In the next few years, minimum wage hikes will offer 13 million people a once in a lifetime opportunity to build their financial security.
The security and peace of mind that comes with having emergency savings is invaluable, and coming minimum wage hikes offer 13 million people a once in a lifetime opportunity to build their financial security. At Commonwealth, we’re looking at how we can partner with workers, employers, financial institutions, community organizations, and government to make sure workers are able to take advantage of this opportunity.
A study by PwC found that nearly one in three employees report that personal finance issues have been a distraction at work. For our own preliminary research, we surveyed two small samples of low wage workers – those who are going to get a raise and those who already got a raise. 67% of the first group reported that they plan to save at least part of their increase and 62% of the second group said that they did save some of their raise. These preliminary results are encouraging– workers see the opportunity to begin building financial security with these raises.
Employers are in a unique position to facilitate this savings opportunity by 1) encouraging workers to make the decision to save a portion of their raise and 2) enabling them to save through automated direct deposit splits or other products. We are doing pre-pilots with two employers in San Francisco related to the July 1, 2017 minimum wage hikes. Through these pilots, we will gauge employee interest in saving upon receiving a wage increase and determine what solutions are most promising from both an employer and employee perspective.
We are also recruiting employers and organizations that work with low wage workers in New York and Los Angeles to work with us to pilot innovations for the hikes occurring at the end of 2017.