Financial Stress in the Workplace Continues to Rise
Financial stress is impacting job performance in the workplace. Despite employers’ best efforts, financial stress in the workplace persists. John Hancock has published a new study that looks at financial stress in the workplace and how it impacts American employees, including retirement plan participants.
Perhaps this is not surprising but financial stress in the workplace is linked to higher instances of absenteeism, a loss of productivity and increased healthcare costs. Forty-eight percent of Americans are dealing with financial stress and bringing it into the workplace. This has a high cost to employers, to the tune of $500 billion. In addition, financial stress in the workplace costs employees a month of productivity per year, and financially stressed workers are 2.2 times more likely to seek employment elsewhere. This lost productivity, in combination with increased turnover costs and other factors related to poor financial wellness account for 11 to14% of an employer’s payroll expense, on average.
The results of the John Hancock study show that financial stress in the workplace continues to rise. This, despite the fact that more people say their financial situation is improving. According to the Hancock study, in 2019, 64% of people said they have a good to excellent financial situation, compared to 55% five years ago. However, more American adults feel stressed by their finances, 68% in 2019 vs. 66% in 2014. What’s more, financial stress in the workplace includes worries about financial difficulties — a staggering 71% are concerned about monetary challenges vs. 60% five years ago.
A lack of financial literacy may be one reason for the marked increase in financial stress in the workplace. It may also be hindering people from improving their financial situation. According to John Hancock, only about a third (31%) of American adults are very knowledgeable about managing debt, 31% are very knowledgeable about budgeting, 20% are very knowledgeable about personal savings strategies, and just 14% are very knowledgeable about retirement savings strategies. It’s no wonder financial stress in the workplace is such a widespread concern — Americans struggle with basic financial literacy. They can’t solve a problem they don’t know much about.
The findings from the John Hancock study reinforced that financial stress in the workplace results in a cost to employers:
- Nearly half of workers say they’d be more productive at work if they weren’t worried about their finances
- Almost half say they spend time on personal finances at work
- In the last six months, 5% have missed a day or more of work due to financial stress
Retirement savings tops the list of sources of financial stress in the workplace, followed by emergency savings and job security. Moreover, a quarter of those John Hancock surveyed has no emergency savings, including 16% of Baby Boomers and 31% of Generations X, Y, and Z.
Another cause of financial stress in the workplace? Most workers are behind on their retirement savings. According to John Hancock:
- Slightly more than half (51%) are behind schedule
- A little more than a third (35%) are on track
- Just 9% are ahead of schedule
- 5% say they aren’t sure
Consistent with previous research, John Hancock found that employees desire — and need —advice when it comes to easing their financial stress in the workplace. Nearly two-thirds of those John Hancock surveyed said they’ve like to get advice about their retirement investments. A quarter of the survey respondents said they work with a financial advisor, and the older the respondent, the more likely they were to work with one. Among Baby Boomers, 36% said they had a financial advisor, while only 12% of Generation Z respondents said they did.
The John Hancock study found that financial wellness programs help ease financial stress in the workplace. According to the study, around 7 in 10 workers feel financial wellness programs have helped reduce their financial stress in the workplace and increased their loyalty to their employer. Additionally, workers with access to a financial wellness program experience less financial stress in the workplace about not having enough retirement or emergency savings, their own personal financial situation or having financial difficulties.
Indeed, financial wellness programs may help assuage financial stress in the workplace by boosting employees’ financial literacy and confidence. However, keep in mind that study after study has shown that education alone in financial wellness programs isn’t enough. There must be an accountability component to help employees reach their goals. Guidance delivered through a financial advisor or via interactive apps and programs can help make financial wellness programs more effective and impactful. Despite this, the results are clear: Employees are battling financial stress in the workplace at higher rates than ever. Employers should take notice and consider providing employees better access to financial advice and assistance to help ease their money worries and reduce the costs of financial stress in the workplace.
