Understanding the Financial Priorities of Low- to Moderate-Income Workers in the U.S.

Building Savings: The Financial Priority of Low- to Moderate-Income Workers

In a recent survey conducted by Commonwealth, it was revealed that American workers categorized under low- to moderate-income (LMI) prioritize building savings above all else. This aligns with the organization’s multi-year initiative, ‘Benefits for the Future,’ supported by JPMorganChase, aimed at bolstering the financial health of employees earning LMI.

Among the 2,054 surveyed U.S. workers with an annual household income under $80,000, the overwhelming consensus indicated that savings for emergencies, retirement, cost of living increases, and other long-term financial objectives ranked as their foremost financial priorities. Specifically, four out of the top five priorities were directly related to saving.

Understanding Employees' Financial Outlook

Commonwealth’s research highlights the importance of workplace benefits in enhancing financial security for LMI workers. Timothy Flacke, CEO of Commonwealth, noted that understanding the needs of these employees can help employers create beneficial programs that contribute to financial wellness.

“Benefits are a major contributor to financial security,” said Flacke. “They provide accessible solutions to prepare for immediate needs and long-term goals.” This understanding is critical since financial stress can lead to decreased productivity; studies indicate that 49% of financially stressed employees face challenges concentrating at work.

Survey Insights on Participation in Retirement Programs

Despite their high savings priorities, only 52% of LMI workers participate in workplace retirement programs. Alarmingly, many report that their employers do not offer retirement benefits, which further exacerbate their financial insecurity. The survey revealed that 21% of LMI employees lack access to such benefits, while 27% acknowledge access without utilization.

Interestingly, the research also revealed that among employees with a 529 educational savings account, 77% received help from their employer in setting it up. This highlights the pivotal role employers play in creating financial opportunities for their workers. A significant 96% of parents without a 529 plan expressed interest in opening one if offered as a workplace benefit.

Navigating Healthcare Costs and Financial Strain

Healthcare costs remain a significant concern for LMI workers, with two out of five respondents indicating they carry medical debt. However, the data suggest these debts tend to be manageable, as 84% owe less than $5,000. Employers can help alleviate this burden by providing stronger health benefits, including health savings accounts (HSAs) and flexible spending accounts (FSAs).

Moreover, many employees expressed a desire for increased communication regarding workplace benefits. Approximately half of the surveyed individuals stated that they wanted more frequent information about available resources, as many felt uncertain about their benefits. This lack of clarity can hinder their ability to fully capitalize on these offerings.

The Importance of Financial Security in the Workplace

The findings underscore a larger narrative about the financial security of the American workforce. Roma Kaundal, U.S. Head of Philanthropy at JPMorganChase, emphasized that fewer than one-third of American workers have access to the benefits necessary to manage critical financial needs. By providing solutions that facilitate savings, manage debt, and promote wealth-building, employers can significantly enhance their workforce's financial well-being.

In summary, the survey conducted by Commonwealth reveals critical insights into the financial priorities of low- to moderate-income workers in the U.S. Employers need to not only understand but also actively engage with their workers to address these financial stressors effectively. Through strategic benefits programs and improved communication, companies can foster an environment that supports financial security, thereby boosting employee morale and productivity in the long run.

About the Initiatives

The ‘Benefits for the Future’ initiative aims to enhance the financial well-being of LMI workers, who often face unique challenges, particularly among Black, Latin, and women-led households. This effort, supported by JPMorganChase, seeks to engage forward-thinking employers across various markets, beginning with Chicago, IL, and Columbus, OH, to implement innovative benefits that cater to the financial health needs of millions of workers.

For more information on Commonwealth's research and initiatives to support LMI workers, please visit Commonwealth's website.