Over the last few decades, the two main pillars of employee benefits have been healthcare and retirement benefits. In recent years, employee benefit packages have expanded with countless point solutions for family planning, tuition reimbursement, pet insurance, etc. While these are important offerings, these point solutions frequently are relevant to or used by only a small percentage of employees, so they haven’t turned into the same behemoth of an employee benefit pillar as healthcare and retirement. What will be the next employee benefit that is as ubiquitous as healthcare and retirement?
What does the next generation of employee benefits look like?
What will be the next benefit that, like healthcare and retirement benefits, provides impactful, equitable, and critical support to all employees?
In this article, I’m going to explain why, as a mechanical engineer with an expertise in home energy use, I believe these three trends are paving the way to the next generation of employee benefits:
- The cost of housing and transportation continues to rise.
- More employees want financial wellness benefits.
- More employees want to work for companies committed to the health of the environment.
Ultimately, I predict that the next massive employee benefit pillar is a solution that helps employees upgrade to efficient home technology and personal transportation to simultaneously reduce their home and transportation expenses and their environmental footprint.
Trend #1: The cost of housing and transportation continues to rise
Healthcare and retirement benefits have maintained their prevalence and importance for two main reasons: cost and relevance.
Cost: Without employer-sponsored healthcare and retirement, the average individual would have to dedicate a significant portion of their income to these areas. We all know that personal financial stress can reduce an individual’s productivity at work. So, it makes sense that companies continue to offer healthcare and retirement benefits to reduce employee cost of living and financial stress.
Relevance: Almost everyone will need some level of healthcare services throughout their lifetime, and most people desire the financial means to retire. Because healthcare and retirement benefits are relevant and valuable to the large majority of employees, they can help companies attract and retain talent across the board.
So when looking at the next generation of employee benefits, we should be thinking about what types of living expenses are significant, painful, and ubiquitous. Not everyone has or wants a family (family planning benefits), not everyone needs has student loans (tuition reimbursement benefits), not everyone has pets (pet insurance benefits). What are financial pain points that most employees have in common?
The US Bureau of Labor Statistics shows that in 2023, the two largest areas of consumer spending were housing and transportation, accounting for almost 50% of average annual expenditures. Like healthcare and retirement, housing and transportation are costly.
Housing and transportation are also relevant to most employees. Many employees are housed, and many employees use modes of transportation other than walking to get around.
Therefore, by offering an employee benefit that makes housing and transportation more affordable, companies can address a large financial pain point for many of their employees. But what is the most financially sustainable way for companies to do this? What is an affordable way that companies can reduce, not just offset, the cost of housing and transportation for their employees?
Trend #2: More employees want financial wellness benefits
Finding a prudent way to help employees reduce their cost of housing and transportation would address significant expense areas for many employees. This is important because more and more employees are seeking help with their financial wellness. A recent WTW study found that 66% of employees want more help with financial wellbeing.
What would be a good way for companies to address financial wellness through a housing and transportation lens? Utility bills and fuel expenses are a great place to start.
Almost 30% of US households struggle to afford their utility bills, let alone the efficiency upgrades that would make these bills more affordable. With hybrid and remote work here to stay, utility bills are higher than ever as people spend more time at home.
As for the cost of transportation, fuel prices are often a concern for individuals.
Per Scope Zero’s calculations, with simple upgrades to efficient home tech and personal transportation, like LEDs or Energy Star refrigerators or electric vehicles, the average US home can save over $5,000 per year. This amount of savings would provide a crucial positive impact on the financial wellness of employees, immediately and for years to come.
Trend #3: More employees want to work for companies that are committed to the health of the environment
The third and final trend that is pointing to the next generation of employee benefits is that more employees want to work for companies that are committed to the health of the environment. In fact, SHRM found that 70% of employees want employers to act on climate change. While it’s clear how the cost of housing and transportation are related to employee financial wellness, you might be wondering why I included this third trend about the environment in the mix.
I have spent the last decade of my career mapping out the relationship between personal finance and personal environmental footprint. I used to design energy- and water-efficiency upgrades for military base housing all over the US to reduce their utility bills. I also studied cost-effective, energy-efficient building design in my graduate studies at Stanford University. I even made a podcast called It All Adds Up, which teaches people which everyday items they can upgrade, modify, or use differently to simultaneously save money and resources (like energy, water, food, and raw materials).
Over the last decade, I’ve learned that the best way for the average American to simultaneously improve their financial wellness and lower their environmental footprint is to make simple efficiency upgrades to their home technology and personal transportation.
With home and transportation upgrades, the average American home can save over $5,000 per year on utility bills and fuel expenses. They can also save 22,000 gallons of water per year, over 5,000 kWh of electricity per year, and over 1,000 gallons of gasoline per year.
As you can see, there is a direct and significant relationship between personal cost of living and personal environmental footprint.
And since employees want to work for companies that are committed to the health of the environment, an employee benefit that helps employees reduce their personal environmental footprint clearly demonstrates this commitment by investing in both employees and the environment.
Why do equitable and impactful employee benefits matter to HR leaders?
By offering an equitable and inclusive employee benefit that helps employees upgrade their home technology and personal transportation, HR leaders can drive positive financial and environmental impact for their employees and their company. Here are some of the results HR leaders can achieve:
- Reduced employee turnover costs because employees feel valued and engaged in purpose-driven initiatives.
- Increased employee productivity by reducing personal financial stress.
- Enhanced mission-focused culture engaging and educating employees about environmental sustainability and financial wellbeing.
- Accelerated corporate ESG efforts by reducing commute and work-from-home emissions with more sustainable employee homes and transportation methods.
Conclusion
Providing employee benefits and engagement solutions that help employees upgrade their home technology and personal transportation are a win-win-win for employees, companies, and the planet. Employees reduce their cost of living and feel proud to work for a company that provides purpose-driven benefits. Companies attract and retain talent while accelerating their ESG goals. The planet wins from less resource consumption and pollution. The future is now for financial and environmental wellness. Companies that win in the future will be companies that prioritize both financial and environmental health today.
About The Author
Lizzy Kolar is the Co-founder and CEO of Scope Zero. Lizzy holds a master’s degree in sustainable design engineering from Stanford University and a bachelor’s degree in mechanical engineering from West Virginia University. Lizzy developed her expertise in residential energy consumption as an engineer at Ameresco, where she designed cost-effective energy- and water-efficiency upgrades for military base housing across the United States. Lizzy is leading Scope Zero’s mission to reduce personal utility bills and fuel expenses by $300B per year, removing the carbon emissions equivalent of 125M cars from the road.
Other Articles from Lizzy:
Founder Spotlight: Lizzy Kolar, Co-Founder and CEO of Scope Zero
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