- Tech companies continue to cut benefits, and may begin lowering 401[ads1](k) matches and health benefits.
- Most employees won’t leave their jobs even after losing benefits that once defined the tech industry.
- But experts said that could change if employees’ financial incentives were cut.
Tech companies have long touted lavish office perks like on-site dry cleaning, ice cream parlors and even paid egg freezing services to recruit top talent and keep them happy.
Now everything is changing. An economic downturn has driven many companies to cut jobs and benefits, sparking an identity crisis among some tech workers. The tech sector has cut roughly 200,000 jobs since the start of 2023, according to Layoffs.fyi, a website that tracks industry layoffs.
Meanwhile, Google has reduced the hours of some on-site cafes and Twitter has cut back on free lunches. Meta employees said the company appeared to be cutting back on snacks and cereal in cafeterias — after the Facebook owner had already canceled on-site laundry and the Lyft subsidy program. It’s not just Big Tech companies either: tech startups and venture funds opted to scale back or scrap lavish holiday parties last year.
In this new era of austerity, few benefits are safe from cuts – and some may never return. Tech companies in particular are “preparing for a long period of slowing demand and capital investment, so they’re looking at long-term benefits cuts,” Aaron Terrazas, Glassdoor’s chief economist, told Insider.
There is no end in sight for the benefit purge either. Companies will reap these benefits as long as the tighter labor market keeps the risk of talent attrition at bay, experts said.
“The corporate floor seems pretty low at the moment,” said Daniel Keum, an assistant professor at Columbia Business School. “More benefits are going to be taken away, but people don’t want to leave for a lot of reasons, including the current downturn in the industry where a lot of people are looking for jobs.”
But employers should take note: some benefits are more sacred to employees than others.
While many tech workers can do without free sushi bars or massages, they are much more likely to rebel against changes to financial benefits like 401(k) matches, disability insurance and health benefits, including fully covered egg freezing or deep prescription drug discounts.
The main advantages
The suite of benefits that technology companies offer is extensive. This includes the somewhat frivolous, such as restaurant reservations, and the more financially meaningful, such as generous employee discounts, travel expenses and education reimbursement.
Keum called the more impactful benefits “invisible pay.” They are not reflected directly in employees’ wages, but make life easier and less expensive, he said.
The loss of these benefits is much more likely to drive away current or future employees. In a May 2 survey of college seniors by iCIMS, a recruiting software provider, 42% of respondents said they expected employers to offer 401(k) matches, 34% said companies should provide financial planning, and 28% said they wanted a student loan repayment program.
“Most people eventually come to a pragmatic attitude when it comes to what they’re giving up and what their options are out there,” Terrazas said. “The more difficult conversations are those around telecommuting, dependent health insurance coverage and 401(k) matches.”
Experts said tech companies won’t rule out cuts to these economically significant benefits, regardless of whether such changes would alienate workers.
The rise of artificial intelligence and the increasing offshoring of work means that employees may find it harder to claim more benefits. And an abundance of new coding and engineering talent waiting in the pipeline is set to keep the tech job market tight.
So if you work in technology, get ready to say goodbye to some of your favorite perks—possibly forever.
NOW WATCH: Top Videos from Insider Inc.