Small businesses are using a classic benefit to stay competitive in attracting and keeping workers
Small businesses are increasingly offering 401(k) plans to attract and retain employees as a cost-effective alternative to expensive benefits like healthcare. This strategy helps smaller firms compete with larger employers for talent.
Why it matters
It demonstrates how small businesses are adapting their compensation strategies to maintain competitiveness in a tight labor market.
A higher share of US job postings mentioned 401(k) plans than several years ago. Daisy-Daisy/Getty Images Small businesses can attract and retain staff with 401(k) plans. Business owners can offer it in lieu of more costly benefits that they can't yet afford. It can help reduce first-year quits, a Gusto analysis found. Sara Marye wanted to get more serious about the benefits she offered. Several months after promoting a part-time employee to full-time status at her school-curriculum small business in 2024, she wanted to ensure it remains an attractive place to work. "If I want to keep her, I need to give her reasons to stay," said Marye, an educator turned entrepreneur in 2015 when she started The Stellar Teacher Company. The employee had been working there since 2021. Marye thought about what she could afford that she could add on top of the existing flexible perks.
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