In spite of any economic recovery, the problems caused by the outbreak of the COVID-19 pandemic continue to exist today. In certain cases, the labor shortage is much worse than it was before the pandemic began.
Before the epidemic that began in February 2020, the unemployment rate in the United States averaged between 5 and 6 percent, and it had reached a record low of 3.5 percent just a few years before. This pattern continued for more than half a century. As of May 2022, the unemployment rate had decreased from its high pandemic rate of 14.7%; nonetheless, organizations in the restaurant, hotel, and retail industries continue to struggle to hire workers.
Despite the continued existence of labor shortages, businesses still have tools available to assist mitigate the impact.
Why Is There Such a Huge Labor Gap in the Retail, Restaurant, and Hospitality Industries?
The persistent lack of available labor in various industries is having a negative impact on the services offered, the hours of operation, the level of pleasure experienced by customers, and, ultimately, financial outcomes.
Owners and operators fought frantically to keep companies running and assist employees and their families as the epidemic took hold and gained momentum.
Joblist conducted a survey, and the results showed that 38 percent of workers who previously worked in hospitality indicate they are not contemplating working in hospitality for their future position.
The Problems at the Heart of the Labor Shortage
There was a considerable decrease in the availability of new and experienced staffing to support these industries as a result of the pandemic, which caused the layoff of many employees who never returned to work. The next paragraphs will go through some of the primary causes.
COVID-19
When the epidemic struck, businesses such as restaurants, hotels, amusement parks, tourist attractions, and merchants were forced to close their doors, and as a result, their employees were either laid off or given unpaid leave.
Some companies have been able to maintain their employee staffing and financial viability by utilizing federal support programs such as the Paycheck Protection Program (PPP), the Economic Injury Disaster Loan (EIDL), the Restaurant Revitalization Fund (RRF), and Employee Retention Tax Credits (ERTC, which is also sometimes referred to as the ERC credit). Eventually, these businesses have been able to restore employment to levels that existed prior to COVID-19. Others went out of business for good.
It is anticipated that workers would continue to move away from the hotel and restaurant industries and into other industries and professions until the year 2022.
Lack of Access to Alternative Sources of Labor
Historically, these industries have relied on labor from beyond international borders to meet their staffing requirements, particularly during periods of low unemployment. Because of increased efforts by US border police in recent years, the availability of workers has dramatically decreased.
Conditions of Employment
Some workers took advantage of the closure to construct their resumes and look for alternative employment opportunities where they might receive a greater salary, work in better circumstances, progress their careers, and be in a COVID-19-free workplace.
Possible Courses of Action That Should Be Thought About
Reevaluate Compensation
Many business owners have been put in the position where they are required to pay much higher wages while simultaneously cutting back on their hours of operation. According to the research from Joblist that was discussed earlier, the main reasons job seekers aren’t interested in working in restaurants and hospitality are the low salary, the lack of perks, and the lack of flexibility in scheduling.
It is possible to recruit employees, offset the usage of overtime, lower the expense of benefits, and give part-time hours for employees who are in school or who need to provide childcare at home by balancing full-time hiring with mutually advantageous partial shifts. This can aid an employer.
Keep Your Current Employees
Review the preferred work schedules of your employees and be sure to arrange proactive one-on-one conversations with each employee to ensure a good and productive atmosphere.
Invest Again in Benefits for Your employee
Make plans for your career and pursue opportunities. Training, clearly outlined career pathways, and problem-solving opportunities are all employees for employers to demonstrate to employees that they have a sincere interest in their professional destinies.
In addition to this, they may provide incentives such as discounts, paybacks for tuition or books, time off to attend classes, or other similar benefits.
Assess the Value of Investments in Technology
For kiosks and online ordering systems, along with other e-commerce solutions, automated back-of-house activities, and customer self-service, it is becoming increasingly commonplace to conduct analyses of return on investment (ROI) related to labor savings generated through technological investments. This return on investment might be realized over a longer period of time, often anywhere from one to three years.
What kind of strategies does your organization have in place to deal with a lack of available labor?
Organizations have alternatives that include short-, medium-, and longer-term strategies to choose from in order to fulfill urgent demands. These options range from minimizing recruiting requirements to building local employment programs.
Short-Term Strategies
- Give some thought to hiring outside contractors. To fill up the gaps, you might want to think about contracting out leadership and managerial responsibilities. The staffing may appear to be more cost-effective, but it is important not to overlook the credentials, education, and training that are necessary for the roles in question.
- Loosen the restrictions for employment. Reduce the number of recruiting standards, such as minimum degree requirements or aptitude tests, and tighten the parameters for excluding convicted individuals in order to attract a larger pool of applicants.
- Make sure that the pool is diverse. A good demographic to target would include veterans, as well as students attending community colleges or vocational schools.
- Network. When posting positions, make use of social networking sites like Facebook, LinkedIn, and Glassdoor. It is possible for current employees to act as brand ambassadors for an organization by advertising open employees within the position to their personal networks in exchange for financial incentives.
