Eliminating the Unemployment Crisis
Even with tangible signs of economic improvement, employers continue to show hesitation towards hiring new employees and as such, unemployment has remained aggressively high totalling 9.7 percent as of March 2010. In an effort to reduce this unemployment rate, the President signed into law the Federal Hiring Incentives to Restore Employment (HIRE) Act1 on March 18, 2010.
The Federal HIRE Act
The inclusion of the Federal HIRE Act into legislation details a financial incentive to companies who actively hire new recruits. The following incentives can be obtained through the HIRE Act:
1. Social Security Tax Exemption
Companies can receive a 6.2 percent Social Security Tax exemption for individuals who were hired after February 3, 2010. These said individuals must have been: previously unemployed; worked less than forty hours during the sixty-day period prior to employment; and must have earned less than $106,800 between March 18, 2010 and January 1, 2011.
2. Income Tax Credit
An Income Tax Credit is available to employers if a qualifying employee is with the company for at least 52 consecutive weeks. This amounts to 6.2 percent of the wages paid to the qualifying worker (over the 52 week period) or $1,000, whichever is the lesser amount. Wages during the last 26 weeks must be at least 80 percent of wages paid for the first 26 weeks. Stipulations:
- If the new employee is replacing another employee, the organization is not eligible for the exemption and credit "unless such other employee is separated from employment voluntarily or for cause.”
- New hires must sign an affidavit asserting that he or she has "not been employed for more than 40 hours during the 60-day period ending on the date such individual begins such employment."
The two main forms that must be completed before benefits can be realized are the W-11 and 941. Form W-11 is the affidavit that each employee must sign in order to qualify. Form 941 is the quarterly federal tax return for participating companies to fill out.
The Implications of the HIRE Act on Talent Acquisition Initiatives
With the injection of more jobs into the market, the unemployment rate will decline. As seen in the chart below2, unemployment has increased steeply over the past two years, although beginning to level out in recent months.
Backed by leading analysts, the act is expected to support talent acquisition initiatives, therefore enabling companies to a) hire more workers and, b) indirectly instill more strength and certainty into the job market and thus, encourage a faster unemployment rate decline.
The act has given organizations the monetary flexibility to hire new employees. Further, it powers recruitment campaigns for all types of employers including non-profit organizations, educational institutions, and corporations. Additionally, it enables organizations to recognize the Social Security Tax benefit before 2011 as savings are accrued with each payroll processed. These savings enable companies to hire with immediate remuneration for their part in stimulating job growth.
Organizations can save up to $6,622 per qualifying employee. Employers who previously needed to expand their workforce, but who were hesitant to do so before due to budgetary constraints, are now given an incentive to hire the targeted number of workers needed to support organizational growth. There is also a greater push for employers to do so sooner rather than later as they will find a greater tax incentive as benefits are recognized in each payroll period. This act is expected to noticeably power talent acquisition initiatives supporting both economic growth and organizational development.
Advantages to Partaking in the HIRE Act
Employers are at a distinct advantage to hire top talent now as the talent pool, in its current condition, is notably extensive. As companies begin to participate in this legislation, top talent will begin to become sparse, forcibly reducing every industry’s talent pool. The smaller the talent pool, the more difficult it is to build a quality workforce. As such, it is important to partake in the act as soon as possible. By doing so, companies will experience both financial and organizational benefits.
To flesh out the financial benefits accrued from the Act, here is an example. A business is in the process of hiring five qualifying individuals over the next three months. The combined salary of all five hires totals $250,000. After submission for the HIRE Act credits was received, savings would sum near $17,000.
