Just a few weeks ago, it appeared that the Delta variant was on the wane in the US. However, in pockets of the Midwest, Southwest, and Northeast, cases are climbing, just ahead of the holiday travel season. Minnesota is experiencing its highest average daily case counts since April, at 3,500 per day, overwhelming some hospitals. In response, Minnesota Governor Tim Walz has enlisted the National Guard to staff temporary sites and care for patients. Even though most serious cases are among the unvaccinated, it appears that immunity is waning among those who first received the vaccine.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Monthly Child Tax Credit Payments
The IRS recently released a Fact Sheet that includes the latest updates to FAQs on the 2021 Advance Child Tax Credit Payments. New FAQs under Topic F explain how to update your income if that has changed substantially for 2021 compared to 2020 or 2019.
As a reminder, if you want to opt out of future payments, you must opt out by the deadline for the next month’s payment. Check out the IRS FAQs where you’ll find everything you need to know about opting out in Section J.
The IRS has released its annual inflation-based changes to tax brackets and various other tax attributes for 2022 returns, to be field in 2023. The standard deduction will increase to $25,900 for married couples filing jointly and to $12,950 for single filers. For 2021 returns that will be filed in 2022, the standard deduction for joint filers will be $25,100, and $12,550 for single filers.
THE GREAT REASSESSMENT
According to research from Goldman Sachs, about half of the 5 million of the people who left the labor force during the pandemic may not be returning because they have retired. Of the people who left the labor force, 3.4 million are over 55, and about 1.5 million of those took early retirements and another million took normal retirement. This leaves a hole of about 2.5 million people who most likely won’t return to the labor force. The numbers of people taking early retirement is consistent with an earlier study from the Federal Reserve Bank of Kansas City that found about 1.5 million more people retired than expected.
Some people who left their jobs during the pandemic may receive offers from their former workplaces, trying to lure them back as “boomerang employees.” If this happens to you, it’s important to weigh that offer carefully. If the reason for departing was your manager, and this person has since left, returning may be a more positive experience. Turnover may have resulted in a completely different team of people, new workflows, and extra work for the remaining employees.
For employers who’d rather retain their employees than see them join the “Great Resignation,” five strategies may be helpful. First, promote existing employees and increase their compensation. Investing in employee education and training is another incentive for employees to remain with an employer. Parents with children may need help with childcare, which may be in the form of a subsidy, flexible work hours, or working with a child care provider. In the post-pandemic era, flexibility is no longer a nice-to-have, but a necessity. Finally, recognition and rewards when employees do a great job can make them feel appreciated.
As of November 5, there were an estimated 11.2 million job openings, but only about 7.4 million workers seeking jobs, and people are quitting jobs at a record-breaking rate. Before the pandemic, the previous peak of job openings was 7.5 million in November 2018. Many of the current job openings are in warehousing, shipping, and retail. With more openings than workers, employers are offering bonuses and higher wages. Some employers who would usually offer jobs to those unemployed have shifted their strategy to enticing people to leave their current jobs for better pay.
Officials have been arguing that pandemic-caused inflation would cool as soon as the economy heals. However, four charts from the Washington Post reveal the ways that inflation today is different from previous waves of inflation. In short, supply chain backlogs and the spread of the delta variant are causing this wave of rising prices to persist longer than anticipated. The spread of the delta variant is one of the causes of the 6.2% increase to the consumer price index for October. These price increases are broad-based, and include increases in prices for energy, food, shelter and used cars.
New claims for unemployment fell to a pandemic low of 267,000, nearing the normal pre-pandemic level of 220,000. New claims, which serve as a proxy for layoffs, have been dropping for six straight weeks. However, the economy is still more than 4 million jobs short of its pre-pandemic level in February 2020.
While job openings are at near record levels and wages are increasing, the percentage of people participating in the workforce remains well below the rate before the pandemic. Of particular concern to economists is that people in their prime working years are only slowly returning to work. About 1.4 million fewer people between the ages of 25 to 54 are working or looking for a job than before the pandemic, and this slow return may have lasting implications for the health of the economy, possibly resulting in sustained inflation. As personal savings diminishes, some may return, but others may be opting out of work due to family obligations.
- 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
- Fast Company has a listing of the best productivity apps for 2020
- 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!