Nearly 7 in 10 Americans Feel Cost of Living Outpacing Worker Salaries

Bank of America (BofA) has announced new findings from its 13th annual Workplace Benefits Report, “The Transforming Workplace”.

The report revealed that two-thirds (67%) of employees believe the cost of living is outpacing growth in their salary or wages, compared to 58% in February 2022.

Over the last year, the impact of inflation and economic uncertainty has contributed to increased financial stress and to financial wellness among employees dropping to 42%, the lowest rate since this research began in 2010. Despite which, more than half (56%) of employees remain cautiously optimistic about their financial well-being over the next 2 to 3 years.

First launched in 2011, the annual Workplace Benefits Report examines trends related to workplace financial benefits and wellness programs. Based on nationwide surveys of more than 1,300 employees and nearly 800 employers conducted during the first half of this year, the 2023 Report unveiled trends across employee retirement preparedness and financial well-being, the impact of caregiving on the workforce, and the state of the workplace.

“American workers continue to feel stressed about their finances and are concerned about keeping up with the cost of living,” said Lorna Sabbia, Head of Retirement and Personal Wealth Solutions at BofA. “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.”

Employees continue to look for support from their employers, with most employees (76%) and employers (96%) agreeing that employers are responsible for employee financial wellness. However, only 2 in 5 employers currently offer financial wellness programs. Other emerging trends include:

• Employees are prioritizing short-term financial needs over retirement savings. Fewer employees are prioritizing long-term retirement savings (31%, down from 45% in 2022) as a growing number are focusing on short-term financial needs, including paying off credit card debt (16% vs. 11% in 2022) and saving for the unexpected (13% vs. 8% in 2022).
• Half of employees are not actively saving for future health care costs. Nearly half of employees (45%) say they are not saving specifically for health care. Additionally, confidence in managing health care costs has decreased (16% vs. 27% in 2022), and only 7% plan to start contributing to an HSA to help address the future cost of health care.
• Women are feeling the weight of financial stress. Only 38% of women feel financially well in 2023, a decrease from 55% in 2022, and a five-year low. 54% feel that they won’t be able to make ends meet due to inflation, compared to 32% of men; and 39% have had to look for additional employment due to rising costs, compared to 17% of men.
• Feelings of financial wellness also vary by ethnicity and location. 61% of Asian employees rate their financial wellness as good or excellent, followed by White/Caucasian (44%), Hispanic/Latinx (40%) and Black/African American (35%). Additionally, less than 1-in-4 of employees living in urban areas feel prepared for retirement, compared to 32% of suburban employees and 43% of rural employees.

To read the full report, including more data and methodology, click here.