The Consumer Financial Protection Bureau (CFPB) said financial distress is rampant in the American workforce, and this distress can negatively impact productivity and employee health. The bureau published a report to promote financial wellness in the workplace and urged companies to establish programs to support the financial health of their employees.
The report, released Aug. 26, contains case studies that are designed to educate employers about practices that can improve employees’ financial health and increase worker productivity.
“Financial wellness at work is increasingly important both to employers and to employees,” CFPB Director Richard Cordray said. “A financially capable workforce is a more satisfied and engaged workforce that is also more productive.”
According to the bureau, research has shown widespread financial distress among those in the American workforce since the Great Recession. This distress can have a significant, negative impact on employees’ work. Financial distress leads to decreased productivity, increased absenteeism and may undermine the overall health of employees.
Company programs that educate employees to help them plan out their life goals and make responsible financial decisions can support financial health, the bureau said.
The CFPB reviewed research on financial wellness programs and on the delivery of financial education in the workplace. The bureau also engaged with executives in the private sector, nonprofit leaders and financial education practitioners to solicit feedback. The CFPB’s review found that many businesses believe financial wellness programs generate greater engagement, loyalty and productivity.
The report also outlined practices that may support financial wellness. For instance, the CFPB suggested that engagement on financial health issues should begin when employees are new to a company and are more open to change.
“This can be a good time to work on financial wellness priorities as new employees are focused on making important decisions about tax withholding, retirement savings and employer-offered health insurance,” the CFPB said. “Successful programs that begin at employee onboarding can include financial education workshops and individual financial coaching.”
The report also recommended peer-to-peer support.
“Coworkers can help each other develop better financial habits,” the bureau explained. “Work teams that go through financial wellness training together end up supporting each other and creating a more collaborative environment. As employees form small teams, they often encourage each other, and that peer support may help individuals adopt and sustain sound financial habits.”
View the CFPB’s report