According to the Harris Poll of 501 small business owners, including 200 African American small business owners, released Tuesday, African American small business owners are more than twice as likely as other owners to plan on enhancing benefits for their employees and twice as likely to provide more access to 401(k) type plans within the next 12-24 months.
“It’s clear that African American small business owners are deeply concerned about the lack of preparation for retirement in our country,” said Eric Stevenson, vice president of sales for Nationwide Retirement Solutions. “Despite the alarming level of concern, it’s encouraging to see they are trying to do something about it by investing in their employees.”
In fact, one in four (26 percent) African American owners say they are going to enhance employee benefits over the next 12-24 months, compared with just 10 percent of other owners.
The survey found that in the next 12-24 months:
• 24 percent of African American owners say they will add a 401(k) plan or some other employee self-funded plan, compared to 11 percent of all small business owners.
• 28 percent are likely to add health insurance (11 percent others)
• 19 percent are likely to add life insurance (6 percent others)
• 16 percent are likely to add a company-funded defined benefit pension plan (5 percent others)
• 14 percent are likely to add disability insurance (6 percent others)
This willingness to do more for employees than the total sample of small business owners surveyed might be related to a higher level of hopefulness about the future of their business and the economy. Thirty-eight percent of African American small business owners expect their business to grow in the next year, compared to just 21 percent of all other small business owners. They are also twice as likely as other business owners to believe the U.S. economy will improve in the next 12 months (41 percent to 20 percent).
One in four African American small business owners say they plan to increase employee salaries in the next 12-24 months, while just 14 percent of other small business owners plan to do the same. Also, more African American business owners (18 percent) plan to hire full-time workers than other owners (14 percent).
The optimism of African American small business owners comes despite the fact that they say their businesses were negatively impacted within the past 12-24 months by the economy nearly as much as all business owners. African American businesses were more likely than other businesses to have cut back on hiring (31 percent of African American small businesses versus 23 percent of all others), more likely to have had layoffs or downsizing (17 percent versus 14 percent) or to have hired independent contractors or consultants (19 percent versus 11 percent) within the past 12-24 months.
While nearly twice as many of all small business owners surveyed expect their sales and revenue to decline next year than those who think sales and revenue will grow (40 percent versus 21 percent), more African American small business owners think their sales and revenue will grow than will decline (38 percent versus 23 percent).
Not all African American small business owners see a rosy picture in the year to come. Nearly half (44 percent) expect the economy to be even worse next year. Roughly a third plan to cut back on hiring (34 percent), eliminate or delay raises (33 percent), offer smaller raises (34 percent), or eliminate/delay bonuses (32 percent) within the next 12-24 months. Four in 10 (40 percent) will hire part-time employees or independent contractors and one in four (25 percent) are shifting more benefits costs from employer-paid to employee-paid coverage. Nearly one in five (18 percent) plan layoffs or downsizing within the next 12-24 months.
“It’s difficult to know what will happen in the future, but small business owners are an important part of the backbone of our economy, and their attitudes and actions will play an important role in the economic recovery,” said Stevenson. “We hope that the comparative optimism of African American small business owners signals better days ahead. There is no doubt that more needs to be done by American businesses in general to address the retirement crisis.”
Survey methodology:
On behalf of Nationwide Financial, Harris Interactive Inc. conducted 501 online interviews of small business owners in the U.S. with 1-100 employees, and 200 African American small business owners, surveyed between August 3-12, 2011. Results are weighted to be representative of U.S. companies with 1 to 100 employees with respect to number of employees.
