Employers Struggle to Meet Employee Demand for Higher Pay, Better Benefits

With increased turnover rates in 2023 and rising demands from employees for higher pay and better benefits, employers continue to face challenges in retaining and recruiting top talent, according to new research conducted by Franklin Templeton Investments. 

According to the firm’s “The Voice of the American Employer Survey,” which included responses from 1,000 U.S. employers, all with more than 100 employees, 62% said they conducted layoffs in the 10 months prior to the survey, and 91% of employers said they experienced at least a 10% increase in staff turnover. 

Around half of turnover was attributed to voluntary terminations, such as employees quitting, and the other half was due to involuntary terminations, such as company layoffs. 

Additionally, 79% of employers recognized that their employees’ expectations for compensation growth have increased in recent years, and 76% said employees increasingly value work-life balance, as well as career advancement. In particular, Franklin Templeton found that the rising tide of promotion requests are often fueled by younger workers, as 86% of employers reported that their younger employees have been more vocal about their desire for raises and/or promotions. 

Around 82% of employers also agreed with the statement that “The workplaces of today face insatiable employees that continue to ask for more,” with 80% of employers struggling to meet employees’ requests for increased compensation.  

While a majority of employers said they recently increased the number of benefits they offer or have increased the quality of their benefits, 80% said they are struggling with managing the increasing cost of providing benefits, and 68% said health insurance premiums for employees increased in the last 12 months. 

Employee Concerns 

Employers are trying to offer the right benefits to retain and attract talented workers, and those workers are, of course, most concerned with their own finances.  

According to Franklin Templeton’s “The Voice of the American Worker Survey,” which included responses from 2,001 U.S. adults, the majority of workers reported being concerned about their income and maintaining a standard of living, with other concerns including retirement savings and health care costs.  

For the first time in Franklin Templeton’s surveys, financial health ranked higher in importance than mental and physical health, experiencing a 15% growth from 2023 to 2024. Many workers said they are concerned about running out of money in retirement, and 55% said they plan on continuing to work during retirement. 

The National Institute on Retirement Security also found in its new survey on retirement insecurity that 79% of Americans agreed, in 2023, that there is a retirement crisis, up from 67% in 2020. In addition, 73% of respondents said recent inflation has made them more concerned about retirement.  

Franklin Templeton found that the most common factors workers cited as preventing them from retiring when they wanted to were rising health care costs, global economy uncertainty, rising housing costs and their debt burden.   

Employers Are ‘Out of Sync’ 

In general, employers are making strides toward addressing employee needs by bolstering benefits packages and offering financial wellness benefits, but they are often out of sync with employees’ needs.  

For example, if given the option for an enhanced benefit, employees expressed a clear preference for increased pay and increased 401(k) match, while employers assume employees would prefer improved health and dental insurance, health savings accounts and charitable contributions. 

Seven in 10 workers also reported experiencing challenges when it comes to understanding benefits offered by their employer. Specifically, 33% of workers said they experience confusion when changing benefits and plans, and 29% said they struggle to understand the “true monetary value” they would receive from certain benefits. 

As a result, Franklin Templeton recognized that employers need to work to effectively communicate the resources they make available and focus more on articulating the holistic value of total compensation and benefits packages. 

Both surveys conducted by Franklin Templeton were fielded in November 2023.