It used to be that health insurance, paid time off and perhaps a 401(k) retirement plan were enough to keep most workers engaged and happy.
But as millennials and other young adults increasingly dominate the workforce — and bring their financial stresses with them — some employers are expanding their benefit packages with programs designed to tackle student debts, encourage emergency savings, teach basic financial literacy and more.
Younger adults still value many traditional workplace benefits. For example, health insurance was the top perk cited by newly graduated job seekers in a survey released this month by the American Institute of Certified Public Accountants.
Paid time off was the second most popular benefit, according to the poll of more than 400 college graduates ages 18 to 34 who are seeking full-time work.
But along with retirement plans, the remaining top choices were fairly nontraditional ones, including student-loan forgiveness, the ability to work remotely and paid parental leave.
Employers and their financial-company partners are focusing more on these side issues that can stress workers, undercut their productivity and keep them from taking full advantage of other valuable programs, especially 401(k) retirement plans.
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“There’s a tremendous intersection between someone’s financial health and their physical, emotional and career health,” said Shawn Leavitt, a vice president in the benefits area at Comcast Corp., who recently spoke at a Scottsdale conference hosted by the Financial Health Network.
Here are some of the new, financially oriented benefit trends being developed by some employers, often with young adults in mind:
Help with emergency funds
Perhaps two in five Americans are basically living paycheck to paycheck, according to various studies that indicate many people would have trouble coming up with $1,000 or less in a pinch.
Two in five Americans are basically living paycheck to paycheck, according to various studies that indicate many people would have trouble coming up with $1,000 or less in a pinch.
This lack of rainy-day money often forces people to dip into retirement accounts, turn to payday or auto-title lenders or make other unwise money moves. It also can make them stressed, less productive and even unable to get to work on time.
Comcast, which employs 190,000 people in business areas ranging from Universal Studios theme parks to internet and TV services, now offers short-term, low-interest loans to those who need money in a pinch, regardless of their credit scores, Leavitt said.
Uber offers a program in which it allows drivers to electronically access the pay they have earned to date, almost immediately.
“A lot of our driver partners start the day with essentially no money at all,” said Peter Hazlehurst, Uber’s head of payments and risk, who also spoke at the Financial Health Network conference.
The ride-share company also offers small-dollar, short-term loans to help them buy gasoline or otherwise get back to work. As noted, Uber doesn’t require drivers to wait for a payday to arrive one or two weeks out.
“Some of our driver partners take their earnings five times a day,” Hazelhurst said. “We pay people in real time and create that safety net.”
Look for more employers to offer these kinds of programs.
With so many young adults facing tens if not hundreds of thousands of dollars in higher-education debt, it’s no wonder employers are paying more attention to this area.
For many younger workers, debt payment can be a more urgent need than putting aside money for retirement, a life phase that won’t arrive for three or four decades.
“A lot of workers aren’t saving for retirement because of student loans,” said Jeanne Thompson, who heads a team focused on workplace benefits at Fidelity Investments. “All that debt causes stress.”
“A lot of workers aren’t saving for retirement because of student loans. All that debt causes stress.”
Some of the employers Fidelity works with are trying various types of student-loan debt assistance. These include: outright company contributions to pay down debts, diverting a portion of a worker’s 401(k) matching funds to debt payment, helping workers understand their debt-payment options and converting a portion of unused sick time into dollars that can be used to pay down debts.
In the AICPA survey, student-loan help was ranked as the third most popular benefit among young adults. But for those with student loans, debt payment was viewed as the most important use of their benefit dollars.
In other words, when given a hypothetical $100 from an employer to split between paying a portion of their student loans or putting the money toward other benefits, young job seekers preferred the former.
For example, respondents with student loans on average would like $61 of the $100 to go toward debt payment and $39 toward health insurance. As for 401(k) plans, they’d rather have $65 go toward debt and just $35 toward 401(k) matching funds.
Financial literacy help
Another way employers are trying to assist workers, especially younger ones, is helping them learn more broadly about financial challenges. Many adults of all ages don’t budget, don’t understand the consequences of compounding, and so on.
More employers are offering financial-literacy help for people like Hayley Gename, who said she didn’t learn credit basics in high school or college.
Hayley Gename, a 27-year-old Gilbert resident, found herself with a subprime credit score and a load of debt after facing an unexpectedly large car-repair bill.
“I have a master’s degree but they don’t teach you that in high school or even college,” Gename said, citing bill-paying, how credit cards work, compounding and other basics. “I think it should be a required course.”
Because Americans generally aren’t learning about these topics in the school system, more employers are lending a hand with seminars, online courses and other ways to educate their staffs. This often involves assistance with budgeting, understanding debt, learning how to save effectively and learning about insurance and other safety nets.
And even when employees aren’t grappling with debts, they’re often investing inefficiently or not aware of tax breaks and other benefits.
Lorna Kapusta, a Fidelity marketing executive, said she believes many of these issues are especially pressing for women. For example, a Fidelity study found that about one-third of women have $50,000 or more sitting in low-interest bank accounts.
“Women often are very good at meeting and paying for daily expenses but not so good at investing for the long term,” Kapusta said.
Reach Wiles at email@example.com or 602-444-8616.