Business Update – February 9 2022
More people in the world are now sick with the same illness than at any time since the 1918-1919 influenza pandemic. By mid-January, about one in five Americans had contracted the Omicron variant, a number which could double by mid-February. While an estimated 80-90% of those infected with the highly contagious Omicron variant are asymptomatic, the widespread of the virus means that many millions of people have been sick. Businesses around the globe are dealing with an unprecedented number of people who are out sick, staying home to care for sick family members, or required to quarantine because of a positive test. Fortunately, experts predict that the current wave will ease by mid-March.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Monthly Child Tax Credit Payments
Since late December, the IRS has been mailing out letters to people who received advance Child Tax Credit payments. But if your Letter 6419 doesn’t match the payments you received, there are a few steps you should take. First, check your IRS Online Account and compare that amount with the payments you received. If that matches, use the amount from the online account when you file your tax return, not the number in Letter 6419. If the online account amount does not match the payments you received, you should request that the IRS trace the missing payment or payments.
Using the correct amount will help ensure that refunds are paid promptly within 21 days. As a reminder, couples who filed Married Filing Joint will each receive a letter reporting half of the payments received. When filing 2021 tax returns, married couples will need to combine both amounts when they file their joint return. For more information on the expanded child tax credits see the IRS FAQs.
To deal with the massive backlog of tax returns and other paperwork, the IRS is shuffling employees around in an “all-hands-on-deck situation.” Problems processing paperwork began when the agency largely shut down at the onset of the pandemic and have resulted in delayed refunds and confusing automated notices. The IRS began the 2022 tax filing season on January 24 with nearly 15 million pieces of unprocessed mail, largely individual tax returns and correspondence.
Soaring tax revenues and billions in federal pandemic aid has brought a windfall of cash to states across the country, who are now contemplating tax cuts and boosts to funding of public schools and infrastructure. High earners mostly avoided layoffs, and federal stimulus payments put money in people’s hands, which they are spending, boosting sales tax revenues for many states. Last year, 29 states cut taxes or expanded tax credits, and more than a dozen are considering income tax reductions. However, in states such as Mississippi, some are concerned that the deep cuts being contemplated may lead to future hardship for low-income residents.
Did you know that companies can track you inside your email box? Companies can put bits of code inside emails that let them know if you opened an email, and when, where, and what device you used. Many of those email trackers are hidden inside images embedded in emails, so blocking images can help stop tracking. Using a privacy protective email such as Apple’s Mail, ProtonMail, or Tutanota can also help. Some privacy experts recommend treating all marketing emails as spam. Avoid opening them, block them, or unsubscribe where possible.
One of the most important financial decisions for your future is deciding when to claim your Social Security benefits, and various tech tools are available to help you make that decision. Benefits are available as early as age 62, but your annual benefits increase in amount each year you wait until age 70. Married couples can take advantage of spousal benefits, which can boost a household’s lifetime benefits. Divorced people and survivors are also eligible to claim benefits. Waiting as long as possible can increase lifetime benefits substantially. Setting up a free account at the Social Security administration’s website is a good first step toward understanding the benefits available to you.
In a period of scarce labor, it may be tempting to reach informal agreements with competitors to not poach each other’s employees or to keep wages the same across companies so that everyone can hang on to the employees they have. But those informal agreements can land employers in hot water with the Department of Justice or the Federal Trade Commission. The personnel within companies who are responsible for enforcing noncompete agreements can be held criminally liable. Training and education are required, and legal counsel may be needed to undo any prior anticompetitive agreements.
While many have cited the lack of physical contact with remote teams as the reason for a lack of innovation, other experts are citing another cause: that knowledge workers simply have too much work to do. A side effect of the Great Resignation is that key tasks of departing workers are now distributed to the remaining employees, two-thirds of whom report that their workloads have increased significantly since the pandemic began. As workloads increase, employees have less time to interact with others outside of their immediate team members and less time to think creatively or to innovate.
REMOTE AND HYBRID WORK OPTIONS
Should fully remote workers receive the same pay they would if they lived in the expensive city where their company is located? Businesses are split on this issue. Many Big Tech firms, including Alphabet, Amazon, Apple, and Microsoft, have announced that they will slash pay for workers who move out of the high-cost areas where those firms are located. However, other companies such as Zillow and Hubspot are paying their employees the same, regardless of where they live. Higher pay allows these firms to access a deeper talent pool and to retain workers amid the Great Resignation. However, keeping the same pay for all team members means that companies may risk losing local employees that are necessary in order to maintain a viable hybrid workforce.
Starting a new job as a remote employee requires a proactive approach for success. Instead of meeting and interacting with new colleagues at the water cooler or in the break room, reach out to people recommended by your manager and close team members for a virtual coffee chat to establish lines of communication. Set up a clean, distraction-free workplace in your home, which need not be in a separate room, but can be a spot at the kitchen counter. Draft a 30/60/90 day action plan with your manager outlining the goals you want to accomplish and the steps needed to achieve them.
Despite the Omicron surge, nonfarm payrolls rise 467,000 in January, well ahead of Wall Street’s estimate of 150,000. However, the unemployment rate also rose slightly to 4%. At the same time, revisions for prior months sent jobs numbers higher: December’s initially reported gain of 199,000 was recalculated as 510,000, and November’s previous report of 249,000 increased to 647,000. The biggest gains for January were in leisure and hospitality. Earnings also rose by 0.7% in December; however that increase did not keep up with 7% inflation for the same month.
Worker absences caused by the Omicron surge are preventing some companies from growing and cutting into normal operations. Companies such as McDonalds have been forced to curtail hours due to staffing shortages. About 6% of the U.S. workforce, or 8.8 million workers, were absent during the first 10 days of January for Covid-related reasons, impacting the ability of manufacturers to fulfill orders.
- IRS resources for stimulus payments:
- IRS information about 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
- 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!