Business Update – September 22 2021
Even before the pandemic, some restaurant owners were challenging the model of paying servers only $2.13 an hour and depending on tips from customers to make them whole. Today, as restaurants and bars struggle to find enough workers to stay open, a few are making further changes to their business model. Some are raising wages and offering signing bonuses. Others are adding service charges to every bill, and others are simply including tips in the price of food to enable them to pay workers a higher hourly wage. A few are making changes with scheduling to bring balance into their employees’ lives. With more than half of restaurant workers considering leaving their jobs, these changes may help to stem an exodus of employees.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Monthly Child Tax Credit Payments
The September installments were scheduled to go out on Wednesday, September 15, but some parents have not yet received their payments. Parents who had no problems receiving their July and August payments are getting conflicting answers when they contact the IRS about their missing September payments. IRS representatives have variously told them they will receive their payments in five days, or that they will not receive a payment for September but will receive larger payments for the rest of the year, or that they will receive the missing funds when they file their tax returns.
As a reminder, if you want to opt out of future payments, you must opt out by the deadline for the next month’s payment. Check out the IRS FAQs where you’ll find everything you need to know about opting out in Section J.
Are you still waiting on a tax refund from the IRS? A backlog of returns, a workforce shortage, technology difficulties, and a higher rate of errors on returns mean that it may take the IRS up to 120 days to issue refunds. Although the IRS says it has processed all error-free returns received before April, pandemic-related challenges combined with the expanded child tax credit, missing information, and possible identity theft continue to delay refunds. Even the Taxpayer Advocate Service (TAS), a service that helps taxpayers resolve issues with the IRS has been overwhelmed by the demand.
THE GREAT REASSESSMENT
When a key employee resigns or is fired, that can set off a chain reaction which management experts call “turnover contagion,” where other team members leave in quick succession. This may happen when a well-liked and respected team leader leaves, and the remaining team members don’t mesh well with the next leader, or when a company scraps a popular workplace policy such as flexible or remote work. Mass resignations seem to happen more frequently in times of uncertainty, such as the ongoing COVID pandemic. To counter a mass exodus, employers should clearly communicate the reasons employees are leaving, especially if the departure is non-work related. Increasing wages for remaining team members can also help, even if it cuts profit margins for the short term, but those increased wages may stave off even bigger losses if an organization loses too many employees to operate.
Addressing workplace burnout will also help to counter the great resignation. According to a recent survey, 87% of employers said burnout and stress were issues for their employees. In response, many companies are offering new and expanded mental health benefits to employees. These benefits include access to counseling, meditation apps, and simply providing the example of leaders paying attention to their own mental health.
Employees in many companies are being asked to work longer hours or take on extra shifts to keep operations running, but that tactic may make finding enough workers even more difficult. While working overtime means bigger paychecks for many employees, that also increases stress and burnout. Overtime pay is more expensive for companies, who may also find that employee performance drops when employees work longer hours. Some companies are adding additional educational benefits in an attempt to add the additional employees they need for growth.
Employers who rely on software to screen candidates may be unwittingly excluding many qualified candidates. Automated job applicant screening software is often configured to exclude applicants with lengthy resume gaps or whose skills do not exactly meet defined criteria. However, that detailed screening process can lead to difficulties in hiring for some positions. Companies such as IBM, Amazon and JPMorgan Chase have been trying different methods to reach out to candidates who had been eliminated from consideration by screening software. Other small companies are reverting to manual screening methods to find candidates.
REOPENING THE OFFICE AND REMOTE WORK OPTIONS
Companies around the world are experimenting with different models for work in the post-pandemic era. No one model will work for all companies. For example, Chargebee, founded in India, has moved to a fully remote model, and had been transitioning to an asynchronous model before the pandemic. Employees have the freedom to manage their time. To guard against overwork, Chargebee employees get the first Friday of every moth off and must take two weeks of PTO per year. Paddle, a UK-based software company, redesigned its London office as a hybrid workspace. Their digital-first strategy means that whether an employee works in the office, remotely, or on a hybrid schedule, they all have access to the technology they need to collaborate easily.
While many employees prefer remote work, 72% of U.S. managers would prefer their team members all be in the office. While the pandemic demonstrated that people can work effectively from home, some managers prefer the sense of control they have when they can easily check in on their teams. However, many workers have grown accustomed to the autonomy and freedom that remote work offers, so offering remote work can have a positive impact on recruiting.
Even with the delta variant rising across the U.S., retail sales rose 0.7% in August, surprising many economists. However, sales at restaurants and bars stayed flat while online sales soared 5.3%. Back-to-school shopping may have helped retail sales as many children returned to school for the first time in more than a year.
For about 41% of Americans, financial security in retirement is “going to take a miracle.” That’s according to a recent survey, that also found 36% believe they will never have enough money to retire. A top concern is that increased government spending due to the pandemic may lead to future decreases in Social Security benefits. Many younger workers reduced retirement contributions or took withdrawals from their accounts.
The strange economics of gas stations mean that even with gas prices are at a 6-year high, station owners barely turn a profit on sales of gasoline. The average profit on a gallon of gas is only five to seven cents per gallon, and tight competition between stations means that owners are reluctant to raise their prices when wholesale prices increase. Most profit comes from retail sales inside the store, where the profit margin on some items can be as high as 53%.
- IRS resources for stimulus payments:
- Use the Get My Payment tool to check on EIP payment status
- Eligibility and general information about Economic Impact Payments
- A list of frequently asked questions for stimulus payments
- IRS information about the Advance Child Tax Credit Payments
- Portal to update information
- A list of frequently asked questions on the advance Child Tax Credit Payments
- The best source for up-to-date and accurate health information is the Center for Disease Control (CDC)
- Entrepreneur put together a listing of free tech resources for remote work
- The Consumer Financial Protection Bureau has warnings about COVID-related scams
- Fast Company has a listing of the best productivity apps for 2020
- PC Magazine explains how to carry your vaccination card on your phone
- How to create a strong password
We sincerely hope that you and your family are well and remain well. If you have any questions or concerns, don’t hesitate to reach out to us. We are all in this together!