Temp Hiring Is Back. Is a Jobs Recovery Next?

Temporary job hiring is on the rise, which has some assuming that job recovery is on the way. However, data is showing that the unemployment problem is not likely to improve anytime soon.

CNNMoney.com reports:

Jobs in the temporary services industry are up 22.1% year-over-year, according to the Labor Department. But the overall job market expanded only 0.2% during the same period. And the outlook is still pretty grim.

"By this stage, we would have expected to see businesses add on larger numbers of permanent workers," said Richard Wahlquist, president and CEO of the American Staffing Association.

The problem is that businesses are still too scared to hire. Mixed economic data, sweeping new financial and health care reforms and uncertainty about the expiring Bush tax cuts, have all left employers feeling jittery about their future business prospects, Wahlquist said.

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Labels Matter to the IRS

Last week, I drafted a new article for WomenEntrepreneur.com on how to decide whether you should label your new employee as an independent contractor or a standard wage earning employee. You can find a snippet of the article below, or visit WomenEntrepreneur.com for the full text.

When business owners start looking into hiring employees, many are overwhelmed at how expensive it can be. Of course, you must pay this person a decent wage, but there are even more expensive costs: taxes.

And there are a lot of them to think about: unemployment taxes, payroll taxes (7.65 percent of the employee's total salary) and other taxes.

Some business owners try to sidestep these tax issues by hiring workers as "independent contractors." Sounds like a good idea, right? Independent contractors do the work but save you the hassle of payroll taxes, tax withholding and unemployment taxes. Hold on! Before you jump aboard the independent contractor bandwagon, you need to understand that the IRS has a say in the matter.

The IRS has very strict rules for determining who is an independent contractor and who is an employee. How you classify your workers revolves around three basic characteristics:

Behavioral control: Do you as the business owner have the right to determine how the work is done via training or instructions, for example?

Financial control: Do you as the business owner have the right to determine or control the financial or business aspects of the work?

Type of relationship: Do you or your workers perceive an employer-employee relationship?

May Job Openings Dip but Hiring Near 2-Year High

Although job openings slipped down in May, the hiring rate increased to the highest levels in 2 years. As this MSN News article explains, a number of these jobs were census workers, but the data still indicates an overall improvement for the U.S job market.

"The positive thing is job openings in general have been trending higher since February, even though they dipped in May. It confirms that the labor market has bottomed, there are some new jobs (being created)," said Harm Bandholz, chief US Economist at UniCredit Research in New York.

Job openings, a measure of labor demand, dipped to 3.21 million from 3.30 million in April, the Labor Department said in its monthly Job Openings and Labor Turnover Survey.

The job openings rate, a gauge of how many jobs were still open at the end of the month, eased to 2.4 percent from 2.5 percent in April.

But hirings rose to 4.50 million from 4.29 million, lifting the rate of hiring to 3.4 percent -- the highest since August 2008 -- from 3.3 percent in April.

Continue reading at MSN.com…

Hire this Summer and Get a Tax Break

If you are an employer, you don’t want to overlook the HIRE Act tax benefits. If you are looking to hire some new employees, college students are a great idea for a summer position. This is exactly what Congress is trying to encourage people to do, hire an employee who hasn’t worked more than 40 hours in the last 60 days before getting hired, and you may qualify for a temporary tax break. Passed in March, the Hiring Incentives to Restore Employment (HIRE) Act would allow an employer with any qualified hire after February 3rd to skip paying the 6.2% Social Security taxes on the worker’s wages from March 19 through the rest of the year. This would save an employer nearly $2500 on $40,000 of pay.

A qualified hire would be someone who is unemployed this year (after February 3, 2010 and before Jan 1, 2011) and has not worked over 40 hours in the last 60 days.

The law is most useful to large corporations where they can use the HIRE provisions to save millions of dollars, but the law is also useful to small businesses. For example, these tax breaks work for businesses this summer who want to hire kids on summer break to help with paperwork or businesses that want to hire college students who haven’t worked elsewhere in the last 60 days and therefore, would be considered a “qualified employee.”

Form to Claim Payroll Tax Exemption for Hiring New Workers Now Available

Unemployment rates were 9.9 percent nationally last month according to the Bureau of Labor Statistics. In the fight against unemployment in our country, President Obama signed the payroll tax exemption and new hire retention credit created by the Hiring Incentives to Restore Employment (HIRE) Act on March 18. The Act states that employers who hire unemployed workers this year (After February 3, 2010 and before Jan 1, 2011) may qualify for a 6.2 percent payroll tax incentive which will exempt them from the employer’s share of Social Security tax on wages.

The Internal Revenue Service announced today that they have issued the newly revised payroll tax form that most employers can use to claim the exemption of newly hired workers during 2010.

Additionally, for each qualified employee retained for at least a year whose wages did not significantly decrease in the second half of the year, employers may claim a “new hire credit” of up to $1,000 per worker.

To claim the Payroll Tax Exemption, employers would need to file IRS Form 941, Employers Quarterly Federal Tax Return. This means the HIRE act is not allowing employers to claim the payroll tax exemption for wages paid in the first quarter, only for wages paid in the second quarter. You can find the full instructions for claiming the exemption as well as claiming wages paid from March 19 - March 31 of this year on the IRS website.

Senate Approves Tax Breaks for New Hires

The Senate approved Obama’s job creation bill this morning with a 70-28 vote. The legislation includes tax breaks for businesses that hire previously unemployed workers. It will need to get passed by the House of Representatives before going to Obama’s desk for a signature, but many experts predict it will have no problem getting enough votes in the House. Democrats hope that this will be the first of many bills that will help encourage job creation.

According to Yahoo, it's the first major bill to pass the Senate since the Christmas Eve passage of a deeply controversial health care bill and the subsequent election of Massachusetts Republican Scott Brown, which rocked Democrats by demonstrating their falling standing even among heavily Democratic voters.

The bill contains two major provisions. First, it would exempt businesses hiring the unemployed from the 6.2 percent Social Security payroll tax through December and give them an additional $1,000 credit if new workers stay on the job a full year. The Social Security trust funds would be reimbursed for the lost revenue.

Second, it would extend highway and mass transit programs through the end of the year and pump $20 billion into them in time for the spring construction season. The money would make up for lower than expected gasoline tax revenues.

Continue reading at Yahoo.com…

Job Openings Rise, But Hiring Still Weak

Although the real estate industry is showing signs of improvement, high unemployment is still troubling this country. According to new reports, the number of job seekers outnumbers the number of job openings by six to one. These statistics come from the recent Job Openings and Labor Turnover survey from the Bureau of Labor Statistics. Their report also claims that layoffs were up by nearly 90% from the year prior in the month of September.

15.7 million people are out of work. The nation's unemployment rate rose above 10% for the first time since 1983 in October. And with fewer openings available, prospects for the unemployed are looking grim.

Job seekers now outnumber openings by more than six to one, the greatest discrepancy since the labor department began tracking job openings.

Job openings: There were fewer than 2.5 million job openings in September, down 35% from a year ago, according to the latest Job Openings and Labor Turnover survey from the Bureau of Labor Statistics.

The only bright spot, according to Bernard Baumohl, chief global economist for the Economic Outlook Group, is that the number of job openings rose slightly to 2.48 million in September from 2.42 million in August.

The uptick in job openings "could be the first break in the clouds," he said."If the economy continues to show strength, then the new job openings could very well result in an increase in employment later this year and into 2010."

Continue reading at CNN.com…