Employees and employers alike are struggling with inflation. In the past year, wages have increased 4.5% while the cost of our most basic necessities (groceries, rent, gas, and mortgage payments) has risen between 10%-48%. This has put pressure on employers to increase pay or risk losing their employees to competitors. If across-the-board salary increases in line with inflation aren’t in the budget this year, what else can employers do financially to assist their employees?
Offer Transportation Benefits
Inflation hits low-wage workers the hardest because there is often little flexibility in their budgets to begin with. Low-wage work is also more likely to be located on-site, meaning that the cost associated with even getting to work can set employees back significantly. Employers seeking to help offset this cost specifically might want to consider providing a commuting stipend or gas cards to employees who have to commute to work. They should increase their mileage reimbursement rate up to the IRS maximum of 58.5 cents per mile if it’s not already there.
Rethink the Work Week
While more companies are starting to reopen offices and require attendance, now might not be the best time to add to employees’ costs. Continuing to allow employees to work from home still makes a lot of sense for cost-conscious employers. For jobs that do require in-office time, offer to allow employees to choose an alternative schedule such as working 10-hour days for 4 days per week to eliminate a day of commuting. Employers can even reduce working hours altogether while paying the same salaries to give their workers more time to explore side hustle income or reduce the need to outsource labor such as childcare, cleaning services, and takeout meals.
Beef Up Pre-Tax Benefits
At the end of the day, pre-tax benefits can be more valuable to employees dollar-for-dollar because the spending power of that money does not take a hit from taxes. If an employer already has high-deductible health insurance, they could contribute directly to employees’ health savings plans (HSAs). If not, flexible spending accounts (for both medical expenses and dependent care) can help employees stretch their dollars on expenses they will pay for anyways. Through 2025, employers can also make $5,250 in annual tax-free payments toward each employee’s student loans.
Provide Financial Literacy & Personalized Coaching
Income alone does not necessarily fix the financial struggles employees navigate and managing that paycheck is still a universal challenge. This has become more apparent thanks to new statistics showing that 36% of people who make more than $250,000 are living paycheck to paycheck. The figure is even higher for millennials: 55% in that income bracket live paycheck to paycheck.
At TFG, we always say, “the zeros are different, but the problems are the same.” Those challenges include budgeting, debt management, and saving for retirement. Financial literacy and one-on-one coaching help employees better manage the income that they do have by addressing all three of those pain points.
The Financial Gym Advisors is a national, personal financial services company with a fitness-inspired approach. Certified Financial Trainers™ work with employees one-on-one via corporate partnerships virtually across the country. TFG also provides engaging webinars including Budgeting Bootcamp, Financial Goal Setting, and Retirement Planning.
