More than half of American workers feel financial stress. They worry about medical expenses, irregular income, saving for retirement, and family expenses like paying for a child’s education and support for aging parents. This worry isn’t good for individuals or families, nor for workers or employers.
This stress can be eased by employer offerings, by opportunities for independent workers, or by ownership or other tools made possible through philanthropic investment and partnerships. AFN gathers and shares information on the difference philanthropy can make in all employment sectors. Grantmakers can explore strategies for employer settings, for entrepreneurial workers in the growing gig economy, and for coop and business owners. AFN members collaborate on proven ways to build financial security and partner to replicate those ideas across the country.
This report sheds light on the role employers and philanthropy can play in best promoting financial well-being for workers through the offering of Employee Financial Wellness Programs (EFWPs).
The third in a series that builds off AFN’s earlier publication, Women & Wealth, reveals that while data shows women-owned businesses are growing in number, the businesses are typically smaller in size and generate lower revenues and profits for their owners and employees.
Why It’s Important
Grantmakers are investing in ways to reduce financial distractions in work settings, and boost workers’ economic foundations.
More security while starting a business
Less absenteeism at work
More business profitability
Increased productivity at work
Better preparation for secure retirement
Reduced employer health insurance costs
All individuals and families face the need to spend, save, borrow, and plan. One-third of workers report distraction due to worries about these financial necessities. That distraction comes at a cost, to individuals and to our economy. Employees that deal with financial matters at work can cost employers alone up to $7K per employee per year.
Employers: Grantmakers are investing in support for employers to reduce these distractions and costs, and boost employees’ economic well-being. Employers can take advantage of a wealth of apps, holistic programs, and practical products to engage employees in improving their financial health. These solutions take all sorts of forms. Perhaps it’s fringe benefits that reduce employee spending on transportation or child care. It may be assistance with short-term and emergency savings, or longer-term retirement accounts. Some employers offer pay advances and loans at reasonable rates. Others go beyond the usual retirement planning seminars to offer financial coaching.
Employees: Opportunities like those offered by employers are vital in the less predictable sector of freelance workers in the growing entrepreneurial economy. Vehicles that offer support to save, to borrow, to build professional skills, or to address unexpected crises are all harder to come by without a traditional employer yet just as necessary. Philanthropy can ensure these workers are not disconnected from opportunities to build their assets by connecting these workers to products and services that provide stability and security for themselves and their families.
Microenterprises: For people who don’t work in traditional employer/employee arrangements, philanthropy is also a key catalyst for owning a business as another key way to build assets. For example, microbusinesses with five or fewer employees require less than $50,000 in start-up capital and are often owned by women or Black, Latino, Asian, or Native American individuals, or others who lack access to business capital and resources. Despite that, many businesses owned by persons of color face capital challenges. One microenterprise organization serving women cites 40% higher average household incomes and 48% more household net worth for clients who own businesses than for clients who don’t.
It’s successful models like these that AFN members are pioneering, adapting, and leveraging for greater impact around the country.
““Promoting economic opportunity is critical for the growth and resiliency of communities and the economy. JPMorgan Chase is committed to helping low income households access a good job paired with asset-building products and services to improve their economic trajectory.”
Colleen Briggs | JPMorgan Chase & Co.