March Journal – Job Losses and Recovery, Inflation and IRS Woes
Wednesday, March 2, 2022
March 2022 Financial Update
Job recovery is on a lot of economists’ minds lately. Job losses during the last two years of the COVID pandemic have been really steep at times, hitting hardest in March 2020. In 2021 the Bureau of Labor Statistics reported that COVID had ended the longest employment expansion in history. The leisure and hospitality industry bore the largest brunt of those job losses.
Since that sharp dropoff in March 2020, recovery has generally been steady (even sharply upward), but two things are complicating that recovery. First it seems that most of the public isn’t actually convinced that job recovery is occurring. A poll suggests that in fact, 35% believe we’re seeing more job losses than ever, and that 2022 is seeing more job losses than last year. Both are incorrect beliefs. Those pessimistic outlooks, however. are likely tied to the fact that inflation and rising costs of goods and energy are hitting everyone’s pockets pretty hard.
The other thing complicating recovery is that it’s been hit or miss in how that recovery has happened. Some sectors are recovering more quickly than others. Some localities (many mid-sized cities) are doing better than others. Finally, it appears that men’s jobs are rebounding more quickly than those for women. Subsequent waves of COVID like Delta and Omicron have also slowed recovery and made it more erratic.
Women have certainly borne the brunt of the job losses during COVID. The National Women’s Law Center has revealed that women account for 63.3% of all job losses since February 2020. The U.S. Census Bureau reported that 3.5 million mothers left active work in 2020 and 2021 – in total, 45% of mothers with school-age children were not working in 2021. As recovery continues that gender gap continues to grow. In December, 100% of the 140,000 jobs lost belonged to women. January’s job reports show that despite a significant increase in jobs growth, only 40.3% went to women, leaving them seriously behind employed men. Or as the National Women’s Law Center report put it, 27 times more men than women joined the labor force in January 2022.
Men clearly gained more jobs than women, by a large margin. The common thought is that women are still being held back by their duties at home, namely child care.
As 2022 continues and federal stimulus fades into history, people continue to watch what happens next with the US economy and business. Will virtual offices continue or will employers try to return to old ways? Will there be more COVID variants (oh no)? What about the problem of record high inflation ? Will the housing market continue to be bonkers (all signs point to yes)? How about the most intense labor shortage in decades and the Big Quit? What about continuing supply shortages? A lot of questions remain. Add to that global upheavals in energy and finance mixed in with other concerns about the Ukraine invasion because Ukraine’s crisis is not likely to stay in Ukraine. 2022 looks to be as turbulent a year as 2021.
2022 Financial Calendar – March:
If you didn’t get your tax return done in February, consider doing it in March well BEFORE the due date. The IRS is experiencing real delays this year. The sooner you get your taxes done, the sooner you will get your refund, which last year could take months. So don’t make plans for spending that refund in short order.
Speaking of refunds, what will you do with yours? Although a portion of it should be allocated to FUN STUFF, I’m also going to include some boring and financially conservative suggestions. Refunds are a good way to tackle debt, build your savings, start an emergency fund, contribute to your IRA, or fund some life insurance. OR you could put your refund to good use in your community and make a couple of gifts to some charitable organizations funding things you believe in.
2022 Tax Updates and Dates
Parnerships and S-Corporations, your taxes are due this month! For a full list including payroll tax deposit dates, see the IRS Tax Calendar.
- March 15: S Corp Returns due! Form 1120S calendar year taxes are due, and any tax payment needed. Furnish copy of Schedule K-1 or K-3 to each shareholder. OR file a 6-month extension on Form 7004.
- March 15: File Form 2553 to elect S Corp Status for next year.
- March 15: Parnership Returns due! Form 1065 for calendar year taxes are due, and any tax payment needed. Furnish copy of Schedule K-1 or K-3 to each shareholder. OR file a 6-month extension on Form 7004.
What’s Afoot in the Government
The Federal Reserve is back in the limelight responding to the high inflation that has continued to increase. January’s inflation rate was 7.5%, a 40-year high. The main Federal interest rates have been at a record low of 0% to .25%. This will likely change in March at their meeting on the 16th, and rate hikes will likely continue in subsequent months as the Fed attempts to slow the rate of inflation.
In February the IRS announced it was putting a temporary hold on automated collection notices, unfiled tax return notices, and balance due notices as it attempts to deal with its backlog. The IRS does not have a timeline for when they expect to deal with their backlog. That backlog is currently 17.6 million tax returns that require manual processing. A representative of the Taxpayers’ Advocate Service recently told me that there are literal 18-wheelers full of unprocessed mail at some IRS centers. The suspension is a result of the confusion and distress taxpayers have felt due to the many inaccuracies caused by unprocessed returns. The situation was compounded by the IRS’s inability to deal with responses to their notices.
What’s Happening, in Charts
Keeping with the theme of employment, here are a couple of charts showing how jobs are rebounding since the pandemic. But it’s not all rosy news. This graphic above showed the gender gap in the labor force report for January 2022. Below, the unemployment rates as of January 2022 mostly show a drop since March 2020, except for a small increase in January 2022 for persons without a high school diploma. Overall, the graph shows that unemployment has improved most for those with a bachelor’s degree or higher.
The Nonprofit Times reports that 72% of the nonprofit workforce that was disrupted due to COVID is back in action, based on estimates from the Bureau of Labor STatistics.
Oh no! Not Girl Scout Cookies! The usual economic woes hit the youngest entrepreneurs.
Shopify offers a simple start guide to figuring out how to keep books for your business. What is bookkeeping and how do you do it?
The flight from bad jobs may have a knock-on effect: entrepreneurship. Spotify explores the Big Quit and looks at the statistics around who quit and why, and what those quitters (starters?) did next.
Wondering what hourly rates for bookkeepers and CPAs are? Are you paying too much or getting a super good deal? This breaks it down by type of work, location/state, and more.
The racial reckoning in 2020 led to new opportunities for Black business owners. Insider talks to 29 of them about the past and future of Black entrepreneurship.
Stories from entrepreneurs show the cost of increased supplies.
Vu from Nonprofit AF weights in on inequitable job hiring practices and why they should be thrown out. For example, maybe don't ask what your interviewee's astrology sign is? And don't ghost folks.
Al Jazeera reports on racism in philanthropy since the 1940s and how conservative influence has changed American culture since then.
The New York times reports a rise in union activity due to pandemic-era revelations about widening gaps between worker and top management pay.
The Washington Post reports on ways to file your taxes for free, and also keep your data secure in the process.