Employee benefits: Rising costs will eat into your paycheck
Businesses are restoring employee benefits eliminated during the recession. But other employee benefits are going to cost workers extra.
With jobs scarce and pay raises slight, workers can take heart in at least one positive trend: Businesses are restoring some of the benefits they axed during the recession.Skip to next paragraph
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The flip side of the trend is not so encouraging: Firms seem resolute in holding the line on benefit costs. So workers who want new benefits from their firms will probably have to pay for many of them themselves.
"Employers are not willing to take on any more" costs of benefits, says Chris Covill, of the national integrated benefits practice at Mercer, a New York-based human-resources consulting firm. "They're looking for ways to mitigate cost increases and to shift the financial responsibility" for benefits to employees.
The most obvious move is that benefits cut during the recession are starting to reappear. FedEx Corp., the shipping service based in Memphis, Tenn., announced in late 2009 that it would resume merit raises and restore company 401(k) contributions to half their prerecession levels. This past January, FedEx fully restored its 401(k) match. In October, trucking firm Con-way Inc. plans to resume basic and transition contributions to its retirement savings plan, which it had cut temporarily in April 2009 (still not restored: its matching contribution to the retirement plan).
Already, 59 percent of companies had restored all or some of their employee perks that they had cut during the recession, according to a poll of human resources executives by Challenger, Gray & Christmas, a Chicago-based outplacement consulting firm. (Another 23.5 percent of respondents said they had introduced new perks.) Within the next two years, 51 percent of companies that recently trimmed or suspended their 401(k) plan matches expect to reinstate them, says a recent survey by the Transamerica Center for Retirement Studies, a private nonprofit foundation in Los Angeles.
But even as employers reinstate some benefits – to help attract and retain workers once jobs open up – they're also aiming to keep a lid on costs. That means that more employers want workers to pay a larger share of the benefits bill, especially as the costs of that bill go up. If employees want more employer-sponsored perks, they increasingly have to pay for them out of pocket.
Already, many workers have seen health-benefit costs rise in the form of higher deductibles and copayments. In some cases, plans no longer cover certain items, experts say. Last year, employees paid a larger share of the total health insurance premium: an average of 19 percent for singles and 30 percent for families, up from 17 and 27 percent, respectively, a year earlier, according to the Kaiser Family Foundation. The private nonprofit foundation in Menlo Park, Calif., called it a "notable change from the steady share workers have paid on average over the last decade."