West Coast companies may be rediscovering the concept that good employees like good benefits packages.

The share of small California employers who say that finding skilled labor is a major challenge has increased to 27% this year, from 19% in 2004, researchers at UnionBanCal Corp., San Francisco, write in a report based on a survey of about 2,000 small California business owners.

The percentage of participating employers that offer retirement plans has fallen to 25%, from 31% in 2004, and the percentage offering health coverage has fallen to 48%, from 50%.

Although 42% of small California businesses plan to invest in land, buildings and equipment this year, only 36% expect to increase staff, according to the UnionBanCal researchers.