The Financial Insecurity Tax: Why Employee Money Stress Is Draining Performance, and How Leaders Can Build Financial Resilience at Work
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Abstract: Employee financial insecurity has emerged as one of the most consequential and least managed workforce risks of 2026. New survey evidence from WTW shows that the share of U.S. employees who feel financially secure fell from 46% in 2019 to 36% in 2026, even as physical and emotional wellbeing improved. Employees in high financial distress report more than twice the burnout of their low-distress peers, lose roughly twice as many days to absence and presenteeism, and are more than three times as likely to hold a second job. This article synthesizes institutional survey data, behavioral economics, and organizational research to explain how financial strain consumes cognitive bandwidth, erodes safety and performance, and weakens retention. It reviews five evidence-based organizational responses: pay adequacy and predictability, automatic emergency savings, responsibly designed earned wage access, benefits design that reduces cost shocks and debt burdens, and trusted guidance supported by better measurement. It closes with a framework for treating financial resilience as a durable organizational capability rather than a perk.
There is a particular kind of tiredness that does not come from the work itself. It comes from doing the work while quietly running the math on rent, a car repair, a child's prescription, or a credit card balance that never seems to shrink. Most leaders have seen it, even if they did not name it: the capable employee who suddenly picks up extra shifts and starts making avoidable mistakes, the high performer who stops contributing ideas in meetings, the new hire who resigns for a role that pays a little more and offers a little less.
In October 2026, WTW released findings from its 2026 Global Benefits Attitudes Survey that put a sharp number on this experience. Among U.S. full-time employees, the share who describe themselves as financially secure dropped from 46% in 2019 to 36% in 2026, which WTW describes as the lowest level in seven years (WTW, 2026). What makes the finding striking is the contrast. Over the same period, the share of employees who reported thriving physically rose from 54% to 64%, and emotional balance and social connection edged up as well. One WTW leader observed that financial security had moved in the opposite direction from nearly every other dimension of wellbeing (WTW, 2026). Employers have spent a decade investing in mental health apps, fitness benefits, and flexible work. Those investments may be paying off. Yet the financial foundation underneath them has weakened.
The pattern is not confined to one survey. PwC's 2026 Employee Financial Wellness Survey found that 59% of employees are stressed about their finances right now and that 49% say their pay is not keeping up with costs (PwC, 2026). MetLife's 2026 Employee Benefit Trends Study reported that 83% of employees name rising living and medical costs as their top stressors (MetLife, 2026). The Federal Reserve's most recent survey of household economic wellbeing found that 63% of adults would cover a hypothetical $400 emergency expense using cash or its equivalent, a figure unchanged since 2022 and below its 2021 peak (Board of Governors of the Federal Reserve System, 2026). Read the other way, more than a third of adults would need to borrow, sell something, or go without.
Why does this belong on a leadership agenda rather than in a benefits vendor's inbox? Because financial insecurity is not simply a private matter that employees carry home at the end of the day. It shows up at work, in measurable ways. WTW's data show that employees in high financial distress are far more likely to report burnout, lose more days to absence and presenteeism (the state of being at work while impaired), and are more likely to hold a second job than those in low distress (WTW, 2026). A growing body of research in behavioral economics and organizational science explains why: worry about money consumes the same limited mental resources that people need for focused, careful, and creative work (Mani et al., 2013; Sergeyev et al., 2025). In safety-critical jobs, that loss of focus can become an accident (Meuris & Leana, 2018).
I refer to the combined cost of these effects as the financial insecurity tax: the share of an organization's human capital that is quietly diverted from productive work toward managing money stress. Like any tax, it is paid whether or not anyone is tracking it. Unlike most taxes, it is partly within an employer's power to reduce.
The timing also matters for a practical reason. U.S. retirement law now gives employers new tools that did not exist a few years ago, including pension-linked emergency savings accounts and the ability to match student loan payments with retirement contributions (Internal Revenue Service [IRS], 2024a, 2024b). Regulators have also clarified how certain earned wage access products are treated (Consumer Financial Protection Bureau [CFPB], 2025). Leaders therefore have more design options than ever, along with more ways to get the design wrong.
This article is written for executives, HR leaders, and people managers who want to move beyond awareness campaigns. It first defines financial insecurity and maps its prevalence and drivers. It then examines the organizational and individual consequences, reviews five evidence-based responses with named organizational examples, and closes with a framework for building long-term financial resilience as an organizational capability.
