As Money Anxieties Mount for Public Employees, so Does the Need for Financial Wellness Programs

The coronavirus pandemic did more than claim what the University of Washington’s Institute for Health Metrics and Evaluation estimates to be in excess of 900,000 lives in the United States. It aggravated the financial insecurity already afflicting too many Americans. This has worrisome implications beyond people’s own households. Employers, communities and the overall economy suffer when people feel financial anxiety.

Recognition of the problem has led to a surge in private employers offering financial wellness programs. The public sector should take note. Those employed by state and local governments—from teachers to maintenance workers to emergency responders—are not immune to today’s financial uncertainties and resulting stress. Indeed, government workers may feel the pressure to an even greater degree.

Feeling anxious over one’s finances is not new. That it has become such an issue for public employees should raise warning flags for everyone because these individuals play essential roles in keeping society running smoothly.

A 2019 study commissioned by the Center for State and Local Government Excellence (SLGE) found 54 percent of government employees worried about their finances while at work. The situation has not improved during a period when state and local governments responded to the economic impact of the pandemic by cutting jobs and freezing salaries.

Furloughs and layoffs were widespread, especially in public education. And while the American Rescue Plan Act enacted in March 2021 provided relief for cities, towns and other jurisdictions with populations lower than 50,000, Moody’s Analytics still predicted spending cuts of up to $500 billion and/or tax increases across all U.S. localities through 2022.

It should be no surprise that public employees, like their counterparts in business, are seeing their financial stress ratchet up in this environment. Some of the fallout comes in the forms of presenteeism and absenteeism. Communities pay the price, as well.

Take teachers as just one example. If circumstances force cuts in salaries and benefits such as employer contributions to pension and health plans, teachers may leave their jobs. For those who remain in the classroom, financial stress could exacerbate issues arising from low morale. What initially manifests as increased absenteeism and lowered engagement by teachers can translate into falling student achievement, greater difficulties with hiring new educators and a range of direct and indirect financial burdens for the community.

In 2019, the SLGE found that only 26 percent of state and local governments offered their workers a financial literacy or education program. This was clearly a missed opportunity, as seven in ten government workers indicated they would be onboard if such a program were offered.

Here are some suggestions for public sector employers to consider when moving to develop and implement a financial wellness program or benefit for their employees.

Don’t Tackle the Problem With Siloed Input

Form a task force with members from across the organization to get the best thinking possible on employees’ financial pressures. Seek input from external stakeholders and from leaders at other organizations that could play a role in relieving employees’ financial stress. Employee benefits experts are not the only, or even best, sources of insights. For starters, speaking with retirement plan advisers can be integral to finding solutions.

Also keep in mind that more than productivity suffers when employees feel financial stress. Having the ability to save money is a big issue for most people in general. If retirement savings and, with it, retirement readiness are hindered, there is a long-term impact. Think, too, about the higher salaries older employees command relative to those of newer workers and how this affects access to and usage of health care and workers’ compensation.

Create a Strategy Based on Sound Analytics

Make finding financial wellness solutions a shared organizational imperative. It is easy to think in generalities about employees’ likely pain points from a generational perspective. Young millennials and Gen Z workers are bound to be carrying student loan debt. Gen X employees may be juggling education costs for their kids and eldercare costs for their parents. Identifying effective solutions requires doing more-thoughtful analyses.

Fundamental questions that demand answers relate to how employees use the health care and voluntary benefits currently available to them. Who are the users, and in what ways are the benefits used? Presently, it is also necessary to look into the specific financial impact of the pandemic.

Segmenting employees and their needs according to factors such as life stage and career status, education, lifestyle and goals also helps point toward new and expanded benefits employees will use and appreciate. Doing this facilitates the delivery of more-individualized solutions that address the financial issues employees worry about the most. And once employees start participating in a financial wellness program, they have the basis for achieving financial goals.

Dust Off Relevant, but Forgotten, Benefits as New Ones Are Added

Before creating a new portfolio of financial wellness benefits, an employer should audit its existing plans to uncover what can be repackaged. Legal, insurance and financial counseling services are likely already available to employees. Tying these into retirement plans and employee assistance programs can make sense. And while executives or elected officials might express concerns over added expenses, employers do not pay the costs for most voluntary benefits.

Tell Employees About the Program Early, Often and in a Way That Resonates

People need to know that solutions exist and can be accessed with relative ease. Too often, those messages get lost in the shuffle. This does a disservice to employees because, in most cases, just having a door opened to assistance with financial woes is beneficial all by itself.

No financial wellness program should be developed with the hope people will come to it. Rather, plans must be in place from the beginning to call out the program and its facets to the people at whom it is targeted. Relevant messages should be sent through the channels employees are most likely to access. And those messages should be delivered consistently as part of coordinated efforts to boost participation and ensure people actually receive the relief they need.