Every Financially Stressed Worker Costs Employers Over $5,000 Per Year

Few readers will be surprised to hear that US workers are worried about money. But Moneyzine.com has analysed new data that puts a concrete number on the cost of financial stress - and it is shockingly high.

Money troubles across the board

According to recent data, both US workers and employers are experiencing more financial stress than they did during the pandemic. 57% of employees say finances are the biggest cause of stress in their lives, and 60% of full-time employees are actively stressed about money. 59% of full-time employees say their compensation isn't keeping up with the cost of living - up from 52% in 2022, and 41% in 2021.

Similar concerns impact employers. More than 80% of Chief HR Officers (CHROs) are concerned the wage growth will not keep up with inflation. The data suggests they are right to be worried: financial stressed employees are less likely to say they feel like they belong at their company (by 14 percent points); are less likely to feel energised at work (by 18 percentage points); and less likely to recommend their company as a place to work (by 13 percentage points).

The biggest problem is wasted resources

Declining loyalty is bad enough, but the data also shows that employers are losing money by not adequately compensating employees. 1 in 3 US workers say that financial worries negatively impact their productivity, and 44% of stressed workers lose at least 3 hours of work per week because they are distracted by money troubles. Strikingly, this figure includes those earning more than $100,000 per year - and 47% of people in that category say they are stressed about their finances.

In August, the average private nonfarm hourly wage was $33.82. So let’s do the maths: 60% of workers are finally stressed, and 44% of those workers lost at least 3 hours of work per week. That means roughly 1 in 4 workers cost their employer $101.42 per week in time lost to money worries.

This number rises to $405.84 per month - and $5273.84 per year. So an organisation that employs 100 people currently spends $131,846 each year on financial stress; an organisation with 1,000 workers spends more than 1.25 million!

The cost of undercompensating workers

The logical extension of this data is simple: US employers could give every worker whose financial stress is causing productivity losses a raise of $2.50 per hour - and make a $13.92 profit per worker each week.

At an organisation with 100 employees, this would equate to roughly $348 gained each week, and more than $18,000 across an entire year.

“This data shows that underpaying employees can actually reduce profits. While not an exact science, the numbers demonstrate that employers cannot solve the problems of inflation by simply cutting wages or laying off workers.”

Jonathan Merry, finance expert at Moneyzine.com