Wave of US Employee Benefit Cuts Spark Questions About Corporate Priorities and Broken Policy

Employee benefits have taken center stage in US labor conversations this week, following three high-profile reports of major American companies rolling back non-salary compensation for their workforces.

First up is TTEC, a Texas-based technology consulting firm that flew under the radar until it made headlines for suspending its discretionary 401(k) matching program for all 16,000 of its employees — a freeze that will stay in place through at least the end of 2026. Per an internal company memo reviewed by Business Insider, TTEC says it is redirecting those funds to investments including AI certifications, new AI tools, employee upskilling, and automation infrastructure.

Auditing and consulting giant Deloitte is also moving forward with benefit cuts for certain employees set to take effect next year, according to reports. The changes include reduced paid time off, a 50% cut to parental leave, and the elimination of a $50,000 reimbursement benefit for family planning care including adoption, surrogacy, and IVF treatment. San Francisco-headquartered Zoom has rolled out a smaller but still notable adjustment: the company has cut paid parental leave for birthing parents from 22 weeks down to 18.

So what’s driving this wave of rollbacks, and can workers expect more cuts to come? There’s no way to predict the second question for sure, and the answer to the first is far more nuanced than the simple take that greedy corporations are prioritizing AI over their people.

To start, “what Deloitte did is completely unconscionable,” says Joan C. Williams, a professor at UC Law San Francisco, a leading scholar on work culture and class dynamics, and author of multiple books on the topic. Deloitte is only cutting benefits for a specific group of internal workers — roles in administration, IT support, and finance — while leaving full benefits intact for client-facing staff. For impacted employees, parental leave will drop from 16 weeks to just eight.

“It treats people differently based on the type of job they do, and cutting any new mother’s paid leave down to eight weeks is just outlandish,” Williams says. “When labor markets are tight, employers pull out all the stops to be more generous. But once power shifts back to management, benefits get rolled back.”

AI has certainly become a convenient catch-all excuse for any corporate decision that negatively impacts workers these days. But a core underlying driver here is the skyrocketing cost of employee benefits themselves. Earlier this year, pandemic-era Affordable Care Act subsidies expired, leading many Americans to drop their health insurance plans entirely. Insurers have pointed to this shift as a key factor driving recent premium hikes.

Sarahjane Sacchetti, a former top executive at benefits administration firms Cleo and Collective Health who is currently developing a new healthcare initiative, says the cost of employer-sponsored health plans has climbed dramatically over the past five years. A 2025 survey of more than 1,700 US employers conducted by healthcare consulting firm Mercer projects that per-employee healthcare costs will rise an average of 6.5% in 2026 — the largest annual increase since 2010. That figure already accounts for existing cost-cutting measures; without those adjustments, plan costs would jump by nearly 9%.

“This trend starts to reshape how employers think about total compensation packages,” Sacchetti explains. That doesn’t let corporations off the hook, she says, but the failure of US healthcare policy and the lack of a robust national social safety net is responsible for much of the financial stress weighing on undercompensated and unemployed workers.

Williams points out that the US is one of just a handful of countries on Earth that does not guarantee federally mandated paid maternity leave — putting it in the same group as Papua New Guinea and Suriname. “This whole situation just shows how crazy it is that we rely on private employers to provide core employee basics like retirement savings and paid parental leave, instead of following the model used by every other industrialized nation,” Williams says. Her fix? “The US needs to join the rest of the world.”

The irony here is hard to miss: the US government claims it is desperate to boost birth rates. If US women are, as celebrity doctor Mehmet Oz put it during a recent visit to the Oval Office, “underbabied,” a comprehensive national paid parental leave policy would be the most obvious first step to fix that. (Oz also claimed that “making babies” is “the most creative thing the universe knows.” We’ll keep that a secret from AI-focused CEOs.)

Even with how alarming these benefit cuts sound, “it’s important not to normalize this trend by exaggerating it,” Williams notes. For example, Zoom only dialed its policy back from “very generous” to still “generous”; 18 weeks of paid maternity leave is still far above the US average. Overstating how widespread these cuts are can actually make the trend worse, she explains, because companies often use other firms’ controversial decisions as cover to roll out their own cuts.

Beyond that, a large body of research shows that eroding employee quality of life and cutting total compensation ultimately hurts a company’s bottom line. A well-known example is Wayne Cascio’s landmark comparison of Costco’s labor model to Walmart’s Sam’s Club, and Williams’ own research reaches the same conclusion: “widely accepted ways of cutting labor costs have unintended consequences that can hurt, rather than help, an organization’s competitive position.”

My core takeaway? Workers are right to be angry about mass layoffs and corporations using their current upper hand to squeeze workers and roll back hard-won benefits. But some of that anger should be directed at a US government that has failed to guarantee affordable healthcare, paid family leave, and other basic social supports. As workers organize to push back against C-suite decisions, they should also be asking why CEOs aren’t using their political influence to support humane federal policies and push the government to expand public social services. This rot stretches all the way to the top of our system, not just the top of corporate org charts.

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This is an edition of Steven Levy’s Backchannel newsletter. Read previous newsletters here.