How to expand beyond traditional financial benefits
Some 59% of workers report that they live paycheck to paycheck, according to Bank of America’s 2024 Financial Wellness Study.
“So at minimum, there are tens of millions of workers who are very much rooted in the financial present and who just carry a lot of financial stress and anxiety,” says Timothy Flacke, CEO and co-founder of Commonwealth, a nonprofit research and advocacy organization. “What that means is we have harm for individuals and families and communities, but also real business costs,” in terms of lost productivity, engagement, and turnover.
The solution, for Flacke, is reimagining corporate benefits packages to support workers’ financial security. In 2024, Commonwealth launched its Benefits for the Future Initiative, a partnership with the Clinton Global Initiative and JPMorganChase focused on researching, piloting, and implementing the next generation of financial wellness benefits.
We reached out to Flacke for his recommendations for organizations. Here are excerpts from our conversation, edited for length and clarity:
What benefits are you focused on to make the most difference for employees?
Over the last five or six years, we’ve had a chance to do a lot of work on short-term liquid emergency savings. Even several hundred dollars immediately available to you in liquid cash is like the Swiss Army knife of financial wellbeing, whether you need to pay for an expense very quickly or you want to loan somebody some money or your hours get cut or a fire comes up or you have an insurance claim that’s coming. There are so many uses, and there’s no approval process or delay, unlike borrowing money from a financial institution. We also see there’s a certain amount of dignity associated with having that reserve under your control.
Beyond that, there’s a ton of evidence that student debt is really burdensome for a lot of households. One thing that sometimes gets overlooked is there are an awful lot of workers who have the downside of educational debt, but none of the upside of higher earnings—folks who started down educational pathway maybe didn’t get to the degree or the credential or who ended up pursuing education in the field that they’re not able to work in. Employers can play a real role in helping workers deal with that debt issue, including matching student-loan debt payments with contributions to retirement plans, which was codified in the 2022 SECURE 2.0 legislation. Other ways to support employees with student-loan debt include information and education or making direct contributions to the debt.
What are areas for innovation in the realm of financial wellness benefits or pilots that you’d like to see implemented more widely?
We have a number of areas that we think are promising, and we want to have conversations with employers and see if they are a fit for their particular workforce. That includes employer support for tax preparation and claiming of tax credits. There are many, many, many hourly workers in this country, especially those who have kids, who qualify for the earned income tax credit or various different child tax credits, both federal and state. Yet there’s a lot of data that not all folks who are eligible realize that, and others spend a lot of money to have access to those credits.
One of the roles that employers play more broadly is group pricing. That’s an old idea—that an employer can go out and buy insurance much more effectively and end up playing a quality-assurance role. If an employer brings in a provider, whether it’s around something traditional like life or disability insurance or something that’s less common, like a tax preparation provider, you’re adding a lot of value to workers who have a lot of things on their plate and may not be specialists in that.
Another area we’d like to explore is medical debt, which is very widespread and really, really burdensome for households who have it. We haven’t yet seen employers step into that space and use their standing, their group-buying power, and their signaling power to help workers address that. In aggregate, a lot of debt that has gone into collections, for example, can be purchased and discharged at literally pennies on the dollar. It holds the promise of being a really high return on investment for an employer, though we’re still figuring out mechanically how one would do that.
Some other ideas in that space are more on the prevention side. Employers are, in a sense, really large purchasers of healthcare, and a lot of the places where that medical debt originates is in hospitals and on the provider side. Some of those institutions already have programs that are intended to cut prices for people who can’t pay for care, but it’s not clear that people who are eligible always find out. It’s interesting to imagine baking that into part of a health plan through an arrangement to default workers under a certain income into those programs.
What to read
- Commonwealth’s guides for employers on student debt and education savings benefits.
- Commonwealth’s case study on AutoNation’s emergency savings benefit.
- Our Work Tech guide to employee financial wellness tools.
- Our case study on Paypal’s financial wellness initiative.
