It should come as no surprise that today’s employers have been steadily investing more in employee benefits over the past few years. But the reasons for this increase in investment is not – as some might be inclined to assume – entirely due to the rising costs of health care.
Since 2005, there has been a marked rise in benefits-related compensation when compared directly to the increase in wages. And, it’s important to note that this phenomenon applies more directly to larger companies and white-collar industries who have highly skilled workers – employees who tend to place more value on offerings related to employee financial protection and physical wellness.
According to Andrew Chamberlain, Glassdoor’s chief economist, this phenomenon illustrates the economic principal called “diminishing marginal utility of income.”
This theory purports that once employees reach a certain income level, their actual pay level becomes less of a concern in the whole “package” that an employer offers. In fact, other forms of compensation – like benefits that are otherwise difficult to obtain outside of the workplace – become more important. Conversely, those earning a lower wage almost always will take extra pay over improved benefit offerings.
“As pay [exceeds] the level needed for the basics, more workers may find themselves earning enough to put pay raises aside and instead negotiate for employer-provided benefits that make huge improvements in the quality of life in the workplace,” writes Chamberlain.
This has forced employers to up their game when it comes to offering competitive, high-value benefits while trying to recruit and retain high-performers. Plus, in addition to the typical benefits that most employers offer, many employers are turning to additional voluntary benefit offerings and less traditional benefit offerings to differentiate themselves from the competition.
So, what are you doing to stand out from the pack? Contact QBS today to learn how we can provide your business with benefit plan options to help you better attract and retain top-talent.