Ballooning Consumer Debt Isn't Deflating: How to Mitigate Employee Stress Around Money

Consumer debt has become a pressing issue, with individuals and households grappling with mounting financial obligations and debt burdens.

The rising interest in the topic of debt, as reported by Google Trends, points to a growing awareness and concern regarding this issue. 

But what are the implications of escalating consumer debt, in particular in the workplace? 

The Soaring Consumer Debt Crisis

This Morning Brew article underscores the concerning trend of ballooning consumer debt that shows no signs of deflating. The burden of debt, including credit card debt, student loans, and mortgages, is placing immense strain on individuals, families, and the overall economy. 

For many years, research has been being conducted into the impacts of employee financial wellness on their job productivity. A1998 research paper by Joo and Garman, “The Potential Effects of Workplace Financial Education Based on the Relationship between Personal Financial Wellness and Worker Job Productivity”, found that:

“Personal financial wellness affects worker job productivity…. the relationship between financial behavior and absenteeism and the relationship between financial behavior and work time used for personal financial matters were identified. The relationship between personal financial wellness and productivity suggests that the potential effects of workplace financial education are positive for workers and employers. 

According to the Federal Reserve's recent data, consumer debt in the United States has reached record highs, surpassing $4 trillion. This surge is fueled by a combination of factors, such as easy access to credit, rising living costs, and inadequate financial education. 

The consequences of excessive debt include increased stress levels, reduced savings, and the potential for financial instability, all of which can have a negative impact on employee wellbeing and productivity.

Google Trends Reflects Growing Interest in Debt

Google Trends, a tool that tracks search queries, provides valuable insights into public interest over time. In recent months, there has been a noticeable upward trajectory in searches related to debt, signaling a heightened awareness and concern among individuals.

View latest Google Trends data here.

The surge in interest can be attributed to several factors. 

Firstly, personal finance has become a prominent topic in mainstream media, with experts and influencers shedding light on debt-related issues. This increased visibility has prompted individuals to seek information and resources to manage their own financial situations better.

Secondly, the COVID-19 pandemic has played a significant role in amplifying debt concerns. As a result, people are seeking guidance on how to address and alleviate their debt burdens effectively.

Whilst these factors have a detrimental effect on individuals, it in turn has an impact on workplace productivity. Employers can increase their employees’ financial wellness by investing in embedded debt management and financial wellness solutions. This can provide a win-win, since improved financial wellness is proven to have a positive impact on the workplace. (EBRI, 2022)

How Employers Can Help to Address the Debt Crisis

Tackling the issue of consumer debt requires a multi-faceted approach. Individuals, financial institutions, policymakers and even employers all have a part to play. 

Here are a few potential strategies:

1. Improved Financial Education: Enhanced financial literacy programs at workplaces and schools can empower individuals to make informed financial decisions, manage debt responsibly, and build long-term financial resilience. Another way of increasing the impact of these programs is by embedding debt management services to help your employees track and understand their options with debt. 

2. Regulatory Measures: Stricter regulations on lending practices, particularly in relation to credit cards and predatory lending, can protect vulnerable consumers from accumulating excessive debt.

3. Debt Relief and Counseling: Accessible and affordable debt relief programs and counseling services can provide individuals with tools and support to navigate their debt and develop effective repayment plans. As organizations, you can provide access to debt guidance tools via your own app using Payitoff Solutions

4. Encouraging Saving Habits: Promoting a culture of saving through incentives, such as employer-sponsored retirement plans and tax benefits for savings accounts, can help individuals avoid relying solely on credit during emergencies.

The news of ballooning consumer debt and the increasing interest in debt-related topics on Google Trends highlight the urgent need for employers to help address this growing crisis amongst their own employees. 

The consequences of unchecked debt can have far-reaching implications on individuals and their relationships, their productivity, organizations and the overall economy. 

If you are an organization who is seeking to implement financial wellness tools to support your employees by providing access to in-app debt guidance, contact Payitoff today.