I’ve been observing a growing list of "non-negotiable" expectations from new entrants in the workforce—specifically in high-stakes service fields like healthcare.
The "List of 6" commonly demanded includes:
High entry-level wages.
Premium healthcare (low/no deductibles or copays).
Substantial PTO.
High scheduling flexibility.
Paid parental leave.
Paid family medical leave.
My question for the economists here: From a macro and micro perspective, how does a business—specifically one where revenue is capped by external factors like insurance reimbursement rates—survive this "benefit creep"?
Is there a theoretical "ceiling" to total compensation before it forces a structural failure of the business model, or are there hidden efficiencies/economic shifts that allow for this level of support without collapse? I am interested in the philosophical and economic trade-offs (e.g., productivity vs. cost-push inflation) involved in this shift.
At what point does the "Total Compensation Package" create a structural viability crisis for service-oriented industries?
byu/SeaRepresentative42 inAskEconomics
Posted by SeaRepresentative42
1 Comment
With the exception of scheduling flexibility, these benefits demands are effectively demands for higher pay with tax advantaged benefits. They do impose a bit of overhead in aggregate on employers, but employers broadly treat the cost of the employee as their total compensation cost for internal decisions about hiring. And that makes economic sense, because the employer cares about the employee cost relative to their productivity, not the specific allocations of cost within the compensation package.
Weirdly, this came up in a conversation after a job interview I was in last week. The hiring HR person told me the per employee value of their benefits package (which was generous, although less so for my situation). We talked about this exact thing as to how employees perceive compensation in offers vs. how employers perceive the compensation.