Thanks to rising inflation, more than eight in 10 hourly workers (83%) have less than $500 saved for an emergency, and nearly half (48%) have nothing saved for an emergency (48%)—a 7% increase from last year, according to new findings from Branch. The instant payment benefit firm—which surveyed more than 3,000 hourly employees across a variety of sectors including food service, logistics, retail and healthcare—found that workers cited gas/fuel (82%), food/groceries (82%) and home/rent prices (57%) as the areas of their personal finances most affected by inflation.
What it means to HR leaders
As employees feel the effects of inflation in many areas—from the gas pump to the grocery store to their retirement plan contributions—they aren’t able to put cash away in savings. That’s not a surprise, but it is another problem that’s causing stress and anxiety for workers—and one smart employers should pay attention to, experts say.
The Branch report found that half of hourly workers (49%) feel negatively about their economic prospects this year, compared to 22% in 2021; economic optimism dropped to 22% from 43%.
Although several employers are turning to compensation hikes in the wake of soaring inflation, salary increases alone won’t necessarily turn the tide, especially as the average raise amount still trails the pace of inflation. For instance, data from Willis Towers Watson found that companies, on average, are budgeting a 4.1% salary increase for 2023; whereas inflation grew 9.1% year-over-year in June.
“Even with higher wages, rising costs of essential expenses have created additional obstacles and setbacks for hourly workers looking to establish greater financial security,” says Atif Siddiqi, Branch founder and CEO.
Experts say offering a variety of tactics, like allowing remote work when possible, offering gift cards or other monetary support, touting financial wellness programs that help employees budget and save money, increasing retirement matches, offering emergency savings or providing instant pay benefits, can help employees better address their financial situation and save money amid rising inflation.
“As workers increasingly turn to their jobs to find financial stability, companies that can offer compelling financial benefits and opportunities will be best positioned to retain talent,” Siddiqi says.