Today, many employers are experiencing unprecedented hiring shortages despite high unemployment. Adding insult to injury, more existing employees consider leaving their employers for better job opportunities as they know the supply and demand is in their favor.
Experts have suggested various reasons behind the labor market trend, including the pandemic and the expanded unemployment benefits. Some argue that the additional payments to jobless workers are discouraging them from finding employment.
Others point to the lack of support systems such as schools for in-person learning, child and elderly care. Many people are simply concerned about returning to work. As the COVID-19 virus stubbornly lingers, companies may continue to have trouble filling their vacant positions.
So what can they do to combat the labor shortage? Improve employee benefits. Although wage increase seems like the most logical solution, it may be costly and complex because it creates internal inequity with existing employees and consequent pressures to raise their compensation.
As COVID-19 became a public health crisis, it has shattered the confidence of many individuals and their families in managing their physical, emotional, and financial well-being. Because the pandemic has magnified our health as more valuable than ever, thoughtfully crafted benefits packages can be an effective tool to attract new employees while providing the necessary safety net for existing employees for today and the future.
Consider the following benefits checklist as a start:
Medical insurance: Reduce employee out-of-pocket costs or lessen their pretax contribution.
Life insurance: Add life insurance to your package as it is an inexpensive benefit. Considering the loss of life this past year, this benefit is more valuable than ever before.
401k plan: Boost enrollment by raising awareness and visibility of the retirement plan. Offer employer matching or a safe harbor plan to avoid testing and allow highly compensated employees to contribute fully.
Healthcare Reimbursement Account (HRA): Offer HRA as an alternative to high deductible medical plans, which may be unmanageable for employees, although it enables employers to save premium costs. The HRA tax code allows the employer to subsidize some of the HRA expense pretax.
Getting a benefits checkup can effectively manage the hiring crisis as it will help employers attract and retain employees and increase their productivity.