In response to the challenges posed by high inflation, companies are strategically scaling back worker benefits. This tactical approach, aimed at tackling the economic impact of rising prices, involves adjustments to various perks and non-monetary advantages traditionally offered to employees. As businesses navigate the complexities of inflation, this shift in benefit structures reflects a broader strategy to maintain financial stability and adapt to the evolving economic landscape.
Original article written by : Megan Henney
Businesses grappling with high inflation are quietly reducing non-monetary perks for employees. A recent Glassdoor study reveals a rise in the number of workers losing access to crucial benefits like 401(k) plans, dental and vision insurance, and tuition assistance. Facing economic slowdowns and diminished labor demand, companies seek to trim overall compensation without touching nominal wages, as employees resist pay cuts. This cost-cutting strategy reshapes the compensation landscape, affecting employees reliant on these benefits for financial well-being and job satisfaction. Glassdoor data shows a modest increase to around 10% in 2023 for workers experiencing annual salary declines, up from the usual 8%.
Rather than adjusting salaries, companies in softer labor markets are employing alternative measures to cut costs, such as reducing hours for non-salaried workers and trimming components like equity, incentives, and the company's contribution to benefit costs. These non-salary adjustments become crucial strategies for managing expenses while maintaining overall compensation stability.
Compensation reductions are particularly noticeable in turbulent industries like tech and finance. Glassdoor predicts an intensification of this trend in 2024 amid an increasingly uncertain economic outlook, potentially accelerating the erosion of benefits access. Despite these measures, some benefits like fertility assistance, adoption support, parental leave, and mental health care remain untouched by many companies. Glassdoor economists caution that the tide could turn in 2024 as businesses evaluate costs and assess the importance of these benefits in retaining workers.
The recent phenomenon known as the "Great Resignation" allowed workers to seek better wages, improved working conditions, and flexible hours. However, signs suggest that the once hyper-competitive job market is gradually softening. The latest government report indicates slower-than-expected job growth in October, reflecting the impact of higher interest rates and persistent inflation, with employers adding just 150,000 jobs and the unemployment rate rising to 3.9%, the highest in two years. These indicators foreshadow a potential shift in the employment landscape, influencing how companies approach compensation and benefits in the coming months.