Transportation costs may be increasing employee financial stress. The gas pump is a painful experience these days. In addition, the used car market has seen unprecedented price increases, rather than the typical substantial depreciation, even over a very short period of time with light use.
For many, car debt is one of the larger debts they’ll take on in their lives, and a lot of us will take that on debt over and over again. According to Insurance Insight, nearly half of Canadians plan to spend $25,000 - $45,000 on their next car. Meanwhile, in the U.S., consumers are paying an additional $10,000, on average, for used cars. That’s approximately 43% more than would be expected based on typical depreciation experience. U.S. car buyers are paying an average of $33,341 for a used car, and over $48,000 for a new car.
Some of this increased car spending, especially in recent years, has escalated due to a reduced supply of new cars. This creates a reduced supply of used cars, all exacerbated by supply chain challenges related to parts. Some people are experiencing FOMO (fear of missing out) when it comes to cars. In addition to existing economic pressures, this FOMO can make people more likely to get into their next car while they feel they still can. While trade-in values are higher, it’s usually not putting a dent in the purchase price of the next car. This is probably the one time in history where anyone in a lease should review the option of buying out their car at the end of the lease. Lease buyout prices are usually set in contracts at the time of signing, so it’s possible that a returning lease car is worth more than it would cost to buy it out.
Transportation costs aren't limited to personal vehicles. But depending on where you live, and how you work, public transit may be time-consuming or not an option at all. Employees that are able to make use of public transportation for work may still have car debt. Just because they don’t drive to work, doesn’t mean they don’t have a car. According to Turo Canada’s first annual Car Ownership Index, 83% of Canadians own or lease a vehicle. Further, 81% felt it would be impossible not to have a car. In the U.S., 91.5% of households have at least one car available to them. No matter how you get to work, the increased fuel prices and other related expenses can cause public transportation to increase as well.
Here are some ways employers can help employees manage transportation costs.
Flexible shift start and stop times ⏰
Consider bringing up transportation challenges during regular review meetings with employees. Discuss potential options to adjust arrival and depart times on work days. This will allow your employees to make the most of their transportation options. Your flexibility may have its limits, and some employees won’t need it. But if it’s possible, you may be able to help your employees find ways to reduce their financial stress by being more flexible with the timing of their work day. Not only could it be a huge win for you and your existing employees, but also a potential draw for top talent.
A personal vehicle or public transportation aren’t the only options for a work commute. Some employees may also be close enough that they have the option to bike or even walk to work. However, those who could potentially walk or bike to work, may avoid it because they’ll be a sweaty mess by the time they arrive at the office. So figure out ways that employees commuting via people power could freshen up before they start their day. Of course, plenty of workplaces won’t be installing a shower room any time soon. But you could be flexible on timing for employees who might be able to use a gym close to work, allowing them to clean up there.
Transportation credit 💸
Consider offsetting transportation costs by adding a small amount to all commuting employees’ pay, and labeling it as a transportation credit. Most payroll systems will allow you to add this type of custom payment.
Several years ago, CacheFlo did this. We went from working from home to asking our team to come downtown every day. Our team was quite concerned about the cost of parking each day. Some of our employees drove, some walked, and some were going to stay remote, as they lived out of town. So we needed to do something to avoid causing harm to the team members who were suddenly commuting.
We offered everyone who lived in the city and was expected to report to the office regularly a transportation credit. We made it a flat rate per day, and added it to the commuting employees’ pay cheques every two weeks. We set it at an amount that would cover the majority of parking daily. But, we let employees know that they didn’t have to drive in and park to get the credit. If they carpooled, they’d break even or make extra money. If they took transit, they’d definitely pocket some extra cash. If they decided to walk or bike, they’d still get the same transportation credit, except it was all upside.
It was an effective program, took into account everyone’s unique circumstances and gave people ways to maximize their benefit.
In our case, we didn’t have any of the remote workers complain they were missing out. But if they had, our reasoning was pretty defensible. Someone who gets to work remotely didn’t have the cost to get to work, and they didn’t lose the time it took to get back and forth. That is probably why we never had any of the remote team complain.
Remote work options 🏘️
Giving employees the option to work a portion of their work week from home, or remotely from another location, can also be a good way to help employees reduce the strain of transportation costs. This is also one of the many ways that some of your employees might be able to manage with a single car in their households.
Being clear about expectations around remote work is important. If you do go this route, ensure you communicate any dates or types of meetings that various team members need to attend in person to ensure they are able to plan accordingly.
Take the Employee financial wellness assessment now.
Not every company, or every role within a company, can allow for all of these solutions to help employees reduce their financial stress related to transportation costs. But give it some thought. Is there something about your workplace that can be more flexible? Are there employees who could keep way more of their pay if they didn’t have to buy so much gas, or cover the cost of a second car? Keep the lines of communication open about these types of issues. You might be surprised at just how much value this type of consideration could contribute to your employee experience. Top talent is looking for this type of flexibility too!
CacheFlo is a financial education company that builds eLearning and tools to help financial professionals and individuals make behaviour-based changes, which allow them to get more life from their money. We want to make it easier for people to predict the impact of their financial choices before they make them.
About the Certified Cash Flow Specialist (CCS) program
CCS professionals go through enhanced cash flow-based training to develop the skill set to deliver behaviour-based cash flow advice. They start the financial planning process with a cash flow plan to genuinely help their clients get more life from their money.
About the Financial Capability Program (FCP)
The FCP combines quick and practical lessons with tools, including Winton, which helps people make financial changes they can stick to. Users can apply what they've learned to their financial situation, thus bridging the knowing-doing gap. The goal of the FCP is to help people get more life from their money.