At the end of March 2020, Congress passed, and the President signed into law, the CARES Act, bringing much-needed relief to millions of people. One of the most discussed and important components of the CARES Act is the economic impact payments (EIPs)—commonly known as stimulus checks—that have been sent or are on their way to tens of millions of Americans. For those who are faring relatively well—whose loved ones are healthy and who are still employed—these payments offered an opportunity to save for an emergency or pay down credit card debt.
For many others, especially our country’s most financially vulnerable, the payment may simply help keep a roof over their families’ heads.
With so much at stake, employers can play an important role in ensuring their employees have the tools they need to take full advantage of the economic impact payments—and any future payments—to build financial security and reduce their financial stress now.
Industry experts with BlackRock’s Emergency Savings Initiative shared how employers can set their employees up to maximize their stimulus payments in an April 23 webinar, Putting Stimulus Funds to Work for Your Employees.
Panelists Mariel Beasley, Principal, Common Cents Lab, Timothy Flacke, Co-Founder and Executive Director, Commonwealth, and Matt Bahl, Market Lead, Workplace, Financial Health Network, joined Commonwealth Senior Policy Manager Jason Ewas to share key insights and surface practical strategies in response to a wide range of employer questions.
This is the second in a series from BlackRock’s Emergency Savings Initiative. You can view the first March 26 webinar here.
Three Key Takeaways
1. The CARES Act stimulus payments present the opportunity to build emergency savings that employees already want to take advantage of. Employers can help them access the best tools to save.
For those fortunate enough to set aside a portion of their stimulus payment, this moment may serve as an important springboard for building emergency savings. Workers don’t need to be convinced of the importance of building this savings cushion—what they need is an effective tool for doing so. Employers can help employees by connecting them with savings tools to make savings as easy as possible. Panelist Mariel Beasley pointed out that fintech Qapital reported the proportion of users creating an emergency savings goal on their platform increased by 500% over several weeks in March.
2. There are other straightforward strategies that employers can implement to help employees beyond saving a portion of their stimulus checks.
Employers can provide hardship funds, offer cash-outs for unused paid time off (PTO) days, or advise on how to approach lenders for refinancing. As Commonwealth’s Timothy Flacke pointed out this employee need represents “an opportunity for HR professionals to acknowledge the issue and offer common sense information” to employees who likely have many other financial tasks on their plates.
3. This is a chance to think longer term about employee financial security. The key is getting this opportunity right.
Employers can use this time to push financial institutions, benefits providers, and other market players towards building innovative financial security offerings. The panelists specifically encouraged employers to reach out to their retirement record keepers to understand what they are doing to support emergency savings. Record keepers can set up emergency savings through after-tax contributions or in partnership with a financial institution or a fintech company. Matt Bahl called attention to “many fintechs [that] are finding innovative ways to help employees save.”
COVID-19 also makes for a crash-training course in communicating with employees on financial security. Developing communication strategies and learning how best to provide support now will pay dividends into the future, beyond this crisis and even during the ones yet to come.
As the COVID-19 pandemic continues to disrupt the economy and people’s lives, employers have a vital role to play to protect their workforce and their businesses in the long term. The CARES Act economic impact payments offer a temporary, but critically important, salve to address the widespread financial stress Americans are experiencing.
These payments also present a significant opportunity for employers to support employees with guidance, well-timed communications and practical tools to maximize the impact of their payments.
As our experts shared in the webinar, there are numerous straightforward, evidence-based strategies that employers can take to ensure employees are equipped to utilize these payments in the way that best supports their needs–both immediate and longer term. We look forward to seeing how employers use this opportunity to support their most vulnerable employees through this time.
Learn more about partnering with BlackRock’s Emergency Savings Initiative.
BlackRock’s Emergency Savings Initiative
BlackRock announced a $50 million commitment to help millions of people living on low- to moderate-incomes gain access to and increase usage of proven savings strategies and tools—ultimately helping them establish an important safety net. The size and scale of the savings problem requires the knowledge and expertise of established industry experts that are recognized leaders in savings research and interventions on an individual and corporate level. Led by their Social Impact team, BlackRock is partnering with innovative industry experts Common Cents Lab, Commonwealth, and the Financial Health Network to give the initiative a comprehensive and multi-layered approach to address the savings crisis. UPS, Uber, Mastercard, Etsy, Brightside, Arizona State University, and Acorns have joined BlackRock’s Emergency Savings Initiative to help their employees, customers, gig workers, and college students take the essential first step towards long-term financial well-being.