Small businesses expand retirement perks to compete for talent

The hospitality sector serves as a primary example of this expansion, with the share of businesses offering retirement plans rising from 4% in 2019 to 12% in 2026. While professional services and finance maintain the highest overall adoption rates, the most significant percentage-point growth occurred within public administration, information, and healthcare sectors.

Industry experts attribute this surge to a mix of employee retention strategies and new state-level mandates. States like California and Delaware now require businesses of certain sizes to provide access to state-facilitated retirement programs if they do not offer their own qualified plans. For small firm owners, these benefits are no longer optional extras but necessary components of the talent wars. Howard Telson, who manages a small accounting firm, noted that providing a 401(k) has become essential when recruiting candidates accustomed to the robust benefit packages of larger corporations.

This wider availability has spurred increased participation among hourly workers, whose enrollment rates climbed from one-third in 2019 to 45% by 2026. Salaried staff saw a more modest increase, moving from 70% to 73%. According to Gusto senior economist Nich Tremper, the data signals a fundamental compositional shift, demonstrating that retirement savings access is no longer reserved for white-collar roles but is permeating deeper into the broader economy.