The Financial Insecurity Landscape
Defining Financial Insecurity, Financial Stress, and Financial Wellbeing
Several related terms circulate in this space, and they are not interchangeable. Financial wellbeing refers to a person's overall sense of how they are doing with money. Netemeyer and colleagues (2018) showed in a series of large studies that perceived financial wellbeing has two distinct parts. The first is current money management stress, the strain of handling day-to-day obligations. The second is expected future financial security, a person's confidence that they will be okay later. Their work found that perceived financial wellbeing is strongly related to overall life wellbeing, with an association roughly comparable to job satisfaction, physical health, and relationship support combined (Netemeyer et al., 2018). That distinction is useful for employers because the two components call for different interventions. Liquidity tools address present stress; retirement and long-term benefits address future security.
Financial insecurity, as used in this article, describes the condition of lacking a reliable buffer against ordinary shocks and lacking confidence in one's ability to meet future obligations. Financial stress or financial distress refers to the psychological and practical strain that results. Employer surveys often measure financial distress with self-reported worry and difficulty paying bills. WTW's analysis, for example, compares employees reporting high and low levels of financial distress (WTW, 2026).
A third concept is bandwidth, a term from behavioral economics that refers to the cognitive capacity people have available for attention, planning, and self-control. Mani and colleagues (2013) demonstrated that prompting people to think about difficult financial scenarios reduced cognitive performance among lower-income participants but not among higher-income participants. In a separate field study, sugarcane farmers in India performed worse on cognitive tests before harvest, when money was tight, than after harvest, when it was not. The authors argued that scarcity itself captures attention, leaving less available for everything else (Mani et al., 2013). This is the key mechanism that links a private worry to public performance.
It is also worth being clear about what financial insecurity is not. It is not simply a matter of poor budgeting or low financial literacy, even though those can contribute. Netemeyer and colleagues (2018) found that financial wellbeing is shaped by a mix of behaviors, knowledge, and circumstances. Employees with strong money management skills can still be financially insecure if their pay is irregular, their health plan exposes them to large out-of-pocket costs, or a family emergency drains their savings. Framing the issue purely as a skills gap tends to produce interventions, such as one-off workshops, that do little to change the underlying exposure.
Finally, financial precarity refers to an ongoing state of exposure to financial shocks, which Meuris and Leana (2018) argued imposes organizational costs even when the employee is fully present at work. The term is helpful because it shifts the focus from individual budgeting skill to the conditions that leave people exposed.
Prevalence, Drivers, and Distribution
The prevalence of financial strain among employed adults is high and, by several measures, persistent. WTW's 2026 survey, which covered 41,000 employees across 31 markets including 6,000 full-time employees in the United States, found that only 36% of U.S. respondents felt financially secure (WTW, 2026).
The broader household picture is consistent. The Federal Reserve reported that 73% of adults were doing at least okay financially in late 2025, the same as the prior year and below the 2021 high of 78%. Concern about finding or keeping a job rose from 37% to 42% of adults, and 91% of adults named prices as a concern (Board of Governors of the Federal Reserve System, 2026). PwC's survey found that 53% of employees have less than $5,000 in emergency savings and 30% have less than $1,000. It also found that 44% use credit cards to pay for necessities they could not otherwise afford (PwC, 2026).
The Federal Reserve's long-running measure of emergency readiness adds a useful time perspective. The share of adults who would cover a $400 emergency expense with cash or its equivalent rose from 50% in 2013 to 63% in 2019, peaked at 68% in 2021, and has held at 63% in every year from 2022 through 2025 (Board of Governors of the Federal Reserve System, 2026). The improvement of the previous decade has stalled. For employers, the practical meaning is that roughly the same large minority of the adult population, many of them employed, remains one ordinary shock away from borrowing or going without.
Several drivers stand out across these sources.
Cost of living and pay adequacy. Bank of America's 2026 Workplace Benefits Report found that 75% of employees name the cost of living as a challenge to their financial security, and that the economy (76%) and inflation (62%) were leading sources of financial stress (Bank of America, 2026). Nearly half of PwC's respondents said their pay was not keeping up with costs (PwC, 2026).
Healthcare costs. Healthcare is a recurring pressure point. WTW found that nearly a third of U.S. employees delayed or skipped medical or dental care in the past year for financial reasons, and 47% said healthcare costs were a barrier to saving for retirement (WTW, 2026). MetLife reported that half of employees often avoid medical care because of out-of-pocket costs (MetLife, 2026).
Thin liquidity buffers. Many employees have little cushion for unexpected expenses. This matters because shocks are inevitable, and the absence of a buffer turns an ordinary car repair into a crisis that can trigger high-cost borrowing.
