US Hiring Has Slowed--But It's Not as Bad as You Think
Yes, it’s true that the US Labor Department has reported that hiring slowed significantly during the month of March. With the knowledge that employers added only 120,000 jobs last month, down from 240,000 in February, concern about the strength of the country’s economic recovery is rustling across the country this morning.
But the reality of the situation isn’t as dire as some may hasten to believe. Although job growth was slashed in half in the course of a month, National Employment Law Project Executive Director Christine Owens says that 120,000 jobs are just enough to keep up with the country’s population growth. Owens likened the number to “treading water.”
And sure, treading water is far from desirable. Our country’s legs and arms can’t hold out for too long if it’s straining to keep its head above water, but when considering the big picture, treading water is respectable.
A variety of factors contributed to the recent hiring slowdown, particularly our unseasonably warm winter, which boosted growth in January and February.
In addition, the unemployment rate dropped to 8.2 percent while the underemployment rate, which accounts for people who are unemployed as well as people working part-time because they can’t find full-time work, fell to 14.5 percent.
During a White House forum on promoting economic opportunities for women, President Obama said that the US job market will continue to face “ups and downs” but that the restoration of economic security for American families is an important goal.
“It’s clear to every American that there will still be ups and downs along the way and that we’ve got a lot more work to do,” the President said. “No issue is more important than restoring economic security for all our families in the wake of the greatest economic crisis since the Great Depression.”
There’s no doubt that the economy will continue to be an explosive, prominent topic in the November presidential election. The Republican Party been vocal about its disappointment with Obama’s unemployment policies, namely criticizing what it calls a record of policies that has frustrated the workforce.
Republican presidential contender Mitt Romney expressed his concern, stating, “This is a weak and very troubling jobs report that shows the employment market remains stagnant. Millions of Americans are paying a high price for President Obama’s economic policies and more and more people are growing so discouraged that they are dropping out of the labor force altogether.”
Many economists, however, say that though some people have left the job market and the road to recovery is uphill, recovery may still be on the horizon. Here’s a roundup of insights from experts and analysts:
“There is more work to be done, but today’s employment report provides further evidence that the economy is continuing to recover from the worst economic downturn since the Great Depression. Despite adverse shocks that have created headwinds for economic growth, including weak construction investment, the economy has added private sector jobs for 25 straight months, for a total of 4.1 million jobs over that period.”
— Alan Krueger, White House Council of Economic Advisors
“Overall, [this is] a reminder that the U.S. recovery is not suddenly going to transform into a spectacular success, particularly not at a time when the rest of the world economy is stumbling.”
— Paul Ashworth, Capital Economics
“Before we all despair and declare the recovery over, it is worth noting that the four-month average for payroll advances is 215,000, while the four-month average for household employment gains is 301,000.”
— Stephen Stanley, Pierpont Securities
“The unemployment rate dropped to 8.2% from 8.3% owing entirely to a decline in labor force participation. Indeed, had the participation rate held steady at the February level, the unemployment rate would have edged up to 8.4%.”
— Julia Coronado, BNP Paribas
“Weaker-than-expected March gains should not cause alarm since a number of other measures provide corroborating evidence of a slowly improving labor market. These include declining jobless claims, falling numbers of announced job cuts compiled by Challenger, solid increases in the employment components of the ISM indexes and rising demand for workers from small- and medium-sized businesses.”
— Sophia Koropeckyj, Moody’s Analytics
Photo via CNN
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.