Much attention has been drawn to employees’ financial stress in the past few years and its effect on their job performance. And then came the COVID-19 pandemic that, beyond the health concerns, impacted employee financial stress beyond imagination. Layoffs and furloughs ensued affecting many employees themselves and/or their spouses and partners. Financial stress was kicked up several notches.
In response, employees did what was necessary to keep their households running, using whatever means were available to them including borrowing money from family and friends, running up their credit cards or withdrawing money from their 401(k) savings. Whether some have returned to work or not, the consequences remain, including maxed-out credit cards accruing interest and not being able to make full payments. And that adds to financial stress as well, as 95% of those impacted by COVID-19 financial hardships reportedly are concerned about their ability to rebuild their credit.
The Federal Reserve recently reported that total consumer borrowing rose by $16.2 billion in September, an increase that was nearly DOUBLE of what economists had been forecasting. Clearly, the impact of COVID-19 on employees’ financial situation continues and will affect their credit for some time.
One way employers can help the situation is making sure their employees are aware of voluntary benefits that are part of their overall employee benefits program. VBs can be a smart alternative for covering unexpected expenses. Often, employees aren’t aware some of these benefits exist because they weren’t something they needed in the past. Open enrollment is a good time for strong benefit communications about options in the employee benefits plan that might be helpful during this time.
Our employee purchase program which allows workers to purchase consumer products and services through payroll deduction when they are unable or prefer not to use cash or credit, is one helpful solution. The program is an alternative to high interest credit cards and other sub-prime financing options for customers desiring to pay for a product or service over time. We do not charge any interest, fees or late charges which are common with credit cards, and we do not require a credit check.
When employers are reviewing voluntary benefit options during this open enrollment season with their benefit brokers, concerns about the pandemic’s far-reaching impact will undoubtedly will bring a focus to those that address employees’ financial well-being. Purchasing Power’s employee purchase program is a meaningful voluntary benefit that can help employees with financial challenges.
Written by: Mike Wilbert, Purchasing Power Chief Revenue officer