Supporting employee financial health pays off

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Every manager wants their employees to be focused on the task at hand, but workers find it difficult to focus when creditors call, their car breaks down, or rent is late.

While most employers provide health care, fewer pay attention to the financial health of their employees. About half of Texas workers don’t have emergency savings, and more than 40 percent rely on non-bank loans, such as payday lenders and securities lending, according to this year’s report. National Financial Capability Study.

Any leader curious about the financial well-being of their workforce should just ask human resources how often employees download a copy of their pay stub, said Francis Gonzalez, program manager San Antonio for the Network of asset funders

“You’d be surprised how many of them are deleted by people who take them to a payday lender,” Gonzalez added.

The flip side of employee stability metrics may reflect employee stress levels: staff turnover, attendance issues, and more frequent income verification requests.

Gonzalez spoke at an Asset Funders Network seminar to promote employer financial wellness programs, not only to help workers manage their money, but also to help companies reduce employee turnover and increase productivity.

The nonprofit network, led by bank JP Morgan Chase, connects businesses with nonprofit and for-profit services that provide low-cost or free support. The network works to reduce poverty by providing low-income workers with the knowledge they need to avoid getting into debt.

Houston and San Antonio both have a higher percentage of the working poor than the rest of the country. According to Wallet Hub personal finance site, residents of both cities are among the worst off when it comes to high-interest credit cards and paying off monthly balances.

Texans also rely too heavily on non-bank lenders, such as payday lenders, auto title lenders, or pawn shops, who can charge fees and equal interest at an annual percentage rate of 661%. Unsurprisingly, only 14% of borrowers say they can afford to pay off these loans on their monthly budget, according to surveys from the Pew Charitable Trust.

Quick default triggers a financial death spiral, where borrowers take out additional loans and incur punitive fees. About 85% of payday loans have to repay past loans, according to the Consumer Financial Protection Bureau. Ultimately, borrowers lose their cars, ruin their credit, and lose their homes.

Responsible employers want to keep their employees away from predatory lenders, and banks and nonprofits are lining up to help.

Work-life partnership is a non-profit organization that, for a fee, provides on-call browsers to help workers get the financial services and information they need, said Valerie Wendell, senior vice president.

“We can also help employers better understand their workforce,” she added. “We can say, ‘Hey, we’re noticing that credit is a real problem, or we have a lot of employees who don’t know how to navigate their health insurance and are facing some really big medical bills… so we can. specialize and create workshops that can be offered on site.

In surveys commissioned by Asset Funders, employees say what they need most is access to short-term loans when a family emergency strikes. They are happy to pay off the loan through automatic payday deductions, but without good credit they end up in a payday loan center.

The Community Loan Center of America franchises an affordable emergency loan program that connects local banks and credit unions to employers free of charge. No credit report or guarantees are required, and the program offers affordable repayment plans and fast approval, said Matt Hull, executive director of Texas Association of Community Development Societies.

“We control the software and the branding; we have all the logos and marketing materials. We see this as a turnkey product, ”said Hull. Because the lender collects the payments with automatic payday deductions, default rates are well below industry averages, and it doesn’t cost the employer anything, he added.

The city of Houston is Texas’ largest employer on a CLC program, and IBC Bank recently signed up as the first lender to offer CLC services in San Antonio. The hardest part is convincing senior executives and human resources departments, who typically have no experience with predatory lenders, that the program is needed, Hull said.

Every business, however, has a stake in the financial well-being of its employees. Firing a qualified employee because his car was repossessed when he couldn’t pay off an abusive loan he took out to fix the car doesn’t make sense.

Without too much effort, employers can make a real difference in the lives of workers, and simultaneously gain loyalty at a time when finding the right help has never been so difficult.

Tomlinson writes commentary on business, economics and politics.

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