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Increase access to financial wellness and emergency savings.

Financial well-being programs are becoming a mainstream HR benefit. “The recently-released eighth annual Employer-Sponsored Health and Well-Being Survey from the National Business Group on Health and Fidelity Investments found that 84% of 141 large- and mid-sized companies surveyed now have financial wellness programs, up from 76% a year ago.” (See  Forbes article  for more information.) 
  • When income stability cannot be achieved by employer-led scheduling or payment changes, employers should offer access to financial services to smooth income, e.g., Even .
Income volatility is a key driver of financial insecurity. The Aspen Institute’s primer on income volatility gives an overview of the prevalence, causes, and impacts of volatility.

There are advances that employers can make in changing scheduling and wage practices. However, there are often other financial products that can smooth income in the event that the employer is not able to offer a steady paycheck. The Aspen Institute has another good brief on these hybrid financial products . Two examples to note, specifically:
  • Even is a company that pairs with your transactional bank account. It notes your average income levels and on weeks when income is relatively high, it skims the additional amounts into a savings account. On weeks when income is relatively low, it puts some back into the transactional account. In this way, the user experiences a steady income stream even though the actual income may be fluctuating.
  • Emergency funds will always be necessary; employers offering payday advance loans or emergency grant assistance keep employees away from payday lenders and cycles of debt. These “cushions” are essential for many Americans who cannot weather financial challenges like an unexpected medical bill or car repair where small investments can head off larger financial catastrophe to keep people on the path to economic security. Payday lenders, while regulated in some states, still often operate without transparency, charge exorbitant interest rates, and often behave in a predatory manner. Payday lenders bypassed McDonald’s in the number of outlets in 2007, and have grown to a $50 billion industry. These lenders often obscure fees and other costs associated with small loans; these additional costs may take many additional hours of work for a minimum wage worker to repay. State governments can do much more to demand transparency and crack down on their worst practices including requiring clear disclosure of total costs; and imposing caps on interest charged.
As employers or the company providing the paycheck, there is an opportunity to offer a better financial product in a more trusted, “safe” manner. Two examples:
  • PayActiv is a solution that provides hourly-wage paid employees with flexibility to access their earned wages in advance of payday. This includes access to better cash flow management tools to help employees manage financial flows. Several employers use this solution, according to testimonials from BRG Medical Center, Goodwill of Silicon Valley, Visiting Angels, and Walmart.
  • Levi’s Red Tab Foundation provides short-term emergency financial assistance of up to $5000 to Levi’s employees around the world. They also provide a separate portal to an emergency savings program where Levi’s provides matching dollars to participating employees.
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