Benefits - Small Firms, Smaller Benefits Packages Large Firms, Larger Benefits Packages

A standard employee benefit package includes most of the plans listed above. This graph shows the percentage of full-time employees that participate in each plan. We show data separately for small and large employers. Where participation rates are high, many employers offer the plans.

Medium-to-large employers have 100 or more employees. Small employers have 99 or fewer people. The category "Small Employer" covers the corner florist shop with one part-time assistant as well as the computer-networking firm with ten vans and a city-wide client list. Each of these categories covers a wide range of diverse establishments.

Not surprisingly, medium-to-large employers offer benefits to more of their employees than do small employers. On average, 1.3 times as many full-time employees of medium-to-large establishments receive the benefits than do full-time employees of small companies/organizations.

There are many reasons for this. Small firms don't enjoy the benefit of scale. For example, medium-to-large firms can purchase insurance policies at lower cost. By spreading liability over a large number of participants, premiums are lower. Larger firms need more people and, especially in labor-short boom times, need incentives to recruit. They also tend to have more employees who are covered by collective bargaining contracts.

In addition to the benefit plans listed here, there is a set of newer benefit plans still in the process of becoming popularized. In the next panel we look at participation rates in these non-core benefit plans.

Source: For data on small private sector employers: U.S. Department of Labor, Bureau of Labor Statistics, Employee Benefits in Small Private Establishments, 1996, Tables 1 & 3. For data on medium and large private sector employers: U.S. Department of Labor, Bureau of Labor Statistics, Employee Benefits in Medium & Large Private Establishments, 1997, Tables 1 & 3.