Small businesses have raised wages to recruit and retain employees during the current labor shortage. With the competition for talent showing no signs of abating, many are now turning to improved health benefits.
The restaurant industry, especially smaller independent restaurants, has long struggled to attract and retain workers, said Clinton Wolf, senior vice president of health and insurance services at the National Restaurant Association. “Over the past few months, I’ve definitely seen more small restaurants come up asking what they can do with their health benefits,” he told Bloomberg Law.
Providing health benefits has long been a problem for small businesses, especially as costs have continued to climb in recent years. But in today’s job market, it’s a burden that more employers have felt the need to bear.
Low-wage workers, black people, Asian Americans and people working in industries such as restaurants are “much more likely than others to be thinking about quitting,” said Melissa Swift, practice manager for transformation of the professional services company Mercer for the United States and Canada. “When we looked at why people would stay or leave, No. 1 is always pay and benefits.”
Hourly wages are rising, said Tracy Watts, senior partner and national head of U.S. health policy at Mercer. For low-wage workers, “suddenly you have a lot of job choices at the same hourly wage,” she said. Adding health benefits makes it easier for workers to decide when considering job offers.
Many small employers cover their employees using Individual Health Care Coverage Reimbursement (ICHRA) arrangements. Blue Cross Blue Shield plans, a major source of coverage for small businesses, are seeing increased activity. The insurer’s small employer members grew from 12.6 million in the first quarter of 2020 to 12.2 million in the first quarter of 2021, said Kris Haltmeyer, vice president of legislative and regulatory policy for the Blue Cross Blue Shield Association. . However, the number of small employers is growing and has reached June 2020 levels, he said.
Beyond wages, health insurance is a signal that employers will invest in their workforce, said Jack Hooper, co-founder and CEO of Take Command in Dallas, which manages health care reimbursement accounts. “Benefits make it seem like you care about them as an employer, and that’s what creates that sticky retention that they want,” he said.