After several years of enhancing rewards to attract and retain talent in one of the tightest labor markets ever, large and medium-sized employers are cutting perks, benefits, and staff with increasing frequency, possibly creating an opportunity for small businesses to level the recruiting and retention playing field.
The list of large employers cutting staff is growing by the day. Along with staff, perks (a.k.a. free food, on-site massages, laundry services, and on-site wellness classes, for example) and benefits are on the chopping block as big businesses try to reign in expenses to prepare for a possible recession.
Care.com’s 2023 Future of Benefits Survey found 95% of survey participants (with 500 or more employees) are “recalibrating” benefit strategies and 47% are cutting back on benefits this year. Adoption/fertility benefits; commuter benefits; financial education and wellness; health and fitness discounts; home office stipends; and learning and development programs are most likely to be cut.
What about small businesses? According to the Bank of America 2023 Small Business Owner Report, over half of small businesses that participated in a survey (53%) indicated they have added benefits and perks to retain current staff (i.e., 34% added remote/hybrid work; 34% provided cost of living bonuses; and 33% increased vacation time). To attract new talent, more than half (54%) increased base pay; over one quarter (27%) are providing additional healthcare benefits; and 27% added training and resource groups.
Why would a small business do this during a time of economic uncertainty? 51% of owners indicated they’re still feeling the impact of labor shortages, with 49% working more hours; 33% having a hard time filling jobs; 31% increasing wages to attract talent; 26% having to change their business hours; 24% reducing products and services offered; and 21% indicating they’re losing customers due to staffing issues.
Interestingly, all of the data is coming together to put a spotlight on a potential recruiting and retention opportunity for small businesses. The Morgan Stanley at Work report indicates almost 70% of employees are paying more attention to financial benefits and almost 90% “would be more invested in staying at their company if it provided financial benefits that met their needs.” Under SECURE 2.0, an eligible small business may receive a tax credit for up to 100% of startup costs for certain types of retirement plans (i.e., SEP, SIMPLE IRA, or a qualified plan like a 401(k)). The maximum credit is $5,000 for three years; eligibility and other criteria apply.
Interested in learning more? Give us a call. Our RBT CPAs professionals, alongside those from our strategic partner Spectrum Pension and Compensation, can help you evaluate whether SECURE 2.0 Act credits can help you strengthen your rewards offerings and, ultimately, your ability to attract and retain talent.
RBT CPAs is proud to say all of our work is prepared in the U.S.A. – we never offshore. As a result, you get peace of mind that your operation’s financial and confidential information is handled by full-time, local staff who have met our high standards for quality, ethics, and professionalism.
NOTE: RBT CPAs is providing this content for informational purposes only; it should not be considered advice. Since every business is different, it’s best to consult a professional (like Spectrum) and/or benefits legal counsel to determine whether new benefit plans and/or benefit changes may be advantageous for your organization.