The unemployment comp program, created during the Depression as a temporary aid for laid-off workers, is now termed by some as an “expensive entitlement.” While those out of work once received six months of payments, that has now surged to as high as 99 weeks in some states. Half of the more than 11 million unemployed have been jobless for longer than six months.

This is a downturn unlike any other since the program was created and many of those jobs will likely not come back. And while the vast majority are very likely doing all they can to find meaningful employment in the effort to return to their previous lifestyle, nearly two years of unemployment benefits has also undoubtedly led some to adopt the option of “let the government pay the tab” for awhile.

Few seemingly agreed with Kentucky Senator Jim Bunning’s recent filibuster that delayed the latest unemployment benefits extension (he wanted Washington to find a way to pay for it), but his logic was accepted in some circles. Colleague Jon Kyle of Arizona commented that the continued benefits are a “disincentive for people to seek new work” and that no one can argue that the current system is a “job enhancer.”

Employers pay the bill through taxes in nearly all states (a few require worker contributions). Benefits have been extended before, but rolled back when the unemployment rate declined. That decline is proving difficult to achieve this time around.

A Washington Post article this week included the following:

“It is appropriate and natural for Congress to extend the time limit of unemployment insurance with the job market as bad as it is,” said James Sherk, a labor economist at the Heritage Foundation. “But by quadrupling it, it is no longer an unemployment insurance program but a welfare program.”

Phillip L. Swagel, a former Treasury Department official who is now a business professor at Georgetown University, said that some people might take longer to find a new job as a result of unemployment insurance extensions, but that right now it’s a needed benefit.

“The reality is that it’s hard to find a job even for people who really want one,” he said.

But as the job market improves, Swagel said, unemployment insurance extensions must be pared back quickly, as they have been in previous downturns. “It’s important to let the extensions lapse as the job market recovers — to avoid having disincentives to work once the job market is better,” Swagel said.

Part of the question is timing. For a program that is currently costing $10 billion a month, that’s something that needs answered sooner rather than later.

Tom Schuman, Indiana Chamber of Commerce

Berne Apparel Company will bring approximately 41 full-time and 90 seasonal employees with an annual payroll of $1.9 million to the Wells County economy and a capital investment of $3.4 million.

“We welcome Berne Apparel Company to Ossian and Wells County and believe they will be a great addition to our outstanding business community. Many will benefit from the capital investment and jobs creation anticipated by the addition of this strong company.”
David Morrison, President
Wells County Chamber of Commerce and Economic Development

“We are very excited that Berne Apparel Company has chosen the Ossian Industrial Park! On behalf of the Ossian Town Council, I want to thank Berne Apparel Company for its investment in our community. I’m confident that they will find Ossian to be an excellent place to work and prosper.”
Angie Dial, President
Ossian Town Council

“The Town of Ossian is excited that Berne Apparel Company has chosen to relocate to Wells County and Ossian in particular. The Ossian Industrial Park has a wealth of successful businesses, and Berne Apparel will add to its ranks. Small business is the backbone of the economy, and the Town of Ossian looks forward to making Berne Apparel’s transition to our community as smooth as possible.”
Josh Barkley
Ossian Town Council and Wells County Economic Development Council Member

“We are thrilled to learn that Berne Apparel Company will be locating in the Ossian Industrial Park. No doubt, Berne Apparel Company will contribute greatly to the vibrant business climate that already exists in Ossian and Wells County.”
Todd Mahnensmith, President
Ossian Development Corporation

“With a leadership team that is second to none, Berne Apparel Company is the gold standard of America’s work wear distribution sector. Indeed, we are honored that Berne Apparel Company has chosen Wells County and remain committed to ensuring its future success.”
Mike Row, Executive Director of Economic Development
Wells County Chamber of Commerce and Economic Development

About Berne Apparel Company:
Founded in 1915, Berne Apparel Company combines exemplary customer service with a full assortment of premium work wear that is known for its durability, comfort, quality and exceptional value.
Berne Apparel Company
2501 E 850 N
Ossian, Indiana 46777

Berne Apparel

“When Ben Bernanke, the chairman of the Federal Reserve, or any economist says the recession is over, we mean the economy is not declining any more,” DeBoer said. “Think of it in terms of digging yourself into a hole. When you stop digging deeper it’s a significant
change.”

