Talent acquisition can be a moving target, especially in today’s economic climate. And yet, for the second year in a row, HR Dive readers have named hiring as a top priority. It should come as no surprise that money continues to be top of mind for talent, but it’s not just money on workers’ minds: It’s a total rewards package.

Human resources professionals say they are responding accordingly: In HR Dive’s 2023 Identity of HR survey, almost half of respondents (43%) said retirement contributions or benefits are a facet of their talent acquisition approach. 

Retirement benefits saw the highest year-over-year uptick, too; only 35% cited this tactic as a tenet of recruiting strategy in 2022.

The data also revealed an uptick in increased hourly wages and referral bonuses as job candidate lures. This indicates that HR is working to meet employee demands not only for fair compensation, but financial stability and security as well, benefits professionals told HR Dive. 

For many, retirement savings offer economic relief

Access to emergency savings is seemingly top of mind for talent. For many, the old financial wellness adage that one should have six months worth of income saved is more maxim than lived reality. Recent data from Consumer Financial Protection Bureau suggested that only 27% of Americans would be able to cover more than six months of living expenses. Even fewer would be able to support themselves for two months or two weeks. 

More specifically, per a 2021 Morning Consult analysis, only a third of people making between $50,000 and $100,000 in the U.S. would be able to support themselves for six months. In Betterment at Work’s 2022 report, 43% of respondents said they had dipped into their emergency funds during the pandemic. Medical expenses and car and home repairs topped the list of reasons; paying rent or bills, and paying for living expenses while temporarily unemployed, followed.

“Those financial stresses can cause employees to dip into savings that otherwise they might have dedicated for some different purposes. And retirement is the first place that most people are saving for anything medium- or long-term,” Edward Gottfried, Betterment at Work’s director of product management, said. 

Additionally, Gottfried highlighted that a recurring theme in his company’s findings was the gap between workers’ financial strain and whether their employers were cognizant of it. (Notably, 83% of Betterment survey-takers said they view financial wellness benefits as a sign that their employer values them and their work.)

With higher pay, total rewards can sparkle

It’s worth noting that as a baseline, workers are demanding higher pay. In 2022, 59% of HR Dive survey respondents said increased hourly wages or salaries were part of their talent strategy. In 2023, that rate crept up to 64%. Workers are increasingly vocal across the board regarding their demand for higher or fairer pay, with state legislators leading the charge.

Tate Hackert, co-founder and president of on-demand pay platform ZayZoon, told HR Dive he has noted the shift in his clients, who come to the Canada-based company for help regarding pay — and that he has been a part of the evolving conversation in his own organization. 

“We have employees that work for us because of the mission and purpose that we’re built for, but also obviously to put food on the table. And that pay has to be market-rate competitive along with the other benefits and offerings,” Hackert said. “Like any business, we’re seeing the effects of inflation and the need from our staff to get raises and be compensated fairly. We definitely see that across our client base as well.” 

Workers are hungry for financial wellness resources

Why more HR professionals are using retirement benefits as a recruiting ploy is clear: Not only are people hungry for financial stability, but potential candidates are also vocal about the ways those resources make a company an employer of choice. In Betterment at Work’s report, 43% said finding a job with better benefits and/or higher pay was their motivation for leaving their company. 

That means employers should work to deliver graceful education around their financial benefits, Gottfried said. Research shows people want financial literacy baked into workplace experience. Online savings platform Vestwell reported at the top of the year that most employees want more involvement from their bosses in understanding their retirement arrangements and options. The majority of workers in that survey also reported financial stress, with the majority saying inflation and economic uncertainty had exacerbated their worries.

And employers best listen

Hackert nodded to the ongoing power shift between employers and employees over the past two years. HR pros have seen this in viral social media trends — the great resignation, “quiet quitting” and corporate villainy. Employees have gained more and more agency, he said. 

