Financially-stressed workers costs US employers $250 billion in lost wages
According to new research, $250 billion in US annual wage losses can be attributed to the effects of financial stress. Employees spend an average of 13 hours per month worrying about their financial security; and while employers are keen to focus on ‘financial wellness programmes’, studies argue that low wages are the key source of stress in workers' lives.
Prolonged stress can have a devastating effect on human beings. Stress can reduce the ability of the immune system to fight off bacteria and viruses, resulting in the increased likelihood and duration of illness. If stress becomes chronic, a number of long-term physical and mental conditions can materialize: stress can impact the human brain, resulting in impaired working and spatial memory, as well as increased aggression.
A range of factors can impact a person’s stress levels, including one’s work environment. A new study by consulting firm Mercer seeks to identify the business cost of stress on US workers. The study, titled ‘Inside Employee Minds: Financial Wellness’, also examines avenues to mitigate stress, with analysis based on survey data from 3,000 US employees.
The headline-grabbing result of the study is that the economic impact of financial stress on US employees is an annual $250 billion – or around 5% of the total US payroll. The study notes that, while not only affecting those with the lowest salaries, financial stress does still disproportionately impact those with the least income. In terms of those in the lowest two financial wellness groups, 86% with household incomes under $100,000 – well above the median household income of $55,775 – are in the bottom two financial wellness groups.
Low pay remains a key issue in the US, with an earlier Mercer report relating that the biggest issue cited by employees in relation to stress at work is low pay, followed by inadequate staffing and company culture. Inequality in the US is growing unabated: corporate profits have continued to swell, while the top income group (top quintile) has increased its income by an average of more than $65,000.
The study group was split between those who are considered to be in financial stress – thus having a low ‘financial wellness’ score – and those scoring highly on the index. Those with a low score note that the biggest issue keeping them awake at night, as cited by 62% of respondents, is just keeping up with their monthly expenses; the second most pressing issue is credit card debt. Those with a high score tend to fret about different financial matters – such as whether they have enough saved for retirement – something that low-scoring individuals are less likely to worry about.
Despite the strong links to pay in workplace stress, many employers remain steadfast in their commitment to treating stress by way of stress reduction programs. While these programs may help fight stress unrelated to pay, and even help to offset some stress derived from financial difficulties, it fails to tackle the root cause of employee financial stress.
A large proportion of employees spend considerable time at work worrying about their financial wellness, or lack thereof. On average, a worker spends about 13 hours per month worrying about money-related issues: 25% of employees spend more than 10 hours per month worrying, while 15% spend more than 20 hours.
A large number of hours worrying corresponds highly to poor scores on Mercer’s financial Wellness Index: in the group that spends more than 20 hours worrying, 40% have a low score, compared to 10% in the group with no hours worrying. Overall, worrying is correlated with poor Financial Wellness Index scores.
Summarizing the report’s findings, Mercer US Financial Wellness Leader Betsy Dill commented, “Financial stress has a clear cost to employers and the survey shows offering a financial wellness program has both tangible and intangible rewards for employers looking to differentiate their brand, improve the engagement of their people and add to the bottom line in terms of enhanced productivity.”
