It’s no surprise that most company owners cut benefits during the past few years; everything from paid time off to truck and cell phone use and, of course, health insurance took a hit. As a result, morale suffered. As Kathy McClain, accountant and human resources manager at BACK Construction, in Kentucky, says, “When you take things from employees and they see people getting laid off, it’s disturbing.” But, she adds, “Communication, in general, has improved because of that. We had more meetings and talked with our employees to let them know we were doing everything we could to keep the company afloat so they’d have jobs.”
Many company owners reported that although they offer health insurance and 401(k) or other retirement benefits, employees don’t take advantage of them. Comments like this one from Mark Buelow, owner of Distinctive Remodeling Solutions, in Roswell, Ga., are common: “I did a small matching percentage for those that wanted to take advantage of our retirement benefits, but employees are not taking advantage of it.” He says he realizes how important this benefit is and he’s going to push for it and get employees more engaged in the coming year.
All the companies that responded to REMODELING offer paid holidays and paid vacation time, but the biggest benefit portion is health care. Adolfi still offers health care benefits including medical, dental, and short- and long-term disability. That cost him $26,000 for eight employees in 2011. This year, he hired 10 more employees and estimates he will spend $37,040. He knows that expenses will be higher next year, if only because he hasn’t paid for an entire year with 18 employees.
McClain reports that during the recession, BACK Construction took away one paid vacation day and four personal days and dropped long-term disability insurance. But all three items were reinstated at the beginning of 2012. The company, which has 38 employees (down from 43 before the recession) pays 50% of the health insurance premium for individual and family plans and also offers dental and vision options.
Rochman says that he never changed his health insurance support. “We’re a very small business, and 70% of the decision on health care has to do with what I want for my own family.”
As evidenced by the recent presidential election and the continuation of the Affordable Care Act, health insurance costs will play a major role in business owners’ decision-making during the next few years. By 2014, companies with 50 or more full-time (more than 30 hours per week) employees will be required to provide health care options. Noncompliance will result in a $2,000 penalty per employee after the first 30 workers.
Mean hourly wage in 2011 of a carpenter helper in San Francisco–San Mateo–Redwood City: $24.91 — almost twice the national MHW for that occupation.
Any business employing 25 to 49 employees won’t face the coverage rules. Premiums may rise, but smaller employers may be eligible for tax credits: If you pay the majority of health care premiums for your employees, you can qualify for a tax credit of up to 35% of what you pay for those premiums. By 2014 that credit may rise to 50% if you arrange for health insurance through one of the Small Business Health Options Program (SHOP) exchanges. Sole proprietors will have to incorporate or become an LLC to be eligible to participate.
Because of the exchanges and the ability to negotiate costs, health insurance may actually become less expensive for those who own very small businesses.
Supple says that he is now looking at benefits from an individual employee’s perspective — which benefit is most valuable to them? For example, if someone wants a company vehicle, Supple shows the employee his or her labor burden, which shows total compensation including things such as truck use. To accommodate the truck, Supple says he may have to lower wages, but the benefit would actually increase total compensation by $1 per hour.