Study Finds Benefits Lacking at Small Firms


More than half of the nation's small businesses did not provide health or retirement benefits last year, a survey conducted by Dun & Bradstreet found.

In addition, at least half did not provide paid vacations, holidays or sick days. The survey, commissioned by Entrepreneur magazine for its July issue, randomly surveyed 503 businesses, nearly all with 25 or fewer employees.

Larry Winters, assistant vice president of small-business services at Dun & Bradstreet, said the numbers reflect the high cost of benefits packages, especially health care. Small-business owners attempting to find employees in the tightest labor market in 30 years may also be luring prospects with higher wages in lieu of less pay plus a benefits package, he said.

The survey found that:

* 81% of small businesses offered no retirement benefits;

* 64% had no pay for sick days;

* 61% offered no health benefits;

* 54% had no holiday pay;

* 50% had no vacation pay.

In some categories, the figures were 7 percentage points or more higher than for last year. For example, only 54% of small businesses in 1996 failed to offer health benefits and 72% had no retirement plans.

"I think small businesses are trying to compete in the tight labor market, but they are also trying to be profitable," Winters said. "Health-care costs are extremely staggering for a lot of companies."

The study reported that the cost of health insurance grew by 13% in 1997.

Winters also noted that many small businesses are start-ups with no resources for even modest benefits.

Women-owned businesses, however, bucked the trend in health benefits. By 12 percentage points, more offered health plans to employees last year compared with 1996.

"There are more women business owners and they are more sophisticated than they've ever been," Winters said. "More sophisticated businesses are more likely to offer health benefits."

Male business owners, however, were nearly twice as likely as women to provide retirement plans.

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