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Americans’ financial insecurity is growing, with critical implications for workplace productivity and talent management. In 2025, 21% of adults had problems paying their rent or mortgage, according to a Pew Research Center survey. To cope, 26% borrowed money from a family or friend and 20% got food from a food pantry or food bank.
Among 18- to 29-year-olds, the situation is worse: 43% feel financially insecure or are struggling to get by, as revealed by a November poll from the Institute of Politics at Harvard Kennedy School.
Employees’ financial insecurity carries risks for the workplace: it erodes organizational performance, triggers counterproductive work behaviors and dampens inclusion, research shows. The good news is that boards may stimulate meaningful interventions by asking 3 questions that go beyond compensation.
How Financial Insecurity Harms Performance
Financial Insecurity Is Cognitively And Emotionally Draining
Employees with money worries are not fully present at work. In studying short-haul truck drivers, researchers at the University of Pittsburgh found that those who had previously expressed high levels of financial worry subsequently had a higher incidence of preventable accidents, underscoring how financial strains can impair attention at work.
Financial insecurity also affects work behaviors by depleting employees’ emotional resources. When they feel emotionally drained, employees are less able to fulfill their job responsibilities. They cut corners, take undeserved work breaks and spend more time on their phones instead of working. The emotional exhaustion that stems from financial insecurity encourages rule-breaking, coming in late, stealing from work and stretching work to earn overtime.
When employees are also worried about their job security, these effects intensify, according to a 12-week study of 434 employees by researchers at Illinois State University, the University of Michigan and Vrije Universiteit Brussel.
Financial Insecurity Exacerbates Psychological Needs
Financial insecurity’s damaging effects on the workplace are not just due to distraction. It can also undermine some of the basic needs people have at work: the need to feel connected to others, to feel capable and to feel in control.
When their basic needs are not met, employees respond with counterproductive work behaviors, like wasting materials, talking badly about the organization to outsiders and taking sick days when they are not ill. This is according to a study of 180 U.S. workers, published in the Journal of Managerial Psychology.
Employees who are constantly thinking about how they will pay their bills turn inward and disengage from others, which reduces their sense of belonging at work. Feeling unable to gain control over one’s finances also erodes employees’ sense of competence, causing employees to feel less confident about their skills. Having to make work-related decisions (hours, roles and projects) purely on financial grounds, rather than personal preferences, tests employees’ sense of control.
When employees feel less connected to others, less confident in their ability and less in control, they check out at work and cut corners. This can exacerbate performance shortfalls and introduce safety risks.
Financial Insecurity Fuels A Need For Control
Team leaders who are more financially insecure tend to tighten their control over decisions, according to a study of 154 teams from a textile company in eastern China.
One explanation for the effect of leader financial insecurity on heightened control is that a feeling of loss of control, which often accompanies financial insecurity, prompts a need for more structure in one’s existence and surroundings, the researchers argue.
Because team leaders who tighten control undermine their teams’ ability to adapt to changing circumstances and manage uncertainty, financial insecurity at the top can trickle down to constrain a firm’s resilience in difficult times.
Three Questions For Boards
Is Our Scheduling Creating Performance Risks?
Unpredictable hours and last-minute schedule changes amplify financial anxiety and contribute to feelings of loss of control. Without certainty in shifts, employees constantly need to worry about whether their hours will suffice to pay the bills. Changing schedules also make it difficult to manage second jobs.
At Gap, an experiment with predictable scheduling practices—fixed shift times, scheduling the same employees for certain shifts and the adoption of a third-party scheduling app to allow workers to add, drop, or swap shifts—delivered a 5.1% increase in labor productivity gains (compared to 2.5% for the industry). This suggests that predictable scheduling eases the cognitive load and emotional exhaustion from financial insecurity and helps employees fulfill their basic needs at work.
The Gap experiment, conducted over 10 months across 28 San Francisco and Chicago stores, also revealed the importance of working with employees to provide a guaranteed minimum number of hours.
To assess the hidden risks of scheduling practices, boards should request data on scheduling predictability and its correlation with safety incidents, absenteeism, and productivity.
Do Our Benefits Mitigate Financial Insecurity?
Helping employees build an emergency savings fund can be effective in fending off financial worries. Offering payroll-deducted, easily accessible emergency funds, like BlackRock’s Emergency Savings Initiative, can mitigate employees’ financial anxiety when unexpected expenses occur. Providing financial wellness tools is another low-cost way to give resources that can help employees feel more in control of their situations when money worries arise.
To understand the value of benefits targeting financial insecurity, boards should request data on their usage and how they relate to productivity metrics.
Are Managers Equipped To Recognize Financial Insecurity?
Because money worries manifest at work as changes in work performance and repeated requests for extra shifts or advance pay, front-line managers are often the first to see the signs of financial insecurity if they know what to look for and how to engage employees around this topic.
With basic training, managers can become skilled at noticing patterns and inviting non-judgmental conversations. They can also foster conversations about financial wellness and point to relevant corporate benefits, before financial stress shows up as cutting corners, safety lapses, or rule breaking.
To ensure workforce resilience to economic insecurities, boards may want to ensure that managers receive training on recognizing and addressing financial insecurity indicators.
As financial pressures on workers intensify, boards that ask these questions today can help build organizational resilience for the future.