There are indications that this situation of distressed companies cutting employee benefits to reduce expenditures, as exemplified by US Airways, may be a sign of a growing trend, even for companies with more stable financials. Especially with the rising cost of health care, companies can no longer afford to pay as much for benefits as in the past. More and more companies are finding ways to reduce costs by reducing provisions to their employees. Trends such as outsourcing to staffing agencies overseas and hiring temporary and contract workers to fill positions that in the past would have been given to long-term hires with benefits speak to the corporate need to ˘trim the fat÷ by reducing staffing costs. Long-term hires will no longer be in a position to expect every job to offer the same types of benefits past generations took for granted.
In his book Prophecy Robert Kiyosaki notes that this change began occurring long before the current business cycle with the passing of the Employee Retirement Income Security Act (ERISA) of 1974, which ushered in defined contribution retirement plans to replace defined benefit plans of the previous generation (Kiyosaki, 2002). Whereas defined benefit plans, as the name implies, defined a benefit an employee was to receive upon retirement, defined contribution plans require an employee to contribute to his or her own retirement fund - typically a 401(k) ű with the employer matching the contribution. Thus the employer retains responsibility to assist the employee in building a retirement fund but is longer responsible for the quantity of the payout upon retirement. If the funds in a 401(k) or similar plan are decreased by downturns in the market, the company is not responsible to supplement the employeeĂs income to make up the differe