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The economic recession is forcing companies to reduce costs in order to remain viable. Labor costs, both pay and benefits, represent one of the biggest cost items for companies. As a result, health insurance and pensions are increasingly scrutinized. Many employers are transferring responsibility for managing benefits to workers. This means that workers are expected to shoulder the bulk of contributions to retirement accounts and bear a greater share of the costs of health plans.


  1. The traditional model for maintaining a quality workforce involved competitive pay and benefits packages. Has this model changed? Aside from the economy, what are the arguments employers are making for restructuring compensation?
  2. Since the economy appears to be the big driver when it comes to compensation and benefits, what can companies do to attract the best talent and keep workers motivated?
  3. The article closes by describing the changing nature of the employment relationship. Is it realistic for workers to expect traditional employment contracts and benefits packages where the employer picks up the bulk of the cost?

SOURCE: P. Dvorak & S. Thurm, “Slump Prods Firms to Seek New Compact With Workers,” Wall Street Journal (Retrievable online at

See also S. Bomkamp, “3 State AGs Threaten to Sue FedEx Over Contractors,” USA Today (Retrievable online at

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