How To Make 1 out of 4 Hires a Veteran

28.6% of total new hires at HRU Tech were Veterans in 2020. We stand proud in our ability to connect employers with transitioning service members and Veterans. Above all, their military experience is an asset to any workplace. 

But, making 1 out of 4 hires a veteran is no easy task. According to a major recruiting org’s survey, 80% of Organizations lack a veterans recruiting program. We want to change this. 

This free eBook is designed to advance your Veteran recruiting strategy to the next level. And, most importantly, help your organization recruit the heroes you deserve.

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The Lies We Tell in HR and Talent Acquisition!

By Tim Sackett

Everyone lies, right? I mean a little. Not bad lies. It’s like the lies we tell those we love to not hurt their feelings, or we believe the lie we are telling is really a victimless crime. You know the kind of lies I’m talking about:

  • Does this dress make me look fat? (Of course not…the dress has nothing to do with you looking fat…)
  • Ordering take-out food, then putting in normal dishes and making them believe you cooked it.
  • Buying new clothes, then bringing them home in dry cleaners plastic, to make it look like it is just stuff from the cleaners, and you really didn’t go buy stuff your budget couldn’t afford! (I have the shoes I buy shipped to my office and then wear them home!)
  • What size are you? (Oh, I’m a size 3! Only at Chico’s!)

Clearly, there are different types of lies.  The ones above, while clearly hiding the truth, aren’t meant to cause pain to the parties involved, and probably, in the end, trying to hold the peace within the relationship (i.e., that what they don’t know, won’t hurt them).

Then, there are those lies (Damned Lies) that will send you directly to hell, don’t pass go, don’t collect $200.  Those are the ones that cause people to lose their jobs, their families, their dignity, and pretty much anything of value.  I think we all agree, these are the “real” lies that get people into trouble.

The problem is, our “little lies”, like those listed above, tend to be the entry drug of lies, that lead to the damned lies.  Boy, this gets really confusing, especially trying to explain this to your kids! “No, Timmy, it’s not okay to lie! But you told Daddy we didn’t buy anything today and you bought that stuff at Lulu!”

Then, we have those lies we tell in HR and TA.  These are lies meant to primarily avoid conflict, protect feelings, protect privacy, protect relationships, etc. You know these –

HR and TA Lies:

Employee: How am I’m performing, and is my job in jeopardy? (bad performer)

HR: You’re really working hard and giving great effort. As of right now, there are no plans to let you go (but 15 min. after you leave I’ll have the plan).


Candidate: Do you have any room for negotiation? 

TA: We can’t move an inch, we’ve completely maxed out what we can offer you. (But, if you decline the offer more money will magically come flying out of my butt!) 


Employee: Can I still sign up for insurance, I forgot to sign up before the open enrollment deadline!?

HR: Of course not, it’s against the federal law, marshall law, the world health organization, and Rule 3 of the Secret Society of Evil HR Pros, and not to mention the Geneva Convention! How could you be so stupid?! We reminded you 87 times via email. We’re very sorry but the government will not allow us to help you! (Or, if we really like you and you’re a valuable employee who is hard to replace, “theoretically” we could fire you on Friday, and hire you back on Monday, backdate your paperwork and sign you up. But don’t tell anyone, it’s just our little secret!)


The last one I like the best, probably because I see it happen in every (yes, I mean every) company I’ve ever worked in or with!

What lies do you tell in HR & TA?

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Does a $15/hr Minimum Wage Really Help Workers?

By Tim Sackett

There might not be a more controversial topic in 2021! Whether or not we (the United States of America) should raise the minimum wage for all workers, in all states, in all jobs to $15/hr.

I would love to say this is ‘simply’ a political issue, but it’s not. It’s much more complicated than politics. Both sides will point to studies that prove why or why not we should have a minimum wage of $15/hr. The reality is, a $15/hr minimum wage is more of an economic issue than political.

What is the argument, really, for and against a $15/hr minimum wage? 

For $15/hr:

  • People need a living wage. $15/hr for a forty-hour week, roughly puts a person at an income level of $30,000 per year. Which, in theory, would bring that person above the poverty level. Let’s be clear, “above poverty level” is still a freaking tough life!
  • Corporations are making record profits on the backs of hourly workers. Hello, Jeff Bezos!
  • Other countries have done this and it’s worked out just fine.

