As the Great Retirement began last year, companies and organizations increased their compensation and benefits packages to keep workers in their seats.
But those benefits and big pay rises are set to roll out this year as employers tighten their belts amid economic uncertainty and sky-high interest rates. Raises have been set to be smaller. Now, it seems the benefits are on the chopping block as well. Nearly half (47%) of companies surveyed plan to cut employee benefits this year, according to Care.com’s 2023 Future of Benefits survey of 500 US-based executives and human resources professionals.
The most popular benefit that executives want? Adoption and fertility assistance, as well as commuter benefits, according to Care.com.
Even among companies that cut benefits, 95% admit to “recalibrating” their benefit strategy by 2023.
What we’re seeing is companies pulling back “boutique profits,” Tim Allen, CEO of Care.com, told me fortune. When it comes to fertility benefits, for example, employers are more likely to cut back on one-off, special programs-especially since many health plans actually boost their offerings in this area. “You’ve got a baseline of service that’s still available, but I think HR buyers are more sensible about adding to the benefits of Rolls Royce.”
Losing travel benefits can also cause problems. Many employers offer these benefits-some of which are programs that allow workers to use tax-free dollars to pay commuting costs for stipends and even discounts or free private transportation services-in an effort to lure employees back to the office on a regular basis. But with the average American paying about $8,466 a year for fuel, vehicle maintenance, and travel time to work, cutting those benefits could mean more remote work.
“Many people want to go back to the office, many employers said to go back to the Sato environment. But also with the Sato environment, you don’t have to complete, the program is aligned with commuter benefits,” said Allen. Many employers are looking for “cost optimization” versus complete cost elimination, he added.
The reaction of employees to the reduction or loss of certain benefits, of course, varies. Eliminating health and fitness benefits—including perks like gym reimbursement—will have minimal impact on employee recruitment and retention. But care benefits, including senior caregiving and childcare, which is about a third of organizations eying to cut, can make a bigger impact.
In fact, eight out of 10 respondents admit childcare benefits have a positive impact on productivity and nearly as many agree that this support improves talent recruitment and retention. And workers are still increasingly demanding those benefits, Allen said. Care benefits have become synonymous with health insurance, dental, 401(k)s, and the kinds of benefits expected of white-collar workers.
So while it may save organizations money now, cutting core benefits may be a no-brainer — especially since the biggest reason workers cited for changing jobs last year was employer-sponsored benefits. Allen, for his part, does not see the care benefits getting scaled back significantly, but the company focuses on benefits that workers can live without. “When you talk about child care, you talk about lost work and productivity. This is one thing we can’t do. It’s an economic case that makes sense,” he said.
Benefits like paid parental leave, childcare, and flexible work schedules can also help “inflation-proof” employee wallets by reducing out-of-pocket costs, according to new research from ESG Bank of America research. Researchers have found that companies that offer these benefits tend to trade at a premium compared to those that don’t (or have only minimal support).
With the economic forecast unclear, Allen said expect companies—even those taking a long-term perspective—to analyze benefit packages, aiming to provide employee programs and benefits that provide the most value to workers and organizations. entire.
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