65% of employees making under $50k can't pay their bills on time

Over the past year, more than half of the full-time employees in the United States were either unable to cover their expenses or barely covered them, according to a new survey that explores how the households of employees have fared financially over the past year while looking ahead to their expectations for the year ahead.

The online survey, which was conducted in March by the Harris Poll on behalf of Purchasing Power, found a continued strain on employees that can be traced in part to the COVID-19 pandemic and its widespread impacts. According to the survey, which is based on the responses of 1,105 full-time employees in the U.S., 40% of respondents say their financial situation is worse or much worse than it was before the pandemic. In addition, nearly all full-time employees – 97% of respondents – reported feeling financial stress.

“From a rising pandemic to a burgeoning endemic and rising inflation, one thing has remained constant – a challenging financial situation for many employees, as well as the toll the resulting financial stress takes on employees’ financial well-being – their health, their personal life and their ability to do their job,” according to a report detailing the survey results.

The signs of financial stress are numerous. For instance, 65% of employees who make under $50,000 are unable to pay all their monthly bills on time, including 17% unable to pay any of them. Meanwhile, 35% of respondents making more than $100,000 said they could not pay all their monthly bills either.

Other signs include 32% reporting having less savings now due to withdrawals made during the pandemic, 24% postponing purchasing a major appliance until their financial situation improves and 16% having nearly maxed out their credit cards due to overuse during the pandemic, adding debt to their challenges.

The top three resulting financial-based worries cited by full-time employees were not having enough retirement savings (41%), not having enough emergency savings to cover unexpected expenses (38%) and being able to pay for basic necessities (29%).

The past year saw little improvement in the respondents’ feelings about their financial condition. Overall, 69% of them reported that they felt the same or more financial stress than they did in January 2021. It affects people in a variety of ways, including 34% pointing to worries about finances harming their physical health.

The impact carries over to the workplace, too. For instance, 28% said financial strain affects their ability to focus at work, 25% said it affects their job satisfaction and 21% said it affects their work productivity.

“Employee financial stress can impact the employers’ bottom line through increased health care coverage costs, loss of productivity and employee retention rates,” according to the report.

Looking ahead, employees show signs of optimism as 47% expected their household financial situation to improve by January 2023. That compares to 28% who expect no change and only 17% who expect the situation to be worse (9% were not sure). However, that data point is worse than it was a year ago when the same survey showed that 52% of respondents expected their financial situation to be better in a year.

Against that backdrop, employees expect their employers to be part of the solution. In the survey, 72% of respondents said employers have a responsibility to improve the financial well-being of their employees.

The report suggests that certain voluntary benefits that employees choose can serve as “an excellent recruiting and retention tool.” These benefits include offerings such as employee purchase programs, bill payment programs, medical deductible financing, financial counseling and student loan repayment benefit programs.

“Employers can build further appreciation, job satisfaction and loyalty as they provide more support to their employees with financial well-being benefits that offer tangible assistance,” the report said.

With financial challenges so widespread and impactful, the report said employers should seek to ease their employees’ burden – because their employees expect their help. In fact, 80% of full-time employees said the availability of benefits impacts their decision to stay at their current job.

“Today’s employee is looking for employers to offer competitive wages and salaries, better benefits, a balanced life and a way to address their financial stress,” according to the survey report. “To remain competitive, employers should consider all aspects of what may contribute to a person’s financial state when life happens: unplanned or unexpected expenses surface, or financial struggles continue.”