Fresh from the economic stresses of the pandemic, workers now are facing record inflation and rising interest rates. That’s making everything from a quart of milk to a mortgage far less affordable. Your workers are very likely feeling the strain. What’s more, their efforts to manage everyday expenses may be affecting their productivity, loyalty, and job performance.

Workers’ budgets were already stressed from the effects of the COVID-19 pandemic. According to The Future of Workplace Financial Well-Being, SoFi’s 2022 survey of 1600 HR leaders and full-time employees, half of the workers surveyed said their financial situation was worse due to the pandemic and 51% said they were more stressed about finances in 2021 than at any other time. Almost 30% of employees said they struggle to meet daily expenses such as rent, mortgage, and food, and that was well before inflation recently hit a 40-year high.

Drastic Action

Employees were willing to take drastic action to improve their financial situation. That includes the 25% of workers who report taking a second (part-time) job and 21% who say they intend to do so in the future. Recent numbers from the U.S. Bureau of Labor Statistics (BLS) confirm that trend. In June 2022, 426,000 Americans were working two full-time jobs. That’s the highest number since the BLS began tracking that statistic in 1994, according to an analysis by the St. Louis Federal Reserve Bank.

Another strong reaction: Changing jobs. According to the SoFi at Work study, 20% of employees report they are planning on leaving their current job for a higher paying position.

A Distracted Workforce

If your employees are working second jobs or job hunting, you can be fairly certain they are not paying 100% attention to their current workload. Financial stress in and of itself is known to affect employee productivity negatively. Indeed, the SoFi at Work study found that employees are spending over nine hours per week while at work dealing with issues related to their financial situation, which adds up to a full 12 weeks of work each year.

In the face of this information, what can benefit pros do to help reduce these stresses, support financial wellness, and ultimately retain a productive and successful workforce? In addition to assessing current wages, HR leaders may want to review and potentially enhance the financial wellness benefits that can best help employees struggling with everyday expenses. Let’s take a closer look.

Debt Management and Budgeting Benefits

About two-thirds of employees surveyed have credit card debt with an average balance of $5,200, according to the SoFi at Work survey. And 39% of respondents said paying off credit card debt was their number one financial wellness goal. Many of the employees who report working second jobs are likely doing so to pay down their credit card balances or avoid adding to them.

Debt management and budget counseling, especially when combined, can help employees manage existing debt and avoid it in the future. However, these benefits are often offered separately, sometimes with somewhat generic advice, making it difficult for employees to access the integrated information they need to make real progress. HR pros may want to ensure their internal financial counselors and outside vendors apply a holistic and customized approach to address each employee’s unique situation, while acknowledging the current economic challenges all workers are currently facing.

Recommended: Understanding Financial Well-being for LGBTQ+ Employees

Student Loan Repayment Benefits

Student loan debt is an important part of the debt management equation, especially as the pandemic-related pause in federal student loan payments comes to an end at the end of August. The majority of employees SoFi surveyed said they are carrying student loan debt, either for themselves (36%) or someone else (25%). Student debt should certainly be considered in any debt management and budget counseling program.

In addition, employers who are not already doing so may want to consider offering student loan repayment benefits. A provision in the CARES Act (Coronavirus Aid, Relief, and Economic Security Act) makes this benefit more effective because it allows employers to make tax-free student loan contributions of up to $5,250 annually through 2025. Before the new rule, employees had to treat a student loan repayment benefit as income on their taxes.

Recommended: How to Support the Financial Well-being of Newly Hired Recent Grads

Emergency Savings Accounts

This is a top priority for many employees, who may have seen emergency savings decimated by COVID-related expenses. When employees were asked what types of financial-wellness benefits they would like to see their employer add, improve or expand, 64% put emergency savings funds at the top of their list.

Emergency savings account (ESA) programs typically allow employees to contribute after-tax payroll deductions into a customized savings account automatically. Funds are available anytime, for any reason, without the employer knowing when or why withdrawals are made. Employers can maximize the incentive to save by providing an initial deposit to help employees get started or offering matching funds.

The Takeaway

With record inflation, the aftermath of COVID, and the rising cost of borrowing, it’s likely that a good portion of your workforce is finding it harder to make ends meet. It’s also highly likely that their efforts to deal with these financial stresses affect their ability to focus on their jobs.

As an HR leader, you’re uniquely positioned to help employees manage their day-to-day expenses and feel more in control of their financial lives, even during chaotic economic times. If you’re ready to start empowering your workforce with innovative financial well-being solutions, including emergency savings accounts, student loan repayment programs, and financial wellness education tools, SoFi at Work can help.

Let’s work together

FAQ

Are my Employees Having Trouble with Day-to-Day Expenses?

The answer is likely yes. In a SoFi at Work survey conducted at the end of 2021, 29% of employees cited paying for basics such as housing and/or food as one of their top financial stressors. Rising inflation in 2022 has increased the costs of most goods and services, making it even harder for your employees to make ends meet.

Can financial stress affect employee productivity?

Yes, financial stress is likely distracting your employees from their work. A recent SoFi at Work survey found that employees spend over nine hours per week on the job dealing with issues related to their financial situation. Some employees have taken on second jobs to help pay expenses.

What benefits can best help employees struggling with expenses?

Employees are looking for help with emergency savings accounts. They are also looking for education and tools to help manage debt — including credit card and student loan balances — and help with budgeting. Any benefits that support employee financial wellness — now and in the future — can help.

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