Where Are All the Workers?

Many tree care businesses are finding themselves short of the one thing they need to thrive and grow: workers. The Bank of America recently estimated that 4.6 million workers exited the labor force during the pandemic – but only half are expected to rejoin by the end of the year. How to coax those badly needed workers off the sidelines remains a problem.

The cure

Now that the federal “bonus” unemployment benefit is in the past, the government is reportedly taking steps to make it easier for employers to attract and hire more workers. Since unemployment benefits are not the only reason workers are remaining on the sidelines, the experts remain divided about why the continued worker shortage.

Among the reasons behind the worker shortage: Many parents are struggling to find child care, with schools remaining closed for in-person learning and child-care facilities experiencing the same worker shortages faced by many tree care businesses. Other workers have said they’re reluctant to return to jobs because of COVID-19 concerns – including mask and vaccine mandates.

Finding qualified workers remains a challenge for tree care businesses and is slowing both their recovery and growth. Some employers are offering bonuses and benefits or are increasing compensation to attract employees. Consider the following strategies that are being used to help tree care businesses search for workers.

Rewards for hiring workers

Imagine, offering a reward to employees who bring another job candidate onboard. These recruiting bonuses, also known as employee-referral programs, foster a sense of trust in existing employees to refer good people that they – and everyone – will work well with.

Of course, in order for these bonuses to be most effective, there should be some requirements to determine the success of the referral before the bonus is paid. These requirements often include working a set length of time, meeting certain standards, sustaining growth over a certain period and more.

So-called “signing bonuses,” just like those we’re familiar with in professional sports, are becoming more and more common. A signing bonus is money a tree care business gives an employee who has accepted its job offer. A signing bonus is offered to attract well-qualified employees and convince them to accept a job. The signing bonus is usually in addition to the employee’s salary, benefits and other bonus or commission opportunities.

Bonuses and awards must, of course, be included in an employee’s taxable income. Should the bonus or award be in the form of goods or services, employees must include the fair market value of those goods or services in their income.

The battle of the minimum wage

While thousands of jobs are available and businesses are finding it increasingly difficult to find workers, many experts say that unemployment benefits were, and are not now, the problem, instead pointing to low wages, specifically the minimum wage. Senate Budget Committee Chairman Bernie Sanders has a simple solution to the problem of hiring low-wage workers: Raise wages and pay decent benefits.

The main argument against a nationwide $15-per-hour minimum wage is that it would make labor too expensive for poorer areas, prompting employers in those areas to shed jobs. So far, a local approach to the minimum-wage dilemma seems viable, as many cities and states pass their own $15-per-hour minimum-wage initiatives.

While the tree care industry’s need for skilled workers and the higher wages they usually get has made the minimum-
wage dispute a thing of the past, the government offers a number of programs to help struggling businesses cope with the economic fallout of the pandemic. These include payroll-tax deferrals, forgivable loans and refundable tax credits to reimburse employers for costs incurred when providing paid sick and family leave to their employees as a result of COVID-19.

Benefits to attract and retain workers

Surprisingly, survey after survey seems to show it is not money alone that attracts new workers and keeps existing employees on the job. It is also the benefits.

That’s right, employees are looking for a sense of security in the form of good benefits and retirement packages – a 401(k) is the most common, but there are many other options. Helping employees maintain their health and build a stable retirement shows job applicants, and existing workers, they are valued.

Also currently treasured by job seekers – and employees – are flexibility and the opportunity to balance work with other life responsibilities, interests and issues. Job training, educational assistance and employer-provided vehicles used for business are among the popular – and often necessary – working-condition fringe benefits offered today.

Job training and educational assistance

Seeking workers “outside the box” often means job training, and many employers are finding ways to use a job-seeker’s previous job experience to place them in new careers. One example often cites the customer-service experience of hospitality and restaurant workers – and their ability to stand on their feet during long shifts – as an excellent entry point for light industrial work.

There are also job training and educational cost-assistance programs for attracting job applicants – and they also are welcomed by existing workers. For instance, employers who hire veterans can receive up to 50% of the veteran’s salary during the VA’s Special Employer Initiative (SEI) program to provide training and experience to veterans, usually lasting up to six months. The credit was worth up to $5,000 per employee per quarter in 2020 and $7,000 per employee for each quarter of 2021.

Covered are expenses incurred for the cost of instruction, necessary loss of production due to training status and supplies and equipment necessary to complete training. And, of course, there is VA support during training and placement follow-up.

And don’t forget, on-the-job training provided by an employer is a tax-free hiring incentive, as well as an invaluable “perk” for current employees. Educational assistance and tuition reimbursement are also welcome fringe benefits.

A tree care business with a formal, written educational-assistance plan isn’t required to immediately fund the plan, only to reimburse an employee’s educational expenses – up to $5,250 per employee, per year, and exempt from taxes. Educational assistance doesn’t just include tuition assistance, but also payments for books, equipment and other expenses related to continuing education.

What do they want?

Among the more common, tax-free employee fringe benefits are the following:

  • Health benefits. Health benefits are by far the single-most important fringe benefit. Health benefits include providing employees with health, dental and vision insurance, as well as paying health-related expenses.
  • Long-term-care insurance. This insurance covers expenses such as the cost of nursing-home care. While premiums are not taxable benefits, benefits received under the insurance may be partly taxable if they exceed certain limits.
  • Group term life insurance. A tree care business can provide up to $50,000 in group term life insurance to each employee tax free.
  • Dependent care. Up to $5,000 in dependent-care assistance can be provided to an employee tax free. Of course, many working parents may qualify for a tax credit for child and dependent care.
  • Working-condition fringe benefits. These include anything provided or paid for by an employer to help someone do their job. Local and long-distance travel for business, business-related meals and entertainment, professional publications and company cars used for business driving are all good examples of tax-free, working-condition fringe benefits.

Hiring the unhireable

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers for hiring individuals from certain targeted groups who have traditionally faced significant barriers to employment. That means qualified veterans, ex-felons, summer youth employees, long-term family-assistance and long-term unemployment recipients and Supplemental Security Income (SSI) recipients, among others.

The credit is equal to a percentage of the eligible employee’s wages – up to $9,600 depending on the new hire’s WOTC target group. The employee must work at least 120 hours in order for the employer to receive the credit.

The bottom line

One evolving method of dealing with the tough labor market involves working without workers. In other words, many tree care professionals are stepping up the automation or mechanization of their operations.

The government, and particularly our tax laws, provide a much-needed helping hand with the cost of automating. The current tax laws offer a first-year expensing option that allows amounts spent for new (or used) equipment to be entirely written off or deducted immediately. So-called “bonus” depreciation is another option for an immediate deduction of 100% of expenditures.

Unfortunately, in order to deduct something, there must be income from which it can be deducted, something far too many businesses lack. The alternative for those equipment expenditures is the tried-and-true depreciation deduction. Depreciation creates a write-off for a portion of those costs annually – when the recovering business will, hopefully, have income that needs reduction.

Conclusion

In order to attract talented individuals to work for their tree care operation, as well as to retain qualified employees, employers in today’s job market must offer increased wages, fringe benefits and other perks. With the help of professional guidance, the most successful options could well be the ones that cost the operation the least.

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