Too many Americans are facing a bleak financial outlook. With 40% of households reporting declines in income over the past year and unemployment spiking, many are choosing between necessary medical care and feeding their families.
With this crisis coming on top of years of stagnant wages for workers, the nation’s economy — and its citizens — are in dire need of support. In the face of this challenge, new data shows that employers and their employees have some significant divergence in perception when it comes to employee financial well-being.
According to a study of more than 1,250 hourly and salaried workers as well as 200 CEOs and HR leaders, employers may not have a clear, complete view of the impact of financial stress on their employees.
Read More:
Assessing the divergence
The biggest gap revealed by the data was in how employers and employees rated the perceived financial wellness of employees. The majority of employers (87%) rated their employees’ financial wellness as good to excellent, while the majority of workers rated their financial wellness as average to good.
A study published by the Society for Human Resource Management last year shows that this finding is in line with general trends; the number of employees who rate their financial wellness as good to excellent has been declining since 2018. Surprisingly, that same study revealed that nearly two-thirds of employers feel extremely responsible for their employees’ financial wellness, up from just 13% in 2013.
That self-reported concern from employers also underscores another dramatic difference in employees and employers: three-quarters of employees say that financial wellness offerings like earned wage access would help them alleviate their financial burdens. Yet, 40% of employers offer no solutions to help.
Read More:
It’s clear that there is extreme pressure on many employees and it’s critical to note that this is not just an issue for hourly employees or entry-level workers.People coming from households with annual incomes of $100,000 or more were more likely to ask for advances from their employers compared to employees making less than $50,000 a year.
Fortunately, there are several areas where employees and employers agree — and it could point to a dramatic shift in the kinds of benefit packages and support employers offer.
Analyzing the convergence
Employees have started to ask for payroll advances more regularly. Over the past year, a majority of both groups reported that they either requested advances (64% of employees) or were asked for advances (63% of employers) two to five times over the last 12 months. It’s clear that employees are feeling a heavy financial need, but recent reports indicate 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.
Read More:
That’s partially because of increased administrative burdens, but may also due to the fact that advances are technically loans, which can become precarious financial territory for employers.
That’s likely why many employers are seeking alternative routes to support employees’ financial wellness. Indeed, 97% of employers and 88% of employees believe more can be done to support employee financial wellness.
Emergent programs, like improved EWA solutions, financial advisory services, and financial coaching are being added to benefits packages to complement traditional offerings, like HSAs and FSAs. One of the key EWA benefits is that it’s not a loan, but rather a withdrawal of earned pay before the usual pay date — thus skirting the administrative burdens and potential awkward conversations typically associated with pay advances.
Read More:
Many of these solutions may come with a fee, which some employers may consider a barrier. But, given that employers claim to want to do more to support financial wellness — and that over two-thirds of surveyed employees said they’d be willing to share the cost of an EWA solution — shows that employers may be considering making these solutions more commonly available. Besides, when it comes to attracting and retaining employees, 80% of employees surveyed said they would prioritize an employer offering EWA solutions.
Recent data also reveals that employees are more interested in benefits like financial wellness tools than they are in health care coverage, paid time off, and mental health support. As the pandemic subsides, expect to see a massive shift in hiring trends. People who have put off job searches to maintain job security may begin to look for more opportunities, and there could be a massive hiring surge — and the talent will be highly competitive.
Establishing competitive and progressive benefits now will help you stand out to the talent pool. Neglecting to do so now is likely to leave you behind when that change happens.