Against $15/hr:

  • Raising the minimum wage to $15/hr and above will cost jobs. If you force employers to pay $15/hr as a minimum they’ll hire fewer workers and have them work fewer hours.
  • $15/hr minimum wage is too little for some markets and too much for some markets. We should let market dynamics decide what the minimum should be.
  • Other countries, like Australia, pay a living wage, but have you been to Australia? It’s not the U.S. It’s U.S.-like, but when you go to a “bar and grill” in Australia you don’t get waited on. You go to the bar, order your food, and they yell your name when it’s done. Need extra ketchup? Go to the bar, wait in line, and hope you can get the one bartender to get it for you. Why? Because wait staff costs too much, so they use them. Things are different. So, yeah, “waitstaff” in Australia gets paid a living wage, but those places just don’t hire very many.

What does the research really say? 

Here is where the rubber meets the road because we can always find a study that will back up whatever point we might have. I’m for an increase in the minimum wage, or I’m against it, I can share with you five studies each supporting my take. Ugh! So, what is it really?

I found a study that looked at all the minimum wage studies (not some dumb Forbes article, real academic research), both for and against, to break down the facts and the myths. Here’s what they found:

  • There is a clear preponderance of negative effects on employment when raising the minimum wage.
  • The evidence is stronger for teens, young adults, and less-educated.
  • The evidence around specific industries is less one-sided.

What does all of that mean? 

First, while you will find studies saying that minimum wage does not impact jobs, there is way more academic and economic literature supporting the other side. Also, the evidence shows a strong effect on younger workers and lower educated, so there might be some room to talk about family or adult minimum wage standards verse just the standard one-size-fits-all. There is also a need to look at minimum wage by industry, again not just across the board.

An example might be, manufacturing sectors can pay $15/hr but service level restaurant jobs can not. Or, $15/hr makes sense in New York City, but not in Winona, MN. Maybe it could be looked at via high margin industries verse low margin industries.

What is clear, from the evidence, is that a straight $15/hr minimum wage, for all people, for the entire country, is not the best remedy for our current dilemma. Most likely, what will happen, if the $15/hr minimum happens is you’ll see organizations adjust accordingly by doing a combination of rising prices, cutting costs, cutting hours, and cutting jobs.

If you believe corporations are just going to “eat” the additional expenses, at the cost of profit, you are at best naive.

What’s my take?

I don’t like the proposal of just across the board we are going to raise the minimum wage to $15/hr across the country. I don’t like it because it won’t do what people think it should do, it’s really just more political posturing. In the end, consumers will pay more (which maybe we should) and corporations will cut to make the same profits. Ultimately, workers will take it on the chin, again.

If politicians truly cared about workers, they would dig in and do a minimum wage by market. It would be way higher than $15/hr in some locations and probably a bit lower in some locations, but there would be more strategy and thought behind it. The federal government does this now with pay bands for federal workers, they should be able to do it for all workers with minimum wage.

To not include market dynamics in compensation policy shows the government doesn’t really care about workers, truly. Because when it comes to taking care of their own, federal government employees, they do take into consideration market dynamics. $15/hr in Los Angles, San Francisco, and New York City is nothing, let’s be real.

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How Many of Your Employees Are Going to Get the Covid Vaccine?

By HRU President Tim Sackett

I’m sure you’ve been seeing the headlines, across America we continue to hear about front-line workers, healthcare workers who are refusing to get the Covid vaccine. In Ohio, it’s estimated that 60% of nursing home workers declined to get the vaccine!

I want to believe that those choosing not to get the vaccine when they could get that vaccine are just ignorant and natural selection will take its course. But, not even 100% of hospital workers, nurses, and doctors on Covid units are getting the vaccine they are eligible to get!

So, we know that when it comes time that we can help our own employees get the vaccine, not all will want it. This will cause a bunch of issues in organizations that we haven’t even come close to really knowing, yet.

Can you fire an employee who refuses to get a Covid Vaccine? 

Short answer? Yes. The longer answer depends on a number of factors. Do they have a legitimate religious exemption, not one they’ve conveniently made up in the past day or so? Do they have a document medical issue? Etc.

The reality is employers have a lot of ground to stand on when forcing employees to get a vaccine or lose their job. Getting the vaccine becomes a workplace safety issue and the government and the courts have shown a willingness to back these protections.

