The opinion of many economists and business leaders in Arizona seems to be that this year marks a year of economic re-growth. It definitely will not happen overnight, but there should be definable improvements for everyone. The construction industry deserves attention when talking about an improving economy because they have felt the harsh effects of the recession as much or more than anyone else. Building development characterized the economic boom that led up to the recession, and trouble in the real estate markets were the first factors cited when the recession was being defined.
Tens of thousands of workers in Arizona depend upon a healthy real estate market to make a living. What opportunities await this hard working segment of our state economy in 2011?
Optimism in 2011
- Commercial Sector- A recent post by the Phoenix Business Journal cites commercial property as a real opportunity for construction companies in 2011. Favorable corporate tax rates and competitively priced leases are making Phoenix–and other cities in Arizona–a location that cannot be ignored by large businesses. Arizona is geographically located in the West but comes without the price tag that many of our neighboring states have, making Arizona a formidable West Coast distribution point or headquarters. While there probably won’t be a lot of bids taken for new construction next year, you would be advised to look out for all of the remodeling work that will be out there. When large companies move in, they will need offices and manufacturing facilities redesigned to suit their needs. Commercial build-outs should keep a lot of contractors afloat in 2011.
- Home Segment- Opinions are mixed, but many in the real estate market are predicting 2-3% increases in home values in most states, not just Arizona, next year. As this happens people will begin to have a little more faith in the economy and likely some extra disposable income to go with it. Again, new development is less than likely, but contractors will again have the opportunity to get into the renovation market. Many people will probably stay in their homes longer from here on out, making remodeling a very enticing prospect for consumers so long as they can get a line of credit for the renovations.
Coaxing businesses from other states will be instrumental in an upturn for the building industry statewide in Arizona. New companies mean more work, not just for the construction industry, but for everyone else as well, once the local economy starts to churn a little faster. With thoughtful decisions and a focus on growth, 2011 should be a better year for employers from Tucson to Tempe.
Recent figures put unemployment in the state of Arizona at 9.7%, which represents one of the highest figures since the 1980’s. We all know that the economy, both locally and nationally, is in a recovery period, but that does not help with the current state of things. What does unemployment mean to a business owner? Can we take advantage of the situation, or is it just another aspect of the current downtrodden economic cycle?
How Does Unemployment Affect Me Again?
As an employer you likely know that you pay an unemployment tax. As long as you have anyone working for you at least part time 20 weeks per year or pay a worker $1500 in a quarter, you are subject to the tax. The actual costs to individual businesses differ based upon how much your payroll is and how long any former employee that you are currently paying out worked for you during their base period. The base period is a predetermined amount of time that the state deems representative of an individual’s income. If employees receive unemployment, the amount they receive is based upon how much they earned during the base period.
In essence, if a worker was under your employ for the whole base period, you pay the employer’s entire share of their unemployment payments (the State and Federal Governments also contribute to unemployment payments). Likewise if they worked for you for half of the base period you pay half and so on. You are charged by the state and they compile your unemployment payments into an account. When former employees are granted unemployment, the state takes money from your account and uses it to pay part of the payments. If your account ever gets too low, you can expect your unemployment taxes to increase.
Unemployment taxes are an unavoidable part of running a business that hires on workers. As you can imagine, the current economic times mean that a significant amount of money is being paid to citizens who are out of work. Some businesses are likely experiencing increases in taxes due to their accounts being drawn below acceptable limits. Hence it is costing them more money to do business, possibly with less staff. This is definitely a negative aspect of unemployment and the current economy.
So What Can We Do?
Since giving up is not an option for most business owners everyone must find ways to deal with the situation. As a staffing company, we are obligated to point out that using our services could help you bypass the unemployment costs associated with some of your new hires. When it comes to temporary workers, we are the employer so we handle the unemployment costs for you. We can let you bring on new people and try out new positions. Instead of your payroll, and of course your unemployment taxes, going up, your expenses do. While this might sound bad at first, increased expenses equal less taxes in the long run, so by using temps you could actually decrease your taxes and get the workers you need. Not a bad deal.
Otherwise as employers it is important to remain positive and optimistic. We can look at the large pool of unemployed workers as potential opportunity. It means that we have more options to choose from to staff our businesses, so long as you have the time to evaluate multiple candidates. It also means that we should all be focused on growth. The lessons learned from running a lean staff have shown us how to effectively operate with fewer people. They have also shown us the value of having a few more sets of hands around. As we grow, our businesses we will be able to effectively put the citizens of Arizona back to work, while increasing our own profits. That has the potential to be a win-win situation.