New BPC Survey Underscores Americans’ Financial Fragility, Demand for Workplace and Policy Innovation

American households face widespread financial insecurity, with some disproportionately bearing the brunt of each economic downturn. The COVID-19 recession forced millions to deplete their bank accounts, dip into retirement savings, or make difficult choices about how to spend limited income. For many, this only worsened an already tenuous financial situation.

BPC, the Funding Our Future coalition, and Morning Consult recently conducted a national survey of 1,600 employed adults to evaluate their financial difficulties, measure workers’ access to emergency funds, and gauge interest in employer-sponsored financial services. The results highlight the importance of household savings and the need and broad demand for tools that could help workers build financial resilience for future downturns.

Americans Are Critically Unprepared for Financial Emergencies

Despite a historically fast recovery from the COVID-19 recession, 42% of employed Americans feel somewhat or very financially insecure, and a quarter (24%) report having zero savings set aside for unexpected expenses—numbers that would likely be higher if the 40% of the adult population that is not employed were included. A third (33%) of working adults feel somewhat or very uncomfortable about their ability to pay for a $400 emergency expense, and nearly one in ten (8%) would not be able to afford it at all. These numbers suggest that a broad swath of workers live paycheck to paycheck, which has substantial negative impacts on overall health. Indeed, 30% of respondents say they could cover roughly a month or less of expenses if they lost their income.

Even as the economy rapidly recovered from the recent recession, workers’ experiences reflected this widespread financial insecurity. Four in 10 employed adults (39%) say they have struggled to pay for personal expenses over the past 12 months, including the 27% who report difficulty on at least a monthly basis. Utility bills, housing costs, and food expenses rank among the most common struggles. Moreover, for many, relatively small expenses caused problems, highlighting the vulnerability of Americans’ finances—while underscoring the benefit of and need for emergency savings tools. More than half (58%) of those who had difficulty paying for personal expenses say the largest expense with which they struggled was under $1,000. Given this financial pressure, many have turned to retirement savings to cover expenses, with 14% of workers reporting having borrowed or withdrawn from retirement accounts in the past year. 

Some Workers Face More Acute Burdens 

Lack of emergency savings varies widely across groups of workers, with women, those with low incomes, and less-educated workers reporting the most fragile financial situations. For members of these groups, a loss of income would quickly prove financially devastating—more than half would be unable to cover even two months of expenses. 

In the survey, 31% of women say they have no money set aside while only 18% of men report the same. Similarly, while 42% of women express discomfort paying for an emergency expense of $400, only 25% of men feel that way. Unsurprisingly, income and education track closely with measures of financial security. Nearly half (45%) of workers with annual household incomes under $50,000 and 41% of those without a college degree report having no emergency savings (or considering money in retirement funds to be their only emergency savings), compared to only 12% of those with household incomes above $100,000 and 17% of those with a post-graduate degree.  

BPC’s survey also shows that working parents, a group rarely singled out in discussions of financial wellness, are particularly struggling: nearly half (46%) report difficulty paying for personal expenses in the past 12 months compared to 35% of non-parents, and 22% of working parents say they have borrowed or withdrawn from retirement accounts compared to only 9% of non-parents. 

High Demand for Simple Solutions 

Consistent with data from the Bureau of Labor Statistics, BPC’s survey finds that nearly seven in ten (69%) workers report having the opportunity to contribute to an employer-sponsored retirement savings account. For most Americans, these tax-advantaged plans, along with Social Security benefits, serve as the foundation of financial security in retirement. Although work remains—particularly for those with household income under $50,000 (only 52% report having access)—Congress is making progress expanding access to these tools to more Americans. 

The survey results emphasize that Americans’ shorter-term financial situation is also fraught and that many would benefit from—and desire—workplace-based solutions. Several of the questions specifically ask working adults about employer-based emergency savings accounts, which could go a long way toward stabilizing household finances. Like employer-sponsored retirement plans, these accounts are linked to payroll, allowing employers (with workers’ permission) to deposit a portion of each after-tax paycheck directly into emergency savings accounts that employees can access, penalty-free, at any time. 

Demand for this type of account is high; access is not. While only 21% of workers say their employer offers a workplace emergency savings account, 60% of employed adults want their employer to offer such an account, including a majority of Democrats, Republicans, and independents. Interest in emergency savings accounts is especially high among young (69%), Black (74%), and Hispanic (68%) workers. Parents (68%) are also particularly eager to be offered this tool. Moreover, 61% of workers with access to a workplace retirement account say they would contribute to this kind of emergency fund, if offered, in addition to any contributions they may be making to their retirement account. 

Workers Want Employers and Lawmakers to Act

Americans need—and want—help saving for emergencies, providing employers and policymakers alike an opportunity to boost household financial resiliency while safeguarding against some of the worst impacts of the next economic downturn. Employers should view emergency savings plans the same as retirement plans—as a benefit that will help attract and retain employees and improve their wellbeing. For workers, access to employer-sponsored emergency savings plans would mark a significant step toward greater financial security. Building emergency savings through payroll deductions enables workers to make the decision to save money one time and automate the saving, rather than attempting to save money from each individual paycheck.

Even better would be automatic enrollment for all employees into an emergency savings plan (with simple ways to opt-out or change their contribution levels), a practice proven to effectively increase savings rates. Indeed, 57% of workers say they want to be automatically enrolled into these accounts. Regulatory uncertainty, however, can impede such private-sector initiatives, and current state laws and banking regulations governing automatic enrollment are unclear. Pending legislation in Congress would address those hurdles.

In sum, financial instability weighs heavily on hard-working Americans, and policy actions—as well as innovative business solutions—are vital to pull back millions from the precipice of financial ruin.

Survey methodology: This poll was conducted online on February 10, 2022, among a random sample of 1,600 employed adults. Results from the full survey have a margin of error of plus or minus 2 percentage points.

Click here for the survey crosstabs.