Where Are All the Workers?

Where Are All the

Where Are All the Workers?

Many springmakers are finding themselves short of the one thing they need to thrive and grow: workers. The Bank of America recently estimated that 4.6 million workers exited the labor force during the pandemic, but only half are expected to rejoin by the end of the year. How to coax those badly-needed workers off the sidelines remains a problem.

By Mark E. Battersby

One reason for the shortage may be that we’re paying people not to work. Quite simply, for workers earning less than $32,000 annually, it’s more financially lucrative to collect federal and state aid than taking a job. After all, benefits for nonworkers now average $16 per hour, more than twice the $7.25 hourly minimum wage.

The Cure The Biden administration is reportedly taking steps that will make it easier for employers to hire more workers, and says Americans must accept a job or lose unemployment benefits. In the Senate, a proposed bill, the National Signing Bonus Act, would convert the expanded benefits of unemployment insurance into a two-month bonus for anyone going back to work. A number of states have already, or were on the verge of, eliminating the $300-a-week unemployment benefit extension included in the American Rescue Plan.

Obviously, unemployment benefits are not the only reason workers are remaining on the sidelines. Among those reasons: Many parents are struggling to find child care, with schools remaining closed for in-person learning and child care facilities experiencing the same worker shortages faced by many in the precision mechanical spring industry. Other workers have said they’re reluctant to return to jobs out of concern they will contract COVID-19, or one of its more dangerous variants.

Finding qualified workers remains a major challenge for spring manufacturers and is slowing both the recovery and growth. Some employers are increasing compensation, offering bonuses and benefits to attract employees. Consider just a few of the strategies in play as spring companies search for workers.

Rewards For Workers Hiring Workers Imagine offering rewards to employees who bring job candidates onboard. These recruiting bonuses, also known as employee referral programs, foster a sense of trust in existing employees to refer good people with whom they will work well.

Naturally, in order for these bonuses to be most effective, there should be some requirements to determine the success of the referral before the bonus is paid. These requirements often include working a set length of time, meeting certain standards, sustaining growth over a certain period and more.

So-called “signing bonuses,” just like those we’re familiar with in professional sports, are becoming more and more common in industry. A signing bonus is money a manufacturer gives an employee who has accepted their job offer. A signing bonus is offered to attract well-qualified employees and convince them to accept a job. That bonus is usually in addition to the employee’s salary, benefits and other bonus or commission opportunities.

Bonuses and awards must, of course, be included in an employee’s taxable income. Should the bonus or award be in the form of goods or services, employees must include the fair market value of those goods or services in their income. The Battle of the Minimum Wage While thousands of jobs are available and businesses are finding it increasingly difficult to find workers, many experts say that unemployment benefits are not the problem, instead pointing to low wages, specifically the minimum wage. Senate Budget Committee chairman Bernie Sanders has a simple solution to the problem of hiring low-wage workers: Raise wages and pay decent benefits.

The main argument against a nationwide $15-per-hour minimum wage in the U.S. is that it would make labor too expensive for poorer areas, prompting employers in those areas to shed jobs. So far, a local approach to the minimum wage dilemma seems viable, as many cities and states pass their own $15-perhour minimum wage initiatives.

Despite the minimum wage stalemate in Congress, the government has employed a number of tactics to help struggling businesses and individuals cope with the economic fallout of the pandemic. These include payroll tax deferrals, forgivable loans and refundable tax credits to reimburse employers for costs incurred providing paid sick and family leave to employees because of COVID-19.

Benefits to Attract and Retain Workers Surprisingly, survey after survey seems to show that it is not money alone that attracts new workers and keeps existing employees on the job. It is the benefits.

Obviously, no spring manufacturer can be an employer of choice without a good benefits package. Employees are looking for a sense of security in the form of good benefits and retirement packages; a 401(k) is the most common, but there are many other options. Helping employees maintain their health and build a stable retirement shows job applicants, along with current workers, the business values them.

Also currently treasured by job seekers and employees are flexibility and the opportunity to balance work with other life responsibilities, interests and issues. Job training, educational assistance and employer-provided vehicles used for business are among other popular, and often necessary, working-condition fringe benefits offered by small businesses.

Job Training and Educational Assistance Seeking workers “outside-the-box” often means job training, and many employers are finding ways to use a job-seeker’s previous job experience to place them in new careers. One example cites the customer service experience of hospitality and restaurant workers due to their ability to stand on their feet during long shifts as an excellent entry point for light industrial work.

There are also job training and educational cost assistance programs useful in attracting job applicants and welcomed by existing workers.

On-the-job training provided by an employer is a tax-free hiring incentive as well as an invaluable “perk” for current employees. Educational assistance and tuition reimbursement are also welcome fringe benefits.

It is not money alone that attracts new workers and keeps existing employees on the job. It is the benefits.

A spring manufacturer with a formal, written educational assistance plan isn’t required to immediately fund the plan, only to reimburse an employee’s educational expenses — up to $5,250 per employee, per year and exempt from tax. Educational assistance doesn’t just include tuition assistance, but also payments for books, equipment and other expenses related to continuing education.

What Do They Want? Among the more common, tax-free employee fringe benefits are the following: l Health Benefits. Health benefits are by far the single most important fringe benefit. Health benefits include providing employees with health, dental and vision insurance as well as paying health-related expenses. l Long-Term Care Insurance. This insurance covers expenses such as the cost of nursing home care. While premiums are not taxable benefits, benefits received under the insurance may be partly taxable if they exceed certain limits. l Group Term-Life Insurance. A springmaker can provide up to $50,000 in group term life insurance to each employee tax free. l Dependent Care. Up to $5,000 in dependent care assistance can be provided to an employee tax free. Of course, many working parents may qualify for a tax credit for child and dependent care. l Working Condition Fringe Benefits. Working condition fringe benefits are everything provided or paid for by an employer to help someone do their job. Local and long distance travel for business, business-related meals and entertainment, professional publications and company cars used for business driving are all good exemples of tax-free working condition fringe benefits.

Hiring the Unhirable The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers for hiring individuals from certain targeted groups who have traditionally faced significant barriers to employment. That means qualified veterans, ex-felons, summer youth employees, long-term family assistance and long-term unemployment recipients and Supplemental Security Income (SSI) recipients, among others.

The credit is equal to a percentage of the eligible employee’s wages, up to $9,600 depending on the new hire’s WOTC target group. Of course, the employee must work at least 120 hours in order for the employer to receive the credit.

The Bottom Line One evolving method of dealing with the tough labor market involves working without workers. In other words, many manufacturers are stepping up the automation of their operations.

The government, particularly our tax laws, can provide a much-needed helping hand with the cost of automating. The current tax laws offer a first-year expensing option that allows amounts spent for new (or used) equipment to be entirely written off or deducted immediately. So-called “bonus” depreciation is another option for an immediate deduction of 100 percent of expenditures.

Unfortunately, in order to deduct something, there must be income from which it can be deducted, something far too many businesses lack. The alternative for those automation expenditures is the tried-and-true depreciation deduction. Depreciation creates a write-off for a portion of those costs annually — when the recovering business’s future income will, hopefully, benefit from a reduction.

In order to attract talented individuals to work for a spring manufacturer, as well as to retain qualified employees, employers in today’s job market must often offer increased wages, fringe benefits and other perks. With the help of professional guidance, the most successful options could well be the ones that cost the operation the least. n