Aspen Digital

Possible Intersections

An abstract illustration revealing different layers of color. Swaths of blue, undulating shapes meet and overlap.
May 24, 2023
  • Aspen Digital

Emerging tech Trends

Providers of financial services and HR service tools are exploring new technologies. These include artificial intelligence (AI), new mechanisms for leveraging data, and tools for collective decision-making. Although adoption of emerging technologies has historically been limited in employer-provided services for financial security, that may not be the case for much longer. Crunchbase found that funding in the HR tech sector “more than doubled” in a four month period, and by November 2021, total venture dollars stood at “nearly $7.5 billion for the year—more than the totals for 2019 and 2020 combined.” To understand the possible impacts on worker financial security, it’s important to understand the technology trends that are driving change across all industries and explore how they may show up in the worker financial security context:

7.5B

Total venture dollars stood at “nearly $7.5 billion for the year in November 2021—more than the totals for 2019 and 2020 combined —Crunchbase

Personalization

There is a wide variety of financial challenges workers face, and an even broader variety of approaches to addressing them.

62%

More than six in 10 workers (62 percent) would exchange their work-related data for more-customized compensation, rewards, and benefits —Accenture Strategy

“One part of AI’s job here is to ensure the employees who need these things receive access to them…AI can ‘nudge’ employees and help them find and navigate the right benefits at the right time.”

Anand Rao, Global Leader, Artificial Intelligence at PwC

Alternative Data Sources

28MM

28 million American adults have no mainstream credit file and are considered “credit invisible.” —Experian

Data Risks

63%

Employee monitoring software demand has been 63% higher on average since the start of 2022 than it was in 2019 —Top10VPN

constant algorithmic monitoring, combined with surveillance, also increases insecurity, because workers feel like they’re being constantly evaluated.

Tech Monitor

64%

64% of workers say data privacy scandals make them concerned that their personal data might be at risk of getting into the wrong hands. —Accenture

Technology Governance

“It is difficult not to provide consent if you enter a recruitment process, start a new job or are asked to agree to new processes at your current place of work.”

Anna Byhovskaya, Senior Policy Adviser at the Trade Union Advisory Committee to the OECD

“Because the data we’re creating is fundamentally shared, collective structures like data cooperatives are the appropriate vehicle to negotiate on behalf of data holders like you and me.”

Divya Siddarth, political economist, Microsoft

Although data about workers may not always be used for their benefit, there are many paths forward that can leverage technology to empower workers. Worker needs, especially for the most vulnerable, must be considered whenever companies are evaluating potential investments in technologies that might impact workers’ financial security. One strategy to ensure that investments in worker financial security are well-spent is to make sure that workers play an active role in the decision-making process.

Outlook for Workers

There are a number of challenges facing workers in the years to come. Following the start of the COVID-19 pandemic, many workers have experienced dramatic upheavals. Globally, roughly 114 million people lost their jobs in 2020 including the 22 million in the U.S. While employment levels are back to, and even exceeding pre-pandemic levels, the labor market is still facing serious disruptions with major layoffs across various sectors, record high inflation closing out 2022. Additionally, there is a looming economic recession that will most likely impact industries with low-income workers the most. A large majority of whom are from marginalized communities. When workers are financially insecure, they aren’t able to build savings and invest in ways that build wealth for themselves and their families. According to the Federal Reserve Bank of St. Louis, the “the median wealth gap between white and Black families has hardly changed over the last 20 years,” while the gap between white and Hispanic families has increased slightly.

114MM

Globally, roughly 114 million people lost their jobs in 2020 — including 22 million in the U.S. —World Economic Forum

And yet with those challenges come opportunities for worker advancements and improvements.

Industries tied to the supply chain are experiencing changes while still trying to recover from a persisting disruption triggered by the COVID-19 pandemic. SHRM (Society for Human Resource Management) released a report laying out the number of issues preceding the pandemic that led to the current state of the supply chain and makes abundantly clear the need for foundational changes, especially in the workforce. In June of 2022, there were 5.5 million more job openings than there were workers to fill them. The labor shortages in the impacted supply chain industries are forcing companies to rethink the services and incentives they can offer to workers, which in turn is giving workers the power to demand more of their employers. This may have a fallout effect in the years to come, however, as employers face greater economic incentives to automate their processes and lower labor costs.

5.5MM

In June of 2022, there were 5.5 million more job openings than there were workers to fill them. —Bureau of Labor Statistics

Beyond the COVID-19 pandemic, there are a number of other factors that will continue to impact workers in the long term. Low-income workers are the group first and hardest hit by the effects of climate change. However, the demand for alternative forms of energy and resources due to climate change and resource scarcity have already sparked job growth in these industries. The 2022 Inflation Reduction Act is expected to create more than 9 million jobs over the next decade according to a report commissioned by the BlueGreen Alliance. With these significant investments in growing the domestic response to climate change, there is a unique opportunity for workers to gain new skills in developing industries. There is a risk that these opportunities will be more available to high-skilled (and high wage) workers, but advocates for unskilled workers are calling for increased focus and investment to include “unskilled” workers in the “green transition.”

9MM

The 2022 Inflation Reduction Act is expected to create more than 9 million jobs over the next decade. —BlueGreen Alliance

Another potential factor in the outlook for financially insecure workers is the impact of AI on the availability of work and value of certain kinds of labor. Many of the eye-catching recent advancements in capabilities afforded by AI are expected to primarily impact knowledge work (and may even expand access to work by lowering barriers to entry for less-trained workers), but there are concerns that increased competition for traditionally less accessible jobs may lead to lower wages being paid for those jobs. That said, adoption of technology tends to take time, and many companies are still early in their integration automation technologies, so there is still a lot of uncertainty about the ultimate impacts of these changes on workers.

Although the issues impacting workers’ financial wellbeing won’t be solved with financial security services from employers alone, actions that companies can take today include intentionally diversifying higher paying roles, ensuring all workers are being paid fairly, and providing financial security resources. Supportive technologies aimed at bolstering savings, credit, and investment practices could help to narrow the racial and gender wealth gap and help keep workers in their jobs at a time when 40% of people are unhappy in their roles and are considering leaving. Other offerings, such as employer-provided childcare, mental health services, and flexible scheduling can help to address many of the obstacles women and people of color face in becoming more financially secure. 

Technological advances and continued economic instability have put the modern workforce in a constant state of flux. Workers need support to achieve financial security, this is especially true for the most vulnerable workers. Those who are low-income and lacking formal education need help gaining, and then maintaining, financial security. A critical factor in getting there is with employer-provided services. While systemic reforms are needed, there are actions employers can take today to be one of the most stabilizing forces in workers’ lives, and, as discussed earlier, when employers invest in their workers, they see a substantial return on that investment, in turn.

AuthorS

Morgan McMurray, Shanthi Bolla, & B Cavello

Dive into this Guide

Current Context

Current Context

Many employers now offer a variety of resources to help stabilize workers’ funds to help avoid short-term financial difficulties.

Expert Insights

Expert Insights

HR decision-makers, labor advocates, social entrepreneurs, and experts in financial security share their perspectives.

HR Resource

HR Resource

How to navigate researching and implementing new services, with an eye toward improving the financial lives of workers.