The U.S. workplace is undergoing a metamorphosis. Shape-shifting trends such as labor shortages, higher wages, diversity, equity, and inclusion (DE&I) initiatives, and higher health plan costs, are all converging currently and causing significant increases in operating budgets for employers.
Industry sources report the following:
- U.S. labor costs in Q3 2021 increased by the biggest margin since 2001 as companies boosted wages and benefits amid a severe worker shortage, suggesting inflation could remain high for some time.
- The Employment Cost Index (ECI), the broadest measure of labor costs, surged 1.3 percent in Q3 2021 after rising 0.7 percent in the quarter before, the Labor Department said in October. It marked the largest gain in 20 years.
- The Bureau of Labor and Statistics reports that compensation costs for private industry workers increased 4.8 percent over the past year.
- U.S. employers were expecting their group health plan premiums to increase an average of 5 percent in 2022, even after taking cost-management initiatives into account, according to recent employer surveys by several HR consultancies.
Currently, a wide range of factors largely stemming from the aftereffects of the COVID-19 pandemic, are driving up operating budgets for U.S. employers. These key trends include:
- A spur of labor shortage costs
- Wage Inflation
- Larger spend for IT security
- Persistent supply chain issues
Current Trends, Challenges and Opportunities for Employee Benefits
This trend has spurred a massive labor shortage across industries as people leave jobs – with no immediate plans to assume new ones. The move has challenged processes, productivity, and profits for employers across the nation. As the Bureau of Labor Statistics reported, there were about 11 million job openings across the country on December 31, 2021—and only 6.3 million unemployed workers. Source: Bureau of Labor Statistics
Opportunity: An experienced employee benefits broker can help employers customize holistic compensation packages that offer high-value, low-cost benefits that meet the needs and preferences of today’s employees, based on income level, stage of life, and age.
Read our article on Strategies to Reducing Healthcare Costs.
To attract more workers back to the workforce, employers are paying higher wages and offering more robust benefit packages that absorb/share higher health plan costs, and include a broader array of employer-sponsored offerings that provide today’s extremely diverse workforce with the customized and flexible options to help preserve a healthy work-life balance. As a result, the required resources to set up, administer, and maintain these programs are swelling overhead and impacting bottom lines. Source: paycor.com
Opportunity: Business leaders should work with an experienced Employee Benefits team to explore ways that can help instill a greater appreciation of all they offer employees. Whether it’s surveying employees to check on their satisfaction and/or to monitor which benefits they value most, they can help customize a full range of benefit offerings that are in line with specific employee populations.
Larger spend for IT security
The shift to more flexible work arrangements and work-from-home policies to accommodate employee preferences are, in turn, requiring employers to make greater investments in secure IT services, equipment, and training to protect against the increased threat of malicious cybercrimes.
Opportunity: As the world continues to offer flexible work locations for employees, it is even more important that your IT and security team has the best coverage and plans in place for your business or organization. Fifty four percent of all ransomware attacks were successful, even in cases where organizations took preventive measures. This statistic illustrates the great need for business leaders to create effective incident response plans in the event they suffer an attack and their systems/data are compromised.
Persistent supply chain issues
The Great Resignation and global supply chain disruptions are very closely intertwined – creating an endless cycle of issues for those desperate to find talent and those on the receiving end of the supply shortage. On the supply chain front, the pandemic led to a loss of 1.52 million workers and a shortage of 330,000 truck drivers is forecasted through 2024, according to Business Insider. Bare shelves, inability to complete projects, and much longer shipping times is leading to unhappy, concerned customers.
Opportunity: Utilize an Employee Benefits broker who will take a more consultative approach when working with your business to squeeze efficiencies out of the benefits you offer and keep plans cost neutral.
This material has been prepared for informational purposes only. BRP Group, Inc. and its affiliates, do not provide tax, legal or accounting advice. Please consult with your own tax, legal or accounting professionals before engaging in any transaction.
Click here to learn more about BRP’s Employee Benefit Solutions.
Download the Full Report
To get the full report, download by clicking the button below.