Benefits and Compensation

Debt Matters: Employers Are Missing a Key Benefit Need Among Workers

health care and retirement, like building emergency savings and repaying student debt. But are the new financial wellness benefits really helping workers avoid financial hardship?

Source: NiseriN / iStock / Getty Images

While retirement savings accounts and health insurance benefits are common offerings for full-time employees at large companies, and many employers have begun offering student loan repayment support in recent years, few workplaces provide help with managing other forms of debt.

Survey Data Shows High Need for Debt-Related Benefits

Workplaces’ providing limited help to workers dealing with unsecured debt represents a missed opportunity for these employers. A recent Financial Health Network survey found that 63% of full-time workers at large to midsize companies have at least one of three kinds of unsecured debt: credit card, medical, or personal loan debt. 

The survey asked workers with unsecured debt about 13 different debt-related benefits. These include resources like financial planning apps, coaching or counseling, emergency grant funds, debt consolidation loans, and more. Less than 40% of respondents said their employer offers the benefit. One in 5 respondents said they didn’t have access to any of the 13 debt-related benefits.

Yet the need for debt help, and the impact of debt on worker well-being and productivity, is clear in the survey data. 

  • Nearly half (47%) of respondents reported not being able to pay all of their bills on time in the last 12 months. 
  • 41% of respondents said they had reduced spending on basic needs in the last 12 months because they couldn’t pay their current debt obligations.
  • 50% of respondents who reported that debt is a source of stress for them said they had spent, on average, at least 1 hour per week at work dealing with debt-related issues (e.g., contacting creditors) in the past month. 

While unsecured debt hasn’t yet attracted the kind of attention in the workplace benefits space that student loan debt has, the findings from this survey reveal a high need for debt-related benefits, as well as gaps between those who need these benefits most and those who currently have access to them. Employees with higher total debt, lower-income employees, and women were more likely to say they don’t have access to debt-related benefits despite reporting higher levels of debt stress.

How Employers Can Help

How can employers better meet the needs of workers with unsecured debt? Employers that are eager to promote equity in the workplace, enhance worker productivity, and help employees avoid financial hardship should consider addressing employees’ unsecured debt as part of their benefits strategy. 

Crucially, offering benefits to help employees manage their unsecured debt may increase the uptake and value of employer-sponsored retirement plans, too. In our survey, respondents with over $25,000 in unsecured debt were more likely to say they had withdrawn money from or taken a loan from an employer-sponsored retirement account because they couldn’t pay their debt obligations compared with employees with lower levels of unsecured debt. 

While important, financial health benefits such as retirement savings incentives may be less relevant to the portion of employees whose debt obligations are causing them to struggle with day-to-day needs and cash flow management.

The good news for employers is that making investments in debt-related benefits could pay dividends when it comes to worker satisfaction and retention.

  • 68% of survey respondents said that debt-related financial wellness benefits are important for an employer to offer. 
  • 62% said they would be more likely to stay at a job that provides debt-related financial wellness programs that were useful to them.
  • Employees value ease of access, clear explanation of benefits, confidentiality assurances, and availability of personalized help when considering whether to participate in debt-related financial wellness benefits.

Bottom Line

While access to debt-related benefits is currently low, employee need for and interest in those benefits are high. For employers looking to invest in their employees and attract talent in today’s competitive hiring landscape, debt-related benefits could be a key HR tool. 

Amelia Josephson is Manager of Innovation at Financial Health Network. Beth Brockland is Vice President of Workplace Solutions at Financial Health Network.