How Financial Worries May Affect Productivity at Work

How Financial Worries May Affect Productivity at Work



Employers have long suspected that financial worries negatively affect employees’ overall financial wellness. Many may also assume, not surprisingly, that these worries can lower productivity at work specifically.

There’s plenty of research from respected institutions that supports these ideas. But while existing surveys can help employers understand the growing need for financial well-being benefits, the bulk of this research relies on self-reporting by the respondents. Very little field research looks directly at how financial stress and the design of employer-sponsored financial well-being programs impact employee productivity.

Now a new study from the National Bureau of Economic Research (NBER) sets out to help fill that gap. In the working paper entitled “Do Financial Concerns Make Workers Less Productive?,” authors Supreet Kaur, Sendhil Mullainathan, Suanna Oh, and Frank Schilbach conducted targeted field research among a group of 408 small-scale manufacturing workers in Odisha, India.

Workers Carry Financial Troubles to Work


The researchers started with the hypothesis, based on existing studies, that workers bring their financial stress with them to their jobs, which may make it hard for them to be effective. To see if that was true, the researchers created a sample group of Indian workers who were contracted to make disposable plates for restaurants.

Most of these workers were clearly financially vulnerable. Just over 70% of participants in the study had outstanding loans, usually in the form of credit owed to local stores and groceries. What’s more, 86% reported being worried about their finances and about half reported worrying about finances while at work.

Financial Relief Can Increase Work Productivity


The researchers then set up a system in which a rotating group of workers received about the equivalent of a month’s pay in one lump sum. There was no increase in wages, no difference in hours worked, and no other change in the job. The workers simply received their usual earnings in a larger payment made earlier than expected.

The result? Workers with the increased cash on hand were 222% more likely to pay off their debt, often within three days. The workers also experienced a 6.2% increase in productivity and a noticeable decrease in mistakes, signaling that their focus and attention increased when their financial worries diminished.

The Takeaway


The study authors realize that many psychological factors might account for the increase in productivity that stems from having more cash on hand. But the lessons from the field indicate that when employers help workers find the means to alleviate some of their financial worries, the workers tend to become more productive.

At SoFi at Work, we believe financial health can lead to an increase in work productivity. Our holistic approach to employee financial well-being, including education, solutions, and contribution benefits, can help you help your employees achieve financial freedom.

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