Sentiment from US small and midsized businesses regarding the health of their business has remained steady despite growing concerns about the economy according to a recent survey by Principal Financial Group®.
Although business sentiment is holding steady, both employers and employees are feeling economic pressures. Both groups rated inflation, a potential recession, and the cost of healthcare as their top three concerns.
However, when it comes to the remaining list of concerns, employers and their employees are not aligned. While Small and Midsized businesses rate higher taxes, rising interest rates, and the costs of supplies as additional concerns, employees are most worried about protecting their health at work amid a continuing pandemic, their mental health and well-being, and managing their own career advancement.
“Employers and employees are generally aligned on their top three concerns, but there’s a significant disconnect once you move beyond that,” said Amy Friedrich, president of U.S. Insurance Solutions at Principal®. “Businesses have a lot on their plate and are focused on direct impacts to their business. Employees are much more focused on their personal well-being. This disconnect will have implications for businesses moving forward since meeting employees’ needs through culture and benefits ties to employee engagement and is a critical component of talent retention today.”
Businesses prioritize employees, wages, and benefits, while cutting other expenses
Although businesses remain stable, most believe a recession is likely. Sixty-five percent of employers and 73% of employees believe it’s somewhat or very likely a recession will happen in the next six months. Both employers and employees are taking steps to reduce spending and increase savings.
When asked about steps they will take to prepare for a recession, businesses are focusing on steps to reduce spending and increase savings.
- 35% have taken steps to reduce operational costs.
- 35% of businesses indicated an increase in prices and services.
- 31% report increasing cash reserves.
While all businesses agree they would avoid any action that would negatively impact employees, smaller businesses are the most focused on minimizing employee impact. In the face of a recession, small businesses are indicating they will not take steps to reduce salaries and benefits or lay off staff.
“Small businesses learned a lot from the 2008 recession, and many learned they can make adjustments that will minimize the impact on salaries or staff during future periods of economic stress,” said Friedrich. “Small businesses are dedicated to their employees. We saw that during the pandemic, and I think we’ll see the same creativity and resiliency if pressures mount in the near-term.”
Employees echo employers’ cautious behaviors, as they’ve begun to tighten their wallets by decreasing spending and maintaining savings.
- 40% of employees would plan to take on a side job to generate income.
- 37% of employees would plan to search for a new job with better pay and/or benefits.
- 45% of employees will not decrease saving for retirement as retirement benefits remain valuable.