Much has been written about disparities in pay and retirement readiness among racial and ethnic groups, but the reasons why those differences exist is not always clear.
A recent study highlights a variety of factors that keep African Americans and Latinos in a constant cycle of financial stress, including language barriers, trust issues and caregiving responsibilities, such as raising grandchildren or caring for an elderly parent.
Nearly one-third of African-American employees and one-fourth of Latino employees reported high or overwhelming levels of financial stress compared to 19 percent of white employees and 12 percent of Asian American workers, according to a study by financial wellness provider Financial Finesse.
Language is an obvious barrier when it comes to communicating financial information, but trust is a more nuanced obstacle that employers should be aware of, according to Tania Brown, a certified financial planner and author of the study. For Latino employees, general mistrust of the government could make them reluctant to participate in financial surveys, for example.
“Both groups disproportionately were victims of mortgage fraud, which probably deepened existing trust issues,” she said, referring to subprime lending practices that resulted in many African-American homeowners losing their homes between 2007 and 2009. “An employer needs to be sensitive to these trust issues. The should make sure that financial coaches are free of bias and are there without agenda to sell that person a product or a service.”
African American and Latino employees are more likely to be caregivers of elderly parents and to provide financial support to adult children, according to report.
“Taking care of your parent is priceless but it has a cost,” Brown said. “If you have someone who started off with debt and a lower income and then you add children, which means putting less into retirement, and now you add caregiving responsibilities, and you see the problem. But it’s also an opportunity for employers to better understand the ethnic groups in their workforce and the trends that affect them.”
Other recommendations include offering flexible work schedules and extending financial wellness and long-term care benefits to the employee’s immediate family.
“Employers are in a wonderful position to directly impact the lives of their workforce and to actually improve the lives of an entire generation,” Brown said.
Rita Pyrillis is a writer in the Chicago area. Comment below or email email@example.com.
This post originally appeared on Workforce Magazine
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