Companies Keep Slashing Employees’ Benefits for the Worst Reasons

The recent trend of major US companies cutting benefits has sparked controversy, particularly with regard to discretionary 401(k) matches and parental leave policies. At first glance, these decisions might seem like a natural consequence of relying on AI and automation in the workplace. However, upon closer examination, the picture becomes more complex – and disturbing.

Deloitte’s decision to slash benefits for some workers starting next year is particularly egregious. The company plans to reduce paid time off, halve parental leave, and eliminate a $50,000 reimbursement for family planning services. What’s striking about these cuts is that they’re being targeted at specific classes of employees – those in admin, IT support, and finance roles. Meanwhile, client-facing staff will continue to receive their full benefits package.

According to Joan C. Williams, a professor at UC Law San Francisco, Deloitte’s actions are “completely unconscionable.” By cutting benefits for certain employees while leaving others intact, the company is perpetuating a tiered system of treatment that disproportionately affects mothers and families. The US is one of the few countries without a federal paid maternal leave policy, making it an outlier among industrialized nations.

The driving force behind these benefit cuts appears to be increased costs for employer-sponsored health plans. With subsidies from the Affordable Care Act lapsed and insurers raising premiums, companies are facing significant expenses. Sarahjane Sacchetti, a former top executive at benefits administration companies, notes that these costs have increased significantly over the past five years – with a projected 6.5 percent hike in 2026 being the highest since 2010.

The poor state of American health care policy and lack of safety net are major contributors to this trend. Williams argues that companies are essentially passing the buck for their own shortcomings onto employees. By cutting benefits, they’re not only increasing stress levels but also perpetuating a system where workers bear the brunt of economic uncertainty.

Zoom’s decision to reduce parental leave from 22 weeks to 18 weeks is often cited as an example of the trend towards benefit cuts. However, Williams cautions against normalizing this behavior by exaggerating it. Even with reduced benefits, 18 weeks of paid maternity leave still stands out in a country where such policies are woefully inadequate.

Workers should be directing their ire not just at companies for mass layoffs and benefit cuts but also at the government for failing to provide affordable health care, paid family leave, and other social supports. It’s time for CEOs to use their influence to push for humane federal policies or better social services – rather than just cutting benefits to boost their bottom line.

As we watch companies continue to play catch-up on human costs, it’s clear that this is a rot that goes all the way to the top. The US government needs to take responsibility for its own shortcomings and provide necessary support for workers and families. Until then, companies will continue to find creative ways to pass the buck – and it’s up to us to demand better.