Jirs Meuris is an Assistant Professor at the University of Wisconsin-Madison School of Business. He researches primarily within the fields of behavioral science and human research management, especially with respect to workers’ personal finances. Professor Meuris earned his Ph.D. from the University of Pittsburgh.
In April of 2018, Professor Meuris’s research revealed that “people who are worried about their financial situation have less cognitive capacity available to them, which subsequently spills over into their work performance.” He recently answered some of Qlicket’s questions about the implications of his findings.
Qlicket: Your study considered “savings, credit availability, and total household income” in addition to wages. What are the most significant and costly effects caused by workers’ overall stress surrounding their finances?
Meuris: My work has shown that when people are concerned about their personal finances, it takes away from their attention to other necessities, including their work. Hence, financial insecurity takes away from people’s ability to perform at work. The most recent published paper shows that accident rates among truck drivers are related to their financial concerns, but I am currently identifying the same effect on other outcomes including productivity, unethical behavior, discrimination, and skill acquisition, to name a few. For example, in a recent series of studies with college freshmen, we found that financial concerns lead students to perform below their academic ability in their first year, even after accounting for their objective economic circumstances. Overall, there seems to be a rather robust argument for an organizational interest in the financial welfare of its workers.
Qlicket: Much of your research focused upon accident data for truck drivers working at a large shipping company. Due to the violent nature of highway collisions, the personal cost of an accident due to decreased cognitive capacity is evidently high for a truck driver. Do workers in manufacturing, construction, and other frontline industries face similar risks as a result of stress over financial security?
Meuris: As I mentioned, the general idea of financial insecurity taking away from your ability to attend to your work will be applicable regardless of the work you do. In a recent study I conducted with a colleague at University College London, we used daily data across a national sample of U.S. workers to examine the effect of stressful financial events (i.e., a life event that negatively impacts your personal finances) on the quality and quantity of their work output that same day. What we found is that when people experienced such an event compared to a stressful event that didn’t impact their finances, both the quality and quantity of their work was more likely to suffer. So we have clear evidence that we would expect performance and productivity, however the company defines it, to go down as error, injury, and accident rates go up as workers experience more of these stressful financial events.
Qlicket: Outside of finances, what other factors contribute to decreased cognitive capacity in the workplace?
Meuris: There are many aspects that affect cognitive capacity at work. It encompasses everything from the nature of the work and how you design jobs (simple versus complex), to supervisor behavior, and to anything aside from financial stress that may be going on in your non-work life. So we can view finances as one piece to that puzzle. I think the important point here is that all jobs will consume some amount of cognitive resources, and some more than others, but organizations can think about how their work practices influence the non-work-related cognitive demands that interfere with—rather than facilitate—performance and productivity.
Qlicket: The recent federal government shutdown was the longest in United States history. During the shutdown, your statement cited in the Atlantic asserted that “we should be worried about the impact of the current shutdown on our national security and health as thousands of government workers… work to protect us from threats while going without a paycheck.” How significant could this threat have become, and is the looming possibility of another shutdown affecting the cognition of federal employees?
Meuris: Do you want to step on a flight where your air traffic controller isn’t getting paid? Do you want to eat food inspected by a person who is concerned about how to pay their next rent payment? I doubt anyone would say “yes” to these questions, but that is basically what you were doing during the shutdown. The major driver of this concern is anxiety. The recent project I mentioned where we used daily data has provided us with considerable insight into why financial insecurity affects people so much. It turns out that the psychological effects are a result of a human survival mechanism where people who experience a stressful financial event experience anxiety, which is responsible for focusing them upon their finances as a means of averting the threat to their personal welfare. In the case of the shutdown, not only are you putting people in difficult economic circumstances, but now you are introducing uncertainty into their lives that will make the experience of anxiety more likely. Because of this, I’ve argued that an extended shutdown has long-term effects that make us less safe, even after it ends, and that’s something we should all be aware of.
Qlicket: Have you seen your research impact companies’ decisions about wages and tenable working conditions?
Meuris: While I hope that my research in itself has influenced companies’ decisions, I’ve approached this more as a process of accumulating evidence and using that to make the case to companies and policy-makers. In this vein, I do a lot of work to communicate these findings to the broader public in the hope that as more evidence emerges, organizations will start looking at their work practices and wage setting in another light.
Qlicket: Have you noticed any patterns among American companies most likely to modify their wages or working conditions to accommodate their workers?
Meuris: There has been a move toward financial wellness programs in most companies, but they are, in my opinion, largely ineffective. Most of them are tied to retirement programs and offer little aside from financial literacy, which has been shown to have little effect on financial welfare. A variety of tech startups have also sprung up into this space where the big problem becomes that those who need it the most are unlikely to go on an app and play the cool fun financial wellness game. I’ve had some success here with more involved programs that address specific challenges workers are facing, but there’s much to be done on what an effective financial wellness approach looks like.
“While unemployment has gone down, job quality hasn’t increased.”
Aside from financial wellness directly, wages and other work practices are very important and here again I have to be pessimistic about the trends. Wages have stagnated while costs of living have increased, the share that workers pay for medical insurance has increased, and employers are cutting their contributions to 401(k) retirement plans. While unemployment has gone down, job quality hasn’t increased. All around, these trends are contributing to the poor state of personal finance in the United States.
Qlicket: What is the most effective strategy that companies can employ to ease stress among their frontline workers?
Meuris: I generally divide workers into two camps when thinking about what companies can actually do. In one camp, you have those who experience financial insecurity because of their structural conditions (i.e., they receive low pay, limited benefits, variable schedules, and lack job security). Here, companies need to look at how they are designing “work” within their organization, because it is these structural conditions that are creating a context for financial insecurity to thrive. In the second camp, you have workers who do not work under these conditions but still experience financial insecurity. For them, financial insecurity tends to be an accumulation of life events that make it difficult for them to save and pay down their debts. In this case, there is opportunity to implement specific interventions, such as a savings program where companies could help break the negative spiral these people are in. According to my research, there can be a considerable return on investment to these measures.
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