Life stage. WTW's data show sharp differences by age. Only 30% of employees in their 40s felt financially secure, compared with 50% of those aged 60 and older. Employees in their 40s were also nearly twice as likely as the oldest group to have delayed or skipped a doctor's visit because of money worries (41% versus 21%), and 70% of employees in their 40s and 50s expected a worse retirement than their parents (WTW, 2026). This mid-career squeeze, in which childcare, housing, debt, and care for aging parents converge, falls on the employees many organizations rely on as experienced managers and senior specialists.
Insecurity is not confined to low earners. PwC found that one in three higher earners worry about meeting monthly household expenses (PwC, 2026). Financial insecurity therefore cannot be treated purely as a frontline issue, even though frontline and hourly workers often face the sharpest liquidity constraints.
A final distributional point concerns perception. Bank of America found that 71% of employers rated their workforce's financial wellbeing as good or excellent, while 55% of employees rated their own financial wellbeing that way (Bank of America, 2026). That gap suggests that many leaders underestimate the problem, which may help explain why the organizational response often lags the evidence.
Organizational and Individual Consequences
Organizational Performance Impacts
The clearest organizational signal in the 2026 data is the link between financial distress and lost productive time. WTW found that employees in high financial distress lost 23.6 days to absence and presenteeism, compared with 11.7 days for employees in low distress (WTW, 2026). Presenteeism is often the larger and more hidden cost, because the employee is on the schedule and appears productive while their attention is elsewhere.
The bandwidth research explains why this happens. If scarcity captures attention, then employees in financial distress are effectively working with less available cognitive capacity (Mani et al., 2013). Sergeyev, Lian, and Gorodnichenko (2025) formalized this idea in economic terms. Their research found that financial stress is closely tied to financial constraints and can produce a kind of psychology-driven poverty trap, in which stress reduces the cognitive resources people need to improve their situation. Relieving that stress, they argued, frees those resources for productive activity (Sergeyev et al., 2025).
For organizations with safety-sensitive work, the consequences can be severe. Meuris and Leana (2018) studied truck drivers and found that greater financial worry was associated with a higher probability of preventable accidents. A follow-up laboratory driving simulation supported a causal interpretation and pointed to reduced cognitive capacity as the mechanism. Their work is important because it moves the conversation from soft outcomes like morale to hard outcomes like accidents and damage claims.
Earlier research reached similar conclusions about attendance and commitment. In a study of white-collar employees at an insurance company, Kim and Garman (2003) found that financial stress was associated with lower organizational commitment and higher absenteeism.
Retention is the third channel. Bank of America found that more than one in three employees left or considered leaving their job in the past year, and that 39% of employees stay with their employer mainly because of their benefits package (Bank of America, 2026). The implication is double-edged. Benefits can be a powerful retention lever, but employees who stay only for benefits may be present without being committed.
A further channel is the second job. WTW found that 17% of employees in high financial distress hold a second job, compared with 5% of those in low distress (WTW, 2026). Second jobs are not inherently problematic, and many employees value the income and variety they bring. Yet when a second job is driven by financial necessity rather than choice, it can compound fatigue, reduce availability for development, and increase the likelihood that the primary role becomes the one that gives.
Individual Wellbeing and Stakeholder Impacts
For individuals, the most immediate cost of financial insecurity is psychological. WTW found that 46% of employees in high financial distress reported burnout, compared with 21% of those in low distress (WTW, 2026). PwC found that 85% of Gen Z employees said financial stress affects their mental health and 71% reported reduced productivity as a result (PwC, 2026).
Health itself is affected through deferred care. When nearly a third of employees put off or skip medical or dental care for financial reasons, small conditions can become larger and more expensive (WTW, 2026). For employers that sponsor health plans, this creates an uncomfortable feedback loop. High out-of-pocket costs lead to delayed care, which can lead to worse health, more absence, and higher claims later.
Financial insecurity also shapes how people borrow. PwC found that 39% of employees had used payday loans or advances and that 52% believed they would likely need to tap their retirement savings (PwC, 2026). Each of these behaviors can carry long-term costs, from high fees to lost retirement growth.
Retirement readiness is a further concern. WTW reported that 48% of high-distress employees were off track on retirement saving, compared with 10% of low-distress employees, and that 65% of all employees expected to be worse off in retirement than their parents' generation (WTW, 2026). Employees who expect to be unable to afford retirement may stay in roles longer than they would like, which can slow internal mobility for others and complicate workforce planning.
