Paid Sick Leave Spreads in Time for Flu Season

A Woman Home without Paid Sick LeaveThe end of summer means the start of flu season. For many U.S. workers, catching a cold means either working through the sickness or giving up a paycheck. The Bureau of Labor Statistic estimates that about 40% of workers nationwide are not covered by a sick leave plan (U.S. Bureau of Labor Statistics, 08/13). These workers, usually part-time employees, must then choose between getting paid or getting well.

However, a string of recent legislation could be changing that. In 2011, Connecticut became the first state to mandate that all workers must have at least 5 days in paid sick leave available to them. The state estimated that the law benefited between 200,000 and 400,000 workers.

In April of last year, New York City became the largest city in the nation to require paid sick leave for workers, covering an estimated 1.2 million employees who were not previously able to take paid time off when they fell ill. The Big Apple followed in the footsteps of San Francisco, Seattle, and Portland, which had already passed mandatory sick laws. As of June 1, workers in Newark are also eligible to earn one hour of paid sick time for every 30 hours they work, allowing them to care for themselves or a sick family member if necessary. Similar laws have been passed in five other New Jersey cities, and a statewide law is making its way through the legislature. If passed, New Jersey would become the third state to pass a mandate for paid sick leave.

Parent with Sick ChildThe latest win for sick leave proponents occurred last week when Governor Jerry Brown of California passed the nation's second state-wide law requiring that all employers grant workers at least three days in paid sick time. Brown signed the law, stating that "Whether you're a dishwasher in San Diego or a store clerk in Oakland, this bill frees you of having to choose between your family's health and your job." Advocates claim it will benefit 6.5 million workers, many of whom work in the hospitality and service industry.

The spread of required sick time has driven 10 states, including Florida, Arizona, and Georgia to pass preemptive measures prohibiting cities and counties within the state from enacting sick leave ordinances. Opponents of the law are concerned that the cost of providing sick days will put too great a burden on small businesses and lower productivity from possible abuse of taking sick time off. A study from the Employment Policies Institute found that of the 86 Connecticut businesses affected by the law, 38 said they were less likely to hire in the future, 31 predicted they would cut benefits, and 12 said they would scale back employee hours (Employment Policies Institute, 02/13).

However, so far in Connecticut, fears of catastrophic costs and businesses closing or moving have not materialized. The Center for Economic Policy Research found that since Connecticut's law was passed, employment rose in key sectors affected by the law, including hospitality and health services (Center for Economic and Policy Research, 02/21/14).

These recent laws have spurred Massachusetts to put its own state-wide measure on the November ballot. If passed, the state would be the third to mandate sick leave for all employees, even part-time workers. And six others have paid sick leave on their legislative agendas for 2015, including Colorado, Vermont, and Maryland. These laws have only started to gain momentum within the last few years; it maybe several years more before it is determined if they are a benefit or a detriment.

Readers, do you think it should be mandatory for employers to give paid sick leave?

Should We Raise the Minimum Wage?

Minimum WageLast week, Americans enjoyed a three-day weekend in honor of the country's working class and their contributions to our nation. Many people fired up barbeques while President Obama tried to light a fire of support for raising the federal minimum wage, saying that "America deserves a raise."

The President's address came just a few days before Michigan's increased minimum wage took effect on September 1. Governor Rick Snyder signed legislation back in May that would raise the minimum wage to $9.25 an hour by 2018. Last week was the first in a number of gradual increases that raised the wage from $7.40 to $8.15 an hour. Michigan joins 13 other states that have raised wages in 2014, including California, Connecticut, Delaware, Maryland, Minnesota, and others. The minimum wage debate continues to sweep across other states and be both applauded as a measure that will expand the pillar of the middle class and criticized as economic folly that will eliminate jobs and actually hurt the low-wage workers it aims to help.

President Obama has pushed for a federal minimum wage increase from $7.25 to $10.10 an hour; however, Congress has shelved the initiative and it is unlikely that any legislation to raise the federal wage will be passed in the near future. But the heated debate still makes headlines as states and cities raise minimum wage requirements. In 2014, 38 states introduced some kind of minimum wage bill (National Conference of State Legislatures, 9/2/14).

Arguments advocating and condemning a higher federal wage all focus on one thing: the economy. Will employers cut jobs because of the higher cost of paying workers? Or will a higher wage mean increased spending and a boosted economy?

Industries Earning Minimum WageWhat will happen to jobs?

Earlier this year, the Congressional Budget Office (CBO) released a report that predicted that if the federal wage were raised to $10.10 an hour, the economy would lose 500,000 jobs (Congressional Budget Office, 02/2014). Opponents of this increase point to what happened in 2009, when the minimum wage was raised and the economy lost 600,000 jobs in the following six months - even while the economy was growing at 4%. When jobs are eliminated, low-skilled workers are more adversely affected, as their jobs are the ones lost and they have a harder time finding employment.

