Issue: Research indicates that the Earned Income Tax Credit is one of the most effective measures in improving a low-income family’s economic security. But many low-wage workers are not aware that they are even eligible or don’t know how to apply.
Possible Solution: Provide education on the value of the EITC and access to tax prep and EITC consultants on-site to ensure that low-wage employees are getting the most out of their tax returns. Employers can also direct employees to free tax prep services offered through the United Way or other local non-profits.
"Tax preparation is a resource tha t is not always easily accessible and can create a barrier for those who do not understand how to file their taxes efficiently. As a company, assisting with this service would help your clients become more financially stable. Bringing a professional onsite to work with clients is an option, contacting your nearest university to request students who want to practice their tax preparation skills, or referring employees to an offsite tax preparation service."
Issue: Many benefits like increased PTO, bonuses, more attractive short and long-term disability packages, life insurance, 401K contribution rates, profit sharing and paid parking are often reserved or enhanced for employees who hold top management positions, when low-wage employees could benefit greatly from and be motivated by these sorts of benefits.
Possible Solution: Consider how extending some of these benefits to all levels of the organization could enhance the attraction, retention and stability of your overall workforce. For example, increased PTO may have minimal overall cost if it results in less unplanned absenteeism.
HSA High Deductible Health Insurance Plans
Issue: High deductible plans present a challenge to low-wage workers who may not be able to afford the costs of co-pays and medication before their deductible is reached. This can lead employees to delay important health care, ultimately increasing costs when minor problems become serious and cause the employees to miss more work.
Possible Solution: Emphasize the importance of seeking routine healthcare and consider a policy of providing up front assistance with HSA high deductible costs/co-pays. Consider also providing information on Patient Advocates at hospitals to assist employees in navigating payment of expensive medical bills.
401K for Retirement Savings
Issue: Although saving for retirement is an important goal, low-wage workers’ more immediate need may be paying off student loan debts or other bills. Until those debts have been cleared, saving for retirement is a moot point.
Possible Solution: Provide the option to re-purpose 401k contribution amounts from employers to student loan repayments or other more immediate needs.
Issue: A 529 plan is a college savings plan paid into by individuals, but for low wage workers it may be difficult to make significant deposits into the account. This means the only individuals helped by this plan are those who can afford to make large deposits into the account, excluding most if not all low-wage workers.
Possible Solution: If a 529 Plan is offered, provide an employer match for education and training for employees and dependents.