Coronavirus Is Already Hurting 2021 Budgets. Here’s How.
Several states and major cities have already announced anticipated budget gaps for 2021, namely as a result of the coronavirus pandemic. Depending on the industry, employers may need to review and update their 2021 budgets accordingly. Here’s what you need to know.
COVID-19 Wrecked Local Businesses
The coronavirus has been devastating for local economies and small businesses. State lockdowns strictly limited public interactions, meaning businesses like restaurants, event venues, and movie theaters had to completely restructure their product. Many were forced to conduct mass layoffs and close permanently.
Other companies operated in work-from-home capacities, though these presented a different set of compliance concerns. Regardless, losses in revenue from the pandemic can’t be overlooked. According to Tax Policy Center, states collectively forecast a 6% decline in personal income and sales tax revenues—the two largest sources of state tax revenue.
Experts expect the effects to last past 2020. Tax Policy Center reports that “[s]tates now anticipate substantial declines in sales tax revenues for fiscal years 2020 and 2021.” A portion of this downturn can be attributed to drops in tourism and energy use, including lower gas and oil prices.
The Impact on Employers Heading into 2021
Much of what employers can expect for fiscal year 2021 depends on their industry and business. There is a chance that once lockdowns are lifted, people return to their “normal” ways of life, where dining out and watching blockbusters in movie theaters are second thoughts and not risky endeavors. However, this bounce back may not be promised to all small businesses.
A Yahoo! News story from July—which featured 25 expert predictions about America’s post-coronavirus economic recovery—paints a helpful picture for employers. For example, employment numbers may not rebound to pre-coronavirus levels for another year, but GDP and consumer spending should return when people have jobs again and/or a vaccine is widely available. (The U.S. unemployment rate for August 2020 was 8.4%.)
A few other key trends to expect in the near future:
- Consumer spending may be permanently shifted to favor e-commerce
- Businesses might begin to rely on shorter, more regional supply chains
- Work-from-home could become a more common long-term option for employees
What Should Employers Do to Help Prepare 2021 Budgets?
Heading into 2021, HR professionals should evaluate key areas of their organization that may have been impacted by COVID-19. These could be minor adjustments to work routines or major changes to adapt to a more internet-friendly world.
Consider the following suggestions when approaching 2021 budgets:
- Audit Your PTO Policy: By considering your company’s financial health and the benefits package that it offers, HR can lead the charge towards meaningful PTO change—and a healthier organization.
- Reevaluate Your Office: Offices will look different after COVID-19 as businesses continue to embrace remote work policies. Think about updating the layout of your worksite or even relocating to a space that accommodates hybrid work setups. (The switch could save money on rent and energy costs as well.)
- Think Twice About Business Travel: How essential is your business travel in 2021? For some companies, a return to normalcy means safely flying across the country from one meeting to the next. For others, a Zoom conference might suffice. Once again, the latter could save thousands in travel expenses.
- Adopt an HRIS: An HRIS like BerniePortal combines and simplifies HR processes to reduce mistakes and increase efficiency. The result? Stronger compliance and fewer mistakes in a fraction of the time it takes to manage typical HR functions.
- Expand (or Adjust) Benefits: Great benefits help teams attract and retain top-talent employees. By reducing your turnover, you can save money in the long run. If possible, think about expanding your benefits package to include offerings like EAPs and telemedicine options.
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