“They’ve realized that they have a little bit of choice as well. When they go to [find] work, they’re looking for an organization that has solid core values and is creating meaningful work, but then also is offering flexibility and benefits,” Hackert said. This raises benefits industry questions, he added, such as, “How can I provide employees the best possible experience?” and “How can I best engage employees, beyond just compensating them more or differently?”

Hackert said he has observed a recalibration of power in the corporate space. “I think there’s going to be more of a compromise. I think that we are shifting more toward an employer’s market again. But a lot of the needs and wants from employees — that were brought up over the last couple of years — in a lot of instances, are not egregious asks.”

They were factors that employers “probably didn’t really realize” were important “until it was right in front of their face,” he said. Examples include wages that caused workers to live paycheck to paycheck, whether a company offered flexible benefits or avenues for quicker pay. The pandemic made these inequities more obvious, he said, adding, “because of that, there was a lot more empathy built from the employer to the employee.” 

Any benefits that are “empathetic” — and especially ones that are low-cost but still meaningful, Hackert said — will be foremost among employers’ differentiation strategies.

Retirement contributions provide acquisition longevity

While discerning the right benefits offering — to entice the right talent — can require a lot of labor on the front end, one return on investment is the ability to retain quality talent. Gottfried said he has witnessed this firsthand. 

“Companies certainly feel they can’t afford to lose very good employees. They’re concerned about the ramp-up costs of hiring a replacement for an employee,” he said, noting that his team has continued to “see good energy” around employers improving benefits packages. That’s true even for companies that are reducing head count, he added; hiring freezes haven’t resulted in his clients paring back benefits.

“That would have long-reaching ramifications that are not positive for them,” he said.

Gottfried said the ultimate goal is to create employee affinity with comprehensive benefits packages. “Hopefully, the pendulum is starting to swing a little bit more in the direction of creating good reasons for longer-term employment and longer-term commitment to an organization.”

Debt, high monthly bills and rising prices have combined to create a difficult environment for U.S. workers, meaning employers may need to refocus their wellness benefit efforts, according to speakers at a virtual event hosted by the Employee Benefits Research Institute.

EBRI’s event centered on the results of the organization’s recent 2022 Workplace Wellness Survey, which the nonprofit conducted with Greenwald Research. The results showed employees have been impacted on several fronts; 60% said they were at least moderately concerned about their financial well-being, while 50% and 48% said the same about their emotional and physical well-being, respectively.

The survey results also reflect the “doom and gloom” felt by U.S. workers in the face of a complex web of challenges, said Kerry Sette, VP, head of consumer insights and research at Voya Financial. “It definitely highlights how many working Americans really do need a respite from all that’s been happening in the world, especially on an economic front.”

Signs of distress abound. For example, an American Staffing Association survey published in December found that 58% of adults were considering getting a second job to help cover expenses within the next year. EBRI’s survey honed in on the topic of debt: 80% of respondents said they had a problematic level of debt, up from 65% in 2021, and 78% of this contingent cited credit card debt as an issue.

“People are going into debt and also the worst kind of debt,” Sette said. “We’re seeing top concerns are really around covering monthly expenses — mortgage, rent, groceries and utilities — as well as being able to retire.”

Employers have a role, but what can be done?

EBRI’s survey found that most employees said they believed employers have a responsibility to ensure that they are mentally, emotionally, physically and financially healthy, and nearly a third said they believed that employer efforts to help manage their well-being grew in the past year. But fewer than half rated employer efforts to improve either of these well-being areas as “excellent” or “very good,” EBRI said.

Emergency savings is one area employers have an opportunity to address, Sette said. While 52% of respondents to EBRI’s survey said they had enough savings to handle an emergency or sudden, large expense, fewer than half said they felt prepared to handle an unexpected expense of $5,000 or more.

Additionally, 60% of respondents said that their retirement plan savings were the “only significant emergency savings that they have,” EBRI said.

