As low unemployment rates tighten the labor market, employers must for new ways to attract top talent. Employees are demanding more robust benefits packages from their employers with offerings known as fringe benefits. But, what exactly are fringe benefits? And why should you care about them as an employer?
What are fringe benefits?
Fringe benefits, according to Investopedia, are additional forms of compensation for employees beyond their base salaries. Health insurance and 401(k) matching are technically considered to be fringe benefits but have become so ubiquitous as to be almost expected by employees. Today, fringe benefits look different than they have in the past and make a big difference in the job market.
Some increasingly popular examples of fringe benefits:
- Maternity and paternity leave
- Student loan repayment assistance
- Financial wellness planning/counseling/workshops
- Office snacks
- Gym memberships
Fringe benefits can often be tax exempt for employers, which makes them even more attractive to offer. Employees typically have to report the fair market value of the received benefits on their taxes but not for all offerings.
Why should you offer fringe benefits?
According to Metlife’s annual Employee Benefits Trends Study, 73% of employees reported that they would feel greater loyalty to their employer if the benefits offerings better fit their needs. Moreover, 83% if employees said that they would be willing to take a small paycut (~4% on average) if they had a better choice of benefits.
It might take some budget shifting to offer things like student loan repayment contributions. Or it might seem inconsequential to keep the kitchen fully stocked with snacks. It is the little things in life that matter, however, and fringe benefits have a real impact on employee satisfaction.
As employers increasingly have to compete over talent, fringe benefits can make the difference in a hire. Employees expect that they are going to receive health insurance and 401(k) matching but are looking for even more perks to sweeten the deal. Once hired, these perks can help retain employees and reduce pesky turnover costs.