The stakeholder effects extend beyond the individual. Families absorb the stress of financial strain. Customers experience it through service quality and safety, as the trucking evidence shows (Meuris & Leana, 2018). Communities experience it through reduced spending and greater reliance on public support. Investors increasingly ask about human capital practices, and financial wellbeing is an area where an employer's choices about pay, benefits, and scheduling directly shape outcomes.
There is also a relational cost inside the organization. Employees who are worried about money may be less willing to raise concerns, take on stretch assignments, or speak up about problems, especially if they fear that any perceived misstep could put their income at risk. Managers may misread these behaviors as disengagement or lack of ambition. When the underlying cause is financial strain, performance conversations that focus only on effort and attitude can deepen the problem rather than solve it.
The overall picture is that financial insecurity is not a narrow benefits problem. It is a performance, safety, retention, and trust problem with a financial root.
Evidence-Based Organizational Responses
The research points to a clear principle: the most effective responses change employees' financial conditions and defaults, not just their knowledge. Education has a role, but a workshop on budgeting cannot create a buffer that a paycheck does not allow. The five responses below are ordered roughly from the most structural to the most supportive.
Response | Evidence Base | Key Practices | Illustrative Examples |
Pay adequacy and predictability | Bandwidth and financial stress research; employer outcome reporting | Living-cost pay reviews, predictable schedules and pay, transparent pay progression | Gravity Payments; Amazon |
Automatic emergency savings | Behavioral economics of defaults; employer savings initiatives; SECURE 2.0 | Auto-enrolled or incentivized payroll savings, seed deposits, matches, PLESAs | Delta Air Lines; Starbucks; Levi Strauss; SunTrust |
Responsibly designed earned wage access | CFPB market data; regulatory guidance; retention research | Free or low-cost access, usage caps, no tipping prompts, monitoring repeat use | Walmart; Amazon |
Benefits design that reduces cost shocks and debt | Survey evidence on deferred care; SECURE 2.0 student loan matching and emergency distributions | Lower out-of-pocket exposure, student loan match, emergency withdrawal options, clear communication | Abbott; Voya pilot employer |
Trusted guidance and better measurement | Financial wellbeing measurement; usage and perception data | Coaching through trusted partners, manager awareness, regular financial wellbeing metrics | Delta Air Lines; employers in the BlackRock Emergency Savings Initiative |
Pay Adequacy and Predictability
The most direct way to reduce financial insecurity is to pay people enough and pay them predictably. This can sound obvious, even naive, in a budget conversation. Yet the evidence from bandwidth research suggests that when pay leaves no margin, every other intervention is working uphill (Mani et al., 2013; Sergeyev et al., 2025). Nearly half of employees say their pay is not keeping up with costs (PwC, 2026), and the cost of living is the most commonly named challenge to financial security (Bank of America, 2026).
Pay predictability matters as much as pay level for many hourly employees. Variable hours, last-minute schedule changes, and irregular overtime make it hard to plan, even when average earnings look adequate on paper. The research on financial stress emphasizes uncertainty and exposure to shocks, not only low income (Netemeyer et al., 2018; Sergeyev et al., 2025).
Effective approaches:
Living-cost pay reviews: Benchmark entry-level and frontline pay against local living costs, not only against competitor pay, and review it on a defined cycle.
Pay progression clarity: Publish how pay moves over time so employees can plan, and so a modest starting wage comes with a credible path.
Schedule stability: Post schedules further in advance, limit last-minute cuts, and give employees more control over shift swaps.
Total cost of employment view: Evaluate pay increases against the costs of turnover, absence, presenteeism, and errors that financial strain produces.
Targeted equity checks: Identify roles and life stages, such as mid-career employees with caregiving loads, where financial security is lowest.
Gravity Payments, a Seattle-based payments processing company, set a minimum annual salary of $70,000 for its employees in 2015. In a ten-year retrospective published by the company in 2025, Gravity reported that turnover fell from 22% to 6%, that average annual employee retirement contributions rose from $1,900 to $6,700, and that the share of employees with a retirement plan increased from 62% to 84%. The company also reported strong revenue growth over the decade (Gravity Payments, 2025). These are company-reported figures and should be read as such, but they illustrate the mechanism the research predicts: when pay creates a margin, employees save more and stay longer.
Amazon took a different route in 2022, pairing nearly $1 billion in pay increases for frontline employees with a new benefit called Anytime Pay. Average starting pay rose from $18 to more than $19 an hour, and employees could access up to 70% of eligible earned pay at any time without a fee (Amazon, 2022). The combination is instructive: a pay increase addresses adequacy, while immediate access addresses timing.
