Money
The latest Principal Financial Well-Being IndexSM (2025 Wave 2 of 4) paints a complex picture of U.S. business health. Employers across the spectrum are balancing cautious optimism with real financial strain. The overall index score for 2025 sits at 6.80 out of 10 — a noticeable dip from the high of 8.08 in 2024, and closer to pandemic-era levels seen in 2021 and 2022. While businesses report modest improvements in the financial health of the U.S. economy and their local markets, their own organizations continue to lag behind.
Much of the stress stems from policy shifts and tariffs. As Amy Friedrich, president of Benefits and Protection at Principal®, put it:“Businesses continue to adapt since the April tariff announcements. But today, business owners are striking a fragile balance—they’ve absorbed what they can and are now feeling the full weight of new tariffs.”
Still, even in this unpredictable environment, employee benefits remain a core commitment for many businesses.
Related: Employer health costs to top $17,000 per employee in 2026
Benefits as a top priority
The survey highlights that more than one-third of businesses say they will not consider reducing or eliminating employee benefits—making this by far the strongest stance among cost-cutting options. This finding underscores a broader truth: employers recognize that benefits are not simply expenses, but critical tools for retention, recruitment, and employee wellbeing.
While cash flow comfort has dropped sharply—from 83% in late 2024 to 68% today—and many businesses are raising prices to offset costs, many employers are unwilling to touch benefits. Even smaller firms, which are often more exposed to rising costs and market fluctuations, are holding firm.
Why this matters for benefits advisors
For benefits advisors, these findings represent both an opportunity and a responsibility. Employers are signaling that benefits are their last line of defense—they’d rather raise prices or absorb tariff impacts than weaken their benefits package. That opens the door for advisors to:
- Reinforce the value of benefits: Advisors can position benefits not just as employee perks, but as essential investments in workforce stability and productivity.
- Tailor strategies for different business sizes: Larger employers are more likely to pass on costs to customers (65%) compared to small businesses (53%). Advisors can help smaller organizations find creative, cost-efficient ways to maintain strong benefits offerings.
- Guide long-term planning in uncertain times: With policy unpredictability topping the list of business concerns, advisors can provide clarity and confidence by aligning benefit strategies with evolving economic conditions.
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