Another significant change is to climb back out of the hole. DeBoer said the economy likely will stay in the hole for a little while, however.

“The recovery is going to take quite some time to bring us back to where we really want to be,” DeBoer said. “We should probably expect a slow decline in the unemployment rate and probably slow growth rates of gross domestic product (GDP).”

GDP is a basic measure of the country’s overall economic output.

DeBoer said consumer spending in the United States is being held back by the 10 percent unemployment rate. The economy grew 5.9 percent in the fourth quarter of 2009. Economists question whether that growth rate can be sustained.

“Even at 5.9 percent, the unemployment rate would only come down from about 10 percent to about 8.5 percent by the end of the year,” DeBoer said. “This tells me we have at best three or four years before we get unemployment back down to 5 percent — where it was at the beginning of the recession.”

An increase in consumer spending would help decrease the unemployment rate, but with unemployment being what it is, consumers are not spending, DeBoer said.

DeBoer said the Federal stimulus package has played a role in keeping the unemployment rate lower than what it could have been.

“The whole idea behind stimulus is to step in temporarily, fill in the hole and add to the spending. There’s no doubt that the spending from the stimulus package has kept the unemployment rate from going up more than it would have,” he said. “Without the stimulus, the unemployment rate might have been 11 or 12 percent instead of 10 percent.”

Because the value of the U.S. dollar is low, foreign countries are buying more American products. Added exports should help bring down the unemployment rate.

DeBoer said markets in Asia are recovering more quickly than the markets in the United States, and that is partly because China has experienced exceptional economic growth.

“A recession in China means instead of growing 8 percent or 10 percent, the economy grows 6 percent or 8 percent,” he said. “It really is unprecedented in the history of the world. Never have 1.3 billion people seen their economy grow as fast as they’ve grown over recent decades.”

DeBoer said the recovery does have implications for American agriculture, which would likely be most affected by interest rates,
farmland assessments and oil prices.

With a 10 percent unemployment rate and little threat of inflation, DeBoer said it’s unlikely the Federal Reserve will increase interest rates soon. However, farmland assessments are likely to increase in the near future, because the formula to assess farmland value takes into account commodity prices with a four-year lag.

“Farmland assessments are going to go up over the next several years because the high commodity prices from 2007-08 will enter the assessment formula,” DeBoer said. “Senate Bill 396 is still alive in the legislature, and it would take the edge off some of those increases, but not stop them. I think farmers can count on property tax increases over the next several years.”

Source: Purdue University

Click here to learn more about these bills currently being debated.

Bills of Interest

ALEXANDRIA, Va. – February 22, 2010 — The American Chamber of Commerce Executives (ACCE) today announced the publication of a new study detailing the credit scores and payment behavior of ten local chambers of commerce across the United States, comparing their member businesses with other regional, state and national business averages.  Produced by Cortera™, a community-driven business credit bureau, on behalf of ACCE, the study includes the Bowling Green (KY) Area Chamber of Commerce, Greater Boca Raton (FL) Chamber of Commerce, Greater Durham (NC) Chamber of Commerce, Greater Omaha (NE) Chamber of Commerce, Helena (MT) Area Chamber of Commerce, Lake Champlain (VT) Regional Chamber of Commerce, Lubbock (TX) Chamber of Commerce, Salem (OR) Area Chamber of Commerce, San Diego (CA) Regional Chamber of Commerce, and Tulsa (OK) Metro Chamber.  According to the study, chamber of commerce members possess an average credit score of 629, compared to a 557 average score for businesses at large.  Such scores – the payment behavior from which they are derived — play a significant role in attracting lines of credit and securing favorable terms from lenders and suppliers. 

A complete copy of the study, which includes both the aggregate findings, as well as the individual commercial credit scores for each of the ten local chambers, is available on the ACCE and Cortera sites.  The study was contracted by ACCE and performed by Cortera, which reviewed payment behavior for chamber member businesses. 

“Chamber members have long been seen as responsible and reliable members of their community,” said Mick Fleming, president and CEO of ACCE.  “What this study indicates is that the perception is right.  From a credit standpoint, chamber members on average are better businesses, and as a result they have significant advantages in obtaining the funds they need.  In this economy and the tight credit environment we are experiencing, that’s especially important.”

“The economic health of the entire supply chain is dependent on the payment behavior of each of its stakeholders,” said Jim Swift, president and CEO of Cortera. “This study suggests that chamber members are among the most dependable participants in this ecosystem.”

