Yahoo Finance Financial stress reaches highest levels since 2008 – and is costing billions
Financial stress is on the rise in North America, reaching the highest levels since the Great Recession and weighing on productivity, a new report has found.
The study, based on a survey of 4,232 workers conducted by human resources firm Ceridian and Western University's Financial Wellness Lab, found that 61 per cent of North American employees are more stressed about their finances today than they were a year ago in the midst of the COVID-19 pandemic. That's the highest level of financial stress since 2008.
Households across Canada and the United States are grappling with inflation and rising interest rates. That has resulted in more people tapping into their emergency savings and cutting back discretionary spending, the report found.
More than half (54 per cent) of workers with an emergency savings account tapped into it to pay for necessities through 2022. Four in five (81 per cent) of North Americans plan on cutting back on discretionary spending such as dining out, entertainment and shopping. Another four in five (78 per cent) say they are looking to increase income in order to relieve financial stress next year. A third of those looking to boost their income say they plan on doing this by getting a second job or side gig.
Dr. Matt Davison, the dean of science at Western University and the research lead at the Financial Wellness Lab of Canada, says the results signal widespread financial insecurity across all demographics.
"Whether workers are highly stressed or comfortable about their financial situation, many are dipping into savings and planning to reduce debt," Davison said in a statement.
"Many are looking for solutions outside their control like asking for a raise or a promotion, but that doesn't always guarantee the financial buffer they seek."
With financial uncertainty and stress on the rise, more people are spending time at work thinking about their financial situation. The survey found that 23 per cent of respondents spend at least an hour a day at work thinking about their financial situation, resulting in a productivity loss worth billions of dollars. Based on average hourly wage estimates, financial stress is resulting in a $50 billion loss for employers in Canada, and $614 billion loss in the U.S., the report says.
"Financial stress is no longer just an individual's problem – it's an organizational roadblock that's costing companies billions of dollars in lost productivity," Seth Ross, general manager of consumer services at Ceridian, said in a statement.
"Employers must provide their people with greater financial flexibility to foster workplace productivity and well-being."
The survey was conducted online in the United States and Canada between Oct. 3 and Oct. 6. It has an estimated margin of error of +/- 2.8 per cent, 19 times out of 20.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.
Download the Yahoo Finance app, available for Apple and Android.
