Two-thirds (67%) of American employees believe the cost of living is outpacing growth in their salary or wages. This compares to 58% in February 2022. The growing concern over inflation is disclosed in the 13th annual Bank of America Workplace Benefits Report.
Over the last year, the impact of inflation and economic uncertainty has contributed to increased financial stress. Specifically, financial wellness among employees drops to 42%, the lowest rate since the research began in 2010. Despite which, 56% of employees remain cautiously optimistic about their financial well-being over the next two to three years.
First launched in 2011, the annual Workplace Benefits Report examines trends related to workplace financial benefits and wellness programmes. The 2023 Report unveils trends across employee retirement preparedness and financial well-being. It also examines the impact of caregiving on the workforce, and the state of the workplace.
“American workers continue to feel stressed about their finances. They are concerned about keeping up with the cost of living,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions at Bank of America.
“Companies who show a sense of urgency for their workforce by offering financial wellness programmes and resources which support employees’ immediate needs and overall well-being will continue to stand out as employers’ of choice.”
Employees continue to look for support from their employers. Most employees (76%) and employers (96%) agree that employers are responsible for employee financial wellness. However, only 2 in 5 employers currently offer financial wellness programmes.
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Bank of America Workplace Benefits Report key takeaways
Employees are prioritising short-term financial needs over retirement savings. Fewer employees are prioritising long-term retirement savings (31%, down from 45% in 2022). A growing number are focusing on short-term financial needs. This includes paying off credit card debt (16% vs. 11% in 2022) and saving for the unexpected (13% vs. 8% in 2022).
Half of employees are not actively saving for future health care costs. Nearly half of employees (45%) say they are not saving specifically for health care. Additionally, confidence in managing health care costs has decreased (16% vs. 27% in 2022). Only 7% plan to start contributing to an HSA to help address the future cost of health care.
Women are feeling the weight of financial stress. Only 38% of women feel financially well in 2023. This is down from 55% in 2022, and a five-year low. 54% feel that they won’t be able to make ends meet due to inflation, compared to 32% of men. Some 39% have had to look for additional employment due to rising costs, compared to 17% of men.
Feelings of financial wellness also vary by ethnicity and location
61% of Asian employees rate their financial wellness as good or excellent. This is followed by White/Caucasian (44%), Hispanic/Latinx (40%) and Black/African American (35%). Additionally, less than 1-in-4 of employees living in urban areas feel prepared for retirement. This compares to 32% of suburban employees and 43% of rural employees.
This year’s report also examines caregiving and its regularly hidden impact on the workforce. More than half of employees (56%) identify as caregivers. This is led by Hispanic/Latinx (70%), Gen Z/Millennials (68%), women (57%) and employees earning less than $40,000 annually (71%). However, employers believe that only 35% of their workforce are caregivers.
Balancing career and caregiving can come with sacrifices for employees. This includes using vacation time (39%), reducing their hours (16%), quitting a job or leaving the workforce (11%), or turning down a promotion (9%). Additionally, while 89% of employers offer some level of caregiver support, only 41% of employees know that these resources exist. Less than one-third (32%) of working caregivers take advantage of programmes or support being offered.
The Evolving Workplace
Employers report lower employee attrition rates this year compared to 2022. But staffing continues to be a challenge. Nearly one-third of employees (32%) say they switched jobs or considered leaving their company in the past year. The top reasons include burnout (53%), size of pay increases (44%), and work-life balance (41%).
More than half of employers currently have an in-person work model (55%). This is followed by hybrid/mix (39%) and fully remote (6%) models. However, in the next three years, more employers plan to shift to hybrid/mix (47%) and remote (17%) models, while fewer (36%) plan to maintain a fully in-person model.