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Smallest businesses feel crush of health care costs

Employee health care costs are becoming a significant burden for small businesses in the United States, particularly those with revenues of $600,000 or less, according to an analysis by the JPMorgan Chase Institute. This analysis highlights a growing trend where health care expenses are consuming a larger portion of payroll costs for smaller businesses compared to larger ones. Click here for article.

  • Disproportionate Burden: Small businesses with revenues of $600,000 or less allocate 12% of payroll costs to health care benefits, while larger businesses with revenues of at least $2.4 million allocate only 7%.

  • Comparison with National Average: The U.S. Bureau of Labor Statistics reports that health insurance typically represents 5.8% of compensation costs for small businesses with up to 49 employees, indicating a notable difference from the findings specific to smaller businesses in the analysis.

  • Impact on Business Operations: Rising health care expenses are squeezing profitability for small businesses, hindering their ability to expand and hire more employees, which are crucial for economic growth.

  • Broader Economic Implications: The analysis underscores the broader economic consequences of escalating health care costs, exacerbated by inflation and a tight labor market, further challenging small businesses' sustainability and growth prospects.

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