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The Health Impacts of Financial Instability on Your Workforce

The sudden, unexpected and aggressive economic impact of COVID-19 will have lasting financial effects for businesses and entire industries. However, the effect could also be compounded for companies not only by external forces decreasing their revenues but through an internal loss of productivity resulting from increased financial stress within their workforce. 

Long before COVID-19, it was widely recognized that as a whole, Americans were not saving enough for emergencies or retirement. The compounded stress of the COVID-19 situation will have both short and long-term effects on the physical and financial wellness of your workforce.

With reports indicating a solid economy and a jobless rate at a 49-year low, one would presume we’d see less stress among U.S. employees. However, this year’s survey shows quite the opposite, with more employees than ever admitting to being stressed about their finances. When asked what they feel causes them the most stress, more employees cite financial matters than any other life stressor combined.” PwC 2019 Employee Wellness Survey

Employers may be thinking, why is this national issue theirs to solve?

First and foremost, many would consider that caring for employee financial wellbeing is the right thing to do. Secondly, there is a substantial amount of research that suggests that when employees are financially stressed, they are distracted at work, more likely to be impacted by stress-related health issues and are generally less happy and productive. In short, if employees are healthier – financially, physically and mentally, companies perform better.

There are numerous studies on the adverse effects of stress, but financial stress alone can lead to: 

  • Sleep Deprivation
  • Overeating
  • Substance Abuse
  • Accidents
  • Smoking
  • Anxiety/Depression
  • Relationship Issues

These activities can lead to high blood pressure, back pain, headaches, insomnia and even an increased risk of a heart attack.

What can you be doing during the pandemic to engage a workforce distracted by financial instability? 

  1. Understand and Engage

    • Gauge the immediate financial challenges facing your employees through third-party conversations or assessments.

    • Identify what tools and resources would be most helpful in reducing stress and addressing root causes.

  2. Offer Education

    • Individual financial education and advice is more effective at impacting immediate stress and long-term well-being. Does your plan advisor or vendor to offer online counseling or resources you could promote to employees?

  3. Provide Ongoing Support

    • Employees are increasingly asking for ‘financial education’ as a part of their benefits package. Personalized and timely conversations are most impactful at changing short – and long-term financial behavior. Please consider whether you should add ‘financial wellness’ as a component of HR or benefits and what types of effective communication and activities that could include.

Please recognize that all ‘financial education’ is not effective in addressing the root causes of financial stress. People need access to financial advice on a personal and ongoing basis if they are going to change their behaviors and create a lasting impact. While important, simply reviewing retirement account balances and allocations with employees on an annual basis is not enough.

Businesses of all sizes are faced with challenges like we have never seen before, but I would encourage you to spend time and focus resources on your employees. Making sure that they are not stressed about their finances will help preserve their health and it will keep them happy and productive while they are at work. No matter what your business, your greatest asset is your employees and their overall wellbeing, should be your priority.

For more information on the important steps businesses should take during this uncertain time, visit our OneDigital Coronavirus Advisory Hub, or reach out to your local OneDigital advisory team. 

Investment advice provided by Resources Investment Advisors, LLC, an SEC-registered investment adviser and subsidiary of OneDigital.

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