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The benefits of working for a small business

May 04, 2018

Today's small businesses, those with fewer than 50 workers, offer their employees a wide variety of benefits. Among the most frequently offered benefits were paid time off work, with vacation and holidays available to 67 percent and 68 percent of workers, respectively. Slightly more than half of workers (51 percent) in small businesses were given the opportunity to participate in a medical plan through their company. Defined contribution plans, such as 401(k)-style plans, were available to 47 percent of workers in small businesses while access to defined benefit plans, like pension plans, was lower at 7 percent.

Percent of employees in private industry small businesses with access to selected benefits, March 2017
Benefit Percent with access

Insurance benefits

Medical insurance


Prescription drug insurance


Life insurance


Short term disability


Dental insurance


Long term disability


Vision insurance


Retirement benefits

Defined contribution plans


Defined benefit plans


Paid time off





Sick leave


Jury duty leave


Funeral leave


Military leave


Family leave


Bonuses and quality of life benefits

Nonproduction bonuses


Employee assistance programs


Wellness plans


Data are for private industry establishments with 1 to 49 workers.

How much does providing benefits cost these small businesses? Employer costs for employee compensation averaged $27.72 per hour worked in December 2017 for businesses with fewer than 50 employees. About three-quarters of the total costs for compensation were wages and salaries, while the remaining quarter were the employers' costs for benefits. For example, paid leave cost employers an average of $1.61 per hour worked and made up over 5.0 percent of the total cost of compensation. Paid time off for vacation accounted for around half of employers' costs for paid leave. Costs for insurance averaged $1.75 per hour worked and made up 6.3 percent of total compensation, with nearly all of the cost ($1.66) going toward health insurance.

Average employer costs per hour worked for wages and salaries and benefits in private industry small businesses, December 2017
Component Cost per hour worked Percent of total compensation

Total compensation

$27.72 100.0%

Wages and salaries

20.33 73.4

Total benefits

7.39 26.6

Paid leave

1.61 5.8


0.82 3.0


0.51 1.8

Sick leave

0.18 0.7

Personal leave

0.09 0.3

Supplemental pay

1.04 3.7

Overtime and premium pay

0.18 0.7

Shift differentials

(1) (1)

Nonproduction bonuses

0.85 3.1


1.75 6.3

Life insurance

0.03 0.1

Health insurance

1.66 6.0

Short-term disability insurance

0.03 0.1

Long-term disability insurance

0.03 0.1

Retirement and savings

0.66 2.4

Defined benefit

0.20 0.7

Defined contribution

0.46 1.6

Legally Required benefits

2.33 8.4

Social Security and Medicare

1.68 6.0

  Social Security

1.34 4.8


0.34 1.2

Federal unemployment insurance

0.04 0.1

State unemployment insurance

0.17 0.6

Workers' compensation

0.45 1.6

Data are for private industry establishments with 1 to 49 workers.

(1) Cost per hour worked is $0.01 or less.

These data are from the National Compensation Survey — Benefits program and the Employment Cost Trends survey. To learn more, see Employee Benefits in the United States, March 2017. For definitions of the terms related to employee benefits, see the Glossary of Employee Benefit Terms.


Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, The benefits of working for a small business at (visited February 28, 2024).