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Financial Stress Squeezing Employees
Employee-assistance providers are seeing a spike from callers in financial and legal distress, spurred on by hikes in adjustable-rate mortgages amid level wages and increasing inflation. Providing access to financial advisers in group or one-on-one settings can help.
Nearly three of four workers say they feel financially stressed, according to a recent poll conducted by Raleigh, N.C.-based Public Policy Polling. In addition, Workplace Options, which commissioned the poll, said it has received 41 percent more financial-assistance calls during the first quarter of 2008, compared to the same period last year. "What we're seeing is that many families are really struggling to make their mortgage payments," says Mary Ellen Gornick, senior vice president of Workplace Options. "Maybe their job hasn't changed, but maybe they signed a balloon agreement for their mortgage and the payments have gone up, but their finances haven't gone up. In any case, we're seeing that crisis." Also based in Raleigh, Workplace Options provides work/life benefits assistance to roughly 18.5 million employees through more than 12,000 companies nationwide. The nationwide survey polled 749 working adults, and found that 71 percent of those responding felt stressed financially. The financial distress felt by some employees is also showing up in reduced employee morale and performance, according to experts. Requests for help will almost surely go up, says Gornick, citing a tightening credit market, sluggish economy, lackluster housing market and unemployment as primary factors. According to the Bureau of Labor Statistics, the unemployment rate has been climbing. For June, it is at 5.5 percent, reflecting 62,000 jobs that vanished during the month. Compounding the financial squeeze for the majority of America's workers is that wage growth increased by only 2.8 percent while the national inflation rate has inched up to 4.1 percent. Gornick says many families are unprepared for any disruption in employment or take-home pay status. "It may be that, in this economy, you absolutely need two people to work to afford their home," says Gornick, adding that those families who signed subprime or adjustable rate mortgages may feel particularly vulnerable if there's a disruption in the family's finances through unemployment or reduced wages. Kim Fiorino, a financial specialist with ComPsych, an EAP based in Chicago, says some of the callers to her organization are at a complete loss on how to cope on missed mortgage payments. "I'll talk with people who've not paid their mortgage in almost a year, and are still living at the property and wondering what their options are," says Fiorino. Although each case is unique, Fiorino advises callers on ways to find alternative funds from potential resources, such as 401(k) plans, or ways to deal with a caller's lender to make partial payment terms. "I think the EAP is a resource that a lot of employees are not aware of, especially on the financial counseling end," says Fiorino. "Now, we're seeing this large spike in calls related to mortgage problems." According to ComPsych, about 20 percent of the calls they receive per day are from employees under financial stress. Fiorino estimates that translates to about 1,000 calls per week. ComPsych serves about 11,000 employers nationally. But, while EAPs can be particularly helpful for employees in a financial crisis -- because they can identify ways to repair credit and mortgage problems, many employees do not take advantage of the assistance program. "What happens, often, when individuals are faced with this kind of stress, is that they're embarrassed, ashamed," Gornick says. "They suffer silently, and they become immobilized. That's the worst thing you can do in a financial crisis." According to the Washington-based Mortgage Bankers Association, about 516,000 foreclosure procedures were started nationally during the first quarter of the year, the highest recorded delinquency rate in the MBA's survey since 1979. Of those foreclosure procedures, 62 percent -- about 320,000 -- were either prime or subprime adjustable-rate mortgages. "Usually what happens when someone is facing financial stress is that they're not going to be absent from work," Gornick says. "They're going to show up for work, they're going to be at their desk, and if there's overtime [pay], they'll take it." Such "presenteeism" can lead to errors, low morale and decreased productivity. If an employer uses an EAP, Gornick recommends that HR officials monitor reports of staff calls to the EAP. While an EAP adheres to confidentiality requirements set forth by the Health Insurance Portability and Accountability Act of 1996, she says, an EAP can reveal numbers, and those numbers will indicate whether a trend is developing in the workforce. "Find out if the EAP is seeing individuals who may be contacting them with increased interest in financial matters," she advised HR leaders. Gornick also recommends periodic "lunch and learn" employee sessions with experts from the financial field, such as credit unions or other local financial resources who can devote time on-site for group or one-on-one financial analysis or counseling. Gornick also stresses the importance of regularly advising workers of available employee-assistance programs as well as other financial or legal services. "We don't have to think long and hard about the fact that, if you're in financial trouble, if there are bill collectors, or you're in the process of potentially losing your home, that's going to be extraordinarily distracting," she says. "By the same token," she says, "financial education is not something that we normally learn in school. So, as an employer, assist your employees in that area. There's nothing like financial freedom to help people feel good about what they're doing."
July 22, 2008 Copyright 2008© LRP Publications |
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