Even pre-pandemic, the average American is doing worse than they were in 2011, and studies show that widening financial, medical, and social inequality is to blame.
The ways in which the COVID-19 pandemic has impacted day-to-day life both at home and abroad are obvious; businesses shuttered (first temporarily, and now more often, for good), millions lost their jobs, and there have been 10.5 million covid cases and nearly a quarter-million deaths in the United States alone due to the virus. However, even before the pandemic began, there have been some alarming red flags raised about our societal well-being.
Of the 168 countries surveyed for the 2020 Social Progress Index, America currently ranks 28th and is one of three countries (joining Brazil and Hungary) where citizens are worse off than in 2011 when data collection began. Notably, data for this study was gathered before the COVID-19 pandemic. So what's contributing to this decline in quality of life?
Wealth and income are a particularly pertinent driving force of growing inequality, according to the Pew Research Center. Using data from the Organization for Economic Cooperation and Development, they found income inequality in the U.S. is the highest of all the G7 nations. Indeed, as of 2019, nearly 30% of adults are unable or nearly unable to pay their monthly bills, and when faced with an unexpected $400 expense, 37% of adults “would not have paid completely with cash or equivalent [and] may have had more difficulty covering such an expense” while 12% said they wouldn’t be able to pay at all, according to the Federal Reserve’s Report on the Economic Well-Being of U.S. Households in 2019. Additionally, while 25% of adults “went without some form of medical care due to an inability to pay,” a disproportionately large 43% of adults in poor health went without care.
However, that’s not the only cause for alarm; in a related study of 8.1 million randomly selected citizens, rates of extreme distress (defined as “major mental and emotional problems in all 30 of the last 30 days”) have gone up from 3.6% in 1993 to 6.4% in 2019. According to Blanchflower and Oswald who authored the study, not only have regression analysis revealed that lack of work and “a decline in the share of manufacturing jobs” predicted great distress, but “the inequality of distress has also widened.” While this study focused on the emotional impacts, the ties to socioeconomic status cannot be denied.
Knowing this, one can easily predict the additionally distressing impact of COVID-19 upon the population. In addition to the stressors already present pre-pandemic, according to a study of 1441 participants by Ettman et. al., depression rates under covid have skyrocketed, more than tripling across all age groups and racial demographics.
“Individuals with lower social resources, lower economic resources, and greater exposure to stressors (eg, job loss) reported a greater burden of depression symptoms. Post–COVID-19 plans should account for the probable increase in mental illness to come, particularly among at-risk populations,” they stated.
This is distressing, if not totally unsurprising, news. However, the question remains: what do employers do with this information? As cases spike and states begin considering a second round of lockdown measures, employees are going to need clear communication from employers detailing their response plans in such circumstances as early as possible to better prepare (both economically and emotionally) to weather this particular wave of the ongoing storm. However, in the long run, we know that employee satisfaction and well-being benefits businesses, so employers should also be considering what measure they can take to work against these trends.
It’s an especially hard time for small businesses, and no one can fully predict what’s around the next corner. However, ensuring employees are being adequately compensated, have access to robust healthcare coverage, and are feeling valued can make a huge difference in employee satisfaction and quality of life, especially at a time when so many millions of are without work and, as noted above, worried about unexpected medical expenses. For example, how many employees might be underperforming because of undiagnosed or untreated medical conditions? Employers can not only review and expand their healthcare plan offerings (including HSAs), but also work to communicate with their workforce to ensure employees have the resources they need to utilize their coverage in a way that benefits them the most, and connects them to the information and providers they need.
These articles are prepared for general purposes and are not intended to provide advice or encourage specific behavior. Before taking any action, Advisors and Plan Sponsors should consult with their compliance, finance and legal teams.
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