The more important question is, do you as an employer want to force employees to get the vaccine, or is there a better way to get the same result? This is really a company by company decision.

What are some ways to get employees to want to take the vaccine? 

Let’s face it, the vast majority of most employees, at most employers, will actually want to get the vaccine and get back to life as “normal” before the pandemic. So, anything you roll out to entice your employees to get the vaccine will be a bonus most probably didn’t need. That being said, here’s what I’ve been hearing some employers are doing:

  • Cash bonus to get the vaccine: $100 if you get the vaccine in a certain time period once it’s available.
  • Extra time off.
  • Extra flexibility around their schedule.
  • Making it super convenient, like offering vaccines onsite at the workplace.

It’s basically the carrot or the stick. Most likely, organizations will have to use both to get to the point of ‘herd immunity’. The reality is, based on data, you don’t actually have to have 100% of employees get vaccinated to make your workplace safe.

I think it’s important to remember that factor. You really don’t need 100%. As organizations do we really want to fight that battle with someone who just refuses, yet, they are a good, solid employee? I don’t think it will be worth it in the long run.

The one thing you might try is drafting an agreement for those who refuse which would state, they are refusing to get the vaccine and I would try and add in some language that gives you the right as an employer to be able to let other employees know who are those employees are aren’t vaccinated from a workplace safety issue, so other employees know who they need to continue to social distance from. Is this ideal? Heck no! There are HIPAA issues, among others. But, this is about how do we keep the majority of our employees safe.

Now, before drafting some agreement like that up on your own, get your legal counsel involved. They’ll balk at first, but with some pushing, they can put something together that will protect the organization from any legal blowback.

Again, you have to weigh the outcome of doing something like this. Those employees who refuse the vaccine, sign your agreement, and you make that public among your employees is now wearing a scarlet letter around. That isn’t good either, from a cultural standpoint.

This is why HR is so much fun! We don’t live in black and white, we live in the gray. There isn’t one perfect answer to the question. Of course, the best-case scenario is every single one of your employees wants the vaccine and gets the vaccine. Unfortunately, I don’t see that happening with too many organizations.

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Should You Build or Buy Talent in 2021?

By HRU President Tim Sackett

Two rules of thumb in acquiring talent:

  • In a good, long-term economic outlook, building talent will ultimately be better.
  • In a questionable, short-term economic outlook, buying/renting talent is the best bet.

2021 is not the time to decide to build talent, at least not in the first two quarters. Most organizations have already started renting talent and we see contingent labor as a percent of the workforce rising in Q1 and Q2 as organizations determine how the economy will come back.

We actually saw this start to increase in Q3 and Q4 of 2020.

If the economic uncertainty continues into later 2021, we’ll see these numbers continue to rise.

With so much talk about “Internal Mobility” in the HR Tech space, it seems like the opposite is being spun as the better solution. For a few organizations, who have continued to stay busy during the pandemic and believe they’ll continue after, this is probably the right strategy.

For the vast majority of companies, the focus on hiring more contingent is a better strategy over the next 12-18 months, to ensure they will have much more flexibility and the ability to move quickly to move their headcount up and down based on immediate business needs.

In Questionable Economic Times, You Need Workforce Flexibility! 

I run into a lot of mid-sized enterprise organizations (500-2500 employees) who freak out when you talk about contingent labor. “We only hire direct, Tim!”

Um, okay, so all those Fortune 1000 organizations that have anywhere from 15-30% of their workforce as contingent are doing it wrong? You know better than they do, is what I’m hearing? Or, are you feeling like hiring contingent labor is somehow a sign of weakness for you as an HR/TA Leader?

Our reality is we saw a decade of crazy growth since the Great Recession. Many organizations during that time forget. Forget the need for a fast flexible workforce that you can ramp up and ramp down very quickly. Large organizations, tend to move slower and forget less. They probably have people around who remember what bad economic times look like.

Quite frankly, I don’t care how or who you hire. 

I do know those TA leaders who move up in their careers tend to understand total workforce strategies better than those who stick to one strategy no matter what the external circumstances they are facing. Also, they are more likely to incorporate multiple strategies and test what works more.

In 2021 we see more organizations buying and renting talent in the short-term. They want to make sure, before adding a permanent headcount, that the organization can sustain itself in the long term. If it can’t, quick and easy ramp down. If it can, they already have some trained and proven workers to pick from for the long term.

