Over the past two years, with the lower and lower unemployment levels, the competition for manufacturing labor has not been as intense in several decades.
I was meeting recently with one our employee benefit advisors and we were discussing the competition for labor. He shared that many companies struggle with educating their employees about the value of their benefits, i.e. health insurance, dental, 401k match, HSA contributions, etc.
He indicated that many younger people in the workforce don’t value these benefits and will chase rate per hour without a comparison of benefits. He has one client that has dumped their 401k match, increased the employee share of health and dental premiums, just so they could raise their base hourly wage rate. This has been successful at reducing turnover and improved hiring.
I struggle with strategies like this as I feel that companies do have a duty to help their employees find ways to get to retirement, reduce the burden of healthcare costs etc.
The last few places I worked had benefit dollars set aside for a benefits menu plan, so that every year you got to allocate the money. That put a dollar amount on them, which might make them easier to compare with raw salary. There was also one statement of pay on the virtual check stub - or somewhere - which included benefits.
Maybe that would help. It is not unreasonable to show another hourly rate with benefits added in.
Older people like us may argue that they’re stupid, but maybe this is more indicative that the “standard” job benefit packages need to be updated to things that new generations value more.
Also, now that everything is computerized (remember when these were started most things were manual/paperwork) why do we even have to use one-size-fits-all approaches? Let each worker choose the benefits they value. I know there are a bunch in my companies suite of benefits that I don’t need or want. HR can wave their pompoms all they want and it still won’t make me participate in the Walking Across the Country “game” to get a discount on my medical premium, for example.
When I was lots younger, I was more concerned with my paycheck than my long-time-from-then retirement. Oh, I did dump a minimal amount into the 401k to get the matching amount, but even that was done grudgingly. A retirement account wasn’t much of a substitute for feeding my family.
As I got older and my pay rose, so did my contributions to savings and retirement. And now that I’m counting down to the end of the year and end of work, I wish I’d saved more in the early days. Not that we’ll be destitute, but we could have had more money to play with at this point.
I guess my point is that our priorities change and sadly, hindsight doesn’t put money in the bank.
My company had a benefits menu, and you could opt out of a lot – and people did when their spouse had a better “family” benefits package. I’m EXTREMELY happy that my company had a 401k. I retired with about twice the money, I would have had if I’d only had their retirement lump sum. I think you really need to show young workers the power of compound interest. Yeah, you need ALL your money when you’re young, but just designate 1% and forget about it. One, you probably won’t notice, and two, it’s a tax-savings, as well.
Yep, when I was say.. 28, the value of most benefits was more theoretical to me; I didn’t need to go to the doctor/dentist/eye doctor for more than the usual checkups and annual set of contact lenses/glasses, and retirement was something that was not quite 40 years away. So the matching percentage on my 401k was sort of nice, but not concrete in the least. And the differences in health plans was similarly theoretical.
But a say… $3000 boost in salary would have been much more noticeable than a similar matching contribution.
Now that I’m older and have a family, that stuff takes on a much more prominent position in my concerns about potential jobs- in many ways more so than the sheer salary amount. And so do environmental type concerns like stress level, working conditions, being on call, overtime requirements, etc… that I didn’t care much about when I was younger either.
ISTM that a “one-size-fits-all” approach to pay and benefits is the problem.
Folks at the lower pay rungs, or in their 20’s, are generally “focused on how much money is in my wallet”. Once one moves up a little, and gets a little older, retirement and health insurance become more of a concern.
I would like to see something where the pieces of the pie adjust depending on where one is in their career or life. Similar to those investment portfolios that change the investment mix as one gets older.
Of course there should be default levels of minimal participation from the start, with options for electing greater participation for the more forward thinking folks. But using the standard models to communicate “overall compensation” to a 21 year old, or for a low wage job, are frankly tone-deaf.
Young people have very low health care costs and retirement is 40 years away. So benefits like health insurance, dental, 401k and HSA contributions aren’t going to be too appealing to a 24 year old. For a 44 year old? Sure, but not to a 24 year old because they are healthy and will not retire anytime soon.
I’d assume 24 year olds care about salary like you said. But they also probably appreciate perks at work like flex time, the ability to work remotely, a low stress work environment, etc. Those things don’t need to cost money but they can increase retention.
