Companies keep cutting their employee benefits for the worst reasons

Employee benefits are In the spotlight this week, due to three recent stories about US companies cutting non-wage compensation for workers.

A Texas technology consulting firm with a forgotten name — TTEC — suddenly became memorable when it suspended its 401(k) discretionary matching program for 16,000 employees until at least the end of 2026. According to Business Insider, which viewed an internal TTEC memo, the company plans to invest in AI certifications, AI tools and training, and automation, among other things.

Audit and consulting giant Deloitte will reportedly cut benefits for some workers starting next year. This includes reducing the amount of parental leave, cutting parental leave in half, and eliminating $50,000 for family planning services such as adoption, surrogacy, and artificial insemination. Meanwhile, San Francisco-based Zoom made a change on a smaller scale and reduced its parental leave for employees from 22 weeks to 18 weeks for parents.

So what is the driving force behind this? Are there more cuts coming? The latter question is impossible to answer, and unfortunately the former is more complicated than “corporate ghouls turning to AI.”

First, “what Deloitte did is absolutely unconscionable,” says Joan C. Williams, a professor at the University of California, San Francisco, the author of several books on work culture and class dynamics, and a frequently cited researcher on these topics. The consulting firm is cutting benefits for a certain category of internal workers — in management, IT support, and finance — while leaving benefits intact for people who work in client-facing roles. The affected worker will see their parental leave reduced from 16 weeks to just eight weeks.

“It treats people differently based on the type of job they have, and reducing any mother’s leave to eight weeks of paid leave is bizarre,” Williams says. “When labor is limited, employers are more generous. But once power shifts, benefits shrink.”

AI is certainly a convenient excuse these days for any corporate decision that harms workers. But the driver here is also the cost of the benefits themselves. Earlier this year, subsidies from the Affordable Care Act ended, and people began withdrawing from health care plans entirely. Insurance companies have cited this as one of the reasons for raising insurance premiums.

The costs of employer-sponsored health plans have increased dramatically over the past five years, Sarajane Sacchetti, a former executive at benefits management companies Clio and Collective Health, who is working on a new health care initiative, told me. A survey last year of more than 1,700 U.S. employers conducted by healthcare consulting group Mercer found that the cost of healthcare per worker was expected to rise on average by 6.5% in 2026, the highest level since 2010. This was after taking cost-cutting measures into account; Otherwise, the cost of the plan will rise by approximately 9 percent.

“This starts to impact how you think about total compensation as an employer,” Sacchetti says. This doesn’t mean the company is the “good guy,” she says, but rather the poor state of American health care policy and lack of a safety net are to blame for much of the stress experienced by workers who are undercompensated or laid off from their jobs.

Williams points out that the United States is one of the few countries that does not offer federal paid maternity leave, which puts it in the same league as Papua New Guinea and Suriname. “This shows how crazy it is to provide employees with basics like pensions and paid parental leave through private employers rather than the way other industrialized countries do it,” says Williams. The proposed solution to it? “The United States needs to join the rest of the universe.”

The irony, of course, is that the US government claims to be obsessed with women having more children. If women in the United States are, as celebrity physician Mehmet Oz put it this week in the Oval Office, “less than children,” then a universal federal paid leave policy would be the obvious place to start. (Oz also said that “having children” is “the most creative thing the universe knows.” Don’t tell AI CEOs.)