- Revamp recruitment. The employment process should be streamlined in order to save time and cut down on inefficiencies.
- Optimize onboarding. Create a comprehensive onboarding procedure in order to swiftly educate new employees and incorporate them into the company.
Medium-Term Strategies
- You should put money into training. Increasing the number of skilled workers in the workforce and retaining more employees will need investment in comprehensive technical training programs.
- Work on increasing your adaptability. Examine the means by which you can supply extra selections about time off as well as remote or hybrid work schedules.
- You should offer rewards. As was said before, an employee recommendation program can motivate current employees to spread the word about vacant openings across their personal and professional networks.
- Make keeping current employee a top priority. Carry out polls and personal conversations with employee members to ascertain their level of contentment, and then make use of their responses to formulate strategies for retaining employees.
- Make the working conditions better. Investigate methods to improve operational efficiency by using technology and automation, putting in place preventative safety measures, and cultivating mental wellness initiatives.
Long-Term Strategies
- Put an emphasis on the good aspects. To change people’s perceptions of the sector, emphasize the positive aspects of working there, such as the advantages and the pleasure.
- Make technology your primary concern. Spread awareness among younger people about the digital transition and the shifting nature of the skills that will be required, which will include a combination of technical, physical, and soft abilities.
- Establish community-based employment programs. Investing in programs offered by local high schools and communities can assist in the development of a talent pool for the future.
- Pay attention to the requirements candidates have. Remuneration attention to what prospective applicants want from an employer, such as adaptable working conditions, appealing pay, and enhancements to the overall quality of the work environment.
Educate future leaders from an early age. Create a training and promotion position for new employees so that they may advance their careers and obtain positions that are more important and permanent in the organization.
Methods for Businesses to Overcome Obstacles Caused by a Lack of Available Labor
The lack of available workers has had a number of different kinds of effects on the functioning of businesses. Think about implementing these four different tactics to assist in keeping your company’s finances in good shape.
Think About Raising Prices on the Menu
Many business owners have resorted to raising prices as a short-term strategy in order to compensate for the increase in the cost of labor and payroll, as well as the growth in the cost of various other supply chain expenses. The reduction in the use of coupons has a contradictory effect on the amount of demand from customers.
Reduce your overall cost of goods sold (COGS)
The organizations’ menu options could be optimized, they could evaluate their supply chain, and they could think about negotiating shortened delivery cycles with their distributors and suppliers.
Automated ordering solutions and optimal food pricing systems, if implemented correctly, have the potential to eliminate waste, theft, and irregularities in the menu’s items.
Determine Whether You Are Qualified for ERC Credits
Despite the fact that this federal program will be retired in September 2021, payroll tax returns can, in some cases, be resubmitted for a period of up to three years.
Some companies are obtaining big refunds of payroll taxes that they have already paid, which is strengthening their financial viability and allowing them to hire more employees at higher wage rates in the near future. Those businesses who qualify are receiving these refunds.
Note that there have been some variations in the ways employed to earn ERC credits, both in terms of program qualifying and the refund amounts sought, which have either been too high or too low. This is something that should be taken into consideration.
Maintain Vigilance Regarding the Remaining Federal Assistance Programs
In spite of the recent decision made by Congress not to replenish the RRF program, efforts are still being made in Congress in 2022 toward the creation and renewal of other support programs with a heavy emphasis on maintaining and bolstering employment. These programs include EIDL and others, and they have the potential to provide operators with additional funding to keep existing team members and compete for new employees in the marketplace.
In light of recent criticism, however, it appears that the demand for this in Congress has diminished in the face of inflation and the growing number of employment opportunities.
The infrastructure bill has certain tax provisions that are important for you to be aware of.
On Friday, November 13, Vice President Joe Biden made the announcement that on Monday, November 15, he will sign into law the Infrastructure Investment and Jobs Act (IIJA), also known as the bipartisan infrastructure bill.
Despite the fact that the vast bulk of the bill is devoted to making large investments in infrastructure projects all throughout the country, the legislation does contain a few important tax provisions. The following is the information that you must know regarding them.
Credit for the Premature Termination of the Employee Retention Program
The employee retention credit (ERC) that was established by the Coronavirus Aid, Relief, and Economic Security (CARES) Act would be terminated earlier than was initially anticipated as a result of the IIJA.
The credit was extended to employers who were qualified for it under the American Recovery and Reinvestment Act (ARRA) for the third and fourth quarters of 2021 and all the way through December 31, 2021. According to the new law, the ERC will no longer be accessible for salaries earned after September 30, 2021. The ERC is now valued at up to $7,000 per eligible employee every quarter for the year 2021. This early termination does not apply to start-up businesses that are focused on recovery.
Recovery start-up businesses are those that began operations after February 15, 2020, and whose annual gross receipts for the three tax years before to the current tax year were either less than or equal to one million dollars. This definition comes from the ARPA.
These employers can submit an ERC claim for up to a total of $50,000 each quarter for the third and fourth quarters of 2021 without having to establish that their activities have been discontinued or that their receipts have decreased.
