New Research Strengthens Need for Employee Education in Personal Finance

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New Research Strengthens Need for Employee Education in Personal Finance, May 17, 1999. Virginia Tech

BLACKSBURG, May 17, 1999 - Research recently conducted by Virginia Tech confirms that employees with credit delinquencies experience stress and physical health problems that ultimately interferes with their work. Results from a separate study also demonstrated that financially-stressed workers were less productive.

Tech researchers teamed with Consumer Credit Counseling Service (CCCS) from Roanoke, Va., to survey a sample national population who were delinquent in their consumer debt. The survey contained questions regarding the current financial status of the participant, the participant's health care, participation in retirement planning, mental and emotional health, and the participant's job performance within the last year.

Research statistics include:

90 percent of these workers are dissatisfied with their financial wellness
75 percent are insecure about their personal finances for retirement
50 percent hold a part-time job at another employer
25 percent-50 percent report spending an average of 24 hours per month of work time dealing with money matters

"An employer would be foolhardy to not recognize that workers with money problems can be identified, helped, and turned to profit centers," says E. Thomas Garman, Fellow and Professor, Center for Organizational and Technological Advancement, Virginia Tech, Blacksburg. "Instead, these employees act like the dead weight of an anchor pulling down a ship."

"Employees with money problems are the workers who are not saving, or not saving enough, for retirement, thus they won't retire," continues Garman. "They will work until they are forced to retire which not only affects the employees themselves but the employers as well.

Job productivity decreases, employee attendance declines, and overuse of health coverage occurs due to poorer physical and mental health. Credit delinquencies can negatively impact the employers' bottom-line."

Increasingly, the responsibility of providing personal finance education and services is falling to employers - not only because they have access to resources that can make such programs a valuable employee benefit, but also because it saves them money in the long run by increasing employee satisfaction and improving productivity.

Tech's research team included Paul Camp, research director of National Institute Personal Finance Employee Education (NIPFEE); outreach director of NIPFEE Dottie Bagwell; senior research consultant Jinhee Kim; and professors Garman, Bruce Brunson, Connie Kratzer, Irene Leech, Charles Baffi and Kerry Redican.

The other study conducted by NIPFEE examined well-educated, high-income, white collar workers at a private insurance company in Wisconsin, who participated in a financial education seminar provided by Capital Strategies Inc. of Indianapolis, Indiana. The workers completed a survey, which rendered the following results:

20 percent of the work force spent time at work attending to personal financial matters
20 percent reported inability to carry out normal work activities three days per month
Job productivity was higher among workers who considered themselves financially stable
25 percent felt continually plagued by financial trouble and found it difficult to pay bills.
25 percent desired financial education on budgeting, tax planning, and getting out of debt
75 percent would attend an employer-sponsored financial checkup if made available

"This study used a higher-educated and higher-income sample, however, they were as financially distressed as workers with lower incomes," said Paul Camp, research director for PFEE. "This sample was much less satisfied with their financial health than samples we have drawn from other employers. There is considerable potential among these workers to improve job productivity with workplace financial education." Further data collection is underway.

"Employees with financial stresses can impact the employer's bottom-line tremendously," says Garman, "Financial education is an employee benefit that employers must offer to maximize profits and remain competitive."