Indirect Employee Compensation...Will it Become a Thing of the Past?

Indirect Compensation, or employee benefits, have been a major driving force in the decision making process of would be job seekers for decades.  The days are gone, however, of employers offering pension and medical benefits virtually free of charge as they did in the old days.  It used to be that you worked for one company your entire life, and they basically agreed to take care of you for the rest of it when you retired.  My Mom has told me stories multiple times about my Grandfather and the benefits that he used to receive after working at Mack Trucks for his entire career.  Not only did they pay him a hefty pension, but they also provided great health care benefits throughout his career and then into his retirement years.

As our economy continues to suffer from the current recession, and as businesses need to focus their attention more and more on benefit cost-cutting efforts to stay afloat, these life-long benefits packages are slowly becoming, if they aren't already completely, a thing of the past.  Even in the areas of education, which has historically been one of the best professions to work within in terms of level and cost of benefits provided, we have recently seen that employees are being forced to contribute more to these plans in order to keep them than they ever have in the past. 

Cost, especially in the areas of health care and pensions, is probably the main issue with implementing programs of this type, and employers of all sizes are now asking employees to contribute larger portions of their salaries in order to make up the difference.  Much attention has been paid lately to public sector employees due to the low cost, and high level, of the benefits they currently receive.  Recent proposals have called for Public Employees in this State to pay between 12 and 30% of the premiums associated with their health insurance costs, which currently account for about 9% of the State's annual budget.  You can view this article from Philly.com to find more information about the proposal.

Offering a healthy combination of benefits should still be an important focus for companies as they attempt to attract and retain the best talent possible, but the current economic conditions and the rising costs associated with programs of this type will make it increasingly difficult to maintain these programs in the future.  According to this Time magazine article, the trend of paying more but getting less may continue if serious reform of the system isn't able to take place.