About the American Chamber of Commerce Executives
Established in 1914, ACCE is the only national association serving the professional development needs of chamber professionals throughout the United States and Canada. Representing more than 7,300 individuals, ACCE enhances the knowledge, leadership skills, and management effectiveness of chamber executives and their staff through education, benefits programs, trend analysis, benchmarking, and network development. ACCE promotes the highest standards of professional excellence and integrity within the chamber profession.

Chamber News February 2010

Click here to register online

2009 is almost over, and it’s time to start thinking about any unfinished financial plans you have for this year. Time is running out to finish whatever needs to be done for your finances personally, for your company and for your employee benefits.

Listed below are six items that are important for everyone to review at the end of each year, all of which are applicable to individuals, families and business owners alike.

1. Year-end planning

• Compare your actual gross income for the year with your already-submitted quarterly estimates. Should your last submitted estimate for January 15, 2010 be the same as the others you’ve sent in 2009 so far?
• Any gifts to children or grandchildren (stock, cash or other asset) in 2009 must be decided upon in the next two to three weeks. Also, have you already gifted all you want to each of your preferred charities?
• Changes to the estate tax law were supposed to be passed in Congress in the third or fourth quarter of this year. So far, there have been no amendments to the estate tax provisions that were implemented several years ago. As it stands now, the exemptions of $3.5 million for each person will be eliminated, and the estate taxes will be zero in 2010 and $1 million per person in 2011. I still don’t believe that Congress will let this happen, but anything is possible. This will have a very large negative impact for each of you when it comes to your estate planning. We’ll have to wait and see what happens on this issue.
• Look at your long-term capital gains and losses for 2009 and work hard to maximize the benefits. FYI – the capital gains tax rate of 15% may go to 20% in the next year or two.
• Check to see if you are going to be in the Alternative Minimum Tax (AMT) category for 2009. If you will not be in the AMT, many of your tax-saving options for this year will be reduced.

2. Talk about a Roth IRA

• In 2010, many people will be able to transfer their IRA assets to a Roth IRA for the first time. A Roth IRA has advantages for some people because during retirement the income that you take out of the Roth IRA is tax free. This idea does not fit everyone, but is especially attractive for people in their 40s or 50s who plan to retire in their 60s or 70s, and whose income puts them in the highest tax bracket.

3. Add to college 529 plans or college trusts

• For those individuals who have children or grandchildren and have established and contribute to either a state-sponsored college 529 plan or to irrevocable trusts for them, contributions for 2009 must be made this month (December). If you have Uniform Gifts to Minor Accounts at a brokerage firm, contributions to these accounts for 2009 must also be made this month. Keep in mind that in Indiana and some other states, you receive a state income tax savings for these contributions.

4. Look for more tax deductions

• Talk to your CPA about all of the tax deductions that apply to you and be sure to take advantage of them this month. For example, consider making an extra mortgage payment so that you get a higher interest deduction for 2009, or give an old car, clothes or a TV set to charity (be sure to get a receipt to verify the donation) to help maximize your deductions.

5. Maximize retirement account contributions

• If you haven’t contributed anything to your retirement account(s) this year, consider doing so quickly. If you have already put some money into a 401(k) plan or an IRA, you should consider adding more to be as close to the maximum contribution amount as possible. If you have a SIMPLE IRA, make sure you put the maximum into your account. Maximizing your contribution to a tax deductible retirement account not only gives you a tax deduction this year (based on your current tax bracket), but it also allows those funds to accumulate (tax deferred) each year in the future. Don’t miss out on reducing your income taxes and increasing your net worth in December.

6. Start discussing your asset allocation for 2010

• December is a good month to take a close look at the first and second quarters of the new year, and to do some asset repositioning planning. Some of you would like to see a lot of growth in your investments over the next 10 or 20 years, but with today’s economy that will be challenging to do in the near future. Many of you want to increase your income, earn more dividends and have more financial security. This is why planning during this bad economy is very important. Talk to your advisors about all of the year-end tax saving options you should be taking advantage of and which changes in the first quarter of the new year they suggest you consider.

By Gary Pittsford, Castle Wealth Advisors, LLC ]]> http://www.wellscoc.com/NewsEvents/uncategorized/year-end-decisions-getting-ready-for-2010/feed/