Why Every California Business Should Be Prioritizing The Right Financial Wellness Benefits

The majority of your employees are living paycheck to paycheck, which means they are spending nearly all of their income on basic necessities with little remaining for savings or an unexpected expense. With the average cost of living in California at an astounding $111,901 and inflation still on the rise, the challenge for your workers to make ends meet can be overwhelming.

How overwhelming?

According to a PwC survey, 60% of full-time employees are stressed about their finances. And their financial stress is likely costing your business a significant amount of money each year. It’s estimated that the annual cost of employee financial stress is $183 billion, factoring in workers losing an average of over seven hours of productivity per week. And many of those workers are supplementing their income and calling in sick to drive an Uber or deliver DoorDash to make a quick buck.

To cultivate and maintain a productive workforce, employers are increasingly leveraging financial wellness benefits to support employees on their path to financial security. This not only helps their team members but helps drive employee loyalty and retention.

In fact, employees no longer view this as a nice-to-have; instead they view it as essential. Nearly 3 in 4 (73%) of employees expect their employer to offer financial wellness programs. Financial wellness is certainly now considered a core pillar of total wellbeing, on par with physical and mental health.

Overall, companies in California, for example, spend an average of around 30% of an employee’s salary on benefits. So, if a worker earns $100,000 per year, the employer would spend an additional $30,000 on benefits. And baked into those packages are financial wellness benefits, including 401(k) plans, flexible schedules, HSA/FSA accounts, life insurance, wellness programs, and educational assistance.

But many employers spend on financial wellness benefit add-ons, but see very low usage. An important question to ask is, do the benefit offerings in your package today feel underutilized or “checkbox” solutions? Do they serve to combat the financial stress or disengagement among your employees? Are there solutions available to meet the more immediate needs of workers today?

Many companies are addressing these issues by leveraging the financial wellness benefit of On-Demand Pay to help their employees tackle their financial challenges. With this benefit, which is often free to the employer, employees are empowered with real-time access to their pay. This enables them to pay bills on time, spend, save, or invest on their own schedule because the timing of bills and paydays are often misaligned.

Often, the difference in successfully paying a bill or incurring a late charge comes down to the timing of the bill. And that’s a real problem right here in California. A report last year in the Orange County Register noted that Californians are not paying their bills at the highest level since 2021. Also of note, according to the Public Policy Institute of California, three in four households in California hold some form of debt.

While long-term retirement benefits are great to have for the future, to address short-term liquidity issues, benefits such as On-Demand Pay can play a critical role in helping workers avoid the never-ending cycle of debt. Research shows that about 7 in 10 (69%) of On-Demand Pay users who previously paid late fees do this less often or have stopped completely since they started using the solution.

For businesses struggling with employee retention, the benefit of On-Demand Pay can bring tangible results. A study from Arizent shows that 30% of employers report a reduction in employee turnover since implementing an On-Demand Pay solution, while more than half (55%) of employees indicate that they pick up at least one extra shift per month.

In an economy where the prices of nearly everything continue to climb, the ability to successfully pay bills on time for workers in California can feel like a Herculean task. The stress they are under directly impacts their ability to bring their best selves to work every day. Companies have the opportunity to help with the right financial wellness benefits that make a real, immediate difference.