The way employee benefits are structured has remained largely unchanged since the 1970s. Employers come up with a package rooted in a traditional health insurance policy and some sort of retirement account. Additional benefits are added as the employer sees fit. Traditionally, employees have had little say in how their packages are crafted. But that could be about to change.
A recent survey from MetLife indicates that Gen Z employees are least likely to understand how their benefits packages work. They need more support in that regard. More importantly, increasing numbers of Gen Z workers would prefer more flexible benefits packages that allow them to tailor benefits to their unique needs. Their attitudes toward employee benefits are far different from their baby boomer counterparts.
A Wave of Boomer Retirements
The baby boom generation was the first generation of American workers to enjoy what are now considered standard employee benefits. First generation benefits were crafted around their needs and expectations. And as the most predominant employee bloc in the American workforce, employers have continued tailoring their benefits packages to boomer needs and the overall boomer mindset. But again, things are changing.
Thanks to a wave of boomer retirements, it is estimated that Gen Z employees will outnumber their baby boom counterparts fairly soon, if they have not done so already. There were estimated 17.1 million active Gen Z employees in 2023 as opposed to 17.3 million baby boomers. It will not be long before there will be more Gen Zers than baby boomers in the workforce.
This suggests that employers start rethinking their benefits packages. It suggests looking for ways to retool benefits so that they more accurately reflect the younger generation. Employers still need to account for Gen X and millennials, but they also need to understand that Gen Z is the future. Now would be a good time to begin transitioning to a new benefits mindset in anticipation of Gen Z eventually becoming the largest employee bloc.
Answering the Call for Flexibility
One of the most important things employers can do, according to Dallas-based BenefitMall, is make their benefits packages more flexible. BenefitMall is a general agency that represents more than one hundred carriers to thousands of brokers around the country. In recent years, they have been encouraging brokers to add flexibility to their benefits packages by way of voluntary benefits.
There isn’t much that brokers or employers can do with health insurance. Ditto for 401k retirement plans. Both benefits are pretty much etched stone in terms of how they work. On the other hand, there is plenty of flexibility in the voluntary benefits realm.
Voluntary benefits are so named because employers have the choice to contribute to them or pass the entire cost on to employees. They are also voluntary from the employee’s perspective inasmuch as an individual worker can pick and choose according to need. Typical examples of voluntary benefits include:
- Vision and dental plans.
- Life insurance.
- Long term disability insurance.
- Critical illness coverage.
- Financial wellness benefits.
- Mental health benefits.
- Pet insurance.
Gen Z employees have grown up at a time when technology allows so many areas of life to be customized. They want their benefits packages to be customized as well. Voluntary benefits offer a pathway to get there.
As the workforce changes and evolves, employers find themselves having to rethink their benefits packages. If survey data is to be believed, it seems in the best interests of America’s employers to think about retooling their benefits to account for the needs and desires of Gen Z.
