Employee Benefits American workers want even more than a 401(k) for retirement

Retaining employees will continue to be the main issue for companies in 2024. Although the labor market cools down a bit and the layoff rate continues to fall from the peak of the pandemic era, more than a third of employees (36%) have considered layoff. job in recent months, according to a new CNBC|SurveyMonkey Workforce Survey.

What could help employers retain the majority of employees longer?

It’s not a 401(k) match. It’s not a free lunch. It’s not a gym membership. According to CNBC|SurveyMonkey data, the No. 1 wish list of employee benefits for employees is fully paid health care premiums.

More than half of employees (51%) said they want fully covered health care more than any other typical employer benefit, including a 401(k) retirement plan (37%), reimbursement for health services or gyms (27%), and free on-site food (26%).

While 401(k) matching is seen as a key benefit for long-term financial security, the study’s findings reflect a significant cost problem amid stark income inequality: workers’ ability to afford health care has declined. About three-quarters of workers can afford the health care they need without financial hardship, but that drops to just 50 percent of the lowest-income workers, according to Mercer. According to the Research Institute for Employee Benefits, almost one in five employees would even accept a lower salary in exchange for more comprehensive health care benefits.

“For some employee segments, affordable health care may be a higher priority than a generous 401(k) match,” said Rebecca Warnken, Aon’s senior vice president of health solutions.

He cited research showing that black, Hispanic, Latino and younger workers are more likely to consider switching employers for better health benefits. Lower-income workers or workers with chronic health conditions may prefer benefits that can support short-term ​health and financial needs over retirement savings, he said.

Although according to CNBC|SurveyMonkey data, employee desire for fully covered health care drops just barely below 50 percent at income levels of $150,000 or higher, and it still outpaces all other benefits among these higher-paid workers.

Healthcare inflation remains high

Currently, employers contribute an average of about 81 percent of health care plan costs, while employees pay the rest, according to Aon.

Healthcare inflation typically accelerates faster than general inflation, although this was not the case during the peak years of the pandemic, when general inflation was at a four-decade high. In 2023, average employee health care costs will increase 5.2 percent to $15,797 per employee, according to Mercer.

These costs are expected to remain above $15,000 in 2024.

“As employers strive to attract and retain top talent, it’s important to consider a variety of retirement, health and wellness, and other benefits that meet the diverse needs of their workforce,” Warnken said.

Amid rising health care costs, employers are taking some steps to help employees by limiting annual deductible increases, or deductibles. Own healthcare costs have risen faster than wages in recent years.

“In a tight labor market, plan sponsors are hesitant to shift significant costs to plan participants and make benefits less affordable,” Farheen Dam, Aon’s director of North American health solutions, said in a recent release.

Some employers offer flexible plans to accommodate more financial and medical situations, such as free employee-only coverage or no-deductible plans, according to Mercer.

However, fully covering health care costs is not a popular benefit method. In 2017, only 9% of employers on Fortune’s “100 Best Places to Work” list offered full health coverage to their employees, up from 34% in 2001. In 2023, only one company on the list, Visa, reported offering the benefit. Other companies that offer fully covered healthcare payments include Boston Consulting Group, Capital One, FactSet, GoDaddy, and Meta.

Retirement and finances remain the biggest concerns for most workers

The focus on health care costs comes amid broader employee concerns about personal finances. Short-term financial security issues, such as meeting monthly expenses, remain the top concern for all workers, according to Mercer, with long-term financial security and retirement planning a close second.

The CNBC|SurveyMonkey Workforce Survey revealed that only three in 10 (31%) workers say their workplace offers financial coaching or counseling, but 401(k) matching was second only to healthcare contributions among all desired job benefits by gender, race or income. , and political orientation, and all but the youngest population group (18-24).

“Retirement and other financial benefits are an important part of an employer’s overall compensation package, as we know that the majority of Americans are not saving enough for retirement, many have significant student loan debt, or are struggling to pay their day-to-day expenses,” Warnken said.

Thirty-nine percent of workers aged 18 to 24 said in the survey that student loans were at the top of their wish list among benefits.

According to the Plan Sponsor Council of America, 98% of companies that offer 401(k)s also offer employers to their employees.

Free food and the changing preferences of Generation Z

Asking for help paying off student loans isn’t the only way Gen Z workers are disrupting the status quo when it comes to employee benefits.

According to the survey, Gen Z workers aged 18-24 value free food (42%) as much as fully paid healthcare (41%), compared to 29% of Millennials and 21% of Gen X workers. priority is free food.

According to CNBC|SurveyMonkey data, 34% of Gen Z workers put student loan payments at the top of their list, compared to 27% of Millennials and 20% of Gen X workers.

“Gen Z is the most racially diverse generation in history, more likely to self-identify as LGBTQ+ or neurodivergent compared to older generations, and more likely to have different expectations in the workplace,” Warnken said.

Warns that it is important for employers to take into account the diversity of workforce needs.

“This matters to the company’s bottom line. Employees who believe their total compensation meets the needs of their families are twice as engaged as those who don’t, resulting in 23% improved profitability, 18% higher productivity, and 18% to 43% lower turnover.” ” he said.

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