Business optimism rebounds as vaccine policies vary

Signs of long-term hope are evident in the latest data from the Principal Financial Well-Being IndexSM, our ongoing pulse survey of employer trends.

While fluctuating infection rates and virus variants continue to complicate immediate expectations for business depending on state or region, the United States’ accelerated vaccine rollout in the first half of 2021 provided a fresh dose of business optimism.

For the first time since before the pandemic (August 2019), most business leaders nationwide (57%) say they’re optimistic about the year ahead.

Thumbnail of the financial goals worksheet.

See all the infographics from the latest Principal Financial Well-Being Index (PDF).

Our latest data on the economic health and outlook of for-profit companies with 2-10,000 employees was pulled from a survey of 511 leaders on March 12-16. This follows three such surveys throughout 2020 that helped U.S. businesses track and analyze the impact of the pandemic and its massive economic volatility.

This latest Well-Being Index introduces an overall brighter tone. Beyond the optimistic outlook, businesses also say their cash flow already has significantly improved.

Meanwhile, they’re taking a variety of approaches on employee COVID-19 vaccinations.

Trend 1: Optimism rebounds.

Economic outlook: 57% are optimistic.

Most business leaders now have a favorable economic outlook after an emotional roller coaster of a year that reflected the ebb and flow of COVID-19 infection rates.

When asked to characterize their company’s sentiment about the next 12 months, 57% of business leaders are optimistic. Only 6% are pessimistic.

This returns optimism to levels not seen since before the pandemic—the 56% optimism and 7% pessimism of August 2019.

Optimism last year at first dropped to 39% during the initial depths of the pandemic (June 2020). It climbed back to 50% at the end of summer (September 2020), only to slide back to 39% with more infections ahead of the holiday season (November 2020).

Image showing that 57% of business leaders are optimistic, companies that had less than 500 employees 52% were optimistic and companies with more than 500 employees 66% were optimistic.

Keep in mind that optimism has returned in 2021 despite relatively few businesses—only 14%—saying they’ve already fully recovered from the economic impact of COVID-19.

Cash flow: 77% are comfortable.

Some of that positive outlook seems to be based on businesses’ current balance sheets. Cash flow has improved: 77% of employers are at least somewhat comfortable with cash flow—up from 58% in November 2020.

Image showing that 57% of business leaders are optimistic, companies that had less than 500 employees 52% were optimistic and companies with more than 500 employees 66% were optimistic.

There remains a cash-flow disparity based on size: 69% of smaller businesses (under 500 employees) are somewhat or very comfortable with cash flow, compared to 89% of larger businesses. Among those somewhat or very uncomfortable, 13% are smaller businesses compared to just 4% of larger businesses.

Recovery: 65% expect full recovery within a year.

Recovery has come into clearer focus as more business leaders now anticipate a shorter timeline to return to (new) normalcy: 45% expect full recovery within the next six months, and the majority (65%) expect to recover within the year.

Only 13% now expect their business to need more than a year to fully recover.

PPP: 70% are satisfied.

The Paycheck Protection Program (PPP) with its billions of dollars in forgivable loans has been the federal government’s signature business relief throughout the pandemic. The Small Business Administration tracks the PPP sums distributed, but our latest survey measures both usage and satisfaction among this key segment of for-profit employers.

In 2020, 40% of these businesses surveyed received PPP funds.

Just over one-third—36%—say they didn’t apply last year because they didn’t need the loan, while 15% say they were ineligible, and 9% had their application denied.

In 2021, just over half of businesses, 52%, say they will apply for a first (28%) or second (24%) PPP loan; 48% say they won’t apply.

One statistical measure of PPP’s positive impact as a lifeline to struggling businesses stands out: A clear majority of business leaders who applied for PPP—70%—say they’ve been satisfied with the program.

Image of a quote that says it allowed us to keep employees we would have otherwise had to lay off in rural areas where they would have become another statistic. We would have had to close entire offices, and this allows us to stay open.

Trend 2: Vaccine policies vary.

Vaccination: 39% require for some employees.

The most common question businesses hear from employees (34%) about vaccinations is whether they’ll become required at the workplace.

Employers’ answers vary.

Only 39% of businesses say they’ll require “certain employees” to get a vaccine. That translates to a variety of criteria—employees over a certain age, those in “customer-facing roles,” “all workers who wish to enter our headquarters during business hours,” or “everyone, no exceptions.”