Employers have the opportunity to enhance financial literacy efforts, too. A 2022 Morgan Stanley survey found that four in five employees said they thought their employers should help them understand how to maximize their benefits, and 90% said financial benefits that targeted their needs would cause them to feel more invested at work. In a recent Vestwell survey, 9 in 10 employees said their employers should be involved in their retirement education.

Many employees understand the importance of basic health and retirement benefits, but they may overlook voluntary and supplemental benefits that could improve their financial and overall well-being, Sette said. “This is definitely an opportunity for employers as well as their providers to help their employees understand which benefits would benefit them and their families.”

Mental health continues to prove a top trend for employee benefits programs entering 2023. Sette said that employers’ mental health and emotional well-being outreach efforts should particularly target younger workers whose lives have been especially impacted by pandemic-induced disruption.

Case study: Outreach to LGBTQ employees

EBRI found that LGBTQ workers were less likely than non-LGBTQ workers to be satisfied with their job, benefits and paid leave, said Paul Fronstin, director, health benefits research at the nonprofit. LGBTQ workers were also more likely than non-LGBTQ workers to give lower ratings to employers’ efforts to improve financial well-being, emotional well-being, mental health and physical well-being and health.

Though a multitude of factors influence this sentiment, the inability to be one’s authentic self at work can be particularly impactful to LGBTQ professionals, according to George Schein, director of the Advanced Consulting Group at Nationwide Retirement Institute.

Schein said the “personal minefields of employee-employee interactions” LGBTQ workers face could mean that such workers switch jobs more often than other workers, or that they are not hired or promoted at the same rate as other workers.

“The result of that isn’t only that we are less likely to be eligible for some of these benefits, but we’re also less likely to be happy with our workplace a lot of time,” Schein said. “It also can lead to limits on our income,” he added, which can result in fewer retirement savings over time.

Schein pointed to two benefits areas that could particularly benefit LGBTQ employees. The first, in-plan guarantees, are annuitized insurance products that guarantee a regular payout or income source in retirement. These products sit within defined contribution plans and were the number one most valuable improvement to retirement savings plans cited by LGBTQ employees in a June 2022 EBRI survey.

Long-term care was the second area highlighted by Schein, who said that LGBTQ workers may lack family or close contacts who can provide care in old age. “They are two to three times more likely to live alone,” Schein added. “Although we have had the right to marry since 2015 nationwide, the majority of LGBTQ individuals are not married. And so the question becomes, who’s going to take care of us as we age if it’s not our children?”

Sponsored content

By DailyPay

Financial wellness programs have gained popularity over the past few years as employers have started to realize the many benefits of supporting employees on their journey to greater financial stability. 

According to a study from Thriving Wallet reported by CNBC, 90% of Americans are stressed out over finances. But how does that stress affect the employer–employee relationship? Well, PwC’s 2023 Employee Financial Wellness Survey found that financially stressed employees are twice as likely to look elsewhere for a new job, with 73% saying they would be attracted to an employer who cared more about their financial well-being. 

Further research shows that employees who experience high levels of stress also exhibit high levels of absenteeism and low levels of innovation. It’s no wonder why the American Institute of Stress estimates that work-related stress costs employers $300 billion annually due to factors such as high turnover, absenteeism and decreased levels of productivity. 

As innovative companies look for solutions to employee stress and its impact, many are leading the charge in implementing financial wellness programs for their workforce. The philosophy of a financial wellness program is that if employees face fewer financial worries and distractions, they can be more focused, engaged and productive at work while feeling more valued by their employer. 

How can an employer benefit from offering a financial wellness program?

By definition, employee financial wellness programs are designed to help your employees improve their financial well-being and learn to control their finances. According to the 2023 Workplace Benefits Report from Bank of America, 42% of employers that currently offer resources to support financial well-being have seen reduced employee stress. When implemented correctly, it’s possible for a financial wellness program to benefit the workplace for both the employer and the employee.

The 2022 Workplace Benefits Report found that 8 in 10 employers agree that financial wellness offerings can result in more satisfied, engaged and loyal employees with increased productivity and performance results. However, in order for a financial wellness program to work, the adoption rate must be high enough to impact the overall satisfaction and engagement of an organization. 