You only get talent in two ways, buy or build. Both are valid strategies for corporate TA leaders, and both are used often together. What will you be doing in 2021?

For more by Tim, visit TimSackett.com

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5 Magic Phrases that Will Instantly Make You More Likable in an Interview!

magic tricks

We’ve heard for decades that most interview decisions are made within seconds. Someone meets you and pretty much sizes you up in those first few moments. I think that’s mostly correct, but every interviewee still has that time to change hearts and minds.

Sure, you came in and immediately made a verbal gaffe or smelled like old lady feet, that doesn’t mean you’re dead in the water! You can still make a comeback, but it really depends on your personality and how you engage with those in the interview.

Here are 5 magic phrases if you used at the right time and context can make you exponentially more likable in your next interview:

1. “Wait, can you say that again, I want to write that down?” 

Of course, you need to use this phrase when appropriate. Let’s say a leader in the interview says something about how they like to manage, or something about their leadership style, etc. It should be quotable or something that would need writing down. But the phrase is very flattering to the person it’s said to.

Alt versions:

“I love that idea! I’m going to write that down so I don’t forget it.”

“That’s interesting, I like how you do that, I’m going to write that down so I remember.”

2. “Thanks for asking…” 

Again, needs to be used in the right context. “So, tell us about yourself.” Is not a good time, to say, “Thanks for asking, well let me tell you about me!” That seems corny at best! But, many times in interviews we get the, “Do you mind if I ask…” This is when it’s a perfect time. “No, in fact, Thanks for asking that question…”

3. “Sorry for interrupting, I’m a little nervous during this interview and can get really excited to respond.” 

This works well when you know you probably jumped the gun, but the interviewer was let you go on anyway. To be able to finish your thought, but let them know that you know, you probably stepped in too soon. “I’m sorry, I think I interrupted what you were going to say…” Also, especially in a setting when you’re a male being interviewed by a female, you don’t want to come across as mansplaining or hogging the floor. Being able to acknowledge you’ve interrupted shows high self-insight and gives the floor back to the person who should have it.

Alt versions:

“Sorry for interrupting, I’m just really into this topic!”

“Sorry for interrupting, I think I didn’t let you finish your question or thought.”

4. “I’d love your input on…” 

In every interview, usually towards the end, there is always the, “do you have any questions for us…” A better way to approach that as an interviewee is to use the “I’d love your input on…” I’d love your input on how you believe “X” technology will evolve or change your business? I’d love your input on how you think my skills can be used within your department? From a communication standpoint, asking for input connotates conversation and peer level. It brings the interview back to the level of professionals having a conversation.

5. “I usually dread interviews, but this has actually been fun.” 

Now, it might have been torture, but you don’t want your captives to know that! Letting your interviewers know you had ‘fun’ when interviewing them lets them know you feel comfortable. Much of the interview process is about “do we and they feel comfortable together”. Just as you worry about do they like me, many interviewers are worrying about the same thing! You are saying, whoever I am, I match you guys and I could get used to this.

For more by HRU President Tim Sackett visit TimSackett.com

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There Is a 75% Chance of Selecting Better Talent if You Only Hire…

ME! No, I’m only joking. I’d be way higher than 75%! 

You all know I love data and some of the fun things we can pull out of studies about performance and selection. A 2014 study on world-class athletes found that the top-performing athletes had older siblings in 75% of the participants studied!

So, want to hire better performers? Ask this question:

Do you have older siblings? 

Ironically, those only children, the super great ones all those parents love, only have a 5% chance of being world-class! Oldest kids get the other 20%, and middle kids, well they don’t get anything but to continue to complain it’s unfair! 

Why do people with older siblings tend to perform better? 

Okay, I get it, we are talking about world-class athletes and performance, but really the same foundations are set by older siblings no matter what the skill or profession. Want to be a better cook? It probably helps to have older siblings who were cooking around you and showed interest, which made you interested, etc.

Siblings tend to compete with each other, and the youngest will always be at a disadvantage until they are not. If you’re kicking little Timmy’s butt all over the court, you won’t work as hard to continue to get better, but little Timmy will never stop until he beats you. (By the way – this isn’t a “boy” thing, the study was done on female world-class athletes – it works across all genders)

The youngest kids get all the advantages of being pushed harder and getting knowledge transfer from seeing older siblings fail and succeed. On average, they are more likely to gain from being in an environment where older siblings are performing.

