American workers want job benefits more than 401(k) retirement match

Employee retention will continue to be a top issue for companies in 2024. Even though the labor market is cooling slightly and attrition rates are falling from pandemic-era highs, more than a third of workers (36%) have considered quitting. jobs in recent months, according to a CNBC|SurveyMonkey workforce survey.

What can help employers retain more workers longer?

This is not a 401(k) match. It’s not a free lunch. This is not a gym membership. The No. 1 wish list of employee benefits sought by workers, according to CNBC|SurveyMonkey data, is fully paid health care premiums.

More than half of employees (51%) said they want fully covered health care premiums, which is higher than any other benefit typically covered by employers, including a 401(k) retirement plan match (37% ), includes reimbursement for health facilities or gyms. 27%), and free food on site (26%).

While the 401(k) match is considered an important benefit for long-term financial security, the survey findings reflect a significant cost issue amid widening income inequality: workers’ ability to afford health care is increasing. According to Mercer, about three-quarters of workers overall can afford needed health care without financial hardship, but only 50% of workers at the lowest income levels can do so. According to the Employee Benefit Research Institute, nearly one in five workers would also accept lower pay 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 Warneken, senior vice president of health solutions at Aon.

He pointed to research showing that Black, Hispanic, Latino and younger workers are more likely to consider changing employers for better health benefits. Low-income employees or workers with chronic health conditions may prioritize benefits that can support short-term health and financial needs over retirement savings, he said.

However, according to CNBC|SurveyMonkey data, workers’ desire for fully covered health care premiums barely drops below 50% at income levels of $150,000 or above, and that’s still not enough for these higher-paid workers. The middle outweighs any other advantage.

Health care inflation will remain high

According to Aon, currently, employers subsidize on average about 81% of health care plan costs, while employees pay the remainder.

Health care inflation typically grows faster than general inflation, although this was not the case in the pandemic boom years with four decades of high general inflation. According to Mercer, average employee health care costs are projected to increase 5.2% to $15,797 per employee in 2023.

This cost is expected to exceed $15,000 in 2024.

“As employers try to attract and retain top talent, it is important to consider retirement, health and well-being and other benefits to meet the diverse needs of their workforce,” Warneken said.

Amid rising health care costs, employers are taking some steps to help employees by increasing annual deductibles or limiting out-of-pocket maximums. Out-of-pocket health care expenses have been rising faster than salaries in recent years.

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

According to Mercer, some employers are offering flexible plans to accommodate more financial and medical situations, such as free employee-only coverage, or no deductible plans.

But covering health care premiums in full is not a popular benefits approach. In 2017, only 9% of employers on Fortune’s “100 Best Companies to Work For” list offered full health coverage to their employees, down from 34% in 2001. In 2023, only one company on that list, Visa, disclosed that it offered this. advantage. Other companies offering fully covered health care premiums include Boston Consulting Group, Capital One, FactSet, GoDaddy, and Meta.

Retirement, finances remain top concerns for most employees

The focus on health care costs comes amid employees’ broader concerns about personal finances. According to Mercer, short-term financial security issues, such as covering monthly expenses, remain the top concern of all employees, with long-term financial security and retirement planning coming in second place.

The CNBC|SurveyMonkey workforce survey found that only three in ten (31%) workers say their workplace offers financial coaching or advice, but 401(k) matching offers all the desired job benefits across gender, race, income. The middle was second only to health care premiums. , and political affiliation, and all except the youngest demographic of workers (18–24).

“Retirement and other financial benefits are an important component of an employer’s total rewards package, as we know most Americans are not saving enough for retirement, many have significant amounts of student loan debt or are Are struggling to pay.” The day’s expenses,” Warneken said.

Twenty-nine percent of workers aged 18-24 in the survey said student loan relief was at the top of their wish list among benefits.

According to the Plan Sponsors Council of America, 98% of companies that offer a 401(k) also offer employer matching for their employees.

Free food and the changing preferences of Gen Z

Asking for help paying off student loans isn’t the only way Gen Z workers are disrupting the status quo in employee benefit desires.

According to the survey, Gen Z workers aged 18-24 value free food (42%) as much as fully paid health care premiums (41%), while Millennials value 29% and Gen Give importance. Give priority to free food.

According to CNBC|SurveyMonkey data, 34% of Gen Z workers put student loan payments first on the list, compared with 27% of the Millennial generation and 20% of Gen

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

According to Warneken, it is important for employers to consider the diversity of the needs of their workforce.

“This matters to a company’s lower-level employees, who believe their total reward meets their family’s needs twice as much as those who do not, leading to 23% higher profitability, There is 18% greater productivity and 18% to 43% lower turnover rates,” she said.

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