Are Perks Instead of Pay Raises Best for You or just another Corporate Sleight of Hand? Is this new employer trend something that is really in your long-term financial benefit or just theirs? Today in the Denver Post’s Business section ran an article called “Job Perks Take Place of Pay Raise”. It was a re-posted version of the original Washington Post article from July 28, 2015 called “Companies have found something to give their workers instead of raises”. There was also a similar article May 25, 2015 by the New York Times “One-Time Bonuses and Perks Muscle Out Pay Raises for Workers”. These articles highlight that pay raises are going the way of pensions and being replaced with perks. Perks such as flexibility, gift cards, and occasional bonuses.

I am all for more job flexibility and performance bonuses just like the next person. But this smells of the same garbage that went on in the late 1990s through early 2000s. I think everyone should accept this new employment compensation paradigm with your eyes wide open. There is a huge difference between a pay raise and these other perks. Much should be considered before drinking the Kool-Aid and jumping for joy hand in hand with your employer.

Are Perks Instead of Pay Raises Best for You- The Problem with Perks

The thing about perks is they can easily be cancelled or taken away

Perks are unlike a raise which is usually added to your salary and never taken away. That is what happened to me over many years while I was an engineer in my first career. The company decided that 10% of our salaries should be at-risk and based on performance. So our salaries were lowered. However based on performance I could get up to a 15% of salary as a bonus.

You never knew ahead of time either. You could be the biggest performance animal. Never saying no to staying late or working weekends. Shooting for a bonus is risky. They can erase it at the last-minute for whatever reason they deem. Its like all the good work never happened. But they will still expect it going forward.

Raises however,

if you qualify for a raise as a percent of income rather than a set dollar amount you actually benefit from compounding. That’s because the percentage includes last year’s salary increase. Qualifying for a yearly 10% or 15% bonus on a flat salary year after year is worth much less to you over time. As you lose all compounding. Don’t believe for a minute this is lost on your corporate masters.

Flexibility sounds great.

Having the ability to take time to do what is important to you would be a great perk. So would the ability to shift your hours of work. Or work from your home office occasionally.

If you absolutely love what you are doing then they have almost created a working lifestyle you don’t need to retire from. You can “keep on trucking” living on a perk heavy but a flat salary.

If you don’t love what you are doing then you have a lot of flexibility. But you might be financially strangled to get ahead and unable to meet your financial goals so that you can one day retire.

Flexibility and gift cards are not going to pay off your student loans.

It won’t escalate your financial independence savings rate. Or afford you the ability to buy a home.

Flexibility that offers more free time seems a little iffy to me when over 40% of Americans can’t even take all of their allotted vacation time each year

People loose vacation days because there is too much work and many other career related reasons. So where is this fee time coming from? If you don’t believe me just google “American untaken vacations” and see all the reports.

I know where I last worked they would ask us to pull all-nighters. Just to meet an impossible last-minute executive initiative deadline. They would offer comp-time for all the hours over 40 worked. But when it came time to take the time-off it was always denied and requested we take it at a later time when it wasn’t as busy. That happened over and over and it was never to be taken because it was always busy.

I know many who work from home who are paid a 40 hour a week salary. But because the business knows they work from home they have no boundaries and engage them at all hours. They end up working well over 40 hours a week.

The Perks offered may not even matter to you but that is the new compensation package.

Maybe they offer a free gym membership. but it is close to work, not your home and you already like your gym. Maybe they offer medical insurance but you have good coverage from your spouse or a retirement benefit and can’t take advantage of it. Maybe they offer subsidized bus or train fare into the city or even parking but you don’t work in the city for them.

Maybe its awesome childcare subsidies but you have no children. The list can go on and on. A bunch of perks that is now your new raise-less compensation package.One that doesn’t pay off your debts, add to your savings, or increases yearly to outpace inflation.

What You Should Do If Not Happy About Perks Instead of Raises

You are pretty much powerless to buck the new compensation paradigm if salary-flat perk-heavy is the new company direction. If what is being offered as a perk instead of a raise is no perk for you then here are a few things you can try.

Negotiate a raise.

If you can’t take advantage of the perks then be very open about it. Ask for a raise to cover you. All they can do is say no. In my contracting work they offered some perks I couldn’t use. Like medical insurance, gym membership, and mass transportation subsidies. I made it clear that I was not able to take advantage of the perks. I was able to get another $1 an hour added to my salary.

Flexibility, free time.

If they offer this perk then take it as real-time as possible whether you need it or want it. The company hopes X amount of people will not take advantage of it and will just soldier through the work to make up for those who do take it. As long as it works for them they will continue doing this. It is a numbers game.

Once while working in my first post-retirement opportunity they gave all employees the perk of having an extra holiday on Christmas Eve except us Network employees. We were offered a free-floating day off as the perk to take at a later time. Based on my experience with previous corporate shenanigans I immediately asked for New Year’s Eve day off and it was denied. I then asked for a 3 day weekend that fell between Christmas and New Years and it was accepted.

I took the floating perk day off. Every other single network employee lost the perk day off the next week because the company realized how many free days were on the books and decided to arbitrarily add a new corporate perk rule during the first week of January. The Floating day off perk must be taken in same year offered. After the fact new rules and all the management team would say is it is out of our hands.

If you find yourself with flexible free time then use it to start a side hustle

Start a side hustle gig to make extra money and stay on track for your financial goals. Try to make lemonade from the lemons that the corporate world has decided is in your best interest.

If a salary increase negotiation has failed then any Free Perks offered should be taken

Take the Perk(s) even if you don’t want them or use them. Like I said it’s a numbers game. A gym membership that you don’t use costs them and until they realize that they are not saving a lot of money then maybe raises will return.

Set financial internet triggers for your company

Have the internet financial alerts set or pay attention to news releases so you can occasionally check and see if the board of directors are allowing executive raises every year or more often. If they are paying raises to upper management and telling you no then it is time to find a better company to work for.

In Closing

My already reaching FI (financial independence) and living a “retire early and often” lifestyle means that I can dig-it big-time having work flexibility. But if I was trying to still grow my portfolio or pay off debt then perks are not going to cut it. The articles made this out to be a huge benefit to the millennial generation who are in the work force. I can see some of it but how can this be good for millennial FI goals and their student loan burdens? This sounds more like Corporate World shenanigans to me.

Are Perks Instead of Pay Raises Best for You or do agree with me that this is just another round of Corporate World shenanigans disguised and sold as a great deal?