Gen Y Faces Economic Downturn
Generation Y employees may have been hardest hit by the daily financial pressures exerted by the economic downturn of recent months. More than half (53%) of Gen Y employees (ages 21-32) say they are now living paycheck to paycheck — up from 50% in 2007 — versus 44% of their older associates. And nearly three in four (73%) are very concerned about having enough money to make ends meet, compared to 56% of Generation X employees and 62% of Baby Boomers, according to MetLife's 7th annual Employee Benefits Trends Study.
Compounding this financial uncertainty is the fact that many of these youngest employees are less likely to own core protection products such as disability income insurance and life insurance. Less than half (46%) of full-time Gen Y employees have disability income insurance, compared to 59% of their older colleagues; and about one-third of Gen Y employees say they have no life insurance (compared to one-fifth of employees in the older generations). Since the MetLife study found that almost half (49%) of surveyed Gen Y employees are married and 46% have children, these gaps in personal financial safety nets could undermine their — and their families' — financial well-being.
"Gen Y employees appear especially vulnerable to unexpected financial risks given their propensity to live paycheck to paycheck and the relative weakness of their personal safety nets," said Todd Katz, senior vice president, Institutional Business, MetLife. "A common misconception might be that Gen Y employees require less financial protection because they don't have dependents, but that is not true — Generation Y is diverse in terms of life stages. Many are getting married, having children and assuming multiple financial obligations. For single Gen Y employees, who have only their own income to rely on, it is equally important to protect that asset."
Underinsured, but Interested
The economic downtown has served as a catalyst and is motivating Gen Y workers to assess their financial needs. Nearly half (49%) said that the economy has prompted them to review their life insurance needs and about one-third (35%) say they have taken steps to determine their financial needs with regard to disability coverage. They are also interested in obtaining more financial advice and guidance in the workplace:
Currently, only 35% of surveyed Gen Y employees say they are very satisfied with the benefits they receive through their employer, and only 39% say they understand which benefits best meet their needs. According to MetLife's research, "all other insurance benefits" — such as life, disability, dental and vision coverage — now fall within the top three primary factors influencing employee loyalty, after medical coverage and salary. In 2007, 48% of Gen Y employees said all other insurance benefits were very significant factors affecting their feelings of loyalty to their employers. That percentage climbed to 71% in 2008.
The MetLife study indicates that benefits satisfaction has a positive relationship with job satisfaction. In fact, among employees across all generations who said they were highly satisfied with their benefits, 73% were also satisfied with their jobs. Only 22% of those employees who were not satisfied with their benefits were satisfied with their jobs.
"Since Gen Y workers obtain the majority of their financial protection products at the workplace, employers have a tremendous opportunity to develop a benefits program that can help retain this mobile demographic — a big win both for employers looking to grow their talent base and for employees who are interested in obtaining valuable assistance in building secure financial safety nets for themselves and their families," added Katz.