- Few employers track financial benefit uptake by race or ethnicity, according to a March 31 Mercer report, missing an opportunity to improve workplace equity.
- Fifty-two employers, representing more than half a million employees, were surveyed. Only 15% said they track participation in defined contribution plans like 401(k)s by race or ethnicity, and only 2% said they monitor racial or ethnic differences in investment behavior. Twelve percent of respondents said they customize or target financial education or training programs on those bases.
- “Understanding utilization is an important step in determining whether programs are meeting the needs of Black employees,” Mercer said, advising employers to recognize financial wellness as part of equity and work to close any gaps.
Most organizations responding to Mercer’s survey (77%) reported challenges, first of all, in attracting Black employees, then in advancing Black employees (71%) and, eventually, in retaining Black employees (63%). The report encouraged employers to target turnover, explore employee experience and dig into disparities, which “run deeper and broader” than unemployment rates and representation among leadership. “The real disparities are often underpinned by unseen connections,” according to the report.
For example, 2019 findings by McKinsey and Company and LeanIn.Org showed that “Black workers experience lower rates of professional advancement—and compensation—at each successive level of responsibility.”
In the case of one financial services firm discussed in Mercer’s report, “Black employees were about half as likely as white employees to receive the highest performance ratings,” and employees who received high ratings were six times more likely to receive the same the following year — a “dynamic that [kept] Black employees from breaking into the high-rated category” and earning more for their work.
This often distinctly Black workplace experience can result in Black workplace attrition. Pay bumps come and go with those transitions, the report explained, but opportunities to build wealth long-term are aborted.
For Black employees, specifically, this combination of circumstances — barriers to advancement and financial wellness — can impede both career trajectory and financial mobility.
It was those factors that drove one employer to fully fund a retirement plan for staff. Just weeks ago, Colin Seale, founder and CEO of thinkLaw, announced via LinkedIn that his company added a “100% employer-paid” plan.
Seale, a Black man, talked with HR Dive about the impetus for this move, relaying a conversation he had earlier in his career — working as a teacher — with a White colleague during open enrollment. “He's like, ‘Really, what's 3% of your salary even going to be to you? You won’t even feel it’ — and in 5 seconds, I saw this discrepancy between the way he had learned about money and what he understood at 21 years old, in ways that I didn't.”
Later, as a summer associate at a law firm, Seale said he would have been content with just the high salary — triple what he’d earned as a teacher, but he was introduced to a financial planner who helped him invest and, years later, would also help him establish a profit-sharing retirement plan for his team at thinkLaw.
He wanted to offer a fully-funded employer plan, he explained, that would bypass the significant costs associated with 401(k) options. “I know the wealth gap is real, and there are racial disparities in knowledge about wealth and financial planning,” he said, adding that he felt a sense of duty to his staff.
Looking back over the national record that has hampered Black access to financial gain, Seale said “[t]he deck has been stacked in so many ways, right? Inequitable access to the GI Bill, not being able to get life insurance [and] the intergenerational wealth gap that we see continuing.”
Martin Luther King Jr.’s long arc of the moral universe that bends toward justice “sometimes takes a hammer,” he said, “because it won't just bend by itself. We, as business owners, have to take the responsibility and the great opportunity to be that hammer."