Advancing Equity Through Worker Financial Health: A Framework for Employers

To address financial health gaps across demographic groups in your workplace, you will first need to diagnose the disparities using data to identify gaps. Next, you will design and deploy solutions targeted at those gaps.

Using Data to Identify Financial Health Disparities

To determine the best solutions for your workforce, you must firstmeasure their financial health needsand identify where gaps and inequities exist. HR leaders have access to a wealth of data through their payroll and benefits systems that can shed light on not only the financial health of a workforce, but also on the current utilization of benefits across that workforce. Employee surveys can be a rich source of additional insight into financial health needs and vulnerabilities. By disaggregating the data by race, ethnicity, gender, income, job level, and other demographic or job characteristics, HR teams can begin to see where there may be differences in financial health outcomes for different groups.

Of course, gathering and analyzing these data can sometimes be challenging. Many employers are required by the EEOC to collect and report limited employee demographic data. Key data are often stored in various systems internally or externally with third-party vendors, which can complicate efforts to assess benefits utilization by demographic segments. Some firms are hesitant to gather and analyze their data by demographics, particularly by race and ethnicity, due to the perceived legal risk of conducting such analyses.

Despite challenges, we’ve interviewed several large employers that recently began analyzing their benefits data by demographics and job characteristics. Some are supplementing benefits data with self-reported data from total rewards optimization surveys and other employee surveys to better understand the prevalence of specific needs, such as employees of children with disabilities or aging parents. Many HR leaders are also proactively working with their organization’s employee resource groups to uncover specific challenges facing specific segments.

Designing Equity-Based Approaches to Employee Financial Health

Once HR leaders have identified gaps in financial health outcomesfor different segments of their workforce, they can begin to consider opportunities to address those disparities through the design and delivery of benefits and total rewards practices.

Through our early research, we’ve identified several strategies for designing programs and benefits that promote equal financial health outcomes for employees.

Broaden Access to Benefits That Support Financial Health

Review and refresh your existing HR and talent policies in areas like compensation, retirement, and healthcare benefits to prioritize financial health. For example:

• • Ensure that all employees are earning wages and benefits that support their financial healthwith tools such asMIT’s Living Wage Calculatorornewer metrics like PayPal’s Net Disposable Income concept. This should include workers who indirectly support operations through contracted firms or temporary staffing agencies.
  • Extend benefits that provide resilience and wealth-building opportunities, like healthcare and retirement plans, to broader segments of your workforce, including part-time employees.
  • Reduce or eliminate waiting periods for new hiresto access benefits, recognizing that financial instability contributes to high turnover, especially for frontline workers.

Use Targeted Strategies to Improve Financial Health for Specific Segments

Historically, the prevailing ethos in most HR departments has been the principle of “fairness” – the idea that the same programs and benefits need to be equally available to all employees. HR leaders tend to design benefits for theaverageemployee, often resulting in suboptimal results for employee segments who do not fit that profile.

A growing number of HR leaders recognize that they need more targeted approaches to close gaps in financial health outcomes among employees.

Our early research reveals that these approaches take three main forms:

1.Making benefits more accessible to financially struggling employees.Beyond expanding access to key benefits for more employees, companies can implement tiered fee structures or modified delivery approaches to address a range of needs, including:

• • Varying the cost of benefits.Adjust employee contributions so that lower-paid employees pay less for benefits or receive greater incentives. This is an increasingly common practice in health insurance benefits.According to a 2019 estimate, a quarter of large employers varied their contributions to healthcare premiums based on employee pay levels. Several employers we interviewed offer similarly tiered structures for other benefits, including long-term disability insurance, life insurance, 401(k) matches, child care assistance, HSA account contributions, and wellness incentives.
  • Redesigning tuition assistance programs.Ensure tuition assistance is accessible to lower-income employees by paying for tuition upfront rather than requiring reimbursement, and design scheduling policies to provide greater stability and predictability for hourly employees.

The employers we interviewed are also taking a hard look at programs like family leave and fertility benefits to ensure they are designed to meet the needs of LGBTQ+ employees. Several are proactively talking to vendors (such as Employee Assistance Programs, behavioral health, and fertility navigation services) to make sure that the professionals who are providing services reflect the demographics of their employee populations and can provide culturally relevant support.

2.Offering targeted benefits to meet the specific needs of less financially healthy groups.Similar to smoking cessation or diabetes management programs, these benefits are technically available to all employees, but are really designed for financial health challenges that only some employees experience. For example:

• • Earned wage accessis designed to help employees who may need access to funds between paychecks to cover an unexpected expense.
  • Student loan repayment benefitssupport employees who carry student loan debt.
  • Resource navigators or investment platformscan target specific demographics, such as women or LGBTQ+ employees.

3.Designing targeted communications to promote benefits utilization among financially vulnerable employees.人力资源领导人还专注于策略来达到employee segments who may not be utilizing programs and benefits in ways that lead to the best possible financial health outcomes. This might be because some employees are less aware that a program or benefit is available to them, or they may feel the benefit is “not for them.”Examples of this type of strategy include:

• • “Meet the match” campaigns. These strategies are targeted at employees who are not currently saving enough in their 401(k) to earn the full employer match.
  • Partnering with employee resource groups (ERGs).Several employers we interviewed are partnering with ERGs to better understand the specific barriers to engagement for those employees and to provide benefits education that is tailored to the needs of that group. One is taking a test-and-learn approach to testing benefits messaging with different business units to see what resonates based on the demographic composition of each business unit’s workforce.