The Cost of Employee Benefits Steadily Increasing, Survey Says

The cost for employers to provide financial benefits to employees is on the rise as employees are becoming more likely to expect such benefits, according to a 2022 survey from the Employee Benefit Research Institute.

In June and July of 2022, EBRI surveyed 250 full-time executives, officers, and managers for companies with at least 500 employees, said Craig Copeland, EBRI’s wealth benefits research director. All the companies had to be at least interested in offering financial benefits to employees, and the individuals surveyed had to work in human resources, compensation, or finance.

“There will be a point where providing benefits will need to bring a return to the company,” Copeland said at the American Payroll Association’s Capital Summit. “And employers are looking to provide benefits that will help employees in the long run by giving them control of their finances and making them feel less stressed.”

Almost all employers in the survey paid at least some of the costs to provide the benefits, and nearly half of respondents said that the financial benefits were fully funded by the employer, he added. In comparison, only 10% of respondents said that the financial benefits were fully paid for by employees.

In addition, the cost of providing financial benefits to employees is on the rise, and employers should make sure that they can afford any new employee benefits, Copeland said.

“Employers are now trying to figure out the cost of these programs,” he said. “When they first provided benefits, they thought it was just something nice to do. Now, as costs rise and benefits expand, employers are looking at their return to see if it’s worth offering these benefits.”

Types of Financial Benefits

Survey respondents were most likely to consider retirement and healthcare plans when offering financial benefits to employees, but there are many more options employers should consider, Copeland said. College savings accounts, life insurance plans, subsidized childcare, and paid maternity or paternity leave are also important parts of a holistic financial benefits package to employees.

“We used to see employers offering benefits through one-time or pilot programs,” he said. “Now, people are thinking about offering these things holistically by considering how the benefits work together to improve an employee’s overall financial situation.”

Many survey respondents already offered certain benefits that should be considered a financial benefit, such as employee discount programs and financial planning education, even though many employers do not think of them as such, he added.

Newer financial benefits that employers should consider include childcare benefits and student loan debt assistance, Copeland said. Only 23% of survey respondents said they currently offer at least one of these benefits, but another 40% said that they are planning to offer at least one them in the future.

Since the Covid-19 pandemic, employees are becoming more concerned than ever with their personal finances, and employers that provide a comprehensive financial benefits package to employees are more likely to have high employee retention and a satisfied workforce.

“Most companies in the survey overwhelmingly believe that they have a responsibility to help with the financial and mental well-being of their employees,” he said. “But we also asked employees whether they believe their employers have this same responsibility, and two-thirds to three-quarters of employees believe employers do. So, employers need to be thinking about providing these benefits, because employees are expecting them in this tight labor market.”