The America Saves First-Time Workers Program

Commitment to Action

The America Saves First-Time Workers Program

Commitment by

America Saves, Consumer Federation of America

In 2014, the Consumer Federation of America and America Saves committed to help change the savings behaviors of the youth population. By scaling their Summer First-Time Worker (FTW) program, America Saves will expand their program to ten select cities for all first-time workers, many of whom are between the ages of 18 and 25. The program seeks to leverage the orientation process to motivate first-time workers to better manage their paychecks by making direct deposit, opening a checking account, and/or automate savings easier and more convenient.
America Saves will implement a review process of their current program, which will operate in ten cities, provide recommendations for the scale up, and implement a revised program by providing an easy to implement online resource for employers and direct services for young workers to make savings a life-long habit.

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Tabs

Overview

Summary

Commitment

The America Saves First-Time Workers Program

Launched

2014

Est. Duration

2 years

Estimated Total Value

$265,000

Region

Northern America

Countries

United States

Commitment by

America Saves, Consumer Federation of America

Partner(s) of the Commitment Maker(s)

National Credit Union Foundation, JPMorgan Chase & Co., City of Little Rock, Sasha Bruce Youthwork, City of Houston, City of Cincinnati, Housing Authority of the City of Los Angeles, CAMBA, District of Columbia, City of Miami, City of Jersey City, City of Evansville, Experian, Fresh Ministries, City of St. Louis, City of Bryan, TX, Milwaukee Workforce Investment Board, Community Development Corporation of Brownsville, City of Los Angeles

Details

APPROACH:
America Saves (AS) has developed and is now expanding a tested program that supports summer youth workers saving a portion of their pay. For this commitment, AS will modify the First Time Workers Program to support all full-time young workers entering the workforce whether it follows high school, college, or military completion. The methodology will be the same with the content adapted to the older market.
This effort seeks to change the saving behavior of young workers by introducing them to direct deposit and automatic saving during their employee orientation.
AS has identified the orientation process as a unique opportunity to positively influence a new employee to take advantage of highlighted benefits. This effort is a partnership between an employer, a financial institution, and AS. The America Saves First-Time Workers Program will contain a short video focused on the benefits of saving and the immediate opportunity to do so; a short script to introduce the video emphasizing the employer's encouragement to save; a short script after the video to re-emphasize the immediate opportunity to set up automatic saving; and will make available all required forms to do so. Included in this is the encouragement to join America Saves by identifying a savings goal and making a commitment to save a portion of their pay towards that goal and a time frame.
ACTION PLAN:
For the next two years, America Saves will expand its First-Time Workers (FTW) Program to focus on all first-time workers. Approximately 14,000 youth will be attending orientation sessions in the ten cities identified where the FTW will be implemented. Previous efforts indicate more than a 50% take up of direct deposit and making a commitment to save. A much smaller number opening new accounts is expected as most youth employees have an account even if custodial.
Phase 1) Expanding and improving the original program. The expansion includes at least ten cities during the summer of 2014.
- July to August 2014: Conduct pre- and post-surveys from at least one location regarding youth employees' attitudes toward saving and saving automatically. Hold focus groups in three cities.
- August to October 2014: Hold discussions with program administrators to determine ease of implementation.
- September 2014: Adapt the FTW to serve full time young workers and create an Advisory Group that can support the appropriate adaption and expansion of the FTW program to the full time work force with a first meeting to be held November 2014.
- October to December 2014: Aggregate account data from partner financial institutions will be provided to gauge use and activity.
- December 2014 to February 2015: Analyze data and plan for implementation of an improved program and managements system for those organizations, municipalities, and businesses that hire 20 million youth during the summer
Phase 2) Roll out an improved program to serve as a resource for hundreds of organizations that employ youth.
- April to December 2015: The program will be tested in three sites.
- January to February 2016: Focus groups will be held in the test sites and aggregate data that will be analyzed to determine improvements and inform an expansion plan.

