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We released an episode of our podcast, Money & Taxes from Bb to XYZ, on this same topic. You can listen to “Work It — or Not!” on your favorite podcast app!
Have you noticed a change in your relationship with work? I’m not talking about your interactions with your colleagues but, rather, how you think about and relate to the job you do. Over the past couple of years, for example, you may have embraced using more of your vacation time or sticking to your 40-hour workweek, rather than letting it creep up to 50 or 60 hours.
Whatever changes you may notice, you’re not alone. The ways in which we relate to our jobs and the income they provide are shifting. With rapid changes, many employees are curious: What is the future of work, and how could it affect my financial plan?
The catalyst for much change in recent years has been the global COVID-19 pandemic. It not only accelerated the trend toward remote work and spurred digital transformation but also shifted how we spend money and think about work-life balance. But before I go into how things have changed since, let’s go back in time a bit.
Pandemic-Era Shifts and Remote Work Trends
The global pandemic disrupted established norms with unprecedented speed. Whereas pre-pandemic employment was characterized by commuting to traditional office spaces for structured hours, businesses swiftly transitioned to remote work where possible in response to health concerns and government mandates for social distancing. The shift forced organizational leaders and their employees to embrace new technologies for communication and collaboration.
As living rooms became offices, and video conferencing platforms replaced conference rooms. The lines between work and home life blurred as employees juggled childcare, household responsibilities, and job duties in the same physical space. This brought about an “always-on” mentality where it was common to increase working hours rather than closing a laptop when the traditional workday was done.
With fewer services available, savings rates increased alongside the purchases of goods. Stimulus checks further bolstered savings while many were forced to put major financial goals on hold. Pandemic-era changes allowed newly virtual employees to relocate to lower-cost-of-living areas while maintaining their incomes.
To attract and retain employees, employers began offering higher salaries and more flexible work environments. This brought about the great resignation as employees left long-held jobs in search of higher pay.
Despite these challenges, many reported benefits from remote work, such as reduced commuting time, increased flexibility, and improved work-life balance. Employers, too, recognized potential cost savings from reduced office space and overhead expenses.
On the financial front for employees, the pandemic brought to light disparities in job security, with some industries facing layoffs or furloughs while others thrived in the digital economy. Employees in sectors deemed essential faced increased health risks but often saw stable incomes or salary increases. Those able to work remotely experienced shifts in financial dynamics, including potential savings from reduced commuting costs and dining expenses.
Work and Work-Life Balance Today
As we’ve emerged from the crisis of the pandemic, the landscape of work continues to evolve. Hybrid work models, where employees split their time between remote work and the office, are gaining popularity. Employees are thinking more about how to improve work-life balance.
Employers, for their part, are increasingly prioritizing employee retention. A focus on well-being and mental health are prominent in employee benefits packages, as employers recognize that a healthy workforce is essential for productivity. Flexible work hours, mental health resources, and support for caregiving responsibilities are becoming standard employee benefits offerings in progressive organizations.
As the economy shifts, many employees are staying at their jobs longer. Rather than taking the risks that can come with job-changing, they’re leaning into the stability that their employers offer. And although many desire work-life balance today, the job market is also changing. With fewer openings, those seeking employment or striving to remain employed are willing to make sacrifices to achieve job security. These range from working weekends and limiting their vacation time to accepting a reduction in pay or taking on a lengthier commute.
Others are increasingly stopping work early or moving to part-time or more flexible work. They’re rethinking their ties to employment that they may not enjoy and determining the value of work in their lives, with many choosing to “work to live, not live to work.” This is evident in the “financial independence, retire early” (FIRE) movement, in which many work hard for a shorter number of years to enjoy a longer retirement.
More recently, the “financial independence, live early” (FILE) push has gained popularity with employees right-sizing their employment to suit their lifestyle needs. These FILE-ers are choosing to work fewer hours or seeking lower-wage jobs that offer them enhanced enjoyment.
Further, changes in healthcare accessibility through the Affordable Care Act have removed barriers to self-employment and early or reduced retirement for many. This has led to many making FILE and FIRE lifestyle moves as full-time employment isn’t crucial for maintaining affordable health insurance.
Future Changes to Work
Although the labor market is tightening today, the future promises further innovations aimed at enhancing both productivity and quality of life for employees. One notable proposal gaining traction is the concept of a 4-day work week. Many U.S.-based companies are testing shorter workweeks, condensing traditional 40-hour work weeks into fewer days or even reducing the work week to 32 hours while maintaining full-time pay. Studies show that this approach, which is prominent in many European countries, can boost productivity, improve mental health, and enhance work-life balance. Pilot programs have shown promising results, suggesting that this shift could become more widespread in the coming years.
AI and automation are expected to revolutionize industries by augmenting human productivity and driving economic growth. Financially, these technologies may create new job opportunities while transforming existing roles to focus on higher-value tasks such as innovation and strategic decision-making. However, navigating the financial implications of AI, including investment costs and workforce reskilling, will be critical for organizations and employees preparing for the future of work.
Whatever the future holds, we’ll be here to support you in adapting your financial plan to suit your life and needs. Whether it’s a change in income and employee benefits or adjustments to your goals, we can help your financial plan evolve alongside you.