Common pitfall: Treating financial wellness programs as a substitute for pay. When employees experience a budgeting app or a webinar as a replacement for a raise, the program can damage trust rather than build it. Leaders should be honest about what pay can and cannot do within current constraints, and position other tools as complements.
Automatic Emergency Savings
The most robust finding in behavioral economics for employers is the power of defaults. Madrian and Shea (2001) showed that automatic enrollment dramatically increased 401(k) participation, largely because people tend to stay with the default option and often interpret it as implicit advice. The same logic applies to emergency savings, which have historically been neglected in favor of retirement savings.
Beshears and colleagues (2020) analyzed how employer-sponsored rainy-day savings accounts could be designed. They argued that separating short-term savings from retirement accounts, combined with automatic features, can reduce the extent to which short-term needs drain long-term savings. The importance of design was underscored by a study of opt-in short-term savings programs at five U.K. employers, which found that no more than 0.7% of eligible employees ever activated an account. Among those who did, however, 96% still had a balance a year later (Berk et al., 2024). The lesson is that people who use these accounts benefit, but opt-in designs reach very few.
Scale is now growing. The BlackRock Emergency Savings Initiative, conducted with the nonprofit Commonwealth, reported in June 2026 that participating programs had helped generate nearly $8 billion in net new emergency savings and given more than 22 million workers access to emergency savings tools (BlackRock, 2026; Commonwealth, 2026). The initiative also reported that 20% of emergency savers began contributing to their 401(k) for the first time after opening an emergency savings account (BlackRock, 2026). This finding challenges the worry that emergency savings compete with retirement saving. For many employees, a buffer appears to be the first step toward long-term saving.
U.S. law now supports this approach. SECURE 2.0 permits pension-linked emergency savings accounts (PLESAs), which are Roth accounts within a retirement plan, capped by default at $2,500 of contributions, with withdrawals permitted at least monthly, for plan years beginning after December 31, 2023 (IRS, 2024a).
Effective approaches:
Default enrollment: Where legally permitted, enroll employees automatically with a clear, easy opt-out, rather than relying on opt-in.
Seed deposits and matches: Start accounts with an employer contribution and match early deposits to create momentum.
Milestone incentives: Reward reaching savings milestones, which builds habits and gives employees visible progress.
Easy access: Make withdrawals simple and stigma-free; a buffer that is hard to reach is not a buffer.
Link to retirement: Use emergency savings as an entry point to retirement participation, with follow-up nudges.
Delta Air Lines launched an emergency savings program in 2023 that combined a $750 employer contribution with a $250 match, up to $1,000 in total, along with coaching from Fidelity or Operation HOPE. More than 45,000 employees enrolled, roughly 45% of the workforce population, far exceeding the airline's goal of roughly 20%. Delta contributed more than $15 million in incentives. Among employees who completed the program, 23% increased their 401(k) deferral, compared with 10% of those who did not engage (Zuss, 2023).
Starbucks introduced My Starbucks Savings in 2022, a program run through Fidelity that lets employees make after-tax payroll deposits into a savings account and earn milestone credits of $25 to $50, up to $250 (Starbucks, 2022). BlackRock later reported that Starbucks emergency savers had 401(k) contribution rates almost three times those of non-savers (BlackRock, 2026).
Levi Strauss offered hourly employees a dollar-for-dollar savings match of up to $240 over six months, administered by the nonprofit EARN. About 1,300 employees participated. For 63% of those employees, the linked account was their first-ever savings account, and participants saved about $700 on average over six months (Min, 2019). In banking, SunTrust gave its own employees $1,000 toward emergency savings and later rolled out its financial wellness program to other employers (Min, 2019).
Common pitfall: Launching an opt-in account with a single announcement and declaring success based on the handful of early adopters. Without defaults, seed money, and ongoing prompts, participation tends to stay very low, and the employees who most need a buffer are often the least likely to opt in (Berk et al., 2024).
Responsibly Designed Earned Wage Access
Earned wage access (EWA) allows employees to receive part of their already-earned wages before payday. It has grown rapidly. The CFPB estimated that in 2022, employer-partnered EWA programs handled $22.8 billion across 214 million transactions, and that total volume including direct-to-consumer products was about $31.9 billion used by around 10 million workers (CFPB, 2024).
