Job creation efforts heat up

Job creation

Following the impact of the 2008 financial crisis, one of HR's biggest issues has simply been keeping workers happy - despite the recession. Thankfully, much of news that tore up the HR space last week was seen to do just that, as a renewed focus on issues such as job creation and pay opportunities began to heat up.

The good news began on Wednesday, in Washington, when President Barack Obama - as part of his State of the Union address - announced that he would promote tax cuts for small businesses in an continued effort to drive job creation forward.

According to his speech last week, plans for a $5000 tax credit for each job created on a net basis in 2010 (up to $500,000 per company), will become the focus for Obama's ongoing mission.

However, while the idea behind the scheme is to encourage companies to hire more workers - small businesses can also raise wages or hours and be reimbursed for the Social Security payroll taxes - analysts are worried that the scheme is likely to fail on one important factor: it won't actually do much to boost hiring.

According to Bill Rys, for instance, tax counsel for the National Federation of Independent Business, "I really don't think it's going to be much of an incentive. Mostly it is going to be used by businesses that would have been hiring anyway."

Job creation

However, despite the sobering outlook on Obama's proposals, there is more good news for the job creation. For one, the National Association of Manufacturers are currently in the process of promoting its own job creation package.

It features a cut in corporate income tax rates and a more generous tax credit for research and development. And, according to reports, the group considers those changes more important than Obama's proposed $5000 tax credit.

"For those manufacturers who are looking to hire, this will help," explained group spokeswoman Erin Streeter last week. "We don't, however, anticipate this tax credit [Obama's] being a reason for them to hire. Our members are going to hire if there is a long-term need."

Meanwhile, in Florida the "creation" bug continues to flourish. There, Governor Charlie Crist, who recently unveiled Florida Back to Work - a new scheme that allows employers in Florida to use federal funds to help pay salary costs of newly hired, low-income workers - is expecting the program to create as many as 25,000 jobs in the state.

Under the terms of the scheme, employers that contract with regional workforce boards may receive funds, on a temporary basis, covering up to 95 percent of qualifying employees' salaries. Crist details that, "Nothing is more important than returning Floridians to the workforce and restoring their hope and economic security."

He hopes that these funds will provide businesses throughout the state with a "tremendous opportunity" to give someone in need a fresh start and a new direction for the future.

'Wait and see'

Meanwhile, reports also surfaced last week suggesting that nearly one-fourth of US organizations that froze pay last year plan to prolong that freeze into 2010, while more than 50 percent plan to resume normal pay levels.

The report, which comes courtesy of WorldatWork's latest salary budget survey update, suggests that many organizations plan to remain conservative in their approaches to their 2010 pay practices and are taking a "wait and see" stance when it comes to returning to any form of normal pay practices.

The issue is really two-fold. According to Jim Stoeckmann, CCP, WorldatWork compensation practice leader, "there are risks both ways. Moving too fast in restoring salaries and merit budgets leaves employers vulnerable if the [economic] recovery fails to materialize. Moving too slowly creates the risk of turnover as employees look for a better opportunity with another company. Even with jobs scarce, there are always opportunities for employees with the right skill set."

The good news, then? Well, while the findings suggest no major differences between regional data and overall findings, the encouraging fact that over half of the survey's respondents are at least thinking about returning to normal pay practices, suggests that the grip of the recession is loosening and HR trends such a recruitment and retention - and compensation, salary and benefits - remain at the forefront of industry leaders' minds.

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