The employee retention tax credit (ERTC) was introduced in 2020 as a way to help businesses retain their employees during the COVID-19 pandemic. While the credit was initially designed as a short-term measure, it has the potential to be a powerful tool for building a stronger workforce for the future.
First, it’s important to understand what the ERTC is and how it works. The credit is available to eligible employers who retained employees during the pandemic even though their operations were fully or partially suspended, or who experienced a significant decline in gross receipts. The amount of the credit is equal to 50% of qualified wages paid to each employee, up to a maximum of $5,000 per employee in 2020 and $28,000 per employee in 2021.
So, how can businesses leverage the ERTC to build a stronger workforce for the future? Here are a few ideas:
1. Invest in employee training and development. As businesses recover from the pandemic and prepare for the future, it’s critical to ensure that employees have the skills and knowledge they need to succeed. The ERTC can help businesses offset the cost of training and development programs, which can in turn improve employee retention and enhance the overall skill level of the workforce.
2. Increase employee compensation and benefits. One of the key factors in attracting and retaining top talent is offering competitive compensation and benefits packages. The ERTC can help businesses invest in higher salaries, better health insurance, and other benefits that will make them more attractive to job seekers.
3. Expand hiring and recruitment efforts. With the ERTC providing financial support to businesses, they may be able to expand their hiring and recruitment efforts. This could include offering sign-on bonuses, increasing advertising and marketing efforts, and investing in more comprehensive applicant tracking and screening systems.
4. Improve workplace culture and morale. By investing in employee well-being, companies can create a more positive workplace culture that fosters collaboration, innovation, and a sense of purpose. The ERTC can help businesses invest in employee wellness programs, mental health resources, and other initiatives that support a healthy and engaged workforce.
In conclusion, the ERTC is a valuable tool for businesses looking to build a stronger workforce for the future. By investing in employee training and development, increasing compensation and benefits, expanding hiring and recruitment efforts, and improving workplace culture and morale, companies can leverage the credit to attract and retain top talent, enhance productivity and innovation, and position themselves for long-term success.