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Times are Changing – Benefits Need to Change, Too

Employee benefits have been in the works for 400 years. Pension plans date back to colonial times and paid vacation days have been around for nearly a century. But as times are changing, benefits need to change, too. In today’s economy, middle-class workers face unprecedented challenges as income levels fail to keep up with soaring costs of housing and education, and financial products become continually more complex. In order to give modern workers a fighting chance in today’s financial world, employers need to consider benefits that can address these challenges.


Facts & Figures

In the past three decades, the US economy has seen some drastic changes. The following are some comparisons using median figures from 1990 and 2022.

  • 1990 median income: $50,200 
  • 2022 median income: $63,214 
  • Income has increased by 26%
  • 1990 median home price: $78,500 
  • 2022 median home price: $507,800 
  • Home prices have increased by 647%

As an illustration, in 1990 it would cost 1.6 years’ worth of income to pay off a house. But in 2022, it costs over 8 years’ worth of income to pay off a house! And that’s not even including interest! In other words, if you worked full time and never spent a dollar on food, taxes, interest, or anything else, you could afford to buy a house after eight years.

Student Loans
  • 1990 average student loan debt: $6,760 
  • 2022 average student loan debt: $31,100
  • Student loan debt has increased by 460%

The US Department of Education typically projects student loan borrowers can pay back their loans in 10 years. But it now takes an average of 21 years to pay off student loans!

In summary, today’s workers are trying to pay off houses that cost 647% more, and pay down 460% more student debt, with only 26% more income than Americans in the same situation in 1990. The only way these employees will be able to navigate these financial extremes is by obtaining financial education.


What’s Different Now


Managing finances was simpler when income was higher than debt. Thirty years ago, the average debt to income ratio (DTI) was 0.76. Today, the average DTI is 1.44! Now more than ever Americans need financial education to help them get out of debt, avoid interest, and understand how to take advantage of their money. 

Student debt is the bane of many millennials, but sadly, it’s not just those fresh out of college that are carrying the burden of student loans. According to Federal Student Aid, 14.2 million borrowers are between ages 35 and 49, and an additional 2.3 million are age 62 and older! For those with little financial education, this situation may seem impossible to overcome.

Two-Paycheck Households

Additionally, the cost of raising a family has increased astronomically. Historically, women have been censured for being working mothers. But in today’s economy, it’s no longer much of a choice. Two paychecks per household are necessary to afford the costs of raising a child when incomes are low and costs are high. The New York Times says, “Even with two paychecks, middle-class status has become more elusive. The soaring costs of those three big-ticket items — housing, health care, and college — have made it more difficult for some people to achieve certain milestones.” But what good is it to have two paychecks if the income earners don’t know how to use them? Too many families struggle because they don’t have access to the financial resources to help them avoid interest charges and late fees and get out of debt.

Complex Financial Products

Beyond managing insufficient income, the burden of complete financial security now falls to the employee. The New York Times says, “Employers and government institutions keep shifting responsibility to workers, forcing them to navigate more threats to their financial well-being. Pensions have been largely replaced by 401(k) plans. Comprehensive health coverage has given way to high-deductible plans. Paid family leave is uncommon.”  

Now, employees with little or no financial education are expected to navigate retirement plans, insurance, debt management, estate planning, investing, stock options, mortgages, taxes, and more. Employees should not be expected to do this without guidance. Milken Institute says, “With Americans having more access than ever to increasingly complex financial products and services, financial literacy is crucial in preventing ill-informed decisions that could have negative long-term consequences on their financial well-being.” Employers are perfectly positioned to give employees the lifelong gift of financial literacy. Employee benefit packages can, and should, include a third-party professional financial education service. Employers would thereby be giving employees the financial guidance they need to navigate the complex products available to them.


Opportunities for Leaders

Understanding Change

Employers and managers have a great opportunity to make a positive difference in the lives of their employees. It starts with recognizing the changes that are taking place, and adapting to match those changes. 

Young workers today are often looking for financial support from their employer, such as student loan repayment assistance. Too often, these benefits are rejected on the grounds of simply being unfair. Employers ought to resist the temptation to respond, “I worked hard to pay off my own loans.” This mentality is usually indicative of one of two things: either the employer thinks their employees are not working hard enough, or that they should have to experience the same struggles. The problem is the struggles are not the same. Debt and income are not the same as they were in the past. Employers who realize this, and recognize the opportunity to help their valuable employees, will see improved retention, increased productivity, and boosted employee morale. 


Employee wellbeing is important to company culture and to the business as a whole. True employee wellbeing addresses five elements: career, social, physical, community, and financial wellbeing. Gallup states, “Leaders can have a big influence on improving individual wellbeing and shouldn’t pass up that opportunity — employees who thrive in all five elements miss less work, have higher customer ratings, solve problems quicker, and adapt to change better, all while saving companies money in healthcare costs and turnover.” Employers have the opportunity to provide wellness benefits that can truly make a difference.


Today’s financial world is increasingly complex. In order to navigate the endless sea of economic challenges and opportunities, employees need support from their employers. Employers are ideally suited to providing lifelong benefits such as financial education that can empower their employees and give them control of their lives. Placed in nearly impossible financial circumstances, employees need more than a paycheck. They need guidance, education, and financial peace of mind.


Find out how 101 Financial’s Workplace Wellness program provides financial literacy to help employees navigate today’s economy.

Sources: Education Data Initiative, Demographia, National Center for Education Statistics, World Population Review, Zippia, Federal Reserve