Survey Reveals Employee Financial Concerns and Employer Support Trends
A recent study conducted by Principal Financial Group® has highlighted a notable contrast between the financial well-being of U.S. employers and their workforce. While employer confidence and business stability remain consistent, there exists an opportunity for employers to contribute to the financial wellness of their employees.
Based on the most recent Principal Financial Well-Being IndexSM, it is evident that both employers and employees share concerns about escalating costs and broader economic challenges. However, there is a divergence in contentment levels, with employers expressing greater satisfaction regarding their company's current financial status compared to employees' contentment with their individual financial situations. Despite indications that both parties generally meet their respective financial responsibilities, this does not necessarily translate to employees experiencing the same level of contentment. Merely 34% of employees report being consistently or frequently content with their personal finances, in contrast to over 70% of employers who express consistent or frequent satisfaction with their business finances.
“As business owners continue to see growth, it’s important to recognize their employees may feel less confident about their financial growth and there are ways to provide greater support,” said Amy Friedrich, president of Benefits and Protection at Principal®.
“Employer support could be offering financial wellness tools or providing a holistic benefits package that meets their employees’ needs. This support can be a key differentiator for employers, helping them retain talent, while also making a real difference in the financial lives of their employees.”
As per the survey findings, almost two-thirds of employees would struggle to cover their expenses for a period exceeding three months if their primary source of income was lost. Analyzing this pattern across different demographics, more than half (55%) of Gen Z employees and 44% of Millennials would face difficulties covering expenses beyond the first month without their primary income. Furthermore, there is a gender disparity, with women being more likely to express an inability to cover expenses for more than a week, while men are inclined to believe they could manage for six months or longer.
The growth trajectory of businesses continues unabated. Despite ongoing concerns about inflation and the stability of the U.S. economy, employer sentiment remains strong. Compared to the previous year, a larger proportion of businesses are currently in a phase of growth (64% versus 52%). Even small businesses are reporting year-over-year growth increases (58% versus 46%). However, although most businesses are experiencing growth, their optimism about the overall U.S. economic growth is more restrained.
Friedrich, a spokesperson, notes, "Small businesses exhibit consistent positive sentiment and stable cash flow. However, when the scope extends beyond their specific business or region, employers' confidence in the broader economy diminishes."
The pivotal role that employers play in their employees' financial well-being is undeniable. With over half of employees experiencing increased financial stress compared to the previous year, there exists an opportunity for employers to share their optimistic outlook and establish a foundation that empowers employees to plan for their financial futures.
Survey results indicate that businesses with a more positive outlook for the next 12 months are more likely to introduce specific benefits such as critical illness coverage, childcare support, financial wellness programs, and Employee Assistance Programs (EAPs), among others.
Financial wellness programs are anticipated to become an additional resource to further personalize the employee experience. Beyond retirement savings initiatives, the most sought-after financial wellness benefits that small businesses believe should be provided include aiding employees in creating budgets and financial plans, retirement income strategizing, and investment education. These benefits play a crucial role in enhancing the sense of security that employees feel both in their personal lives and at work.
Based on the most recent Principal Financial Well-Being IndexSM, it is evident that both employers and employees share concerns about escalating costs and broader economic challenges. However, there is a divergence in contentment levels, with employers expressing greater satisfaction regarding their company's current financial status compared to employees' contentment with their individual financial situations. Despite indications that both parties generally meet their respective financial responsibilities, this does not necessarily translate to employees experiencing the same level of contentment. Merely 34% of employees report being consistently or frequently content with their personal finances, in contrast to over 70% of employers who express consistent or frequent satisfaction with their business finances.
“As business owners continue to see growth, it’s important to recognize their employees may feel less confident about their financial growth and there are ways to provide greater support,” said Amy Friedrich, president of Benefits and Protection at Principal®.
“Employer support could be offering financial wellness tools or providing a holistic benefits package that meets their employees’ needs. This support can be a key differentiator for employers, helping them retain talent, while also making a real difference in the financial lives of their employees.”
As per the survey findings, almost two-thirds of employees would struggle to cover their expenses for a period exceeding three months if their primary source of income was lost. Analyzing this pattern across different demographics, more than half (55%) of Gen Z employees and 44% of Millennials would face difficulties covering expenses beyond the first month without their primary income. Furthermore, there is a gender disparity, with women being more likely to express an inability to cover expenses for more than a week, while men are inclined to believe they could manage for six months or longer.
The growth trajectory of businesses continues unabated. Despite ongoing concerns about inflation and the stability of the U.S. economy, employer sentiment remains strong. Compared to the previous year, a larger proportion of businesses are currently in a phase of growth (64% versus 52%). Even small businesses are reporting year-over-year growth increases (58% versus 46%). However, although most businesses are experiencing growth, their optimism about the overall U.S. economic growth is more restrained.
Friedrich, a spokesperson, notes, "Small businesses exhibit consistent positive sentiment and stable cash flow. However, when the scope extends beyond their specific business or region, employers' confidence in the broader economy diminishes."
The pivotal role that employers play in their employees' financial well-being is undeniable. With over half of employees experiencing increased financial stress compared to the previous year, there exists an opportunity for employers to share their optimistic outlook and establish a foundation that empowers employees to plan for their financial futures.
Survey results indicate that businesses with a more positive outlook for the next 12 months are more likely to introduce specific benefits such as critical illness coverage, childcare support, financial wellness programs, and Employee Assistance Programs (EAPs), among others.
Financial wellness programs are anticipated to become an additional resource to further personalize the employee experience. Beyond retirement savings initiatives, the most sought-after financial wellness benefits that small businesses believe should be provided include aiding employees in creating budgets and financial plans, retirement income strategizing, and investment education. These benefits play a crucial role in enhancing the sense of security that employees feel both in their personal lives and at work.
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