I think that many young people believe there’s no such thing as a “permanent job” and that they’d better get as much take-home pay as they possibly can while they can.
One of my kids was laid off when his company filed for bankruptcy without warning. The owner assured everyone, “things are tough right now, but we’ll be fine.” He had some money in a 401K, but so what? Yes, there’s a hardship exception for a 401K, but it doesn’t include unemployment. He would have to borrow from his plan and pay it back.
Struggle with educating their employees? Sounds to me like the company is deciding what the employees want and then failing to convince those employees that CEO knows best. You don’t understand why that’s a flawed strategy?
The fact is that whatever the company makes as default is what a lot if not most employees will do. When 401K became the default, 401K enrollment rates rose. Unfortunately to be conservative they defaulted to a low matching level, and there was a decrease in the level of participation because of this.
So don’t give your average employee too much credit. It’s human nature to follow the default.
Early 20s don’t need your insurance plan. Unless they are married, they can be on their parents insurance. I have a 24 year old niece, working a nice job, that is on her folks insurance plan. It doesn’t cost the parents any extra for her to be included in the family plan, so why would she pay for insurance through her employer?
She wouldn’t - but unless she’s already planning to look for a new job in two years, she might prefer a job that offers a plan she can take then. My nephew’s still on his parent’s plan - but he still looked for /took a job that offers insurance because he doesn’t want to have to look for a new job in a couple of years just because he’ll need insurance. I mean , he might be looking anyway, but he didn’t want insurance to be the reason.
My company has an app on the intranet home page that one can click and see the value of their entire pay package - base pay, bonus, 401k company contributions and company paid portion of health benefits. It even shows the value of the employee’s PTO. The app was heavily promoted for a month or 2 prior to going live. Not sure how many associates actually look at it, but I have viewed mine.
In general (very general) in a job with “full” benefits, that package adds about 25-30% to a person’ base pay - not an insignificant amount.
Sounds like the problem is that the benefits aren’t being explained properly. Putting a dollar amount on them makes them tangible to some people. Encourage people to include that dollar amount in their salary and people tend to value them more.
School debt. Paying off interest in the medium-short term at least breaks even with small 401K payments.
Foregoing health insurance is a sensible consideration. Given deductibles, reduced need, and high COBRA premiums.
One good recession and your retirement is wiped out. Over 30-40 years of paying in, sizable loss is a probability. Granted, unless they saw this happen to someone nearing retirement, young folks aren’t likely to consider this.
It’s not just the folly of youth to look at all that and take the money now.
Of course she’s planning on looking for a new job in the next two years. What 24-year old human being already working in a good job doesn’t think that in two more years employers won’t be dumping baskets of money at her front door?
When I was 24 I had moved from “entry-level job in my field” for a college graduate at a tiny little company, to “same job but with a nicer title and five cents per hour more” at an equally tiny competitor. I was so sure that in two more years I would be juggling offers from the biggest and best companies in my field that I proposed. And my girlfriend was so sure I would that she actually said yes.
In the current job market, if you have the right skills, this may in fact be true. I’m currently only earning 85k in a Southern state and am entertaining offers for 140k in Fremont, California…
Doing the numbers, this higher offer is a substantial net gain if I can get a roomate in a 2 bedroom apartment at the average monthly rent.
You’d be surprised - my kids are 28 and 29 and both of them are still working at the same employer as when they were 25. Not in the same job- but they both got their first jobs at places where promotions and raises are possible. Haven’t even looked anywhere else.
The current plan (Mom & Dad) costs her $0. When she ages out, she can get on her employers plan at the next annual enrollment period.
I have health insurance. I am healthy. Therefore, I am probably paying more in premium than I am getting in service. Once you add in my deductible, it’s a sucker’s bet…except for the fact it is insurance against something catastrophic, including a bad accident. You’re all welcome.
As for 401(k)s; many of them vest the employer’s contribution; 20% a year is common. Many companies also make the contribution, in lump, in the early part of the year. If you leave after 2 years in, say, November & you’re only getting .6% match on one year’s salary, not the 3%/year that was advertised.
