Small Business Finance News
Fewer Than Half Of Small Businesses Provide Employee Benefits
Written by Tim Morral
Published: 2/5/2013
Life insurance industry research organization reports that the number of small businesses offering benefits to their employees reaches the lowest point in two decades.
Employee benefits help companies attract and retain talented workers. But for many small businesses, the ability to leverage benefits in recruitment and employee retention is being compromised by limited budgets and the rising cost of health insurance.
According to a recent study by the life insurance industry research organization LIMRA, only 47 percent of U.S. small businesses (representing 35 percent of the nation's workforce) are currently able to offer benefits to their employees -- the lowest level in LIMRA's two decades of research.
The study also showed that 78 percent of small businesses are family-owned and that family-owned businesses experienced the most significant decline in employee benefits. In 2012, only 40 percent of family-owned companies offered employee benefits compared to 47 percent in 2005.
"The recession has had an impact on smaller employers' ability to offer benefits, particularly those with fewer than 10 employees," said LIMRA research analyst Kim Landry. "The weak economy caused a lot of small firms to close, while the new firms cropping up to replace them are less likely to offer benefits. Many small businesses are also hesitant to add new benefits until the economy improves."
The most common benefits offered by smaller employers are small business health insurance plans and prescription drug plans. Life insurance plans are also popular with small business employers because they are relatively inexpensive and require a lesser amount of employer administration.
To compensate for a lack of traditional employee benefits, small business employers should consider offering unique employee benefits. Although a company-wide trip to Disneyland might be cost-prohibitive, with a little creativity it's possible to identify many inexpensive ways (e.g. flex-time) to provide helpful benefits to workers.
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