On the other hand, proponents of raising the wage argue that those states who introduced higher minimum wages in 2014 have actually added jobs at a faster growth rate than those who did not. The 13 states who boosted wages added jobs at 0.85%, while those states that did not raise their minimum wages grew at a rate of only 0.61%.

Will it help or hurt the economy?

Although the federal wage was raised in 2009, advocates of raising the wage again point out that inflation has eaten away at the previous bump's real value, which has slipped back to where it was in 1998. Additionally, a wage hike to $10.10 would lift workers out of poverty. The CBO predicts that 900,000 workers would be lifted above the poverty line and wages would be increased for 16.5 million workers. Other research forecasts even more positive expectations, estimating that 4.6 million people would be lifted out of poverty (Minimum Wages and the Distribution of Family Incomes," 12/2013). Critics are quick to point out that raising 900,000 out of poverty out of a total of 45 million does little solve the problem of poverty as a whole.

Furthermore, raising the wage will act as a stimulus and boost consumer spending, according to supporters. Opponents counter that any money used to increase wages must be passed on either to the business, resulting in lost jobs, or to the customer, resulting in higher prices. Additionally, there are no guarantees that an increase in wages would go directly into the economy or toward businesses.

Politicians, businesses, and other leaders have been drawn into the battle surrounding the minimum wage. Recently, Gap Inc.'s CEO Glenn Murphy decided to raise the wage for 65,000 of its workers to $10 an hour by June 2015. Murphy said that the move was not political or tied to any side of the debate but was motivated by Gap's commitment to "invest in front-line employees." Regardless of whether the company wanted to join the national discussion, they are now part of it; President Obama applauded the company and urged other businesses to use them as an example and work to raise wages for their employees in the absence of a higher federal wage.

Readers, do you think the federal minimum wage should be raised?

August 2014 Jobs Report

The U.S. economy added 142,000 jobs in August while the unemployment rate decreased slightly to 6.1%, according to the Bureau of Labor Statistics' Employment Situation Summary. The number of long-term unemployed persons declined by 192,000 to 3.0 million and accounted for 31.2% of the total unemployed.

Major industries with gains in August included professional and business services (+47,000), health care (+34,000), food and drinking places (+22,000), and construction (+20,000). Temporary help employment increased 2.4% from July and 7.9% year over year.

Despite the downward tick in the unemployment rate, August posted the smallest job gain in eight months. Average hourly pay rose six cents to $24.53.

Tax Inversions: Shady or Savvy?

Burger KingAs their long-time slogan states, Burger King wants you to "have it your way." Well, Burger King also wants it their way, according to some critics of the American fast food company's move to relocate their headquarters to Canada in order to take advantage of lower corporate tax rates.

On August 24, Burger King confirmed that it is in talks to merge with Tim Hortons, the Canadian coffee and donut chain, and move their headquarters across the border (Yahoo Finance, 8/24/14). Such deals, referred to as "tax inversions," consist of American companies buying foreign firms in order to move their headquarters to a lower-taxed country.

Tim HortonsBurger King is not the first company to consider this kind of deal; so far in 2014, nine tax inversion transactions have taken place, the most in any one year (Reuters, 8/25/14). But the Burger King merger is unique. Most past deals have involved companies buying much smaller foreign corporations. However, the iconic American chain and Tim Hortons are similarly sized; Burger King has a market capitalization of $9.6 billion while the Canadian company has $8.4 billion (Forbes, 8/24/14). Additionally, most companies that have struck deals are medical device companies like AbbVie or MedTronic, not an American household name seen on street corners all over the country (The New York Times, 8/24/14).

America has one of the highest corporate tax rates in the industrialized world at 35%, and when combined with state taxes, that number reaches 39% (Forbes, 8/25/14). If Burger King moves their headquarters to Canada, they'd benefit from the second-lowest tax rate in the G-7 at 15% (Forbes, 8/24/14). Ireland, which has a tax rate of 12.5%, has also become a common country for American companies to relocate to in tax inversion deals.

Businesses also consider tax inversions because it allows them to bypass paying taxes to the United States on their worldwide profits. Most nations employ a territorial tax system, which means that income is only taxed when it's earned domestically. However, America's tax structure is a mix of both a territorial and worldwide system, meaning all income is taxed, regardless of whether or not it was earned inside the country. For instance, if a U.S.-based company sold products or services abroad, they would pay the taxes of the foreign country as well as taxes from domestic sales.

