US businesses are prioritizing employee wages and benefits, while employees look to maintain retirement savings
DES MOINES, Iowa–(BUSINESS WIRE)–Sentiment from US small and midsized businesses regarding the health of their business has remained steady despite growing concerns about the economy according to a recent survey by Principal Financial Group®.
Even as recessionary pressures rise and inflation persists, the latest Principal Financial Well-Being IndexSM (WBI) found 64% of businesses report financial improvement compared to this time last year, and most businesses consider themselves growing or stable. Large businesses1 were more likely to say they are growing (61%), compared to 46% of small businesses2. Nearly half (49%) of small businesses consider themselves stable compared to 36% of large businesses.
Businesses and employees concerned about inflation, potential recession
Although business sentiment is holding steady, both employers and employees are feeling economic pressures. Both groups rated inflation, a potential recession, and the cost of healthcare as their top three concerns.
However, when it comes to the remaining list of concerns, employers and their employees are not aligned. While businesses rate higher taxes, rising interest rates, and the costs of supplies as additional concerns, employees are most worried about protecting their health at work amid a continuing pandemic, their mental health and well-being, and managing their own career advancement.
“Employers and employees are generally aligned on their top three concerns, but there’s a significant disconnect once you move beyond that,” said Amy Friedrich, president of U.S. Insurance Solutions at Principal®. “Businesses have a lot on their plate and are focused on direct impacts to their business. Employees are much more focused on their personal well-being. This disconnect will have implications for businesses moving forward since meeting employees’ needs through culture and benefits ties to employee engagement and is a critical component of talent retention today.”
Businesses prioritize employees, wages, and benefits, while cutting other expenses
Although businesses remain stable, most believe a recession is likely. Sixty-five percent of employers and 73% of employees believe it’s somewhat or very likely a recession will happen in the next six months. Both employers and employees are taking steps to reduce spending and increase savings.
When asked about steps they will take to prepare for a recession, businesses are focusing on steps to reduce spending and increase savings.
- 35% have taken steps to reduce operational costs.
- 35% of businesses indicated an increase in prices and services.
- 31% report increasing cash reserves.
While all businesses agree they would avoid any action that would negatively impact employees, smaller businesses are the most focused on minimizing employee impact. In the face of a recession, small businesses are indicating they will not take steps to reduce salaries and benefits or lay off staff.
“Small businesses learned a lot from the 2008 recession, and many learned they can make adjustments that will minimize the impact on salaries or staff during future periods of economic stress,” said Friedrich. “Small businesses are dedicated to their employees. We saw that during the pandemic, and I think we’ll see the same creativity and resiliency if pressures mount in the near-term.”
Employees echo employers’ cautious behaviors, as they’ve begun to tighten their wallets by decreasing spending and maintaining savings.
- 40% of employees would plan to take on a side job to generate income.
- 37% of employees would plan to search for a new job with better pay and/or benefits.
- 45% of employees will not decrease saving for retirement as retirement benefits remain valuable.
See all results and insights from the latest Principal Financial Well-Being IndexSM (PDF).
1 Businesses with 500 – 10,000 employees.
2 Businesses with two to 499 employees.
About the Principal Financial Well-Being IndexSM
The Principal Financial Well-Being IndexSM surveys business owners, decision makers and business leaders aged 21 and over who work at companies with 2 – 10,000 employees. The nation-wide survey, commissioned since 2012, examines the financial well-being of American workers and business employers. In response to COVID-19, the Well-Being Index was transformed from an annual survey to a quarterly pulse, offering three waves, revisiting questions and measuring sentiment regarding timely issues in the small and midsized business marketplace. In the first pulse of the Well-Being Index in 2022, the employee audience was added to the survey to compare and contrast key ideas and sentiment from employers. The survey was commissioned by Principal® and conducted online by Dynata from July 7-20, 2022, with a total of 500 business owners, decision makers and business leader participants and a total of 200 employee participants. The research report focuses on providing a holistic perspective on key trends and timely issues in the small and medium business market.
Principal Financial Group® (Nasdaq: PFG) is a global financial company with 18,500 employees1 passionate about improving the wealth and well-being of people and businesses. In business for more than 140 years, we’re helping more than 54 million customers1 plan, protect, invest, and retire, while working to support the communities where we do business, and build a diverse, inclusive workforce. Principal® is proud to be recognized as one of America’s 100 Most Sustainable Companies2, a member of the Bloomberg Gender Equality Index, and a Top 10 “Best Places to Work in Money Management3.” Learn more about Principal and our commitment to building a better future at principal.com.
1 As of June 30, 2022
2 Barron’s, 2022
3 Pensions & Investments, 2021
Dynata is not an affiliate of any company of the Principal Financial Group®
Insurance products issued by Principal National Life Insurance Co (except in NY) and Principal Life Insurance Co. Plan administrative services offered by Principal Life. Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc. Securities offered through Principal Securities, Inc., 800-247-1737, member SIPC and/or independent broker/-dealers. Referenced companies are members of the Principal Financial Group®, Des Moines, IA 50392. Principal Global Investors leads global asset management and is a member of the Principal Financial Group®.
© 2022 Principal Financial Services, Des Moines, IA 50392, USA.
Ashley Miller, [email protected], 515-878-6295