From the Great Resignation to Quiet Quitting: Why Benefits Plans Are More Important than Ever
With a record 47 million workers quitting their jobs in 2021, the Great Resignation led to a workforce crisis, making it hard for companies of all sizes, and across all industries, to remain fully staffed. Though the initial crisis has eased, attracting and keeping employees remains a challenge that is further complicated by a new trend, the Quiet Quit. Exhausted employees, tired of working extra hours at under-staffed companies, are opting to “quietly quit” by staying on the job but restricting work effort to the minimum hours and effort needed.
While it may seem counterintuitive, this growing disengagement, can be an opportunity for companies to evaluate and offer incentives to keep employees happy and motivated at work. By understanding the factors driving employee dissatisfaction, companies may be able to improve morale and retain talent, by considering what today’s employees value most in terms of a benefits package.
How tight is the labor market?
Americans have quit in record numbers in recent years. The U.S. “quit” rate peaked between November and December 2021 with 3% of the American workforce voluntarily resigning their positions each month, according to the U.S. Labor Department’s monthly report on job openings and labor turnover. The historic monthly average over the prior 20 years had been 2%.
Even with rising inflation in 2022, and as concerns for a recession increase, the monthly quit rate as of September 30, 2022, remained elevated at 2.7%. Meanwhile, job openings in the U.S. have remained at a consistent level since July 2021, hovering at approximately 11 million, according to the Labor Department. Previously, there had not been a single month since 2000 in which job openings exceeded 8 million.
The challenging labor market could continue. Surveys show that workers are still restless and dissatisfied. According to a Prudential survey of American workers, 20% were actively looking for a new job and another 26% were considering joining them. Among millennial workers, discontent has been even higher, with 59% either actively looking or considering it.
Learning from worker dissatisfaction
A closer look at the reasons behind worker disenchantment offers a potential solution for reengaging employees and attracting new talent in an ultra-competitive job market.
- Lack of retirement benefits. Mercer’s annual survey, Inside Employees’ Minds, asked workers what factors would most attract them to seek new employment. More than two-thirds of the survey respondents said, “better pay or benefits.”
A 2019 Millennium Trust survey of small businesses and their workers received a similar response. It also found that roughly half of the surveyed businesses didn’t currently offer a retirement plan. Most employers without company sponsored retirement plans cited costs, complexity, or their firm’s small size as reasons for not offering a retirement plan.
Workplace savings programs provide options for companies of all sizes to offer a retirement plan as part of a benefits package, such as a SIMPLE IRA plan (for businesses with 100 or fewer employees that isn’t as administratively complex or costly as a 401(k) plan). An even simpler retirement benefit choice may be Payroll Deducted IRAs, where employers of any size can make traditional or Roth IRAs available to employees with contributions made via payroll deductions.
- Need for financial wellness options. Since the onset of the global pandemic, the number of Americans suffering from financial anxiety is rising, even among those who remained employed. A recent survey by the Society for Human Resource Management found that about one-third of workers and two-thirds of the unemployed report having finance-related anxiety or depression. Meanwhile, 83% of workers surveyed by Betterment said they view financial wellness benefits, which are designed to alleviate some of those fears, as a sign that “my employer values me and my work.”
Besides retirement, the financial wellness benefits that are among the most desired by workers include financial planning education and emergency savings funds. These workplace programs add to peace of mind by allowing workers to set aside small, routine contributions to their emergency savings in the same, user-friendly, and automated way they save for retirement through a 401(k).
- Burden of unreimbursed healthcare expenses. The physical well-being of workers can’t be overlooked. Among workers considering quitting their jobs, nearly half say they feel physically or emotionally exhausted. While expanding healthcare coverage to address these issues may not be financially possible for many businesses, other benefit offerings can go a long way toward addressing workers’ physical well-being. Considering that the single biggest reason workers deplete their emergency savings funds is to pay for out-of-pocket medical expenses it’s no wonder that respondents to a Betterment survey cited Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) as the benefits with the most appeal after retirement and financial wellness benefits. HSAs allow workers to set aside and invest money pre-tax to cover out-of-pocket health care expenses while building a reserve for health-related expenses incurred later in life. FSAs, which are more of a budgeting tool, allow workers to put away money on a pre-tax basis each year to cover that year’s out-of-pocket expenses and unreimbursed medical expenses.
Fortifying benefits can stem the flow
Regardless of the size of your business, there are a variety of affordable, and scalable, workplace solutions that can help reengage employees. More importantly, by offering what job seekers value in a benefits package, it can help you attract the talented employees you look for as you grow your business. Learn more about our workplace solutions and the health and wellness plans we now offer through PayFlex®.
The material in this article is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Millennium Trust Company performs the duties of a directed custodian, and as such does not offer or sell investments or provide investment, legal, or tax advice.