Financial Hardship Surges as Cost-of-Living Crisis Squeezes Workers

An employee restocks meats at a grocery store in North Miami on Jan. 17, 2023. Wilfredo Lee/AP Photo

Workers in America and around the world are reporting significantly higher levels of financial hardship compared to last year, as a cooling economy and high inflation has left a growing number cash-strapped and planning to quit in search of better-paid jobs.

Despite a softening economy and workers reporting growing levels of financial stress, the “Great Resignation” seems poised to continue, according to the latest PriceWaterhouseCoopers (PwC) workforce study.

Just over a quarter (26 percent) of workers surveyed by PwC plan to change employers in the next 12 months in hopes of finding better paid work, up from 19 percent last year.

Around 42 percent said they are planning to demand pay raises to offset the higher cost of living, up from 35 percent last year.

“With the ongoing economic uncertainty, we see a global workforce that wants more pay and more meaning from their work,” Bhushan Sethi, joint global leader of PwC’s people & organization practice, said in a statement.

While inflationary pressures have eased in recent months, they remain well above pre-pandemic levels, squeezing households and undercutting financial well-being.

Tough Times More Widespread

Employees in the United States and elsewhere increasingly feel cash-strapped as inflationary challenges and economic headwinds continue to impact workers’ wallets.

PwC’s  “2023 Hopes and Fears Global Workforce Survey,” which polled 54,000 workers in 46 countries, showed that a growing number of households struggled to pay bills every month or could not pay bills most of the time.

The share of workers who said their household could not pay the bills most of the time doubled from 2 percent last year to 4 percent in 2023.

People shop for bread at a supermarket in Monterey Park, Calif., on Oct. 19, 2022. Frederic J. Brown/AFP via Getty Images

At the same time, the percentage of workers who say their household can pay all the bills every month and still has some money left over to sock away or for discretionary spending like holidays fell sharply from 47 percent to 38 percent.

Around one worker in five is doing multiple jobs, with 69 percent saying they were doing so for extra income and just 36 percent to learn new skills.

Negative Feedback Loop

Workers who are struggling financially are also less able to meet future challenges, including investing in developing new skills and adapting to the rise of artificial intelligence (AI).

Those who struggle to pay their bills are less likely (50 percent) to actively seek new skill development opportunities than those who can comfortably pay their bills (62 percent).

Similarly, financially secure workers (57 percent) are more likely to seek feedback and improve their performance at work compared to financially struggling workers (45 percent).

More than one-third (37 percent) of financially secure workers believe that AI will enhance their productivity, while only 24 percent of financially struggling workers think the same.

The divide between those who have specialist skills and those who don’t is a growing problem, hindering productivity and innovation for companies and exacerbating workers’ financial strain.

“The global workforce is divided into two—those with valuable skills who are well set to keep learning, and those without,” Bob Moritz, PwC global chair, said in a statement.

“We found that often, those without the skills are less financially secure and less able to access training in the skills of the future,” he added.

Outdated recruitment practices are hampering employees’ confidence in their ability to explore new opportunities within the workforce, the PwC survey said.

In a competitive job market, employers are failing to tap into valuable talent due to legacy approaches to recruitment and development that focus on qualifications rather than skills.

Recent research conducted by the World Economic Forum in partnership with PwC indicates that adopting hiring practices that prioritize skills could potentially let over 100 million people worldwide secure higher-quality employment.

A sign for hire is posted on the window of a Chipotle restaurant in New York on April 29, 2022. Shannon Stapleton/File Photo/Reuters

Labor Market Losing Steam

Recent labor market data shows that U.S. job growth accelerated in May, although the unemployment rate shot up to a 7-month high of 3.7 percent, suggesting that conditions were easing.

The latest monthly nonfarm payrolls report, released at the beginning of June, showed unemployment rising from its 53-year low of 3.4 percent in April.

“American businesses are still aggressively hiring, likely to meet resilient consumer demand,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.

“However, the other areas of softness in this report suggests that the labor market is losing steam,” he added.

There was a slight decrease in wage growth in May, with average hourly earnings slowing to 4.3 percent compared to the previous rate of 4.4 percent.

The labor force participation rate remained unchanged at 62.6 percent, indicating stability in the number of people actively engaged in the workforce. However, average weekly hours saw a slight decline, dropping from 34.4 hours to 34.3 hours.