The evidence on EWA is mixed, which is why design matters. On one side, EWA can help employees avoid overdraft fees and payday loans. A working paper using data from a Mexican EWA provider covering more than 51,000 workers found that users were less likely to leave their employer in the following pay cycle, with larger effects among lower-ranked staff (Murillo et al., 2023). The authors' results are associations rather than proven causal effects, but they are consistent with EWA reducing short-term stress.
On the other side, the CFPB's 2024 analysis found that workers averaged 27 EWA transactions a year and paid an average of $68.88 a year in fees. For a typical $106 advance repaid over ten days, an average fee implied an annual percentage rate of 109.5% (CFPB, 2024). Frequent use can signal that EWA is masking a structural pay shortfall rather than smoothing an occasional shock.
The regulatory picture has shifted. In December 2025, the CFPB issued an advisory opinion concluding that certain employer-integrated EWA programs, those repaid through payroll deduction, limited to accrued wages, non-recourse, and not based on credit assessments, are not credit under the Truth in Lending Act (CFPB, 2025). Several states have also enacted EWA laws, with requirements that vary (McGuireWoods, 2025).
Effective approaches:
No-cost access: Offer at least one free access option so employees are not paying fees to reach their own wages.
Sensible limits: Cap the share of earned wages available and the frequency of use to discourage dependency.
Avoid tipping prompts: Choose providers that do not pressure employees to tip, which can function as a hidden fee.
Monitor repeat use: Treat frequent use as a signal to review pay, scheduling, or hardship support for that group.
Pair with savings: Combine EWA with an emergency savings option so employees can build a buffer, not just borrow against the next paycheck.
Walmart partnered with the fintech firms Even and PayActiv in 2017 to offer more than 1.4 million U.S. associates a budgeting app and an early wage access feature called Instapay. Walmart covered the cost of the app, and early access was free up to eight times a year (Walmart, 2017). American Banker reported that withdrawals were capped at 50% of earned but unpaid wages (Wack, 2018). The design combined access with limits and a planning tool, an approach that matches the research-backed principles above.
Amazon's Anytime Pay, launched in 2022, allows eligible employees to access up to 70% of their earned pay at any time without fees (Amazon, 2022). Because it was introduced alongside a pay increase, it functioned as a timing tool rather than a substitute for adequate pay.
Common pitfall: Offering EWA without monitoring how it is used. If a growing share of employees draw wages early every pay period, the organization has not solved a liquidity problem. It has revealed a pay adequacy or scheduling problem and should respond to that.
Benefits Design That Reduces Cost Shocks and Debt Burdens
The second-largest source of financial strain after general cost of living is often the employer's own benefits design. When nearly a third of employees delay or skip care because of cost (WTW, 2026) and half often avoid care because of out-of-pocket expenses (MetLife, 2026), the structure of the health plan is part of the financial insecurity story. Benefits choice has expanded significantly, with 71% of U.S. employees now reporting significant choice compared with 54% in 2019 (WTW, 2026). Choice is useful, but it also shifts risk and complexity onto employees.
Debt is a second pressure. SECURE 2.0 allows employers to treat qualified student loan payments as if they were elective deferrals for the purpose of retirement plan matching contributions, beginning with plan years after December 31, 2023 (IRS, 2024b). This lets employees with student debt build retirement savings without choosing between the two.
SECURE 2.0 also permits plans to offer an emergency withdrawal of up to $1,000 from retirement savings without the usual early withdrawal penalty (BlackRock, 2026). Some employers worried this option would drain retirement accounts. Early evidence suggests otherwise: the BlackRock initiative reported that 87% of employees who took the $1,000 emergency withdrawal continued contributing to retirement (BlackRock, 2026).
Effective approaches:
Out-of-pocket review: Analyze deductibles and cost sharing by pay band, and consider lower-deductible or salary-banded options for lower-paid employees.
Student loan matching: Use SECURE 2.0 to match student loan payments with retirement contributions.
Emergency distribution option: Offer the penalty-free emergency withdrawal and communicate it clearly as a safety valve.
Simplified decision support: Provide plain-language comparisons of total expected costs, not just premiums, during enrollment.
Hardship support: Maintain a confidential hardship fund or process for acute crises.
Abbott, the healthcare and medical device company, launched Freedom 2 Save in 2018. If an employee contributes at least 2% of salary toward student loans, Abbott deposits 5% of salary into their 401(k). HR Brew reported that more than 2,600 employees had enrolled, that Abbott had contributed $5.5 million, and that enrollees were 19% more likely to stay with the company (Vinopal, 2024).
