The Employer's Cost for the Personal Financial Management Difficulties of Workers: Evidence from the U.S. Navy

Abstract

While most employers remain unaware, personal financial management problems of workers cost American employers millions of dollars in lost productivity every year. One employer who was interested in studying the cost was the United States Navy. This research found that the U.S. Navy experienced $35.8 million in annual productivity losses. This translates into the loss of over 826 worker years due to letters of indebtedness, bad checks, garnishments, bankruptcies, and time spent obtaining assistance from the Navy-Marine Corps Relief Society. In addition, the service member’s personal financial management difficulties caused the Navy to replace 2,919 service members due to failure to re-enlist or loss of security clearance, and this cost another $65.2 million.