The financial resiliency of American workers and their families is in jeopardy. Already in a precarious state before COVID-19, the economic fallout from the pandemic has exacerbated their financial fragility. Systemic problems require systemic solutions, and now is the time for employers, government officials and communities to come together to address workers’ needs.
According to Prudential’s 2020 Financial Wellness Census, more than half of working-age adults saw their finances recently compromised — with people of color, women and younger people all disproportionately impacted. Small business owners too are reeling, with a third losing upward of half their household income. Further, 48 percent of workers are worried about their financial future. Closing these gaps is essential to building a more financially resilient nation.
The Role of the Workplace
Work is so much more than a paycheck — it is the primary avenue for Americans to access the benefits for financial security. These benefits — including health and life insurance, retirement savings and paid time off — became increasingly more valuable to workers as the pandemic progressed, according to a separate Prudential survey of American workers.
To create gainful employment opportunities for more workers, we must offer access to programs that help them learn and maintain the skills necessary to stay competitive in our rapidly changing job market. Researchers and employers alike have long pointed to a widening skills gap — that is, the supply of skilled workers has not kept up with demand. Companies’ own success is increasingly related to their ability to address this skills gap and help their workers stay current.
Now more than ever, workers will be looking to employers for these benefits and training opportunities, and indeed, employers are making great strides. However, addressing these challenges will require an “all of the above” approach, leveraging the best of what the private and public sectors have to offer.
The Need for Partnerships
Public-private partnerships are needed to bring about substantial and lasting change. By combining the public sector’s infrastructure and ability to achieve meaningful scale with the financial services sector’s deep expertise in investing, risk management and employee benefits, we can bring together the “best of both worlds” to help Americans build financial resiliency. We’ve seen this model employed successfully in our partnership with the nonprofit Prosperity Now, with whom we’ve designed an emergency savings feature and now offer to employers to include within their employee benefits plans.
Public policy is another powerful tool for addressing the financial challenges facing the American worker, including eliminating barriers that preclude access to valued benefits through the worksite. For example, the SECURE Act — which Prudential had long advocated for — helped address significant barriers that had previously shut out many small business workers from participating in workplace retirement plans. The SECURE Act’s commonsense approach can serve as a blueprint for strengthening Americans’ financial stability.
As a next step, policymakers should focus on developing proposals and advancing legislation to expand access to skills training opportunities, address the mounting burden of student debt, bolster Americans’ retirement savings, and enhance their ability to withstand financial emergencies. Achieving these outcomes will go a long way toward strengthening Americans’ financial condition.
With COVID-19 wreaking havoc on Americans’ finances, workers need both public and private sectors to come together to address barriers to gainful employment and the benefits that strengthen financial security. All parties must rise to the occasion and do their part to build a stronger and more durable foundation for financial resilience for this generation and generations of workers to come.
Rob Falzon is vice chair of Prudential Financial.
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