Aside from a myriad of ongoing issues that have been damaging employees’ mental health, from the pandemic to social and political angst, there’s another stressor that employers would be wise to pay attention to—ever-rising inflation.
Inflation, which rose 9.1% year-over-year in June and hit a 40-year high, is eating away at employees’ feelings of security and causing rising anxiety in the process.
Soaring cost-of-living that has its grip on the nation is “a highly destabilizing force,” says Paula Allen, senior vice president of research and total wellbeing at LifeWorks, a digital mental health firm that conducts a monthly mental health index to gauge how employees are feeling.
“What inflation does is it takes away your sense of security, like you’re not sure whether you can pay for things in the future, you’re not really sure about how things are going to be,” she says. “Even if you are financially stable now, there’s this concern that you might not be in the future.”
Recent data from LifeWorks, which polled 5,000 U.S. employees in May, finds that 20% of Americans say inflation is impacting their ability to meet basic needs. The index also found that people with unmet basic needs have a mental health score 16 percentage points lower than the national average.
That stress around inflation is spurring some employers to act, although more work can always be done, Allen says.
“Employers can’t really change the fact of inflation, but there are tools to help employees deal with the [impact],” she says. Employers are embracing more or expanded financial wellness programs, implementing hardship funds, adding benefits, and offering one-time financial payments or bonuses to help with higher costs.
Other organizations are, unsurprisingly, turning to salary increases: 63% of executives plan to make compensation adjustments in response to high inflation, according to Gartner. Meanwhile, Willis Towers Watson recently found that employers are planning to up employee salaries in the biggest projected hike in 15 years, on average budgeting a 4.1% increase in 2023—a plan in part spurred by inflation.
Although these are all needed and important strategies, Allen says employers can’t forget about the emotional toll inflation is taking, as some people need more than just financial tools to deal with the issue. Mental and financial health are often tied together: For employees who don’t have positive feelings of financial security, their mental health is often affected, too.
“Two people could be in exactly the same situation financially and in experiencing inflation, but for one person, it could really throw them over the edge,” she explains. “They can start catastrophizing, they’re paralyzed, they’re not able to move forward, and the other person is able to more focus on the practical aspects and adjust their lives to move forward.”
That’s where mental health help comes into play—from leveraging and promoting employee assistance programs to offering counseling and coaching to simply talking to employees about how they’re feeling and being empathetic.
“You have to play the ball where it lies, and [inflation] is a very real and meaningful thing for some employees.”