As 2024 approaches, inflation continues to wreak havoc. Employee financial stress is exacerbated as people navigate soaring prices, rising interest rates, and record debt. More than ever, employees are turning to their employers for a lifeline. Future-focused HR leaders are utilizing flexible benefits like Lifestyle Spending Accounts (LSAs) to provide financial relief to employees.
Lifestyle benefits are a powerful tool to empower your workforce. During periods of inflation, they grant employees greater flexibility and control over their compensation and bolster employee engagement. Designed to cover a range of personal expenses, their true value lies in giving employees the autonomy to allocate funds according to their unique needs. In this article, we’ll demonstrate how you can use LSAs to ease the effects of inflation on employees.
Here’s what we’ll cover:
- How has inflation impacted the US economy?
- Empowering employees in challenging times
- Attract and retain top talent in a dynamic economy
- The ultimate flexible employee benefit
How has inflation impacted the US economy?
In the summer of 2022, inflation peaked above 9 percent. While there was hope inflation would pass as the economy recovered, today, we understand that while inflation is down to about 3%, consumer prices have risen steadily in the past few years. And like most things since the pandemic, they show no signs of returning to “normal.”
Make no mistake, the US economy is strong by most economic indicators. Unemployment has stayed below 4% for nearly two years. Wage growth is solid. And yet, despite all of this, the average American still feels discouraged about inflation. The overarching reason for these feelings is that consumer prices are up by 20% since late 2019. This is a much quicker pace of inflation growth than people are used to. And plenty of us remember when prices were much lower.
The impact of inflation is everywhere. Grocery prices are up 26% compared to 2019. A 15-gallon tank of gas cost the average American $38 at the start of 2020, and today it costs $49. Mortgage rates have risen and hovered around 8%, and home prices have risen by 47% in the last four years. Student loan payments that were temporarily paused during the pandemic have resumed.
Increased costs of living at every turn means the power of a consistent paycheck has waned. Any help employers can offer to their people (tuition reimbursements, for one) is welcome. Employees compromise and sacrifice in every area of their lives and still pay more for less.
Tailored benefits strategies transcend traditional boundaries and provide a financial shield for employees.
Empowering employees in challenging times
Unleash the power of flexibility to boost employee resilience in the face of rising costs. Tailored benefits strategies transcend traditional boundaries and provide a financial shield for employees. Offering individualized coverage for a diverse range of expenses sends a powerful message of empathy and understanding, demonstrating that your people’s well-being is at the heart of your company’s mission.
Financially stressed employees tend to be more distracted, less engaged, and more likely to seek other work opportunities that better support their needs. A PwC 2022 CHRO Pulse Survey found that 73% of financially stressed employees admit they would be drawn to an employer that demonstrates genuine care for their financial welfare, and 33% of employees acknowledge that money concerns negatively impact their work productivity. Further, the Mercer 2023 Inside Employees’ Minds Survey found that pay and benefits are trending as the top reasons talent is attracted to an organization, with 68% of those polled planning to stay with their current company based on total rewards offerings.
LSAs are dynamic tools that seamlessly adapt to the ever-evolving economic landscape. Employers can proactively review and update contribution limits or categories based on real-time inflation rates and other economic factors, ensuring that LSAs remain relevant and impactful for their employees.
How can employers help ease the effects of inflation on employees?
While companies can’t control the course of inflation, they can equip employees with the essential tools to thrive. LSAs are game-changers, empowering individuals to proactively manage the rising costs of essentials like food, fuel, childcare, and housing. By offering this financial flexibility, you’ll help employees keep pace with the cost of living and foster a sense of security and well-being that resonates throughout your entire organization.
Embrace the opportunity to transform challenges into catalysts for growth. Investing in innovative benefits like LSAs demonstrates an unwavering commitment to your people’s financial strength and overall well-being. Foster a workplace where employees feel valued, supported, and equipped to succeed personally and professionally.
Unleash the Power of Flexibility
LSAs are dynamic tools that seamlessly adapt to the ever-evolving economic landscape. Employers can proactively review and update contribution limits or categories based on real-time inflation rates and other economic factors, ensuring that LSAs remain relevant and impactful for their employees.
This inherent flexibility empowers individuals to prioritize their needs amidst shifting economic tides, enabling them to address the most pressing inflation-related concerns proactively. Employees can seamlessly allocate funds from their LSAs to cover a range of inflation-impacted expenses, including commuting and soaring grocery bills. Harness the power of LSAs to empower your workforce to navigate the ebb and flow of economic cycles confidently.
Demonstrate an unwavering commitment to total well-being
Investing in LSAs is a resounding affirmation of an employer’s dedication to their employees’ total well-being. This commitment boosts morale and job satisfaction, especially during periods of economic uncertainty. LSAs empower employees to take charge of their well-being by allocating funds for activities that enhance their mental and physical health. From invigorating fitness classes to engaging recreational activities, mindfulness practices, and holistic wellness services, your people will proactively prioritize their well-being and reduce stress.
This proactive approach has a ripple effect, fostering a more resilient workforce equipped to navigate the challenges of inflation. Investing in employees’ well-being cultivates a thriving workplace and lays a foundation for enduring success.
Bolster long-term financial security
Amid the challenges posed by inflation, LSAs emerge as a beacon of support, empowering employees to take control of their finances and navigate financial complexities with confidence. LSAs can be tailored to encompass financial education and planning, equipping individuals with the tools to make informed financial health decisions.
As inflationary pressures continue to impact household budgets, LSAs play a crucial role in bridging the gap between immediate needs and long-term financial goals. LSAs empower employees to make informed decisions, protect employee savings, and ensure that financial well-being remains a top priority, even during economic uncertainty.
Financial wellness to attract and retain top talent
In today’s competitive talent landscape, compensation remains a cornerstone of employee retention and attraction. An inclusive total compensation package that extends beyond traditional salary to encompass innovative benefits like LSAs is a game-changer.
PwC’s 2023 Annual Employee Financial Wellness Survey reported a staggering 59% of employees found that their compensation fails to keep pace with the escalated cost of living. Addressing employees’ financial wellness is not only a compassionate initiative but also a strategic one aimed at fostering an engaged, supported, and committed workforce. By providing benefits to combat inflation, people teams are creating workplace cultures that value and support the holistic well-being of their people.
Employers face the challenge of ensuring that employee compensation keeps pace with the increasing cost of living in a dynamic economy. Offering a one-time inflation bonus is a proactive measure that can temporarily bolster purchasing power. However, lifestyle benefits are more sustainable, empowering employees to allocate funds towards a wide range of expenses.
Financial wellness and workplace stability go hand-in-hand. Employees are increasingly feeling the impact of inflation on personal finances. Financially stressed employees clearly prefer employers who prioritize their financial well-being.
The ultimate flexible employee benefit
LSAs are the ultimate flexible employee benefit that allows employees to allocate funds toward their most pressing financial needs. Beyond their inherent flexibility and ease of personalization, LSAs adapt to changing economic conditions, including inflation rates, ensuring benefits remain relevant and impactful in meeting the day-to-day needs of the workforce.
LSAs serve as a cornerstone of a comprehensive benefits strategy designed to address the evolving needs of the workforce in dynamic economic conditions. Employers empower their people wherever they are by offering strategic benefits beyond the expected. Level up your benefits strategy to address the real-life challenges your people face. Embrace LSAs and unlock the power and resilience of your workforce.
With the Espresa platform, HR delivers what your employees want and need. Ready to learn more about an LSA from Espresa? Reach out to our team for a free demo!
