Pay Raises Make a Slight Comeback

Employee pay stagnated somewhat during the Great Recession, but now pay raises are no longer coming so far apart, according to one non-profit human resources organization.

Employee Pay Increases 2013WorldatWork, an association of HR professionals that compiles employee compensation data, reported that the average worker waited about 12 ½ months get their latest pay raise. Just two years ago, in 2010, the time between pay raises was averaging more than 13 ½ months. Most employers who adjust their salary structures regularly do so at intervals of one to two years, whereas during the recession the average was closer to 2 ½ years. A sizeable minority of employers even waited as long as 3 years between adjustments to their base pay scales.

The average pay raise this year will be about 3 percent, according to WorldAtWork. For comparison, the overall rate of inflation in the United States in November was 1.8 percent. However, unfolding developments in Washington regarding tax policies make appear that an employee who gets a 3 percent raise wouldn’t actually keep most of that money in his or her pocket. The political deal struck on New Year’s Day puts an end to the 2 percent payroll tax holiday, meaning that if nothing is done to lower Social Security taxes again, an employee with an average-sized raise is going to see a big chunk of it withheld by the federal government.

WorldatWork pointed out that some employers will reward star performers with raises about double that of the average worker, however. Employees who receive promotions can expect raises in the 9-10 percent range.

In general, employers are taking a cautious approach because of the slowness of the economic recovery and the widespread belief that it might be torpedoed by Congress’ failure to reach sound compromises on taxes and government spending.  There is also speculation that raises around the 3 percent level are going to become the “new normal,” rather than rebounding to averages as high as 4.5 percent that held sway for the two decades up until 2009.

In 2009, the average employee raise sunk to a 39-year low of just 2.2 percent. That year, one-third of employers surveyed expected to keep their salary levels steady, whereas this year only 5 percent are keeping their compensation frozen.

As far as timing for those getting raises, WorldatWork says that more companies are moving to a system in which all wage and salary bumps are given at the same time, usually in January or sometime during the first quarter of the year.

An essential part of any company’s compensation program is getting employees paid accurately and on time. Of course, as a small business owner, you have plenty of other things to think about, especially in these changing and uncertain times. That’s where Padgett Payroll Services comes in. We take the stress of payroll processing off of the shoulders of thousands of small business owners all over North America, and at affordable rates. Visit the Padgett website or call us at 877-244-5842 today to get started!

Fiscal Cliff Creates Payroll Processing Uncertainties

Payroll Processing Uncertainties at Fiscal CliffPayroll processing will become less of an exact science this week because of uncertainties over what payroll and income tax rates will be applicable in 2013. The ongoing negotiations in Washington meant to avert a tumble over the so-called “fiscal cliff” have put payroll managers nationwide in this difficult situation.

At many companies, employee pay must be processed now for paychecks to be issued on a timely basis in early January. Not knowing what eleventh-hour deal might be reached has made it impossible to know for certain how much employers should deduct from 2013 checks. Now, despite lawmakers and the President cutting their Christmas vacations short in order to return to the capital for further bargaining sessions, it seems that a deal might not be reached in time at all.

However, even the assumption that it’s too late to prevent a plunge over the fiscal cliff doesn’t provide certainty on every tax issue. If our elected officials do head out for New Year’s Eve parties on the evening of December 31 without having reached new agreements on taxes and spending, taxes will go up for just about everyone. In some cases, though, there will still be a question of just how much they’re going up.

Every worker will be paying more toward Social Security, because the payroll tax rate will revert to 6.2 percent after having been temporarily lowered once again to 4.2 percent in 2012. Also, that rate will apply to the first $113,700 in wages, an increase from the current figure of $110,100. If Congress doesn’t act, those numbers are certain.

Income tax withholding will be trickier. One component of the fiscal cliff is the expiration of Bush-era tax cuts, which would mean elimination of the current bottom bracket, 10 percent. The new bottom income tax bracket will change back to 15 percent. However, knowing that does not tell employers what the income ranges will be for the various brackets. That direction must come from the IRS. Employers will most likely stick to the old tax withholding tables for the time being, with any necessary adjustments being made later.

