While U.S. industry waits for Congress to finalize its ObamaCare replacement plan, many employers are facing fierce competition for a limited pool of qualified workers. Companies that persist in offering exceptional health benefits — no matter how Congress resolves to overhaul the system — can attract and retain the best talent, reducing employee turnover costs and improving their employer brand.
In the fourth quarter of 2016, half a million U.S. workers left one job for another, up nearly 20 percent from the same period in 2015. With the unemployment rate approaching a 10-year low, over 80 percent of employers expect to struggle with talent scarcity over the next year, according to Randstad Sourceright’s survey of over 400 HR leaders.
To keep up with growth last year, 32 percent of HR executives reported that they hired extensively throughout 2016, but more than 41 percent say they expect to make even more hires in 2017. The need to fill critical positions is creating a worker’s market, where skilled employees are willing to change jobs, and employers are compelled to offer better benefits to make them stay (or to attract qualified replacements).
Among the reforms Congress is considering is to encourage employees to deposit more pre-tax income into Health Savings Accounts (HSAs), from which they can purchase their own coverage. Workers say, however, that they overwhelmingly prefer employer-provided insurance over additional cash to shop around for their own plans.
In one 2015 survey of 2,000 American workers, 88 percent said they would even consider taking a lower-paying job if it offered better health, dental and vision insurance.
For job seekers, employer-provided healthcare was preferred over improved work-life balance, more flexible hours or even greater vacation time. Millennial workers, in particular, find it difficult to afford healthcare on their own.
A recent Randstad U.S. study found that 45 percent of Millennial workers claim they either cannot afford routine healthcare expenses or can do so only with great difficulty. Employers offering generous healthcare benefits, consequently, will be in a better position to entice these younger workers, especially if healthcare costs continue to rise.
For current employees, insurance benefits are vital to keeping them from leaving their positions. A 2010 ADP study determined that one in three employees is a flight risk, but 60 percent say their company’s healthcare insurance is an important reason they stay.
In fact, 93 percent of respondents in one 2013 workplace survey claimed that an employer’s healthcare benefits were as important to them as salary.
Employers that commit to providing their employees with quality healthcare benefits, regardless of tax incentives, signal that they care enough to invest in the wellbeing of their workers. And when employees feel like their employer cares, they are 28 percent more likely to encourage friends and acquaintance to consider working for the company, according to one 2015 survey.
The best talent leaders will tell you that the feedback of friends and colleagues is the most valuable form of employer branding. Word-of-mouth will make or break a company’s recruitment efforts.
As a tool for employee attraction and retention, generous employer-based health coverage is an investment that will pay for itself.
Employer-provided insurance improves a company’s brand and saves employers the exorbitant costs of replacing talent, which can amount to as much nine months of an employee’s salary by one estimate.
In a tight labor market, where workers are constantly looking for better opportunities, turnover costs this high can quickly undermine a company’s financial performance. HR executives that look beyond the tax code to weigh the value of employee benefits will generally find that employer-provided health insurance is well worth the cost.
Rebecca Henderson is CEO of Randstad Sourceright, one of the world’s leading human resources providers.
The views of contributors are their own and are not the views of The Hill.