There are few bigger stresses in life than having to worry about financial circumstances every day. Something that may be an inconvenience for one person — a flat tire or a babysitter canceling — could set off a downward financial spiral for the
As the saying goes: it's expensive to be poor.
Too often, well-meaning employers are short-sighted when it comes to financial benefits beyond a paycheck. Many only offer retirement savings programs and access to certified financial planners, which are mainly used by people who have money to save or invest. At the same time, lower income employees more likely to face daily economic struggles are disproportionately people of color.
If you are a compensation and HR leader, it's time to consider whether your benefits are unintentionally creating barriers and working against your DEI strategy rather than providing relief.
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Understanding the problem with most company benefits
The first step is to ask some hard questions:
- Are your benefits making a measurable difference for all employees — not just the salaried or higher paid populations?
- Are people of color using your currently provided financial benefits at a lower rate than other populations?
Offering a 401(k) is not discriminatory on its own, of course. But if these workplace benefits only help those with the means to invest, it will widen the wealth gap and can perpetuate practices that drive systemic racism.
The data points to Black and Brown employees generally having a lower level of financial health, net worth, and retirement savings than white men, and these gaps are even wider for women of color. Some of this is due to the pay equity gap, but even at the same pay, Black and Brown employees often have
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When your most at-risk people are faced with unexpected financial challenges, traditional financial benefits do little to help them.
Creating programs that uplift people
Helping to financially align families means finding real solutions for their issues. Black and Brown employees disproportionately struggle with the crippling combination of high credit card debt (relative to assets and income) and poor credit scores, and a single emergency can decimate even the best budgetor.
We all know that poor credit scores make everything more expensive, from auto loans to rent.
Real solutions for this population must put money in their pocket today. This may mean taking advantage of existing employer, government, or community benefits that too often go unused. It may also mean fairly-priced financial products free of the fees and charges that keep many unbanked or underbanked. Real, transformative help might also mean guiding people through achievable savings and debt-reduction plans to open doors to financial success. Whatever the means, what matters most is that employers get the support to make accessing these things easy, even if it means calling a local food bank to make sure groceries reach the employee.
Enduring progress for all
Creating a level playing field is in companies' best interests: bad financial health and inequity cost employers money. Smart organizations that are dedicated to DEI and to supporting holistic employee wellness must learn how to avoid offering financial benefits that only serve people with money to save and invest, as this will only perpetuate inequities. These companies have the power to transform the lives of employees' families and communities in the process.