BOSTON (TheStreet) -- Profits are up and bonuses are flowing again. Case in point: Goldman Sachs (GS) - Get Report reported earnings of $13.4 billion for 2009 and said it would spend an average of $498,000 per employee on bonuses.
Stock options hold value once again. Executive perks that were eliminated during the worst of the recession -- or hidden from prying eyes -- are being flaunted. But will the gravy train make a stop for Wall Street's rank-and-file employees? Will salary and benefit cuts be reversed?
As the economy slowed, employers cut benefit spending 14% from $21,527 in 2006 to $18,496 in 2007, according to the U.S. Chamber of Commerce. Now, with the worst of the recession in the rearview mirror, benefits are getting a second look. While some employers expect to restore previously curtailed benefits, many companies will be looking for cheaper ways to show they care.
"We know that employers are paying attention to costs more than ever," says Dr. Ronald Leopold, national medical director for
institutional business and a part of the team that compiles its annual survey of attitudes regarding benefits. "What we found in our study was that employers were more apt to hold back in terms of salary and compensation than they necessarily were with benefits."
Companies' compensation costs averaged $27.49 per hour worked in 2009, according to the Labor Department. Wages and salaries accounted for 71% of total compensation, while benefits averaged 29%. Employer costs for paid leave (including vacation, holiday, sick, and personal time) averaged $1.86 per hour worked and insurance benefits averaged $2.15 (7.8%). Retirement and costs, which include pension and 401(k) plans, averaged 94 cents (3.4%).
Economic conditions heightened the value employees place on benefits, the MetLife study found. More than 41% of employees surveyed in November considered workplace benefits to be the foundation of their personal safety net, a significant jump from the 33% who said the same thing in August.
"The American worker is more engaged about what benefits are offered at work and they are looking to their employer as the primary support for their financial savings and retirement planning," Leopold says. "We've kind of gone from a world where we used to think of our employer as the place where we got our salary to a place where we get the means to a more successful financial future by way of the benefits they offer."
Leopold expects employers to move away from the one-size-fits-all approach to benefits as the workforce becomes more diverse. The most expensive and in-demand benefit is health insurance and its costs will continue to escalate.
estimates that companies spent, on average, $9,552 per employee for health benefits in 2009, up 6% from 2008. Large employers faced health care cost increases of roughly $532 per employee. Health insurance costs could rise 10% this year.
2009 Benefits and Talent Survey found that chronic medical conditions accounted for 50% or more of annual medical expenditures. Among respondents who plan to change their medical plans this year, 56% are introducing or expanding wellness programs, including those that target stress, smoking and obesity.
Leopold foresees increasing creativity in how companies offer benefits. Many incentives can be provided as opt-ins for employees at little or no cost to employers.
"There are a lot of ways that smaller employers, and certainly larger employers can leverage the value of working for them," he says. "Many employees are thrilled that they can get a better rate for their car and home insurance, have it deducted from their paycheck and view that as part of a value proposition for working for a company."
-- Reported by Joe Mont in Boston.