Living Close to the Financial Edge, Americans Feel the Stress

By Stephen Miller Aug 6, 2010

According to The 2010 MetLife Study of the American Dream, four in 10 Americans believed that their personal financial situation would remain the same through 2010, with lack of a financial safety net and concerns over job loss offsetting their efforts to save more, spend less and work harder.

Fielded April 14-21, 2010, among the general U.S. population, the survey revealed that two-thirds of Americans believed that the full economic recovery of the U.S. was still three or more years away.

“Americans perceive their situation to be worse off than that of the U.S. economy in general,” said Beth Hirschhorn, senior vice president for global brand and marketing services at MetLife, a financial services provider. “In fact, many Americans report they continue to dig themselves out of a deep financial hole that they have been in since before the economic downturn.”

According to the study, Americans were taking significant steps to improve their financial situation:

  • More than half were taking on more responsibility at work.
  • Almost two-thirds had started saving more and spending less.
  • An additional 29 percent planned to cut spending.

‘Family Net’ Emerges

A significant number of Americans were helping their family members financially—even though they may be struggling themselves:

  • Nearly half of Americans said they had given money to a family member in the past year so they could pay their bills.
  • More than one-third had a family member give them money in the past year.

A Rising Bar of Expectations

Though many were struggling to make ends meet, needs and expectations have continued to increase. More than half of Americans believed that the bar is constantly rising in terms of the basic necessities in life. Three in 10 felt more pressure to buy more and better material possessions.

In addition, respondents expected more from the American dream itself. Since MetLife's first American Dream study in 2006, Americans were more likely to define the dream as:

  • Financial security (from 59 percent in 2006 to 65 percent in 2010).
  • Family and children (from 42 percent to 58 percent).
  • A comfortable retirement (from 31 percent to 36 percent).
  • Marriage (from 21 percent to 29 percent).

Not one component of the dream had decreased during this time.

“Given the financial pressures that most Americans are facing, one might expect us to recalibrate somewhat, but instead, Americans are expecting even more for themselves—all while dealing with mounting stress from their daily lives,” said Hirschhorn.

Despite Efforts, Americans Close to the Financial Edge

Many Americans still found themselves close to financial ruin should they lose their job:

  • 45 percent could not take care of expenses for more than a month.
  • 65 percent could not do so for more than three months.

And, their fears of job loss were high, with more than half of Americans concerned about losing their job. In addition, the lack of a personal safety net (a “cash cushion,” retirement savings as well as auto, health, home and life insurance) appeared to contribute to the pessimism about their own personal financial recovery.

A Frayed Safety Net

Two-thirds of Americans did not feel that they had an adequate safety net, and 95 percent of those were concerned about it. Considering these financial pressures, it’s no surprise that stress was running high:

  • 45 percent of Americans said that concerns about how they are going to “make ends meet” were keeping them up at night.
  • 52 percent said they felt more stress in performing their job requirements.

Americans who considered themselves to have an adequate personal safety net were twice as likely to feel they had achieved the American dream as those who did not.

“This result, combined with the response that 77 percent of Americans say that they are working toward creating a personal safety net, may be telling us that building a safety net is an important prerequisite for Americans to be firmly on the road to recovery—both emotionally and financially,” added Hirschhorn.

Countering a Decline in Employee Engagement

While the economy was slowly recovering in the summer of 2010, employee engagement and morale in the workplace was not, according to an analysis by consultancy Hewitt Associates.

Almost half of organizations worldwide saw a significant drop in employee engagement levels at the end of the June 2010 quarter—the largest decline Hewitt had observed in the 15 years it has been conducting employee engagement research. This highlights the growing tension between employers—many of which are struggling to stabilize their financial situation—and employees, who are showing fatigue in response to a lengthy period of stress, uncertainty and confusion brought about by the recession.

In addition, the percent of organizations with declining engagement has been steadily growing. Hewitt found that 46 percent of organizations experienced a decline in engagement levels in the quarter ending June 2010, while just 30 percent saw an improvement.

“The economic situation over the past two years has clearly strained the connection between employers and employees and the stress continues to increase,” said Ted Marusarz, leader of global engagement and culture at Hewitt. “Organizations are struggling to improve employee engagement, but they need to stay focused. The extra effort companies put forth now will make a difference in how successful they are at boosting employee morale and retaining top talent as the economy stabilizes and employee opportunities open up.”

Steps to Improve Employee Engagement

According to Marusarz, key factors that differentiate organizations with improved engagement levels include:

  • Focus on the long term. While many of these organizations underwent cost-cutting and reductions in staff, they made changes consistent with their principles and values and without losing sight of their overall goals.
  • Obtain buy-in from leadership. Leaders at companies that saw improved engagement scores were visible and provided ongoing updates to reduce employee uncertainty and stress. They also created excitement among employees about the future of the organization.
  • Seek information. Almost three-quarters conducted exit surveys to understand why employees were leaving and to proactively identify potential hot spots.

Stephen Miller
is an online editor/manager for SHRM.

Related Articles:

Related Video:

Financial Stress in the Workplace, SHRM Multimedia, 2008

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