Wellness programs can’t help your employees if they don’t know they are available. In Bank of America’s 2022 survey, one-third of employees said they want access to financial advice through a digital portal, and 52% of employees prefer to use a digital app to manage their finances.7 When choosing which financial wellness programs to offer, employers should prioritize benefits that incorporate digital tools to drive employee engagement. 

A wellness benefit that really resonates with employees

DailyPay is an effective solution for employers looking for a financial wellness benefit to offer their employees. Through the DailyPay app, employees can access their earned pay before the regularly scheduled payday. DailyPay seamlessly integrates with HCM, payroll and time-management systems so it doesn’t disrupt the existing payroll process. 

This financial wellness benefit allows employees to access their earned wages before the scheduled payday, so they can pay bills on time, avoid late fees and meet financial goals on their time. With an on-demand pay benefit, employers can provide greater financial wellness support for employees, leading to happier and more productive employees across
an organization. 

To measure the power of on-demand pay, the Mercator Advisory Group conducted a study sponsored by DailyPay on the cost-saving outcomes of DailyPay users. Read the results to see how this on-demand pay benefit might be the accompaniment to your financial wellness program that resonates with your employees the most.

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¹ _{CNBC, 2023}

² _{PwC Employee Financial Wellness Survey, 2023}

³ _{Questis, 2022}

⁴ _{The American Institute of Stress, 2022}

⁵_{Bank of America Workplace Benefits Report, 2023}

⁶_{Bank of America Workplace Benefits Report, 2022}

⁷_{Bank of America Workplace Benefits Report, 2022}

The number of 401(k) participants taking hardship distributions increased 36% year over year, Bank of America has reported.

Still, contributions remained steady and average balances are up, the bank said.

The data tells two stories, Lorna Sabbia, the organization’s head of retirement and personal wealth solutions, said in a statement: “one of balance growth, optimism from younger employees and maintaining contributions, contrasted with a trend of increased plan withdrawals.” It shows the employees are understandably prioritizing short-term expenses over long-term saving at the moment, she said.

Bank of America’s report comes as plan sponsors weigh a new option to offer workers in-plan emergency savings accounts.

With the Secure 2.0 Act, Congress made non-highly compensated employees eligible for such benefits, in plan years beginning after Dec. 31, 2023, consulting firm Mercer explained in a report. Withdrawals from the accounts will have fewer restrictions than those from 401(k)s.

The shift comes after workers made it clear they want additional financial support from employers — support that goes beyond a raise.

Employees seem to be seeking a sense of financial security and stability, research shows. Many of those responding to a recent survey said they lack enough money for retirement. And in another survey, respondents said employers could offer financial wellness benefits and education to help mitigate that issue.

Earlier this year, HR pros said they’re doing just that. Nearly half of respondents to HR Dive’s annual survey said retirement benefits or contributions were part of their talent acquisition strategies. That offering saw the highest increase among a variety of total rewards package components; only 35% said retirement benefits or contributions were part of their recruiting strategy the previous year.

Employers will, of course, have to weigh costs. But one source previously told HR Dive that benefits that convey empathy, and that are truly meaningful, can help an employer differentiate itself in the job market.

Walmart is teaming up with Khan Academy to offer a free financial literacy course for company associates, customers and community members, according to an announcement from Walmart.

About 72% of U.S. adults report feeling stressed about money, according to the American Psychological Association’s Stress in America survey. Walmart’s financial literacy course is aimed at improving overall well-being, which includes physical, emotional and financial health.

“We know if someone is experiencing financial stress, it can lead to significant physical and emotional health issues, like heart disease, depression and more — it’s all connected,” Kim Lupo, Walmart’s senior vice president of global total rewards, said in the announcement.

“That’s why we have been and continue to be focused on providing access to tools and resources to support total well-being,” she said.

