Small business retirement plans grew 64% since 2019, led by hourly workers

Introduction

Whether a small business offers a retirement plan depends a great deal on what it does. Among small professional services employers, nearly half do, yet among restaurants and hotels, that falls to about one in eight. However, that gap has narrowed sharply since 2019, and industries that have historically not offered 401(k)s are now doing so more often.

Across all small businesses, the share that are offering a retirement plan that their employees use has risen from 19% in 2019 to 31% in 2026, an increase of 64%. Using administrative payroll data to track active retirement plan use we show how access to retirement has changed since 2019, led mainly by expansion in industries that historically did not have retirement benefits and among people who work for hourly pay instead of an annual salary. 

Our data also let us describe 401(k) access and participation at businesses with fewer than 10 employees. These firms make up a large share of U.S. employment and are thinly covered in survey data. These employers account for much of the growth we’ve observed over the last six years. We define an active retirement plan to be when a small business has at least one person with a payroll deferral to any retirement plan type or an employee receives an employer contribution, and our analysis focuses on private sector businesses with 2 to 99 employees, observed from 2019 through June 2026.

Key Findings

• Retirement plans grew fastest in the industries that had previously offered them least. The share of small hospitality businesses with an active plan tripled since 2019, from 4% to 12%. Recreation rose 147% and agriculture 122%. Every industry we observe gained ground, but the steepest climbs came from the lowest starting points.

• Hourly workers gained the most ground on access to 401(k) plans, and they used them when they became available. The share of hourly workers with a retirement plan at work rose 79%, from 21% to 38%, while salaried access rose 24%. Counting both access and participation, the share of hourly workers actually saving through work more than doubled, from 7% to 17%.

• 401(k) savings rates have remained flat among salaried workers, but have increased among hourly workers. While the overall savings rate has declined among small business employees, most of this can be attributed to an increase in the share of hourly workers saving for retirement. This is a compositional shift that shows the breadth of new 401(k) access to workers throughout the economy.

Retirement plan adoption is rising across all industries

Every industry in our data saw an increase in the share of businesses with retirement plans between 2019 and 2026. White-collar sectors like Professional Services, Finance, and Information now have shares approaching 45%, but the largest gains were in industries where active plans were rare six years ago: Hospitality (+200%), Recreation (+147%), and Agriculture (+122%). While adoption rates in these industries remain lower than in traditional white-collar sectors, the pace of growth reflects a meaningful shift in where retirement plans are taking hold. These sectors have seen steady, year-over-year expansion since 2019, suggesting that employer-sponsored retirement savings are becoming more common in parts of the economy where workers have historically been less likely to have access.

The levels behind those growth rates are worth reporting alongside them. In 2019, 4.0% of hospitality businesses had an active plan, and by 2026 that share had reached 12%. Recreation rose from 9% to 21% over the same period, and Agriculture from 8% to 17%. Each remains well below the roughly 45% we observe in professional services, so these gains describe industries closing a large gap rather than overtaking anyone. 

Because access alone does not mean that employees save, we also looked at participation within these industries. In most cases the participation gains follow the gains in adoption. Participation among hospitality workers with access to a plan rose from 27% to 37%, and among recreation workers from 34% to 45%. Construction and health care each saw participation rise by about 29% over the period.

In general, both sides moved after 2019: more small businesses began offering retirement benefits, and among workers with access, a larger share contributed. The gains were largest among hourly workers, whose participation rose 11 percentage points compared with 3 points for salaried workers. The overall participation rate rose more modestly, from 54% to 57%, because expanding access brought in workers who have historically participated at lower rates. The same compositional shift that holds down the aggregate savings rate also holds down the aggregate participation rate.

Hourly workers gained the most through expanded access to retirement plans

The industries where retirement plans grew fastest are also the industries that rely most on hourly work. Restaurants, hotels, salons, and farms tend to staff by the shift rather than by the salary, so the pattern we observe across industries and the pattern we observe across pay types describe much of the same underlying change. 

