More than a 401(k)

BY CHRIS WOLF

After their health and safety, finances were a top concern for individuals and families during the pandemic. Job insecurity, market instability, the financial implications related to health concerns, and the realization that they were drastically underprepared for an emergency kept many people awake at night.

“next generation” benefits packages address overall financial wellness by teaching employees how to manage debt, save for emergencies, and prepare for the future through a mix of technology and personalized guidance, without requiring additional time or resources from the employer. They also provide comprehensive products, ranging from retirement accounts to insurance plans and health savings accounts. Some popular options for financial wellness programs include:

Chris wolf

An employee financial wellness survey released by PwC in January found 63% of employees said their financial stress had increased since the pandemic started. This was especially true for Millennial and Gen Z employees. But while the pandemic may have increased financial concerns for some, it simply shined a light on the ongoing concerns for many. Multiple studies conducted over the past few years had already concluded most Americans would struggle to come up with $500 for an unexpected cost. The pandemic was the ultimate unexpected occurrence, prompting people to re-evaluate their financial situations and how to better prepare for the future.

For employers, the financial stability of their employees is not just a payroll issue. Financial stress spills over to the workplace in the form of decreased productivity and increased absenteeism.

It can also impact recruitment and retention efforts. This is reflected in the PwC study, which asked employees if they would be attracted to another company if they felt it cared more about their financial well-being than their current employer. Of the employees who said their financial stress increased during the pandemic, a whopping 72% agreed with the statement. Nearly 60% of employees whose financial situations were not impacted due to the pandemic also agreed with the statement.

Planning for the future

Financial wellness programs, therefore, have become an increasingly important employee recruitment and retention tool. These

• Retirement accounts. Common types include traditional 401(k) accounts, SEP IRAs, or simple IRAs. Eligibility for these accounts may vary based on your company’s employee headcount and individual employee earnings. Other differences include withdrawal penalties, deferral limitations, and federal filing requirements for the employer, so consult a trusted advisor to make sure you are setting up the right plan for your company.

• Health savings accounts. These are long-term savings accounts specifically for health care costs that are paired with low premium, high deductible insurance plans. Contributions are not taxed, earn interest, and can roll over from year to year, enabling employees to build a nest egg for medical expenses.

• Personal financial fitness tools. The most effective financial wellness benefits packages combine personalized, professional advice with technology. Technology offerings give employees a full view of their finances and help them build financial confidence. Employees can use one tool to access their retirement account, track emergency savings, create personalized budgets, and manage debt, empowering them to take control of their financial future. Employees can set personal goals, use automatic transfers to save money and manage debt, and build new financial habits with guidance and encouragement from financial experts — no employer participation necessary.

The pandemic proved no one is immune to emergencies, and employers can play a significant role in helping their employees prepare for the unexpected. Companies who embrace this opportunity are likely to get a leg up on employee recruitment and retention, while helping their employees become financially confident.

Chris Wolf is the northern valley market president at Alerus, a diversified financial services company headquartered in Grand Forks, N.D.

Unemployment Rate

Total nonfarm payroll employment rose by 559,000 in May, and the unemployment rate declined by 0.3 percentage point to 5.8%, according to the most recent data by the U.S. Bureau of Labor Statistics. Notable job gains occurred in leisure and hospitality, in public and private education, and in health care and social assistance.

Consumer Price Index

The consumer price index for all urban consumers increased 5% from May 2020 to May 2021, according to the latest information from the U.S. Bureau of Labor Statistics. Prices for food advanced 2.2%, while prices for energy increased 28.5%. Prices for all items less food and energy rose 3.8% for the year ended May 2021, the largest 12-month increase since the year ended June 1992.

Labor Productivity

Source:

From the first quarter of 2020 to the first quarter of 2021, nonfarm business sector labor productivity increased 4.1%, reflecting a 1.1% increase in output and a 2.9% decline in hours worked. Unit labor costs increased 4.1% over the last four quarters, as hourly compensation increased 8.3% and productivity increased 4.1%.

Source: U.S. Bureau of Labor Statistics

Freight Transportation Services Index

The Freight Transportation Services Index (TSI), which is based on the amount of freight carried by the for-hire transportation industry, rose 0.7% in April from revised March, rising for the second consecutive month, according to the latest data by the U.S. Department of Transportation’s Bureau of Transportation Statistics. With the April increase, the index equaled the level of January 2021, the highest since pre-pandemic November 2019.

April 2021 Freight Shipment Index

From previous month: 0.7%

From same month of previous year: 8.9%

Source: U.S. Bureau of Labor Statistics

Source: U.S. Bureau of Transportation Statistics