It’s tax season now, the season when CPAs work 70 hour weeks. But not this year. Not only do job agencies like Robert Half have no accounting jobs, they tell me companies are laying off accountants now, during tax season. This is unprecedented.
This is a previously unexamined leading indicator. How cheery will the economic near-future be, if accountants are being laid off … during *busy* season?
Big Four accounting firms hunt smaller clients in post-recession fallout
…The financial crisis blew up many big-name clients, leaving audit firms with excess capacity. Bear Stearns Cos., Merrill Lynch & Co., Washington Mutual Inc. and Fannie Mae disappeared from Deloitte LLP. Ernst & Young saw Lehman Bros. Holdings Inc. implode, while KPMG lost Countrywide Financial Corp. and PricewaterhouseCoopers lost Freddie Mac.Gary Boomer, a Kansas-based accounting industry consultant, says Big Four firms sometimes are bidding less than $100 an hour for non-profit and public-sector work, down from $175 to $250 for junior auditors. “What they’re doing is buying some work to keep the staff busy,” he says.
Meanwhile, the Perkipants-That-Be are cheering the latest “positive” news … i.e. “only” 469,000 new claims for unemployment.
This doesn’t mean that a half-million people found work.
Continuing claims: The government said 4,500,000 people filed continuing claims in the week ended Feb. 20, the most recent data available. That’s down 134,000 from the preceding week’s revised 4,634,000 claims.
The 4-week moving average for ongoing claims fell by 29,250 to 4,575,750 from the previous week’s revised 4,605,000.
But the drop may just mean that more filers are dropping off those rolls into extended benefits.
Continuing claims reflect people filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those people who have moved to state or federal extensions, or people whose benefits have expired.
Half of CFOs don’t plan to replace laid off positions.
Rather, they figure to deploy other strategies to increase production or output. For example, they plan to reinstate overtime for existing employees, turn to outside consultants, hire part-time employees, and/or make current part-time employees full time before rehiring new full-time employees.
Just 44 percent of the total surveyed said they anticipate an increase in hiring at their companies. On the other hand, about one-quarter of the finance execs expect to cut back on hiring. Not too encouraging, huh?
Meanwhile, employers in insolvent states with depleted unemployment insurance funds are facing doubled or tripled unemployment tax rates. In order to meet unemployment benefit claims, states are borrowing from the Federal government …
Employers should anticipate increases in their unemployment taxes in 2010 and possibly beyond, whether or not their business is in a state like Virginia, where increases are automatic if the unemployment trust fund falls below a certain level, or in states like Michigan and Texas that have complex formulas based on “experience rates,” or states that decide to levy some form of deficit surtax. State unemployment trust funds have fallen to such a low level that rate increases may be required to rebuild their balances even when employment improves. States that have borrowed money from the federal government under the Federal Unemployment Trust Act (FUTA) to cover their current obligations will need to pay this money back with interest.
…the Federal government is signaling that states should not expect to be forgiven these loans ….
New Jersey shouldn’t expect much help from the federal government to bail out the state’s insolvent unemployment insurance fund, according to U.S. Sen. Robert Menendez (D-NJ).
Gov. Chris Christie wants Washington to forgive the state’s $1.2 billion and growing debt, borrowed from the federal government to allow New Jersey to continue paying unemployment claims.
That possibility is looking extremely unlikely. Twenty-seven states have borrowed about $30 billion to pay their unemployment claims, according to Menendez. He said it is “just not possible” to cover all of the costs “in this budget climate,” but added that he would work to extend New Jersey’s payments, or perhaps forgive the interest on the borrowed money, as a more “realistic” way of offering help.
Interest payments of about $180 million on the state’s debt would be due in 2011, according to state Labor Commissioner Hal Wirths, who added “any help would be great.”
… and New Jersey mull cuts in unemployment benefits.
Christie proposes cut in unemployment benefits. The maximum benefit for the unemployed would drop from $600 to $550 a week under a proposal Gov. Christie announced yesterday. …
Can other states be far behind?
Most especially those that are currently providing tax breaks to employers?
Florida lawmakers gave sweeping approval Tuesday to a measure that delays a steep unemployment compensation tax hike for businesses.The reprieve will force Florida to borrow an additional $4.3 billion from the federal government to cover benefits for the state’s growing number of unemployed workers.