PROVIDENCE – Slightly more than half, or 56%, of employees are cautiously optimistic about their financial well-being over the next two to three years, according to findings in Bank of America Corp.’s 13th annual Workplace Benefits Report, “The Transforming Workplace.”
The optimism comes despite 42% of employees rating their financial wellness as good or excellent, which is the lowest percentage since this research began in 2010, according to a news release.
Launched in 2011, the Workplace Benefits Report examines trends related to workplace financial benefits and wellness programs. Based on nationwide surveys of more than 1,300 employees and nearly 800 employers conducted during the first half of this year, the 2023 report unveiled trends across employee retirement preparedness and financial well-being, the impact of caregiving on the workforce, and the state of the workplace.
“American workers continue to feel stressed about their finances and are concerned about keeping up with the cost of living,” Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America, said in a statement. “Companies who show a sense of urgency for their workforce by offering financial wellness programs and resources which support employees’ immediate needs and overall well-being will continue to stand out as employers’ of choice.”
The report also revealed that the number of employees who agree that the cost of living is outpacing growth in their salary and wages has increased over the past year, jumping to 67% in June 2023 from 58% in February 2022.
And while 76% of employees and 96% of employers agree that employers are responsible for employee financial wellness, only 2 in 5 employers currently offer financial wellness programs, according to the report.
Other emerging trends in the report include:
- A growing number of employees are prioritizing short-term financial needs over retirement savings, with 31% of employees prioritizing long-term retirement savings, down from 45% in 2022. Short-term needs include paying off credit card debt (16% compared with 11% in 2022) and saving for the unexpected (13% compared with 8% in 2022).
- Nearly half of employees, or 45%, said they are not saving for future health care costs, while confidence in managing health care costs has decreased (16% compared with 27% in 2022), and only 7% of employees plan to start contributing to a health savings account to offset future health care costs.
- The number of women who said they feel financially well hit a five-year low in 2023 at 38%, a decrease from 55% in 2022. Fifty-four percent of women said they won’t be able to make ends meet due to inflation, compared with 32% of men, and 39% of women said they have had to look for additional employment due to rising costs, compared with 17% of men.
- Feelings of financial wellness also vary by ethnicity and location, with 61% of Asian employees rating their financial wellness as good or excellent, followed by white/Caucasian at 44%, Hispanic/Latinx at 40% and Black/African American at 35%. Additionally, less than 1 in 4 employees living in urban areas feel prepared for retirement, compared with 32% of suburban employees and 43% of rural employees.
This year’s report also examined caregiving and its impact on the workforce. More than half of employees, or 56%, identify as caregivers, led by employees earning less than $40,000 annually at 71%, Hispanic/Latinx at 70%, Gen Z/millennials at 68% and women at 57%. However, employers believe that only 35% of their workforce are caregivers.
Employee sacrifices when balancing career and caregiving include using vacation time (39%), reducing 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, and 32% of working caregivers take advantage of programs or support being offered.
While employers report lower employee attrition rates this year compared with 2022, staffing continues to be a challenge. Nearly one-third of employees, or 32%, said they switched jobs or considered leaving their company in the past year, with the top reasons including 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%), followed by a hybrid/mix (39%) and fully remote (6%). 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.