Does this concept transfer to the world of work? 

I don’t have hard data from a study that it does, only anecdotal evidence to say it depends! I’ve worked with brilliant people who come from all kinds of family dynamics. I do find, on average, that those people who were raised as younger siblings bring competitiveness to the workplace that if channeled appropriately can be very good.

I do think it also depends on how close in age they are to their siblings. The closer the better in my experience. My younger brother is 15 years younger than me. He’s more only-child than younger sibling grinding it out trying to beat me. My two oldest sons are twenty months apart, one year apart in school age. They are strong competitors, and my youngest you is four years younger than his brothers gets competition shoved down his throat, by his brothers in everything he does.

So, today, younger siblings who have taken all the beatings from your older siblings, smile bright! You probably have a better shot a being great, because of those beatings!

For more by Tim visit TimSackett.com

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4 Things You Can Do to Get Candidates to Open Your Emails!

Notification of new email on laptop

By HRU President Tim Sackett

I found some cool data that probably got overlooked a while back from CB Insights. Now, this data is from 2016, but it’s super relevant!

CB Insights did some testing with their own email newsletter that went out to 175K+. A very big sample and the reality is they have the exact same goal as we all do, Get Candidates to Open Our Email!

These 4 things work really well in getting people to open your email:

1. Brand Names. CB found that using a big brand name like Apple, Google, Nike, etc. in your subject line increases your odds greatly of getting someone to open your email. Now, you might be asking yourself, “Tim, how the heck am I going to use a brand name in my recruiting emails!?” How about something like, “3 Ways we are a better place to work than Apple!”

2. Short Titles. Less is more when it comes to attention-grabbing subject lines! I suggest under 5 words if possible. “Are we paying too much?” or “I’ve Got a Quick Question” or “Sackett” – Yep, in my own testing, the one email that gets open at a higher rate than any other is when I only put my last name in the subject line!

3. Negativity. This seems counter-intuitive. No way! People love positivity. You are right, but negativity draws them in! “How Candidates Fall on their Face!” will get opened way more than “How Candidates Succeed!” Again, in ten years of blogging and making headlines, this data also rings true. I get way more interaction on negative headlines than positive headlines.

4. Surprises. Different viewpoints that people don’t expect. “Punching Your Boss Can Get You a Raise!” or “Older Workers Have More Energy Than Millennials!” or “Hiring Dumb People!” Basically, people open these because they don’t agree with the headline. What the heck is Tim talking about today!?!

So, if all of these things work. What does CB Insights say doesn’t work, in fact, what should we stop doing with our subject lines? 

  • All of the opposites of above! Long headlines, positive headlines, boring, etc.
  • Question Headlines. “What 3 Things Are You Doing to Hurt Your Brand!” While Buzzfeed has made billions with these clickbait headlines, CB found readers are getting fatigued with these types of headlines. (I will tell you “The X Things to do…” headlines still work in my world. 5 Ways to Hire More People! Will always do well.
  • Broad topics do worse than Niche. A headline that says “5 Ways to Attract More Talent” will do worse than “5 Ways to Attract More Nurses Right Now!”

The key to great email subject lines is they get opened! If you send out a hundred emails to candidates and no one opens them, it doesn’t matter what the content is and how much time you spent making it perfect. Get Them To Open Your Emails! Is the single most important thing you should worry about first!

It’s very Recruiting 101, and it’s something almost every recruiting shop struggles with, but then we go and focus on the picture we’re using. Does it have a puppy and a kid in a wheelchair? No, stop the presses! Stop it. Fix the basics first, then worry about doing the higher level stuff.

What is your most responsive email subject line?

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Trump and Biden Envision Different Paths to Retirement Security

By Stephen Miller, CEBS – SHRM

There is not a lot of overlap among the proposals that President Donald Trump, a Republican, and his Democratic challenger, Joe Biden, have championed regarding private-sector and government retirement benefits. Below is an overview of the candidates’ proposed changes to employer-sponsored savings plans and Social Security.

Biden Favors ‘Equalizing’ 401(k) Tax Benefits

Biden’s tax plan calls for changes to the traditional 401(k), ending upfront tax breaks that grow larger as more money is saved and replacing them with flat-tax credits.

