Financial stress has been a factor in the workplace for many years now, affecting employee productivity as well as impacting their health.
BY MIKE WILBERT
EMPLOYEES ACROSS ALL INDUSTRIES and salary levels have experienced workplace changes in the past two years due to the COVID-19 pandemic. Perhaps the biggest and most widespread impact for employees in all this disruption has been on their finances.
Household income levels don’t discriminate when it comes to the pandemic’s financial effect on employees. A recent Harris Poll on the state of employee finances conducted on behalf of Purchasing Power illustrated that nearly half of full-time employees in all household income levels said their financial situation was worse in February 2021 than prior to the COVID-19 pandemic. That includes 44% of those making $75,000 to $100,000 and 41% with household income over $100,000.
Financial stress has been a factor in the workplace for many years now, affecting employee productivity as well as impacting their health. In recent years employers have become more aware of employee financial stress and the effect it has on healthcare costs, absenteeism and the company’s bottom line. Employees answering the Harris Poll readily admitted how their financial stress affects them on the job:
• 33% said it affects their physical health
• 24% said it affects their ability to focus at work
• 21% said it affects their productivity at work
• 21% said it affects their job satisfaction.
Financial stress levels have gone up a notch since the onset of COVID-19. As a result, employers are realizing that employees at all income levels are affected by financial stress today and that their employee benefits packages should include robust financial wellness benefits that can provide a lifeline during these difficult times.
Employee finances in 2022
What can we expect 2022 to mean for employee finances? According to the Harris Poll survey, over half (52%) of full-time employees expect their household financial situation to be better in January 2022 than it was the previous year. However, just over one-third (37%) said there would be no change or that it would be worse than the previous year.
Financial well-being will remain top of mind in 2022 for employees and they say that financial well-being benefits matter. The Harris Poll found that three-fourths (78%)
of employees reported that they can tell how much their employer cares about their financial well-being by the benefits they offer. Further, four of five employees (79%) said they would be more likely to stay with their present employer if they offered more financial well-being benefits.
Why financial well-Being benefits are critical in 2022
Here are three reasons employees are placing such emphasis on financial well-being benefits in 2022:
1. Financial stress levels will be the same or worse in 2022 than a year ago.
Half (51%) of the employees responding to the Harris Poll anticipate that their financial stress level will either be the same or worse in January 2022 than it was at the beginning of 2021. Those employees who expect their financial stress to be significantly or somewhat worse in 2022 range across all income levels:
• Less than $50,000 – 17%
• $50,000 – $74,999 – 25%
• $75,000 – $99,999 – 21%
• $100,000+ – 25%
2. Employees are concerned about not being able to cover unexpected expenses.
More than one-third (37%) of employees are worried about having enough in emergency savings to cover unexpected expenses that might come up such as car repair, home repair, broken appliances, etc. Those expressing these concerns ranged from employees making less than $50,000 (44%) to those making over $100,000 (34%) and all points in between. One of four employees responding to the Harris Poll said that taking money from their emergency fund to cover monthly expenses was one of the financial challenges they faced because of the pandemic.
3. Employees are worried about not having enough retirement savings.
Not having enough retirement savings worries just over one-third (35%) of employees and more women (41%) than men (31%). Almost one in five (17%) of employees said they withdrew funds from their 401(k)/retirement savings to cover monthly expenses during the pandemic.
It’s going to take time for employees’ financial situation to recover from the impact of financial consequences of COVID-19. Smart companies are finding ways to help, which will ultimately mean increased employee performance and improved retention and loyalty.
The value of voluntary benefits
Because they can address many of the specific needs that employees have as they continue to struggle with and overcome pandemic challenges, voluntary benefits have taken on a significantly more important role now.
In recent years, voluntary benefits have seen more popularity as the products themselves have become more diversified and appealing to the multiple generations in the workplace. Voluntary benefits have always been a win-win for employers and employees. For employers they are an excellent recruiting and retention tool while employees see voluntary benefits as an opportunity to choose benefits that they need or want.
The impact of COVID-19 on employees’ lives and their finances really put the spotlight on the value of voluntary benefits, which have given employers a way to meet the shifting needs and priorities of their workforce during this critical time.
Benefit brokers can help employers be part of the solution
Employees are looking for ways to stretch their paycheck and recover from the financial hardship of the pandemic. They need a solution in 2022. Employees overwhelmingly said they want their employer to offer more financial well-being benefits to help relieve some of the financial stress that they do not expect to go away any time soon.
Benefit brokers can help employers build a better financial benefits package by making sure their product portfolios include voluntary benefits like employee purchase programs, bill payment programs, medical deductible financing, financial counseling, student loan repayment benefit programs and other financial well-being benefits.
MIKE WILBERT is chief revenue officer at Purchasing Power, a voluntary benefit provider. He has 30 years of experience in the insurance and voluntary benefits industry.