The economy is good these days and many employers may believe their employees also are doing well financially, but this is not the case.

There are two economies prevalent in society, and oftentimes our daily routines and biased views on the rest of the world mean we are not aware of that.

The truth is that more employees than employers might imagine are living paycheck-to-paycheck. They are struggling financially and don’t have viable credit options. Further, the stress associated with it is taking its toll — on their health and on their performance at work.

Corporations need to be more empathetic to the financial decisions that many of their employees have to make on a daily basis. Recognizing the importance of financially-healthy employees is critical, as is providing benefits that assist those employees to improve their financial situation.

The evidence of financially struggling employees is all around us, but it’s easy to miss sometimes. We see employees who fail to save.

GOBankingRates survey last year showed that 58% of Americans don’t even have $1,000 in savings. So, they likely can’t cover even the most ordinary household emergencies, to speak nothing of retirement. Those who have put away something for retirement in company-managed 401ks frequently borrow from them to cover these surprises.

According to PwC’s current Employee Financial Wellness Survey, nearly half (47%) of employees report that they are stressed dealing with their financial situation, and 41% say that their stress level related to financial issues has increased over the last 12 months. Why?

A CNBC.com story in January reported that 78% of American workers said that they are living paycheck-to-paycheck. And it’s not merely those earning low wages who are struggling. Nearly 10% of Americans with salaries of $100,000 or more live paycheck-to-paycheck as well.

We saw the reality of this distress during the federal government shutdown in January 2019 when, after missing one paycheck, many federal government employees were forced to take on second jobs as Uber drivers or waiters and could not pay their next mortgage payment.

Perhaps even more troubling: numerous studies show that financial stress drives health-related costs higher. Employees with financial debts have heart attacks at twice the rate of employees whose finances are in order. They have three times the rate of ulcers or digestive issues, a 44% greater chance of suffering migraines, and a 500% increase in the likelihood of anxiety and depression. In addition to driving costs higher, sick employees miss work more frequently, which also hurts productivity.

Paycheck-to-paycheck reality

So what happens when an employee living paycheck-to-paycheck needs to buy something that their monthly budget won’t cover? It might be a household expense like a refrigerator that needs to be replaced or a child in school who needs a computer.

Paying cash or using a prime-rate credit card is the best way to buy, but many people living paycheck-to-paycheck don’t have those options. High-interest credit cards, payday loans or rent-to-own contracts might look like lifelines. But they most often result in compounding interest rates and fees, or even loss of merchandise.

It’s often the hidden costs and fees associated with high-risk credit options that take a financially fragile situation and make it worse.

Actions for employers

Financial education benefits can help employees with budgeting and debt reduction needs. But I advocate that organizations across the private and public sector must play a more active role in relieving this financial stress. Employers also should adopt voluntary benefits that provide employees the opportunity to have some financial flexibility.

Read the rest of the article at Atlanta Business Chronicle