Devastated from the recession and economic slowdown of the past year, the world is gradually recovering from its lasting effects. However, all is not well yet, as this is clearly reflected in the economic perception of various sections of the society. A recent survey has pointed out the negative outlook about financial wellness in the workplace of American employees, though organizations they work for, are becoming profitable.
The study reveals a contrast in the financial health and wellness of American employers and their employees. In a situation where employer confidence and business stability are steady, there exists an opportunity for them to lend support to their employees’ financial well-being.
The Principal Financial Well-Being IndexSM conducts an annual survey involving individuals aged 21 and above, specifically business owners, decision-makers, and leaders within companies ranging from 2 to 10,000 employees. This nationwide survey has been commissioned since 2012 with the aim of analyzing the financial well-being of both American employees and business employers. Through this research report, a comprehensive outlook on significant trends and current matters within the small and medium business sector is offered.
According to the latest findings from the survey, common concerns shared by both employers and employees include increasing costs and broader economic challenges. However, a noteworthy distinction is noticeable – employers express greater contentment with current financial status of their businesses compared to satisfaction level of employees regarding their personal finances. While both parties generally attest to meeting their respective financial responsibilities, this does not necessarily translate to employees feeling content with their present financial situations.
- A mere 34% of respondents report consistent satisfaction of American employees regarding personal financial matters.
- Almost two-thirds of employees would find it challenging to cover expenses for more than three months in the event of losing their primary income source.
- Dissecting this trend along demographic lines, it’s apparent that more than half of Generation Z employees and 44% of Millennials would struggle to make ends meet beyond the first month sans their primary income.
- Further dissecting the data, women are more inclined to indicate that they would manage for only a week, whereas men are more confident in their ability to cover expenses for a duration exceeding six months.
- Millennials and households with children are prone to experiencing financial shortages.
- Men and Baby Boomers exhibit superior punctuality in making payments.
- In case of an unforeseen crisis, a significant number of workers can readily manage unanticipated expenses.
- During the last quarter, small enterprises concentrated on both recruiting and retaining staff.
Notably, employer sentiment remains optimistic despite lingering concerns regarding inflation and the overall stability of the U.S. economy.
- In contrast to sentiment of employees, over 70% of employers express contentment with their businesses’ financial standing.
- A higher proportion of businesses are currently experiencing growth compared to the previous year (64% versus 52%).
- Even small businesses display increases in year-on-year growth (58% versus 46%).
However, this optimism is tinged with caution as most businesses exhibit less sanguine expectations concerning the broader U.S. economic outlook. Let’s look closely at the financial well-being of American employers:
- 82% of businesses feel comfortable with their existing cash flow.
- Around 64% of respondents note their business is expanding, though they hold a less positive view on the overall growth of the U.S. economy.
- Over 75% of businesses anticipate an improvement in their financials within the coming year.
- After notable banking sector collapses, businesses are encountering obstacles in securing lines of credit.
- Continuous cash availability is more probable for well-established or very new businesses (10+ years), while over a third of larger businesses frequently face cash shortages before meeting expenses.
- Larger businesses are notably more content with their financial situation, whereas businesses under six years old and smaller enterprises tend to be consistently dissatisfied.
According to the survey, businesses that hold a more optimistic view of the upcoming year are more inclined to introduce specific benefits for their employees. These may include critical illness coverage, childcare assistance, financial wellness programs and Employee Assistance Programs (EAPs).
How do Sentiments of American Employees and Employers Compare?
- Employers are more hopeful about the ease of upcoming challenges in the next six months compared to employees, who hold a less optimistic view.
- Both employers and employees anticipate the possibility of a recession occurring in the next six months, with employee apprehension aligning with employer expectations.
- Confidence in establishing and achieving financial objectives is shared by the majority of both employers and employees.
- 15% of companies have reduced their workforce via job cuts in the last quarter, with the primary reason being employees transitioning to different careers.
- Businesses remain committed to attracting and keeping skilled workers, leading to upcoming enhancements in employee benefits.
- The previous trend of automatic and inflation-linked salary hikes, prominent during intense labor market competition, is being replaced by a resurgence of performance-dependent salary raises.
Amy Friedrich, President of Benefits and Protection at Principal, highlights the significance of acknowledging that as business proprietors revel in growth, their employees might harbor diminished confidence in their own financial advancement. There lies an avenue for providing enhanced support, which could encompass tools for financial well-being or comprehensive benefits packages tailored to employees’ needs.
This form of support not only sets employers apart from the competition but also tangibly improves the financial landscapes of their employees. Amy reiterates that small businesses demonstrate ongoing positivity and consistent cash flow. Nevertheless, when their focus extends beyond their immediate business sphere or geographic region, employers tend to exhibit less confidence in the broader economic picture.
Financial wellness programs are anticipated to become an additional resource, adding a personalized touch to the employee experience. Alongside retirement savings schemes, smaller businesses consider essential financial wellness benefits to include aiding employees in devising budgets and financial plans, charting out retirement income strategies, and providing education regarding investments. These advantages play a pivotal role in enhancing employees’ sense of security in both their personal and professional lives.
Employers play a crucial role in their employees’ financial well-being. With over 50% of employees being more concerned about their finances compared to the previous year, there’s a chance for employers to share their positivity and create a foundation that empowers employees to prepare for their financial futures. This will help them overcome the negative outlook about financial wellness in the workplace of American employees.
Source: Principal Financial Well-Being IndexSM
