The COVID-19 pandemic permanently reshaped the labor market, creating ripple effects that continue to shape compensation and
As featured in Issue 2 of
Wages climbed sharply during the pandemic as shifts in workforce composition — particularly the temporary exit of many
The workforce itself has also changed. Employees aged 16 to 24 now account for 12% of the workforce, up one percentage point from before the pandemic. Meanwhile, the share of workers aged 45 to 64 has dropped by two points compared to before the pandemic. These demographic changes, combined with heightened employee expectations, mean that traditional approaches to compensation and benefits can adapt accordingly.
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Modular benefits for a diverse workforce
A one-size-fits-all approach is no longer effective. Employees bring diverse needs based on life stage and personal priorities. Early-career workers may seek tuition reimbursement, while mid-career professionals may prioritize dependent care assistance. Later stage employees may place greater value on enhanced retirement contributions.
Work arrangements add another layer. Remote employees often appreciate stipends for home office equipment, while on-site employees may place higher value on commuter benefits. HR leaders can address these differences by designing flexible benefits structures that allow employees to choose what matters most to them without dramatically increasing costs.
Emerging expectations must also be considered. Mental health resources and financial wellness programs are increasingly viewed as baseline offerings rather than optional perks. Decision-support technologies can further personalize the experience by guiding employees through options based on health history, financial needs and lifestyle preferences.
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Rebalance compensation strategy
Because wage expectations will not return to pre-pandemic norms, benefits are becoming a critical differentiator when organizations cannot compete purely on salary. When raising wages is not feasible, strengthening the total rewards package is essential. Highlighting benefits such as wellness stipends, student loan repayment or expanded parental leave demonstrates value in ways that resonate with today's workforce.
Another strategy is identifying high-impact roles that require scarce or highly technical skills. Investing more heavily in these positions ensures limited resources are targeted where they deliver the most value. At the same time, borderless hiring offers new ways to optimize cost and capability by sourcing talent across regions or globally.
Optimize value for new generations
With a growing share of Gen Z and millennials, more emphasis is needed on organizational purpose and social impact. Research has shown these generations are eager to see employers invest in their growth. Providing clear career pathing helps them envision a future within the organization, while reverse mentoring programs give them a voice early in their careers.
Moreover, considering how your organization highlights meaningful work and delivers a strong Employee Value Proposition may resonate with those earlier in their careers.
Equally important is financial empowerment. Gen Z and millennials desire support for managing their lives outside of work, from budgeting and homebuying to maximizing benefits and retirement savings. Offering financial literacy workshops or tools for optimizing 401(k) contributions can help foster recruitment, engagement and retention.
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Communicate benefits effectively
Even the most thoughtfully designed benefits package falls short if employees don't understand its value. With five generations in the workforce, communication cannot rely on a single channel. While email may reach some, others engage more with text reminders, short videos, webinars or workplace signage.
A multi-channel strategy ensures no employee group is overlooked. Tailoring both content and delivery reduces barriers to informed decision-making, drives higher enrollment in underutilized benefits, and strengthens employees' perception of the employer's commitment.
Make work human-centric
The pandemic blurred the lines between work and personal life, shifting expectations of what employers should provide. Flexibility has emerged as one of the most valued benefits, whether through remote and hybrid models, flextime or expanded leave policies. Employees are also looking for more holistic support, including daycare options, mental health days and extended parental leave.
The key is to design flexible policies that adapt to the diverse needs of today's workforce. Recognizing that flexibility looks different across employees — and providing multiple paths — creates a more inclusive and supportive environment.
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The pandemic permanently altered the structure of the workforce, making compensation and benefits inseparable. Persistent wage growth and a younger demographic mix have raised expectations, requiring employers to go beyond salary in shaping employee experience.
For benefits professionals, the challenge is clear: Personalize offerings, rebalance compensation strategies, empower younger workers financially, communicate effectively and embrace flexibility. Organizations that rise to this challenge will not only retain talent, but also build a reputation as employers of choice in a competitive labor market.
