[Guest Post from Ona Porter, CEO, Prosperity Works]
In the first few days of the COVID-19 crisis, we saw reports of 700,000 unemployed workers. Now, it is in the millions. Nearly 25% of workers now say their pay is reduced or they were laid off. Simply put, we’re all in unchartered waters. Rightly, there is a lot of focus on immune-compromised and health risks. But the shock to the economy is not getting enough attention. Federal stimulus or payments are forthcoming, but cash is king. Access to credit is also critical, but it has to be safe, fair, and affordable.
The American Banker published an analysis that projects an increase in demand for small-dollar lending and that many people may be turning to payday loans and other short term loans that can cost 400% interest or more. The most economically vulnerable employees may be able to stay healthy at home, but they could be financially devastated – not just by the loss of income but by the cycle of high cost debt caused by predatory lenders.
Businesses and organizations have some options to help support their employees and when an employee isn’t under undue stress, this goes a long way in staying focused at work. Many vulnerable workers will be furloughed or their hours reduced until everything is more clear and it’s going to be the people without access to low-interest, non-balloon payment loans that will be the most vulnerable. The most financially insecure are the ones most likely to be on the front lines and most vulnerable financially when facing reduced hours or mandatory time off. How will they pay their bills?
Many employers that are able to maintain their workforce are working hard to come up with ideas – like advancing paid time off or accrued vacation time – to give employees a little extra money in their pocket to cover unplanned expenses. Employers can also offer economic support designed to help employees in times of financial stress. Family Friendly New Mexico’s toolkit includes sample policies that employers can implement.
Other options with no cost or financial risk to employers can help employees to access loans without using a credit score as part of the process. Some can be repaid via payroll deduction like the True Connect Employee Loan. This small loan product is repaid with a payroll deduction and has been widely adopted by cities, counties, school districts, colleges and businesses across New Mexico. There is no cost or risk to the employer. It is simple to administer, employees love it and you can sign up for it today.
Prosperity Works is a local non-profit that has been developing initiatives to support the economic security of New Mexicans since 2000. To learn more about how your business/organization can help your employees with access to reasonable loan funds, email Ona Porter, Prosperity Works CEO.
Together, businesses and their employees can find ways to get through this economic storm and work to keep our New Mexico economy and communities sustaining and thriving.
About the author:
Ona Porter, President and CEO of Prosperity Works, develops and tests high impact strategies that build the opportunities, knowledge and relationships required for all New Mexicans to achieve economic security and prosperity. Known for her powerful, no nonsense approach to problem solving and strategy development in business, education, health and human services. Her tenacity to empower individuals and organizations to name and create the environments that lead to success may be measured by her oft stated remark, “Don’t tell me NO, tell me How!” She believes that, “working for what we do want instead of against what we don’t want,” allows individuals of diverse talents and perspectives to create and invest in high impact goals that change their lives. Ona Porter previously served on Family Friendly New Mexico’s Business Leadership Council.