Navigating the Decline of Employment Benefits

Life is better using unlimited leave to sail to Scopello.

My employer just announced that it would be decreasing its 401(k) match from 7% to 6% starting in 2026.  There is be a forthcoming announcement about updates for medical insurance as well, presumably not positive changes for employees.  The company already decided to no longer observe Indigenous People’s Day in October to reduce the federal holidays observed from 11 to 10 and changed our unlimited leave policy to require a minimum hours worked.

It is not a good time to be an employee.  Work conditions are declining as the workforce market tips in the favor of employers—at least based on the quantity of employees looking for jobs.  A wealth of job applicants apply for every job posting, even as many companies close ranks and halt outside hirings due to reduced business.

This is happening across a number of industries for various reasons, from the decline of government contracts to higher costs of importing products, but the pain of companies is being shouldered by their employees as employers choose to cut costs by reducing employee benefits.  To add to the problem, healthcare costs continue to rise, so employers need to spend more to retain the same benefits in many cases.

For years, we have told you to demand the benefits you need to enjoy your life and prioritize it over your work.  Unfortunately, we fear that is becoming less possible in an increasing number of fields.  As companies previously considered leaders in employee welfare reduce their employee benefits, we must reconsider how employees should navigate this new reality.

How to Stay Without Being Devalued

If I receive a 2–3% cost-of-living raise at the beginning of 2026 but I also receive a 1% reduction in employer 401(k) contributions, lose an annual holiday, have significantly less paid time off available to me, and receive lower-quality healthcare, my overall compensation will decline since I first secured my last promotion in October 2024.

Benefits are part of your overall compensation package.  If your benefits decline, your overall compensation may decline even if you receive a small raise.  Salary is not the only piece of compensation from your employer.

But with so many employers reducing their benefits packages to cut costs, finding job opportunities that interest you and offer an ideal benefits package may be limited or impossible to find.  If you already like your current role but are experiencing declining benefits, you can stay without devaluing yourself, but this requires a shift in outlook.

First, consider whether there are benefits available to you that you have not previously used but would like to in the coming year.  For example, I usually calculate my compensation package focused on the salary, leave, health insurance, and 401(k) match.  Those are my priorities.  However, my employer offers other benefits.  For someone considering an advanced degree or professional certification, my employer offers tuition assistance that may equal or exceed the value lost in the decline of other benefits.  This only has value for employees at certain stages of their careers, but it adds much value when applicable.

There are similar opportunities for those at various life stages.  My employer still offers financial assistance regarding fertility treatments, so employees looking to start a family may recover their benefits value by choosing to start a family now, taking advantage of family leave if they succeed, and reassessing whether the company’s benefits make sense in a year or two.

For employees who are not in a career or life stage where it makes sense to take advantage of more specific benefits, the decline of benefits may be devaluing if they do not take any further action.  The obvious counter is to try to get a larger-than-normal raise or a promotion.  But many companies remain stingy when it comes to raises or require significant time and/or evidence to hand out a promotion.

If you are sticking with a job with a declining compensation package and no opportunity to secure a significant raise, act your wage.  Your employer decided to decrease your compensation.  It is your turn to decrease, or at least delay the pace of, your output.  This does not mean shirking your job responsibilities, but it does mean bringing less energy to the workplace and accepting when this new work energy level means taking an extra day to deliver a final product.

When to Leave

For me, benefits are what make a job with an employer appealing.  There are opportunities to make money outside of employment, and many of those opportunities come with more flexibility over your own time and schedule.  As benefits decline, there comes a point when a job is no longer worth the compensation.

I am approaching that point.  My company’s 7% 401(k) match and current health insurance benefit last through the end of the year, and our annual raises are released in the second week of January.  At that point, I plan to crunch the numbers and see if my overall compensation package is actually higher than it was in late 2024.  If my overall compensation declines, I will probably leave the restrictions of working for an employer with control over my schedule.

This is happening across various industries in increasing numbers.  Decreasing workplace flexibility has pushed out the first wave of talented employees with options.  Declining benefits will push out the second wave of talented employees.  Tons of employees will still seek jobs, but the most talented will continue to flee the 9-to-5 to control their own schedules.

If you are considering leaving your employer to work for yourself, set yourself up before taking the plunge.  On the financial side, this means creating a financial runway and verifying that you have enough to pay for your health insurance.  Schedule a doctor’s appointment before leaving your employer, and visit the exchange to see what health insurance makes the most sense for you.  On the business side, it means putting in the work and research to set yourself up with a plan before telling your boss they do not pay you enough.  Get yourself set up, and then make the decision to walk.

The Impact on Employers

Employers will have fewer talented employees as employment benefits decline.  Employees leave one-by-one rather than all at once.  It will take years for employers to realize the full impact of driving top employees out of the workforce.

Over time, some of those employees will compete for business with their former employers.  Hopefully, those employees that form their own businesses will become the type of employer they seek, offering benefits that their employees value.  If they do, the employees leaving the workforce today will become the future employers that keep some talented employees in the workforce.

