Small business owner and employee in discussion
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Ask any small business owner what keeps them up at night, and the answer is rarely ambition—it’s arithmetic. Balancing payroll, benefits, rent, and rising costs in an uncertain economy leaves even the most committed employers caught between wanting to offer more and being unable to afford it.
For many of America’s smallest firms, that tension defines the day-to-day reality of running a business. Owners want to provide stability, benefits, and fair pay, but the systems surrounding them—insurance, compliance, HR—were built for large companies, not for ten-person teams trying to stay afloat.
What’s remarkable is that the will to do right by workers is already there. What’s missing is the infrastructure to make it possible.
That reality comes into focus in new research from the Association for Enterprise Opportunity (AEO), conducted in collaboration with WorkRise, a research-to-action network hosted by the Urban Institute. The findings reinforce what many small employers have been saying for years: the desire to create good jobs is strong, but the scaffolding around them is weak. (More details on the research are available here.)
As Todd Greene, Executive Director of WorkRise, explains: “We’ve spent years trying to improve job quality by changing employer practices in large companies. But what small businesses need is help changing the system around them. Shared infrastructure is a critical lever for making better jobs possible.”
The data shows why. Eighty percent of small employers say they offer supportive work environments, but only one in four can afford to provide health insurance, and just 18 percent offer retirement benefits. Nearly two-thirds would offer insurance if premiums were more affordable, and more than half cite administrative complexity as the primary barrier. This isn’t a motivation gap—it’s a structural one.
Small employers feel this contradiction constantly. “Pay and hours are often shaped by cash flow, not choice,” one business owner shared. Rising premiums, unpredictable demand, and regulatory frameworks designed around large HR departments leave small firms managing pressures far outside their control.
This is where the human side of the story surfaces. As Lori Smith of AEO notes:
“What stands out from this research is how deeply small business owners care about their teams. They’re creating workplaces built on trust and flexibility, but they need systems that make it possible to match that care with security and stability.”
That mix of commitment and constraint creates a paradox. Very small firms excel at delivering what workers say they value most—autonomy, voice, community, and meaningful day-to-day work. Yet they lag in providing stability and benefits, not because they don’t care, but because they can’t clear the hurdles built for much larger organizations.
Our data shows that the smallest firms—those with fewer than ten employees—often want to hire or expand hours but are held back by thin margins, rising costs, and benefit systems built for large employers. Many provide flexible, community-based jobs that could absorb underemployed workers, but only if we lower the cost and complexity surrounding payroll, benefits, and compliance.
Even modest scale makes a difference. Firms that grow from fewer than ten employees to ten-to-nineteen see measurable improvements in scheduling predictability and benefits access. But most small firms never reach that threshold. They operate independently, without access to pooled benefit hubs, shared administrative systems, or simplified HR tools.
Only 46 percent of these firms use payroll software, and just 20 percent use benefits-administration tools—even though the majority of users report improved compliance and efficiency. That gap represents both a challenge and a significant opportunity. Affordable, plug-and-play HR technology, pooled benefits through trusted intermediaries, and simplified compliance systems could help small firms deliver better jobs without sacrificing autonomy.
Because strengthening small business isn’t just about providing capital. It’s about modernizing the systems that support work.
America’s entrepreneurs don’t just create jobs; they shape the character and resilience of communities. Helping them offer better jobs isn’t charity or policy rhetoric—it’s economic strategy. And building the infrastructure that lets good employers offer good jobs is key to the health of the entire economy.
Source: https://www.forbes.com/sites/nataliemadeiracofield/2025/11/13/the-real-reason-small-businesses-struggle-to-offer-good-jobs/
