Financial stress is at its highest level since 2008 and is costing billions
Financial stress is increasing in North America, reaching the highest levels since the Great Recession and weighing on productivity, a new report has found.
Research based on a survey of 4,232 employees conducted by a human resources company Ceridian and Western University’s Financial Wellness Lab, 61 percent of North American workers are more stressed about their finances amid the COVID-19 pandemic than they were a year ago. This is the highest level of financial stress since 2008.
Families in Canada and the United States are struggling with inflation and rising interest rates. This has resulted in more people tapping into emergency savings and cutting back on discretionary spending, the report found.
More than half (54%) of workers with an emergency savings account used it to pay for necessities through 2022. Four in five (81%) North Americans plan to cut back on discretionary spending, such as dining, entertainment and shopping. Another four in five (78 percent) said they want to increase their income to ease financial stress in the coming year. A third of those looking to supplement their income say they plan to get a second job or side gig.
Dr. Matt Davison, dean of science at Western University and head of research at Canada’s Financial Wellness Lab, says the results point to widespread financial insecurity across all demographics.
“Employees are either very stressed or comfortable with their financial situation, many are dipping into savings and planning to reduce debt,” Davison said in a statement.
“Many are looking for solutions that are out of their hands, like asking for a raise or a promotion, but that doesn’t always guarantee the financial buffer they’re looking for.”
With financial uncertainty and stress on the rise, more people are spending time at work thinking about their financial situation. According to the survey, 23 percent of respondents spend at least an hour a day at work thinking about their financial situation, resulting in billions of dollars worth of lost productivity. Based on estimates of average hourly wages, financial stress is costing employers $50 billion in Canada, and $614 billion in losses in the U.S., the report says.
“Financial stress is no longer just an individual problem; it’s an organizational bottleneck that’s costing businesses millions of dollars in lost productivity,” Seth Ross, chief consumer services officer at Ceridian, said in a statement.
“Employers need to offer their people more financial flexibility to boost productivity and wellbeing in the workplace.”
The survey was conducted online in the United States and Canada between October 3 and October 6. It has an estimated margin of error of +/- 2.8 percent, 19 times out of 20.
Alicja Siekierska is a senior reporter for Yahoo Finance Canada. Follow him on Twitter @alicjawithaj.
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