More than half of U.S. business leaders — 53 percent — told Axios in a March survey that they are cutting employee benefits this year. Sixty-one percent are cutting bonuses. Fifty-three percent are cutting raises. The survey, conducted by ResumeBuilder.com across 500 U.S. business leaders, asked why. The most common answer: funding for AI investments.
That framing deserves scrutiny. Companies are not being forced to choose between parental leave and AI infrastructure by some neutral economic law. They are making that choice. And the workers losing benefits are not the ones deciding the tradeoff.
Deloitte and Zoom are among the largest companies to have made headlines recently for pulling back on family leave, according to Axios. Deloitte framed its cuts as an effort to "better align with the marketplace" — a phrase that means, in plain English, we are cutting because our competitors already cut and we can get away with it now. The company is also trimming vacation time and ancillary health perks including fertility support. TTEC, a customer experience technology firm, told Business Insider it paused 401(k) matching for U.S. employees this year, citing spending on AI tools, automation, and training.
The official rationale splits into two lanes. The first is health care costs: a Mercer 2026 CFO Perspective on Health survey found 38 percent of chief financial officers are cutting benefits elsewhere because of the jump in health costs over the past two years. Drug spending alone jumped from 21 percent to 24 percent of companies' total health care spending in a three-year period, according to Jim Winkler, chief strategy officer for the Business Group on Health. "Health care costs, which feel out of control, are squeezing out other benefits that are for which you have greater control," said Shawn Gremminger, CEO of the National Alliance of Healthcare Purchaser Coalitions. The second lane is AI: companies describe themselves as redirecting budget toward automation, training, and tools. Both explanations are real. Neither is the full story.
Here is what the full story looks like: Corporate America spent roughly four years — from 2020 through 2023 — in an unusual labor market. Workers had bargaining power. Unemployment was low, job-switching was high, and companies competed for talent by stacking benefits. Paid parental leave expanded. Fertility subsidies appeared. 401(k) matches grew more generous. Free food, gym memberships, and mental health stipends became standard at mid-to-large employers. None of this was charity. It was a market response to a tight labor supply.
That market has shifted. Layoffs in the tech sector thinned white-collar hiring. Remote work normalization expanded the candidate pool. And AI — or more precisely, the credible threat that AI will reduce headcount — has given employers a new form of power they did not have in 2021. Benefits consultants told Axios that white-collar workers may be in less of a position to demand perks when AI appears capable of replacing at least some of the workforce. Rich Fuerstenberg, a senior partner on Mercer's Health and Benefits Practice, put it directly: "I think reality is setting in. There's more scrutiny, and it's 'Why are we over market? What am I getting from these programs?'"
That question — "why are we over market?" — is worth sitting with. It treats employee benefits as excess, as overshoot, as something that happened because employers got sloppy during a hiring panic. It does not treat parental leave or retirement matching as things workers earned through years of stagnant wages and productivity gains that flowed almost entirely to shareholders. The framing of "over market" is a power move dressed as accounting.
Between 2020 and 2023, a tight labor market forced employers to compete on total compensation packages. Paid parental leave, fertility subsidies, expanded 401(k) matches, and mental health benefits became standard tools for recruitment and retention — particularly in tech and professional services. That bargaining power was always conditional on workers' ability to credibly leave. As layoffs mounted and AI threatened white-collar roles, that condition eroded.
The AI-as-justification narrative deserves particular attention. When TTEC says it paused 401(k) matching in part due to AI spending, it is making a specific claim: that the company cannot afford both. But TTEC is not a company in financial distress — it is a company making a capital allocation decision. The same is true of Deloitte, a firm that generated $67.2 billion in global revenue in fiscal year 2024. These are not companies that ran out of money for parental leave. They are companies that decided AI infrastructure was a better use of that money than employee retirement security. That is a choice, made by executives, with consequences distributed to workers.
This pattern connects to a broader dynamic that has been building for years in the American economy. As our earlier coverage of AI fluency and economic class documented, the gains from AI investment are not distributed evenly across the workforce — experienced AI users pull ahead while workers with less access fall behind. The benefit cuts now accelerating that divide: the workers most likely to lose parental leave and retirement matches are not the senior engineers making AI investment decisions. They are the mid-level and support staff whose roles are most exposed to automation and who have the least power to negotiate individual compensation packages.
There is also a gender dimension that the corporate announcements do not address. Paid parental leave and fertility benefits are not gender-neutral perks. Their elimination falls harder on workers who are pregnant, who are trying to become pregnant, or who take on primary caregiving roles — which, in the United States, remain disproportionately women. Cutting fertility support and family leave while directing capital toward AI tools is not a neutral budget decision. It is a decision about whose needs count as a business priority.
The health care cost argument is more complicated, and more honest. Drug spending — particularly GLP-1 medications like Ozempic and Wegovy — has driven employer health costs to levels that genuinely constrain compensation budgets. Gremminger's observation that health care costs "feel out of control" while other benefits feel more controllable is accurate. But the reason health care costs feel out of control is that the United States has no mechanism to control them. Employers are not the cause of pharmaceutical pricing, but they are absorbing the cost — and passing it to workers in the form of benefit cuts rather than demanding systemic reform. The choice to cut parental leave instead of lobbying aggressively for drug price controls or single-payer health coverage is also a choice.
What the current moment represents is a transfer of risk — from employers back to workers — that mirrors the broader arc of American compensation over the past four decades. Pensions became 401(k)s. Employer-sponsored health coverage became high-deductible plans. Paid leave that appeared during a labor shortage is now disappearing as that shortage ends. Each transfer is framed as a market correction. Each one leaves workers more exposed to the costs of illness, caregiving, aging, and economic disruption. The AI investment cycle is the newest chapter in that story, not a departure from it.
The workers most affected by these cuts have limited recourse in the current environment. Union density in the private sector sits below 7 percent. The National Labor Relations Board has been weakened. And the psychological threat that AI creates — the ambient fear that your job may not exist in three years — makes collective action harder to organize. Employers are cutting benefits at precisely the moment when workers are least positioned to resist, and they are using the AI transition as the justification for doing so.
That is not a coincidence. It is a strategy. And the workers who spent four years building bargaining power in a tight labor market are now watching that power get dismantled — one parental leave policy and one 401(k) match at a time — while the capital freed up flows into infrastructure that may eventually replace them. For a more detailed look at how AI investment is already sorting workers into new economic classes, see our analysis of the disappearing entry-level job — the same dynamic, one rung lower on the ladder.
The Democratic Party, which has spent years promising a worker-centered economic agenda, has been largely silent on the benefit rollback. There is no federal paid leave law. There is no minimum 401(k) match requirement. There is no regulation requiring companies to disclose how AI capital expenditures affect worker compensation. The absence of that framework is not an accident — it is the result of decades of successful corporate lobbying against any constraint on how employers structure total compensation. That gap between Democratic rhetoric and policy reality is part of why working-class voters have been drifting away from the party for years.
The era of expanding workplace perks did not end because companies ran out of money. It ended because workers ran out of bargaining power. The next question is whether anything — legislation, unionization, or the next tight labor market — will give it back to them before the AI transition completes the job of making that power structurally impossible to rebuild.
