Labor Shortfalls Could Reshape Benefits Selling: Eastbridge

Labor shortages in the U.S. will become increasingly common in many industries in the next 15 to 20 years, a development that could have a deep impact on employee benefits selling, a new report predicts.

The scarcity of qualified workers will effectively shift employee benefits decision-making from employers to employees, according to the report from Eastbridge Consulting Group Inc., Avon, Conn.

This development could go hand in hand with a general split of U.S. industry into two different classes: small businesses with under 100 workers and mega-companies with over 1,000 workers, says Eastbridge in “The Future for Insurance Companies in the Benefits Arena–A 2020 Supplement.”

By 2020, most employers will provide a specified amount of dollars to each worker to buy the employee’s choice of benefits. In effect, employers will offer all benefits as part of a defined-contribution package, much like today’s retirement plans.

As a result, job candidates will no longer evaluate benefit program contents in deciding which job offer to accept but rather the job itself and the salary plus defined-contribution dollars, the report says.

By 2020, more products will be unbundled and sold as part of three major benefit instruments: retirement savings, nonqualified savings and protection (insurance), the report continues.

Many employees will self-insure a good deal of their protection benefits, setting aside cash to pay high deductibles for, say, disability, and buying insurance as stop-loss coverage against catastrophic illness or injury, Eastbridge says.