Does Saving for Emergencies Improve Productivity at Work?

Does Saving for Emergencies Improve Productivity at Work?

Manita Rao, Jeremy Burke, David John

Other publication

AARP Public Policy Institute

2024

Emergency savings are widely accepted as an important tool for improving financial well-being. In this paper we examine how saving for emergencies affects workplace productivity. Using several subjective and objective indicators of worker productivity, including job satisfaction, receiving a raise or promotion, and acquiring sick leave, the paper offers a comprehensive view on employee- and employer-assessed workplace productivity. Our research uses data from the Understanding America Study (UAS) panel, a probability-based internet panel that longitudinally tracks a US representative sample of over 13,000 adults. The sample is composed of respondents who completed two UAS surveys that were fielded in late April/early May 2022 and April 2023. Using a regression-based approach, we find that saving for emergencies is strongly associated with higher worker productivity. In particular, saving for emergencies is associated with a 7 percent increase in job satisfaction and a 16 percent increase in the likelihood of receiving a raise or promotion. Furthermore, our analysis shows that the relationship between emergency savings and worker productivity is stronger for workers in white-collar businesses but vital to the financial well-being of workers in both white- and blue-collar industries.