Financial stress is crushing worker productivity — are employers doing enough?
As employees strain to meet the rising cost of living, skyrocketing expenses around necessities like healthcare and childcare, and student loan debt, financial stress has become a workplace issue employers cannot afford to ignore.
Seven in 10 workers report high or moderate levels of stress, with more than half citing their personal financial situation as a primary stressor, according to employee benefits platform Alight’s Hot Topics in Retirement and Financial Wellbeing study.
The impact on workplace performance is alarming, with more than 6 in 10 HR leaders noting decreased employee performance due to financial pressures, per Alight.
Employers are responding to the challenge by significantly expanding their financial wellness offerings. A decade ago, about 25% of employers offered resources for budgeting or financial planning. Today, nearly 6 in 10 employers plan this year to enhance their financial well-being programs beyond retirement accounts alone, per the study.
“Financial stress is an epidemic that has affected employees for years. Rising inflation, stagnant wages and a tough job market have fueled this stress, resulting in growing concerns about how employees can afford their essential needs like rent, groceries and bills,” said Tate Hackert, co-founder and president of ZayZoon, an employee financial empowerment platform.
Still, communication remains a hurdle. The North American Workplace Fulfillment Gap Index from Ricoh North America found that fewer than half of employees say their higher-ups communicate the link between financial stress and the health and well-being of team members.
Laurel Taylor, founder and CEO of student loan debt management platform Candidly, has seen the direct impact of financial wellness programs on employee retention and engagement. According to Taylor, employees who use Candidly are up to 57% less likely to leave their employer, while 45% feel more in control of their finances and 77% report increased confidence after working with a student loan coach.
“For employers, this underscores a critical opportunity: by offering tools that help employees manage financial stress — whether through student loan benefits, savings programs or financial coaching — companies can foster a more engaged, loyal and high-performing workforce,” she said.
Some advocate for an even more aggressive approach to financial well-being.
Andy Hamilton, co-founder and CEO of offboarding support platform When, challenges employers to think beyond the current employment period. “It’s a tough time for everyone right now,” he said. “Some employers have really dug in on responding to that reality. They’re investing in incredible systems that support financial well-being. But is that really enough?”
The need for expanded support becomes especially apparent during particularly strained times for household budgets. According to online lending marketplace LendingTree, more than one-third of Americans took on debt this past holiday season, with the average person adding $1,181 to their financial load, often without planning to do so.
Some companies are responding with innovative solutions. Financial services firm Empower, for example, just announced a new consumer-directed healthcare offering designed to help individuals manage their healthcare finances alongside their broader financial picture, demonstrating how benefits providers are working to create more integrated solutions.
Financial wellness programs can take various forms — from earned wage access (EWA) and emergency savings accounts (ESA) for short-term needs to comprehensive financial education and professional guidance for long-term planning. The key is matching such offerings to employee needs while maintaining privacy and anonymity for those who are dealing with financial hardships, according to experts.
As employers evaluate their approach to employee financial wellness, Hackert emphasizes the importance of understanding the needs of individuals. “Financial hardships and challenges are unique to every employee, and it will take more than a standard benefits package to ease the financial burden employees face today,” he said.
He added, “When employees are worried about making ends meet, it’s not a surprise it bleeds into their workday … Employers can’t afford to ignore this financial stress epidemic any longer.”