Recent economic data in the United States has been largely positive, with lower inflation, minimal unemployment, and steady GDP growth. However, a significant worry emerges: many American workers are facing all-time high level of financial stress, as revealed in a detailed study by Guardian Life Insurance Company of America.
The findings from Guardian’s ‘12th Annual Workplace Benefits Study,’ based on a survey of over 4,000 employees and workplace benefits decision-makers, illustrate a notably complex trend. Employee well-being has experienced a significant downturn, about to its lowest level in 12 years.
Meanwhile, financial stress has hit an all-time high, underscoring the harsh reality where 4‑in-10 (38%) workers find themselves living paycheck to paycheck. Even more interestingly, a third of respondents reported heightened anxiety, depression, or stress in recent years, directly linked to financial worries.
Factors contributing to this prevailing stress include economic uncertainties, inflationary pressures, debt management challenges, inadequate retirement provisions, and notably, a lack of comprehensive workplace benefits addressing mental health concerns.
Despite positive economic indicators, such as a decrease in unemployment to 3.90% in October 2023 and an increase in GDP growth to the current level of 22.49 trillion USD from 22.23 trillion USD last quarter and 21.85 trillion USD a year ago, workers’ perceptions remain notably pessimistic, as reported by the Guardian news site.
Meanwhile, a survey by CNBC and SurveyMonkey reflects similar sentiments, demonstrating that over 70% of employed Americans are under substantial stress due to their personal financial situations. This distress is intensified by the fact that over half of these individuals are consistently reliant on living from one paycheck to another.
Moreover, the survey has highlighted the pivotal role of homeownership in reducing financial stress, noting lower stress levels among homeowners compared to non-homeowners.
Crucially, these studies emphasize the huge impact of financial strain on mental health. Economic factors, particularly the absence of adequate emergency savings, are identified as primary contributors to adverse mental health effects resulting from financial stress. Specific vulnerable groups include women, lower-income households, and middle generations (ages 27 to 58), all contending with persistent financial strains.
Factors such as inflation, escalating interest rates, and income instability significantly contribute to financial anxiety among individuals.
According to Laura Wronski, Director of Research at SurveyMonkey, inflation is still the primary source of stress for Americans these days, but “this survey reveals pockets of relief for certain lucky people.”
“If you’re lucky enough to own a home, you probably have a very low mortgage rate; that alone clearly relieves some of the day-to-day financial strain,” CNBC reported Wronski as saying.
Notably, inflated consumer prices directly impact emergency savings, debt management, and discretionary spending, magnifying overall stress levels.
Experts recommend several strategies to manage financial stress during challenging periods. These include focusing on controllable spending, such as reducing grocery bills by opting for store brands. In addition to this, exploring opportunities to increase income through negotiations for raises, extra work hours, or side gigs can alleviate financial strain.
Prioritizing essential bills, establishing a savings plan, tracking financial progress, communicating with lenders for potential solutions, and seeking advice from financial experts are also suggested to reduce financial stress.