Similar to what millennials faced from the 2008 recession, Gen Z is now entering the workforce at a time of uncertainty. Just a few months ago, it was a tight labor market where opportunities abounded, and now we face a future of unknowns. Born in 1997 or later, Gen Z is estimated to comprise about a quarter of the workforce, and that number has nowhere to go but up. Knowing Gen Z may have an uphill battle, what can employers do to help this generation start their careers on the right foot?
When the financial crisis hit in 2008-2009, Gen Z was too young to be directly impacted, but they grew up watching their parents and older siblings struggle with the effects of the Great Recession. As a result, their outlooks and attitudes toward finances are different than those of millennials, and employers who are future-proofing their workforce will recognize this and help them address financial needs, and by extension, the anxiety and stress about work and money that permeated their formative years.
With today’s economic uncertainty relating to coronavirus affecting global markets, Gen Z is likely to react in different ways than older generations, and it’s imperative that employers do what they can to help them establish healthy financial habits as early as possible. Get started with these three strategies:
Explain financial concepts — but don’t dumb it down.
Contrary to what you may think, Gen Z is actually very aware of the need for financial literacy. In fact, over half already have a checking or savings account, and 64% have begun researching about finances or talked to others about it — and remember, the oldest members of this generation are only in their early 20s. Yet, they need education and resources: In a Raddon study titled “Generation Z: The Kids Are All Right—How High Schoolers Perceive Financial Needs and Opportunities,” 84% said they rely on their parents for financial information. That means employers can offer expertise and guidance as Gen Z employees enter their ranks.
A key difference between this generation and millennials is that Gen Z is extremely debt-averse, which makes sense based on their experience watching millennials deal with crushing student loan debt. But establishing a credit history is important for things like buying a home or car later in life, so employers who recognize those needs and provide educational resources for their employees can help instill good habits early, resulting in less stress later. Additionally, providing avenues to start them on a path of savings through goal accounts or automatic deductions from a paycheck is a cost-effective way to help. These lessons can help Gen Z employees navigate their early years of financial independence and benefit them in the years to come.
How can employers reach them with this information? These digital natives are comfortable with video content, texts and other mobile-optimized messaging. There are also a number of budget apps available, and this is the employee population that’s unafraid to put them to work.
Offer savings options that speak to this generation.
Gen Z already understands the importance of saving, but retirement can feel like a lifetime away for these younger employees. Encouraging them to set aside part of their paycheck for a time 40 years in the future can be challenging, so consider the ways you communicate about it. If the only retirement communications they see from your organization feature older couples enjoying a beach, they’re going to tune them out.
Also, savings are more than just retirement funds. Help Gen Z understand how 401(k)s can develop a nest egg over time and why these are important for the long term, but also increase their understanding of savings vehicles like FSAs and HSAs. The HSA, in particular, is a widely foreign concept to Gen Z. They will likely have little idea of how to use one or why it’s worthwhile to grow it over time. But, in our current climate, having an HSA could be of great value to younger employees who typically have low medical usage, allowing them to use their dollars toward a variety of health-related expenses.
These savings vehicles beyond just 401(k)s can help them budget now, and with 89% of Gen Z saying that planning for their financial future makes them feel empowered, the door is open for employers to provide multiple tools to establish savings and good budgetary habits.
Mix flexibility with stability.
Much like millennials, Gen Z values flexible work schedules. But in a recent survey, 91% said job stability was moderately important, and 46% called it very important. While they have likely embraced our new virtual world rather quickly, they desire stability more than employers may expect, and they’re willing to work hard for it.
For employers, offering a tailored suite of benefits can address that need for stability. Health coverage and the savings vehicles we’ve discussed are important, of course, but your organization should also consider options such as career training and tuition support so that these younger workers can keep developing their skill sets without feeling they have to job hop. And there’s more — pet insurance, student loan assistance and fitness reimbursements are just a few of the ancillary benefits to consider when designing offerings that speak to Gen Z.
These employees are likely to find these options useful, even if they’re not ready for accident insurance or long-term disability coverage, for example. Meeting this need for stability provides a steady paycheck and benefits, along with the mental and physical well-being that those entail.
Building For Tomorrow
Gen Z is not like other generations in our workforce today. They grew up surrounded by a financial crisis and debt issues. Their entry into adulthood is now marked by a pandemic and global economic uncertainty. Employers have an opportunity to establish a positive financial start for these employees, who are unusually attuned to the importance of financial wellness. Doing so can benefit this younger generation’s overall well-being, as well as strengthen all of our organizations.
