barriers in the labor market,” said Kijakazi. “Namely, racial discrimination in hiring, pay, promotions and in benefits as well.”
Such problems are best addressed by consistent, long-term programs to reach equity, said Maria Reis, director of compensation and benefits at LG Electronics. “You don’t fix a problem that’s happened over decades in one year. You’d never have enough money to do that, but we do what we can,” she said. “We tell employees, ‘Look, this may take a few years to fix,’ and I think it’s been effective for us so far.”
Editor's note: From Day One thanks our partner who sponsored this webinar: Even, the financial-wellness platform. Thank you as well to everyone who attended this webinar live. If you missed it, feel free to check out our replay here and visit our conference page to register for more upcoming events.
Michael Stahl is a New York City-based freelance journalist, writer and editor. You can read more of his work at MichaelStahlWrites.com, follow him on Twitter @MichaelRStahl, and order his first book, the autobiography of Major League Baseball pitcher Bartolo Colón, at Abrams Books.