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What Does HR in 2021 Look Like?

The past year punched both businesses and employees right in the gut, piling on more money problems for millions of people. What seemed like just the mountain most Americans lived on—all the money stress, paycheck-to-paycheck living and lack of savings—was actually a volcano waiting for a once-in-a-lifetime event to set it off.

The coronavirus pandemic was that event. And you know how the story goes from there.

But what you may not know is the absolutely critical role human resources professionals have played in getting businesses and employees through a year that caught so many people off guard. Simply put: You can’t spell hero without HR. These everyday heroes are the glue that has been holding businesses together through the barrage of mask mandates, contact tracing, quarantines, lockdowns, remote work situations and layoffs.

There’s good news though: It doesn’t have to be that way in 2021. In fact, there’s a golden opportunity for businesses to do something that moves the needle for employees in a way they’ve never done before. And even though there’s still some uncharted territory to navigate in the coming year, there’s hope for businesses and employees. Harnessing that hope and taking advantage of that golden opportunity just comes down to applying what 2020 taught us as we move into the future.

2020 Recap: What Happened?

Most business leaders and HR folks have seen the stats surrounding the corporate chaos from this year. Some of you reading this are part of those stats. But as bad as it may seem and as tough as those stats may be to face, it’s important to learn from the hits we took this year. If we don’t push through and do something different, we won’t make any progress in 2021.

Layoffs, Furloughs and Record Levels of Unemployment

The fallout from the pandemic left record numbers of Americans unemployed. Millions were laid off or furloughed and had to line up for quickly disappearing part-time jobs during a historic economic slowdown. These nationwide company cutdowns delivered a knockout punch to families all over the country. Here’s what we’ve seen since March:

  • 84 million workers filing unemployment at some point since mid-March 2020, smashing previous records from the housing crisis in 20091
  • 4.6 unemployed people per job opening at peak (versus the usual 1–2 people per opening)2
  • An all-time high rate of layoffs and discharges in small, medium and large businesses (8.8% versus the usual rate of less than 2%)3
  • Higher unemployment rates in all 389 metropolitan areas in the U.S.4
  • Record unemployment rates in 43 states5

New Household Debt Added in 2020

The financial stress of mass unemployment has had an interesting effect on household debt (consumer and mortgage debt) in 2020. In Q1, the New York Fed reported that American household debt increased by $155 billion.6 Then, with the rise of the coronavirus pandemic in Q2, it actually dropped by $34 billion as Americans tightened their budget belts.7 But in Q3, we saw household debt spike back up by $87 billion, raising the total American household debt to $14.35 trillion.8

Because many Americans have been living paycheck to paycheck for so long and didn’t have enough in savings, they were forced into more debt when things hit the fan. That’s not OK!

401(k) Withdrawals and Loans

As if new household debt wasn’t enough, many employees also started pulling money from their retirement accounts to cover their short-term cash problems. And it’s all thanks to the CARES Act, which allows employees to withdraw up to $100,000 from eligible retirement plans and increases the amount they can borrow against their 401(k)s.9 The result? As of July 2020, there were $12.2 billion in total CARES Act distributions initiated.10 The average 401(k) distribution amount was $12,100, and the average 401(k) loan amount was $16,200.11


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That’s billions of dollars taken from people’s futures across the country—and represents an even larger number down the line when you take compound interest into account. That’s a huge problem because it puts employees on course for long-term financial hardship and sets them back years with their retirement, if not decades.

Employee Stress and Mental Wellness

People are drowning in stress and anxiety. We already knew that employees were bringing their money stress into work with them, hurting businesses in the form of lost productivity, absenteeism and turnover. But the pandemic and the consequences of social distancing have made it worse for people all over the country.

Data trends from the CDC show that more and more people are struggling with stress and anxiety. And that can affect their relationships, work and finances. According to their research, all working-age demographics reported an increase of new symptoms of anxiety or depression in 2020.12 And the two largest age groups have been hit the hardest: 58.7% of workers 18–29 years old and 49.5% of workers 30–39 years old reported new symptoms of anxiety and depression.13  Employees need help—that’s a fact.

