Benefits Matter to Low-Wage Workers 

Oct 21 2021

At the heart of the labor shortages that are playing havoc with the economic recovery is the growing exodus of frontline, low-wage, minority and lower-level workers from their jobs. While there may be a number of factors at play, it’s clear that – with some notable exceptions -- US employers have underinvested in this segment of the workforce, where wages have stagnated behind inflation for decades. The pandemic has shown just how essential these workers really are, and employers are pivoting to develop a more compelling value proposition that addresses their unmet needs.

Benefits matter to hourly, front-line and low-wage workforces

Benefits are a critical part of the value equation – and health benefits are more important now than ever.  When asked to rate their top concerns, in and out of work, a recent Mercer survey of 2,000 US workers found that, across all demographics, physical health has risen to the top of the list -- a change from historical trends, but perhaps not surprising given the pandemic. Second on the list is work-life balance and workload. Mental health is the third top concern across all employees, but it is most pronounced amongst younger workers, women, low-wage workers and Black employees. Some of these groups overlap -- in the survey, women were much more likely to be low-wage workers than men (61% vs. 39%).

Our Health on Demand survey showed that the employees who are offered the most health and well-being benefits and resources – from basics like medical, dental and vision coverage to condition management programs to onsite gyms -- are the most likely to agree that their employer cares about them. Importantly, they are also much more likely to say that their benefits are a reason to stay at their current job. Yet the survey also found that workers whose household income (HHI) is at or below the median ($67,521 in 2020) ) are offered fewer benefits than those with HHI above the median: 39% of those with lower HHI are offered 6 or more benefits, compared to 59% of those with higher HHI. And part-time workers are offered far fewer benefits than full-time workers (only 13% are offered 6 or more benefits). 

If your organization is looking to add benefits and resources of value to lower-wage workers, consider:

  • Benefits that enhance economic stability. While pay is clearly a priority for workers who worry about covering monthly expenses, benefits can enhance take-home pay – for example, by making healthcare more affordable. Benefits that offer income protection, like STD, LTD, and critical illness insurance, are also a key component of financial well-being.
  • Benefits that address mental health. Mental health was an especially big concern for workers who are younger, low-wage, Black, and/or female. Especially for those in health plans with high deductibles, other priorities may put the cost of therapy out of reach. Virtual mental health services are a good way to address the challenge of access and cost, and many telehealth programs include an option for mental health services as well as standalone virtual mental health support.
  • Policies that provide flexibility. Again, women make up a large percentage of the low-wage workforce, and since the onset of the pandemic and the shutdown of schools and daycare, they have had to juggle caretaking and work responsibilities. Schools may be back in session, but they are not back to normal, and parents will need continued flexibility. As a start, consider whether you can offer parents a work schedule that better matches school hours.
  • Virtual care that improves access. As virtual care expands on all fronts, be on the look-out for lower-cost options that might be a differentiated offering for part-time workers. Two things to keep in mind: Training and education may be required on the value of the benefit and how to use it. While 97% of Americans own a cell phone, only 85% own a smart phone and/or have internet access.
  • Impacting the social determinants of health. The most effective approaches will be the ones that “meet people where they are.” A case in point is the recent announcement of a partnership between Walmart and Transcarent – it offers a combination of in-person care and virtual care.

As the pandemic has made clear, frontline and lower-wage workers not only keep business afloat, they keep our nation running. After almost two years of meeting the extraordinary demands created by the pandemic, these workers are asking for more of their employers. How employers rise to this challenge will determine their ability to succeed in the years ahead.

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