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The absence of health insurance benefits in small firms may be due as much to employee preference as to employer cost-cutting. A study commissioned for the Department of Labor concludes that many lower-paid workers ($10,000 or less, in 1977 dollars) would rather get more pay than fringe benefits, while higher-paid workers find that the tax structure makes benefits more attractive. Since lower-paid workers are concentrated in small firms, lack of insurance in that sector should come as no surprise. According to the study, about 1.5 million businesses -- primarily new sole proprietorships in construction, retail trade, or services -- that employ a total of 7.5 million workers do not offer group health plans. Moreover, many of the small companies that terminated their plans cite employee pressures as the reason.

Last updated: Aug 1, 1981




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