Shutdown Jeopardizes Tax Credits, Holiday Hiring, and Optimism

Hey, everybody, it's Gene Marks, and welcome to this week's episode of the Paychex THRIVE Week in Review. This is where we take a few items of news that impacts your business and mine and we talk about them a little bit.

Obviously, still in the news is the shutdown. The government shutdown entered its third week this week with no immediate end in sight as both parties continue to dig in on their respective positions. The Senate had votes throughout last week on a GOP measure to fund the government, with neither side of the aisle budging.

Congressional Democrats continue to demand Republicans to come to the table to negotiate extending the ACA premium credits. Formal negotiations are not happening, but there does appear to be some behind the scenes discussion among a bipartisan group of senators.

Meanwhile, the Trump administration has continued its actions and rhetoric around increasing the pain for Democrats, including promises of continued layoffs, as well.

Some of the impacts on small businesses: Bipartisan tax credits that expire at the end of the year may not see an extension as the government enters this third week of a shutdown, leaving little room on the other side of the government reopening for another tax credit. One of them is the Work Opportunity Tax Credit, which is one of my favorites. It was left out of the Republicans package passed in July in the hopes that Congress would pass an extenders package that would renew these credits before the end of the year.

Remember the Work Opportunity Tax Credit gives a very generous federal tax credit for employers that hire people that are long-term unemployed, off of welfare, out of the military, formerly incarcerated. The tax credit could be as much as $9,600 per employee that's hired. But that tax credit is slated to expire at the end of the year, and the longer the shutdown continues the less of a chance that a tax credit like that is going to be extended.

Also, since the tax bill passed in July, regulatory guidance of the tax deductions on overtime pay has been a slow rolling process. It's left many businesses unprepared as how they should move forward handling the deduction, and obviously with the government being shut down and the IRS furloughing so many employees, things like guidance on the overtime rule, no tax on tips, things like that are also being delayed, as well.

So, as the shutdown continues on, it is creating a lot of headaches for a lot of business.

Hey, another headache that you probably have as a business owner is managing your team and managing HR, from hiring the right people to getting them onboarded and keeping things running smoothly. Paychex has the HR tools and support that you need so you can do it all. It's like having an extra set of hands when you really need it. So, if you're curious, visit paychex.com/meetpaychex. That's paychex.com forward slash M-E-E-T-P-A-Y-C-H-E-X. You can also find the link in the show notes.

All right, let's move on to another story which has to do with retail sales as well. As we head into the new, you know, the holiday season, employers are entering into it with caution. This is according to PR Newswire. A new job may top candidates wish lists, but will employers cautious approach to seasonal hiring derail the holiday season?

ICIMS, which is a leading talent acquisition software company, released their Insights Workforce Report today examining the latest trends in job openings, applications, and hires. This report includes a special focus on retail and transportation. It found that overall job openings are up 9% since September 2024 and applications have risen 19%, yet hires have remained flat year over year, indicating employer caution ahead of the seasonal hiring surge.

With candidate supply high, employers will need to prioritize faster conversion, not more sourcing, to win the top talent of the day.

According to the head of talent acquisition insights at ICIMS, applicant volume is up, but so is time to fill. Retail teams are drowning in choices, not shortages. It's time for employers to review their hiring processes and eliminate obstacles as they gear up for the busiest time of the year.

By the way, just as a side note, Amazon is planning on hiring 250,000 workers during this hiring season for the third straight year.

So, the takeaway is that job openings are up, but there are a lot of people applying for jobs. And if you're an employer looking for seasonal help, you really need to get your process down to make sure you are not wasting your time because there is a good supply of workers available for you to hire.

The final story this week has to do with small business confidence. The National Federation of Independent Businesses released their Small Business Optimism Index, and it fell to a level of 98.8 in (September). In September, the index fell. However, it's first decline in three months, but it's still above its 52-year average.

Some other statistics from this survey which, by the way, has been going on for 40, 50 years at this point – it's a monthly survey from the NFIB:

• Inflation and supply chain disruptions intensified with 64% of owners affected, and 14% citing inflation as their top concern
• Labor quality and taxes tied as the most critical issues, each cited by 18% of owners
• Despite high uncertainty, hiring plans rose for the fourth consecutive month
• Earnings trends improved, but expectations for better conditions dropped

Overall, small businesses remain resilient among rising costs and economic unpredictability. So, again, the shutdown is continuing and providing a lot of uncertainty and challenges now the further that it goes for businesses working with the government.

Hiring, if you're looking to hire for employees for the holiday season, you are probably dealing with an oversupply, so you need to get your processes in shape, and according to the NFIB, although small businesses optimism dipped in September, it's still above the 52-year average and small businesses overall are still planning on hiring and remain resilient.

My name is Gene Marks, and you have been watching or listening to this week's episode of the Paychex THRIVE Week in Review. Hope you got some good news and information from it.

If you need any help or advice or tips in running your business, please go to paychex.com/thrive. That way you could sign up for our newsletter. We'll not only provide that kind of help but also links to back episodes of this podcast. Thanks so much for watching or listening.

I'll be back with you next week with more news that impacts your business and mine. Take care.

Do you have a topic or a guest that you would like to hear on THRIVE? Please let us know. Visit payx.me/thrivetopics and send us your ideas or matters of interest. Also, if your business is looking to simplify your HR payroll benefits or insurance services, see how Paychex can help. Visit the resource hub at paychex.com/worx. That's W-O-R-X. Paychex can help manage those complexities while you focus on all the ways you want your business to thrive.

I'm your host, Gene Marks, and thanks for joining us.

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