Summary

Financial precarity—the persistent worry about money and not having enough of it—is widespread, even in developed economies. It is a particular affliction of the poor, but it describes many people across the income distribution. Financial precarity is harmful not just to the individuals who experience it but also to the organizations in which they work. For individuals, financial precarity can negatively affect cognitive functioning, emotional stability, and social functioning. It is also associated with worse physical and psychological health, as well as depressed performance, both on and off the job. For employers, there are direct costs in the form of decreases in performance at work, as well as indirect costs in the form of increased absenteeism and health care costs. Private-sector companies are taking notice and have initiated a variety of programs to address employee financial precarity, including enhancing wages and offering financial assistance programs such as financial counseling, incentivized savings plans, and enhancements to retirement plans. Many of these programs have not been subjected to rigorous analysis (e.g., incentivized savings programs), and for some, there is little evidence of their effectiveness (e.g., financial literacy programs). Other programs (e.g., opt-out retirement plans) have a strong track record of success. Overall, private-sector employers are increasing their investments in employee financial wellness, which is a positive step in terms of providing needed supports to employees.