Companies are cutting worker benefits to offset the sting of high inflation

foxbusiness.com:

FreedomWorks senior economist Steve Moore provides insight on the state of the economy on 'Making Money.'

Companies looking to cut costs to offset the pain of high inflation are quietly paring back the non-cash benefits they offer to employees – and the problem may soon get worse.

That is according to a new analysis by Glassdoor, which found that a growing number of employees lost access to 401(k) retirement plans, dental insurance, vision insurance, tuition assistance and other benefits this year. 

With the economy slowing and demand for workers cooling, companies are looking to reduce the total compensation they offer to workers. However, wages and salaries almost never decline in real dollar value for individuals who stay in the same job at the same company because «most people have such a strong aversion to seeing smaller paychecks hit their bank accounts,» the report said. 

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In fact, Glassdoor data suggests that only about 8% of workers who remain in the same job typically see their salary decline on an annual basis. The figure is slightly higher in 2023, coming in at around 10%.

However, many companies instead look to cut costs by using levers beyond salary.

«During soft labor markets, there are other dimensions of total compensation that commonly decline,» the report said. «These include hours worked (for non-salaried workers), equity and incentive-based compensation and the company-contribution to the cost burden of benefits like health insurance or retirement plans.»

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