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Majority of Small Businesses Do Not Offer Retirement, Health Benefits
The majority of small- to mid-sized businesses (SMBs) do not
offer health, retirement or other ancillary benefits, Paychex found in a survey of 318 such companies. Only 38% offer such benefits.
“While this contrasts national levels, it does reflect in part the absence of
legal requirement for businesses with less than 50 employees to offer benefits—most
notably, health insurance,” Paychex says. “Providing benefits is also a matter
of economics for many SMBs. Of businesses earning less than $500,000 in
revenues, 78% reported that they do not offer benefits. This is in contrast to
responses from businesses with revenues of more than $1 million, where 74%
confirmed that they do offer benefits to their employees.”
Similarly, 66% of businesses that have been in operation for 10 years or more
offer such benefits. However, this drops to 42% for businesses between six and
up to 10 years in existence. Likewise, 77% of companies that say they are
experiencing stagnant growth do not offer benefits, but 51% of companies that
are experiencing fast growth do offer them.
Among the companies offering benefits, the top values
they cited from offering these benefits were improved employee morale and ability to attract and retain talent.
For health insurance benefits, the top reason for offering was split between
attracting talent (23%) and supporting healthier employees (22%). Only 2% of
respondents who offered health benefits reported that they didn’t see a need to
offer these benefits.
When considering retirement benefits, minimizing turnover was reported as the
most important reason (23%) for offering this benefit, followed closely by the
individual need for the benefit (20%). Attracting talent remained important
(18%), but 17% of respondents said they did not see the need to offer
retirement benefits to their employees.
Among the companies offering health and retirement benefits, they said they
found them to be a positive addition to their businesses, with 89% saying a health
insurance plan was beneficial and 72% saying a retirement plan was beneficial.
As Paychex concludes, “For businesses, offering benefits to employees can be a
challenge. This is especially true the smaller the business is and the
business’s economic environment. However, the value of offering benefits to
employees, especially health insurance, is unanimously understood and
appreciated. This survey showed that the majority of businesses that do offer
benefits find them beneficial to their businesses and they see value in the
benefits they offer. As largely perceived, if a business doesn’t offer benefits
to its employees, a competitor will. As the size of a business grows and
revenues increase, the value of benefits becomes clearer, as well as more
achievable.”
The full findings of Paychex’s survey can be downloaded here.