Regardless of what generation you are in, you have probably heard of a generational gap. It occurs when differences of opinion exist between one generation and another in regards to beliefs, politics, or values. We see it play out all the time in the workplace. When Oscar who has been with the company for almost thirty years complains about the need for Jeff, three years removed from college, to Snapchat pictures of his lunch every time the company goes out to eat. We also see this working in the opposite way when Jeff cannot comprehend how Oscar has been with the same company for 30 years and four companies have employed Jeff just since graduation. As I said, we all know what the generational gap is. Another gap that's less well known is the benefits gap. The benefits gap is a newer term that has manifested as Millenials have entered the workforce in numbers comparable to the Baby Boomer generation. Simply put, the benefits gap is what happens when changing demographics make the traditional benefits that a company provides for a full-time employee become either less relevant or in some cases no longer pertinent to the needs of the younger workforce. There are four main areas in which traditional benefits are failing to meet the needs of today's employee. Health Benefits, Student Loans benefits, 401k benefits, and secondary benefits are the four areas of note. For part one of the benefits gap series, the focus will be student loans.
Regardless if you are watching t.v. or surfing the internet, it has become increasingly difficult to avoid the dialogue that exists around student loans. While it may be easier to change the channel or dismiss an article, it is much harder to elude the employee in your office battling with financial issues due to the mountain of debt they face because of student loans.
Let's again use Jeff and Oscar from the example above. In 1990, when Oscar graduated college, the average student could expect to carry a student loan debt of just above $12,000. Just twenty-seven years later, Jeff and the other graduates in his class carry a median student loan debt of $31,941. This stark difference represents a 164%. Another fact that compounds this difference is that wage growth, adjusted for inflation, has remained flat since 1990.
What this means for you- For many years, this burden has been viewed as a private one in which students and eventually employees have to bear on their own. However, with 50% of employees suffering from severe financial stress and those same financially-stressed employees contributing to upwards of 40% of all workplace turnover, student loan debt now directly impacts a company's ability to operate efficiently. For example, A PWC study on workplace turnover indicated that the average price to hire and train a new employee is $3,976. This hefty price tag eventually weighs on a company's bottom line. That same survey of 1,600 full-time employed adults states that "When we compare those with student loans who say that the loans have a moderate or a significant impact on their ability to meet other financial goals to all other employees, we found that those impacted by student loans are in worse financial shape. They are more likely to be stressed about their finances (81% vs. 45%.) With student loans creating direct financial stress for the employee and indirect financial stress for the employer, the time is now to look at new ways to address the financial needs of the modern employee.