If you stopped an average millennial on the street and asked what their biggest financial concern was, the most likely answer would be student loans.
Millennials entering the workforce are in a significantly different financial position than generations before them—the costs of living, housing, and higher education are astronomical and the amount of student debt this generation is graduating with is much higher than previous generations. Many recent surveys have revealed that young people consider paying off their student loans to be the biggest financial challenge they face.
How does this impact the workplace? One trend we see—and will likely continue to see—is the emergence of “alternative benefits,” including employer student loan payment matching programs. Health insurance and 401k matching are no longer sufficient. Employers eager to hire talented younger workers need to pay more competitive base salaries and recognize that alternative benefit options like this and other creative financial support will absolutely become mainstream in the foreseeable future.
It’s a common refrain that millennials demand regular feedback and recognition in the workplace, but they don’t want that at the expense of not being able to meet their financial obligations. Great employers strive to learn what their employees want from their jobs and then use that information to attract and retain key talent. As a result, they are starting to expand their benefit offerings to offer support to their employees in areas where it is most needed. Assistance with student loan payments will have a more immediate and valuable impact for millennial employees with seven years left on loans—whereas a subsidy on a family health plan is more of a future need and a less enticing benefit offering at this stage of their lives. Additional current offerings include $5,000 annual cash payments to be used for anything (e.g., gym membership, pet insurance), interest-free home down payment assistance programs, tax-free HSA funds, subsidized office cafeteria for lunch and for take home meals, free parking, or subsidized shuttles to transport employees to the office. All of these things will help you get and keep the talent that you want.
Additional competitive benefits for millennials is access to a financial planner. Organizations’ retirement services providers may currently offer these services for older workers, but customized sessions specifically for millennials would be a huge value-add. Many large companies provide financial planning support to their top executives, when it is the younger portion of the workforce that probably needs this support more than anyone. This generation receives mixed messages about what to prioritize financially, and they don’t always have the flexibility to do it all. One expert might say contributing extra to a 401k fund should be a main concern while others recommend paying down student debt first. Should a bonus be used to get ahead on student loans or put into a high-yield fund for a future down payment on a house? These options can quickly get confusing—especially when they are all big, life-changing decisions, and their parents don’t have the answers. Access to financial planning support is a great first step in creating more millennial-friendly benefits offerings.
Standard benefit offerings are bound to shift with the generations. What was right for Baby Boomers and GenX isn’t necessarily going to be what’s right for millennials—which in turn may not be right for the future young workforce of 2030 and beyond. An organization’s ability to attract and retain the best new talent will depend largely on whether the compensation and benefits can be customized to meet the needs of their employees.