Current tax benefits for retirement savings are based on savers excluding their retirement contributions from tax in traditional 401(k) plans, and then paying taxes when they withdraw money from their account. “This system provides upper-income families with a much stronger tax break for saving and a limited benefit for middle-class and other workers with lower earnings,” according to Biden’s website. “The Biden plan will equalize benefits across the income scale, so that low- and middle-income workers will also get a tax break when they put money away for retirement.”

Roll Call reported that Biden’s plan would “equalize” the incentive system by replacing tax-deductible contributions with flat-tax credits for each dollar saved. “The campaign isn’t saying what that percentage would be, but the Urban-Brookings Tax Policy Center has estimated a 26 percent credit would be roughly revenue-neutral over the first 20 years and beyond, which the Biden campaign is aiming for,” Roll Call reported. “Under this plan, someone earning $600,000 would get the same tax break as someone making $60,000—an identical $260 tax credit for their $1,000 retirement contribution.”

The credit would also be refundable, so employees earning too little for the credit to offset their income tax liability would still receive the full value.

“By and large, it would help lower- and middle-income people save more,” said Eric Toder, co-director of the liberal Tax Policy Center, a joint venture of the Urban Institute and Brookings Institution, Forbes reported.

Alicia Munnell, director of the Center for Retirement Research at Boston College, also supports the idea, writing that “the Biden proposal is a desirable change on equity grounds and would have little effect on contribution patterns.”

But Brian Graff, CEO of the American Retirement Association, which represents plan services providers, is concerned over “how reduced tax incentives for small-business owners would impact their willingness to make matching and other contributions or, even more worrisome, to have a plan in the first place.”

Vince Morris, president of resources investment at OneDigital, an HR technology and services provider, noted that “business owners bear plan liability, the cost of employer contributions and sometimes plan administrative costs,” and they see their ability to make large tax-excluded contributions for themselves as offsetting the costs and administrative burdens of plan sponsorship.

“When offered a planwe know that people save more for retirement than those who don’t have access to a plan,” Morris said.

“Employer-sponsored retirement plans offer more than 120 million American private-sector workers the opportunity to accumulate savings and improve their retirement security,” said Chatrane Birbal, vice president of public policy at the Society for Human Resource Management (SHRM), citing data from the nonprofit Pension Rights Center.

“SHRM believes that every American worker should be afforded the opportunity to save for his or her own retirement,” Birbal added. “Retirement reform proposals should facilitate and encourage voluntary employer-sponsored plans, as well as individual savings, through consistent tax incentives and simplified regulations.”

Retirement Plans Snapshot
According to the Society for Human Resource Management’s 2019 Employee Benefits survey of 2,763 HR specialists from among SHRM’s members:93 percent offer a traditional 401(k) or similar defined contribution savings plan.
74 percent match employees’ contributions.
42 percent automatically enroll new employees into the plan.Somewhat fewer but growing numbers also offer Roth 401(k) accounts, which employees fund with post-tax dollars and from which funds withdrawn during retirement are tax-free. Biden’s tax-credit proposal would not apply to Roth accounts.

Biden’s campaign website also addresses the following retirement plan issues:

AUTOMATIC ENROLLMENT 401(K)S

“Under Biden’s plan, almost all workers without a pension or 401(k)-type plan will have access to an ‘automatic 401(k),’ which provides the opportunity to easily save for retirement at work,” the website states. Although details aren’t provided, this could involve a mandate for employers to provide auto-enrollment plans with subsidies for small businesses to set them up, or possibly a government-provided defined contribution plan option, building on state-run auto-enrollment savings programs.

“Retirement plans represent an important aspect of the total compensation package used by employers to recruit and retain employees,” Birbal said. “As a result, many employers are already proactively enrolling employees into employer-sponsored retirement plans.”

MULTIEMPLOYER PENSION PLAN RELIEF

Forthcoming Biden proposals, according to his website, will include “issues related to pensions, starting with passing the Butch Lewis Act,” which would provide federally backed loans to underfunded multiemployer defined benefit pension plans.

The Butch-Lewis Act passed the Democratic-led House last year but has not been brought up for a vote in the Republican-led Senate.

Trump Targets Social Advocacy by Employer Plans

Trump has not proposed fundamentally changing how 401(k) plans operate. Among actions the Trump administration has taken regarding workplace retirement plans, the Department of Labor (DOL) recently proposed a set of rules that, if finalized, would:

The DOL said it was attempting to keep fiduciaries from making decisions that further social and political aims but do not advance the goals of growing and securing plan participants’ retirement accounts.