The BlackRock initiative described a pilot conducted by Voya Financial with an employer that has a large hourly workforce. Employees who saw messaging about the $1,000 SECURE 2.0 emergency withdrawal were up to 3.5 times more likely to enroll in the 401(k) (BlackRock, 2026). The reassurance that money could be reached in an emergency appears to have lowered a barrier to saving.
Common pitfall: Shifting costs to employees through higher deductibles while promoting wellbeing programs. Employees notice the contradiction. When a plan design change increases out-of-pocket exposure, leaders should model its effect on lower-paid employees before implementing it.
Trusted Guidance and Better Measurement
Financial guidance works best when it is trusted, timely, and connected to real tools. The appetite for help is there. PwC found that where employers offer financial wellness services, 83% of Gen Z and 79% of millennial employees use them (PwC, 2026). Yet 52% of employees say they do not feel capable of planning for long-term goals (PwC, 2026), which suggests that information alone is not enough.
Measurement is the second half of this response. The gap between employer and employee perceptions of financial wellbeing, 71% versus 55% rating it good or excellent (Bank of America, 2026), suggests that many organizations are not measuring what employees experience. Netemeyer and colleagues' (2018) distinction between current money management stress and expected future security offers a practical structure for measurement, because it shows which kind of support employees need.
Effective approaches:
Trusted partners: Use nonprofit or fiduciary coaching partners, rather than providers that profit from selling products to employees.
Point-of-need guidance: Offer guidance at moments that matter, such as enrollment, a hardship request, a new child, or a move.
Manager awareness: Train managers to recognize signs of financial strain and to refer employees to resources without probing into personal finances.
Regular measurement: Track financial wellbeing, both present stress and future security, alongside engagement and wellbeing metrics.
Outcome tracking: Link program participation to retention, absence, and savings outcomes to show return on investment.
Delta's emergency savings program paired its financial incentive with coaching from Fidelity or Operation HOPE, a nonprofit focused on financial inclusion (Zuss, 2023). The combination of money, a tool, and guidance helps explain why participation far exceeded the target. Employers participating in the BlackRock Emergency Savings Initiative, including GXO, AutoNation, The Fresh Market, and Truist, have contributed to an evidence base that now spans more than 60 projects (BlackRock, 2026; Commonwealth, 2026). Bank of America reported that nine in ten employers offering financial wellness programs say they see measurable returns (Bank of America, 2026), though employer-reported returns are best confirmed with an organization's own data.
Managers deserve particular attention. They are often the first to notice signs of strain, such as a sudden request for extra shifts, a change in punctuality, or a pattern of uncharacteristic errors. They are also rarely trained to respond. The goal is not to turn managers into financial counselors or to invite them into employees' private finances. It is to equip them to respond with empathy, avoid assumptions, and point employees toward confidential resources. A simple script, a current list of resources, and clarity about what managers should not ask can go a long way.
Common pitfall: Measuring participation rather than outcomes. A high webinar attendance rate says little about whether employees are less stressed or more secure. Leaders should measure financial wellbeing directly and track whether it improves.
Building Long-Term Financial Resilience Capability
The five responses above can each deliver results on their own. The organizations that get the most from them, however, treat financial resilience as an ongoing organizational capability rather than a set of programs. Three pillars support that shift.
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Treat Financial Security as a Workforce Metric
What gets measured gets managed, and financial security is rarely measured. Most engagement surveys ask about workload, managers, and growth, but few ask whether employees could handle an unexpected expense or whether they feel on track for the future. Given that financial distress roughly doubles lost days and burnout rates in the WTW data (WTW, 2026), its absence from workforce dashboards is a blind spot.
A practical starting point is to add a short set of financial wellbeing items to existing surveys, structured around present money stress and future security (Netemeyer et al., 2018). These results can then be broken down by role, pay band, location, and life stage, with the same care used for engagement data. Leaders can track the measures alongside absence, turnover, safety incidents, and benefits utilization. Over time, this allows organizations to test whether interventions are working and to target resources to the groups where insecurity is concentrated, such as mid-career employees in WTW's data (WTW, 2026).
Measurement also helps close the perception gap. When leaders see their own employees' data rather than relying on assumptions, the distance between employer and employee views of financial wellbeing (Bank of America, 2026) becomes harder to ignore.
Design for Defaults and Dignity
The behavioral evidence is consistent: defaults shape outcomes far more than information does (Madrian & Shea, 2001; Beshears et al., 2020; Berk et al., 2024). A long-term capability therefore means building good defaults into the employee experience. These include automatic emergency savings, automatic retirement escalation, student loan matching that requires minimal paperwork, and benefits options that are pre-sorted by what is most likely to fit an employee's situation.
