Open Letter to Employers: Time to Improve Your Workers’ Financial Lives!

Hourly workers are the lifeblood of your company. They are the ones who have the most direct conversations and interactions with your customers. They are the ones who run the machines that make, repair, and distribute your products. They’re the ones who fix the problems that impede your service, and apply the policies that make your firm financially efficient.

But most hourly workers live paycheck-to-paycheck, which is a precarious and fragile financial condition. And when was the last time you really thought about helping them to improve their own financial lives? 

Six out of ten adult Americans don’t even have $500 for an emergency!

So who are these folks? Just about anyone making $25 an hour or less, including virtually all your customer-facing employees, such as retail store clerks, contact center agents, service technicians, and caregivers, not to mention accounting clerks, drivers, janitors, dishwashers, assistants, and others.

Financial stress is the modern affliction; but while we all suffer from it, your rank-and-file employees suffer worst of all. And the financial stress experienced by hourly workers isn’t relieved by standard HR financial wellness programs like retirement planning or health savings plans.

According to a Federal Reserve study, more than 20% of hourly workers, when faced with a temporary financial setback, turn to payday lenders, pawnshops, tax refund anticipation lenders, or auto title lenders. These bottom-feeders charge extremely high interest rates and then hustle even more money by imposing exorbitant fees and penalties (up to $30 for a two-week loan of $100, for instance).

It’s a difficult cycle to get out of, too. In fact, 80% of payday loans tracked over a ten-month period by the Consumer Finance Protection Bureau were rolled over at least once, and most were rolled over multiple times, each time with additional fees.

Employers: Where is your outrage?

Come on, people, it’s the 21st Century already. Shouldn’t you be upset that some of your own employees are probably caught up in this vicious financial treadmill?

The irony is that the same fintech revolution already equipping up-and-coming (and higher paid) Millennials with financial wellness products such as Moven, Payoff, and Qapital has spawned a variety of other solutions designed for lower-income workers, as well. But for some of these tools, employers need to participate, or at least take some action to make it happen.

Top of my list in this category would be PayActiv, a company I first encountered in November when I met CEO Safwan Shah. Safwan is a Silicon Valley serial entrepreneur, and he told me that his current venture is based on memories of his own struggles, living paycheck to paycheck, when he was younger (long before he founded his first company).

He founded PayActiv because he’s determined to do something to help ease the financial stress that all hourly workers face. So PayActiv has developed a fintech product that makes the simple process of getting a payroll advance fast, cheap, discreet, and frictionless, eliminating entirely the employer’s burden of processing and paperwork. It doesn’t cost employers a dime, but they do have to agree to offer the service, allowing employees to download the app.

So effective is PayActiv’s fintech product, in fact, that HR Executive Magazine named it “HR Product of the Year,” calling it “one of the simplest, most straightforward solutions we have seen addressing the precarious, paycheck-to-paycheck state of millions of middle- and low-income American workers.” 

Employers: Help your own business by helping your hourly workers!

Easing the financial stress felt by rank-and-file workers is crucial to your own success as a business. After all, if an employee is worried sick about where she’s going to get the money to pay for her child’s overnight school trip, or to have her car repaired, do you really think she’s paying close attention to the customer she’s dealing with? 

Study after study shows that a workforce of engaged workers is the single most important key to a company’s long-term competitive success, but when you’re stressed out about your personal financial problems, engagement at work is likely to be the last thing on your mind.

PayActiv recently surveyed its employee users across all employer clients, and the average eNPS score among these users was +73, which represents an astounding increase in employee engagement! (Practitioners who have studied eNPS at many different companies say that the average company’s eNPS score is negative or close to zero.)

The health and welfare of your hourly, customer-facing workforce is the next frontier of CX competition. Your success will depend on their engagement.

So why not do something proactive to show them you’re worth it?