Image of a quote that says all our employees are required to travel and interact with customers. They will be required to be vaccinated.

Slightly more businesses, 41%, won’t mandate vaccinations for any employees.

The remaining 20% are unsure.

Image showing that 39% of business will require certain employees to get vaccinated (30% of business with less than 500 employees said this and 52% of businesses with more than 500 employees said this), 41% of business won't mandiate vaccination (50% of businesses with less than 500 employees said this and 29% of businesses with more than 500 employees said this), and 20% of businesses are unsure if they will require vaccination (20% of businesses with less than 500 employees said this and 19% of businesses with more than 500 employees said this).

There’s also a clear split in vaccine mandates between smaller and larger businesses. Their tendencies are the inverse:

  • Larger: Just over half (52%) of larger businesses (500+) are requiring certain employees to be vaccinated, with 29% not requiring and 19% unsure.
  • Smaller: That contrasts with only 30% of smaller businesses requiring vaccines, with 50% not requiring and 21% unsure.

Other common questions employees ask business leaders about COVID-19 vaccines:

  • Remote workers: 31% of remote workers wonder whether a vaccination will be necessary to return to the office.
  • Access: 30% of employees have asked the business to help get faster vaccine access.
  • Insurance: 30% wonder how the vaccine works with their employer-sponsored health insurance (despite the fact these vaccines are provided as a free public-health service).

More: CDC information and guidance for employers on workplace vaccination programs

Trend 3: Staffing is more stable.

Employment: 82% of smaller businesses are maintaining or adding jobs.

Considering their improved cash flow and satisfaction with PPP, perhaps it’s less of a surprise that staffing also has improved for businesses—including smaller businesses.

Among those with fewer than 500 employees, 60% have maintained staff, and 22% have increased (for a combined 82% showing at least some stability).

Forty percent of larger businesses have maintained staff, while they’ve also driven a renewed hiring trend, with 47% increasing staff.

Image showing that of the businesses who have increased staff, 22% were businesses with less than 500 employees and 47% were businesses with more than 500 employees.
Image showing that of the business who have maintained staff, 40% were businesses with less than 500 employees and 60% were employees with more than 500 employees.

Among the relatively few businesses (15%) of all sizes that have lost staff, they cite a few top reasons for their decrease:

  • Impacts of COVID-19 (36%).
  • Additional caregiving responsibilities due to COVID-19 (31%).
  • Changing career path (27%).

What’s more, only 10% of businesses have shed full-time employees (vs. part-time or contract/temporary workers)—one more small but meaningful statistic that shows the improving outlook on employment.

Trend 4: Telehealth and mental health are key priorities.

Benefits: 36% plan to increase telehealth (top choice).

Most business leaders plan on maintaining or boosting benefits as they emerge from the pandemic.

This seems to be driven in part by their concern over what they identify as two top stresses for employees:

  • Additional family or caregiving responsibilities: (57% all businesses, 70% for 500+, 48% < 500).
  • Uncertainty around COVID-19 that also has sapped productivity (56% all businesses, 66% for 500+, 49% < 500).
Image of a quote that says we have more employees asking for counseling since the pressures of work and family life due to COVID-19.

It’s also fueled by broad agreement about the worth of mental health and well-being offerings for specific reasons:

  • 74% of business leaders agree they’re important for the workforce.
  • 71% believe it’s the right thing to do.
  • 66% say it’s important for employee recruitment and retention.
Image showing that 74% of businesses agree mental health and well-being resources are important.

Acting on their concerns and values, the three most popular benefits businesses plan to increase in the next 12 months:

  • Telehealth (36%)
  • Mental health/well-being services (31%)
  • Health care (28%)

When asked specifically to identify benefits they’re choosing because it’s their “ethical responsibility,” business leaders most often mention (1) paid family medical leave and (2) caregiving benefits.

Image showing the most popular bnefits employers say they'll increase in response to specific needs, such as telehealth, health care, paid family and medical leave, vacation time, disability insurance, and pet insurance Image of a quote that says the past year has shed light on the fact that we need to have managers checking in more frequently with their employees and be armed with the resources to provide when needed.

Another important wellness dimension—financial—rose to the top when employers were asked to choose the most useful specific well-being offerings, or tactics, from a list of 16:

  1. Financial wellness program (43%)
  2. EAP (40%)
  3. Regular communication from employer about their wellness offerings (34%)
  4. Access to well-being mobile apps (31%)
  5. Fitness facility reimbursement (28%)

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