My employer just announced that it would be decreasing its 401(k) match from 7% to 6% starting in 2026.  There is be a forthcoming announcement about updates for medical insurance as well, presumably not positive changes for employees.  The company already decided to no longer observe Indigenous People’s Day in October to reduce the federal holidays observed from 11 to 10 and changed our unlimited leave policy to require a minimum hours worked.

It is not a good time to be an employee.  Work conditions are declining as the workforce market tips in the favor of employers—at least based on the quantity of employees looking for jobs.  A wealth of job applicants apply for every job posting, even as many companies close ranks and halt outside hiring due to reduced business.

This is happening across a number of industries for various reasons, from the decline of government contracts to higher costs of importing products, but the pain of companies is being shouldered by their employees as employers choose to cut costs by reducing employee benefits.  To add to the problem, healthcare costs continue to rise, so employers need to spend more to retain the same benefits in many cases.

For years, we have told you to demand the benefits you need to enjoy your life and prioritize it over your work.  Unfortunately, we fear that is becoming less possible in an increasing number of fields.  As companies previously considered leaders in employee welfare reduce their employee benefits, we must reconsider how employees should navigate this new reality.

How to Stay Without Being Devalued

If I receive a 2–3% cost-of-living raise at the beginning of 2026 but I also receive a 1% reduction in employer 401(k) contributions, lose an annual holiday, have significantly less paid time off available to me, and receive lower-quality healthcare, my overall compensation will decline since I first secured my last promotion in October 2024.

Benefits are part of your overall compensation package.  If your benefits decline, your overall compensation may decline even if you receive a small raise.  Salary is not the only piece of compensation from your employer.

But with so many employers reducing their benefits packages to cut costs, finding job opportunities that interest you and offer an ideal benefits package may be limited or impossible to find.  If you already like your current role but are experiencing declining benefits, you can stay without devaluing yourself, but this requires a shift in outlook.

First, consider whether there are benefits available to you that you have not previously used but would like to in the coming year.  For example, I usually calculate my compensation package focused on the salary, leave, health insurance, and 401(k) match.  Those are my priorities.  However, my employer offers other benefits.  For someone considering an advanced degree or professional certification, my employer offers tuition assistance that may equal or exceed the value lost in the decline of other benefits.  This only has value for employees at certain stages of their careers, but it adds much value when applicable.

There are similar opportunities for those at various life stages.  My employer still offers financial assistance regarding fertility treatments, so employees looking to start a family may recover their benefits value by choosing to start a family now, taking advantage of family leave if they succeed, and reassessing whether the company’s benefits make sense in a year or two.

For employees who are not in a career or life stage where it makes sense to take advantage of more specific benefits, the decline of benefits may be devaluing if they do not take any further action.  The obvious counter is to try to get a larger-than-normal raise or a promotion.  But many companies remain stingy when it comes to raises or require significant time and/or evidence to hand out a promotion.

If you are sticking with a job with a declining compensation package and no opportunity to secure a significant raise, act your wage.  Your employer decided to decrease your compensation.  It is your turn to decrease, or at least delay the pace of, your output.  This does not mean shirking your job responsibilities, but it does mean bringing less energy to the workplace and accepting when this new work energy level means taking an extra day to deliver a final product.

When to Leave

For me, benefits are what make a job with an employer appealing.  There are opportunities to make money outside of employment, and many of those opportunities come with more flexibility over your own time and schedule.  As benefits decline, there comes a point when a job is no longer worth the compensation.

I am approaching that point.  My company’s 7% 401(k) match and current health insurance benefit last through the end of the year, and our annual raises are released in the second week of January.  At that point, I plan to crunch the numbers and see if my overall compensation package is actually higher than it was in late 2024.  If my overall compensation declines, I will probably leave the restrictions of working for an employer with control over my schedule.

This is happening across various industries in increasing numbers.  Decreasing workplace flexibility has pushed out the first wave of talented employees with options.  Declining benefits will push out the second wave of talented employees.  Tons of employees will still seek jobs, but the most talented will continue to flee the 9-to-5 to control their own schedules.

If you are considering leaving your employer to work for yourself, set yourself up before taking the plunge.  On the financial side, this means creating a financial runway and verifying that you have enough to pay for your health insurance.  Schedule a doctor’s appointment before leaving your employer, and visit the exchange to see what health insurance makes the most sense for you.  On the business side, it means putting in the work and research to set yourself up with a plan before telling your boss they do not pay you enough.  Get yourself set up, and then make the decision to walk.

The Impact on Employers

Employers will have fewer talented employees as employment benefits decline.  Employees leave one-by-one rather than all at once.  It will take years for employers to realize the full impact of driving top employees out of the workforce.

Over time, some of those employees will compete for business with their former employers.  Hopefully, those employees that form their own businesses will become the type of employer they seek, offering benefits that their employees value.  If they do, the employees leaving the workforce today will become the future employers that keep some talented employees in the workforce.