Tax inversions have started a heated debate between proponents and critics. Supporters insist that tax inversions allow American companies to stay competitive and profitable in the American worldwide system and amid high corporate tax rates. Contrary to accusations, proponents claim there is nothing "unpatriotic" or "unethical" about cutting costs to run your business. Rather than shaming companies that are trying to increase profits, America should focus on revising the tax system and lowering the statutory corporate tax rate to help companies remain competitive.

Corporate greedMeanwhile, opponents blast the deals, saying they are motivated by unveiled greed that passes on costs to individuals and small businesses. While those businesses are technically based in a foreign country with more attractive corporate tax rates, they can still take advantage of the conditions that make America a positive environment to conduct business, such as the American educational system, R&D capabilities, innovative culture, and a skilled workforce. Critics also argue that tax inverted corporations put a greater burden on small businesses and individuals to maintain the country's infrastructure, national defense, and education, all of which corporations benefit from and depend on (The Washington Post, 7/27/14). Finally, while acknowledging that the nation does have one of the highest corporate taxes of industrialized countries, opponents claim that most companies avoid paying the full tax rate by applying tax credits, subsidies, loopholes, offshore tax havens, and a long list of other accounting tricks that reduce many multinationals' tax rate considerably, sometimes to as low as 10% (Citizens for Tax Justice, 5/19/14). President Obama himself called these companies "corporate deserters."

Meanwhile, the Joint Commission on Taxation estimates that the United States could lose about $19.5 billion in corporate taxes over a decade from tax inversions (The Wall Street Journal, 7/14/14). Time will tell whether this practice will help or hurt American business and the economy.

Readers, what do you think? Are tax inversions just good business tactics or a shady strategy for profit? Comment and let us know!

July 2014 Jobs Report

The U.S. economy added 209,000 jobs in July while the unemployment rate rose slightly to 6.2%, according to the Bureau of Labor Statistics' Employment Situation Summary. The number of long-term unemployed persons remained little changed 3.2 million and accounted for 32.9% of the total unemployed.

Major industries with gains in July included professional and business services (+47,000), manufacturing (+28,000), retail (+27,000), and construction (+22,000). Temporary help services decreased by 33,600 in July, a typical pattern due in part the Independence Day holiday.

Manufacturing added 28,000 jobs in July, making it the industry with the second-highest job growth. Most gains occurred in motor vehicles and parts and furniture-related products. Over the prior 12 months, manufacturing has added an average of 12,000 jobs per month, primarily in durable goods industries. Other industries, such as leisure and hospitality, transportation and warehousing, information, financial activities, and government changed very little during the month of July.

State of the Economy and June 2014 Jobs Report

The U.S. economy has seen tough times over the past few years, and speculation as to its health and recovery is in the news every day because Americans want to know how secure their jobs are, what they will be able to afford for themselves and their families, and what to expect for the future of their dollars. In recent weeks and months, optimism for the health of our economy has seemed to wane.

For the past two years, our economic growth rate has remained at a measly 2 percent. Economists were confident at the beginning of this year that we would finally boost that growth to 3 percent, but in mid-June, the International Monetary Fund (IMF) reduced its estimate of 2.7 percent growth for 2014 to 2 percent (Bloomberg.com, 6/16/14). Although employers have added many jobs over the past few months, the long winter placed a strain on several industries, and experts are worried that climate change could present even more challenges to economic projections in the coming years.

Some experts say that the economy is doomed to never fully recover from the Great Recession in 2008. While it would seem as though the economy has rebounded greatly, the truth is that salaries and household incomes have not risen in years and many are still unemployed despite growing numbers of jobs added each month. Other economists maintain that full recovery is on its way, but will take more time than originally estimated due to the slow rate of growth (The New York Times, 6/11/14).

While this speculation, estimation, and evaluation continues among experts and politicians, the Economic Employment Situation for June 2014 had some unexpected positive news – with the economy creating a higher-than-expected 288,000 jobs and the unemployment rate falling to 6.1%, a six-year low. In addition, the May payroll number was revised upward.

Other news from the June Jobs Report included:

  • The number of long-term unemployed persons declined by nearly 300,000 and nearly 2% of the total unemployed.
  • Major industries with gains included professional and business services (+67,000), retail trade (+40,000), food services and drinking places (+33,000), health care (+21,000), financial activities (+17,000), transportation and warehousing (+17,000), and manufacturing (+16,000).
  • Temporary help services continued its upswing by gaining 10,000 jobs in June, which makes for a total gain of 216,000 over the past year.

Upon the news, the Dow Jones Industrial Average broke the 17,000-point barrier for the first time. Similarly, the S&P 500 and Nasdaq Composite were in the green. Some news outlets, like CNNMoney, claimed that this report was an indication "the American jobs recovery seems to have finally hit its stride" and also noted that rising pay rates, partially spurred on by some minimum wage increases in several states, have encouraged consumer and economic optimism (CNNMoney, 7/3/14).

