As business try to stay afloat during the recent recession and lack-luster recovery that has followed it, a lot of them are looking for anyone they can to cut costs. Unfortunately, for many employees this means cutting back on benefits such as insurance.
For many years, insurance benefits were considered a standard part of the compensation package for nearly all middle class jobs. In the past several years, however, a lot of these jobs have cut the benefits packages significantly. This has led to many jobs that used to be a ticket to a middles-class lifestyle now offering little more in wages and benefits than entry-level positions.
There are several reasons behind this. The first is the skyrocketing costs of health insurance. While health insurance benefits used to be assumed to be part of the compensation package with many professional jobs, many companies are not trying to cut back this benefit anyway they can. In the past year, the cost of the average health insurance premium rose 9%; more than three times the overall inflation rate for that same period of time. Because the cost of this insurance is rising every year, employers have to choose between paying for the additional premiums out of pocket, passing the cost on to their employees, or reducing or eliminating coverage all together.
Unfortunately, the poor economy has not helped matters. While health insurance costs have been rising for several years, the high unemployment rate has encouraged many businesses to cut back on the amount of compensation that they offer employees. Knowing that there are not a lot of options for employees who are unhappy with the cuts has convinced many employers that now is the time to make permanent cuts. For some employers, this means cutting out insurance altogether, but many companies have chosen to cut back on benefits instead.
The reason for this is that offering health insurance does make a workforce more efficient by reducing the number of sick days that employees take. Additionally, over half of professionals have indicated in various surveys that they would start looking for a new job if their current company no longer offered health insurance. Cutting back on these benefits, however, does not garner nearly so strong a response. By passing on premium increases to employees or opting for policies with increased co-pays and reduced benefits, employees still have access to health insurance. This leaves an employer with an efficient work force, but the employee with a reduced level of compensation.