Business Update - Weekly Digest (September 9, 2021)
Thanks to tight supply chains and logistics in the developed world, many people have grown accustomed to receiving whatever they ordered promptly and predictably. That era may be over, as shortages are likely to continue. Toyota will be slashing production of cars by 40% in the face of a continuing chip shortage. It may be another year—or two —before shortages in sectors from construction to medical testing to kitchen supplies are fully resolved. Quarantines at key ports and a lack of dock workers at other ports mean that shipping containers are in short supply, a problem exacerbated when traffic through the Suez Canal was halted for a week when a giant container ship got stuck there.
THE AMERICAN RECOVERY PLAN ACT (ARPA)
Employee Retention Credit
This credit didn’t get as much attention as the Paycheck Protection Program when both were passed as part of COVID-19 relief, and it may be curtailed early as a mechanism to fund infrastructure bills being proposed. This credit allows employers to receive a refundable credit of up to $7,000 per quarter for 2021, or up to a total of $28,000 per employee.
To be eligible, a business must either be fully or partially closed due to government orders or have experienced a decline of 80% or more in gross receipts compared to the same calendar quarter of 2019. Startup companies may also be eligible. Employers can claim a refundable credit of 70% of wages, up to $10,000 in wages, or $7,000 per employee per quarter. The credit is claimed on the quarterly tax form, Form 941. As the credit now stands, it is available through the end of 2021, but there are discussions in Congress of cutting it off at the end of September. For more information, see the IRS FAQs for this credit.
Paycheck Protection Program (PPP)
Although the promise of the PPP was that if borrowers used the funds correctly, their loans would be forgiven, 6% of borrowers are being told they need to repay part of their PPP loans. About half of borrowers have not yet completed the forgiveness process. Some problems stem from the speed at which the program was rolled out, resulting in several updates to SBA’s guidance, applications, and forgiveness processes.
Meanwhile, a new report finds that as much as $3.6 billion in PPP loans were made to ineligible businesses, among other types of fraud in COVID relief programs. Nearly $87 billion in fraudulent unemployment payments will be made by the end of September, and $918 million in Economic Injury Disaster Loans may have been made to ineligible businesses.
CYBERTHREATS
To avoid phishing attacks by clicking on bad links in emails, a commonly advised strategy is to hover over the link to check on the destination before clicking on that link. However, a recent spate of phishing attacks has targeted Office 365 customers by leading victims to a fake login page where Office 365 credentials are stolen. Bad actors have been exploiting open redirects to redirect visitors from trustworthy sites to malicious sites. Google warns that the mouse hover trick is not a reliable tool to prevent phishing.
So far this year, scammers have stolen $545 million in COVID-related fraud from Americans, according to the FTC. These scams include overcharging consumers for sought-after goods such as hand sanitizer, toilet paper, and masks and fraudulent online shopping sites that never ship the purchased goods.
THE GREAT REASSESSMENT
In the U.S. there are currently 10 million job openings and 8.4 million unemployed seeking work. Business owners can’t find enough people, so stores and restaurants are short-staffed. These are all symptoms of a massive shift in employment that has been called “The Great Resignation,” but which appears to be more of a reassessment of work and a mismatch between the skills that employers want and the opportunities that employees seek.
Some want to work remotely, some want more time for family, and some want a more meaningful career. In several job sectors, there are many more job openings than there are people with experience in those fields. These include professional and business services, education and health, wholesale and retail trade, and leisure and hospitality. This contrasts with the situation after the Great Recession, where the number of unemployed outnumbered available jobs in all sectors for years. Compounding the issue is the reluctance of many employers to hire people who have been out of work for six months or more, which, in the wake of the pandemic, is not an unusual situation.
ECONOMY
Even as COVID cases increase, the stock market is booming. Since hitting bottom in March 2020, the S&P 500 index has more than doubled, with August marking a seventh consecutive monthly rise. At the same time, other parts of the economy are not faring so well—businesses are not planning to reopen this fall, staffing shortages abound, and supply chain bottlenecks continue. Investor confidence seems to be related to two factors: the Federal Reserve will keep interest rates low and the federal government will continue spending to keep the recovery going.
States that ended federal COVID-related unemployment benefits saw about the same job growth as those that continued the additional benefits, according to analysis by the Wall Street Journal. However, it may be too early to detect any impact, and effects from state reopenings and restrictions may be offsetting any impacts. While the enhanced benefits did keep some people out of the labor market, other factors such as school closures, family-care responsibilities, employee fears about COVID and a mismatch between available jobs and the locations and qualifications of prospective workers have all likely had an impact as well.
Happy Animal News
There’s a 34-year old recording of a Musk Duck named Ripper in Australia talking. Well, making some disparaging comments. Ducks mimicking human sounds is a rare event.
If you’re not familiar with the Comedy Wildlife Photography Awards, then take a look at the finalists. It can put a smile on anyone’s face.
