Hourly workers shift focus to immediate financial needs as inflation takes hold

America’s hourly workers are increasingly focused on being able to afford to pay their day-to-day bills in today’s economic climate, pushing saving for retirement down the list of priorities for this segment of the workforce.

These are among the findings of the 2022 Future of Hourly Work report produced by Branch, a technology company that provides a workforce payment platform. The report, which Branch conducts annually since 2019, studies what employees across a variety of sectors, including retail, restaurants and health care, value in their financial, professional and personal lives. This year’s survey of 3,000 hourly employees also evaluated the impacts of inflation on this segment.

According to the U.S. Bureau of Labor Statistics, about 73.3 million workers age 16 and older in the United States were paid at hourly rates as of 2020. This represents more than half of all wage and salary workers. Branch calls this significant segment the ‘Deskless Workforce.’

When asked what factors signify financial freedom, hourly workers surveyed primarily point to being able to pay day-to-day bills, with only 15% saying being able to save for retirement is an indication of financial freedom. The same percentage says being able to buy a house and having a large emergency fund are indicators of financial freedom.

The current economic situation has left many hourly employees feeling negatively about their own economic prospects, with nearly half of respondents expressing concern this year vs. only 22% the previous year. Similarly, economic optimism plummeted from 43% last year to 22% this year. However, the economic landscape hasn’t dampened hourly workers’ confidence in their ability to switch jobs easily or grow in their current position. 

While the top financial difficulty for hourly workers continues to be affordable housing, inflation has compounded that challenge by raising prices for fuel, food and utilities. About 13% of those surveyed say short-term savings have also been impacted by inflation, while 5% say long-term and retirement savings habits have been impacted.

Inflation also is cited as a reason for a decline in emergency savings, with nearly half of hourly workers surveyed saying they have nothing saved for an emergency despite rising wages. That represents an increase of 7% from findings of the survey last year. Eighty-three percent of hourly workers have less than $500 saved.

Related: Financial goals increasingly important to Americans — but are they achieving them?

Rather than viewing hourly work as a step to a different career, many hourly workers are now looking for career advancement from their current employer. More workers this year want higher compensation from their current workplace, up from 69% to 73%. Hourly workers also are looking for predictability in scheduling and a strong work culture. 

About the same percentage of hourly workers as last year (60% vs. 58%) have no plans to leave their current employer in the next six months, while 27% are considering making a move, and 11% are actively looking for new employment. While higher pay is the biggest motivator for those seeking a job change, the ability to work from home has grown in importance in the wake of the pandemic, increasing by 9% from last year. For those eager to remain in their current job, hourly workers want stability and financial mobility, citing higher wages, promotions and financial stability as their chief career goals. Only 8% are interested in having access to financial wellness benefits.

Half of respondents say financial stress impacts their mental health a lot, which is perhaps why many say they would focus on reducing financial stressors if given the chance. If given a $1,000 bonus, 42% of hourly workers who responded say they would apply it toward paying down debt and 27% say they would put it into emergency savings. However, only 2% say they would save it for retirement.