The virtual course includes articles, videos and exercises focused on personal finance skills. The learn-at-your-own-pace modules feature topics such as budgeting, saving, consumer credit, financial goals, loans, debt, insurance, investments, scams and taxes.

“We know from listening to our associates and customers that financial well-being is an important component to their total well-being,” Lupo said. “We believe offering these unique financial offerings will empower people to live their best lives — in and out of the workplace.”

Employees want more education programs, particularly around financial wellness and their retirement benefits, according to a recent report. Employers who work with financial advisors also listed employee financial literacy and employee investment recommendations as top issues.

Overall, employees are increasingly in favor of their employers being involved in their finances, particularly helping them through financial hardships. This includes helping employees to understand how to maximize their benefits and achieve financial wellness.

In turn, talent acquisition professionals are offering comprehensive total rewards bundles to draw workers. Several options are on the table, including signing bonuses, flexible work arrangements, public transportation or rideshare benefits, mental health or counseling coverage and education or apprenticeship programs.

To retire comfortably, American workers believe they will need $1.27 million saved, according to Northwestern Mutual’s 2023 Planning & Progress study — and while readiness is improving, a big disparity still exists between what workers think they will need to retire and what they’ve actually saved.

Savings expectations only continue to increase, as well; workers reported they would need $1.25 million saved last year to retire comfortably. But the average amount Americans have saved for retirement continues to rise “modestly,” according to the report, growing by 3% to $89,300 from $86,869 in 2022.

Generation Z remains most confident that they will be financially ready for retirement, while older generations are more pessimistic. More than half of Gen X say they will not be ready, and nearly half of millennials and baby boomers say the same, according to Northwestern Mutual.

That confidence also directly reflects on long people expect to work — a growing question as employers continue to grapple with succession planning and talent shortages amid an aging workforce.

Boomers, for example, on average plan to work until they are 71 years old, while Gen Z expects to be able to retire around age 60.

The report comes as recessionary concerns — and continued pressures in the wake of the pandemic — prompt workers to delve into their savings accounts to cover expenses, according to survey results released in July by the Transamerica Center for Retirement Studies.

Workers, also, are increasingly working past the traditional retirement age — and while financial need is increasingly part of why, workers also indicate they want to work to keep their minds active and maintain a sense of purpose in their lives, according to a report from Easterseals and Voya Cares.

Employers may, in turn, may want to consider tapping into older generational pools to find workers, especially those desperate to fill open roles, experts previously said.

Two-thirds of workers say the cost of living is rising faster than their income, according to Bank of America’s 13th annual workplace benefits report, The Transforming Workplace. That compares to 58% of workers in February 2022.

Financial wellness among employees fell to 42%, the lowest it's been in the 13 years Bank of America has produced the workplace benefits report. That strain is more strongly felt among women, only 38% of whom characterized themselves as financially well in 2023, a five-year low and down from 55% the year before. Among women, 54% said they worried they wouldn’t be able to meet their financial responsibilities because of inflation, as opposed to 32% of men.  

Despite the effects of inflation and economic uncertainty, 56% of workers say they’re “cautiously optimistic” about their financial future over the next two to three years, per the report, which surveyed 1,300 employees and nearly 800 employers.

To remain competitive and retain workers, employers are turning to financial benefits. "American workers continue to feel stressed about their finances and are concerned about keeping up with the cost of living," Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America, said in a statement about the new workplace benefits report. "Companies who show a sense of urgency for their workforce by offering financial wellness programs and resources which support employees' immediate needs and overall well-being will continue to stand out as employers' of choice."

In HR Dive’s 2023 Identity of HR survey results, published earlier this year, 43% of respondents said they offer retirement contributions or benefits as part of their talent acquisition strategy, compared to 35% the year before. In fact, retirement benefits had the greatest increase among offerings in total rewards packages.

And 90% of respondents in a 2022 survey by Morgan Stanley at Work said they would feel more invested at work if their employer offered financial benefits tailored to their needs.