In 2019, a salaried employee at a small business was more than twice as likely as an hourly employee to have a retirement plan available through work: 45% compared with 21%. By 2026 that difference had narrowed, to 55% compared with 38%. Access among hourly workers grew 79% over the period while access among salaried workers grew 24%, and the gap between the two narrowed from 23 percentage points to 17.

Access and participation are different measures, and the gains among hourly workers hold on both. Among hourly workers who had a plan available to them, the share contributing rose from 34% to 45%. Salaried participation was already high and changed little, moving from 70% to 73%.

Taken together, these two changes are larger than either one suggests on its own. Counting every hourly worker in our data rather than only those with a plan available, the share saving for retirement through work rose from 7% in 2019 to 17% in 2026, more than doubling over the period. Among salaried workers the comparable share rose from 32% to 40%.

A considerable distance remains. Hourly workers make up 63% of the small business workforce we observe but only 43% of its retirement savers. Still, the direction has held for six years, and these patterns suggest that expanded coverage is reaching the workers who have historically been least likely to have it.

State mandates don't explain all of the expansion in 401(k) access

While important, our analysis shows that state mandates aren't the whole story. Since 2017, many states have passed Auto-IRA laws requiring certain employers to either offer a qualified retirement plan or enroll employees in a state-run IRA. We observe larger increases in active plans in these states, though adoption also rose in states without such policies. Among businesses with 2 to 5 employees, active plan adoption increased 121% in Auto-IRA states, compared to 54% elsewhere. For businesses with 5 to 9 employees, the corresponding increases were 83% and 37%.

Policy alone does not explain the trend, and several factors likely contributed to the increase in the share of businesses offering retirement benefits. The post-pandemic labor market likely reinforced these changes as small employers competed more aggressively for workers in 2021 and 2022. Increased affordability from SECURE 2.0 tax credits lowered th]e cost of establishing a plan over the same period, and some small business owners see a retirement plan as a way to limit the costs associated with employee attrition. 

In addition to being associated with increased employee retention, small business owners offer benefits like health care and retirement because it’s personally important to them to do so. Taken together, these patterns suggest that the rise in active retirement plans, especially among the smallest employers, reflects multiple forces working in the same direction rather than a single policy or market change.

When retirement plans are available, more than half of employees participate, but real savings are down from 2019

Access alone doesn't guarantee savings. But among small business workers with access to an active plan, more than half participate (57%), with notable gains among groups that have historically saved at lower rates. 

Among all workers who save, the median deferral rate declined slightly, from 4.8% of gross pay in 2019 to 4.5% in 2026. That decline does not reflect savers reducing their contributions. Hourly workers who save raised their deferral rate from 3.7% to 4.0% over the period, and salaried workers held at 5.0%. The aggregate median fell because hourly workers grew from 26% of all savers to 43%, and hourly workers save a smaller share of their pay than salaried workers do. Bringing lower-wage workers into retirement plans lowers the aggregate deferral rate even when no individual saves less. While employee savings has changed over the last couple of years, employer contributions to plans have stayed relatively flat, at about 3% across all industries. This suggests that employers are taking advantage of retirement plan safe harbor provisions to avoid additional compliance testing.

The same consideration applies, more strongly, to savings measured in dollars. In today's dollars, median monthly savings across all savers fell from $357 in 2019 to $245 in 2026, a decline of 31%. Within pay types the declines are considerably smaller. Hourly savers are down 5% in real terms, from $130 to $123, and salaried savers are down 14%, from $514 to $442. While savings in real dollars have declined, most of that aggregate 31% decline reflects the change in composition rather than a change in behavior.

What remains after accounting for composition still matters. Both groups are saving less in real terms than they were six years ago, and neither raised its deferral rate enough to offset the inflation of 2021 and 2022. Smaller real contributions compound: dollars not set aside in one year never earn a return in any later year, so a sustained shortfall in real saving translates into a measurably smaller balance at retirement.

One development in the 2026 data is more encouraging, and it is the first of its kind since 2019. The decline in deferral rates among all savers appears to have stopped. Real monthly savings were essentially flat between 2025 and 2026, and increasing for hourly workers.

