Paychecks have been disappointing investors for years, but that’s not all that’s been putting pressure on household spending.
While companies have been stingy with raises since the 2008 recession, they’ve also been whittling away at benefits for the last five years. So in many cases, workers have had to get by on frozen paychecks while also forfeiting the extras that might have stretched paychecks in the past.
The greatest impact typically has come from employers requiring employees to pick up larger portions of their health care costs. But in addition, over the last five years employers have cut things like automobile subsidies related to business use, moving and relocation expenses, and costs related to picking up more education or training, according to a national survey of human resources professionals done by the Society for Human Resource Management.
The only compensation benefit that has increased since 2010, according to the survey, has been spot bonuses — one-time awards that recognize an employee’s performance.
Companies are still providing the benefits most employees assume are part of the workplace, although some of the benefits are less extensive than they once were. About 95 percent of the employers surveyed offer prescription coverage and dental insurance. About 87 percent provide mental health coverage.
Yet, while 83 percent offer vision insurance and chiropractic coverage, the survey found that roughly 1 percent of employers are planning cutbacks in those benefits over the next 12 months.
Some new health benefits have been added over the past five years, such as bariatric coverage for weight loss, mental health care and contraception. But costly additions are less likely than cuts.
The median cost for employee-only coverage for companies large and small was $5,838, and the human resources professionals are expecting a 6-10 percent increase in health care costs this year.
There has been a 12 percentage-point increase in the last year of companies offering health savings accounts, in which employees can stash away pay from every paycheck so they have savings to cover medical costs that aren’t covered by benefits.
The rising cost of benefits, particularly health insurance, has “made it more challenging for employers to continue to offer them,” SHRM said in a report on the survey.
In addition, in a challenging global economy since 2008, companies have been keeping profits up by reducing costs.
The Society for Human Resource Management noted that companies may be shortsighted by cutting back on educational assistance to employees.
Many companies have complained that they have been unable to find people with the backgrounds needed to fill jobs. In the past, they might have provided training or helped pay for outside classes.
Yet the SHRM report noted: “Virtually all professional and career development benefits tracked in the survey declined between 2010 and 2014 or within the last year.
So although many organizations are apprehensive about future skills shortages, this concern has not yet translated into greater investment in benefits related to employee professional and career development.”
Besides apparent inattention to internal educational needs, the survey also reflects less attention to a growing long-term national need. Most employees with pensions must save on their own through 401(k)-type plans at work. And studies suggest a national retirement crisis is brewing because most people save too little, invest poorly and retire too early. Yet, the SHRM survey showed companies cutting back on the advice they’ve been offering employees with 401(k) plans.
Last year, 59 percent of employers were offering online investing advice, and 53 percent offered one-on-one advice from a person. This year, only 50 percent were helping employees with investing online, and the personal touch had been sharply cut back. Only 41 percent of employers were offering it.
Companies adding benefits tended to be offering those that didn’t involve upfront expenditures, such as flexible work hours, casual dress at work and telecommuting.
Gail MarksJarvis is a personal finance columnist for the Chicago Tribune and author of “Saving for Retirement Without Living Like a Pauper or Winning the Lottery.”