These Employer-Sponsored Benefits Could Vanish in 2024

A slew of employer-sponsored benefits are likely to disappear in 2024, according to a new Glassdoor workplace trends report.

The report noted benefits were starting to diminish in 2023, with the number of employees with access to 401(k) plans, dental insurance, tuition assistance, commuter assistance, gym memberships and phone discounts all declining across industries. And that is expected to only increase in the new year, the Glassdoor report said.

"There is some evidence that benefits access has started to erode, a trend that could accelerate in 2024," Glassdoor wrote.

Some industries felt the strain harder than others, like tech and finance, which have experienced economic uncertainty and mass layoffs over the past several years. But all industries are suffering under the pressure of inflation, which currently rests at 3.2 percent.

"Companies often scale back on benefits during economic downturns to cut costs," Amy Spurling, the founder and CEO of employee stipend software Compt and a 20-year human resources veteran, told Newsweek.

"We've seen this happen plenty of times before. When budgets get tight, benefits are often on the chopping block. They're seen as an area where reductions can be made without directly impacting salaries or headcount."

The sustained inflation, while coming down from 2022 highs, along with increasing healthcare costs places intense financial strain on companies across industries, but some are especially vulnerable.

"Firms with already slim profit margins in competitive industries like retail, hospitality, transportation, and construction seem especially likely to cut back on benefits expenditures," Brittany Truszkowski, a human resource specialist and chief operating officer at Gale, Angelo, Johnson & Patrick P.C, told Newsweek.

Truszkowski said retail and hospitality experienced tight profit margins along with various supply chain disruptions and unstable consumer demand. Construction companies were also more likely to reduce benefits as the industry's high injury rates makes health insurance costly.

Small- to medium-sized businesses generally have tighter margins, making it far more likely they cut down on the benefits available to employees while still offering competitive wages, the report noted.

Most professional services still offer competitive benefits packages to attract the top talent, Truszkowski said, but this could wane as economic conditions become more difficult to sustain.

What Benefits Increased?

Only a few types of benefits increased in 2023. These included initiatives like fertility assistance, adoption assistance, parental leave and mental healthcare, Glassdoor found. These issues became a prime focus of employers during 2021 and 2022, as HR discussions around parent support grew and millennials reached their prime family-building years.

"That tide could ebb–or even turn–in 2024 as labor is more available, and companies scrutinize costs and identify the benefits that are most (and least) important to their employees," Glassdoor said in its report.

In many cases, the loss in benefits was made to support a rise in wages, which is often more important to workers as they look to afford their rent and groceries. However, one thing that rarely decreases for employees–salaries–saw an unusual trend across workplaces this year.

Although wages rarely decline for those in the same job at the same company, Glassdoor's data found 10 percent of workers had this occur. That's around two percentage points higher than the average year, where Glassdoor estimates around 7 to 8 percent of workers stay in the same job and end up making less annually.

How Are Employees Affected?

Employees who see their benefits decrease in the coming year could see significant effects in their daily lives, but it isn't likely to leave the companies unharmed either.

"Without company-subsidized insurance, paid time off, retirement savings plans and other financial security supports, workers struggle affording basic healthcare, enduring income losses, and providing for themselves and families," Truszkowski said. "The combined stresses deplete mental and physical health, diminish productivity through disengagement, exhaustion, and incidents."

"As disadvantaged employees seek better compensation packages elsewhere, retention plunges while recruitment costs surge. Rebuilding loyalty and morale without reestablishing key benefit incentives poses a monumental challenge for leaders seeking to restore positive employment relationships."

Even getting rid of pandemic era benefits like flexible remote and in person office schedules could see many employees looking for better opportunities, according to HR Expert and CEO of getAbstract, Thomas Bergen.

"Employees are more likely to stay at an organization where they feel heard and valued," Bergen told Newsweek. "Companies implementing a mandatory office presence will face a severe talent shortage as employees have voiced they value the flexibility of remote work. When it comes to cutting benefits, leaders must understand the message it is communicating to their employees and be ready to see potential churn."

Over the past few years, companies have contended with a tight labor market and a nationwide phenomenon coined the "Great Resignation" as many employees quit and pursued opportunities with higher salaries, better benefits and work life balance.

In recent months, however, job growth stalled, slowing more than expected in October. The labor department reported companies added just 150,000 jobs last month, below recent predictions. The unemployment rate was also at a two-year high of 3.9 percent.

Still, employee satisfaction will be a top factor determining if a worker stays or goes, and companies could see some severe consequences if employees are unsatisfied with their benefits packages.

"Unhappy people quit," Spurling said. "We've known this for a long time. Companies that cut benefits risk losing talent, period, not just to competitors who offer something shiny and new."