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Private sector hiring and pay growth slowed in July

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Private sector employment grew by 122,000 jobs in July, while annual pay increased 4.8% year-over-year, payroll giant ADP reported Wednesday. However, the 122,000 represented a deceleration from the average job gains seen over the second quarter of the year.

The service-providing sector gained 85,000 jobs, but within that category the professional and business services sector lost 37,000 jobs, and the information sector lost 18,000. On the other hand, the trade, transportation and utilities sector gained 61,000 jobs, leisure and hospitality 24,000 jobs, education and health services 22,000, and financial activities gained 14,000 jobs. But even in leisure and hospitality there appeared to be a slowdown.

The goods-producing sector added 37,000 jobs, including 39,000 in construction, offset by a loss of 4,000 in manufacturing.

ADP
An ADP sign at the TechFair LA job fair in Los Angeles.

Patrick T. Fallon/Bloomberg

“This is evidence of the continued narrative of a slowdown, for sure, even if you took in some weather effects and you caveat it for that, it’s clear that the labor market is slowing steadily,” said ADP chief economist Nela Richardson during a conference call with reporters Wednesday, noting there might have been some impact from the recent hurricane in Houston. “Now, when we talk about a cooldown, we often reference the cooldown without referencing the context in which this cooldown is taking place. We’ve seen really strong, solid job gains and a remarkable job to market, and it is a normalization that we’ve seen in the data, back toward a normal means gain.” 

Small businesses lost 7,000 jobs in July, with a gain of 15,000 jobs among small businesses with between one and 19 employees offset by a loss of 22,000 in businesses with between 20 and 49 employees. Medium-sized establishments added 70,000 jobs during the month, including 55,00 in businesses with between 50 and 249 employees and 15,000 in companies with between 250 and 499 employees. Large businesses with 500 employees or more added 62,000 jobs.

Year-over-year pay gains for people who stayed at their jobs slowed to 4.8% in July, which was the slowest pace of growth in three years. Job-changers saw a big drop, with pay gains slowing to 7.2% from 7.7 %. In professional and business services, the median change in annual pay for job stayers was 4.7%.

“If inflation picks up, and no one thinks that’s likely right now, it won’t be because of labor,” said Richardson. “We’re seeing continued, steady decline in wage growth that fits with the overall inflation picture also cooling along with the labor market.”

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Accounting

In the blogs: Just in time

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BOI is back; phantom stocks; continuous compliance; and other highlights from our favorite tax bloggers.

Just in time

  • Tax Vox (https://www.taxpolicycenter.org/taxvox): Who benefits and who loses from extending major provisions of the Tax Cuts and Jobs Act?
  • Taxing Subjects (https://www.drakesoftware.com/blog): The Republican party can shape legislative priorities for the next two years, setting the stage for long-term policy changes. A downloadable resource offers a breakdown of key policy areas and action steps for tax pros and small businesses. 
  • AICPA & CIMA Insights (https://www.aicpa-cima.com/blog): How the IRS and tax pros can both start prepping for any government shutdown.
  • Eide Bailly (https://www.eidebailly.com/taxblog): “Just in time for the holidays,” a federal appeals court has restored the Corporate Transparency Act requirement for businesses to disclose their beneficial owners.
  • Taxable Talk (http://www.taxabletalk.com/): And just like that, yet again, with an injunction’s stay, course is reversed.
  • Current Federal Tax Developments (https://www.currentfederaltaxdevelopments.com/): At least they extended the deadlines a whisker.
  • The Tax Times (https://www.thetaxtimes.com): The IRS continues to claw back from non-filers, to the tune of 10 figures and counting.
  • The National Association of Tax Professionals (https://blog.natptax.com/): Favorite headline of the week: “The best gifts for the tax pro in your life this holiday season.”
  • National Taxpayer Advocate (https://www.taxpayeradvocate.irs.gov/taxnews-information/blogs-nta/): “‘Twas the night before tax season, and all through the land; Tax professionals were working, each with pen in hand; The forms were all sorted with numbers just right; who says tax accounting can’t thrill and excite?”

2025

Continuity

Size matters

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Accounting

H&R Block releases Santa Claus’s tax return

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That doesn’t look like a 1040 … .

H&R Block has given the world just what it wants to see this holiday season: Santa Claus’s tax return.

Santa has a lot of itemizations to consider. Eight tiny reindeer depend on him for food and shelter, for instance, but are they dependents? How much can you give to one person before reporting it? Does Santa keep good mileage records for his 41.5 million miles? Santa isn’t an employee, so compensation (even in cookie form) over the threshold may create a 1099-NEC.

Old St. Nick, who files MFJ with Mrs. Claus, did all right on 1040 Line 34, but some of his numbers do bear examination: 6.3 million cookies and 2 million gallons of milk means a third of a gallon of milk per cookie. Will the deduction of coal, magic dust and sleighbells stand up to audit? At least Santa has plenty of time on his hands between January and April to find a good preparer.

Santa's tax return

“Even the jolly man in red takes time to report taxes,” reads the announcement from the tax prep giant. “He’s probably the world’s most famous small-business owner, running a gift-giving workshop and distribution network across the globe … Santa is giving us the first ever peek at his tax return and showing us how he used H&R Block Online and AI Tax Assist to get his maximum refund.”

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Accounting

5 changes coming to IRAs and 401(k)s in 2025

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The SECURE 2.0 Act contained several changes to traditional and Roth individual retirement accounts and 401(k) plans that are being phased in over the coming years, with several notable changes coming in 2025. The Illinois CPA Society highlighted five changes coming to IRAs and 401(k)s in 2025:

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