Exclusive: Almost half of employers are planning to give out raises, but what workers really want is better benefits

Bosses are worried about the economy, but they’re still planning to give out raises this year. 

That’s according to a survey of 529 HR professionals from NFP, a property and casualty broker and benefits consultant, shared exclusively with Fortune. Around 59% of employers say they are extremely or very concerned about the economy in 2024. Despite these concerns, 47% of employers plan to increase spending on employee compensation in 2024, and 37% plan to do the same for well-being programs. 

That’s good news for workers—but they might be more interested in other perks. Around 59% of employees say they’re willing to give up some salary in order to get better health care benefits. After inflation and financial anxiety plagued workers in 2023, many are opting for lower-quality benefit plans this year in an effort to spare their wallets. Around 38% of employees feel that economic concerns will cause them to choose a lower-tier benefits plan in 2024, according to 1,026 U.S. workers polled for the same survey by NFP. 

While benefits have always been somewhat important to employees, the COVID pandemic and increased costs of living have prompted them to place more value in higher-quality assistances. But they still don’t want to break the bank, says Kim Bell, executive vice president, head of health and benefits at NFP.

“What COVID helped highlight was that even the younger generation can get sick and have significant health care issues,” says Bell. As more Americans employed in the private sector enrolled in high-deductible plans in 2023, Bell suspects many have become displeased with having to shoulder more healthcare costs. “That’s when employees started to realize that not only had a lot of the costs been passed along to them with increased contributions, but my benefits deteriorated.”

However, Bell warns employers against blindly cutting salaries or nixing annual raises in favor of stronger benefits plans, especially as companies face a struggle for talent in a continuously tight labor market.

“The reality is they [workers] want both, they want better benefits [and] higher pay. And they’ll leave for higher pay or for better benefits,” says Bell. “There is definitely an expectation, and employers understand that: ‘I’ve got to pay more, but also, I can’t take away anything that’s valued on the other side, with the benefits equation.’”

Instead of hastily investing in more benefits without much planning, employers should focus on ensuring that they are getting a healthy return on investment for the benefits they offer. Bell recommends clients focus on measuring benefits utilizations, and sourcing feedback from employees on what benefits are working for them. 

“I think this is a year where, even from a consulting standpoint, we need to help employers get to the bottom of: What are you offering today that maybe isn’t as valued?” says Bell. “Are there things we could pull back on, because they’re not as valued, and I could do something different with those benefit dollars?”

Paige McGlauflin
paige.mcglauflin@fortune.com
@paidion

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