Traditionally, the run-up to elections causes some economic uncertainty in the nation. We'll have to see if the optimism stemming from today's Jobs Report will stay high in the coming weeks and months.

Readers: Do you think the economy has recovered as much as it can already?

May 2014 Jobs Report

The United States economy added 217,000 jobs in May while the unemployment rate remained at 6.3%, according to the Bureau of Labor Statistics' Employment Situation Summary. The number of long-term unemployed persons remained at about 3.4 million and accounted for 34.6% of the total unemployed.

Major industries with gains in May included professional and business services (+55,000), health care and social assistance (+55,000), food services drinking places (+32,000), and transportation and warehousing (+16,000). Temporary help services continued its upswing by gaining 14,000 jobs in May, which makes for a total gain of 224,000 over the past year.

Although manufacturing did not add a significant number of jobs this past month, its gain of 105,000 jobs over the past year is promising. Other industries, such as mining and logging, construction, retail, and government employment changed very little during the month of May.

Whose Market Is It?

Last week, TradePost discussed how to interview and hire new graduates, many of whom have unpolished interview skills but are eager to learn and produce for you. However, these eager new employees may have more of an upper hand than hiring managers think. With the unemployment rate falling to 6.3% in April, the lowest rate since Fall 2008, job seekers are finding themselves with more choices than in the past few years.

Now, we are not completely out of this scenario. While the economy has improved greatly, the drop in the unemployment rate has still been slow in coming. Many employers are still apprehensive about hiring new employees, especially if they have found a way to get all of their work completed with fewer staff members over the past few years.

So, whose market is this? The answer is that we are in transition. On one hand, we see more companies making plans to hire recent graduates (USA Today, 4/24/14). However, we do still see uncertainty by employers regarding economic growth and the continuing political landscape (EconoMonitor, 05/20/14).

In the current situation where things are getting better, but while we have still not fully recovered from the recent recession, trends are emerging and hiring managers can be aware of them. First, it is likely that while your company may have received a very high volume of responses to job postings in the last few years, you will now receive fewer résumés for positions that you post, and responses may be delayed as job seekers are taking time to think about available positions before applying rather than applying to any posting that seems feasible.

Also, after receiving those responses and conducting interviews, job seekers are more likely to negotiate salary and benefits upfront. While you could count on at least one of your preferred candidates to accept an offer without too much negotiation in recent months and years, this is changing as those same preferred candidates are now more likely to have offers from other companies. Some of your candidates may even be negotiating with more than one company at once!

Finally, do not be surprised if you offer a candidate the position with a fully competitive salary and with benefits and they still turn it down. Your first choice may be someone else's first choice as well. Or perhaps he or she still has a job and does not feel that your offer warrants leaving the current position. You may be contacting your second-choice candidates more often in the coming months.

Finally, do not be surprised if you offer a candidate the position with a fully competitive salary and with benefits and they still turn it down. Your first choice may be someone else's first choice as well. Or perhaps he or she still has a job and does not feel that your offer warrants leaving the current position. You may be contacting your second-choice candidates more often in the coming months.

Readers: Have you experienced any of these recent changes when hiring for your last position?

April 2014 Jobs Report

The April Employment Situation Summary as reported by the Bureau of Labor Statistics showed a gain of 288,000 jobs as well as a fall in the unemployment rate from 6.7% to 6.3%, the steepest drop since December 2010.

Professional and business services gained the most jobs at 75,000. Within that category, temporary help services continued to grow by adding 24,000 jobs in April, up 9.3% year over year. This industry continues to grow at about 9% annually.

Retail trade also grew in April by adding 35,000 jobs, and food services and drinking places increased by 33,000. Construction added 32,000 jobs while health care added 19,000. Finally, mining had a decent gain of 10,000 jobs in April.

Other major industries showed little change since March. The average hourly wage also remained unchanged from $24.31 per hour. April has been a month of growth for most industries. However, with such a sudden and steep drop in the unemployment rate, May's numbers may prove to be less exciting as the unemployment rate is not likely to continue to decrease at such a rapid rate.

March 2014 Jobs Report

The unemployment rate remained stable at 6.7% in March, according to the Bureau of Labor Statistics' Employment Situation Summary. Some 192,000 jobs were added to nonfarm payrolls, making March another month of little change for the United States' employment situation.

Several industries added jobs in March with the most notable being professional and business services (+57,000). Within that category, temporary help services added 29,000 jobs. Health care also added 19,000 jobs, while food services and drinking places (+30,000) and construction (+19,000) also had substantial gains.

Government employment as well as manufacturing, wholesale trade, retail trade, transportation and warehousing, information, and financial activities remained unchanged from February.

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