Democrats have criticized these proposed rules, and a Biden administration could seek to replace them. Democratic majorities next year in both houses of Congress also could pass Congressional Review Act resolutions to overturn any rule finalized by a federal agency within 60 legislative days of the election.

The proposals seek “to influence corporate policy on issues that some argue are not directly related to ‘economic value,’ including with respect to [ESG] issues,” according to an overview of the DOL’s 2020 regulatory agenda by October Three, a retirement plan advisory firm. “In this regard, there has to some extent been a different ‘Republican Administration’ and ‘Democratic Administration’ position at the DOL.”

During the Obama administration, the DOL eased the way for plan sponsors to consider social issues in selecting investments.

Different Views on Social Security and Payroll Taxes

The candidates have staked out different positions on the future of Social Security.

TEMPORARY PAYROLL TAX SUSPENSION FOR COVID-19 RELIEF

In August, Trump issued an executive order that led to IRS guidance allowing employers to temporarily stop collecting Social Security payroll taxes during a “suspension period” from Sept. 1 through the end of the year for employees whose wages are less than $4,000 for a biweekly pay period. Companies that suspend collection of employees’ payroll tax would collect additional amounts from workers’ paychecks from Jan. 1 through April 30 next year to repay the tax obligation.

Trump and Treasury Secretary Steve Mnuchin have called for legislation to forgive suspended taxes. Biden criticized Trump’s executive order, calling it “a reckless war on Social Security” funding, The Hill reported.

TRUMP FLOATS THE IDEA OF REPLACING PAYROLL TAXES

Trump also suggested, but not in any formal proposal, replacing the Social Security payroll tax with funding from general tax revenues. According to Politifact, Trump said during an Aug. 10 briefing that “the payroll tax is a big deal for people … and we intend to terminate it at the end of the appropriate period of time.”

Trump “made clear … that his real goal is to replace the Social Security payroll tax with revenues drawn from the general tax fund, the vast majority of which is income taxes,” wrote Andrew G. Biggs, a resident scholar at the conservative American Enterprise Institute, who favors the idea.

Seth Hanlon and Christian E. Weller, senior fellows at the liberal Center for American Progress, wrote that “cutting Social Security’s income stream is the last thing Americans need right now,” as it could upend the Social Security system.

BIDEN WANTS EXPANDED BENEFITS AND A HIGHER EARNINGS THRESHOLD

According to Biden’s website, his administration would expand current Social Security benefits by making changes that would:

  • Provide the oldest beneficiaries—those who have been receiving retirement benefits for at least 20 years—with a higher monthly check “to help protect retirees from the pain of dwindling retirement savings.”
  • Implement a minimum benefit. Workers who spent 30 years working would receive a benefit of at least 125 percent of the poverty level.
  • Allow a surviving spouse to keep a higher share of the benefits, raising the monthly payment by about 20 percent for affected beneficiaries.
  • Provide earlier benefits for teachers and other public-sector workers.

Biden’s plan calls for having high-wage earners pay taxes toward Social Security on a higher percentage of their income. Currently, employees and employers each pay 6.2 percent from wages to fund Social Security for a 12.4 percent combined tax rate, but the tax is capped at wages of $137,700.

According to analysts at The University of Pennsylvania’s The Wharton School, the Biden plan increases Social Security taxes by creating a “doughnut hole” in the payroll tax structure. While earnings immediately above the current taxable maximum would continue to be exempt from Social Security taxes, earnings above $400,000 would be taxed at the 12.4 percent rate. However, the new taxes on earnings above $400,000 would not trigger additional benefits.

DOL Fiduciary Rule

In July, the DOL proposed guidance that would change requirements for advisors who recommend investments to retirement plan participants. The proposal would still require advisors to act in participants’ best interests and to avoid conflicts of interest when recommending specific investments, but it is less restrictive regarding how advisors are compensated than a 2016 rule by the Obama administration, which was struck down in 2018 by the 5th U.S. Circuit Court of Appeals.

The Democratic party platform says Democrats will “take immediate action to reverse the Trump administration’s regulations allowing financial advisers to prioritize their self-interest over their clients’ financial well-being.”

The fate of the new rule will likely depend on November’s presidential election.

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