After two years of existential crises – the pandemic, a war in Europe, and historic inflation – employees are more focused on their financial security and well-being than climbing the ladder or career advancement, according to Mercer’s 2022 Inside Employees’ Minds study.
The number of employees who are considering leaving their employer has increased to 36% compared to 28% in 2021, with low-income (those who make less than $60k per year), frontline (healthcare, retail, hospitality, etc.), and underrepresented employees being more likely to consider leaving than other groups. The findings also show significant declines in employee satisfaction and commitment across the board since last year, most noticeably in compensation, benefits, and career goals.
The purpose of this survey was to understand the root causes of high turnover and how employees’ needs and wants have shifted over the past year since the term “Great Resignation” was coined in May 2021. The findings reveal that, among all demographics, concerns over inflation have placed financial health as the greatest unmet need* – covering monthly expenses now claims the top spot, up from #9 in 2021. The ability to retire is now the second top concern amongst all demographics, up from #5 in 2021.
Third on the list is work-life balance and boundaries – employees continue to say burnout is a key reason for them to consider leaving their employer. More than half (51%) of employees reported feeling exhausted on a typical day at work. These concerns were most pronounced in front-line workforces, such as those working in healthcare, retail, food service, and hospitality. Concerns about physical health have declined this year as health and safety measures at work and the threat posed by COVID-19 have improved, though it still remains a top concern overall (#4, down from the #1 spot last year).
Adam Pressman, Mercer’s US Employee Research Leader said, “During the pandemic, organizations that led with empathy, and prioritized health and flexibility saw the benefits through employee commitment, engagement, and productivity. But 2022 has brought new challenges – inflation, labor shortages, a war in Ukraine, and more.”
“It’s clear now more than ever that employees are prioritizing their well-being now. The top three reasons employees consider leaving their employer are pay and benefits, burnout due to workload, and insufficient healthcare benefits,” he added. “For some, especially front-line and low-income employees, that means financial survival. Others, who have their basic financial needs met, are placing increased importance on their lives outside of work.”
With the onset of remote and hybrid work, 2 out of 3 employees report they feel empowered, valued, connected, and stimulated. However, half of the employees say they feel exhausted on a typical day at work. The study revealed that flexibility is highly valued, and was the top item that would attract employees to a new employer, behind only pay.
Americans across demographics are experiencing significant financial stress
Above all, the research revealed that the financial concerns of employees reign supreme this year, despite US employers increasing base pay between 5% and 7% in 2022. Financial concerns remain high even for high-income earners — 71% of employees who make more than $200k per year say that high inflation and market volatility have increased their financial stress. Overall, nearly 2 out of 3 employees (62%) say they’ve reduced spending, and a third say they’ve reduced savings or tapped into savings to supplement their spending needs.
Low-income employees are the most vulnerable to inflation, as pay levels often fall below living expenses. Nearly 1 in 3 employees making less than $60k per year say they’ve taken on additional work to supplement their income. They’re also less likely to ask for a raise, as compared to higher-income workers. More than 8 in 10 workers across all income levels say it’s important that their employer clearly and strongly supports living wages, through both internal/external statements and tangible actions. However, today only 21% of employers say they’ve adjusted compensation so that all employees in their organization are paid at least a living wage.
Employees are increasingly concerned about retirement and healthcare affordability
Employees report that behind pay and workload, insufficient healthcare benefits are the next top reasons they would consider leaving their employer. 68% of employees report challenges with getting the care they need, with the top challenge being trouble affording the healthcare costs that aren’t covered by health insurance plans, such as deductibles and co-pays. Over 60% of employees purchase healthcare services outside of their insurance plan, with the top item being prescription drugs (31%).
Additionally, fewer than half of respondents feel confident they can turn their retirement savings into a steady income to last the rest of their life. When asked what changes they would value most in retirement benefits, employees overall chose an increase in the contribution amount matched by their employer. Employees under 45, who are less likely to have discretionary income to contribute to their retirement plan, would value matching payments made to student loan debt and contributions to a health savings account (HSA).
DEI is improving, but underrepresented employees still face unique challenges
The survey also found some improvements in diversity, equity, and inclusion (DEI) practices, most notably, an 8-percentage point increase in Black and African American employees who say they feel a sense of belonging to their team (up to 74%). However, a greater number of underrepresented workers are considering leaving their employers, especially Hispanic and Latino, and LGBTQ+ workers.
Where Hispanic and Latino workers showed a significant decline in balance, satisfaction, and commitment across all categories since last year, one in three LGBTQ+ workers reported a lack of sense of belonging with their team, and fewer than half believe they can meet their career goals at their current organization. LGBTQ+ employees are significantly more likely to consider leaving their employer – an 8-percentage point difference over non-LGBTQ+ employees. LGBTQ+ employees rank mental health as the second greatest concern (behind only covering monthly expenses) and employees report significantly higher levels of exhaustion and frustration during a typical day.
“In 2022, employees value a workplace that centers on well-being; where they have more sustainable workloads and more resources to support their holistic health – financial, physical, and mental. We see this as a defining moment – a new contract between employers and employees – the “Lifestyle Contract,” said Lauren Mason, Senior Principal in Mercer’s Career Business.
“There will be no return to pre-pandemic ways of working; employers who adopt this lifestyle contract will gain a committed and productive workforce and be an employer of choice in today’s job market,” she added.