"Across all the major types of benefits, there has been some declines," said George Sharpley, senior economist at the state Department of Labor, who wrote the report. The study compared benefits in 2001 and in 2005.

Larger companies offer more generous benefits and saw fewer benefit cuts, but companies of all sizes are shrinking benefits to cut costs, the study found.

Some of the most notable cutbacks were in health care. In 2001, 93 percent of workers in the private sector were employed at companies that offered health benefits; last year, that dropped to 88 percent.

"We encourage all of our companies to offer the richest benefits they possibly can, but as costs go up, they make cuts," said Richard Heffron, senior vice president for government affairs at the state Chamber of Commerce. "It's one place they make cuts because it's easy, it's quantifiable. And frankly, health care has gotten so expensive."

"We are seeing some large trends in the increase in cost of the health care benefits and what is going on with that is the reduction of coverage," said Bruce Prangley, principal at Mercer Heath & Benefits, a human resources consulting and research firm.

Annual health benefit cost increases peaked three years ago at nearly 15 percent. Since then, costs have risen at a slower pace, estimated at 6.1 percent in 2005, to an average of $7,089 per employee, according to Mercer.

Still, for many small businesses in Delaware, health care costs remain too high. Only 50 percent of the companies with fewer than five employees offered any type of health care, compared with 95 percent of companies with 50 or more workers.

"It's a huge concern," said Richard Ungerbuehler, chief operating officer at Sky-Trax Inc. in New Castle, a 2 1/2-year-old company with about eight full-time employees. "We simply cannot afford 401(k) plans, dental benefits or even eyeglass benefits."

Instead of offering comprehensive coverage, Ungerbuehler tries to keep his workers happy by offering them flexible schedules, stock options and other work-life balance benefits.

"I run a very large risk of losing an employee," said Kim Iorii, owner of Cakes by Kim, a bakery in Wilmington, with seven full-time employees who haven't been offered any benefits so far.

"I go to the doctor a lot," said Pepe, who has been covered by her mother's health insurance, but will no longer be eligible today, when she turns 19. "I was born with cleft palate and I have had a couple of surgeries. I have one more to go, and with the health benefits it will be a lot cheaper."

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