There has been a lot of speculation that Congress and the President will eventually work out a deal some time later in January. That means that a new income tax structure could be put into place and the Social Security tax could be tweaked again. Worker used to getting a more-or-less identical paycheck every pay period might see the amount of their checks vary in January until the tax picture is cleared up as political events unfold.

Padgett Payroll Services can take care of the complexities of payroll administration for your small business. Hiring our payroll experts means that you don’t have to be one! Call Padgett Payroll today at 877-244-5842 to find out more about how we can help simplify your life as a small business owner.

Improved September Jobs Numbers Fuel Discussion of How Unemployment Rate is Calculated, What It Means

Sept 12 Employment Payroll StatisticsWhen the announcement came last week that 114,000 workers were added to the nation’s employee payrolls  in September, just about everyone seemed to be caught off guard by the surprisingly good news. Officially, the U.S. unemployment rate fell below 8 percent for the first time in almost four years, going from 8.1 percent the month before down to 7.8 percent. Exactly three years ago, in October 2009, the official unemployment rate topped out at a whopping 10 percent.

Apart from some quickly dismissed allegations that the Department of Labor Statistics may have cooked the books to generate favorable news on behalf of the Administration, the monthly jobs figures raised some valid questions about how the numbers are to be interpreted.

For instance, there are actually two ways that the DLS calculates the unemployment rate. One is to survey businesses’ payroll processors, the other is to survey households directly about the employment situation of those living there. The catch is that the household survey always shows lower unemployment than the payroll survey. Not only that, the gap between the two varies, and it’s not insignificant – the difference between the surveys can be as much as high as one million jobs.

In September, the payroll survey showed modest job growth, while the household survey showed a much larger jump in employment. There are many theories as to why these two surveys differ and how they should be proportionally weighted in calculating the “true” unemployment rate, but suffice it to say that these figures will always be an estimate and at best will show general trends.

Another fact that calls unemployment rates into question is the federal government’s definition of “unemployed.” Only jobless people who are actively seeking work are classified as unemployed. In the past few years, some of the small monthly dips that have occurred in the unemployment rate have been attributed to discouraged workers dropping out of the job market, rather than actual job creation. That seems not to have been the reason behind September’s improvement, but some observers say that if these discouraged workers werecounted, the unemployment rate would have been well above  10 percent for the last few years, and would still be around 11 percent now.

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U.S. Employment Stats Continues to Underwhelm

Employee Payroll StatisticsNew workers have been added to U.S. employee payrolls month after month throughout the late spring and early summer – just not enough of them to bring the overall rate of unemployment down, according to figures from the Department of Labor’s Bureau of Labor statistics (BLS).

According to the BLS, the U.S. economy added 163,000 jobs in July. That’s the most since February, yet unemployment went up from 8.2 percent to 8.3 percent. The difference between the percentages in June and July before rounding was statistically insignificant, ut the very best that can be said is that the country’s employment situation is stagnant.

The July increase in job numbers exceeded the increases for June and May combined, and were somewhat higher than the monthly average over the last year and a half. For each the past 18 months, government, large business and small business payrolls together have added an average of a little more than 150,000 jobs per month.

Unfortunately for American workers, that pace of growth in the number of jobs available is little more than enough to keep up with the continual expansion of the nation’s available workforce due to population growth. At the meager rate that jobs are being added, says one economic research group, it will be 2025 before we again see pre-recession levels of employment.

As has been the case throughout the recession and recovery, some areas of the U.S. are suffering much higher unemployment than others. Nevada, Rhode Island and California were the only states with unemployment rates higher than 10 percent in June – 11.6 percent, 10.9 percent and 10.7 percent respectively. The states with the next-highest levels of unemployment were New Jersey, North Carolina, South Carolina, the District of Columbia and Georgia. States with unemployment well below average were North Dakota (the lowest nationwide at 2.9 percent), Nebraska, South Dakota, Oklahoma, Vermont, New Hampshire, Iowa, Wyoming, Virginia, Utah and Kansas.

Small businesses in North America are leading providers and creators of much-needed jobs, and Padgett Payroll Services is proud to be a partner in success with small businesses from coast to coast in the United States and Canada. Click here to find out what professional payroll outsourcing can do for your business http://www.padgettpayrollservices.com/why-outsource.php  Contact the payroll specialists at Padgett Payroll Services via our website, or call us at 877-244-5842.