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How Inflation Affects Your Employees’ Financial Wellbeing and Your Bottom Line

Did you know that the average cost of living has increased more than 30% in the past 10 years? It doesn’t look like it will be slowing down anytime soon. This is having a major impact on employees and their financial well-being. Fiscal stress in all industries is one of the driving forces behind mass layoffs and employee dissatisfaction.

In this article, we will discuss how inflation is affecting employees and what companies can do to help their employees save money. We will also talk about the financial wellness services offered by 101 Financial, and how we can help your employees get ahead financially.

Overview:

Inflation is Costing Employees and Companies More

With rising inflation, the costs of running a business are increasing, as are the costs of simply living. This is putting a lot of financial pressure on employees. Many are now struggling to keep up with the rising cost of living and are turning to their employers for help. They are asking for raises to cover their increased costs, but companies are not always able to provide them.  This can lead to employee dissatisfaction and turnover, which, in turn, can lead to increased costs for businesses. In fact, a recent study showed that companies are losing an average of $11,000 per employee due to financial stress.

The Cost of Living is Up

You may have found an increase in your employees asking for raises. This may be due to the rising inflation and the cost of living skyrocketing. The cost of groceries, housing, transportation, and healthcare have all increased significantly in recent years. Many employees are struggling to make ends meet. They are looking to their employers for help with raises to cover their increased costs. While it is understandable that employees need to keep up with the rising cost of living, this can be a major financial burden for companies. In fact, according to a recent study, 60% of businesses said that the rising cost of living is their biggest financial concern.

Employee Financial Wellbeing Is Your Problem

As an employer, you may be thinking that employee finances are not your problem. However, rising inflation and the increased cost of living are impacting your employees’ ability to do their job effectively. If your employees are worrying about how they are going to pay their bills, they are not going to be focused on their work. This can lead to decreased productivity and even turnover.

How this Hits Your Bottom Line

For every 50K in salary, 6.8% inflation equals an additional $3,400 in salary. Now add the 25-30% in benefit increases. Ouch! Inflation is hard on you and your employees.

Can You Afford Salary Raises in 2022?

The biggest hit is when you take that $3,400 per employee per $50K and multiply it by the number of employees that you have. That’s a major hit in your 2022 bottom line.

101 Financial Can Help Your Compensation Manager Cope

Unless you have a lot of extra money lying around, $3,400 per employee isn’t doable. Even if you can’t afford that high of a raise for every employee, you can still give them an advantage in our economic climate. 101 Financial offers courses to help your employees pay off their debt and budget their money. With these courses, they’ll learn to use their money more effectively, so they won’t need a major raise to keep up with inflation.

Are Salaries Increasing in 2022?

44% of companies plan to raise worker pay by more than 3%, according to Payscale’s 2022 Compensation Best Practices Report (CBPR). That’s the highest rate of companies giving more than 3% pay raises in six years.

What is the Average Salary Increase for 2022?

According to CNBC, the average salary increase for 2022 is 3.4%. This is a larger increase than both 2020 and 2021. Rising inflation is a big factor in this.

Will Government Employees Get a Pay Raise in 2022?

Yes. Federal employees will get a pay raise of 2.7%. Local government employees may only get a 0.5%-2% raise. Overall they will get a pay raise this year.

How Much Should Salary Increase with Inflation?

Inflation is the highest it’s been since 1982. If you want to keep up with inflation, you’ll need to give a raise of at least 7.9%. This is much higher than most employers can afford. If you can’t afford to give large enough raises, you may be in danger of losing good talent.

101 Financial Can Help Your Employees Save Money

At 101 Financial, we offer financial wellness education courses to help your employees save money. We can help them budget their expenses and make smart financial decisions. We also offer a variety of other services to help employees get ahead financially.  Inflation doesn’t have to be a major issue for your employees or your company. With the help of 101 Financial, your employees can save money and get ahead financially. Contact us today to learn more about our services and how they can help your employees.