Financial well-being benefits have never been as important as they are today — for workers, employers, and benefit brokers and advisors.
Workers, many of whom were living paycheck to paycheck prior to the COVID-19 pandemic, find themselves farther behind the eight ball today and remain financially stressed. Employers feel the effects of worker financial stress on their bottom line and are now fighting to win the talent wars that ramped up as a result of the pandemic.
Benefit brokers and advisors strive to make sure their product portfolios include an arsenal of financial well-being benefits in order to make sure their clients’ recruitment and retention efforts are competitive.
Nationwide Harris Poll research conducted on behalf of Purchasing Power reveals a great deal of insightful data on the state of employee finances, financial stress and COVID-19 effects.
A key finding was that household income levels don’t discriminate. The survey shows that the pandemic had workers at all income levels living paycheck to paycheck from February 2020 through February 2021. Almost half of full-time employees in all household income levels reported that their financial situation was worse in February 2021 than it was prior to the COVID-19 pandemic. That includes 44% of those making more than $75,000 annually and 41% of those making an annual salary of more than $100,000.
Faced with furloughs, layoffs and monthly income loss, employees turned to several sources to cover expenses. Delta Air Lines reported in November 2021 that employees took about $1 billion in early withdrawals from their 401(k) retirement plans during 2020, indicating that workers were in financial stress.
The Harris Poll survey showed how workers covered the monthly expense challenges of the pandemic, illustrating the impact on their financial well-being:
» 32% took money from savings.
» 26% took money from their emergency fund.
» 17% withdrew funds from their 401(k) or other retirement savings.
» 13% requested a payday advance from their or their spouse’s or partner’s employer.
» 13% received financial assistance from their or their spouse’s or partner’s employer.
» 10% took out a second mortgage or a home equity loan.
The workers who answered the survey readily admitted their financial stress negatively affects their work. This stress disrupts their physical health, their ability to focus, their productivity at work and their job satisfaction. This confirms that employee financial stress impacts the employers’ bottom line through increased health care costs, loss of productivity and lower employee retention rates.
Workers’ Financial Situation And Worker Stress: 2022
The Harris Poll found that 95% of employees reported they have financial stress, so what can we expect 2022 to mean for employee finances? Although the economy is better now than it was during the shutdown in 2020, the pandemic and its effects (as well as the current rise in inflation) are still with us, and it will take more time for workers’ financial situation to recover.
According to the survey, more than half of full-time workers expected their household financial situation to be better by January 2022; however, they anticipated their financial stress level will be the same or worse than it was last year.
What are the top three things workers worry about most? Here’s what the Harris Poll revealed.
» 37% worry about having enough in emergency savings to cover unexpected expenses that might come up, such as car repair, home repair or a broken appliance. Those responses came from workers making less than $50,000 a year (44%) to those making more than $100,000 annually (34%) and all points in between.
» 35% worry about not having enough retirement savings.
» 34% worry about their mental or emotional health as a result of the pandemic.
Other items mentioned included unexpected medical expenses (30%), layoff or job elimination (27%), paying for basic necessities (26%), paying credit card bills on time (25%), incurring additional new debt (18%) and paying student loan debt (14%).
Voluntary Benefits In The Spotlight
Financial stress has always been a factor in the workplace, affecting workers' productivity and impacting their health and health care costs for the employer. Realizing that workers at all income levels are affected by financial stress, employers need to make sure their benefits packages provide robust financial wellness benefits that can provide a lifeline during these difficult times.
Because they can address many of the specific needs that workers 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. But then, voluntary benefits have always been a win-win for employers and workers. For employers, voluntary benefits are an excellent recruiting and retention tool, while workers see voluntary benefits as an opportunity to choose benefits that they need or want.
The impact of COVID-19 on workers’ 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. Virtual care, mental health services, critical illness coverage, child care and financial well-being are among the needs and priorities for employees these days as they deal with pandemic reality.
Why Financial Well-Being Benefits Matter
There’s a lot of talk right now about the “Great Resignation,” the spike of workers voluntarily leaving their jobs in response to the COVID-19 pandemic. But workers aren’t leaving the workforce. Instead, they are seeking better opportunities and accepting new jobs, and it’s not really about money. They are going to new jobs where they will have more family time and a better work-life balance, and where employers value them more. Workers want to know their employers care about them. And they expect employers to show they care by the benefits they provide, especially financial well-being benefits.
In the Harris Poll, workers strongly indicated that financial well-being benefits do matter.
» 78% of full-time workers reported that they can tell how much their employer cares about their financial well-being by the benefits they offer.
» 79% said they would be more likely to stay with their present employer if the employer offered more financial well-being benefits.
It will take time for workers’ financial situation to improve, and their financial stress in turn impacts their employers’ bottom line through increased health care costs, loss of productivity and decreased worker retention rates. Smart companies are finding ways to help, which will ultimately mean increased worker performance and improved retention.