Financial stress of employees costs US $250 billion in lost time

03 October 2017 5 min. read

A yearly estimate of around $250 billion in losses can be attributed to the effects of financial stress, according to new research. Employees spend an average of 13 hours per month worrying about fiscal security, and while employers are keen to focus on financial wellness programmes, earlier studies highlight that low wages are the key driver of stress in workers' lives.

The effects of prolonged stress on human beings can be profound. Stress has been documented to reduce the ability of the immune system to fight off bacteria and viruses, resulting in increased likelihood and duration of illness. If the stress becomes chronic, a range of long term physical and mental conditions can come about, even restructuring of the brain, resulting in impairments in working and spatial memory as well as increased aggression.

A range of factors impact a persons’ stress levels, including employment. A new study by consulting firm Mercer aims to identify the business cost of stress on US workers. The study, titled ‘Inside Employee Minds: Financial Wellness’, also looks at ways to mitigate stress, with analysis based on responses from 3,000 US employees.

Financial wellness index

The headline result of the study is that the economic impact of financial stress on US employees stands at $250 billion annually, or around 5% of the total US payroll. The study notes that, while not only affecting those on a lowest pay, somewhat predictably, financial stress does 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 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 noting 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 also remains rife, while corporate profits have continued to run well above that of the previous period and the top income group (top quintile) increased its income by an average of more than $65,000.

Biggest financial worries

The study group was split along those whom are considered to be in financial stress, thus having a low Financial Wellness score, and those scoring highly on the index. Those with 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, followed by credit card debt. Those, meanwhile, with a high score, tend to be worried about other things, or whether they have enough saved for retirement – something those with a low score may not have time to get around to.

Despite the strong links to pay in workplace stress, however, many employers remain steadfast in their commitment to treating stress via stress reduction programmes. While these may well help with stress unrelated to pay, and help to offset some stress sourced from financial difficulties, it remains a treatment of a symptom, rather than tackling the root cause.

Hours spent at work worrying

A large proportion of employees spend considerable time at work worrying about their wellness, or lack of it. On average, a person spends around 13 hours per month worrying about money related issues. Around 25% of employees spend more than 10 hours per month worrying, and 15% of them spend more than 20 hours.

A large number of hours worrying corresponds to poor scores on Mercer’s financial Wellness Index – in particular, 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. The group with zero hours of worry has a relatively high score, with more than 50% in the medium-high to high group. Overall, worrying is correlated with poor Financial Wellness Index scores.

Hours per month worrying

“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.” said Betsy Dill, US Financial Wellness Leader, Mercer.

Overworked and underpaid in UK

In the UK, meanwhile, new research by the GMB general union, showed that 150,000 public sector workers in Yorkshire and Humberside regularly work unpaid overtime worth £830 million a year. The study of public sector staff found that more than 26% of those based in the region regularly worked an average of eight unpaid hours a week, leading to an increased workload and stagnating wages driving up levels of stress. With an average of 15 hours being worked among the sample of employees per week, were they paid for that time, they would be on average £5,400 better off per year, which is equivalent to a 24% pay rise.

GMB contend that the statistics reflect a wider national trend, in opposition to recent controversial claims by Chancellor of the Exchequer Philip Hammond that public sector workers were “overpaid.” Hammond’s comments, which drew national ire, came as the government refused to reverse a pay-freeze, something debated in the House of Commons in the wake of work by emergency services following terror attacks in London and Manchester, and the Grenfell fire.

Neil Derrick, GMB Regional Secretary, said, “Public sector workers… work above and beyond their contracted hours because they are committed to jobs they love. Yet the Government rewards their dedication with crippling real-terms pay cuts. Ministers think they can push staff indefinitely, but low pay, unmanageable workloads and stress are pushing many of our members to the limit.”