Financial Stress and Absenteeism: An Empirically. Derived Model

Headnote

This paper examines the relationship between financial stress and absenteeism. A conceptual model was derived from a Health Promotion Model and empirically tested to investigate relationships among determinants (individual characteristics), stress (financial stress), physical and psychological responses (organizational commitment and health), and absenteeism. Using data from white-collar workers at an insurance company in three mid-western states, this research determined that financial stress was negatively related to organizational commitment and was positively associated with absenteeism. Employers might reduce employee absenteeism and improve organizational commitment by helping employees reduce financial stress through effective workplace financial education programs.

Key words: Financial stress, Absenteeism, Workplace,Financial Education

Introduction

Do financially troubled employees bring those concerns to work? Are financially troubled employees as productive as others? Twenty-seven percent of those responding to a recent survey conducted by the Los Angeles Times characterized their personal finances as shaky. Forty percent reported difficulty paying installment loans, car payments or insurance premiums (Atkinson, 2001). It is widely believed that many personal life stresses, such as marital, family, illness, and financial, influence an individual's psychological state and behavior at work (Families and Work Institute, 1997). Stress at work not only affects the individual but has also been estimated to cost American industry more than 100 billion dollars annually in absenteeism, productivity loss, and health-related expenses (Jacobson, Aldana, Goetzel, Vardell, Adams & Pietras, 1996; Rosch, 1984).

Employees who are suffering from stress at work are less likely to be productive. The three most common reasons for unscheduled absences are personal illness (33%), family issues (24%), and personal needs (21%). Stress as a reason for absenteeism has increased over 300 percent since 1995 (CCH Inc., 2002).

Financial stress is an important source of distress in people's lives because many fundamental activities of daily living and opportunities for success are closely tied to current levels of personal financial resources (Peirce, Frone, Russell & Cooper, 1996). Financial stress also affects family issues (Mills, Grasmick, Morgan & Wenk, 1992), personal health (Drentea & Lavrakas, 2000), and increases illness-related absenteeism (Hendrix, Steel & Schultz, 1987; Hendrix, Spencer & Gibson, 1994; Ivancevich, Matteson & Preston, 1982; Jacobson, et al., 1996).

Brown (1993, 1999) reported that at least 10% of employees experience financial problems and bring those issues to work where it...