Tackling The Financial Impact of Climate Change on Workers

The first in a blog series

Commonwealth

Workers are not confident that they could financially recover if extreme weather were to impact them tomorrow.

Since 2022, the Occupational Safety and Health Administration (OSHA) has been working on proposed legislation to implement guidelines for workers and heat exposure. If approved, it would mark a critical acknowledgment that climate-related weather changes are having a massive impact on the United States workforce. Last year, natural disasters created nearly $93 billion in physical damage in the U.S. alone, and the International Labour Organization reports that more than 70% of the global workforce is exposed to climate-related risks. Even as OSHA moves forward to implement guidelines regarding physical security, another critical part of overall worker security needs to be examined: the impact of climate-change-related events on worker financial security.

Commonwealth’s survey, Feeling the Heat: Climate Change’s Impact on Worker Financial Security, details the impact of climate change on worker financial security, using responses from 1,200 U.S. workers living on low to moderate incomes (LMI). Workers across the country shared their experience of climate-related weather events impacting their financial lives. The survey’s results echo those from research also conducted over the past year by agencies and organizations, including the U.S. Department of Treasury, the U.S. Census Bureau, SaverLife, and the Aspen Institute. These findings reveal how climate change is adding further financial stress to the most vulnerable workers.

Commonwealth’s research showed that 49% of all workers living on LMI reported experiencing negative changes in their work due to extreme or unusual weather. More than a quarter (28%) report losing their financial stability altogether. Workers surveyed also said they are not confident that they could financially recover if unusual or extreme weather were to impact them tomorrow. Our report further revealed that workers impacted by climate change said they are unable to save for emergency expenses (30%) and pay off their debt (28%). To cope with financial shocks, workers explained they had to tap into their savings (41%), and take on more debt (22%), among other strategies. Additionally, respondents reported a reduction in their income, with nearly half of workers impacted saying their annual earnings decreased by approximately $5,000. 

Commonwealth’s survey aligns with a growing body of research demonstrating similar ramifications:

  • The U.S. Department of Treasury states that 13% of U.S. residents reported economic hardships from disasters or severe weather events within the past year. 
  • SaverLife, a non-profit organization that uses technology to improve the financial health of people living on LMI, showed similar results regarding debt management: “25% of its members  missed a monthly payment or household bill due to financial hardship after a severe weather event.” 
  • The U.S. Census Bureau mirrors responses in its 2023 Pulse Survey with “over one-third of U.S. residents impacted within the past year turning to loans or credit cards to meet spending needs.” 
  • The U.S. Department of Treasury showed that workers experienced decreases in earnings because of job loss and reduced working hours. It further reported that “lower-income households, who rely heavily on employment earnings to meet basic needs and often live ‘paycheck-to-paycheck’ may experience compounding hardship from even short-term disruptions in earnings.” 
  • Aspen Institute’s Financial Security Program highlights how “climate hazards” can lead to “income shocks” including wage disruptions from fewer hours worked or an inability to work. 

Despite these significant challenges, 60% of workers remain hopeful that we can solve the climate crisis if we come together. Workers surveyed by Commonwealth see a role for industry leaders to tackle the financial impacts of climate change:  

  • More than 80% are calling for an expanded employer response.
  • Twenty-three percent believe financial institutions should be providing aid. 
  • Seventy-three percent say that the government has a role to play in supporting those impacted by climate change.

Employers, financial institutions, and the government can address financial shocks—including debt management, hindered savings, and income reduction—by considering pathways within workplace benefits, consumer services (i.e., banking), and policy practices focusing on workers’ short-and long-term financial security.

Read the full report here and visit our climate page: buildcommonwealth.org/climate