PayPal leads the way to directly address worker financial wellness. Large companies have had programs to improve employee wellness such as free yoga classes, discounted gym membership, to open-ended discretionary time-off (DTO), but this one directly addresses the number one cause of stress for most Americans: money.
In partnership with Just Capital, Financial Health Network, and Good Jobs Institute, PayPal assessed the financial wellness of its employees by looking specifically at net disposable income or NDI. This number is the amount left over after an employee pays taxes and necessary living expenses. PayPal found out that some of their employees had an NDI as low as 4%.
To address the issue, not only did PayPal increase salaries, but also lowered the cost of health insurance, and granted stock to all employees. Beginning of 2021, they have reached a minimum 16% NDI. Their goal: 20% NDI by the end of this year.
Catalyst for Change
The program started as a result of an emergency relief fund set up by PayPal. They predicted that employees would use the fund for unexpected and emergency financial hardship, but instead, employees applied for the fund to address day-to-day financial issues. This led to company to set up a study to better understand their workers’ financial situations. Two-thirds of their employees had a hard time making ends meet, even though PayPal compensated at or above market in a given location. The study focused on hourly and entry-level employees.
The initiative hopes to provide tools for other companies to understand worker financial wellness and make necessary changes.
It’s easy to target big companies as ruthless, but that sometimes paints an incomplete picture. Moreover, when dealing with wellness, we have to address the hard truth. Yes, meditation and positive attitudes all contribute to our peace of mind, but money matters.
64% say that money is a significant source of stress in their life in 2020.American Psychological Association