Impact of Economic Factors On Workplace Benefits

July 2024

Written by: Patrick Leary , Corporate Vice President and Director, Workplace Benefits Research, LIMRA and LOMA

Economic indicators measure the health of the U.S. economy, its businesses and consumers. As such, they also provide insights into the health of the workplace benefits market. A strong and healthy business environment gives employers the confidence to invest in their businesses and offer comprehensive benefits packages to attract and retain workers. A strong economy affords employees the willingness and ability to participate in workplace insurance programs, retirement savings plans and other benefits.

While the specter of a recession or economic downturn has loomed for quite some time now, the economy remains strong. Bolstered by a strong second half of the year, real gross domestic product (GDP) increased 2.5 percent in 2023, according to the U.S. Bureau of Economic Analysis (BEA). GDP increased at an annual rate of 1.43 percent in the first quarter of 2024, according to the most recent estimate provided by the BEA. Strong consumer spending continues to lead the way.

One economic indicator that continues to cause concern is inflation. While the increases in the inflation rate have waned, prices remain high across a range of goods and services. According to LIMRA research , cost and affordability were top of mind with workers as they reviewed their benefits in 2023. In an inflationary environment, “wallet share” is an important consideration for providers of insurance, retirement and related workplace benefits.

Another form of inflation and a major contributor to the cost of benefits (for both employers and employees) is the cost of health insurance. An employee’s share of rising health insurance premiums limits their ability to participate in other workplace benefits, such as retirement savings plans, wellness programs and voluntary benefits. According to the Kaiser Family Foundation , the average annual premium for employer-sponsored health insurance coverage ...

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