There could be multiple reasons for the decline in savings rates. First, in recent years inflation has caused workers to keep more money from their paychecks in their pockets rather than save it for the future. As costs have increased across the board, workers are spending more money than they expected to in order to maintain the same standard of living, and cutting deferrals to retirement savings can provide immediate cashflow. 

On the other hand, small business employees could be saving less from their paycheck because they feel relatively less urgency to do so because of the strength of the stock market in recent years. As retirement savers watched the value of their balances increase, they could feel wealthier and therefore become less likely to increase their deferral rates year-to-year.

Conclusion

Access to active retirement plans at small businesses has expanded substantially since 2019, and the 2026 data shows more clearly where that expansion came from. The growth reached industries where retirement plans were once rare, it was steepest among the smallest employers, and it landed most heavily on hourly workers, who went from less than half as likely as salaried workers to have a plan available to nearly three quarters as likely. State mandates account for a real share of that change without accounting for all of it.

What has not changed is what goes into these accounts. Employers that contribute cluster at about 3% of gross pay regardless of industry, and workers who save have not raised their deferral rates enough to keep pace with the inflation of 2021 and 2022. The coverage gap is closing faster than the savings gap. Some of what appears to be a decline in savings is the arithmetic of that success: as millions of lower-wage workers enter retirement plans, the typical amount contributed falls even as far more people are building a balance at all. Closing the remaining gap will depend on whether expanded access can eventually translate into higher levels of saving.

Methodology

This report uses anonymized administrative payroll data to examine how access to and use of retirement plans at small businesses has changed since 2019. The analysis focuses on private-sector businesses with 2 to 99 employees observed between 2019 and 2026 (data through the last complete month, June 2026; 2026 is therefore a partial year). Businesses enter and exit the sample as they appear in the payroll data, reflecting real-world firm dynamics.

Defining active retirement plans. We define an active retirement plan as one in which at least one employee makes a payroll contribution to a retirement account or receives an employer contribution during the year. This definition distinguishes plans that employees actually use from plans that exist on paper but see no participation. For very small firms, even a single participating employee represents a meaningful share of the workforce and signals that the plan is available and functional.

Measuring access, participation, and savings.

• Access is measured at the worker level as employment at a firm with an active retirement plan in a given year.

• Participation is measured among workers with access, defined as making at least one retirement contribution during the year.

• Deferral rates reflect the share of gross pay that participating employees contribute to their retirement accounts.

• Where we report the share of all workers in a group saving through work, that figure is the product of access and participation for that group.

All statistics are calculated directly from observed payroll and contribution records.

Pay type. Hourly and salaried classifications come from employer-reported FLSA status, taking one observation per worker per year. Commission-only workers are a small and growing category, reported separately in our underlying outputs and not discussed here.

Employer contribution rates. Monthly employer contribution rates are top-coded at 100% of the month's gross pay. Unlike employee deferrals, which are payroll deductions bounded by a month's pay, employer contributions are not: a profit-sharing allocation or year-end true-up can land in a month with little payroll and produce an uninformative ratio. The cap does not affect any reported median.

Firm size, industry, and worker characteristics. Businesses are grouped by employee count to examine differences across very small firms. Industry classifications are based on employer-reported industry codes and aggregated to broad sectors. Worker-level analyses include breakdowns by pay type (hourly vs. salaried) and earnings levels.

Inflation adjustment. Where noted, savings outcomes are adjusted for inflation to compare real values across years, using the average CPI-U for each year (BLS/FRED). Real dollars in this refresh are expressed in 2026 dollars (CPI-U SA, avg Jan–Jun 2026). Because 2026 is a partial year, the annual savings figure is defined as median monthly real savings times 12, which is comparable across a partial year; this differs from the published "actual annual saved" definition and runs at a higher level.

Partial-year and national-figure notes. 2026 covers January–June, so coverage, access, and participation shares are a slight lower bound for 2026.