A new perk being offered at an insurance company shows how badly the system is broken.
When CNBC reported last May that hundreds of businesses were offering to help pay down their employees’ student loans, it seemed like a positive development, a way for debt-saddled workers to get some relief. After all, health insurance became a common benefit for businesses to give workers during World War II, when wage controls and other government rules incentivized bosses to provide it, and that has given rise to an employer-provided system that is generally popular among the Americans lucky enough to be a part of it. Why shouldn’t businesses fill another gap in America’s broken social insurance system and help out workers with expensive degrees?
Well, maybe they should. But a benefit employees at an insurance company will enjoy next year, while seemingly just another spiffy perk, points to the larger problem of relying on corporate benevolence to solve massive social ills.
As Bloomberg News reported Wednesday, Unum Group—which, it should be said, provides 28 or more paid days off per year, well above the national average—will allow employees to trade in unused time for the equivalent in payment toward their student loan debt. Given that some workers might not use all their vacation time, it certainly seems preferable that they get help with their debt burden rather than let that paid time-off waste away. As 30-year-old Unum employee Jimmy Valentine told the outlet, “I should take more days off. But I continue to work to make sure I keep up with everything.”
The problem, as the Bloomberg piece noted, citing a popular recent BuzzFeed essay called “How Millennials Became the Burnout Generation,” is that young workers graduate from college with incredibly high debt in the first place. The lucky ones find steady work that compensates them well enough to start paying down that debt, but some millennials are so overwhelmed by student loans that they literally flee the country. Plenty of others may find themselves trapped in jobs they hate—high-paying or otherwise—or neighborhoods they despise for fear that they might otherwise start seeing wages garnished at a new gig or even lose their driver’s licenses due to not paying back their loans. Though wages for American workers have recently showed signs of growth, employees may still feel theirs is a tenuous position in a post–financial crisis reality where hot companies tank after a bad quarter and entire skillsets can become irrelevant in the blink of an eye. Those feelings of uncertainty may only be exacerbated when your employer is providing you with money for loan repayments.
In that context, encouraging workers to sacrifice traditional benefits for help with debt—debt they may have taken on in hopes of winning a job—is at least a bit concerning.
“We’re seeing more employers offering a trade-off between things like vacation days or perhaps making payment toward retirement and repaying student loans,” said Julie Margetta Morgan, a fellow at the left-leaning Roosevelt Institute, who described the issue as one of employer power.
“We’re asking people, particularly younger people, to make tradeoffs and framing it as a choice,” she added. “We’re saying: Choose to go to college and take on debt, or the alternative is that you fake the sharply declining wages of people with just a high school diploma.”
In other words, perks like this only exist because a) college is far too expensive in America, and b) society has made it clear to many young people that taking on debt is the only way they can generate value. Given the health insurance example—and the popularity of employer-backed insurance stymying past attempts at broader reform—it’s not entirely unreasonable to worry policies that help some workers with their debt might convince those same workers that there’s no need to overhaul the education and debt systems. After all, it’s not just radical solutions like free college or debt cancellation that seem bewilderingly out of reach: Even existing student-loan forgiveness programs, like the federal one targeted at people who go into public service, have been dishing out help at comically low rates.
Meanwhile, it’s fair to wonder if businesses that decide to offer student loan relief in exchange for other benefits in the future may do so at growing cost to their employees’ well-being.
As Margetta Morgan put it, “If we approach this big social problem by allowing employers to dictate how much or how little help people get, we’ll never really solve the problem and end up with really unequal solutions.”