Between high inflation and lingering recession fears, these are challenging times for everyone. Stress over money is the highest it has been since 2015, according to a recent survey by the American Psychological Association. While employers reportedly lose up to $250 billion in productivity each year because of this issue. This is a major concern for gig workers who account for about 35% of the U.S. workforce – a number that’s expected to grow. While flexible hours and independence make gig work especially appealing, low and unpredictable wages serve as drawbacks that can make it difficult to save money for emergencies and retirement. A national nonprofit organization’s recent pre-pilot program set out to explore potential financial solutions for 138 gig workers by testing three types of financial interventions primarily used to pay basic needs such as rent and utilities.
They included a weekly stipend, grant or loan. While the assistance provided short-term relief over the four-month period it was offered, the additional funds had no lasting effect on the financial hardships that were experienced. Participants were eligible for up to $1,000 in assistance. Nearly all of them faced at least one expense of less than $1,000 during that time, while as many as 76% had bills that exceeded that amount and 32% struggled with three or more financial hardships. In partnering with Green Dot, GigWage and Steady to research effective financial interventions and benefits, Commonwealth concluded that a single solution cannot fix an intricate problem. Instead, the nonprofit suggests that gig-work employers consider integrating these interventions into a more holistic approach that lays stronger building blocks for financial security.
More research, for example, could be done to understand how earned wage access, Health Savings Accounts, student loan repayment and flexible retirement plans help gig workers reduce their financial hardships and save more money. Another recommendation was for employers to make a concerted effort to better understand the specific needs of non-traditional workers earning low and moderate incomes who are often left out of traditional benefits and financial wellness programs. Without access to even basic plans that full-time employees are offered, which would help level playing field, gig workers end up trading financial security for flexibility. But if enough employers adopt a more thoughtful approach, both sides will clearly benefit.
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