Companies in the Washington area are allocating smaller portions of their budgets toward employee benefits and are more likely to sponsor less-expensive perks such as wellness programs, tuition reimbursement and maternity leave, according to new research.
A survey of 160 local companies by the Human Resources Association of the National Capital Area found that local companies plan to spend just 26.3 percent of their payroll budget on employee benefits in 2015, the lowest portion since the organization began conducting the survey in 2006. In less than a decade, this percentage has dropped by almost six percentage points.
The decline comes as traditional benefits such as pensions and health insurance plans — which tend to be more costly for employers and harder to phase out without drawing workers’ ire — are fading across the country in favor of less costly programs.
Local employers kept the amount they allocate toward “health care and welfare” costs steady at 10.4 percent this year by shifting more of the burden to employees, including raising the deductible they pay for a visit to the doctor, according to the data.
Twenty-eight percent of companies surveyed said they are asking employees to shoulder more of the cost of health insurance. One quarter of companies said they are raising deductibles, up from 22 percent last year and 20 percent in 2013.
They are also allocating less to retirement benefits — 7.3 percent in 2015, compared with 7.8 percent last year.
Meanwhile, local companies are filling the gap with less expensive, piecemeal offerings such as more generous maternity leave policies and tuition aid, according to the study.
“Clearly employers are not adding the traditional benefits,” said Lenny Sanicola, who specializes in employee benefits at WorldatWork, a human resources association. “What they’re doing instead is looking at more of the nontraditional benefits; ‘how to make a less stressful work environment, how do I enhance your professional development.’ ”
In 2015, 36 percent of employers offered a wellness program, up from 23 percent in 2007. Thirty-six percent of companies offered paid paternity leave in 2015, compared with 27 percent two years ago. Tuition reimbursement is also more common — 91 percent of companies are offering it in 2015, up from 83 percent in 2008.
More companies, 84 percent, allow telecommuting. This is down slightly from last year.
“Telecommuting is a triple-win for an employer,” said Alan Chvotkin, executive vice president and counsel at the Professional Services Council, a trade association for businesses that contract with the government.
“It’s an inducement and benefit to the employee who doesn’t have to endure a commute. And it’s a win for the company because they might get more productivity [by cutting the commute], and they can reduce the size of their real estate footprint.”
These types of benefits are often cheaper to provide, and employees do not get as attached to them, workplace experts said.
“If you took a wellness program away, who would care? If you took away their health insurance, you’d hear much more of an outcry,” said Joan Passerino, a member of HRA-NCA’s survey committee who also serves on the D.C. Retirement Board.
It is also a reflection of a changing workforce. Job-hopping, post-recession millennials might have different ideas about what they want in a job.
“Years ago, when you went into an interview it was really about ‘how much are you going to pay me, what does the health plan look like, and how much paid time off do I get,’ ” Sanicola said.
“Now the conversation is much more complex: ‘Do you expect me to be on e-mail 24/7? Will you pay for my professional development? Is this the kind of work environment I would enjoy?’ ”