On Wednesday, the Federal Reserve took steps to try to stymie inflation by raising the interest rate, again. The next day, the Bureau of Economic Analysis announced the nation’s gross domestic product shrank in the second quarter, again. But, even before that, the “r” word has been creeping into concerns for a while now.
According to Prudential Financial Inc.’s latest Pulse research series, Americans Prepare for the Economy’s Next Act, 74% of respondents are expecting a recession within the next two years.
Those concerns come in light of the fact that most (51%) of those surveyed said they felt more financially secure than they did three years ago, including 58% of Black Americans. However, inflation – currently at a 40-year high of 9.1% – along with debt already have people changing their habits. The Pulse report found that 53% of respondents were making adjustments because of the current economy and 46% were concerned about the future economic state. Interestingly, concerns about “pandemic-induced uncertainly” follow the others at 32%.
Risk and reward
According to the report, more people are seeking advice from unconventional channels (30% look to social media) or turning to more precarious investments, like crypto.
Even though it wasn’t highest on the list of antagonists, COVID-19 is still linked to a sense of financial security for Americans through work.
The pandemic undoubtedly shook up priorities when it comes to jobs (be it where people are working from, or when), but it also put more emphasis on how much more important having one is for creating stronger financial footing: The pulse found that most workers (63%) said steady pay is the biggest factor to feeling financially secure. When it comes to interference with that ideal, an economic downturn was seen as the biggest threat to job security at 46%.
But that doesn’t mean as an employer you can rest on your laurels. The report cautions that not meeting workers’ financial needs could drive them elsewhere—and there are a lot of options out there these days.
Another thing that employers should pay attention to – if they aren’t already – when it comes to attracting and retaining talent is where employees are physically doing their work. According to the survey, about half of hybrid and remote workers said they would never accept a new job that required them to go to an office or work site full time.
According to the Pulse report, “Employers who offer benefits that provide flexibility and help support the financial success of their employees may have a leg up on their competition.”
How else has the pandemic reorganized priorities for employees? You may not want to hear it, but 64% say they’re now prioritizing their personal life over their career. Mental health considerations have taken a step forward since the onset of the pandemic, and that’s reflected in workers’ attitudes, too, with 61% saying they are putting their mental health first, over their job.
Overall, having a job seems to offer a sense of security that is hard to, well, work around: 57% percent of workers said they’d pick job stability over salary or benefits. However, more than half of workers (54%) said they’re looking for personal fulfillment from their work, prioritizing purpose over salary or benefits.
While Prudential’s Pulse found many Americans are preparing for uncertainty, it also found that coming out of the pandemic, two groups were already starting out a more of a disadvantage. Women actually lost ground, according to the survey’s findings, while millennials are – again – facing the onset of a potential recession, this time, as they should be entering their peak earning years.
Pru’s Pulse found the pandemic reinforced the financial divide when it comes to women and men.
The flip side
In the past 12 months, I feel my personal financial situation has been insecure.
I am confident I would be able to withstand an unexpected financial event, such as a disruption or loss of your income.
I am confident I would be able to cover an unexpected expense, such as a household repair or medical bill.
Overall, the survey showed women reported facing greater financial insecurity compared to men and owning fewer financial assets. Together, that creates a “crisis of confidence,” for women according to the Pulse. Meanwhile, more than half of men said their financial confidence has grown in the past three years, while just 46% of women felt the same.
This “crisis” is not contained at the personal level, either, bearing impacts in the professional space. The Pulse found that 38% of women do not feel fairly compensated for the work they do, and most are uncomfortable asking for an increase (38%) or negotiating a salary (42%)—even less (22% and 16%, respectively) have ever tried.
For millennials, who started their careers amid the Great Recession, pain points from the pandemic are acute. The group has a harder time saving than any other generation (72%), according to the survey, are more worried than other generations about their immediate financial security (64%), and worry about money more on a daily basis (62%).
Looking ahead, the glass is apparently half-empty. Nearly half (49%) of millennials do not think they’ll ever be able to retire, and the generation remains more skeptical than others about other financial goals, as well (building personal wealth or owning a home, for example).
The Prudential Pulse Survey was conducted on behalf of Newark-based Prudential by Morning Consult from May 26 to June 3, 2022, among a national sample of 4,000 self-identified employed adults (age 18 and over). Results from the full survey population, released July 27, have a margin of error of ±2 percentage points.