The Rise of Remote Work

Because of the pandemic, millions of workers were sent home and have had to juggle work and family life in one space. That’s introduced new stress and raises productivity issues—it can be hard to stay focused between your canine coworker busting into conference calls and your kids needing help with their virtual classes.

According to Gallup, 51% of surveyed American employees were working remotely from home full time in mid-April of 2020—during the peak of restrictions on businesses.14 And now, months into the remote work situation, 65% of those still working from home want to keep doing so while 35% want to get back to the office.15 What was a trend before COVID-19 has turned into the reality and expected future for millions of employees across the country.

The Business Cost of This Perfect Storm

It’s still too early to see the long-term cost of 2020 for businesses and employees. But we know that nearly 80% of American employees were living paycheck to paycheck before the pandemic hit.16 And we know that 39% said they couldn’t cover a $400 emergency.17 Add in all that new household debt and stress, and the financial futures of American employees look bleak if their employers aren’t able to help.

But what about the bottom line for your company? Well, you can draw a straight line from employee money stress to costs to the business, and the pandemic isn’t helping.

Key Takeaways: HR Philosophy for 2021

While there are a million takeaways for the heroes in the HR department after a year like this last one, the most glaring of all of them is this: Employees need help. And you can bring it to them.

The struggles of 2020 won’t just go away because we turn the calendar. Business and HR leaders need to push back against the things threatening their employees because doing so directly benefits the business. You have the power to make sure 2021 isn’t a repeat of 2020 for your people. How? By offering the right benefits, meeting the employee needs that came front and center in 2020, and helping employees prepare for the unexpected.

The Focus Should Be on Real Employee Wellness Going Forward

It’s not rocket science to figure out that people who are struggling in their personal lives also struggle at work. So, business leaders must prioritize employee wellness. In the past, the concept of employee wellness has been about incentivizing exercise and looking for ways to keep morale “good enough.” But that’s not good enough, and 2020 has been proof of that.

Employee wellness needs to evolve to meet the needs of, you guessed it, employees. Handing out a fitness tracker or offering a free investment tool doesn’t do much good for a single mom who is more worried about putting food on the table than fitness or investing. Or for a person who needs to see a grief counselor. Or for someone trying to pay off medical debt. It’s like trying to fit a square peg into a round hole. That’s not wellness. That’s just checking a box.

With so many American employees struggling with money issues, it’s clear that financial wellness is a must for a well-rounded benefits package. After the year they’ve had, it’s one of the most thoughtful and effective things you can do as a business or HR leader.

Choosing the Right Financial Wellness Benefit for 2021

Being good with money is 20% head knowledge and 80% behavior. So, when you’re looking for a financial wellness program for your team, you need one that focuses on behavior change as the means to reaching financial goals.

A lot of people think they need to inherit a fortune or be a financial professional to be good with money. But that’s just not true. What they need is a proven plan that gives them the tools and resources to get on a budget, get out of debt, and save for the future. They need a financial wellness program that helps them get rid of the money stress that’s been following them into work and hurting your business. That’s exactly what SmartDollar does.

Even through a year like 2020, SmartDollar users were able to fight back, making progress toward their money goals with an average first-year financial turnaround of $16,200 in debt paid and dollars saved. They’ve been following their budgets, saving up emergency funds, paying off debt, and actually feeling hopeful about the future during a time when hope has been hard to come by.

And it’s all because business and HR leaders were standing in their corner, acting on the value that true financial wellness can add to their employees and their bottom line.

2021 Doesn’t Have to Be a Repeat of 2020

So, what does the future of HR look like? It depends on how you choose to respond to the lessons 2020 taught us. The success of your business relies on your employees’ wellness. That’s a fact. By focusing on the right benefits, meeting employee needs that were highlighted during the past year, and helping them prepare for the unexpected, you can empower your team and your business to go from surviving to thriving in 2021.

Learn more about true financial wellness and how SmartDollar can benefit your employees and your bottom line.



10Fidelity Plan Sponsor and Participant Trend Reporting

11Fidelity Plan Sponsor and Participant Trend Reporting

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Ramsey Solutions

About the author


Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners. Learn More.

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