- The Covid-19 pandemic raised awareness that the average American worker lacks a "cash cushion" for emergencies.
- Here's how some employers are working with BlackRock's Emergency Savings Initiative to help change that.
When new employees get hired at the Levi's store in Lone Tree, Colorado, there's one job perk for them that really stands out, says store manager Debbra Ward — a company emergency-savings program that includes a match.
If store workers save $40 per month, Levi's will match that with another $40 per month; in addition, they get a $20 sign-on bonus.
Provided workers stay in the program for six months, that adds up to $500 — more than the $400 that surveys say many Americans can't afford to pay in cash for unexpected emergency expenses.
The program runs once a year. But even after it ends, Ward expects the workers who have enrolled will continue to participate after they have built a habit of savings.
More from Personal Finance:
IRS still has sizable backlog of returns, taxpayer advocate says
Americans have 'tip fatigue,' push back against 'tip creep'
3 steps to take before you start investing, advisor says
For retail workers, many of whom are in their late teens and early 20s, that can be a powerful lesson, she said.
"This teaches you to be your own safety net," said Ward, who has seen workers use the money on everything from car repairs to school expenses.
When Ward, who has worked for Levi's for 13 years, relocated with her family to Colorado from California, she used her own savings through the program to help with moving costs as they bought their first home.
Levi's has been running a program to help workers boost their emergency savings since 2015. But in recent years, the company has decided to partner with the BlackRock Emergency Savings Initiative, which helped Levi's present its savings incentives in more creative way, according to Jenny Calvert Rodriguez, executive director of Red Tab Foundation, Levi's employee-assistance fund that focuses on improving the financial health of both employees and retirees.
"Ultimately, we're trying to get people into a set-it-and-forget-it [mindset] to get people to set aside money every month," Rodriguez said.
Since Levi's relaunched its emergency-savings program with BlackRock about a year ago, the company has attracted about 1,250 participants, Rodriguez said. Altogether, the company's emergency-savings initiatives have included more than 3,000 employees, with about $1.2 million in savings.
Today, the BlackRock Emergency Savings Initiative has reached a new milestone of more than $2 billion in net new savings for the program's participants.
More than 10 million people were reached with new savings products through BlackRock's initiative.
More companies may be poised to start offering these benefits after Congress approved new retirement legislation that paves the way for employers to provide emergency-savings benefits. Experts say the changes are needed to help individuals and families shore up their cash reserves amid high inflation and rising interest rates that make carrying debt more expensive.
Other initiatives like SecureSave, a fintech company working to help employers set up emergency-savings programs for workers, emerged during the pandemic. Millennium Trust, a privately owned trust company, announced the launch of its emergency-savings benefits program for employers in March 2020.
"Employers need to get involved in this, because most people won't save money unless their employer somehow does it for them through a payroll deduction," personal finance expert Suze Orman, a co-founder of SecureSave, said earlier this year.
BlackRock's Emergency Savings Initiative was established in 2019 with a philanthropic commitment of $50 million. To date, it has deployed $30 million.
The firm is working with nonprofit organizations including Common Cents Lab, Commonwealth and the Financial Health Network.
Other employers offering emergency savings in collaboration with BlackRock include Best Buy, which has seen more than 1,300 employees open accounts, and AutoNation, which offers several savings options to employees to help fit their needs.
In addition, BlackRock is also working with record keepers, payroll providers and workplace banking providers to give employers more access to savings features. That includes companies like Automatic Data Processing, Truist Financial Corp., Varo Bank and Mastercard.
Since BlackRock's emergency-savings initiative was founded four years ago, the awareness of the need for it has increased, according to experts involved with the initiative.
"There's really been a sea change over the last four or five years around the issue of emergency savings," said Timothy Flacke, co-founder and executive director at the nonprofit Commonwealth.
The Covid-19 pandemic helped bring public attention to how close many people are living to the financial edge, Flacke said.
That has prompted more employers to try to get involved in providing savings benefits, he said. Policymakers are also stepping up.
It would previously have been a "wild dream that Congress would have enshrined emergency savings," as they did last year in Secure 2.0, he said.
Having a buffer of cash can help prevent workers from withdrawing from their retirement accounts when they are financially pinched, said Claire Chamberlain, chief investment officer and managing director, BlackRock Corporate Sustainability and Social Impact.
BlackRock's initiatives have shown "saving even a small dollar amount can be meaningful," Chamberlain said.
But beyond that, there's a psychological boost from demonstrating to yourself that "I can be a saver" that is enormous and hard to capture in numbers, she said.
Ward, the Levi's store manager, said she has seen firsthand how workers' outlook on their ability to save has changed by even just giving up their weekly lattes.
"Really just putting aside a little bit of each paycheck helps people to get into the habit of savings," Ward said.