- Tech companies continue to cut benefits and may start cutting 401(k) matches and healthcare benefits.
- Most employees won’t quit their jobs even after losing the perks that once defined the tech industry.
- But experts said that could change if financial incentives for employees are reduced.
Tech companies have long touted lavish office perks like on-site dry cleaning, ice cream bars, and even paid egg freezing services to recruit top talent and keep them happy.
Now everything is changing. An economic downturn has caused many companies to cut jobs and benefits, triggering an identity crisis among some tech workers. The tech sector has cut about 200,000 jobs since the start of 2023, according to Layoffs.fyi, a website that tracks job cuts in the industry.
Meanwhile, Google has reduced the opening hours of some on-site cafes and Twitter has reduced free lunches. Meta employees said the company appeared to be cutting snacks and cereals in cafeterias – after the Facebook owner had already canceled on-site laundry and its Lyft subsidy program. It’s not just Big Tech companies either: Tech startups and venture capital funds opted to scale back or ditch lavish holiday parties last year.
In this new era of austerity, few benefits are safe from the cuts – and some may never return. Tech companies, in particular, “are bracing for an extended period of slowing demand and capital investment, so they’re looking at longer-term reductions in benefits,” Aaron Terrazas, Glassdoor’s chief economist, told Reuters. Insider.
There’s no end in sight for the purge of perks, either. Companies will exploit these advantages as long as the tightening labor market wards off the risk of talent drain, experts said.
“The floor for business looks pretty low right now,” said Daniel Keum, an assistant professor at Columbia Business School. “More benefits are going to be cut, but people won’t leave for many reasons, including the current downturn in the industry where many people are looking for jobs.”
But employers should take note: some benefits are more sacred to employees than others.
While many tech workers can live without sushi bars or free massages, they’re much more likely to rebel against changes to financial benefits like 401(k) matches, disability insurance, and health care benefits, including fully covered egg freezing or in-depth prescription medication. discounts.
The most important advantages
The suite of benefits offered by technology companies is vast. This includes things that are somewhat frivolous, such as reserving restaurant tables, and more financially important, such as generous employee discounts, travel expenses, and education reimbursements.
Keum called the most impactful perks “invisible wages.” They are not directly reflected in employees’ salaries but make their lives easier and cheaper, he said.
The loss of these benefits is much more likely to drive away current or future employees. In a May 2 survey of college seniors by iCIMS, a recruiting software provider, 42% of respondents said they expected employers to offer 401(k) matches, 34% said said companies should provide financial planning and 28% said they wanted a student-loan repayment program.
“Most people eventually come to a pragmatic stance in terms of what they’re giving up and what their alternatives are,” Terrazas said. “The trickiest conversations are around remote work, health insurance coverage for dependents, and 401(k) matches.”
Experts said tech companies wouldn’t rule out cuts to these financially significant benefits, whether or not the changes alienate workers.
The rise of artificial intelligence and the growing outsourcing of work means employees may find it harder to demand more benefits. And a glut of new coding and engineering talent waiting in the pipeline is expected to keep the tech job market tight.
So if you work in tech, get ready to say goodbye to some of your favorite perks, maybe forever.
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