Reporting of Updated Information Regarding Digital Assets
In a manner analogous to how securities brokers record stock and bond trades, the IIJA would mandate that brokers disclose to the IRS the cost basis of digital assets that have been transferred from their customers to third parties who are not brokers.
Any digital representation of value that is stored on a cryptographically protected distributed ledger or comparable technology is referred to as a digital asset. This definition encompasses all digital assets. This concept has the potential to include not only cryptocurrencies like Bitcoin and Ethereum, but potentially some non-fungible tokens as well (NFTs). The term of broker will be expanded to encompass those who run trading platforms for digital assets, such as cryptocurrency exchanges, as a result of the IIJA.
The treatment of digital assets as currency under existing tax law will also be modified as a result of the IIJA. As a consequence of this, people who are involved in a trade or business will be required to submit IRS Form 8300, Report of Cash Payments Over $10,000 Received in a Trade or Business, if they receive such sums in a single transaction or many related transactions combined together.
The requirements regarding digital assets will become operational for returns that are necessary to be filed and statements that are required to be provided after the deadline of December 31, 2023. It is anticipated that the IRS will issue advice prior to that time, but some businesses may conclude that the reporting burden associated with taking cryptocurrency as payment is not worth the potential benefits.
Despite the fact that the vast bulk of the bill is devoted to making large investments in infrastructure projects all throughout the country, the legislation does contain a few important tax provisions.
Tax Provisions That Do Not Fit Any Other Category
The International Investment and Joint Activity Act (IIJA) has a few extra tax provisions, including the following:
- Extends a number of the excise fees that are used to pay expenditure on highways
- Extends and makes modifications to a number of the existing superfund excise levies
- Authorizes the use of private activity bonds for certain eligible broadband projects and facilities that absorb carbon dioxide
- Extends pension funding assistance
- Extends certain administrative concessions made by the Internal Revenue Service (IRS) to taxpayers who have been adversely affected by federally declared disasters and severe fires
Build Back Better Act
In addition to the Individual Investment and Job Creation Act (IIJA), the Democrats suggested additional alterations to the tax law in the Build Back Better Act (BBBA). The BBBA is currently being debated in the House of Representatives and the Senate, and it is possible that the recommendations that have been made public will be revised at some point.
Although many of the details are not yet known, it is possible that the BBBA may ultimately contain important clauses involving the following:
- A tax credit for children
- Limits on the tax that can be deducted for state and local taxes
- Restrictions on the ability to deduct company financing expenses
We will keep you up to date on the latest events that may have an impact on the financial outcomes of both your personal life and your company.
Guidelines for the ERC Credit and COVID Relief under Washington State’s Business and Occupation Tax
During the entirety of the epidemic, businesses were eligible to take use of an employment tax credit known as the Employee Retention Tax Credit (ERTC), which is also referred to as the ERC credit. On March 27, 2020, this change became law as a result of the passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES), and it was subsequently extended as a result of the passage of the Consolidated Appropriations Act, 2021 (CAA), and the American Rescue Plan Act (ARPA).
The Washington Department of Revenue (DOR) has issued guidelines that aims to clarify the Washington business and occupation (B&O) tax treatment of COVID-19 related relief.
This warning supplements an earlier article regarding the B&O tax treatment of PPP debt forgiveness that was issued by Moss Adams.
The Latest on the Employee Retention Tax Credit
The Infrastructure Investment and Jobs Act (IIJA) was signed into law by President Joe Biden in November 2021. As a result of this, the ERC credit was terminated retroactively for the fourth quarter of 2021. This narrowed the window of opportunity for receiving credit to the period beginning March 13, 2020 and ending September 30, 2021, inclusive.
The following provides information on the prerequisites for qualifying as well as the many details in which employers may qualify.
Guidelines & Eligibility Requirements for ERC Credit
During the entirety of the epidemic, businesses were eligible to take use of an employment tax credit known as the Employee Retention Tax Credit (ERTC), which is also referred to as the ERC credit. On March 27, 2020, this change became law as a result of the passage of the Coronavirus Aid, Relief, and Economic Security Act (CARES), and it was subsequently extended as a result of the passage of the Consolidated Appropriations Act, 2021 (CAA), and the American Rescue Plan Act (ARPA).
The Washington Department of Revenue (DOR) has issued guidelines that aims to clarify the Washington business and occupation (B&O) tax treatment of COVID-19 related relief.
This warning supplements an earlier article regarding the B&O tax treatment of PPP debt forgiveness that was issued by Moss Adams.
The Latest on the Employee Retention Tax Credit
The Infrastructure Investment and Jobs Act (IIJA) was signed into law by President Joe Biden in November 2021. As a result of this, the ERC credit was terminated retroactively for the fourth quarter of 2021. This narrowed the window of opportunity for receiving credit to the period beginning March 13, 2020 and ending September 30, 2021, inclusive.
The following provides information on the prerequisites for qualifying as well as the many details in which employers may qualify.