Small businesses see big value in benefits, but need help with rising cost, complexity
Small-business owners overwhelmingly see the value of employee benefits, according to a new survey, but many say they need outside help navigating the complexities of offering them.
New data from the Q3 Justworks and U.S. Chamber Small Business Index shows just how much benefits can influence the workplace: 95% of small business owners say they boost productivity and engagement, 94% say they help retain employees, and 89% say they help attract talent.
But offering those benefits can be a challenge, particularly when it comes to cost. Most small business owners (67%) say they wish they had outside help offering employee benefits, while 35% cite rising costs and 34% name limited budgets as barriers.
“The challenge is finding benefits that are financially sustainable for the business while still being useful to the people they’re meant to serve,” said David Feinberg, senior vice president of risk and insurance at HR administration platform Justworks. “The old tradeoff of small company culture and big company benefits is no longer viable. SMBs need to have both in order to compete for, and retain, great talent that are ultimately the engine for their business growth.”
Feinberg recently spoke to Employee Benefit News about what these findings say about the benefits challenges facing small employers. This interview has been edited for length and clarity.
What benefits are small employers struggling most to afford right now?
Health insurance continues to be the big one. When small businesses were asked what they would offer if resources were unlimited, the Justworks x U.S. Chamber of Commerce Small Business Index revealed that health insurance topped the list at 71%, followed by retirement plans, paid vacation, paid sick leave, and dental and vision coverage.
There is encouraging movement: 46% now offer health insurance, up from 41% last year, but healthcare costs continue to rise, which can create pressure on founders, entrepreneurs, and small business leaders. More businesses are forming and growing in today’s AI-native world. As they do, they’re experiencing complexity — like offering benefits to their team — even earlier in their journey. People don’t often start a company because they want to figure out benefits for their teams, so finding the right partners to help take that burden off the plate can be freeing.
What’s driving the gap between how much owners value benefits and how difficult they are to provide?
The gap is in execution. Operators want to take care of their teams, but they’re balancing rising costs, limited budgets, and increasingly diverse employee needs. We call this the “Bene-Fit Gap”: the disconnect between what employers want to provide and what employees actually need. The intent is there; owners need better ways to translate that intent into benefits that fit their people without creating another operational burden.
How are rising benefit costs affecting employers’ ability to attract and retain workers?
In our Bene-Fit Gap research conducted with The Harris Poll, 49% of small-business decision-makers said they were concerned their current benefits could make it harder to hire or retain talent. The Q3 2026 Justworks x U.S. Chamber of Commerce Small Business Index adds another layer: 58% say keeping up with employee pay expectations is challenging, while 53% are concerned about retention issues caused by stress or burnout.
Small businesses shouldn’t try to outspend larger companies. Their size can actually be a superpower because they’re often closer to their employees and can get a clearer sense of which benefits will actually move the needle for the people they’re trying to hire and keep. If they can do that, they just need access to the options to fulfill those needs and not break the bank.
Where do small employers need the most help when it comes to offering and managing benefits?
For many of these owners, benefits are one of a dozen things they’re responsible for on any given day. They shouldn’t have to become benefits experts on top of running their business. They need trusted partners who can help them understand what their options are, what fits their workforce and budget, and what will be sustainable over several years.
There’s also a big education and navigation component. Offering a benefit only gets you so far if employees don’t understand it or know how to use it. The strongest experience combines technology for simplicity and speed with human guidance for the questions that are more personal or complex.
I’ll also say: Small businesses need to get better at communicating how benefits fit into a total rewards package for candidates and their employees. It’s amazing to be able to take care of your team, so make sure they understand what they have access to, and continue checking in to make sure the package is still relevant to them.
What are some practical ways small employers can strengthen their benefits without significantly increasing costs?
Start by changing the mindset that more expensive means better, or that more benefits automatically mean a better benefits package. Small employers should focus on the benefits their employees will actually use and value, and their size gives them an advantage because they can listen and adapt more quickly.
They can also get more value from what they already offer through simple things like office hours, short explainers, and year-round benefits education. I also encourage owners to ask their partners what other coverage models are available. Traditional group coverage remains the right fit for many businesses, but options like custom health option and individual care expense arrangements can give certain employers greater cost predictability while giving employees more flexibility.
It’s about having visibility into the full market, understanding the options available, and making informed choices based on your business, budget and team.
Source: EBN
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