Different demands: 5 ways the demographic shift could impact your benefits

By now it’s common knowledge: The U.S. is experiencing a seismic cultural shift as baby boomers retire and millennials rise to power as both employees and customers.

As those younger generations assert different wants and needs than previous generations, employers are by necessity paying close attention. That’s because the labor shortage caused by the demographic shift is allowing younger workers to be choosier about how, when and where they’ll accept employment, forcing companies to beef up their salary and benefits packages in order to lure the best talent.

All that helps explain why a quarter of U.S. executives polled by LaSalle last year (across industries and company sizes) planned to adjust their benefits packages in 2019, with the top three additions slated to be flexible working arrangements, medical coverage and 401(k) matches.

“With millennial talent making up more than one-third of the workforce, there’s no question companies need to fight hard to recruit, hire and retain this population,” writes Paris Wallace in Forbes. “We’re finding what used to attract talent is not what attracts today’s talent: 89% of millennials prioritize benefits over pay raises and 83% would change their job for better benefits.”

Some ongoing compensation trends to be aware of as an employer:

  • Millennials want customized benefits packages. Companies are using everything from basic surveys to big data to segment their workforces and better understand the benefits most likely to fit their needs. Often, the answer is the offering of a wide variety of voluntary benefits such as adjustable life insurance and short-term disability for medical leave that workers can choose or not according to their circumstances.
  • Millennials are struggling with healthcare costs. An NIH study indicates nearly three-quarters of Americans are insured but can’t pay their medical bills, while a 2017 Urban Institute report notes medical debt is the most common kind of debt referred to collections in the U.S. As such, many companies are turning to voluntary insurance benefits to supplement the high-deductible healthcare plans (HDHPs) that are still leaving many policyholders with enormous out-of-pocket bills. “We need to redouble our efforts to try to find ways to make health insurance more attractive and more affordable, particularly under the age of 44,” Emory University professor Kenneth Thorpe recently told PBS.
  • Millennials are overburdened with student loans. Some 44 million Americans already owe a combined $1.5 trillion in student loan debt. And 69 percent of college students in the class of 2018 had outstanding student loans, with an average debt per student of $29,800. To combat that, some employers are helping their workers pay down that principal, a trend that’s expected to grow.
  • Millennials seek financial planning advice from employers. Partly due to the aforementioned expenses, many younger employees are failing to build wealth like generations before them. “If you look at people under age 40 today, their wealth has only inched up compared to the wealth their parents had back in the early 1980s,” Urban Institute Fellow Caroline Ratcliffe recently told PBS. That’s why many employers are trying to help via in-house workshops and presentations.
  • Millennials want easy digital access. Because transparency is so important to them, younger generations expect to be able to research and track the details surrounding their benefits packages online at any time. As such, employers are increasingly keeping their benefit offerings convenient, accessible and easy to understand, with clear communication about regulatory and other changes that may affect employees’ wallets.

Need sound, well-informed advice on which benefits to offer for younger workers, and how to position them? Contact Ochs, experts in insurance for public employers for more than 76 years.

[Note: When published, link to Blog 5 about financial planning for millennials.]