Workers living paycheck to paycheck on the rise and that is a problem

Too many workers live paycheck to paycheck and are jailed by debt.

On my way driving to downtown Atlanta I heard a report from consumer activist Clark Howard. He was reporting that the rate of workers living paycheck to paycheck is up to a new high. Additionally, the number of workers saving money is at a new low. This jives with a new study by CareerBuilder published just today.

Study shows

The CareerBuilder study shows that money problems occur across the majority of income levels. The study shows:

“…nearly one in 10 workers making $100,000 or more (9 percent) saying they usually or always live paycheck-to-paycheck and 59 percent in that income bracket in debt. Twenty-eight percent of workers making $50,000-$99,999 usually or always live paycheck to paycheck, 70 percent are in debt; and 51 percent of those making less than $50,000 usually or always live paycheck to paycheck to make ends meet, 73 percent are in debt.”

Those are appalling numbers!

Causes problems

Rosemary Haefner, chief human resources officer for CareerBuilder says “Workers may become so distracted by their financial struggles that their quality of work decreases. Financial struggles can take a hit on employees’ morale, productivity and ability to concentrate.” It weighs on a worker to be stretched for money, I know, I have been there. Many people I have known both as coworkers and employees have felt the stress of financial stress. It has become such a problem that most, if not all, Employee Assistance Programs offer financial counseling in their suite of services.
Employees feel the stress of financial problems and that has an impact on their productivity. Additionally, they look for ways to make additional money. Uber is taking advantage of that need by advertising how easy it is to make money driving for them. Their ads even include the fact that you can get paid immediately. If your employees take an extra job in the gig economy, or as an employee in a part time job, they may not be putting in their best effort for you. They may be tired from working too much. They may have conflicts with work schedules, often giving priority to the part time position because the attendance policy of that job may be stricter. This conflict may put the employee of losing their “regular” job because of misplaced priorities. Often, we in HR have to explain that to the employee.

What are priorities?

The survey also asked the question “What wouldn’t you give up, regardless of money?” The responses are interesting:

  • Internet connection: 54 percent
  • Mobile device (smart phone, tablet, etc.): 53 percent
  • Driving: 48 percent
  • Pets: 37 percent
  • Cable: 21 percent
  • Going out to eat: 19 percent
  • Traveling: 17 percent
  • Education: 13 percent
  • Buying gifts for people: 13 percent
  • Alcohol: 11 percent

Some of these responses are interesting and perhaps necessary for continuing to look for work, but on the other hand some people need to rethink their priorities.

Debt is an issue

The study cites the magnitude of debt. These figures are:

A quarter of workers (25 percent) have not been able to make ends meet every month in the last year, and 20 percent have missed payment on some smaller bills. Further, 71 percent of all workers say they’re in debt — up from 68 percent last year. While 46 percent say their debt is manageable, more than half of those in debt (56 percent) say they feel they will always be in debt. And it should be noted that 18 percent of all workers have reduced their 401k contribution and/or personal savings in the last year, more than a third (38 percent) do not participate in a 401k plan, IRA or comparable retirement plan, and 26 percent have not set aside any savings each month in the last year.

This level of debt translates to later problems for employees, employers and our government.
Employers can help workers with education on finances. Younger employees are notoriously under-educated. They could use that education.
By providing this education we might be able to stave off the coming disaster of workers without savings.

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