Biggest financial health opportunity? Focusing on short-term help

Financially speaking, things have been bleak for many employees: Some statistics show as many as 78% of employees live paycheck to paycheck. Other stats show that 40% of Americans don’t have $400 in the bank for emergency expenses. And that was pre-pandemic.

Now two years into COVID-19, the crisis and its continued uncertainty aren’t making things easier for employees’ financial health.

Tim Flacke
Tim Flacke

“There is a lot of pressure,” says Timothy Flacke, executive director and co-founder at Commonwealth, a Boston-based financial nonprofit. “We have this enormous new variable, which is public health, and not knowing when the next variant will be and how it affects the industries we work in. It’s a vector of vulnerability and uncertainty.”

Some COVID relief bills, as well the expansion of the child tax credit, have helped many employees in the short-term with their finances, says Flacke, who started his career in HR. “In many ways, it’s been historic and wonderful, but it’s also been the case that it is not been predictable. There’s a bill passed, and it expires, then there’s a period of uncertainty.”

The silver lining is that there is a lot of innovation happening in the financial health industry and there are a lot of relatively easy strategies—many of which are largely underutilized—that HR and benefits professionals can embrace to help employees. Flacke will be speaking in-depth about these strategies—and how they can make a difference—at HRE’s upcoming Health & Benefits Leadership Conference April 5-7 in Las Vegas. Register here.

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Ahead of his session, HRE spoke to Flacke about the importance of emergency savings, what employers should do now to help and some of the innovation he’s seeing.

HRE: At the workplace level, there’s now a lot of conversation about employee savings and helping workers build a nest egg. It’s a simple concept, but it hasn’t been a big focus of employers historically. Why is that, and how are you seeing that change?

Flacke: For very understandable and good reasons, in a workplace context, a lot of our focus on benefits is really on long-term financial security. But the thing that we sort of missed at a high level is that for the majority of workers in this country, their financial life is very much in the present.

Ginger Zee of ABC News to headline Health & Benefits Leadership Conference 2022Short-term issues, volatility and breaking through them—that’s really the place that most of us are spending our lives, our emotional lives, our financial lives. And yet, if you look at what employers are spending resources on, and historically what they’ve prioritized, there’s not a lot of tight alignment there. And so from our perspective, that creates real opportunity.

Short-term liquid savings is probably the epitome of that. But years ago, it was really not talked about as a workplace issue. And today, we feel like that’s very different. These are fintechs that are specifically focused on emergency savings. So there really has been a shift that this is now a workplace-relevant issue.

HRE: What do you think are some of those most impactful things employers can, and should, do to help employees with their financial health right now?

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Flacke: What we’re really excited about and think there is truly an opportunity for is a set of tools, interventions and benefits that are very focused on short-term financial insecurity. And some of the things we’ve seen work on emergency savings. There’s a growing world of emergency cash assistance, which is actually a pretty widespread practice among corporate America. There’s short-term lending as an employer sponsor and early wage access. There are student debt repayment benefits. There’s a ton of innovation and opportunity around these very short-term things that make a difference in people’s daily financial life. And what’s important is not all of them are incredibly expensive [for the employer].

Wildly underutilized is the ability to split your direct deposit to more than one destination. It’s not a panacea. But a careful effort to promote that from hire is a way to help people—from their first paycheck—add [money] into liquid savings or a health savings account. So again, these are not heavy lifts.

Related: HSAs, FSAs and 401(k)s: 11 figures to know for 2022

HRE: This is all so important. What does the employer help accomplish in terms of employee morale too?

Flacke: Done right, employers who are doing any of these things can send a message of essentially, “I see you; I see the challenges that you’re experiencing.” And that’s important because, in our view, we’re trying to solve for the objective reality that people are not as financially insecure.

And we’re trying to solve for the subjective sense that they feel confident and secure. That’s where the return comes in terms of for their own life, and also in the workplace. And sometimes it’s not just what you do, it’s also how you do it, the way you explain it, and the way you communicate it, that can send a message that [employees] are not alone; a lot of people are struggling in this.

HRE: You’ll be speaking at HRE’s upcoming Health & Benefits Leadership Conference. What can attendees expect from your session?

Flacke: It’s this conversation with a little more space and an emphasis on what does it mean for me as a benefits professional and as an HR professional. I think the frame here really, truly is opportunity. There are things to do, there’s low-hanging fruit. In all our great intentions and all the effort that’s happening, we’ve missed some things. I think getting these [ideas] out and into the world should be a cause for optimism.

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Kathryn Mayer
Kathryn Mayer is HRE’s former benefits editor and chair of the Health & Benefits Leadership Conference. She has covered benefits for the better part of a decade, and her stories have won multiple awards, including a Jesse H. Neal Award and honors from the American Society of Business Publication Editors and the National Federation of Press Women. She holds bachelor’s and master’s degrees from the University of Denver.