June Jobs Data and Thoughts on Current Small Business Challenges in WA State

Two new clients I worked with in June provide this month’s theme:

                  (1) A small construction company of 5 employees, marred by turnover, was trying to process payroll, deposit taxes, and pay garnishments themselves, struggling with the myriad of compliance challenges with doing so. The tasks ate up their time and frustrated their business, culminating in tax penalties and personal stress.

                  (2) A small flooring company looked to get mobile in their payroll technology to gain the ability to process payroll on the jobsite, and to accurately communicate pay information to employees, using a mobile device.

                   Echoed from last month’s job growth, June brought with it a significant increase in jobs across a number of sectors including the construction (21,000 new jobs according to the ADP NER) and restaurant (21,000+ new restaurant franchise jobs according to the ADP NFR) industries. The great thing about these industries is they often offer entry level employment opportunities alongside more tenured jobs, inducing more financially diverse employment opportunities for those in search. The challenging side about these industries, from a business owner perspective, is they tend to be more seasonal, carry a higher rate of employee turnover, and carry a higher risk  of employment in terms of compliance—i.e. garnishment payment processing, unemployment claims, etc…

                   The small businesses that support these industries are looking to not only manage compliance, but to provide quality communication to their employees in terms of their hours worked and pay, in an effort to minimize turnover. They are also trying to get more done in less time, opening a new wave of mobile payroll prospective clients interested in such services.

Data Overview:

Small businesses with 1-19 employees had a net jobs gain of 84,000 jobs nationally (ADP/NER)

Professional/Business Services Industry had a net gain of 40,000 jobs nationally (ADP/NER)

Restaurant Franchise Jobs grew by over 21,000 in June (ADP/NFR)

WA State had a gain of over 6,000 jobs (ADP/RER)

WA State Preliminary Unemployment Rate is 1.6% lower than at the same point last year, June 2012 (BLS)

WA State has added an estimated 67,000 jobs in the last year: June 2012—June 2013 (BLS)

What the May Jobs data means to Washington State Employers

Two new clients I worked with in May provide this month’s theme:

                 (1) An independent contractor for years, providing a professional service, this business owner decided to invest in a retail space and hire on her first employees. With no previous experience in managing employees, her biggest concern was compliance—how to report what information, and to which agency, in order to avoid fines and penalties.

                 (2) The owners of an expanding doctor’s office, knowing they deal with sensitive client information (HIPAA Regulations, etc...), were looking to reduce their exposure during the hiring process by performing background screening of candidates as well as establishing company wide policies for better employer to employee communication of industry compliance standards.

          I’m always interested when a new business tax deduction or tax holiday is proposed via government in an effort to spur business hiring. In the small sample of business owners I bring on each year (75-100), most will tell you it is not tax breaks they want as an incentive for hiring, but risk mitigation—lower the level of risk that comes with hiring on a new employee.

          As more SMBs embark on the journey of employment growth, options for compliance and risk management are becoming increasingly more sought out. And knowing as they do, business owners are concerned about their increased chances of state or federal audits as our governments struggle to find new sources of revenue to bridge their increasing budget gaps —and the tidal wave of this trend is coming...as 2014, the year of the Affordable Care Act, looms.

          With that being said, employment growth is happening, which is wonderful news—And here in the Greater Seattle Area, when we look at the local unemployment rate, we should feel particularly optimistic about our prospects to make of our future what we wish. Cheers.

Data Overview:

Small businesses with 1-19 employees had a net jobs gain of 37,000 jobs nationally (ADP/NER)

Professional/Business Services Industry had a net gain of 42,000 jobs nationally (ADP/NER)

Business Services had the 2nd largest jobs growth by industry in Franchise Employment (ADP/NFR)

WA State had a gain of over 3,000 jobs (ADP/RER)

WA State Preliminary Unemployment Rate dropped to 6.8% (BLS)

Seattle/Bellevue/Everett Preliminary Unemployment Rate dropped to 4.7% (BLS)