HR Insights
February 17, 2023

Workers' financial stress may be costing over $600B in lost productivity. Here's what you need to know

Learn how on-demand pay can help increase productivity and decrease financial stress among employees


A recent North American study revealed that 82% of workers are thinking about their personal finances at work, contributing to an estimated US$664B in lost productivity. 

In partnership with Canada’s Financial Wellness Lab at Western University, Ceridian surveyed over 4,200 North American workers to understand the personal and professional impacts of recent economic shifts. The results help to reveal what workers are really after – and it’s not just an increase on their paycheck. 

Seth Ross, General Manager of Dayforce Wallet and Consumer Services, sat down with Chuck Grace, award-winning professor at Western University specializing in institutional investing, personal wealth management, and fintech, to get his perspective on the impact individual financial stress is having on organizations. 

Ross: As we’ve seen through this survey, North American workers are experiencing significant levels of financial stress. What would you say are some of the major causes of this stress?  

Grace: That’s a tough question because there are so many variables – but maybe that’s the issue? In 2022, North American households were confronted with a host of things to worry about, including their finances. COVID no longer dominated the news, but it was still a concern. Extreme weather was compromising housing and incomes, inflation had spiked, interest rates were rising, and stock markets were declining. And to top it off, social media was amplifying, if not exaggerating, all those issues. US and Canadian households have proven to be resilient when confronting one or two of those types of issues, but in 2022, we were wrestling with all of them at the same time.  

Ross: This study grouped respondents into three categories, based on their levels of financial stress – stressed, unsettled, and comfortable. What are some notable takeaways for each group?  

Grace: It’s important to remember that stress cut across all the demographics, and the three clusters were similar from that perspective. Financial stress was prevalent amongst older and younger respondents, males and females, large and small incomes, families and singles.  

In our research, we discovered three factors that dominate financial wellness – spending, saving, and debt. Other factors, including income, gender, age, and education all play a role, but our research, which was collected over more than 10 years and across multiple countries, doesn’t identify those factors as the drivers of wellness.  

In the Ceridian survey, the same patterns emerged, and our algorithms grouped those with similar characteristics or behaviours into what we call clusters. Each cluster represented approximately one-third of the respondents.  

The comfortable cluster was focused on managing their spending and maintaining their savings. They were looking at ways to cut their spending to maintain their savings.  

The unsettled cluster had an unusual number of households without an emergency account or a buffer in case of unexpected expenses or lost income. They were focused on increasing their incomes and managing their spending to increase their savings and avoid increasing their debt.  

For the stressed cluster, debt was often used to make ends meet. They were carrying a lot of debt and it was keeping them up at night. They were looking for ways to get out from under their debt burden. The stressed cluster also spent a significant amount of time on their personal finances while at work.  

Ross: Some people will argue that higher income may result in decreased financial stress. From your research, what has been the correlation between earnings and economic anxiety? 

Grace: There is no question that income plays a role. Theoretically, it should be easier to manage spending, accumulate savings, and avoid excessive debt if you have a higher income. But in our research, we have seen a large portion of high-income households in the stressed cluster, with high debt loads and little savings.  

Sometimes, higher incomes come with a higher expense lifestyle. We have also identified lower income households in the comfortable cluster who have no debt and are able to save. Therefore, income alone isn’t the solution and giving everyone a raise won’t fix the problem unless we can address some of the underlying behavioural issues.  

Ross: If businesses are losing an estimated $664B in productivity cost due to employees’ financial stress levels, what can employers do to help their people?  

Grace: The priority is to recognize that financial, physical, and mental wellness are interdependent and all three should be considered when it comes to employer benefits and wellness programs.  

How does the timing of one’s paycheck affect financial wellness? For most households, paychecks represent the number one source of incoming cash flow. When that cash flow is unpredictable, volatile, or simply not aligned with the timing of expenses (cash outflows), it creates financial stress. Anything employers can do to enable flexibility or create predictability in cash flows would presumably alleviate some of the stress.  

The last item we would suggest is the automation of savings plans. Our research has shown that households that automate their savings (through payroll deduction, for example) save four to five times more than those who do not. Most employers have done a good job encouraging payroll deductions for retirement savings. We would encourage them to extend those same programs to such things as emergency accounts, children’s education, or down payments for a home.  

Our research shows that financial wellness is a complex topic, and generic solutions will not fit all households. It will be important for employers to enable personalized solutions for their employees – across all age groups, backgrounds, and income levels.  

Ross: On-demand pay offers employees more control over their finances. Based on your research, what do you think this kind of empowerment can do for people across the financial wellness spectrum?  

Grace: Flexible access to earned income would offer the household a chance to synchronize inflows and outflows to avoid shortfalls or offer an inexpensive way to react to unexpected shortfalls. The timing of the standard monthly or biweekly payrolls was determined decades ago when running the payroll system was a major undertaking for employers. Modern technologies have reduced those challenges, but we haven’t adapted the timing to recognize that many household expenses don’t necessarily synchronize with the payroll timing – leading to cash flow challenges and accessing emergency savings or relying on debt to cover shortfalls. 

The key word in your question is control. There is a well-established body of literature that points to self-efficacy or the perception of control to reduce stress. Using the examples noted above, we don’t need to create a ‘perception’ of control – the flexibility to personalize cash flows through on-demand pay is real and would presumably lead to reduced household stress. 

Grace is also the Program Director for Western’s Financial Wellness Lab and the Ivey Academy’s Investment Professional Leadership Program. His previous roles as Associate Director for The Scotiabank Digital Banking Lab, Research Engineer at the Centre for Quantitative Analysis and Modeling (CQAM), and COO of Quadrus Investment Services have led to his extensive expertise in financial wellness. 

Click here to check out the Reimagining Payday Guide to learn more about the benefits of introducing an on-demand pay solution. 

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