In conjunction with substantial financial benefits, organizations could potentially experience higher employee retention. In this recent recession, employers have been trying to survive by “getting more for less”, leaving workers disgruntled with multiple job responsibilities and frequent overtime. This strategy may cost the employer less money in salary expenses; but it can drastically reduce employee satisfaction and work quality due to obvious time constraints. Although studies3 show that taking on a variety of work can in fact help employee satisfaction, when work-life balance suffers, employee satisfaction is likely to be negatively affected. Therefore, employers can find an undesirable turnover rate. With the addition of new hires, employers are better equipped to ensure a balanced work/life schedule for all employees. Satisfied workers can lead to more indirect benefits such as higher productivity levels, stronger performance results and an overall positive affect on company culture.
Developing a Talent Acquisition Program to Facilitate the HIRE Act Process
As the act has a strong set of guidelines to follow, it is important to have an effective talent acquisition program in place in order to ensure minimal error. The program should effectively encompass the following processes: Sourcing, Applicant Tracking and Reporting, Electronic Candidate and Employee Data Management.
Before wasting countless hours blindly searching for these HIRE-qualifying candidates, it is best to utilize advanced sourcing tools. By inserting a handful of screening questions regarding HIRE Act qualifications into your application process you will be able to identify candidates easily.
Companies across industries find tools such as applicant tracking or e-recruitment systems are the best way to source these candidates. These tools allow users to create an automated application process, in which HIRE Act screening questions can easily be incorporated. Screening questions such as “Have you been employed within the past 60 days?” and/or “Have you worked less than 40 hours in the past 60 days?”, and the candidate’s answers are automatically tagged to the candidate profile, which should be highly searchable. After the application is processed, pinpointing a qualifying candidate is capable through a simple search query; thus, easing and creating an effective sourcing process.
Applicant Tracking and Reporting:
Focalizing efforts to effectively manage received applications and analyze trends via reporting tools will enable employers to better implement hiring intiatives of all kinds. By utilizing executive reports that provide better insight into the number of HIRE Act applicants hired and financial savings incurred over that period, recruiters will be able to report upon and validate the success of the HIRE Act to their organization.
Easily Accessible Candidate and Employee Data Management Storage:
HR processes tend to be paper-intensive and it is often due to this attribute that documents can be lost or misplaced. Companies that organize their documents in a centralized, electronic location are more likely to save substantial amounts of time and money that would have been spent on searching for misplaced documents4
In order to capitalize upon HIRE Act benefits, it is important to organize all candidate and employee data. There are two reasons for this:
- To remain compliant with government regulation, and
- To qualify for the Income Tax Credit, documentation is requested.
Implementing an effective talent acquisition program will enable you to staff your company sufficiently and accumulate government cost savings all at the same time.
On average, employees find greater importance in work/life balance over having a variety of work. 46% find work/life balance important compared to 34% who found variety of work important.
Web-based Talent Management Systems incorporate all the tools needed to easily apply for the HIRE Act credits including, but not limited to, workforce planning, applicant tracking, onboarding, employee data management and much more.
Easily apply for Federal HIRE Act Benefits
The Federal HIRE Act can help companies experience organizational growth, overall cost savings and indirect benefits accrued from the decrease in the unemployment rate. However, it is important to implement an effective and efficient talent acquisition program in order to quickly and easily apply for these credits, otherwise the application for these benefits would be very time consuming and stressful. To access the Federal HIRE Act’s required forms, visit the IRS website today.
How iCIMS Can HelpiCIMS enables companies to manage their entire HR program all from one, web-based platform. From applicant tracking to onboarding and employee data management to reporting, the Talent Platform enables your organization to streamline and automate all of your candidate and employee data.
iCIMS’ Talent Platform is capable of tracking and reporting upon all candidate and employee data for tax purposes. The system makes it easy to track eligible employees and provide HR Management with the data necessary to file for such credits.
You can learn more about how the Talent Platform can help make your organization’s HR process more effective by contacting an iCIMS Representative at 1-800-889-4422 or by trying a FREE online demo today.
1 IRS - Federal HIRE Act
2 Unemployment Rate from March 2008 - March 2010
3 2009 Employee Satisfaction Survey
4 Electronic Document Management