How startups can help you win the talent war with tailored employee benefits

Nearly 50 million employees in 2021 voluntarily left their jobs. The average employment of employees over the age of 25 has fallen from 5.5 to 4.9 years since 2014. Employees aged 25 to 34 now stay in work for less than three years on average.

This isn’t just “stopping quietly.” American workers are ready to leave their current jobs – and they’re sending that message loud and clear.

In the battle for talent, employer benefits have become an important weapon. Sixty-three percent of employees said they would leave their current company for a job with better benefits — even for equal or lower wages. In response, employers are launching a benefits-based offensive, complete with longer PTO, remote work options, fertility support and mental health support.

It’s an exciting time to sell employee benefits

The employer sales channel has inherent and often overlooked benefits. These include a steady user base, employee financials and demographics, and no consumer price barrier when employers cover costs. New and exciting products are emerging from the combination of consumer APIs (such as Plaid for consumer banking information and Method, spinning wheel and Right foot for consumer liability data) and a new cohort of employment data APIs (including Argyle, pin wheel and To merge). With a deeper financial view of individual employees, startups can build more tailored benefits.

These new APIs and a competitive job market have made the employer channel increasingly attractive. We’re particularly excited about two categories that are currently being sold through employers.

Access to earned wages

More than 40% of full-time workers in the US live paycheck to paycheck. Earned Wage Access (EWA) services allow employees to receive their wages earlier than the usual biweekly cadence. They represent the latest in a long line of “income equalization” products that make employees’ money available more quickly. The first iteration of income smoothing was the payday loan, which often sent people into vicious debt cycles due to astronomical interest rates.

The next iteration of income smoothing involved B2C cash advances that helped consumers avoid overdrafts. Companies like Dave and Earn provide consumers with cash advances up to $750where the service is dependent on membership fees and voluntary gratuities.

The most recent iteration of Income smoothing is EWA sold through the employer channel. Because employers have access to wages and hours worked, they can provide risk-free “advances” to their employees. Players like Rain and Tap control sell through the employer and charge employees a small fee per advance, while others like that Claire and Branch completely remove cost barriers by relying solely on the exchange of debit cards.

Financial well-being

Financial stress among employees is currently on the rise all the time high, resulting in high turnover and low productivity. Employers are turning to fintech to relieve the stress.

Traditional financial advisors are equipped to serve only high net worth individuals. However, employers can provide financial advice at no additional cost to employees. This also gives each employee a clearer financial identity, with visibility into salary, 401(k), insurance, and stock options. Companies like North Star and Origin offer dedicated certified financial planners and online tools at no cost to the employee.

Financial wellness products don’t just take the form of advice. Products now exist for employers to help employees build emergency savings (such as Sunny Day Fund) or paying off student loans in the style of a 401(k) match (such as Unsaddled). Companies like PTO genius and PTO Stock exchange enabling employees to use accrued PTO to contribute to their retirement or pay off personal debts.

What’s next?

Done right, selling through employers can help more consumers get products, with benefits for both employers and employees. As the channel evolves, we expect two larger shifts.

We expect more benefits to become portable as job-switching Millennial and Zoom professionals move from company to company and gig workers seek employment beyond the traditional nine-to-five. Companies like Icon and Manifesto help link retirement plans to employees and reduce 401(k) account abandonment.

In the growing sector of the gig economy, Pass Health and Catch provide insurance benefits to the growing population of self-employed and 1099 employees. Some companies, such as Northstar, are moving in this direction by allowing continued access to employer-sponsored benefits after the employee leaves, and we expect others to follow this trend.

Second, employers will increasingly offer stratified benefits that are unique across generations, parental statuses, and income levels. Depending on the stage of life, employees’ preferences may differ regarding access to travel benefits (eg Donde) versus fertility benefits (eg Carrot). Employees in the office will care more about commute benefits such as Part Mobility while home workers prefer to access a service like Desk card.

In fact, less than half of the current working population is “very satisfied” with their current employment conditions package. In response, products such as Form offer a fixed budget alongside a wide range of potential benefits, allowing employees to choose what matters most to them.

There are real challenges associated with selling a service as an employer benefit, including the inherent difficulties of replacing B2B customers to handle everything from marketing to customer success with your end users. But in today’s job market, employer benefits are an effective way to drive employer retention, productivity and happiness – which is why they’ve become an essential resource for HR staff.

John Lin and Sarah Lamont