Employees and employers disagree about financial wellness
Too many Americans face dire financial prospects. With 40% of households experiencing declines in income and an increase in unemployment in the past year, many are choosing between getting medical care and feeding their families.
With this crisis on top of years of stagnant workers’ wages, the country’s economy – and its citizens – are in dire need of support. Faced with this challenge, new data shows that employers and their employees vary significantly in perception of the financial well-being of workers.
According to a study of more than 1,250 hourly and salaried employees and 200 CEOs and HR managers, employers may not have a clear, complete picture of the effects of financial stress on their employees.
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Assessment of the divergence
The biggest gap revealed by the data was how employers and employees rate the perceived financial wellbeing of employees. The majority of employers (87%) rated the financial performance of their employees as good to excellent, while the majority of employees rated their financial performance as average to good.
A study published last year by the Society for Human Resource Management shows that this finding is in line with the general trend; The number of employees who rate their financial well-being as good to excellent has been falling since 2018. Surprisingly, the same study found that nearly two-thirds of employers feel very responsible for the financial health of their employees, up from just 13% in 2013.
This self-reported concern of employers also underscores another dramatic difference between workers and employers: three-quarters of workers say financial wellness offers, such as access to earned wages, would help them alleviate their financial burdens. However, 40% of employers do not offer solutions to help.
It is clear that many employees are under extreme pressure, and it is important to note that this is not just a problem for hourly or entry-level workers. People who come from households with an annual income of $ 100,000 or more were more likely to require advances from their employers compared to workers who earn less than $ 50,000 a year.
Fortunately, there are several areas where workers and employers agree – and this could indicate a dramatic shift in the types of benefit packages and support offered by employers.
Analysis of the convergence
Employees have begun to ask about pay advances more regularly. Last year, the majority of both groups stated that they had either applied for advances two to five times in the past 12 months (64% of employees) or received advances (63% of employers). It’s clear that workers are feeling huge financial needs, but recent reports show that many employers are trying to reduce the accessibility of pay advances in the workplace while others don’t even have a standard process in place.
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This is partly due to the increased administrative burden, but it can also be due to the fact that technically advances are loans that can become precarious financial terrain for employers.
That’s probably why many employers are looking for alternative ways to support the financial health of their employees. In fact, 97% of employers and 88% of workers believe that more can be done to support workers’ financial wellbeing.
New programs such as enhanced EWA solutions, financial advisory services and financial coaching are being added to service packages to complement traditional offerings such as HSAs and FSAs. One of the main advantages of EWA is that it is not a loan, but rather a payment of your earned salary before the usual payment date – which avoids the administrative burden and potentially awkward conversations normally associated with salary advances.
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Many of these solutions may come with a fee that some employers may consider a barrier. However, given that employers claim to want to do more to support financial wellbeing – and that more than two-thirds of workers surveyed were willing to share the cost of an EWA solution – it shows that employers may consider these solutions to develop more widely available. In addition, 80% of the employees surveyed said they would prefer an employer that offers EWA solutions when it comes to attracting and retaining employees.
Recent data also shows that employees are more interested in benefits like financial wellness tools than they are in health insurance, paid time off, and mental health care. As the pandemic subsides, a massive shift in hiring trends can be expected. People who postponed job hunting to maintain job security may be looking for more opportunities, and there could be a massive surge in hiring – and the talent will be very competitive.
Now, when you set up competitive and progressive benefits, you can stand out from the talent pool. If you neglect this now, you will likely be left behind when this change occurs.