Once a fixture of the US working world, The Washington Post reports that the annual pay increase is now being phased out in favor of more creative and cost-efficient perks.
According to recent survey data, more businesses are increasing their spending on benefits such as one-time bonuses, health care benefits and paid time off, while others are rolling out perks such as free gym memberships, commuting subsidies and even pet health insurance! In fact, all told, benefits now make up 31.6 percent of workers’ total compensation, a share that has steadily risen over the past decade, according to government data.
Meanwhile, pay increases are being put on hold. Growth in workers’ average hourly earnings has been stuck at roughly 2 percent for the past five years, despite the rapid drop in unemployment and surge in hiring over the past 18 months.
For their part, companies say they are “catering to the growing workforce of millennials who seem to prize short-term flexibility over long-term financial security, and the change allows bosses to reward star employees without permanently increasing costs.”
Economists are divided over whether paltry paychecks are the new normal or a sign of underlying weakness in the labor market, especially among people in relatively low-wage jobs like retail, where the paycheck is often the end of the line when it comes to benefits. And even in jobs that have enjoyed bigger benefits, experts warn that workers don’t always come out ahead if they sacrifice traditional raises for other forms of compensation.
Do you think your employees would prize perks over increased pay checks? Let us know in the comments.