Background

The national savings rate is approximately four percent. About 69 percent of low-income households, 54 percent of moderate-income households, and 45 percent of middle-income households do not have a savings or money market account. America Saves surveys found that two-thirds of Americans are struggling to save or are not saving at all.
Workplace saving has been a focus of America Saves since its inception as the most logical place from which to establish savings with a regular paycheck and the employers' ability to facilitate automatic saving through direct deposit. Reports and stories from savers around the country say that saving automatically is a component of virtually every successful saving plan.
Additionally, the organizations have found that low-income youth receiving their first paychecks are more likely to utilize expensive non-bank financial products and are less likely to have a checking or savings relationship with an insured financial institution. Therefore, AS has tested and developed a program over the last three years that seeks to change that behavior by introducing young people to the best practices and strategies to save effectively, which are direct deposit and automatic saving. This proven methodology will encourage wage earners to build a habit of saving and effective money management that will last a lifetime. This initiative is expanding to ten cities during the summer of 2014 to reach approximately 14,000 young workers. Impact data on savings pledges, direct deposit authorization, and in some instances aggregate account data will be evaluated between Augsut to December. This information will guide the modifications for significant take up during summer 2015 and over time ideally be incorporated into hiring practices.
AS commitment is to take this proven method to save through work for seasonal employees, and modify it to serve all young full time workers 30 years and under. This population is the least likely to save for both short term and long term needs yet have a tremendous opportunity to start saving small amounts early in life automatically and consistently.

Partnership Opportunities

April 2016

America Saves seeks grant support to expand the opportunity for first time and young workers to learn how to save automatically. With appropriate support this initiative could grow to 50 cities within three years. America Saves seeks private and government funded youth employment programs to partner in helping youth to save automatically by using the America Saves for Young Workers Program and the technical assistance provided by AS in securing financial institution partners to offer safe and appropriate accounts.

April 2016

America Saves for Young Workers is a program built for the needs of today's youth and their readiness for tomorrow, created by America Saves, a national nonprofit dedicated to encouraging individuals to reduce debt, save money, and build wealth. While many young workers are aware of personal finance and the need to save for the future, they may not understand the tools offered by their employers.Successful savers use direct deposit and automatic savings to accumulate money, no matter how little each paycheck. Youth who complete the America Saves for Young Workers Program are saving for a particular goal, and saving at higher rates than the national average for comparable age youth. According to a current study of those completing the America Saves for Young Workers Program, 71% of America Saves Teens have made a deposit into their Savings account two months after their summer employment ended. Additionally young workers find the savings pledge and ongoing support and resources through monthly contact to be helpful in keeping a savings mindset.

Progress Reports

April 2016

During the summer of 2015, America Saves partnered with the following summer youth employment programs: One Summer Chicago, Chicago; Youth Opportunities Unlimited, Cleveland; SERS Jobs for Progress, Houston; Keep Indianapolis Beautiful, Indianapolis; Office of Financial Empowerment, Miami; Workforce Investment Board, Milwaukee; Virtual Enterprises, Inc., New York City; City Treasures office and SLATE, St. Louis; Office of Banking and Insurance Washington, D.C.

A total of 21,945 youth employees were reached through the America Saves for Young Workers Program, 15,950 used direct deposit, 4,480 opened new savings accounts, and 4,886 opened new checking accounts. Of these who opened accounts, 1,293 youth opened checking with linked savings accounts to establish automatic savings.

12,335 youth pledged to save through America Saves a total of $5,657,980. When there was a dedicated effort by a local program and financial institution staff to help youth set up automatic savings using a checking account with a linked savings account, they saved automatically, in most cases having their America Saves pledge amount directly deposited into their savings account to achieve their goal.
We also know through the first wave of a behavioral study that will track savings attitudes and behavior over eight months that youth took the America Saves pledge primarily because they thought it would help them to save. When given a choice, the majority (66%) chose to be paid through direct deposit. Youth are still saving after their summer employment ended (77%), even after 57% reached their savings goal. Youth recognize and remember text and email communications from America Saves (77%).