Dignity matters as much as design. Financial strain carries stigma, and employees may avoid resources that require them to disclose hardship to a manager or that feel like charity. Programs work best when they are universal, confidential, and framed as standard features of employment rather than as rescue measures. The Levi Strauss finding that many participants opened their first-ever savings account (Min, 2019) is a reminder that some employees have never had access to the basic financial infrastructure others take for granted.
Defaults also need guardrails. Automatic features should come with easy opt-outs, clear communication, and regular review to make sure they are not creating unintended harm, such as fees from overdrafts when a payroll deduction lands at the wrong time.
Integrate Pay, Benefits, and Work Design Governance
Financial insecurity sits at the intersection of decisions that are often made separately: compensation, benefits, scheduling, and workforce planning. A pay increase can be undermined by a benefits cost shift. A new EWA program can be undermined by unpredictable scheduling. An emergency savings program can be undermined by a restructuring that makes employees fear for their jobs. With 42% of adults now concerned about finding or keeping a job (Board of Governors of the Federal Reserve System, 2026), job security itself is part of financial security.
A long-term capability requires governance that looks across these decisions. Some organizations do this through a cross-functional financial wellbeing council that includes compensation, benefits, operations, finance, and employee representatives. Others build a financial wellbeing impact review into major people decisions, asking how a change to pay, benefits, or scheduling will affect the employees who are already most exposed.
A useful discipline is to ask a small set of questions before any major people decision. Will this change increase or decrease the predictability of employees' income? Will it shift costs or risks onto employees who are already financially exposed? Does it create or remove a buffer? These questions are simple, but asking them consistently can prevent the kind of well-intentioned decisions that quietly raise the financial insecurity tax.
This governance also creates accountability. When financial wellbeing metrics are reviewed at the executive level alongside safety and engagement, leaders are more likely to treat them as business outcomes rather than as human resources trivia.
Conclusion
The 2026 evidence tells a clear story. Employees are, by several measures, healthier in body and mind than they were in 2019, yet fewer feel financially secure (WTW, 2026). That insecurity does not stay at home. It consumes cognitive bandwidth (Mani et al., 2013; Sergeyev et al., 2025), increases burnout and lost time (WTW, 2026), raises safety risk in critical roles (Meuris & Leana, 2018), and weakens the bond between employees and employers (Bank of America, 2026).
The good news is that employers have more effective tools than ever. Behavioral design, new retirement plan provisions, clarified rules for earned wage access, and a growing base of employer evidence give leaders practical options. The organizations that have moved first, from Delta and Starbucks to Abbott and Gravity Payments, show that thoughtful design can increase savings, retention, and participation. The essential insight is that the most effective interventions change conditions and defaults, not just knowledge.
Practical takeaways for leaders:
Measure it: Add financial wellbeing items to workforce surveys, and break results down by role, pay band, and life stage.
Start with pay: Review pay adequacy and schedule predictability before launching new programs; the other tools work better when there is a margin to build on.
Default to savings: Use automatic or strongly incentivized emergency savings, including PLESAs where appropriate, with seed money and easy access.
Design EWA carefully: Offer free access, set limits, avoid tipping prompts, and treat frequent use as a signal of a deeper problem.
Fix benefits friction: Model out-of-pocket exposure for lower-paid employees, match student loan payments, and communicate emergency withdrawal options clearly.
Choose trusted guidance: Use fiduciary or nonprofit partners, offer help at moments of need, and train managers to refer without probing.
Govern it together: Bring pay, benefits, scheduling, and workforce planning decisions into one view, and review financial wellbeing at the executive level.
Financial insecurity is a tax that organizations pay whether or not they track it. Leaders who choose to measure it, design against it, and govern it as a business risk can reduce that tax, and in doing so, give employees back the bandwidth to do their best work.
Research Infographic
References
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Jonathan H. Westover, PhD, Chief Research Officer (Nexus Institute for Work and AI); Co-Founder & Chief Workforce and Learning Officer (Future State University); Founder & CEO (Human Capital Innovations); Professor of Organizational Leadership & Change (UVU). Read Jonathan Westover's executive profile here.
Suggested Citation: Westover, J. H. (2026). The Financial Insecurity Tax: Why Employee Money Stress Is Draining Performance, and How Leaders Can Build Financial Resilience at Work. Human Capital Leadership Review, 40(2). doi.org/10.70175/hclreview.2020.40.2.4
