6 signs your employees' savings are suffering

August 27, 2024 5:30 AM

A woman has her hands in her hair in frustration as she looks down at her desk.

Inflation has long outpaced wages, but the last few years have made it strikingly clear just how high the cost of living has become.

Over 80% of workers don't believe their wages have kept up with the cost of living, according to job search site Monster, and a Monmouth University poll has found that 46% of Americans are struggling to maintain their current finances. While some employers may assume that financial stress is ultimately their employees' business, a workforce weighed under money problems does impact a company's bottom line, says Tom Spann, co-founder and CEO of Brightside, a financial wellness benefits provider. But before employers can identify solutions, they need to identify the breadth of the problem.

"Maybe employers occasionally see cases pop up where an employee is evicted, but that's the tip of the iceberg," says Spann. "Employees don't often want to share their [struggles] with their employer, so leaders need to do a bit of work to understand the financial health of the population and address it."

From high healthcare costs to an increase in workplace safety issues, there are telltale signs that employees cannot afford to bring their full focus to work — and financial stress is often at the heart of it. Spann shares six ways to spot a financially unhealthy workforce.

Complicated or non-existent 401(k) relationship

If benefit leaders note low retirement plan participation or frequent 401(k) hardship withdrawals (withdrawing a portion of your retirement savings early), then it's a clear sign employees do not have enough money to plan for the future, says Spann. Their wages and financial wellness benefits are not meeting their needs if they can't at least consistently contribute to their retirement savings.

High healthcare costs

The more unhealthy a workforce is, the higher the healthcare costs, notes Spann. If employees have adequate funds, then they are more likely to access preventive care like annual physicals and cancer screenings, ensuring they catch the condition early — the longer a person waits to address a health issue, the worse the condition becomes and the more expensive it becomes to treat. Similarly, if an employer notices their workforce has a higher rate of long-term health conditions, like diabetes, cancer, high blood pressure and heart disease, then they know their employees are likely not utilizing their health plans, possibly for fear of costs.

Read more: Holistic healthcare benefits can cut down surgery spend

"Brightside was the idea of Shawn Leavitt, a benefits innovator who passed away in 2020," says Spann. "He estimated that poor financial health cost employers $3,000-$4,000 per employee per year. And one clear difference between employees who were financially sick and people who were not was their healthcare costs."

High rates of absenteeism

If employees regularly miss work, it may be another sign of financial struggle. While absenteeism is defined as avoiding work without reason, Spann emphasizes that there may be plenty of meaningful reasons why employees are struggling to show up: They may not be able to afford car repairs to make their commute to the office safely, or they or a loved one may be dealing chronic pain or illness.

"Often frontline managers see somebody not making it to work, but do they know what that might have to do with the financial situation?" says Spann. "Just stress from poor financial health is debilitating, and stress makes you sick."

The need for earned wage solutions

Earned wage access solutions allow employees to access their wages before their next payday — and while it can be an effective financial wellness benefit, Spann believes high engagement in the benefit likely means trouble. If employees access their pay day-to-day, they are fighting to make ends meet.

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Alarming gap between what employees have versus what they need to retire

"Earned wage access can be super valuable, but not if people depend on it," says Spann. "That's not improving their financial health. They aren't getting to a place where they can save money for the next emergency."

Dwindling workplace safety

For Spann, one of the most obvious signs is higher rates of accidents on the job. If people are stressed about their finances, unable to access adequate healthcare or properly care for their families, it becomes too hard to focus on the job, underlines Spann.

"You see all kinds of issues when people can't show up at their best," he says. "Our customers actually saw a 10% reduction in safety incidents."

High turnover

The above signs tell the story of poor work experience, and for Spann, it's obvious what the consequences of financial stress lead to: Employees leave. Whether it comes down to reassessing wages, strengthening health plans or adding effective financial wellness benefits like student loan assistance or emergency savings plans, Spann emphasizes that it's worth leaders' time to get to the bottom of this crisis.

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How employers can make the 'Big Stay' permanent

He advises employers to assess the financial health of their workforce and consider how they can ensure their solutions genuinely meet the needs of their workers.

"Financial wellness is not a one-size-fits-all education — that has proven not to work," says Spann. "There are all these point solutions employers are doing, and it can help people financially but only used in the right context."