The financial vulnerability so many Americans are experiencing in the current health and economic crisis is being felt as well by many of our nearly 19 million state and local government workers, 56 percent of whom report suffering financially as a result of the pandemic recession. In an effort to ensure benefit sustainability and adequacy, many governments in recent years have reformed retirement and health plans, often shifting more costs and decision-making onto individual employees. As a result, it is increasingly clear that now is the time for public-sector employers of all sizes and types to incorporate financial wellness programs into their employee-benefit offerings.
Though 65 percent of state and local government employees believe it is important for their employers to offer a financial literacy program, only 29 percent of those governments have such a program. Yet even before the pandemic, 88 percent of public-sector employees reported worrying about their finances and financial decision-making, and two-thirds reported worrying about these while at work.
Since March, state and local employment has contracted by some 1.1 million jobs. The longer-term impact that the current economy will have on state and local revenues and public workforce employment levels is still unclear, but at the individual level 47 percent of state and local workers predict that their own financial situations will worsen. The need for financial wellness in the public sector is far from new, but it has certainly been exacerbated.
The benefits of financial wellness programs for governments go beyond simple concern for employees' wellbeing. Going into 2020, governments struggled to recruit and retain enough employees with the essential skills needed to fill key positions at a time when low national and regional unemployment rates supercharged talent competition. The revenue losses and reduced government hiring resulting from the pandemic have pushed that problem aside for now, but there's every reason to think it will return to center stage when the economy begins to recover.
In the near term, financial wellness programs will help public-sector workers mitigate the impacts of the current economy. In the longer term, the programs will help demonstrate that states and localities want to invest in their employees, assist them in planning for important financial life events, and aim to reduce workplace stress, all of which increase job satisfaction, retention and productivity.
Financial wellness programs encompass a broad range of financial-literacy subjects, from retirement planning to budgeting to home ownership to managing debt, savings and medical expenses. While these programs have been expanding overall, they are not one-size-fits-all. An effective program requires an acute understanding of a given audience's particular needs, and few initiatives have been developed and tailored for use by either state and local government workers, or subsets of employees within the sector.
In an effort to improve the financial wellness of the state and local public-sector workforce, our organizations have collaborated and, with the support of the Wells Fargo Foundation, created a new national initiative that has provided financial wellness grants to state and local governments. Twenty-four organizations recently received a combined total of nearly $1.4 million from the initiative to establish financial wellness programs or improve existing ones.
Additionally, new digital tools will assist public-sector organizations in their ongoing efforts to promote financial wellness. Whether or not entities received a grant, they will be able to use these tools to help build a common understanding of financial wellness with employees, support the development of new or ongoing policies and/or programs, and garner public support and participation. These resources aim to assist programs in guiding public-sector employees toward both their short-term and long-term financial goals, while taking into account their various life stages and broad array of financial management and planning needs.
While industry experts are predicting that financial wellness will become a main priority for employers following the pandemic, we must continue taking steps to ensure that this includes public-sector employees and their unique attributes. In creating these resources and supporting existing programs, we hope to help governments take action.
Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.